Brad Feld just gave me a shout out in his fine blog and I was touched because he has always been an inspiration to me. In the early days, there were a handful of folks who got me really excited about blogging to bring transparency to the voodoo that we do. There are too many people to acknowledge, but a few stand out: Josh Kopelman with his razor sharp insights was my first inspiration, David Hornik was saying some really thoughtful stuff with a really distinctive voice, Paul Kedrosky was using data in some really interesting ways, and Brad was bringing a real authenticity, in addition to intelligence, to his writing.

Indeed, authenticity became one of my critical evaluation factors during those heady days a decade ago.   After all, entrepreneurs were changing and so were venture capitalists.   Coming out of the Great Internet Bubble, founders and VCs were demanding a different level of accountability of each other.   Groups like First Round were talking about venture capital as a product with the entrepreneur as customer and the phrase “founder friendly” became almost cliché because every VC firm had adopted this catchphrase as part of their values. Underlying it all, however, was a tacit acknowledgment that venture capital is a multi-period interaction; in Silicon Valley, “you’re never on your way up or down, you’re always coming around.” In a world like that, inauthenticity can be an albatross, imposing costs that can be significant.

As a result, in my first meetings with new folks I typically ask a lot of questions that might seem odd. People are itching to flip through their slide deck and I might ask them instead, ”tell me about your best self?” or, “what’s the biggest debate that simmers without end at your firm?” There’s no right answer; every question is a Rorschach designed to start a dialogue and give insight into the people across the table.

Most of the time folks are great sports and the discussion can really flow; this kind of chat can generate lots of insights (it is a mutually selective process, after all) and a welcome break from routine for both sides. Every now and again, though, things go awry and I’ve been hesitant for some time to write about my worst meeting ever, as I never want to break confidentiality. But I think there are timely lessons and insights about authenticity so I’ll keep it as vague as possible to obscure and protect the identity of those involved.

So, there I was, sitting with a group of hotshots. They seemed to have all the answers and came across as top-decile cocky, but the meeting seemed unremarkable otherwise . . . a bit stilted, perhaps but run-of-the-mill despite that. Naturally, I worried how their hauteur would play with entrepreneurs so I asked a question that calls for a bit of introspection and humility: “what’s the best piece of personal or professional feedback or criticism you’ve ever gotten from your partners and how have you put the lessons learned into practice?”

“I prefer not to answer,” snapped one of the partners.

“Really?” I replied.

He went on: “I believe what I say to my partners should stay between the partners.”

“Well, you’re asking me to be a partner, perhaps a limited partner, but a partner nonetheless.” I retorted.

“I believe in praising publicly and criticizing privately,” he shot back.

Starting to feel my Brooklyn rising, I said, “as far as I can tell, it’s just us in this room; that’s about as private as it gets, no?” And with my interest piqued I followed up by asking what they would do if an entrepreneur refused to answer their questions.

“We would never ask such impertinent questions,” he glared back. (and yes, I wrote that word down because I was so taken aback . . . also, my $5 brain likes $10 words.)

“I guess if you won’t answer, I’ll have to wrap this up,” I said, almost as a dare.

“Thanks for coming,” he tossed back. So I packed up my notebook and showed myself out.
I tell the story not to look like some interrogatory bad-ass or to call out these cats (and please don’t ask me who they are, as I’ll never tell!) Rather, it’s a reminder that investing is a people business and whether you’re investing in funds or start-ups, understanding the behavioral footprints of the individuals involved is critical. We are investing in long-dated way-out-of-the-money options. As I’ve said many times, investments in start-ups or the funds that back them can last longer than the average marriage. It’s also a good reminder that we’re almost exclusively dealing with Other Peoples’ Money. As such, we have a responsibility to make sure that were being rigorous. We shouldn’t be shy about asking tough questions and can’t be afraid to walk away if those questions don’t get answered.  Sometimes it feels like capital is cheap and thrown around too liberally, but I try to never forget the words that Greylock’s legendary Henry McCance uttered to me years ago: “venture works best went time is cheap and capital expensive.  When that relationship gets reversed, watch out!”