Understanding VCs

I saw Joe Fernandez‘ tweet a few days ago and thought “he is making an important point.”

VCs are not heroes. We are just one part of the startup ecosystem. We provide the capital allocation function and are rewarded when we do it well and eventually go out of business when we don’t do it well. I know. I’ve gone out of business for not doing it well.

If there are heroes in the startup ecosystem, they are the entrepreneurs who take the biggest risks and create the products, services, and companies that we increasingly rely on as tech seeps into everything.

VCs do have a courtside seat to the startup world by virtue of meeting and getting pitched by hundreds of founding teams a year and sitting in board meetings for many of these groundbreaking tech companies. We get to see things that most people don’t see and the result of that is that we often have insights that come from this unique view we are given of the startup sector.

Another thing that is important to know about VCs is that we operate in a highly competitive sector where usually only one or two VC firms are allowed to make a hotly contested investment. So in order to succeed, VCs need to market ourselves to entrepreneurs. There are many ways to do that and the best way is to back the most successful companies and be known for doing that. There is a reason that Mike Moritz and John Doerr were invited to lead Google’s initial VC round. By the time that happened, they had established themselves as the top VCs in the bay area and their firms, Sequoia and Kleiner Perkins, had established themselves as the top firms in the bay area.

Another way that VCs market ourselves to entrepreneurs is via social media. And blogging is one of the main forms of social media that VCs can use to do this. And, given that VCs have this unique position to gather insights from the startup sector, we can share these insights that we gain from our daily work with the world, and in particular entrepreneurs. If anyone has played this blogging game well enough to get into the top tier, it is me. I know of what I speak.

So how should entrepreneurs use this knowledge that is being imparted by VCs on a regular basis? Well first and foremost, you should see it as content marketing. That is what it is. That doesn’t mean it isn’t useful or insightful. It may well be. But you should understand the business model supporting all of this free content. It is being generated to get you to come visit that VC and offer them to participate in your Seed or Series A round. That blog post that Joe claimed is not scripture in his tweet is actually an advertisement. Kind of the opposite of scripture, right?

But you should also know that there is data behind that blog post, gained from hundreds (or thousands) of pitches and dozens (or hundreds) of board meetings. If VCs are good at anything, we are good at pattern recognition and inferring what these patterns are leading to. And so these blog posts that are not scripture, and are in fact advertising, can also contain information and sometimes even wisdom. So they should not be ignored either.

What I recommend to entrepreneurs is to listen carefully but not act too quickly. Get multiple points of view on important issues and decisions. And then carefully consider what to do with all of that information, filter it with your values, your vision, and your gut instinct. That’s what we do in our business and that is what entrepreneurs should do in their businesses.

If you are at a board meeting and a VC says “you should do less email marketing and more content marketing”, would you go see your VP Marketing after the meeting and tell them to cut email and double down on content? I sure hope not. I hope you would treat that VC comment as a single data point, to be heard, but most likely not acted on unless you get a lot of similar feedback.

VCs are mostly not idiots and can be quite helpful. But we are not gods and our word is not scripture. If you treat us like that, you are making a huge mistake. And I appreciate Joe making that point last week and am happy to amplify it with this post.

#VC & Technology

Comments (Archived):

  1. awaldstein

    Brands can be completely authentic and self serving at the same time.The best VC blogs are just that. As are the best brands.

    1. Jess Bachman

      I don’t think “completely authentic” exists in todays world, or at least I haven’t seen it. I have certainly seen “seemingly authentic” or “authentic as a strategy”. But honesty has no business in marketing, especially today, and without honesty I don’t think one can be completely authentic.Or rather, honesty in marketing is like the speed of light, you might be able to get pretty close with tremendous effort, but you never actually get all the way there. And if you do, you have defied thelaws of physics/marketing.

      1. karen_e

        As Seth Godin says, “All marketers are liars.”

        1. awaldstein

          I don’t buy into this.We tell stories for a living if we do our jobs well. We set communication protocols cross companies. We are not 100% honest but neither is anyone nor neither is that desirable.

          1. pointsnfigures

            agree with Arnie big time. There are plenty of people that are completely authentic (Arnie is one of them) and there are brands that are completely authentic. Don’t mistake selling for being inauthentic.

          2. karen_e

            It was the title of the book. Gets you to open the book, I think that’s the idea.

          3. awaldstein

            Of course.

        2. LE

          Godin can chime in [1] but his product is Godin an as such making an absolute statement about something and not being circumspect is the way he builds his brand. My point is even Seth doesn’t really believe that but by putting “generally” before “liars” he wouldn’t get as much conversation around his product (Godin). [2][1] Although he probably won’t because he typically leaves one of the first comments which gains a large amount of upvotes and then rarely leaves any more comments or replies to his replies.[2] When JLM talks about Austin he is not equivocal. He is absolute. And it has brainwashed me since I never thought anything about Austin before I was impacted by superlatives.

          1. JLM

            .Austin been berry berry good to JLM.JLMwww.themusingsofthebigredca…

          2. ShanaC

            what kind of berries?

        3. ShanaC

          and truthtellers

        4. johndodds

          Seth changed that title because he was eventually persuaded that it gave the wrong impression of what the book actually said.

      2. awaldstein

        Agree but but ‘so what’ is my response.How are you or I doing on that scale?Being an authentic individual making an honest product is the core of the real work maker revolution. Personal brands.For companies , being authentic is indeed possible or better, something that can be on the table as a guideline to strive towards.

      3. LE

        But honesty has no business in marketing, especially today, and without honesty I don’t think one can be completely authentic.Honesty in marketing (and in life) is overrated and idealistic. The truth is when buying into a brand most people would prefer to live the fantasy and not know the entire truth anyway. If I am staying at a 4 or 5 star hotel I want to think that I am getting my money’s worth I don’t want to really be told of what happens behind the scenes that will make the visit less valuable in my mind. Or that the Best Western is a better value. And in life my aunt doesn’t want to know what I really think of her she wants to hear me say that she looks beautiful in the dress that she is wearing. When she was younger I used to tell her she looked like Elizabeth Taylor and she loved that.In business the example that I give is that if you are selling a mink coat to a woman she doesn’t want to hear from the salesman that the cloth coat will keep her just as warm. She wants to have the party in her brain that results in owning a mink coat (back when woman actually wanted those of course but Peta killed that dream which is kind of my point actually).

        1. awaldstein

          what does Peta possibly have to do with this?

  2. joahspearman

    Hammer, meet nail. This is very high on the truth meter.

  3. Sebastien Latapie

    There is a right way and a wrong way to do “content marketing”. The amount of value I’ve derived from this blog clearly puts this in the right way bucket. And that doesn’t even include the incredible commenter community.”I know what I speak” – and I hope you will keep speaking for years to come.

  4. Pointsandfigures

    It’s a people business. People make mistakes.

    1. JimHirshfield

      Especially when it comes to Chicago-style pizza, LOL!

      1. pointsnfigures

        Hey now. Dats not gonna fly. Dese guys in Chicaga knows how to make a real pie.

        1. JimHirshfield

          For sure. I did really enjoy deep dish pizza that one time.

        2. ShanaC

          *shakes head* this is one of those unsolveable problems in my apartment. At the end of the day, homemade chicago pizzas are now referred to as pizza casseroles.We live in brooklyn, I’m a new yorker. To the idea of deep dish pizza I sayhttp://i.giphy.com/3o72EVJc…Nope!

  5. JimHirshfield

    “VCs are mostly not idiots”, this means…1) Every VC is compositionally < or = 49% idiot, or2) Most VCs are not idiots.You be the judge.

    1. Matt Zagaja

      I thought the rule of thumb was VCs only have to not be idiots 10% of the time to succeed.

