VCs Are (What Google Thinks)

Last night at dinner while waiting for the food we played the “Google autocomplete game.” Here is how it goes. You go to Google and type the beginning of a search query. Then you tell the others the possible completions and they have to guess which is the most popular (you can even try to guess the whole order — this is loosely based on Family Feud and if you want a more elaborate version check out Google Feud).

So when it was Susan’s turn she typed “VCs are” and got this, which is pretty funny but also a bit revealing

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I am not exactly sure if this list is entirely driven by the most frequent queries or takes other signal into account but in any case it does reveal something about the perceived image of venture investors (see my posts about information cascades on why this should be taken somewhat with a grain of salt).

The first one is interesting because it is right but not necessarily in the way you might expect. Most likely what people are looking for are examples of VCs doing mean things to founders. There is another interpretation though. I have encountered a number of (especially younger) entrepreneurs who have selected their investors based on whom they got along with the easiest. But that’s a shallow definition of friend. Rather a friend should be someone who will tell you when you are screwing up. With that definition of “friend” I agree that a lot of VCs are not friends because they wait too long to tell entrepreneurs that and then it is usually too late.

The second one could be fed by many things but I suspect that it primarily arises from situations in which the interests of the VC and those of entrepreneurs diverge. There are many such situations that can arise over the lifetime of a company starting with giving entrepreneurs reasons for passing on an investment and for others negotiating the price at which an investment takes place. My own approach to these situations and others (e.g., sale of a company) has been to make the conflict completely transparent and discuss it openly and thoroughly. This takes more time and may lead to somewhat different outcomes. But I find it sure beats hiding behind claims that something is “standard” or possibly even claiming it is good for the entrepreneur when it is not.

The third one frankly came as a surprise to me. Personally I could be considered a failed academic (completed my PhD but didn’t go into academia), but many VCs I know are former operators and often with great success. So this morning I figured I would look

this query actually returns and the top result is an article from Australia titled “VCs are ‘failed academics’” that as far as I can tell has nothing to do with VCs. So here then we are left with a bit of a puzzle and potentially a sign of an information cascade of the type that had Google in a defamation lawsuit by the German first lady.

The fourth one is, well, dumb, and I am sure applies to many other professions (I didn’t actually test this). For good measure then, here is what Google thinks about entrepreneurs