SIGN IN

Forgot Your Password?


Incorrect login or password

SIGN UP



Existing user?

I Don’t Know1


An entrepreneur asked me a great question last week: When is it OK to say I don’t know in a pitch meeting? I told her the following things: 1/ This varies from investor to investor. Some investors are looking for founders to have all the answers. 2/ I am not one of those investors but I do want the founders to have some of the answers. 3/ If I asked her how large and valuable her publicly traded competitor is, and she said “I don’t know but I will find out and get back to you on that”, I would be fine with that answer. 4/ If I asked her what the tech stack is that her engineering team is using to build the product, I would be dissapointed if she didn’t know that answer. In general, I believe it is critical that the founder be knowledgeable about all the details and aspects of the internal operations. They should have those answers on the tip of their tongue. That includes things like monthly burn, cash balance, headcount, etc. And if you don’t know the answer to the question, you should be honest about it and say that you will get it and get back to the investor. And do that quickly. Sometimes investors ask ridiculous questions and then you have to bite your tongue and be polite. I will end with a great story. It was 1991 and we had seed funded a brilliant software engineer who was building a product for the wall street sector. I took him to see a very prestigious VC as we were looking to fill out the seed round. The company was maybe six months old and was not yet in market with the product. The entrepreneur started in on the market, the opportunity, and the product. Maybe three or four minutes in, the VC interrupts the founder and asks, “what will your revenues and profits be next year and the year after?” The founder was pissed. He had not even gotten to the product they were building and he was annoyed by the interruption and the question. So he answers in his broken English “I don’t have a fucking clue.” Our meeting ended several minutes later and we were shown the door. We did not secure an investment from that VC but the company was successful and went public five or six years later. So you obviously don’t need to have all of the answers in a pitch meeting to be successful. But you do need to be polite and respectful if you want to secure the funding. And there are some things you absolutely need to know the answers to. https://avc.com/2018/07/i-dont-know/

I Don’t Know1


An entrepreneur asked me a great question last week: When is it OK to say I don’t know in a pitch meeting? I told her the following things: 1/ This varies from investor to investor. Some investors are looking for founders to have all the answers. 2/ I am not one of those investors but I do want the founders to have some of the answers. 3/ If I asked her how large and valuable her publicly traded competitor is, and she said “I don’t know but I will find out and get back to you on that”, I would be fine with that answer. 4/ If I asked her what the tech stack is that her engineering team is using to build the product, I would be dissapointed if she didn’t know that answer. In general, I believe it is critical that the founder be knowledgeable about all the details and aspects of the internal operations. They should have those answers on the tip of their tongue. That includes things like monthly burn, cash balance, headcount, etc. And if you don’t know the answer to the question, you should be honest about it and say that you will get it and get back to the investor. And do that quickly. Sometimes investors ask ridiculous questions and then you have to bite your tongue and be polite. I will end with a great story. It was 1991 and we had seed funded a brilliant software engineer who was building a product for the wall street sector. I took him to see a very prestigious VC as we were looking to fill out the seed round. The company was maybe six months old and was not yet in market with the product. The entrepreneur started in on the market, the opportunity, and the product. Maybe three or four minutes in, the VC interrupts the founder and asks, “what will your revenues and profits be next year and the year after?” The founder was pissed. He had not even gotten to the product they were building and he was annoyed by the interruption and the question. So he answers in his broken English “I don’t have a fucking clue.” Our meeting ended several minutes later and we were shown the door. We did not secure an investment from that VC but the company was successful and went public five or six years later. So you obviously don’t need to have all of the answers in a pitch meeting to be successful. But you do need to be polite and respectful if you want to secure the funding. And there are some things you absolutely need to know the answers to. https://avc.com/2018/07/i-dont-know/

