A Fairy Tale of Mountain View

From the Series, "Down and Out in Silicon Valley" by,  Alan Wilensky.

It was a silent 4:00PM in Mountain View, CA, the artificial city of the Silicon Peninsula. I ended my funding pitch with a quote from Jonathan Swift. I had no idea it would be so poorly received:

“When a true genius enters the world, you may know him by this sign: the Dunces are all aligned in confederacy against him.”

So I quoted with a smile at the VC meeting where my baby, ThruDispatch, was pitched.

One of  the Senior Partners hurled a stentorian barb in my direction.”You are calling yourself a genius and we are the Dunces? ”

“Not at all. I am merely saying that many valley equity investors seem to be throwing capital at just so many duplicate social media and video sharing plans”, I said, almost ready to mace these suits if it wasn’t for the consequences. Don't they see the mess in cloned business models ruining this wonderful valley?

One of the Juniors looked at me with withering scorn and vomited his invective in my general direction, “Everyone in this room makes seven figures, we are placing the next sub-round in Facebook Apps…good day Mr. Wilensky and, good luck with your….plan”.

As I left, I passed a famous 'Silicon Valley undertaker',  a reaper of VC capital, walking confidently into the conference room. He had a track record of raising capital and burning down (so to speak) any number of here and gone startups, few of which ever became profitable. Indeed, he seemed more notorious for NOT making equity pay. What was his secret?

“How do you do it?”. I hissed, “how, how?” He barely glanced backwards at me as his Patek Philippe Minute Repeating watch chimed a quarter past the hour.

“I hire friends, I am hired by friends, I make sure that the first order of business when receiving a placement of equity is to find a way to compensate the VC partners", he said, his suit was impeccable.

Hmm, leather sandals with a suit in such Bay Area  cold.

Clammy and faint, I staggered towards the elevator - Ping….Bing…bong..softer as the conference room door clicked closed….fainter voices from behind…”hey guys…good to see you again….(Ping!)

It was 4:30PM in Mountainview.

Comments

[Alex]

Definitely I would have left out the quote for another occasion, if ever. Having said that I'm very thankful for your honesty, as yours and others experiences are very welcomed.

This story doesn't surprise me at all. One thing I've learned from my readings is that VCs have a certain percentage of equity they can burn without having to show any results for, and it's all good as long as they look good among their peers, since they all do the same. Therefore, this fellow you talk about was simply doing his part. They possibly knew he might not produce sure value at the end, but he was among peers, so who cares.

VCs seem to put a lot of emphasis on appearances, and that simply doesn't add any value to a start-up. Hence, VCs cannot be considered a partner in any way, shape or form. They'll be the first ones to escape and leave you holding the dynamite stick they themselves convinced you in the first place to light up. Thus, to act on something a VC says for the simply reason they said it goes against your best interests.

Bottom line, don't get in business with a VC unless you really, really (and I mean really) have to. If you do, don't ever ask for so much money that you'll be required to give up your controlling stake. And whatever amount you get, use it conservatively. If you're really good at what you're doing, you should be able to execute either alone or with a handful of very skill individuals. Throwing bodies to a problem will always, always make it worst.