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Tag: marriage

Pitching a VC is a Romantic Affair

processI swear the title has nothing to do with Valentine’s Day :-).

One question that comes up often when people find out that I work at a venture capital firm is “how do venture capital firms decide what they invest in?” How is it that the same firms that pick wildly successful companies like Google and Facebook can also pick the “what were they thinking” duds?

People are oftentimes surprised to hear my answer. The truth is that while there is a general perception that there is some kind of a secret formula with objective criteria and analysis, the idea that the VC decision process is a purely objective and analytical affair is plain wrong.

The analogy I like to give is that getting an investment from a venture capital firm is a lot like marriage. Yes, there are obviously objective criteria which inform the decision – is the potential spouse/founding team trustworthy? Do we share the same goals in life (i.e. kids vs no-kids or size of outcome/industry)? Are we at the right stage (i.e. ready for commitment or point in lifecycle of the startup)? What do friends/industry experts/customers say? Can both parties add meaningful value to both sides?

But, like with marriage, there is a significant emotional component to the decision as well which can’t be ignored. Things like personal chemistry or whether or not the investors involved are enchanted/charmed by the founding team and the business idea play an enormous role. An investor who doesn’t have a specific qualm about a startup but who just isn’t feeling “the love” will not push a deal forward, no matter how great of a business case is being made. Why? The business model of most venture capital firms forces individual investors to only commit to a handful of companies that they truly can commit to and stick with through thick and through thin (and, rest assured, all companies have bad times they have to survive through).

Of course, let it be clear: any decent investor who “falls in love” with a startup and later uncovers objective reasons to not go forward will fall rapidly out of love with a company – lest someone reading this gets the idea that its all about the emotions. But the lesson to take away here for entrepreneurs is that while its absolutely critical to nail the objective criteria (things like business model, team composition, market size, go-to-market strategy, product/service quality, technology, etc) – that is, after all, the bread and butter of any good startup – don’t forget that, just as with most sales/business deals, the VC process has a huge emotional piece. So:

  • Have high EQ when you approach a conversation with a VC you are interested in: fit the message to the person and if you see the interest/reaction start to go the wrong way, shift gears and adapt the message (although I should remind people to not lie – that never ends well for either party)
  • Know the VCs you are presenting to: its impossible to precisely predict what combination of things will really click with a person, but you can get hints of that by doing your research. At the minimum, it means reading the backgrounds/profiles of the individuals you will be meeting with to understand what they are interested in and what sorts of themes they tend to look for. But, keep in mind to also pay attention to what things might turn them off (i.e. if they were involved with a bad eCommerce deal and you are trying to pitch a eCommerce company, make sure your story/pitch is *very* different).
  • Talk with a lot of VCs and expect to do this for every round of financing: as with romance, you can’t expect to click with everyone, not to mention, as with romance, things can always change the second or third time around. There are definitely cases where entrepreneurs have had very successful relationships with investors they never expected in their first set of pitches as well as VCs who have passed on earlier rounds of investment (no chemistry the first time) only to eagerly participate in follow-on investments.

(Image credit – 3Forward)

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Love Consultants

image They say that “All is fair in love and war.” So, if consultants can help businesses with all sorts of issues, why not help you. Personally. With your love life?

Well, they do. In Japan. (hat tip: V Liu) Enter companies like ACYours, which “provides counseling to people in unhappy marriages”

What kind of counseling?

“[ACYours] deals with some 6000 couples a year. Of these, 300 are truly desperate: the husband wants to leave the wife and the wife doesn’t want to go, or vice versa. Counseling is not enough. As to whether he breaks the couple up or helps them stay together, it all depends on who’s paying the bill.”

With Japanese society moving past traditional gender roles, it seems that an entire industry has sprang up, built around helping men/women with troubling relationships. The article discusses multiple scenarios, but they seem to fall into three major categories:

  1. Using a professional seducer to catch a straying spouse in the act
  2. Using a professional seducer to “encourage” a spouse/significant other to stray (to give you grounds for a breakup)
  3. Getting back together with an ex by:
    • (possibly) hiring a professional seducer to sabotage the ex’s current relationship
    • Giving the client a personality/appearance makeover so that he/she can keep the ex’s interest

The article has some juicy tidbits about the lives of these professional seducers and the services these agencies provide. For instance, how much can a professional seducer make?

“Kyoko’s work is not prostitution, as no money is handed over. She earns a basic salary of £2,000-2,500 a month [$48-60K/year], plus bonuses when a case is successful, which they usually are. She can earn up to £5,000 a month [$120K/year]”

Impressive. But, what about your own personal life? How does one maintain “work-life balance” with such a job? Kyoko apparently lies to her boyfriend who thinks she’s merely a secretary. And, what about those professional seducers who are married?

“Takashi has been doing this job for five years. His wife doesn’t like it, “but the salary is high, so she doesn’t complain”. He works on three or four cases at a time; he can make in excess of £3,500 a month [$84K/year]. His five-year-old son thinks he’s a private eye who catches bad guys.”

Image credit

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Marriage Prediction Market

File this under the list of things which are probably practical but also somewhat offensive and not easily implementable but fun to discuss anywaysmarriage futures.

Prediction markets allow the application of market forces to make general predictions. Take the example of the Bush v. Kerry election — InTrade allowed individuals to buy and sell what are essentially “shares” (in a stocks sense) of Bush or Kerry winning the election. The basic idea is that the stock will pay out $10 if Bush wins, and $0 if Kerry wins, but that the shares cost money to buy. Thanks to investors buying and selling, the price of the “share” will thus fluctuate depending on what the market thinks is the actual probability of Bush or Kerry winning. If it is priced at $5, then the market believes there’s a 50% chance that Bush will win. If it is priced at $9.90, then the market believes that there’s a 99% chance that Bush will win.

These markets have been applied by InTrade to make (fairly accurate) predictions on political events and have even been applied by companies such as Hewlett Packard to improve forecasting and product development.

A quick look will show that these can be applied to just about anything — maybe even predicting how long a marriage will last? I’m not quite sure how this would work — but the gist of the idea I got is that for a new couple about to get married, friends and loved ones would implement a prediction market, whereby an appreciating asset (say money in a bank, or a bond, or a stock or annuity or something) would pay off after 50 years or at the divorce proceeding. People would then buy/sell the asset. For simplicity’s sake, lets say the asset is currently worth $10, and will be appreciate by $1 every year. If the going price is $15, then the “market” believes the marriage will only last 5 years. If the going price is $40, then the market believes that the marriage will last 30 years.

Now if the market is run anonymously, then this would be an effective way to communicate to an engaged (or thinking about it) couple on what everyone believes is the prospects of their marriage without having to tell them on a personal basis. This can help inform friends/loved ones (how nice of a gift to buy) as well as the couple themselves (should they get married).

What becomes interesting are the theoretical implications — will people who are shorting try to sabotage the marriage? Will people who have them in the long haul try to force the couple to stay together?

Would anyone be dorky enough and have friends open enough to do this?

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