      1. JimHirshfield

        Thumb + Idiots…we know how this movie ends

    2. Chimpwithcans

      Love number 1 – Makes me wonder which part of them would constitute the <=49% idiot? “his left index finger is awesome, right one is idiotic” 🙂

  6. LIAD

    Q: What’s the best way to really internalise VCs aren’t all-seeing all-knowing geniuses?A: Meet them.:-)[if Disqus added animated gifs – what laughs we could have]

      1. Vasudev Ram

        Is that guy having trouble talking?

        1. JimHirshfield

          Read his lips….he’s saying “what?”

  7. BillMcNeely

    I think you outline the need to balance the day to day tactical awareness needed by entrprenuers and more operational and strategic viewpoint provided by the local community and national VCs. Im pretty suprised by how many entmrprenuers have no idea whats going on outside their company.Sitiuational awareness is awesome.

  8. William Mougayar

    In many cases, reading VC content is like reading the tea leaves. You need to interpret what’s being written and figure out if it’s applicable to your situation.

    1. awaldstein

      Isn’t that everything we read?

      1. William Mougayar

        True, and in light of this post, it’s a good reminder. Even more so, because the content is piece meal.

      2. JimHirshfield


      3. Chris DeRose

        William is new to thinking.

        1. ShanaC

          be nice

          1. Chris DeRose

            Have you read his book? It’s not about being nice. People read his posts and don’t realize his brand of solutionism is completely devoid of science or evidential thinking. IMO, people should be given the courtesy of knowing who they’re talking too.

          2. ShanaC

            of course. I’m in the middle of the book.I tell people to be overall nice here when debating. I try to enforce early 20th century rules of parliamentary debate without roberts rules to get people talking.Unlike congress /s

          3. Chris DeRose

            I’m a member of congress, and I take offense to your sarcasm.

          4. ShanaC

            I’m rarely sarcastic, mostly because other people sarcasm tends to go over my head on a very regular basis.I know that Congress does use some form of Roberts Rules of Order. I also know that it doesn’t equal congresspeople becoming friends and having a lot of discussions easily across party lines currently. I try pushing for the reverse here (especially when the conversations do turn political) for the sake of the broader community, new people who have no idea what is going on, and that people continue to come back on some sort of regular/irregular basis.That said, I shouldn’t have been sarcastic about it, andI apologize for my remark. Like many Americans, I’m frustrated by what I see as gridlock. Unlike many Americans, I see this as at least partially (in the sense that I’m a voting citizen who often is too busy/not educated enough/turned off by) the local and/or primary process (hence my fault) and someone who realizes that changes made towards too much transparency and cutting pork when I was a minor has made it extremely difficult for Congress people to actually do thier jobs.Still, in no way is this an excuse. The US Federal government is still in existence after 228 years (the Constitution was ratified in 1788.), without a question of the overall legality of its government (and that includes during the Civil War, the South didn’t question the existence of the federal government, just if they wanted to be part of it and extent of its power) There is no dynasty in a monarchy that is still around, republics or democracies around as long as the US. I’m impressed that you are part of that tradition

  9. charlieok

    I’d offer that the comment sections on VC blog posts tend to contribute to the phenomenon Joe Fernandez is pointing out.

    1. awaldstein

      The number of VC or any blog that have a substantive community is I think less than you would imagine. Fred’s blog is a corner case and not the norm. In fact it is at times counterproductive to try and duplicate.

      1. charlieok

        Didn’t mean to suggest that Fred’s blog is the norm, nor that AVC’s comment section is the best example of the point I was attempting to make (I wasn’t thinking either of those things).

        1. awaldstein

          Understand and not criticizing but if you look to Fred’s blog as the norm for community you will be sorely disappointed of what you find and what you build.It is unique to itself and the community.

      2. LE

        My thought is that it wouldn’t be that difficult for another VC to duplicate what Fred has here. I don’t mean easy either. But possible. Assuming they have a reputation already (some kind of halo) they simply need to attract and nurture a group of people who comment on a regular basis so they return of their own volition and need no further stroking or reinforcement after the comments get to a critical mass. Also keep the post to something short and readable and not Suster like (who has great things to say but I limit myself to one place time wise).The first thing that I noticed about AVC (and drew me in) was the avatars of repeat commenters that made it seem like a sitcom with characters worth following. I remember yours in particular as well as JLM, Kid Mercury, William, Shana (who doesn’t comment much anymore), Phil Sugar, Andy Swantastic, Sigma Algebra, Charlie Crystle, Aaron Klein, Falicon and a few others that I am forgetting.

        1. awaldstein

          I think community at this level of dynamics is almost impossible to duplicate. A true rarity.I have seen in nowhere cross the web, cross any discipline,I build them for a living and dissecting those that work is only a small step to replicating them.There are many successful ones, but at this level for a personal brand–dunno.

        2. JLM

          .I am not aware of another blog on Earth which is as consistent as Fred’s — every day Freddie. [Though he will phone one in from time to time.]The guy is the most consistent and consistently interesting blogger I know. Period. Including The Big Red Car, which cannot hold Fred’s jock.It is hard work to do that.The audience is the best on the web bar none. It has real depth, varied viewpoints, and comity.I have made a lot of good contacts through this blog and I have learned a lot.JLMwww.themusingsofthebigredca…

        3. Sam

          For the record, LE, you are most definitely a character around these parts.

  10. JimHirshfield

    This is truly sincerely one of your great posts. I saw Joe’s tweet a few days ago and it jumped out at me. One area you missed is the tech media’s work in putting many VCs on a pedestal. Every story needs a hero.

    1. Matt Zagaja

      Except for Gawker which relied on villains.

    2. Girish Mehta

      And every hero needs a villain, no ?

  11. kirklove

    Specific to blogs and even more specific to this blog the comments is where the juice is at. And it’s a bummer (and a big reason I don’t swing by more often) that you don’t visit your own bar much anymore.

    1. JimHirshfield

      The post is 100-proof vodka. The comments are the juice. Enjoy your morning screwdriver.

      1. pointsnfigures

        more of a bloody man in the morning myself

        1. ShanaC

          I approve of the tomato goodness! Especially this time of yearMMM tomatoes!

      2. creative group

        JimHirshfield:You pour of unmitigated top shelf wit.

      3. ShanaC

        that isn’t so good for me.

    2. LE

      I am confused. It seems that you are saying the comments are what makes AVC AVC (agree) but the fact that Fred doesn’t comment much (which is true) means you are less interested in visiting.Fwiw and ironically I remember with pegg it became less interesting to me when your cofounder stopped doing his peggboard. And I have seen that elsewhere as well so your point is taken.

      1. kirklove

        I am saying the exchange between his readers and their comments are what made it interesting to me. Big difference.And I agree on your latter point.

  12. jason wright

    “…young entrepreneurs…”

  13. dan_malven

    I can’t claim this quote as mine, but I don’t remember who said it so I can’t give them proper credit…but I remind entrepreneurs of this a lot:Think of VCs as MLB pitchers. Both are relatively individualistic endeavors, and it takes a certain amount of skill and prior successes to make it to the big leagues, but there is a HUGE difference between the Cy Young winner and the guy who has has a 10.0 ERA.

  14. Vendita Auto

    “To summarize the summary of the summary: people are a problem.” Douglas Adams

  15. johnmccarthy

    “If you are at a board meeting and a VC says “you should do less email marketing and more content marketing”, would you go see your VP Marketing after the meeting and tell them to cut email and double down on content?”Thanks for posting this. Good VCs are aware that their words have consequences. What may be an off the cuff remark at a board meeting (“maybe you should do more content marketing”) can create a huge ripple across a management team. Many hours can be used to analyze data, etc to back-up or refute the VCs comment. Those hours may be better spent doing something else. So choose your words carefully and use them knowing that they will be acted upon in some way.

