Telling The Truth

On the flight out to LA, I sat next to a woman who was very talkative. She was single and was doing a fair amount of online dating. She asked me for some advice about how to call it off with one of her dates. She wanted to tell him she was seeing someone seriously, which wasn’t true. She felt that would end it the easiest. I suggested to her that maybe she just ought to tell the guy the truth, whatever it might be. She wasn’t sure about that approach.

Why do I mention this? Because it inspired me to think about the way turn-downs work in my business. We raise money and we invest money. In the first activity, we are the ones who get turned down. In the latter, we are the ones who do the turning down.

I have to do turn downs all the time, sometimes as much as one a day. Telling anyone that you don’t want to do what they want you to do isn’t easy. When I was younger, just like the woman on the plane, I tended to say whatever got me off the phone the quickest. But I soon realized how counter productive that was.

Entrepreneurs have long memories and while they never appreciate being turned down, they also appreciate the VC that actually takes the time to spell out exactly what the issues that caused the turn down. I believe that you must think about every action you do in the context of a long career. If you take that approach, then taking the time to give constructive feedback nicely and engaging in a dialog instead of just delivering a message is the best approach.

I remember one particularly painful turndown from about eight years ago. We had looked very hard at a company in the Internet market and liked the plan and the opportunity but we got consistent feedback that the CEO was going to be very difficult to work with. We decided to pass on the opportunity. When the CEO called me, I said that we had decided to pass. The next question, of course, was why? I said that we had a number of concerns about the opportunity that we just couldn’t get over. A nice but totally uninformative statement. That wouldn’t work for the CEO. So, after beating about the bush for about five minutes, I decided to tell the truth. I said that we felt it was going to be difficult working with her. That didn’t go down very well. But it was the truth.