How to Talk About Companies
How to discuss companies so that your Partners pay attention
After a few fairly strategic posts, we thought we’d bring this one way down to Earth and talk about something very practical.
One of the things you hopefully are doing all the time as a newer VC is talking to your Partners about companies that you are seeing. The tough part of the job is that you are not a check-writer, so you need to get someone else excited about an opportunity to pursue it. Because of this, you need to get really good at talking about companies in a way that a) gets a Partner’s attention b) maintains your credibility.
The hard part about a) is that you need to be able to distill a company to a few sentences to really grab the attention of your colleagues. Most Partners at VC firms (myself included) have very short attention spans and are constantly prioritizing inputs to figure out what to pay attention to. You get some of their attention as a member of the team but can lose it in an instant if you start rambling or are unclear. The hard part about b) is that you need to make the company seem exciting without giving up your sense of objectivity. You also want to be known as someone who has good signal to noise, which further helps Partners feel like they want to pay attention to what you have to say. The bad scenario is if a Partner starts to lose trust in you, either because you are indiscriminately throwing stuff against the wall or because you seem to overly promote a deal.
So, here are a couple thoughts on how to talk about companies appropriately.
First, know the context and timing expectations and respect those norms. There are probably two general opportunities to talk about companies. One will be at an investment team meeting that is highly structured around deal sharing. The other will be a more casual setting like a 1:1. In the structured setting, there will be some norms established by the other members of the team in terms of how much air time you can take and what kind of feedback people seek. Firms differ along these lines. Some firms are very focused on volume and want to process a lot of deals very quickly. Some expect the investment team meeting to be tight and focused about things that are higher priority. If you feel like you don’t have an opportunity to more casually seek feedback on companies that you are unsure about, try to set up a 1:1 with a Partner or mentor who is willing to more loosely banter about companies that are further up the funnel.
Second, prepare. Partners might haphazardly start talking about companies in a seemingly random way. That won’t work for you. You want to bring a list of companies that you are ready to chat about and have the list prioritized. The air time left for you might be long or it might be short, so be prepared to flex up or down depending on the situation. Think about how you want to discuss each deal and maybe even practice talking about them on your own so you seem like you have your shit together.
Third, “answer first”. I was trained early in my career to be “answer first” in most professional communication. In some situations, you can tell a meandering story and narrative, but in this sort of setting, you need to get to the punch line. In a deal discussion, that usually starts with why you are talking about this deal, and anticipating what is likely to be the obvious reaction of the group. An “answer first” statement can be many things, such as:
“This company is super interesting and right in our sweet spot. They are deep in their process, so if this is interesting, we’ll have to move pretty quick.”
“This company is much earlier than our typical deal, but I hear the founder is A+ and so I think we should be actively tracking it”
“This company seems to have a lot of traction, but I need some help understanding whether this is a good market opportunity or not”
This company is crazy, but maybe in a good way. Let me describe it for 30 seconds, and if no one else thinks it is interesting, we can move on”
Answer first prepares the mind for what is coming next and gives you the best chance of keeping your team’s attention and getting the feedback you want.
Fourth, share the highlights and warts. Don’t waste time on the mundane stuff. You don’t want to give a 5 minute soliloquy about every company you bring up. Hopefully, in 30-60 seconds you can talk about the most relevant sub-set of:
What the company/product does
The 2-3 datapoints that seem unusually impressive or are necessary to understand the business
Who the team is
Details on the financing
Whether there is any weird detail that would give most investors pause (eg: unusual founder dynamics, unusual ownership details, other notable warts)
By definition, you can’t give all six of these points air time, so you will have to prioritize the stuff that is important. I personally usually will lead with either the background of the founders or what the company does. This helps to orient the rest of the information. Then you quickly hit a couple of the highlights and pause. Let the rest of your team ask questions and express interest in potentially taking a meeting.
Fifth, assert yourself appropriately. There will probably be times when you share the details about a company and you get tons of pushback. Most of the time, you should just accept it and move on. There are many reasons why an investor might not get excited about a company and you don’t want to thoroughly prosecute each one. But when it’s a situation where you do think the team is missing something, you should say so respectfully. Don’t do it too often, but make it notable so that it leaves some sort of an impression on your Partners. That way, if it turns out the company ends up being successful or just raises a round from notable investors, there is a chance that your Partners will remember and will pay more attention to your signal next time.
Finally, be careful about over-selling heat. On one hand, knowing that a competitor is chasing a deal brings out the FOMO in almost everyone. But even if it’s true, VC’s are sort of self-loathing about it. While being good at chasing heat is a strength, you don’t want to be known for only getting excited about a deal because someone else is interested. If your Partners just think that you chase heat, the deals you bring forward may still get attention, but they are less likely to think of you as a peer that can influence their thinking.