    1. Sada Kshirsagar

      This is as true as it can be in non startup world too. A remark from HiPPo (Highly Paid Person) (i.e.:- EVP/SVP/C Level) doesnt necessarily mean jump and do it. Always good to use data to drive decisions.

  16. Jess Bachman

    I used to think one thing about VC’s, then I talked to @JLM:disqus , and now I think the opposite.

    1. JLM

      .Jess, that was told to you in confidence. Now everybody is going to want to know it. Sheesh!JLMwww.themusingsofthebigredca…

      1. Chimpwithcans

        We can guess no? – you think all VC’s should move to Texas?? 😉

        1. JLM

          .Well, there is no personal income tax, Big Mix. That’s not chopped liver. But, no.JLMwww.themusingsofthebigredca…

          1. Chimpwithcans

            Sounds pretty good to me. That and Texmex.

          2. JLM

            .Do not overlook the Q. The BBQ capital of Texas is 30 miles from my keyboard and it’s nothing but good Q between me and Lockhart.See you at Green Mesquite for lunch in 30 minutes?JLMwww.themusingsofthebigredca…

          3. Chimpwithcans

            Ha…I wish – would love to visit. Sounds like we share a love of the braai (https://en.wikipedia.org/wi… with the Texans

  17. AlexBangash

    Most VCs are very smart in the conventional sense (High IQ, top prep schools, MBAs) but it is exceedingly rare to find those who invest in conviction of contrarian ideas rather than chase consensus ideas. As Mike Markula the seed investor and first CEO of Apple reportedly said, “Money men (VCs) and scribblers (reporters) are all characterized by a particular sheepiness.”

  18. Frank W. Miller

    Jeez, nice try at PR spin. There are some interesting nuggets but your spin is comedic. Entrepreneurs are typically abused by VCs, plain and simple. The focus of large amounts of capital through a few individuals that control who gets what is a power relationship and that begs abuse. And don’t even get me started on collusion. The basic system is flawed in its current form.The funny thing is the way to fix it is to have some startup figure out a new system for early stage funding. But that will never happen because no VC would fund it, they’d lose they’re power! 😉

    1. pointsnfigures

      Angel List? Seed Funder?

      1. Frank W. Miller

        I’m actually an investor on Angelist. Its a great site and I’m enjoying my small investments there but its not the tectonic shift needed to break this inherently lopsided vc/entre relationship.

        1. pointsnfigures

          To be honest, Angel List is like going to TDAmeritrade and picking a mutual fund to invest in. VC is very different. In the best case, you are talking about establishing a relationship with someone that can help you. VCs also do a lot of due diligence before they write a check. They only write checks when they think they have an unfair advantage over the rest of the market. Then, good ones use their networks/expertise to try and keep that advantage for as long as they can.Some people get pissed that Fred talks his book on his own blog. If I were an LP in his fund, or an entrepreneur that he invested in, I’d be pissed off if he didn’t talk his book.

    2. ShanaC

      how would you break the system if you could?

      1. Frank W. Miller

        I’m not sure. But two things would be important to start with. First, the govt. should not be involved in any way and second, the focus should be on widening the valve between the money (their LPs) and the entrepreneurs. I don’t know what the mechanism would be but it should probably be publicly transparent somehow.

      2. Adam Sher

        Universities and existing businesses can break this system because they provide a safety net (i.e. free time, grants, scholarships, and salaries) under which entrepreneurs can build businesses that do not need VC money to reach self sustaining sizes.It has been said so many times (and recently by Sigma Algebra in this comment section) that there are millions of successful businesses. Most of them aren’t investible. Investible /= successful.

  19. Chris Piatt

    Agreed on premise of article. Isn’t scripture merely the best advertising though? Not only are you told a story that convinces you to buy into the product (a particular religion), but that story becomes part of your core identity. Envy of banner ads everywhere…

  20. bfeld


  21. DJL

    The VC world does appear to be a “club” – with two main lounges on each cost. Once you are in it (“funded”), then you can get funded even if your last idea cratered and lost millions. It would be very interesting to determine how many of the current VC rounds are given to previous teams versus to brand new investments. To the point where you get 10 “pets.com” investments at the same time.I understand the entire notion of the “team” and how you can reduce risk by being familiar. But I don’t see a lot of true risk taking on new teams and ideas in new markets. Why leave Silicon Valley or New York when you don’t have to? I want to be wrong… But so far that is my experience.

    1. Adam Sher

      I witnessed the same thing happen in the CRE fund world where Club investing came back in a big way. The industry (i.e. funds) consolidated almost entirely into the major players (e.g. Apollo, Blackstone) with a small allocation to emerging managers (Preqin tracks this). This occurred as a response to the Great Recession. It’s ironic that the outcome of an industry of investors in response to a recession was to narrow their thinking (i.e. increase manager risk). In other words, the industry experienced a consolidation of capital allocation.The advantage that the VC world has is that there are well-funded incubators that provide early stage capital to lots of unknown founders. There’s still a chance for new innovators and business people to make their way in. Hold out hope!

  22. iggyfanlo

    GREATEST content marketing

  23. Jeff Steinke

    Re: “What I recommend to entrepreneurs is to listen carefully but not act too quickly. Get multiple points of view on important issues and decisions. And then carefully consider what to do with all of that information, filter it with your values, your vision, and your gut instinct.”Isn’t that learning and analytical thinking in general? Not just how entrepreneurs interpret VCs?

  24. Taylor Edmiston

    It’s surprising how much of being a good entrepreneur just boils down to solid critical thinking skills.

  25. jeffgrillo

    This is one of my favorite posts. It really puts everything into perspective.My focus is technology and travel, but first I need to come up with an business idea that will solve one of the many challenges when traveling.

  26. Harry Alford3

    Very good post! With regards to entrepreneurs viewing VCs suggestions as scripture…Someone once told me to not “follow advice, but apply it.” It’s up to the entrepreneur to do his own hw.

  27. Ketan

    The tweet is poignant one because the entrepreneurial landscape has fundamentally shifted from – founders looking at investors as a tool to reach their customers – to looking at their user-base as a tool to raise money. This shifts the onus on the investors to find a profitable exit from the founders to build a fiscally sound business. This fuels the valuation bubble and universal greed of so-called entrepreneurs who worship VCs as Gods (or King makers) and their words, scripture.

  28. JLM

    .A VC is at the top of the power Totem pole as it relates to the venture capital business. It is a position of “make it — break it” power.Comm’l banking used to be able to provide capital — “backers” v bankers. Those days are gone forever and that is a damn shame. Now, only a VC can be a “backer.”Much of life is about figuring out the power relationships, figure out how to work with them, and obtaining some power for oneself.There are no heros in life (except for Audie Murphy).There are ordinary people who rise to the challenges of extraordinary circumstances. Don’t get me wrong, there are some damn smart people out there but if you can only have either smarts or experience (street smarts), take the experience.Fred Wilson is as nice a guy as there is in the VC business but he has LPs to report to and he has a fiduciary obligation which he takes seriously. He is a great communicator and, in that, he is extremely generous.The definition of a “nice” VC is one who will let you get out of your underwear when he comes to chop them up for rags on the dark side of failure. It is a business, not a charity.But, hey, that’s OK cause that’s the way the game is played.Pro tip: Don’t get into any game before you learn the rules.JLMwww.themusingsofthebigredca…

  29. OurielOhayon

    VCs are not heroes. They are just, sometimes NBA super stars, or Hollywood top paid actors. Which for some is the same

  30. Donna Brewington White

    It was here more than any other place that I’ve learned the rules of social media. A great hands on learning experience. One lesson learned early on: be authentic and transparent. But it takes practice to figure out what those concepts are and what they are not.These lessons among many others. Marketing or not this can be a great learning ground.

