Some thoughts on VCs hiring journalists/PR/media staffers on their teams

July 18, 2013

Dan Primack wrote an int’g article yesterday on Fortune titled “VCs and entrepreneurial ego“, to discuss his views on why a growing numbers of VCs are getting so active in the media/PR/journalism game, and in fact spending millions of dollars (over the life of a fund) to bring on-board specialists hired to do the same for them.

Below are my ramblings on the topic. Obviously opinions don’t hold true for all investors, all entrepreneurs, or all media as well. There will always be exceptions, quite a few of them actually, in a highly dynamic ecosystem.

VCs sometimes think entrepreneurs know a lot about fundraising and investors, or that they spend a lot of time thinking about investors. I somehow doubt that.

Reality is that entrepreneurs, esp first time entrepreneurs  and those that we consider to be awesome product guys starting companies, are often too busy thinking about their own ideas, the spaces they want to build businesses in, competition, next generation technologies, recruitment/hiring etc; and spend little time thinking about VCs, angels, investment dynamics and the like on a day to day basis. In my humble opinion when time comes for them to raise capital, their thought process likely goes as follows:

Priority 1: I want the most connected investors to invest in my company. After all, I want people who can connect me to customers, partners, buyers at the highest levels

Priority 2: I want the smartest people on my Board. Those who can help me with strategy, and also educate me about trends they are observing because I will likely have have less time for that

Priority 3: I want people who can help attract great talent. How can I hire that SVP out of Ebay or Google or Facebook

Priority 4: I want people whose name being associated with me, and whose networks, can prevent dilution for me in future rounds by getting me higher pre- money valuations (at least in early rounds where cost of capital remains high)

For many entrepreneurs some names are no-brainers, e.g. Mike Moritz, John Doer, Vinod Khosla etc. But that elite list is relatively short because those guys have consistently delivered billion dollar companies over decades (and in recognition some also sit on big public company boards they didn’t even invest in). After that elite list, there is a relatively sharp drop off after that. There are investors I know who may have returned hundreds of millions of dollars to their LPs in the past few years but young student entrepreneurs building the next Facebook have never really heard of them – unless of course they hover around TechCrunch all the time, and even then its doubtful.

So how do VCs get entrepreneurs to believe that we can do all of the above for them? There are a few ways:

  1. Do great deals so you get coronated as a king in the spaces you invest in. Unfortunately a bit of a chicken and egg problem for most new investors, though some get lucky early in their careers.
  2. Be a part of an already super well-known firm so your biz card goes further than you. This might be one reason why some big name firms have revolving doors for great people going in and out as investors.
  3. Be so present in media that you have the equivalent of a high SEO/SEM/Klout score (choose your favorite – you know what I mean). And we know how much harder it is to get attention now than it was in 2000. Just as an example, banner ads may have worked well to advertise your company in circa 2000 but have much less impact now. Occasional appearances in major publications like WSJ/Forbes etc may have worked 5-10 years ago but don’t have as much impact any more given how much noise exists in the media. Sensing above, VCs started occasional blogging in the middle of last decade to share their views a bit more publicly but now even that gets lost in the clutter. So now, in order to create a large enough (and persistent) signal amidst all the media clutter/noise, you have to be more social, subtle, indirect, personable, etc. You have to use Twitter, Tumbler, Facebook, Snapchat, show up in news feeds, get on Hackernews etc. But all that takes a lot of work and while 140 chars on twitter may be easy to write a few times a week, the rest starts to look like a lot of work. Hence, IMHO, VCs are increasingly bringing on-board full-time media folk to create more and higher frequency signal, to get themselves placed at the center of every article written about spaces they invest in, and to have their companies listed as examples whenever a space gets discussed. It is to do work that many VCs are actually not very good at, and probably don’t really find very interesting, but needs to be done to win at their actual day jobs. Result: they outsource it to the best person they can find for the job.

Anyways…at least thats what I think. And I also think there is nothing wrong with it. Its good for the entrepreneurs and for the startup ecosystem to have more thoughtful views out there, to have more transparency, and for investors to be more ‘approachable’. Entrepreneurs will hopefully develop a nose to sniff out the truth from the bullshit that aggressive PR sometimes brings with it.

Reality is that at least for now VCs are as much in the marketing/sales business as any other business. Several ex-VCs tell me what they were most surprised by (and often hated) most about their jobs was that sales-y aspect of it. I actually don’t mind that part of my job. In fact, I like it. Marketing to entrepreneurs, marketing to other VCs & potential investors for our portfolio companies, marketing to corporate partners & buyers of our companies, marketing to LPs, even marketing to our families/friends when we are less present than ideal. If it helps my portfolio companies, I am game. That’s just how it goes, and we all roll with it. And compete.

