A twitter theme I have noticed of late in Valley VC tweets is the self-deprecating VC tweet, where VCs make fun of themselves, for wearing Patagonia vests (!), or spouting philosophy, or the way they interact with founders.
Take these two tweets.
Incidentally both the tweeters above, Matt Turck from First Mark Capital, and Turner Novak from Banana Capital (yes, that is the name) do this a fair bit. They arent the only ones but yes, they are a tad more regular than others on this theme (e.g., Logan Bartlett is another. Do share if you think there is any other regular tweeters of self-deprecating VC tweets).
VCs are trying to reset the traditional VC-founder relationship norms
A clear reason to do this is to get (younger) founders to vibe with you, and to get founders to see you as some one who is ‘fluent’ – i use fluency in the sense that Alex Danco refers to i.e., familiarity with genre conventions. It is also an attempt to be level with the founder and be seen as one of the tribe.
Why is this important?
The VC-founder relationship is a complex one. It is fairly aligned in incentives, and hence you would think there would be a lot more friendliness or vibe. However, the nature of each other’s roles, and the immense power the VC has at your fundraising moment, can mean that founders can view the VC as from ‘the other side / tribe’. The traditional view, and notion, one held by founders as well as outside observers is seeing the VC as more powerful than the founder (in general that is; of course Musk and Zuck tower over any VC).
The notion of power imbalance is reflected in the traditional twitter avatar of the VC as thought leader, spouting clever takes on product, funding and trends. It is a kind of talking down, though the language is very balanced / diplomatic (usually). Yes, this is sales for the VC is pitching himself or herself to founders, but the theatre of thought leadership means that it is not seen as sales but marketing.
Thus when we see tweets like that of Matt Turck or Turner Novak, it is a kind of verbal bomb that blows up these existing genre conventions. The VC making fun of himself / herself, playing the role of the jester, is an inversion of the traditional twitter theme (twitter is the playground typically where VCs and founders do these performative stunts). Thus the VC is saying – look at me, I am not like the other VCs who talk down to you; I am like you, just on the other side. I am cool, bruh!
The power equation is getting reset in favour of founders
It is also interesting that these genre-busting twitter themes / memes are emerging when there is actually a perceptible shift in power from the VC to the founder. This is demonstrated in the pace of funding, the rise of crossover funds some of whom are investing at seed / A, the emergence of rolling funds through which founders can back founders etc. It is never ever been easier to raise than now. Also the evolution of startups imcluding the proliferation of easy to access tribal knowledge of building for scale on twitter, blogs, newsletters, podcasts etc., mean that we have a large class of new founders familiar or fluent with founding + scaling. VCs are struggling to keep pace with deal flow as well as fundraising aggression from founders.
Another factor contributing to the resetting of power equations is that rapid scaling helps founders unlock value much much faster than VCs. If a founder can get to PMF in 12-15 months and raise a Series A, then they can pay themselves market salaries. In another 12-15m with a Series B, they can paying themselves the kind of salaries that senior management in corporate earns. They can do secondaries to get some liquidity and use it for angel investing, some of which stakes get bought over by later stage funds giving them quick returns. VCs can get larger returns – which will again pale in relation to the exits that successful founders make – only when the fund closes in 8-10 years.
The relative economics have got wonkier by the years, and now it looks particularly loaded in favour of founding. Is it any surprise then that we are seeing a large number of exits by VC Analysts and Associates into growth startups or founding one themselves? Added to this is the continual celebration of founding up and founders by VCs themselves. The more the celebration of founding and tom-tomming of founders, and the continuous creation of such communication to stress founder-friendliness, the more it is an obvious signal to Analysts and Associates that being a founder is higher on both the reward and prestige curve.
VCs democratized VC. So what is next for VCs?
Venture is actually at an interesting point. What was once the preserve of a small elite group of white men in Silicon Valley has got democratized successfully. What they did is being done around the globe, and also by people who are not traditional VCs – crossover funds, angel networks, founders etc. Everybody is doing VC now. So what should core VCs do?
There have been some interesting reflections on this – including the vanishing middle and adopting a barbell strategy – and I dont have very much to add to them. I do agree with many of the points they make. One point I would make is that we do need a strategy to self-select talent into VC. And there I believe here we VCs havent been as strategic. We have focused on getting two broad types of talent at the junior levels – either high quality raw material (elite undergrad / Bchool / MBB GS types) or those from the founding side who have good ‘ins’ into founders. A small minority of these may become students of early stage investing, and develop a desire to continue and hone their craft – doing the same thing day on day, year on year, but trying to gradually improve every time (I joke that the best movie to watch for aspiring VCs is Jiro Dreams of Sushi, where Jiro does much the same everyday his entire life, but eventually achieving perfection in his work.)
What we need to do perhaps is focus on getting venture nerds – the kind of person who is a student of this professsion, who enjoys reading its history, studies its arcana, and passionately communicates his or her interest and critically takes pride in it – into VC. We need to self-select these folks – perhaps through creating great content on venture investing and communicating it. Venture is a craft, and it is important we celebrate and take pride in it.
I came to the world of venture from media and education. In both these fields I noticed that practitioners – be it those on the writing / teaching or business sides – took pride in their field’s history. Past practitioners are revered, and their craft and contributions are celebrated and studied. Perhaps those professions may over do it perhaps, but clearly any half-decent professional in these fields has awareness of the traditions of the field, and its elderstatesmen / women.
Venture is interesting in that you can operate here without any clue of the past, either traditions or practitioners. While there is no dissing of the past, there is a casual disregard however – a feeling that it is just not relevant. I suppose it comes from the fact that venture lives in the future, and excessive disregard for the past can constrain / lead you astray. Still, I would hold that there is a lot we can learn from the past masters – Don Valentine, Arthur Rock, Tom Perkins etc. – as well from the past histories of our profession.