  31. MickSavant

    also, most don’t profit, and many that do profit do so at the expense of the the average investors that buy in during the IPO

  32. ShanaC

    This is one of those posts that are so true that ifa) it wasn’t awkwardandb) we were in personI’d give you a hug for writingYou bust your own bubble. Not many people are willing to do that.You admit it is just pattern recognition by being in board rooms – and someone can say “what about the meetings and board rooms you are not in” and you admit the VP of marketing may know way more about the situation involving marketing than you as a VC with all the meetings you’ve taken have seenThat is so great and refreshing to hear these days – because you are right, there is a bit of a cult.And I wish instead there was a cult of an entrepreneur and important employees for that knowledgebase instead. But they seem awfully quiet…

    1. Supratim Dasgupta

      I agree. honest post. Coming to pattern recognition, just curious is there a big data used by VCs to identify potential great teams/companies or is it still manual instinct driven.

  33. Leslie L. Kossoff

    I have to say, the comments on this post went some really interesting and unexpected places.To the post, itself, in the ‘executive’ industry in which I live, for years now I’ve referred to what you’re talking about as the “Jack Welch Effect.” He did some great things as CEO of GE – and he did some pretty horrible things, too. What he wasn’t was a god or even a demigod.That being said, during and post-GE, he created a celebrity around himself that people still react to…as if he knows all the answers to everyone else’s questions. He doesn’t. He can’t. No one can.Branding is branding. Content is content. It’s lovely when they intersect positively. They should never be confused with each other. Therein lies the risk.

  34. Sonny Blarney

    VC starts article with ‘VC’s are not heroes’.Funny, I don’t think too many people were thinking ‘hero’.That comment alone says more about how VC’s view themselves than anything else.