Steven Pinker on mind and mass media: Manage your time to manage your smarts

June 14, 2010

This article by Steven Pinker in NY Times is quite likely the most ‘personally useful’ piece I have read in a while. I was starting to think that maybe I am mad that I occupy a substantial amount of my time with new media that presents more headlines to me and less substance. I wondered if there was a balance to be struck or if it was a blackhole of ADD that one could not pull oneself out of. I was a blackberry addict before I started blogging, and now I am active on facebook and twitter as well.

Well, Pinker does not give me a formula for managing this but at least its clear that (a) I won’t die hyperventilating due to a massive information attack, (b) my brain is not getting damaged (definitely not irreparably) by my engagement with fast-feed media, (c) if I can strike a good balance in how I spend my time I can be quite productive, and (d) if I want to be an expert in (at least good at) something, I need to read more of it…Awesome stuff.

Op-Ed Contributor

Mind Over Mass Media

Published: June 10, 2010

Truro, Mass.

NEW forms of media have always caused moral panics: the printing press, newspapers, paperbacks and television were all once denounced as threats to their consumers’ brainpower and moral fiber.

So too with electronic technologies. PowerPoint, we’re told, is reducing discourse to bullet points. Search engines lower our intelligence, encouraging us to skim on the surface of knowledge rather than dive to its depths. Twitter is shrinking our attention spans.

But such panics often fail basic reality checks. When comic books were accused of turning juveniles into delinquents in the 1950s, crime was falling to record lows, just as the denunciations of video games in the 1990s coincided with the great American crime decline. The decades of television, transistor radios and rock videos were also decades in which I.Q. scores rose continuously.

For a reality check today, take the state of science, which demands high levels of brainwork and is measured by clear benchmarks of discovery. These days scientists are never far from their e-mail, rarely touch paper and cannot lecture without PowerPoint. If electronic media were hazardous to intelligence, the quality of science would be plummeting. Yet discoveries are multiplying like fruit flies, and progress is dizzying. Other activities in the life of the mind, like philosophy, history and cultural criticism, are likewise flourishing, as anyone who has lost a morning of work to the Web site Arts & Letters Daily can attest.

Critics of new media sometimes use science itself to press their case, citing research that shows how “experience can change the brain.” But cognitive neuroscientists roll their eyes at such talk. Yes, every time we learn a fact or skill the wiring of the brain changes; it’s not as if the information is stored in the pancreas. But the existence of neural plasticity does not mean the brain is a blob of clay pounded into shape by experience.

Experience does not revamp the basic information-processing capacities of the brain. Speed-reading programs have long claimed to do just that, but the verdict was rendered by Woody Allen after he read “War and Peace” in one sitting: “It was about Russia.” Genuine multitasking, too, has been exposed as a myth, not just by laboratory studies but by the familiar sight of an S.U.V. undulating between lanes as the driver cuts deals on his cellphone.

Moreover, as the psychologists Christopher Chabris and Daniel Simons show in their new book “The Invisible Gorilla: And Other Ways Our Intuitions Deceive Us,” the effects of experience are highly specific to the experiences themselves. If you train people to do one thing (recognize shapes, solve math puzzles, find hidden words), they get better at doing that thing, but almost nothing else. Music doesn’t make you better at math, conjugating Latin doesn’t make you more logical, brain-training games don’t make you smarter. Accomplished people don’t bulk up their brains with intellectual calisthenics; they immerse themselves in their fields. Novelists read lots of novels, scientists read lots of science.

The effects of consuming electronic media are also likely to be far more limited than the panic implies. Media critics write as if the brain takes on the qualities of whatever it consumes, the informational equivalent of “you are what you eat.” As with primitive peoples who believe that eating fierce animals will make them fierce, they assume that watching quick cuts in rock videos turns your mental life into quick cuts or that reading bullet points and Twitter postings turns your thoughts into bullet points and Twitter postings.

Yes, the constant arrival of information packets can be distracting or addictive, especially to people with attention deficit disorder. But distraction is not a new phenomenon. The solution is not to bemoan technology but to develop strategies of self-control, as we do with every other temptation in life. Turn off e-mail or Twitter when you work, put away your Blackberry at dinner time, ask your spouse to call you to bed at a designated hour.

And to encourage intellectual depth, don’t rail at PowerPoint or Google. It’s not as if habits of deep reflection, thorough research and rigorous reasoning ever came naturally to people. They must be acquired in special institutions, which we call universities, and maintained with constant upkeep, which we call analysis, criticism and debate. They are not granted by propping a heavy encyclopedia on your lap, nor are they taken away by efficient access to information on the Internet.

The new media have caught on for a reason. Knowledge is increasing exponentially; human brainpower and waking hours are not. Fortunately, the Internet and information technologies are helping us manage, search and retrieve our collective intellectual output at different scales, from Twitter and previews to e-books and online encyclopedias. Far from making us stupid, these technologies are the only things that will keep us smart.

Steven Pinker, a professor of psychology at Harvard, is the author of “The Stuff of Thought.”