VentureBeat

r1 said:

Matt,

Are you telling us that, Midas List is a approved by VC sort of site! that you would remove peoples remark on a specific VC based on your judgment. If so than what is the value prop for Midas list ( as your VC friends would ask)

crimsonquaker said:

Matt,
Great article. This doesn’t surprise me at all. As an Internet professional very familiar with feedback forums, I have seen many occasions when a forum for feedback gets overrun with negative comments. Those with negative experiences (with a website, VC, company, etc.) just have a much greater tendency and incentive to get on the Internet and leave a comment. What you are seeing with the Midas List and what is happening on The Funded is not unusual in the least.

Sandhill crawl said:

Matt,

This is a tough balance to walk. While I’ve had the “pleasure” of successfully raising venture financing from over a dozen funds on Sandhill, there is a fair share of negative feedback that is warranted. Somedays I wish I had the guts to write a book from being on the inside but realize I’ve never get funded again for being honest.

the fact is there are probably alot of unwarranted posts that lack perspective however it also seems to me that many of the vc’s simply don’t like having a light shined on there practices.

P-Air said:

This is indeed a conundrum. Having been part of both successful and unsuccessful VC pitches, I’ve always appreciated straight talk. At the same time, I’ve also dealt w/VCs that I felt were clueless, rude and arrogant. One thought might be to do what some of the shopping sites do, and have the VCs send out an evaluation form after meetings they hold w/entrepreneurs getting them to submit their comments. This would at least come across as a more earnest approach on the VCs part to improve and to get honest feedback fm someone they just met with. The VC s/b able to also respond w/their honest feedback on the idea (w/o of course divulging what it was) in terms of whether their enthusiasm (or lack thereof) for the new venture was as a result of the team, the biz model, the tech, etc. Maybe this could be the beginning of healthy dialog.

Matt Marshall said:

R1

The comments on VentureBeat’s Midas List are NOT approved by VCs. I’m saying that I’ve had lots of comments arrive to their profiles, and many are hateful and without substance — and so I nix them and they never see the light of day. I’ve never run any of these comments by VCs for approval and never will. I’m trying my best to have a great conversation. Trust me, I’ll accept very negative comments, as long as they are concrete and, as Robert Scoble suggests as a standard, can be used in my living room.

Adam Bruce said:

I checked some of the reviews and I can say they have not matched my experience so far….don’t know, maybe I’ve just been lucky. That said I think it would be good to somehow give weight to the entrepreneurs that have signed deals with VC as they ca give a more accurate review of what it is like to work with these investors on a day to day basis.

I don’t think a couple of rejections is a good read on an investment fund’s operational ability.

SmallGuyPR said:

Well, until I read your comments about Hartenbaum’s response, I would have said TheFunded would not be a factor. But if it indeed induces behavioral change in how the VCs do business, well then it is a factor (and not necessarily in a good way). Regardless, while VCs might take a short term hit on their ego and find less blunt ways to handled shunned entrepreneurs, the site’s influence likely won’t have legs. I can’t see entrepreneurs refusing meetings with VCs based on hatchet jobs - unless you have a massive volume of credible posts bringing up ethical or related questions. Entrepreneurs need money, and most of the VCs that will be taken to task on the site will logically be the high-profile ones (i.e. - those the entrepreneurs will most want to have as investors).

Howard Hartenbaum said:

As the recipient of negative remarks, I have to comment that since “perception is reality” and if I was “rude and arrogant” then I was, in fact, rude and arrogant. I took the response to heart and pondered either (a) how can I improve (and not be rude and arrogant) or (b) how can I avoid being considered rude and arrogant. Regarding (a), I can ask entrepreneurs if they want direct blunt feedback, and if they say “yes” then assume they are man/woman enough to accept it realizing it is only my (one person’s) advice or regarding (b) I can simply listen, nod my head and then a week later say “it doesn’t meet our threshold for response” (i.e. vague worthless response to the entrepreneur). I thought my direct comments may be helpful to the entrepreneurs but maybe they didn’t want my help, just my money. At my prior company that focused on enabling enterprise use of customer feedback, a major lesson I learned is that many companies hide from feedback because the vocal and dissatisfied minority hijack the common voice and you can’t run your business solely concerned about those vocal minority of customers who are dissatisfied and likely will never be satisfied anyway.