  35. sigmaalgebra

    Understanding VC? Okay:Here I will write for any would be entrepreneurs reading Fred’s blog today. I will write especially for any entrepreneurs like in the Fernandez tweet: too many young entrepreneurs talk about vc’s like they’re heroes and their blog posts are scripture At one time, I heard about VCs. I read a lot of VC blogs and Web sites and contacted many VCs.Bottom line: I should not have done that. There I learned some good things about business, but the efficiency was awful. For my startup, far too much of the effort was a waste.I blame the VCs and their Web sites for being deceptive, of making the VCs seem significantly different than they are. I blame myself for being gullible and working too hard.Some bad news is that I greatly overestimated how good the venture partners are at business. Some good news is that they are so bad that they and the companies they fund and work with don’t represent much of a threat.Broadly, a good founder won’t want to dilute his (her, here and below) team with people like venture partners.Here is what I wish I’d known before my first effort to understand or contact VCs:(1) Business 101.There is the famous quote The business of America is business.There’s a lot of truth in that quote.In particular, for financial security for yourself and family, it is, depending on circumstances, from good, to important, to crucial to start, own, and run a successful business.It’s easy to see Microsoft, Apple, Google, Facebook, and more as examples of successful businesses, and they are successful, but they are very unusual, that is, not representative of the successful businesses.Here is a crucial fact about business in the US: Border to border, east to west, north to south, from the tailgate of truck to a spare room to an office, on just a street, at a crossroads, in a village, town, …, the largest cities, the US is just awash in millions of successful businesses.A Lesson: In the US, success in business is not rare. Instead, success is from common to nearly standard — millions of successful businesses.A shocking large fraction of the US people and families doing well enough for nice houses, second houses, late model luxury cars, $100,000 sports cars, summer family vacations in Canada, winter family vacations in Florida, winter ski vacations, private schools K-12 and college, country club memberships, recreational boating, yachts and yacht club memberships, and financial security for both the present and next generation are paid for from a person in the family, maybe with help from much of the whole family, owning and running a successful business. That’s just the way it is.Here are some examples of successful businesses:(A) Own a medical testing lab, and then do a roll-up — that is, buy up nearly all the medical testing labs in much of a state (eliminate geographically local competition; get some efficiencies from being larger; raise prices; make more money).(B) Own and rent 500 apartments.(C) Own and run 15 fast food restaurants or gas stations and convenience stores.The difference in earnings between running a fast food restaurant well and just average is quite a lot of money per year per restaurant and enough over 15 restaurants to make a family moderately wealthy.(D) In a radius of 100 miles, be the leading supplier of electrical supplies for residential and light commercial construction, similarly for HVAC supplies, plumbing supplies, lumber, or other building materials; be the main, local source of sporting goods for local high schools and colleges, etc.(E) Operate a plant that kills, say, 5000 hogs a day and ships and sells the resulting fresh pork, maybe processes some of the pork, e.g., makes various sausage products, and sells those.(F) own and run a successful local, independent insurance agency — life, home, car, medical, business, etc. Use good knowledge of the local community to make good rating decisions.To start to understand how such businesses work, look around the area and see what the fundamental needs are. See food, clothing, shelter, transportation, medical care, insurance against risk, etc. Then, there will be businesses to supply those fundamental needs; look at those businesses and try to understand how they are successful.Doing well in one of those businesses can mean doing relatively well in the US economy — e.g., for those private schools, vacations, toys, financial security.Since mostly such businesses serve relatively common and fundamental needs, they have to be common on, or near, nearly every Main Street in the US. So, here I call these US Main Street businesses.(2) Education 101.There’s an old joke, If you believe that education costs too much, wait until you see the cost of ignorance.Yes, we want to get education so that we can learn knowledge that is true, powerful, and valuable. And, there are some opportunities to do that.But likely the most valuable knowledge we learn about is that which is false, dangerous, and costly — that is, we learn how to detect and reject such bad knowledge.The good knowledge might help you a lot; some bad knowledge that fools you can cost you much, much more than the good knowledge usually helps you.E.g., there are a lot of people out there trying to manipulate, fool, and mislead you; if they are successful, then they can gain while you lose, possibly a lot.Then one of the most important lessons you can start to learn in education is how to detect and reject knowledge that is false, dangerous, and costly.Net, the most important knowledge is the bad knowledge you learn to detect and reject and not the good knowledge you learn and use.How can education help in this way? Well, much of education has some very high standards of, call it, information quality.Of course, the highest such quality is from mathematics: E.g., there get to see results such as the Pythagorean theorem with its rock solid proof.There are also many lessons in high standards of information, knowledge, and thinking available in the other STEM fields, parts of the social sciences (e.g., there can learn in stark terms, like running full speed into a stone wall, just how darned difficult it can be to get new results that are both solid and significant — thus, can accumulate some very strong skepticism), law, medicine, etc. E.g., in computer science can see that some useful software can have 10,000 programming language statements but can be ruined by just one error in one of those statements — so, can get another lesson in high quality.So, education can provide some examples of high quality in information, knowledge, and thinking. Then, with this critical view, can more easily separate the good and bad claims, lessons, information, knowledge, etc. elsewhere in life.Along these lines, there is an old joke about a good education: You can always tell a Harvard man, but you can’t tell him much. So, one result of a good education is a healthy skepticism. The lesson is not just to reject everything; instead, the lesson is how to separate the good from the bad.And, for the second grade lesson, we learn that we nearly never can get something perfect so usually have to settle for something that is good enough. A third grade lesson is that it can be difficult to know when what we have is good enough. In that case, maybe as we move on we will improve our information and make it good enough.In addition to the above, in education we can also learn some knowledge that is true, powerful, and valuable. E.g., at times, e.g., depending on the economy, can get such knowledge in some fields of engineering. And can learn some about business, e.g., accounting (in fact, heavily based on the tax laws; otherwise designed to permit an outsider to evaluate the business; if have some significant work to do in accounting, then don’t try to be an accountant and, instead hire one), business law (for any issue that is serious and/or not trivial, don’t try to be a lawyer and, instead, hire one), organizational behavior (high end name for understanding nearly ubiquitous deception, duplicity, self-serving, dysfunctional, destructive behavior, sabotage, playing both ends against the middle, etc.), and at least the basics of practical finance.For a lot even in just business 101, there is a lot of utility in just high school and freshman college physics, e.g., for mechanical systems (Newton’s second law), electricity, radiation (e.g., the Planck black body radiation), compression of gasses (e.g., air conditioning, internal combustion engines), phase change, and more.But for Business 101 and just life, likely the most important knowledge is just about people. There are claims that literature is a good source, but my view is that this is false. Likely the best source was your mother, then your father, then your siblings, then your friends. Then, IMHO, the best lessons about people are what the clinical psychologists have accumulated via essentially only practical, empirical, descriptive techniques.Technical Skills. The US economy needs millions of people who have some technical skills. Business commonly fails to understand these skills and ends up paying too much for them. Actually, with some reasonably good training, nearly all of such skills, e.g., in computing, can be taught and learned quite quickly.(3) Education 102The US has several dozen high end research universities. The top ones are well known — Harvard, MIT, Princeton, Berkeley, Stanford, Cal Tech.Well, the main activity of those universities is not education for life or business 101 given to the undergraduate students. Instead those institutions are research universities. Their main mission is all in just three words, research, research, and research.The first outlet of that research is peer-reviewed conferences and/or publications.The financial support for the work is heavily from research grants, heavily from the US NSF and NIH. The grants are based mostly on the quality of the research proposal and past work. The grant process is highly competitive.Why the emphasis on research?(4) The Unreasonably High Value of ResearchWith just a little reflection we can see that the main difference in life in the US between 1700 and now is due to research.For the improvements in life, obviously that research was necessary. That research was also nearly sufficient since, given the research, all the rest was comparatively routine and not much in doubt.(5) Information Technology StartupsWe have seen that, in the US, for life for a person and their family, starting, owning, and running a successful business is important.Well, one approach to such success is a startup in information technology; today mostly that means computing and the Internet; commonly that means developing software for Windows or Linux on PCs and/or servers or on iPhone or Android.Why? Broadly there are four reasons:(1) With software, can automate lots of activities; for the target users, this automation can mean entertainment, information, etc.The infrastructure, e.g., Microsoft’s .NET Framework, has made writing powerful software much easier.(2) The Internet is providing fantastic, world-wide, highly reliable, easy to use, inexpensive, high data rate, digital communications.There is also lots of relevant infrastructure, e.g., in standards, application programmer interfaces (APIs), tools.(3) The crucial, core hardware has improved at historic, explosive rates in speeds, capacities, costs, and reliability.(4) There is good infrastructure for running ads, and running a lot of ads can result in a business worth more than $1 billion, $10 billion, $100 billion.Since (1)-(4) have come forward relatively quickly; they have not yet been fully exploited; and good business opportunities remain.So, one person, e.g., the Canadian romantic match making site Plenty of Fish started by Markus Frind, can do well:The site was long just Frind, two old Dell servers, ads just from Google, and $10 million a year in revenuehttp://highscalability.com/…As athttp://techcrunch.com/2015/…as ofJul 14, 2015,Frind sold out for $575 million.(6) Doing an Information Technology StartupThe best information technology startups are terrific business successes, but many such startups flop.So, how to do a successful startup?There are likely opportunities for some relatively simple such startups, e.g., Web site design and construction for local businesses.But, more is possible and maybe desirable. For more:The best way — get very lucky.Otherwise, usually not easily. But, try to have good insight and work both smart and hard.If it becomes clear that the startup is not a good idea, then give it up, take the lessons, software development skills obtained, etc., and use them for something new that looks better.Maybe:(A) Find a fad, a wave, and ride it.(B) Create a fad, a wave, and ride it.(C) When see two different ways to do much the same work, build a way to convert between the two.(D) Try to have some advantages. One advantage is a product/service that is much better for a lot of motivated users/customers.(E) Try to have some barriers to entry.(F) Look for some network effects. These can be ways both to grow and to have barriers to entry.(7) One More Candidate AdvantageSince in some respects, both fundamental and sometimes specific and practical, research results can be powerful and valuable, maybe can use research results for a business advantage.For information technology, we have to notice that fundamentally information is close to mathematics. Next, for computing, that manipulates data, and all such manipulations are necessarily mathematically something, understood or not, powerful or not. So, for more in information and for more in data manipulations, might look to some research results in mathematics.For US national security, such a view of mathematics long been common, powerful, and valuable.Really, quite generally, well informed people understand and confirm that much of the future of computing and information technology will depend on more exploitation of mathematics.So, broadly, for an advantage in an information technology startup, one possible advantage is some exploitation of some mathematics.(8) Costs of a StartupFor starting an information technology business, we can look at the costs of tools and equipment and compare with those costs for other business startups:For an information technology startup, e.g., Plenty of Fish, the main equipment and tools needed are just some PCs maybe, smart phones, likely some books, and some Internet access. For these resources, now can do well for well under $10,000.In comparison, commonly a lawn mowing business arrives in a $30,000 truck pulling a $10,000 trailer with a $15,000 lawn mower. Indeed, the business will likely have at least one PC and more than one smart phone! The $10,000 for an information technology startup would get spent quickly.For a pizza carryout, need some pizza ovens and refrigerators. Need some usually quite expensive kitchen preparation and a lot of health and safety inspections. The $10,000 for an information technology startup would get spent quickly.Similarly for an auto repair shop, auto body shop, franchised fast food restaurant, dentist’s office, etc.A Lesson: For cost of tools and equipment, an information technology startup is commonly by far the cheapest US business to start.(9) Venture FundingIn the US there are a few thousand venture partners and a few thousand deals a year. But in the US, there are millions of successful businesses. Really, only a tiny fraction of successful US businesses get venture funding.A Lesson: If start a successful business, then venture funding is not nearly necessary. In particular, for an information technology startup, venture funding is not necessary.(10) Apparently Venture CapitalHere are some guesses about US information technology venture capital:Criterion. The main criterion for venture funding is a startup for a huge market with the number of users/customers already significant and growing rapidly. In a word, that is called traction.Everything else that might be regarded as in favor of the startup is from not very important down to ignored or unwanted.How to know this: Just send e-mail messages to venture partners. You can send anything you want, about the product/service, technology, business advantages, market, team, progress to date, etc. written anyway you want, long, short, high level, low level with details, with details in appendices, technical, non-technical, as just e-mail text, as a well formatted PDF file, as foils, with informal wording, formal wording, very careful wording and writing, with introductions from famous people, with preceding and following phone messages, with follow-up contacts, etc., and as long as don’t have or mention traction, then the venture firm will rarely respond at all and will essentially never give a meaningful response.Commonly venture capital Web sites claim to be interested in new ideas, innovation, technology, new technology, leading edge technology, innovative, disruptive, new products and services, teams with great qualifications, etc. and rarely emphasize current revenue or traction. So, here the Web sites can mislead and deceive entrepreneurs. The situation is a waste of time for both the venture partners and the entrepreneurs.However, with the criterion met, the startup should have plenty of revenue from product sales or ads to support a team of one or a few persons and buy more computers, etc. In that case, the startup should be able to use the revenue to fund the growth.What can be done in an information technology startup for that $10,000 in tools and equipment mentioned above means that it can be difficult to close a venture deal:If the startup is too early, then the venture firm won’t want to write a check. By the time the venture firm wants to write a check, the startup should be well past needing or wanting it.Upside of venture funding? Startup founders who have achieved what venture firms want will be shocked at how little the venture partners know and understand about the founder’s business. Usually the answer is — at best, nothing significant.Downside of venture funding? The overhead of the Delaware C corporation and the BoD stand to be severe; for the founder, already fully busy, the time, effort, and legalities of reporting to the BoD are huge, new responsibilities; the advice from the Bod is commonly at best something to be ignored and otherwise toxic enough to kill the company; the extra legalities, the costs of lawyers, the costs of the BoD meetings, etc. can easily nearly sink the startup; the term sheets and deal terms are commonly onerous, horrendous, e.g., can have the founder suddenly go from owning 100% of his company to owning 0.0% with some chance of getting back to maybe 40% via a four year vesting schedule where the BoD can fire him and have him leave with essentially nothing at any time for any reason or no reason and install one of their buddies as CEO.With only rare exceptions, on the startup founder’s team, the best position a venture partner can play is Drawback.The situation for venture funding is so uniform across the US it appears that there are some strong, common influences. A guess at the influences is what the leading limited partners agree on; these limited partners are commonly professional staffs of large institutional investors, e.g., pension funds.So, how are venture partners making money? Well, on average, for their investors, the returns are poor. E.g., seehttp://www.kauffman.org/new…http://www.avc.com/a_vc/201…Given a startup founder with the traction a venture partner wants, how can a venture partner get the founder to accept a check, the term sheet, the deal terms?Well, if the startup team has five guys, each married, each with a pregnant wife, then, okay, they may well take the check.Otherwise, IMHO, the days when a founder of a small, successful information technology startup would accept a check, terms, BoD, etc. are coming rapidly to a solid end.(11) SummaryBusiness? Super important. Information technology startups? Historically great opportunity. Venture funding for such startups? F’get about it.Wish I’d known the above.A Lesson: For a startup founder, by far the person most qualified to help the startup and the person most concerned about the startup is the founder.

