After reading Josh's surprisingly thought provoking post on American Idol he asks a rhetorical question which I think is at the heart of VC/Entrepreneur enmity: what feedback style should a VC have when discussing an opportunity with an entrepreneur?
VC Feedback Style Options:
1/ Simon’s brutal honesty and candor (sometimes perceived as rude or ungracious)
2/ Paula’s unbridled enthusiasm and politeness (positive feedback only)
3/ Randy’s noncommittal, whats up dawg feedback (positive vibe only)
If left only those options, and can only pick one, I think great entrepreneurs prefer a Simon.
Unfortunately, as Josh points out, being too direct without any praise, if done inconsiderately, can backfire on a VC and damage their reputation; I am sure I've bruised a few egos in my day. Interestingly the Wall Street Journal "The Most Praised Generation" (sorry subscription required) had an interesting article discussing just this topic as well last Friday, regarding the possible sad need to give heavy stroking to a younger generation (those under 40, whom I count myself among), in order to retain their confidence and respect (who's group I don't count myself among).
I believe that great entrepreneurs will push back and thrive when challenged. I find that the best entrepreneurs don't back down when the going gets tough, but redouble efforts and get more motivated. They rise to challenges. They don't blink in the face of a whithering assault. And actually, from an investor perspective that's exactly what you want from a great entrepreneur, someone that doesn't require stroking and will rise to the challenges on their own, are justifiably self confident, aware of their weaknesses, and motivated. Customers, potential managerial recruits, and alliance partners aren't going to give a startup any slack, so how can investor not test this sensitivity in some manner and still do a great job as an investor?
Sometimes it's tough getting that balance right between directness and mushiness in that first meeting; a VC or investor can rip that band-aid off too quickly. I believe that this is possibly the heart of the bad rap that VCs often get from entrepreneurs, either by not giving enough feedback, or giving it in too harsh a form. I work on it every day, hoping to strike the right balance, but if you have 200 meetings a year with tight time constraints, it's likely a few egos are going to get bruised. That's part of the job of being a VC or entrepreneur.
I am always looking for feedback, so I can do my job better, just like a good entrepreneur does. So if you are an entrepreneur that I have met with, or even ended up backing, and haven't gotten that due feedback or feel like I was too harsh, be brave and do let me know. Tear off that band-aid.
P.S. I want to give credit for the "band-aid" analogy to David Lalich, a CEO that I recruited to replace myself from that role in a startup call AdOne (now merged with and called PowerOne). I've used that metaphor for over a decade and it's served me well. Thanks David.