I have to give credit to thefunded for opening my eyes to my behavior and I believe I will improve moving forward, but I don’t think thefunded provides a fair and open structure that appropriately opens the forum to provide properly structured and relevant data. Thefunded faces the challenge of turning data into something useful, and not just providing a handful of data points from a few “anonymous” (i.e. unwilling to stand up and provide direct feedback) minority data sources.

I also challenge the entrepreneurs who consider myself (or other VCs) to be rude and arrogant, to tell them to their face so that they can improve, rather than hiding behind an anonymous claim on a website.

danny said:

HH - It’s always a good thing to take critical feedback and construct something from it, but please don’t equate frankness with arrogance and soften your honest edge as a result. As someone who’s been in a few of these meetings, I can tell you that I prefer candor above all else, and it’s unfortunately not something I receive frequently. It’s a valuable quality to keep.

nas said:

This site is actually created by person who is running out of ideas. I honestly say that it is very hard to have reliable informations about VC

it is just completely useless sorry for the rude comment but i have to say this…

thefunded.com more like needmoney.com

Daniel said:

TheFunded is definitely biased to have negative approach to VC’s - more entrepreneurs are rejected by VC’s than approved. Actually, Thefunded community is based on grudge keepers. However, Thefunded does create some leverage for entrepreneurs, as deeterrent factor.

Ivan Pope said:

I think TheFunded has huge potential - but it needs a lot more volume of submissions before it becomes trustworthy. At the moment a single bad comment just sits there making the VC look terrible. They need to broaden their intake a bit and ramp up the volume.
That said, Howard’s response to the comments is brilliant and just spot on. I would go see him like a shot just based on his response. I mean, there’s no reason the original comment wasn’t accurate and fair - but then the site has the desired effect, it makes people look at their own behaviour.
For sure, it would be perfect to add a ‘right of reply’ for VCs but not to privelege that reply above the original comments.
Anyway, we know that VCs discuss us in private - at least this is all in the open air. I think this site will live to prove its value.

Ken said:

I’m on my third startup, and I only wish that more VC’s would take a look at some of the comments and think like Howard.

In general, I have found most VC’s to be
- arrogant
- self centered
- closed minded

Meetings may have less to do with their interest in investing then their concern about validating another deal they have. Or just kicking the tires. In general they simply do not grasp the business concept, and then spin out from there.

Example: For my last company a VC looking me in the eye and told me our optical switching costs would be 10X what they were, that I had to be lying. This despite the fact we were commercially operational carrying live traffic and yes, our costs were 1/10th that of everyone else. We went a round and around… What a waste.

As a rule, VC’s do not read anything before the meeting, or have some wildly preconceived notion as to what the pitch is about. I have learned numerous methods to prevent this, but it has taken me years.

Due diligence is another exercise fraught with peril. I’m on the board of another startup that does wireless HD (200 feet, through walls, and it WORKS!). A VC wanted one of their companies to validate us - a company that makes HDMI cables. Can you say conflict of interest? I’ve had that happen over and over. Needless to say, the deal did not go through.

Conversely, VC’s who do “get it” are a joy to speak with, even if they pass. I have gone down the diligence path with several who in the end passed, but I’m going back to them for my newest venture. They may point out major flaws in the plan that we never saw, make introductions, even become friends as some have. I respect them immensely.

