When Investors Treat Us Like Toys

3/2/11

Update: Dan Primack, Senior Editor at Fortune Magazine, approached me and asked if they could put this post on their website. It’s now on Fortune’s website. Very cool.

I spent a few days at Launch Conference last week and had a great time. Great conference for entrepreneurs and investors. Good description of the event here.

I met some entrepreneurs doing really interesting things. Their passion and energy is contagious. They are underdogs. And I love underdogs.

The conference was also filled with early-stage investors and VCs. I interacted with a few personally but mainly I listened and observed as they participated on panels and as they gave feedback to the presenting startups.

The Investor

I don’t appreciate the way some investors talk about the startups in their portfolio. I’ll sometimes hear, “Yea, i’m in on that deal.” The words themselves aren’t that bad… but it’s the way they say it. They convey an attitude of not really caring. It’s just a “deal.” It’s like they’re playing a game of monopoly or doing some fantasy baseball trade or playing a game of Poker and us entrepreneurs are just the Skittles they’re playing with.

I get it. It’s often their job to invest in a bunch of companies. I understand. Spray and pray. Yadda yadda yadda. But it’s no excuse for not caring.

The Entrepreneur

We put our entire life and livelihood at risk for the startup. We have no alternative. No portfolio to lean on. It must work. All day every day, we are consumed in building value in the enterprise. We forgo great jobs, great schools, and great opportunities to be building a startup — a startup that will most likely fail. But we continue.

Some of us are post-economic (we’ve sold a company), but most of us aren’t. We’ve got no track record. Little money in the bank. Just hustle in our veins and a dream that won’t die.

I’ve had my share of battle wounds. I’ve gone through tens of thousands of dollars in debt. I’ve slept on couches and bunked up with friends. I’ve begged family members for loans… as humiliating as that is. I’ve gone through a nasty foreclosure. Yes, you heard that right: i’ve lost a home. Do you know how hard and embarrassing that is? My credit is a complete disaster and will take years to recover. This hasn’t been easy.

Yet to so many investors, we’re just a “deal.” Just a drop in the bucket. Just a Skittle on the poker table. And while these investors are worried about what country club they’re gonna join next or what imported car they’ll get their wife for V-day, we entrepreneurs are busting our butts and sacrificing everything trying to get the company off the ground.

The Exception

Not all investors are like that. Many investors are former entrepreneurs and they still remember what it’s like. They know what we’re going through. They understand how wet the pillow gets at night when times get tough. They understand what it’s like to come home and tell your loved one, “honey… i don’t know how we’re gonna pay rent this month.” They remember.

Many investors aren’t former entrepreneurs. But you’ll know what kind of investor they are by how they talk about their startups and founders. You’ll know by how they express concern and empathy for them, their family, their situation. If they are truly founder-friendly, they’ll care. You’ll hear it and you’ll feel it.

The Conclusion

If you’re an investor, care. Really care. Don’t forget the blood, sweat and tears that we shed every day to make this happen. To you we’re just one investment. To us, this is everything.

If you’re an entrepreneur, don’t take money from investors who treat you like a pawn. You aren’t a toy for them to play with. This means the world to you — literally. They need to respect and appreciate that.

Note: We’re lucky to have great investors at Zinch.

  • http://500startups.com/ Dave McClure

    great post mick.

    good reminder to those of us who get a little too caught up in the “art of the deal”.

    thanks for the lesson.

    • http://www.mickhagen.com/ Mick Hagen

      Dave, thanks for stopping by. It was great meeting you at Launch. I don’t think you have this problem. From what I hear, you’re a great investor.

    • Anonymous

      doesn’t a concept of ‘lean startup’ teach us not to put our whole life on the table of an idea? pivot when it turns out that customer doesn’t care about our dreams and wants something different right now and here? spend as little money (mostly investor’s, right, but..) to prove a concept?

  • http://www.enterthegroup.com Sal Pellettieri

    Very true. It’s hard for others to know what entrepreneurs have gone through to get to the stage where they can ask for money. It’s usually a roller coaster of emotion and a lot of stress + hard work. Great post

  • http://communico.co.nz Julian A Waters

    Good on you for putting this out there. As an all-in entrepreneur its hard to appreciate the perspective my ‘life’ is a cheese piece in someones game…. as much as I look forward to being that side of the equation in the future.

