Another Perspective On The “Anti-Investor” Mantra @ Y Combinator
Anyone who knows me and/or reads this blog knows that there is a group of people that I really look up to mainly because of their writing and minds. I was first motivated to write about technology when I was introduced to Chris Dixon. I didn’t know who he was in late 2009, but then realized when I Googled him after our meeting. My blog was on Posterous at the time. It was really bad. I think my first post was a review of Chris Nolan’s “Inception.” Chris got me turned onto Fred Wilson’s blog, which of course is the bible for the intersection of consumer technology, venture capital, and networks. I began to read it religiously. After I moved to the Valley, I read through all of VentureHacks, which was invaluable to me. Then, I became friends with MG and Erick at TechCrunch, and they saw my writing on Quora, and they graciously invited me to post a few times, which eventually turned into a monthly post, which last year became a weekly column, Iterations. MG is making great waves now, which is so fun to see. Now, I try to follow the writing of a small set of reporters and investors, which you can see here. So, it goes without saying, that writing about entrepreneurship, technology, and venture is something I like to do, and ultimately it helps me learn quicker because, frankly, I am not from this world. I need to catch up.
One of the early writers I grew to worship is, of course, Paul Graham. His essays are legendary. Someone recently referenced one of his essays from 2005, The Submarine, which still rings true today, over eight years later. His insights on how startups are formed, how they compete, and how they win is pretty much incomparable. Many of these essays, of course, touch on the tense relationship between investors and founders. There’s no doubt that, in the past, the relationship was rife with tension. Fast-forward to today, and things do feel different — the founder is quite empowered. And, while investors now market themselves and either are or behave in a “founder friendly” manner, the sheer competitiveness doesn’t bring out the best in people. Everyone reading this will have encountered more than one investor who rubbed them the wrong way. There’s no doubt we could use a few more saints.
A few months ago, Graham shared a post mocking investor language, which struck me as too heavy-handed because I had actually seen the opposite behaviors from investors. You can read my response here. I realize it’s not kosher to write about Y Combinator in this manner, but at the same time, I have helped many YC founders through the fundraising process (without ever asking for anything), and I’ve observed how they and others who are pitching behave. The investing game is business, and I would agree it’s unnecessarily tedious. And, the entire process can boil anyone’s frustrations. Believe me, there are some interactions I’ve had myself that still bother me. Everyone knows part of the YC mantra is to help founders navigate once-treacherous waters and not get screwed, but in that training, new behaviors emerge on the part of founders that aren’t always in their best interest. I’ve seen investors back away from a deal they like because of the overt game mechanics. Yes, this is a taste of their own medicine, but I’d argue that in the end, it’s the founder who learns a bad habit and that it’s the investor who is rendered irrelevant.
Last night, this tweet from Graham was retweeted into my Twitter feed. It made me sad. I totally understand that Graham has his own view of the relationship between founders and capital. And, I don’t have enough context or history to draw from. But, I also think he’s made his point clearly. He has ground-rules for his Demo Days. Some people are invited, and others are not.
So, when I read this tweet below, it makes me sad for Graham, that despite all of his successes, and all the great founders he’s helped and will help, and all the investors that have helped YC founders (even when they didn’t invest) that he would use his great platform to throw another cheap dig at a group that’s actually quite diverse. Maybe the founder below isn’t talking to the right people. Maybe the pomp and circumstance of a staged, gated Demo Day attracts those prone to cynical behavior. Maybe he needs to, yet again, remind everyone of his disdain for and disappointment in “investors.”
I don’t know, because I’m not an insider in this specific world nor do I seek to be. I’m just lucky to work with a few YC companies and have seen many, many pitches by them, as well as many of their funding negotiations. So, given all that, when I read a tweet like this, it makes me sad because not only is it petty, and not only is it directionally wrong (based on my experience), and not only does it potentially influence a founder to learn bad behaviors themselves, but ultimately I think one could switch around the words “founder” and “investor” in his tweet below and, perhaps more often then anyone would like to admit, have the quote read quite similarly.
“I tried to be as cynical as I could but it still wasn’t cynical enough.” — a w2013 founder on investors
— Paul Graham (@paulg) May 15, 2013