For my newest venture my partners and I drew up a list of “who to avoid”. Sequoia, and DFJ where at the top, both based on previous experience of everyone involved. (I did not deal with Howard. I had the most bizarre meeting of all time with Tim. Plus there subsidiary in LA, Zone Ventures, is universally loathed by everyone down here. I had numerous meetings with them. Never again.) Both on your Midas list. They certainly know how to make money, but I do not want to work with them.

I agree that there should be feedback from VC’s on The Funded. They need to tweak there model a bit. Having a forum where entrepreneurs can tell others “call them” or “avoid like the plague”, I cannot tell you how valuable that would be.

Anil said:

As an entrepreneur who has pitched to Howard before and been turned down, the only thing I can say is that I have a lot of respect for Howard. He is really sharp, and insightful. He was upfront with us and told us exactly how we felt about our business, what metrics/goals he would like to see in order to get him interested in the deal.

Then he jumped to the whiteboard and actually helped us think through our pitch!!! He gave us pointers as to how we could make it more compelling. Last, he forwarded us to a couple of people he thought who could help us out.

I am surprised that some people have had such a bad experience with him. Based on the responses at the Funded, it has to be his upfront, honest feedback that might put people off.

BEC said:

I think such site is definately needed. This is my 3rd startup. Previous two has been successful.

VCs are very close to be compared with lawyers and ???. You can’t live with them nor you can live without them.

Despite of all negative and some not so nice comments, such platform will keep VCs in check upto some extent.

VCs always forget that they are playing with OPM ( Other People’s Money ) while founders and the team have a lot of their own in the game. Many VCs have no idea what it takes to be a good entrepreneur. And they themselves forget “respect”.

Although I have met many wonderful VCs, many or most of the are low quality just like any other industry.

Opinion is a good thing !

Mister X said:

I think it’s difficult to openly talk about these issues, and while I generally agree with the fact that there is arrogance on the VC side, in all fairness there is an equal amount of it on the entrepreneur’s side.

I met Howard for the first time early 2006. I was raising my seed round for our tech startup. I had my laptop ready with my nice deck of PPT slides - Internet connection, overhead projector ready, coffee mug on the side, etc etc. Howard was about 10 mins late for the meeting, and when he arrived, the first question he asked was basically “who are you and what’s important to you in life”. Clearly, I was a little surprised. We talked for about an hour - never got to the PPT. It was a heated, fun, open, not the kinds of conversations you typically have when pitching. I liked it. Liked the form (no BS, get to the point), like the content (he gave me lots of feedback), and liked the guy (as a human being).

He eventually passed on the investment and we went with other VCs. Yet, he introduced me to some key press people and partners - without me asking for anything.

So yes, Howard shows up late at meetings. Yes, he asks pointed question that are sometimes destabilizing. Yes, he might appear arrogant at times. But of all the people the VCs that I’ve met he’s one of the few people who dares to challenge but also makes a genuine effort to suggest other ways. And that to me is pretty remarkable.

Harshal Vaidya said:

I run a website goolti.com which primarily targets public opinions on consultants which bring Indian people on H1 visas to work in the US. They’ve caused a nightmare on the name of professionalism.

The site lets people rate these consulting companies. I’ve always had a problem of validating the feedback of people who put opinions on goolti.com. However since so many people need it, such sites should definitely exist cos’ they weed the bad ones out for sure. In run, unfortunately they take in a couple of good ones down too. Howard, I guess, is this unfortunate one. But well, there is no better way out either.

Ethan Stock said:

I posted an earlier variation on this comment six weeks ago on TC when TheFunded launched. This latest news only confirms my beliefs.

TheFunded completely breaks the trust models that make Silicon Valley work. It presumes that there is only an antagonistic relationship between entrepreneurs and VCs, and only a friendly relationship between entrepreneurs.

Neither, of course, is true. Microsoft and Intel had their tensions, but worked together well; and Intel and AMD like each other not so much, but substantively cooperate in various technical and industry forums. VCs and entrepreneurs are a different value chain, with the same complex tensions.