  36. PhilipSugar

    I will add only one nasty comment after the thread is dead: Many think they are gods. By my count a vast majority.

  37. Pete Griffiths

    Stop being obsequious!Yes, Sir. Certainly, Sir.

  38. jason wright

    (Mis)understanding VCs. A common problem.

  39. David Cohen

    One of our favorite sayings is “it’s just data”. Another is “it’s your company.” Meaning, I will tell you what I think and it’s up to you to synthesize it and act. It’s important to take into considering the experiences of the person giving the feedback, their motivations, and their frame of reference.

  40. Martin

    VCs have become rockstars, thanks to SM, the cult of celebrity, $$$ envy and yes, self promotion (via blogging or SM or whatever). The reality is that if you look at VC investment portfolios and the success of each investment decision (not just the one or two unicorns) they are very much ordinary and can be characterized as random…akin to Malkeil’s Random Walk…heroic? History repeats itself. The heroic investments of the .com days, when looking back, one can easily say WTF were they thinking. FOMO (fear of missing out) takes over. VC s are human too and biases take over. It may be happening again today… and the cycle will repeat itself.

  41. David A. Frankel

    TRUE STORY: In early 2009 (in the middle of the financial crisis) I was in a board meeting where our lead VC (known respected name, known respected firm who had put another $10mil+ in just before Sept 2008), was vehemently pounding the table insisting that our company should pivot towards selling our SaaS tech solution to the govt because “that is where the money is and is going to be.” Other board members agreed.Our CEO, who had been a CEO before and brought this VC in, listened, respectfully counter argued, but ultimately agreed we would look into it. After the meeting, she told me to look into what it would take, but not spend a lot of time on it. We knew that with our cash burn and existing sales model, we would not survive the year if we did this and it certainly would be distracting.Sure enough, next board meeting (3 months later), when the topic came up on the agenda, the VC did not ask for an update on this. In fact, our CEO informed us afterward that during a prep call for the meeting it was clear he had forgotten that he even suggested this angle for which he had so passionately campaigned.Hard to tell how the VC went from hot to cold so quickly. Perhaps he had been in another board meeting that day and was part of a similar discussion. Perhaps his colleagues at his firm had been discussing this as a potential avenue for their investments. Perhaps he had seen a bunch of other companies do this in the past with success and thought it might fit with us. Or maybe he was as clueless as the rest of us as to what was going to happen to the economy in 2009 and beyond an just passionately spitballing or pontificating.MORAL: No matter their name, their firm, or how much someone has invested in you or your company, the people running the company are entrusted with driving the bus. The sign of a strong leader (and management team) is one that can listen to the advice of their trusted advisors/investors (no matter how passionate the delivery may be) and make it a FACTOR in their operating decisions, not the DRIVER.

  42. hardaway

    This blog is a great example of native advertising, or branded content, or whatever. And so is Mark Suster’s. Thank you for calling it out.

  43. Voncelle Volté

    When I think about the climate of Exits, most people don’t understand the pressure of Venture Capitalists to stay relevant. One Filene’s Basement Exit in order to expedite a Liquidation Preference can make you look as if you’ve lost the Midas Touch. In short, Venture Capital is a numbers game not a Hollywood film franchise.

  44. Kenny Fraser

    I am with Charlie Crystle on this one. Enjoyed the post Fred but I think hero conjures up the wrong image for any startup http://www.sunstonecommunic

  45. Pablo Caballero

    Every time I heard the VC is competing for talent, I look around in my country (Spain), and laugh. Dozens of really good project talking with VC that only want to invest in startups with revenues from day 0. Really, the day US VC come to Spain, well, would be great to see that.

  46. LE

    Agree. I never got that link between taking a risk and gambling and being a hero. But then again I guess I never got the link between being a hero and jumping in front of a train to save someone either.Only when you sacrifice personally for others with no reward for yourself (near or long term) do you approach heroismI would argue (like I am some pontificating academic or something) that there is always reward wrapped into almost everything that someone does. It is always self serving it’s just a matter of degree. I am sure philosophers have said this in a million places as well over the years. If the reward is feeling good about yourself then that is a reward.What is the reward to someone when there is no “reward” of the traditional nature? The party in their brain. They feel good about themselves and feel that they are a good person for what they have done. Perhaps even having tricked themselves (not saying that in a negative way either) into thinking they are even greater because there is no outward reward or recognition.You know my theory on why most people tip the bellman in the hotel when they deliver the baggage? It’s to avoid feeling bad that they didn’t do it as much as maybe caring about the bellman etc. When I tipped a waiter 20% instead of 18% do you really think I care about the waiter who I will never see again? Why not give the 2% to someone who is more deserving? The easy way out is to take the brain reward rather than seeking out a better use for the tip money and avoid the negative.

  47. JLM

    .My heroes are the single Moms who face down 20 years of working their asses off to get their kids educated and to have a better life than they had.This is what makes our country great.JLMwww.themusingsofthebigredca…

  48. ShanaC

    it may have turned out that way, but I don’t think of it that way. It just is a safe place with nice people for me *shrug*

  49. LE

    Explain that one to me I am confused by what you are doing and why.

  50. PhilipSugar

    Ok. I have a serious question here and maybe it’s an a-hole alert.I tip. Now even in countries like Singapore and Australia I do. (not customary).But you never get less than 20% from me at a restaurant unless you display truly poor and disinterested service.However, when I valet park (which I don’t love, sorry I am fine parking myself) I pay $2 on drop off and $2 on pickup.So am I an a-hole? A two buck chuck? I always assumed, and that has ass u and me in it that valet keeps the whole tip. Now where I live you also get charged to valet so I again assume that goes to the company, and the valet gets the whole tip.If you run a car out and back every couple of minutes that seems decent even assuming there is no wage. Kind of sucks in the beginning and the end of an event versus a steady stream.