I Don’t Know1


An entrepreneur asked me a great question last week: When is it OK to say I don’t know in a pitch meeting? I told her the following things: 1/ This varies from investor to investor. Some investors are looking for founders to have all the answers. 2/ I am not one of those investors but I do want the founders to have some of the answers. 3/ If I asked her how large and valuable her publicly traded competitor is, and she said “I don’t know but I will find out and get back to you on that”, I would be fine with that answer. 4/ If I asked her what the tech stack is that her engineering team is using to build the product, I would be dissapointed if she didn’t know that answer. In general, I believe it is critical that the founder be knowledgeable about all the details and aspects of the internal operations. They should have those answers on the tip of their tongue. That includes things like monthly burn, cash balance, headcount, etc. And if you don’t know the answer to the question, you should be honest about it and say that you will get it and get back to the investor. And do that quickly. Sometimes investors ask ridiculous questions and then you have to bite your tongue and be polite. I will end with a great story. It was 1991 and we had seed funded a brilliant software engineer who was building a product for the wall street sector. I took him to see a very prestigious VC as we were looking to fill out the seed round. The company was maybe six months old and was not yet in market with the product. The entrepreneur started in on the market, the opportunity, and the product. Maybe three or four minutes in, the VC interrupts the founder and asks, “what will your revenues and profits be next year and the year after?” The founder was pissed. He had not even gotten to the product they were building and he was annoyed by the interruption and the question. So he answers in his broken English “I don’t have a fucking clue.” Our meeting ended several minutes later and we were shown the door. We did not secure an investment from that VC but the company was successful and went public five or six years later. So you obviously don’t need to have all of the answers in a pitch meeting to be successful. But you do need to be polite and respectful if you want to secure the funding. And there are some things you absolutely need to know the answers to. https://avc.com/2018/07/i-dont-know/

I Don’t Know


An entrepreneur asked me a great question last week: When is it OK to say I don’t know in a pitch meeting? I told her the following things: 1/ This varies from investor to investor. Some investors are looking for founders to have all the answers. 2/ I am not one of those investors but I do want the founders to have some of the answers. 3/ If I asked her how large and valuable her publicly traded competitor is, and she said “I don’t know but I will find out and get back to you on that”, I would be fine with that answer. 4/ If I asked her what the tech stack is that her engineering team is using to build the product, I would be dissapointed if she didn’t know that answer. In general, I believe it is critical that the founder be knowledgeable about all the details and aspects of the internal operations. They should have those answers on the tip of their tongue. That includes things like monthly burn, cash balance, headcount, etc. And if you don’t know the answer to the question, you should be honest about it and say that you will get it and get back to the investor. And do that quickly. Sometimes investors ask ridiculous questions and then you have to bite your tongue and be polite. I will end with a great story. It was 1991 and we had seed funded a brilliant software engineer who was building a product for the wall street sector. I took him to see a very prestigious VC as we were looking to fill out the seed round. The company was maybe six months old and was not yet in market with the product. The entrepreneur started in on the market, the opportunity, and the product. Maybe three or four minutes in, the VC interrupts the founder and asks, “what will your revenues and profits be next year and the year after?” The founder was pissed. He had not even gotten to the product they were building and he was annoyed by the interruption and the question. So he answers in his broken English “I don’t have a fucking clue.” Our meeting ended several minutes later and we were shown the door. We did not secure an investment from that VC but the company was successful and went public five or six years later. So you obviously don’t need to have all of the answers in a pitch meeting to be successful. But you do need to be polite and respectful if you want to secure the funding. And there are some things you absolutely need to know the answers to. https://avc.com/2018/07/i-dont-know/

Investment Pace


We were hanging out with friends last night and one of them asked me how many investments I have made this year. I replied “one so far.” He said, “you are not very active.” and I replied “I do one to two deals a year and always have.” Which surprised him. I have been investing in early stage companies since the late 80s and over those thirty plus years, I have personally led investments in about sixty companies. An average of less than two investments per year. Our firm usually makes eight to ten new investments per year, which is one to two new investments per partner per year. When you are making early-stage investments, which require a lot of your personal involvement over a seven to ten year period, you can only take on so many projects. If you assume the average hold period for an early stage investment is seven years and if you make one to two investments per year, you will have between seven and fourteen portfolio companies to manage at any one time. The low end of that range is quite manageable. The high end of that range is not. I have been there. I believe that early stage venture capital done right is a service business in which the entrepreneur and the company they started is our customer. We need to be able to service that portfolio company properly and that requires bandwidth at the partner level plus a team around the partners that can provide additional support. And so that means managing the investment pace tightly and saying no to most opportunities that come in and being really committed and convinced about the projects that we say yes to. And so that is what we do at USV and what I have done my entire career. Doing this well is hard. Because if you only make eight to ten new investments per year and expect to produce at least one billion plus exit each year, something we have been able to do every year for almost ten years now, you have to have a pretty high hit rate on super early stage investments. Our approach to making this work is an evolving thesis that tells us what to invest in and what not to invest in, rigor and collaboration in our decision making, and real substantial value-add post-investment. This is not spray and pray, this is not following the herd, this is not momentum investing. This is thesis-driven, active early stage investing, which has always produced the best returns over time and I believe always will. https://avc.com/2018/07/investment-pace/