The “trust model” of the Valley is figuring out which VCs *and* entrepreneurs are good guys, and which ones aren’t. It’s figuring out, on a completely separate axis, which ones know what they’re talking about and can get things done, and which ones don’t and can’t.

I am willing to have a very open conversation with a VC I trust about other entrepreneurs, and a very open conversations with entrepreneurs I know about VCs. With people I don’t know and trust, I am highly skeptical of telling them much of anything.

TheFunded doesn’t play into the reality of getting things done here any more than gossip sites play a meaningful role in getting Hollywood movies made. At its best (and it is far from ‘best’) it would be idle entertainment only.

Yen Lee said:

As an entrepreneur, it’s good to see a venue for entrepreneurs to share feedback. Having said that, it seems unfair that VCs can’t respond to comments, even if they can’t influence rankings.

I’ll jump in directly on the Howard Hartenbaum “hatchet job”. Howard rejected us too, but I’d say I appreciated his blunt style. While I could see how his style might be perceived as arrogant or rude, I thought his candid and straight forward style was a very welcome breath of fresh air. He let us know what his concerns/questions were, was explicit about how he was going to make a decision and was clear he didn’t have to wait for another firm to validate us with an offer. I agree with Mister X that Howard’s “here is what I think” and “have you thought of this?” approach is quite remarkable in an overall environment where it’s easier to keep stringing things along with opaque issues, more questions, and hazy timing.

I won’t hesitate to take my next venture to Howard (if he’ll take the meeting ;-)

Martin Edenström - What.se said:

Re: Howard Hartenbaum - Great reply! Made my morning.

Mister Foo said:

We pitched to Howard too. He seemed distracted and focusing on complete non-issues until Andreas Stavropoluos walked in, at which point the meeting became truly wonderful. Andreas liked our ideas and at that point Howard became quite “tame”.

My impression was that Howard was asking these “tough” questions just to sound intelligent. He really did not have much of a clue. Without Andreas’ interest he would have just passed on us.

I’m sorry to post this anonymously, but I cannot take a chance to offend a DFJ Board Member. Too much riding on it.

TheFunded said:

As a result of this article, we launched a new service to let venture capitalists tell their side of the story:

http://www.thefunded.com/submission/welcome

TheFunded should be a place for the entrepreneurs and the venture capitalists to meet. To be clear, we are a staunch advocate of venture financing and venture capital, and we believe that it is important for the venture industry to have a voice in this fast growing community. We are processing over 1 Membership application from CEO’s every minute, on average.

Howard Hartenbaum said:

To Mister Foo:

VCs use a lot of methods to make investment decisions, one being looking for how entrepreneurs respond to questions and whether they have thought of everything about the challenges their company will face. The entrepreneurs know their companies much more than I, and my job is to determine if they are masters of the topic and have thought of everything. If they fish for answers to my questions, then I worry they may not have thought of everything. This is the basis for the questions, not for my desire to sound intelligent.

I like to have co-investment partners work in presentations together, and a big benefit is it allows us to be more “tame” and let someone else ask the questions so that I can observe the interaction. I don’t ask questions because I want to sound intelligent, because I am not. I am just an ordinary guy. Your assessment is correct, without the opportunity to allow a great VC like Andreas to ask the questions while I review the interaction, it is more likely I would pass. These are techniques I use to make investment decisions and I am fine if you disagree with them. In the end I have to make a decision if I want to invest and the entrepreneur has to make a decision if he wants my money. Your observations are spot on, but I think you may not have realized all the reasons for how I run an investment decision process.

Thanks for your comments. I will try to explain my techniques to entrepreneurs in the future if they find them unsettling.

BADADEO said:

It is amazing that while being paid and funded to run a company, he had the time to start and operate this venture. Any entrepreneur or executive at a startup knows that to be successful you need to give all your time, energy, and focus to building the company. The fact he was doing this on the side is acknowledgment he was cheating the company, the company’s employees, and his investors.