  51. LE

    Does it matter if someone you never see again thinks you are a cheap ass if you don’t even know they think you are a cheap ass?My saying is “it’s not what people think, it’s what you think that they think that matters”. That cuts both ways of course.I am reminded of my niece who worked in a restaurant where I went and picked up some takeout food. I didn’t know that she worked there it was a coincidence. So I go to pay for my food and then I gave her a tip, something that I never did with takeout food ever. I then told my sister and she said to me “oh yeah lots of people tip on takeout” and then something like “you know you should bla bla bla”. All of these years I never knew that and was totally happy and never thought about it. It didn’t have any impact on me at all. I still don’t tip on takeout I actually did it a few times but got no reinforcement from the person that I tipped so I decided to save the money and revert to my past behavior.

  52. awaldstein

    You are the corner case here.Truth is that people do actually give a shit. People are empathetic. People as a whole want to do good stuff and help others.There are self centered unempathetic assholes everywhere of course.And if my world of my nets and friends is a bubble, it is one big one and I’m thankful for it.

  53. PhilipSugar

    Ok, we are off topic here but I’ll go there. I don’t tip bellman because I don’t use their service. I find it useless. You take that bag that I have schlepped 2mm miles (yup one bag) and want to bring it from the marble lobby to my room?? No thanks.Waiters. Hell yes. I value good service. Maybe its because I have an easy name, but they remember me. Last week when I was in Dubai a co worker complained she couldn’t get a reservation at Dishoom in London for an anniversary: http://www.dishoom.com/ I said oh, I love that place. Call back and say Mr. Sugar sent you. She laughed and said: I’ve lived in London all my life. I said just call. She came back shaking her head, and said they told me great and to buy him a Sherry, we love bringing a complimentary one to him.You saw my pictures from yesterday? I tip those guys each day. They say: but we’re not done. I tip upfront. I also treat with deep respect, my wife puts out 10lbs of ice with cups each day. They were there till 6:30 last night taking out a stump, do I think I get better service??? Hell yes. It is a rational use for my money.

  54. cavepainting

    You raise an interesting point. I believe “Brain Reward” is a proxy for the ego. Both outward and inward rewards serve the same goal – gratify the needs of the ego.The spiritual traditions of the world have long maintained that the purpose of life is to become increasingly aware of the ego and what it does, and use that awareness to diminish its role in our lives. Which in turn is likely to develop more empathy for others that is genuine and heartfelt.I do believe there are people in this world who put others’ needs above their own, and take actions that are primarily intended for some one else’s benefit and not their own rewards, be it internal or external. May be not all the time, but at least some of the time and in some relationships that they hold dear.

  55. LE

    So is your point that you caused him pain which made you feel good or that by being a jerk he caused himself pain because you jerked him around by parking his car in an undesirable place? (How is this a good reflection on you by the way?) What did you gain by it? You are the one parking his car, right? Is he a jerk just because he treated the parking attendant (you in this case) in such a lowly manner? [1]In the end if he had treated you better does that really make you think he actually cares about you or would do anything for you if you were in some kind of need of help or assistance?[1] I once had a friend who had a father in law that everyone just thought was the shit. He would go in a movie theater, call out to some young boy usher and say “yo chief here buy me some popcorn” and hand him some money. The ‘chief’ would return with some popcorn for him. Everyone thought he was an asshat for doing that and laughed at him and though he was a narcissistic pompous ass. I didn’t. Why? He actually was one of the few people that would go out of his way to make sure his son in law gave my company at the time business when they didn’t need to. And his son in law as gruff as well was this way also but was much better in terms of what mattered then my own fucking sisters who would never call out “yo chief” in a movie theater.

  56. JLM

    .Haha, good one.I was a caddy once upon a time. A great gig — nice walk on a sunny day. I could carry two bags for which the going rate was $20 — $10 plus a $10 tip.I could walk two loops a day. One early and one after lunch. I would come home with $80 back in the 1960s which was a lot of money. I walked to the golf course which was 5 miles from my house. It made for a long day but a good one. Sometimes a Saturday and a Sunday.I got the best loops because I used to kick back 10% to the caddy master. Not everyone did. Thirty caddies sitting waiting to saddle up and i’d get the first loop. Sometimes, I’d bring him a bottle of whiskey from the Class VI store on the Army post. He was a big drinker.When you’re done, you clean your golfer’s clubs and the caddy master has someone else put them in the golfer’s car or in the club’s storage room.So, I come back from a loop and give the caddy master two bucks. Ten percent of $20 cause the second guy says to me, “He give you $20? That covers him and me.” Meaning, no tip, kid.I tell the caddy master this and he says, “I’ll look into that, kid.”I don’t get any more money but when the guy’s clubs go into his trunk he doesn’t know it but he’s got 3-4 broken shafts (metal in those days).JLMwww.themusingsofthebigredca…

  57. LE

    Truth is that people do actually give a shit. People are empathetic. People as a whole want to do good stuff and help others.Except in business or in their careers when real money or survival is involved?If that is the case “people actually do give a shit” (implication ‘most’ or ‘mostly’) it doesn’t explain why companies, which are made up of people who make decisions, [1] typically do such obnoxious things to make a buck. You know when their ass is actually on the line and it matters. Not for something trivial like the size of the tip that they leave or whether they extend common courtesies to others.[1] After all computers aren’t making the decisions, people are.

  58. PhilipSugar

    I am in between.I agree I think most people are good.However: I think there are very many people that are bad.Where many elite people get mixed up is they think: Oh, they are not really bad. It is just where they live, how they were brought up, the color of their skin, or their religion, its my fault.No f! that. They are bad. If you are good you do not need to make an excuse for those that are not. You need to call those out that are bad.”The only thing necessary for the triumph of evil is for good men to do nothing” Edmund BurkeI think that a lot of what is fueling some very strange behavior these days is there are many regular people that perceive (and I think rightly so) elite people enabling bad behavior because it is an easy story that sells well, makes them feel good, and keeps them in power:How many people think they are below average??? How many people have the self awareness to realize they are bad???It directly affects average people, and not the elite. The elite like to say its just a certain set of angry white men. They are wrong. That is why you get crazy surprises.

  59. LE

    Well one other thing about good tipping though that perhaps you haven’t considered. It can be a golden handcuff. I am reminded of my other niece who worked in a deli and was totally loved by everyone there. She would take a boatload of tips really way more than she could make doing other work (at her age). As such we had to stage an intervention to get her to stop at that job because long term it wouldn’t lead to anything and her time was better spent in another direction and taking a hit pay wise for long term benefit. Was really hard for her to walk away from that money. It became addictive.So there you have it. I don’t tip 25% (typically 20 sometimes 18) because I don’t want to be an enabler.My niece by the way would tell me of people (old dudes) who would give her $20 for a $10 order as long as they could flirt with her. And she liked it I could tell even though they were old dudes she like the attention.

  60. LE

    I think you need to think of a more creative way to gain from that situation rather than flattening someone’s tire to get them to pay $20 to you.There are many reasons for this and I won’t even get into the fact that it is wrong (because we all cross the line sometimes I am no saint nor are others here even though they think they are). I just think you never know how, if you go down that road, you will then have behavior like that in other areas and at one point it will bite you in the ass.What I am saying is that Ryan Lochte’s original story is not the first time something like that happened to him but probably the last time he will assume there is no a) mom with loose lips (the thing that started it) and b) security cameras recording footage of what he did.The unknown unknown I think is what they call it.

  61. LE

    Nice! See how we relish one type of behavior to the detriment of others (the bribe which is a disadvantage to others). God knows I’ve done similar things (getting leads from the property management office that should go to everyone).

  62. ShanaC

    what do you mean by an enabler?

