It has been just over two years since I became a full time investor at True Ventures (after being a venture investor for about six years). It seemed like a natural progression from being a reporter and then a company founder. My three different incarnations had a few things in common: I pray at the altar of technology and change. I love people who dare to be different and I absolutely love the long-shots. This is a fairly simple lens to look at the world — and it allows me to focus on what matters, and what’s important. It also allows me to spend little or no time filtering the things that don’t matter.
Such as any and all conversations about startup valuations. As a veteran and very successful VC once told me, “The only valuation which matters is the one that you get when you exit.” And yet, we see a lot of people, including my peers in the venture business spend an incredible amount of time and energy talking about things that in the long term have very little consequence. There is too much focus on valuations, deals, deal dynamics and individuals.
Whether it is tweet storms or blog posts, whenever I see those topics discussed, all I see is content-based marketing to get attention, to get new deals and more deals. This loop, often distracts from the real reason we are all doing what we do — founders, their ideas and the businesses they are trying to build.
I learned this as a young reporter. My then editor would often chastise me for focusing too much of my time on investors. While investors & investment dollars are a good barometer when measuring the story worthiness of a startup, they aren’t the story, because what really matters is the company: its product, its technology, its founders and the business they are trying to build.
Today, as an investor I carry those lessons with me every day, much like my belief that timing, intangibles and luck play a big role in the final outcome. They are the things that separate a startup from success and ignominy.
There are many reasons for the present down-in-the-dumps sentiment, though it is clear everyone, down from Goldman Sachs to your Uber driver is just guessing. Is this a seasonal case of the blues or will the trouble last a year? I don’t know and neither does anyone else. The same investors who six months ago were busy droning on about unicorns, are furring their brows.
In good times, as an investor, I tell founders, regardless of who had backed them to not fixate on valuations too much, because in the end everyone and I mean everyone has to grow into their valuation. Take LinkedIn: it’s valuation was based on its promise, and when investors suspected that it couldn’t live up to it’s valuation expectation, it got sliced into half. It was a good company before, it is a good company now. Jeff Weiner was a great CEO then and he is a great CEO now. What changed was the market’s perception of the company.
In times of uncertainty, as an investor, my one and only job is to help the founders navigate choppy waters. Some companies need new funds. Some companies need to tighten their belts. Some just need to take this downshift in the tempo of Silicon Valley, do some soul searching and try to figure out if they even belong in the future.
Whichever option a founder has to consider, they are emotionally tough on the founders and the companies they spearhead. My job as an investor and a board member is to be truthful, be empathetic and be honest in my feedback to the founders, so that they can continue to make smart decisions about their future. Decisions that allow them to survive, during the harshest of times.
February 15, 2016, San Francisco