The 21st Century, in its teens, is not even a new. The Y2K hoopla is far behind us (what a letdown), and we’ve gotten comfortable with iPhones and 4G LTE networks which didn’t exist just a few years ago. The ascent of SaaS and AWS, the descent of Microsoft and Dell — all recent phenomena. A new bunch of 30-somethings became millionaires and new 20-somethings are well on the way to tech successes, 20-somethings who were born after the internet entered the common psyche. These days, VCs raise their eyebrows at the mention of an enterprise sales model so popular at the turn of the last century, and toss around terms like “monetization,” and “gamification” — terms that very recently didn’t even exist.
But Venture Capital is a glacial business with funds living 8 or 10 year at a time — a lifetime in tech terms. And most VCs, being past the age of 40, probably remember the first time they opened a web browser or made their first mobile phone call (I remember both). Or, also like me, they remember the 1984 Mac SuperBowl ad. It was a GUI (pronounce goo-ey), which paved the way for things like “WYSIWIG (pronounced wizzy-wig)” and drove new technologies like “client-server”. Also, most VC funds are in their third, fourth, or tenth “vintage,” originally raised by people who were in this business when Dell was a hot new company and Yahoo, Google, and Amazon were new kids on the block using that crazy thing called “the net” to sell stuff to awe-struck multitudes.
Well, entrepreneurs, you are in business for the NEXT twenty years, and you ought to be wary of people who got to see (and could afford) the best technology offered over the last decade but adopted so little of it. So watch out for these warning signs when visiting a VC’s office. If you’re alarmed, as I have been, do what you want, but I’d be careful. I distinctly recall myself screaming (silently and sometimes quite audibly once out of earshot).
Top 10 Signs Your VC is Living in the Past.
Check for these tell-tale signs before proceeding to the conference room…**
10. Dell (or, worse, Acer) logo on the monitor at the front desk.
Frightening. This is usually seen on the back of a small monitor in front of which an administrative assistant answers the PBX sitting somewhere in the closet. This means that the fund you’re visiting is a) out of money, b) extremely frugal and will be charging your company for every Starbuck’s coffee they sip on the way to your board meeting or c) doesn’t think that large monitors and faster machines improve productivity. Chances are they are running Outlook 2003 with Exchange somewhere on the hoster their outsourced IT guy set up during their last fund’s lifetime. They don’t have to be as cool as you… but….
9. Windows XP.
Take a peek at the front of the monitor with that Dell logo. Is it flashing the vaguely familiar Windows XP screensaver? Startled by the “Start” button from 1995? Well, XP may have been the most stable Windows Microsoft ever released, but, hey, DOS was pretty good too (anyone remember Doom?). If it has to be Windows, at least make it Windows 7 (hopefully they were skipped Vista).
8. Wood paneling… anywhere.
Unless you’re meeting someone whose first name is “John,” middle name is “Pierpont” and last name is “Morgan,” I don’t think your VC’s office should be either “moneyed” or intimidating. It should not smell of cash (or polished wood for that matter). “Pecunia non olet” — but VC offices somehow do. I’m not suggesting glass walls framing the cityscape or translucent panels shaded by sequoia groves, but wood and faux-Persian carpeting and landscape paintings on the wall should make you wonder… would I decorate this way? Think: why not? and count the reasons.
Now look at the personal touches of the office and the people in it…
7. Card with a fax number and an @aol or @yahoo email.
Business cards, still are a fixture of business life, though your VC should have a LinkedIn profile you can use to get much more information about them than fits on a card (if they don’t, by the way, ask why? Are they undercover for a reason?). But, as long as there are cards, be a good detective and see what the card is telling you about them and their fund.
First of all, fax number. Fax number?
Yes, there are custom domains out there, but I have personally seen email addresses from @aol, @msn, @yahoo, @hotmail(!?) in recent years. I know DNS and MX records are heights of technology (we VCs focus on high tech, and email is so low tech), but I think that the same outsourced website builder that put up their PHP-4 driven home page should have told them that they get free email addresses, even with GoDaddy.