  63. ShanaC

    who is that?

  64. LE

    In other words by an action (large tip) you create a situation (you make desirable) for someone to stay at a job when long term it’s better if they are not there.I am actually joking about that being the reason I don’t tip 25%. I have on the other hand given money plenty of times when none is expected (for example to furniture delivery people, repairmen and the like I am actually a big tipper..)

  65. LE

    Yeah as I said in my other comment I am big with tipping for deliveries of furniture or large things, workman, things that need to be assembled and the like. The other week a plumber was there to unclog up a outside drain line (mexican guy) and I found out he made $30 an hour so I gave him $20 tip (the entire bill came to maybe $200 or so). He was really sweating the dirty nasty job (tree root in drain). And he took my suggestions and created a nice drain so it wouldn’t get clogged again (once again proving how you have to get involved in these things).One time I had someone spend all this time assembling a piece of exercise equipment (delivered) and then asked him if he could carry something from the basement to the curb. He said he wouldn’t so I didn’t give him a tip I just didn’t like the bad attitude. Another time I offered to pay (first) and the person said “sorry boss won’t let me do that”. Another time a guy said “here is my number call me if you need other stuff”. All things you run into obviously as well. I called that other guy but he didn’t return the call or show up after he promised to do so. (This was with a nice tip). That is the bolt of cloth they are made from if they were you they wouldn’t be doing this type of labor I guess. (Sounds crappy but that’s explains a large part of it but not all of it..)For the tipping of the bellmen that’s something where I got over it because I figure it keeps someone employed and it’s only $2 per bag or whatever (maybe a $5 spot). Way the guy earns his living and all of that. Just the way it is. Small enough to not matter so I go with it. If it mattered I wouldn’t. I wouldn’t tell a college student making $7 per hour to do it “everyman for himself” until you have money.For the drain I simply told him instead of burrying it to build it so it can’t have roots grow in which so far has worked we will see long term. Good reason not to have the wife supervise this type of thing.The guy doing this work has been there before and I have tipped him each time….

  66. awaldstein

    We are the same. I tip and tip well for service. Lianna who spent a bunch of time on the waiter side during her acting days feels like this is part of the bill.We compromise which means she wins.But bellman–never as I always carry one except when I ski.

  67. Nigel Walsh

    tipping in the UK is so different to the USA. I agree re bellman, I like carrying my own stuff – as you say, I’ve dragged this sorry case around the world.. Ill get it to the room!. Re other services, barbers, shop assistants, waiters etc – I guess its all down to how they make you feel and if they go the extra mile to make your experience great. I don’t like when a) discretionary service is added automatically and its poor service and you are made feel bad to ask for it to be removed b) they add discretionary and expect more, leaving the tip area blank or c) adding service for 6 or more (or whatever the number). If I was 3 tables of 2, you wouldn’t add it.. its a whole world unto itself. Either way, Ill happily tip for great service. Now how did we get to this topic from what AVC posted, which I thought was great, as always!.

  68. LE

    What about Dads? No hero for doing the same thing? Only single moms?

  69. cavepainting

    Amen to that. The heroes are the Moms. Period. Not that Dads aren’t, but there are too many Moms who do not get the recognition for the sacrifice they do every day. We can talk about other heroes after the Moms get their due.

  70. PhilipSugar

    What ruins it for the doorman for me is the way the extort taxi drivers for airport runs. You know how much they make? That is the plum job. I’m sure like JLM they kick it back to the manager.

  71. JLM

    .Never met one. Limited experience on my end, possibly?JLMwww.themusingsofthebigredca…

  72. cavepainting

    I think the difference may be that there are more Moms who are heroes not treated like one. There is a gap there between “performance” – a bad word to use probably in this context – and recognition which is glaring.

  73. creative group

    LE:the duties of a Father, Dad and hopefully a Mentor is a responsibility that will always go unsung and unrewarded. The difference is reverence and acknowledgement between Mothers Day and Fathers Day is a prime example. The HHS and US Census list single Mothers to Single Dad nine out of ten when using the classification of single parent. It is highlighted by those who know because they experienced it.The duties of a Dad being patted on the back is like asking a parent to babysit their own children. YOU CAN’T BABYSIT YOUR OWN CHILDREN!#Termlimits#Unequivocally&UnapologeticallyIndependent#TrueIndependent

  74. LE

    Look they are small men basically and eking out a living the only way they know how to. If they were smarter, had a better upbringing, or more ambition, or more luck (have I covered everything?) they would then be competition for how I make a living. Who needs that? Let them stay at that station in life and have that tax on society by charging people who can afford to pay it (optionally of course). If they didn’t earn a living that way, what would they do? Create more crime?Would you want to be a doorman? I wouldn’t.

  75. awaldstein

    This is a worthy topic.Let me respond that possibly you are correct but I know that I don’t need to be an ass to succeed. Being tough and being an ass are and should be mutually exclusive.

  76. awaldstein

    I honestly have no idea what you are saying.

  77. LE

    You say “people give a shit and are emphathetic”.Is say but “companies are made up of people who don’t give a shit by the actions that they take”.What’s so hard to understand? Personally people put themselves out as “good people”. But then they work in a job and their actions are often self serving and centered around what is good for them and the company so they can keep their job.

  78. PhilipSugar

    You do not need to be an ass to succeed.Actually you have that ass backwards :-)You need to not become an ass when you succeed.That is harder. When you are a nobody, nobody will tolerate you showing your ass. When you are a big shot, people will actually kiss it when you show it.

  79. awaldstein

    Now I understand and disagree 100%.

  80. cavepainting

    People are people. Self interest is the biggest driver there is and no one is beyond or above doing despicable things… But, there is also a goodness in people that comes out every so often, making you wish it was more frequent and more prevalent. There is great value to focusing on this inherent goodness vs. a selfish and narcissistic society. Reality has both aspects contained in it.The level of ego – which really drives the self-centric behavior – in people varies quite a bit, and even within the same person, it changes a lot over time and across circumstances. What people position themselves as or what others perceive them as really does not matter. It is what happens in their hearts and the “intent” behind any action.

  81. awaldstein

    Love this!

  82. PhilipSugar

    Ok……here is my rationale.I actually valet park cars.Yup! Even as a CEO. I belong to the Knights of Columbus which is a Catholic Charity where every penny we make goes to widows and orphans. (It was formed when the the Italians and Irish used to lose a lot of fathers due to labor)We park for the University of Delaware. They give us some donation and free admission and we valet park the high end cars for $20 (we don’t get that) at the basketball and football games.All tips go right into a tip jar. Who better to park your big 600 Series Benz than a bunch of old guys for charity?I figure I park about 60 to 100 cars per hour. (of course we have the best spots)I know it is charity and I do it for camaraderie but I figure I clear about $500 a night even with the two buck chucks. Maybe more when somebody puts in a big bill into the jar on the way in, but I’m not counting that.

  83. ShanaC


  84. Vendita Auto

    ? perhaps we can discuss this over tea in your future ! I blame royal mail.

  85. PhilipSugar

    Yes. But here is the thing: I’d rather pay people a living wage and then tip a bit. That is what happens in most parts of the world (I traveled 50k miles in the last 30 days)But it does not happen in the U.S. That waiter makes $2.13 an hour. Yup that is right. Less than $20 a day.So the reason for the mandatory tip on a six top is that if you decide to not tip the waiter because you think it is ridiculous to give somebody a $54 tip on a $300 dinner.They both actually achieve the same thing. In most parts of the world that dinner would be $350. But you would not tip very much.As LE points out it can be a trap for the waiter in the U.S. in a perverse way. A great waiter might make $50/hr in tips which is hard to give up.Like all things there is a ton of nuance.