Entrepreneurs of early stage, high-growth, tech-centered ventures – like me – depend on venture capitalists. True VCs are a breed apart from other investors. They understand the three big early stage risks – technology, finance and management – and they bring valuable talent to bear on mitigating those risks in return for a handsome upside return if things work. They also understand that despite best efforts, the odds of success are long, so they diversify their portfolio to mitigate the risk of being a VC.
Beneficial money – so-called smart money – decreases risk and adds material benefit. Part of the entrepreneur’s job, therefore, includes seeing the venture from the VC’s point of view, reducing friction so the venture rolls more easily when value-added money increases momentum, counteracting drag. The goal is to grease the wheels and keep them on.
That grease is a powerful force for good in the quest for safety, security, stability and return on investment. Keeping things well-greased involves blurring the line between rationality and intuition. Rationality is necessary but insufficient. Creative skills are equally important. In my case, design training really helps.
Spending time inside an early stage growth company can be a memorable experience because synergy creates energy, making early stage companies alluring and seductive, even infectious. [Apple is revered in part because it is a singular example of a large company that innovates and designs like an early stage company, making it alluring and seductive for consumers seeking the thrill of associating with this type of energy. Best wishes for a complete recovery, Mr. Jobs, and god speed to those who are stepping up in his absence.]
It takes courage to be a true VC. The type of investor I am allergic to is the more cautious investor who uses skepticism to masquerade as a true venture capitalist, but who is really looking for low risk in a high-risk investing arena.
The skeptic “overstands” all the above intellectually, but does not “understand” that on the early stage playing field, guts and money are different commodities. The problem isn’t the caution, it is the hidden agenda.
The original Skeptics were members of an ancient Greek school of philosophy who argued that real knowledge of things is impossible. Their descendants are skeptics with a small ‘s’ who doubt or question the possibility of real knowledge of any kind.
This type of skepticism is analytic, aimed at cogent assessment. The purpose is inquiry, not criticism. I have no inherent allergy to this type of skeptic or Skepticism as a philosophical position. In fact, questioning the validity or authenticity of something purporting to be factual can be valuable. For example, we all would have benefited if we had paid closer attention to skeptics concerned about the purported facts about the interest rates on adjustable rate home mortgages or the ratings of CDO’s and other derivative investments by Standard & Poor’s or Moody’s.
The skeptic I am allergic to is the person who maintains a doubting attitude regardless of the assessment. The purpose of the assessment, which sometimes is only revealed over time, betrays a hidden and contradictory skeptical agenda whereby doubts about values, plans, statements, or even the character of others are intended to enforce the superiority of the skeptic’s values, plans and statements.
The skeptic’s unstated aim in the most extreme cases is to render the Other irrelevant. Interactions with this type of skeptic go nowhere good, devolving into power struggles over the legitimacy of purported facts and plans, revealing a fundamental belief that theirs are the better choices. Instead of saying, “Let’s get heads together to devise our unique brand of grease, the skeptic essentially says, “My brand of grease is better than your brand of grease.” This is unhelpful.
I might as well go all the down the rabbit hole and explain that this type of skeptic reminds me of the parable of the Grand Inquisitor in Dostoevsky’s The Brothers Karamazov, which I studied in undergrad philosophy, in which the Grand Inquisitor decides that Jesus is irrelevant. The parable uses religion to raise larger issues of belief.
The Grand Inquisitor recounts the responses Jesus makes to three questions Satan asked Jesus during his temptation in the desert. On the basis of those responses, the Grand Inquisitor determines that Jesus believes that humans have the freedom to choose. The Grand Inquisitor holds a different position – most humans do not have the freedom to choose. Therefore, the Grand Inquisitor decides that Jesus is irrelevant because by his responses to Satan, Jesus has excluded the majority of humanity from redemption and thus doomed humanity to suffer.
In my view, suffering is optional; therefore, interacting with skeptics is voluntary. My choice is not to be confused with solipsism. I will leave that topic for another time. But if you want to go down that rabbit hole, here is the link to solipsism at the Stanford Encyclopedia of Philosophy.
