I’m getting sick of the bullshit

I love the start-up world. I love working with founders and young companies. I love the excitement of working on business ideas that are new and different. I love seeing the success that often comes from this hard work. I’ve never before in my professional life seen a time of such innovation and creativity. At Foundry we see more business plans now than we ever have. And what’s more, more of those business plans are really interesting (and fundable).

It goes without saying that I love the business of venture capital. I love helping entrepreneurs work on their ideas. And I love helping companies figure out how to become as successful as possible. I love the challenge of trying to figure out the next great investment and the energy that comes from working with amazing and creative people.

But I’m worried and I wanted to get it out there.

I’m worried that in all the hype, in all the “we launched our company” events, and “we changed our name again” parties, and “we redid our website – come celebrate!” shindigs, and the SXSW parties, and the hoodies, and everyone who is “killing it!”, that we’re losing sight a bit of the really hard work that is creating and building a business.

I’m worried that in offering term sheets after a single 60 minute meeting, and in pricing early stage deals like they were already late stage successes and most egregiously by constantly running around self promoting and self aggrandizing, VCs are falling prey to a cult of personality about themselves and forgetting that their jobs are to help companies be successful. And as far as I can tell, very few seem to believe what I hold as a fundamental tenet of the venture industry, which is that entrepreneurs come first, not VCs.

Don’t get me wrong. I enjoy a good party (not to mention a good hoodie!). And I recognize the reasons to celebrate important company milestones and in going to industry events like CES and SXSW. And in bringing a bunch of customers, prospects and partners together at a social event. But I feel like I’m hearing less of “did you see XYX company’s great new product” and more “are you going to so and so’s party at ad:tech:”. I’m not exaggerating when I tell you that I’ve received 30 invites to SXSW parties but not a single invite to a panel session at the conference. And when someone tells me that someone is “killing it” (a phrase I think I hear 10 times a day these days), more often than not they mean “doing the job they were hired for”.

I hear more and more stories about companies making a pitch to a VC and having an offer before they walk out of the room (entrepreneurs: do you really want to work with someone who puts so little thought into their investment process that they would do this?). And the way VCs talk about the companies they work with has clearly shifted to be substantially more VC centric (lots of use of “I” and taking credit for company success as something they themselves created rather than participated in or helped with). And, of course, much has been written about rising valuations and the potential risk this poses to particularly early stage companies. Not to mention the increasing popularity of the “party round” where many VCs participate but no one actually takes ownership (also not good for entrepreneurs, in my opinion).

And it feels like a lot of this is for external show. I’m cool; I run a shit hot start-up; I saw [insert big name technorati here] at our company party last night. I’m in such and such company with [long list of other investors] and doesn’t that make me awesome. I’m awesome I’m awesome – look at me!! And not really about building great products or great businesses.

So by all means, lets keep having fun. But let’s also remember that the goal is to build great companies. And please – my fellow venture capitalists – can we take it down a few notches and remember that our role is a supporting one. If you wanted to be the star you should have become an entrepreneur.

  • http://www.venturestab.com/ Jerome Gentolia

    Thanks! Hopefully this will bring back realistic perspective to some. It’s all about building a business and not hype! I can relate, I fell into the hype trap myself and learned a  painful valuable lesson. 

  • http://www.aaronklein.com/ Aaron Klein

    This is really true. It’s tempting to do those things that have no relevance or impact on building a great company out of a fear that others won’t perceive that you’re building a great company if you don’t do them.

    So far, I’m resisting that peer pressure. :)

  • Greg Berry

    Nice one, Seth.  Couldn’t agree more.  I’ve always been partial to the entrepreneurs and VCs who do their work, and let the results speak for themselves.  Keep up the good work.

  • http://tech.mn Jeff Pesek

    Hey Seth, love the candor and can see where you’re coming from.  Is the phrase “If you wanted to be the star you should have become an entrepreneur,” is directed at anyone/firm in particular?

    As in, what VC’s do this?

    Hope all is well in CO.

    • http://www.sethlevine.com sethlevine

      I have a few ideas, but you know me Jeff. I don’t like to call people on the carpet publicly. At least not if I can help it!

  • http://www.crowngroupadvisors.com/ Drake Pruitt

    Great post Steve. VCs and entrepreneurs are optimists by nature. Combining the two and fueling with money…. well. Further, the hyper growth of new market categories, combined with a very healthy stores of LP capital is accelerating the combustion. My guess is that it will burn brightly until the $ fuel runs out.

    Meanwhile, where’d you get that hoodie?

  • http://www.facebook.com/profile.php?id=593790311 facebook-593790311

    Seth, don’t blame the player, blame the game. 

  • dshen

    “entrepreneurs: do you really want to work with someone who puts so little thought into their investment process that they would do this?”
    the lack of due diligence is really appalling, even at some minor level.

  • RedRookDigital

    A lot of the self-promoting froth is just that, froth. Anyone investing needs to go deeper than the bubbles to see what lies beneath. I don’t necessarily think a single meeting investment is an issue (provided both parties have done diligence beforehand), I would expect it to be the exception, not the rule.
    The assertion that you’re going to be huge because you bumped into Technorati X at a party is the worst kind of self delusional vanity metric. Breathing the same air doesn’t put you in the same league. Building a sustainable long term endeavour does. 

  • http://www.facebook.com/gelicapp Angelica Caporuscio

    Love this article!! We are building a start up and have been researching investors for 6 or 7 months now. We’ve always known that we would need investors and have been looking for VC’s that will make a good fit with our team. It’s important for a start up team to have an incredible support system, especially when you’re building a company that will potentially change the world. None of the shenanigans of bragging about a company they invested in, both parties need to be humble and be working together because they love what they do!