6. No whiteboard.
Shocking, this is not standard equipment and sometimes you have to draw on yellow pads of paper. I always found that difficult. I guess watching slides is easier (see “Be a Deckless Wonder“). How can you explain how things work without a whiteboard? Si you have trouble scribbling on pads of paper, I always had, but had to do it, many times over. And, speaking of watching slides…
5. VGA dongle.
Yep, a heat-spewing projector with a VGA dongle at the end of a long cable — just what you need. I’m not saying everyone should have an Apple TV with AirPlay, but at least HDMI… If you don’t have a Mac and your Windows laptop only has an SVGA port, well, maybe you found your technology match. I’ve told several windows laptopers: “sorry, we don’t do windows” leaving presentations (gasp) unwatched. Not that I like presentations at all — I like demos, and my Mac runs a browser and projects pretty well.
4. Sense of humor (or, rather, lack thereof).
No, talking about the chilly Hamptons (or Sierra Foothills) this time of year is neither amusing nor something most 20-somethings (unless named Skip or Biff or Winklevoss) will get. Neither is laughing about the challenges of charging the Tesla. Neither is joking about how technically backward they are because they majored in “business” (whatever that means). If your VC is boring, you are signing up for years of boredom as you build your company — years that really need cheering up. Close your eyes and imagine seven years of board meetings with them… Smiles anyone?
Once the meeting ends, how is the follow-up handled?
3. The “availability” chain letter.
Who scheduled the VC’s appointment? Was it done by an admin who sent you a long list of time slots when Dave (or Bob or Chip) was available in the next twelve weeks, sprinkling the list with unnecessary details of their board meetings, travel plans, and family commitments? Is a third party now in charge of scheduling followups with the “crazy busy” of this world? Administrative assistants can play an important role in any organization, making groups of people working together function better, they are good people. But looking at Outlook on small monitors is a waste of talent — theirs and yours. Being too busy to look at a computer and see where the empty time slots hide is a throwback to days computers needed “booting up” .
2. “Reply All” and infinite “cc’s”
Does your prospective VC understand the difference between “Reply” and “Reply All?” When I got (and still get) an email addressed to more than three people, I felt a chill down my spine. Here it comes…. “Reply All” with a sentence of commentary, followed by a “Reply All” with another one, followed by a “Reply All” with yet more. It sometimes took 8 to 10 emails just to schedule something. Fortunately GMail has a “mute” button. I always “Reply” unless I really mean “All.” I always move people to “BCC” to get them out of the conversation not because they are not important, but because I don’t want to make noise under the guise of “keeping in the loop”.
1. Blackberry. Enough said.
If you see one if those anywhere in the course of your interaction with the investor, be careful. Two illusions at work here… First: somehow information VCs exchange needs to be “extra secure” — like Obama’s emails about carrier maneuvers. Second: it’s easier to type out long-winded texts (or reply-all) on a blackberry. The latter may be true (the former is definitely false), but I think the VC’s whipping out their RIMM devices fail to understand their customer — and, for a VC, the startup is the customer — a customer that doesn’t use a Blackberry and associates that thing with something “dad” once carried, a customer who has somehow learned to type on an iPhone. A blackberry, in 2014, is yet another differentiator between startups (the kids) and VCs (the adults with the money.) Are you sure you want that to play the game of children vs. grown-ups for the next seven years?
Some VC’s (minority) show none of these signs; not so for the vast majority. I’m not trying to suggest how people should run their business and this blog is not written for VCs, it is written for the entrepreneurs. Most of my life, I saw the world through a startup’s eyes and distinctly recall how that world looked from that side of the table — at times wonderful, at times harrowing and depressing. And I’m just trying to tell stories that educate and, importantly, amuse (see item #4 on the list).
Also, customer impressions matters… good investors know they need to start off on the right foot with the startup — a customer for their money, as much as entrepreneurs needs to appeal to the VC — a customer for their equity.