  • http://twitter.com/rohi81 Rohit Nallapeta

    A great post and true empathy for the likes of us. Its awesome that you brought this up and pointed out that we are just not “deals” but people with flesh and blood trying to realize the dream of changing the world for better.

  • http://twitter.com/hongdquan Hong Quan

    Great perspective from the trenches Mick. And very timely since I just wrote a few checks to cover rent for our developers and bought ourselves another month to hustle.

  • some super angels

    great post. some investors play hard to get – as opposed to just saying yes and no. This ain’t a game of how much you can chase me – entrepreneurs have products and businesses to build.

  • http://twitter.com/TrevorFiatal Trevor Fiatal

    The longer I do this, the easier it gets to tell the founder-centric investors apart from the fund-centric investors. Note to fellow entrepreneurs: a fund that is getting a lot of press for being “founder friendly” is sometimes using that as a marketing differentiator to get deal flow. Watch for the clues that that this is marketing and not a core value — you’ll see them if you’re patient.

  • http://www.syrv.us Julian Miller

    Love this post! I think this is what happens when investors invest in companies instead of teams. My startup is still very early stage but I’m proud of the work my team has done and would rather stay bootstrapped forever than let us become an “investor toy” in some valueless toy box. Looking forward to reading more.

  • Anonymous

    Really great post Mick. I blogged about how I disliked the connotations of “deal” a few months back. But I admit that it’s hard to keep it from creeping into my language. Good stuff!

  • http://twitter.com/georgelbowen George L Bowen

    I very quickly learned to smell the difference. Just last week I met with 4 investors, 2 of which spoke intimately about the struggles and triumphs of their companies, the other 2 I knew more about their investments than they did and they didn’t seem to care that I did…

    The act of caring itself can influence outcomes.

  • Melissa Simpler

    Fellow entrepreneur here thankful for your post. Our business has grown through persistence and perseverance I could have never forecasted this prior to starting this thing nearly 8yrs ago. Mostly built from customer sales and our bootstrapped beginnings. Some angel money. Experientially relate to “know thy investor”. Starting my phase two and plugging in to share and help new entrepreneurs. -Melissa Simpler, CEO and co-founder, Affinegy

  • Matt Bills

    Mick, great comments in all of its vulnerable veracity. My sentiments exactly.

  • Davidpetersonharvey

    About investors, ” … in their portfolios.” They aren’t all sharing the same one. Entrepreneurs should, “… put our entire lives and livelihoods … ,” keeping the plural consistent.
    “Us entrepreneurs” could do without the word “us.” “Bunked up with friends” should read “bunked with friends” to get rid of the second preposition in the phrase.

    It’s easier for investors to care about entrepreneurs that use correct grammar. Showing investors that you are intelligent goes a long way toward earning their trust.

    I’m suggesting that you check your article for grammatical errors. You will look a lot more intelligent to readers of those fancy magazines if you do.

    Please feel free to follow my suggestions and delete my post. It is not my intention to criticize in a negative way. I would like to see you make those changes so your article is taken more seriously and you have greater success with your readers.

    • http://twitter.com/jarvie Scott Jarvie

      All your suggestion are somewhat pathetic reaches and some of them actually suck. “Bunked with friends”… no… it’s “bunked up”. 

      Language is used to communicate meaning, don’t forget that. If he can communicate his meaning, without ambiguity, in the language best understood by the readers, then he has won.

      Have you read his blog posts? He’s plenty intelligent. 

      My suggestion for you: People skills… get them and you will go a long way with those posters you pretend to help.

      Grammar errors… Did I make some? Yes. Did you understand every frickin single word and phrase I made. Yes.

      Good, because I’m not calling in and paying a professional editor for a comment, nor should he have to for a blog post that simply attempts to help others.

      Do your best (with grammar) don’t try to suck, but don’t forget the end goal… communication of an idea. Pick your battles.

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