  • http://www.learnpipe.com John Dineen

    Great post Seth. Clearly written by a guy who calls a spade a spade. Next up ‘Beware of ASSHOLE VC’s’. Worth reading for the title alone – I’ll be swearing like a docker before I finish!

  • Francesco

    Couldn’t agree more. Getting right investors is costing us as much effort as building the product, even less than selling! I see no value on an investor that bring just money and does not challenge us. Or an investor giving a yes in an hour. Not mention parties or the “I am the man” attitude.

    Also I fail to see the urge to rush to VCs from the start and huge inflated valuations.
    I guess in Europe, where we are, the game is different.

  • http://profile.yahoo.com/B6C3I2AKQJAVONP7CIV6GWZ7AU Some

    Seth, if you want to take it down a notch, start at home.  Your video “I am a VC”, is that about building great companies?  Is that taking it down a notch?  Was that for “I’m cool” points?  Foundry group has earned a reputation as a “rock star” venture group.  Don’t get me wrong, you guys enjoy a well deserved reputation as being a first class venture group, but don’t be a hypocrite.  

    • http://www.sethlevine.com sethlevine

      i think of the video as a parody (certainly the words suggest that and that was clearly our intent). we work really hard to help our companies; are very clear about our priorities and about putting entrepreneurs first. but yes – i can understand why you might think the video crossed the line i’m talking about (and i am not surprised to see this comment). all that said, i don’t think this post along with the video (or the fact that i blog and tweet and speak at events, etc) makes me a hypocrite. hopefully at least a little self aware…

      • JamesHRH

        at least you didn’t force portfolio companies to participate.

        I am not a fan of the video. You guys are pros – home movies don’t resonate.

        • davidthomas8779

          Home movies? That video had production value. I loved the video because it made it very clear that the Foundry guys don’t take themselves seriously. The contrast is that if one follows their other social media or blogs, it’s very clear that they take what they do for a living seriously.

          I vote for more videos, especially with Feld “singing”

          • http://www.sethlevine.com sethlevine

            Trust me – you don’t want more Feld singing. I can personally attest to that.

            I had a ton of fun making that video. And hopefully most people took it for the parody that it was.

  • orbiter

    I was just talking to someone about this at our epic 0.7 release party; and just then in walks Arrington sporting one of our custom t-shirts under his button down, totally rocked it.  We are definitely posting that on our video wall at our SXSW “burn down the burn rate” meetup, only 500 invites though, so hustle and pick one up, it’s going to kill.

    • http://www.sethlevine.com sethlevine

      awesome! i’ll swing by your party, but i’ll need 10 invites – i go nowhere w/o my posse. keep me real, no?

      • http://blogmutt.com Scott Yates

        Come by our party, it will be held here in Boulder and it will be called “working.” This party is so cool that it will be going All. Week. Long.

        Great post, Seth, and to me the funniest part is that you point out that you’ve gotten party invitations, but no invitations to panels. 

        Most panels are such a time suck that normally you’d — rightly — complain about how many there are. The fact that the parties don’t even match up to that low bar for a good use of time is perhaps the saddest commentary of all.

    • http://twitter.com/hrcolors Jeff Coe

      That was very funny orbiter, would love to know who you are :)

  • aboer

    Essentially, you are saying that the Fear/Greed meter is once again pointing too far in the Greed direction.

    (Perspective: I am an entrepreneur who was part of the late 90’s dot com bubble–and currently running a non-VC funded tech company).

    I am not sorry to hear this. Here is why I think this is happening. 
    1. With hedge funds/Private Equity under increasing regulation and scrutiny, there are fewer places to invest to get outsized returns — which has lead to a new minor bubble in VC. This, in my mind is a good thing; VC bubbles are better than any other kind of bubble, since they tend to create lasting value and infrastructure for the economy (although not necessarily for VC investors).2. Companies today require much less money to fund to succeed or fail; this means the risks to VC’s are dropping while the reward structure seems to be more or less the same.  That makes VC a more attractive investment.  A resurgence of tech IPO’s (Facebook, GroupOn)  confirms an exit strategy. So this will create more demand for deals, and put more angel money back into the innovation economy (new “Paypal mafias” will emerge)3. Entrepreneurs are far more buttoned up and sophisticated today — due in no small part to the  influence of Cal style entrepreneurship (the customer driven development model, popularized by Steven Blank and others).  The Cal approach, if followed, takes a ton of risk out of the funding equation for entrepreneurs and VC’s. I haven’t met a successful entrepreneur lately who isn’t using this playbook in one form or another.If and when my company is ready to go out the door for funding this time around, we will have customers, an operating history, a working product, a proven revenue model, positive cash-flow, and the right team.  That is just much much more than we had when we were funded in 1998.  I recall that I also received an exploding term sheet back then after a 60 minute meeting — which I definitely did not “deserve” (happily, with a bit of luck and work we still managed to make that investment worthwhile.)

    • http://www.jeffdolan.com Jeff Dolan

      Very astute comment.Good conversation. It takes two sides to play the game.

    • http://www.sethlevine.com sethlevine

      Great comments. I found this line particularly interesting: VC bubbles are better than any other kind of bubble, since they tend to create lasting value and infrastructure for the economy (although not necessarily for VC investors).

      Appreciate the comment.

  • http://www.postlinearity.com gregorylent

    startup is the new religion.

    it has scriptures (techmeme), pilgrimage sites (conferences) and a priesthood (paul graham, arrington, etc)

    and, evangelicals. oh yes. 

  • http://www.sethlevine.com sethlevine

    such a great analogy. spot on.

  • http://blog.roost.com Derek Overbey

    Seth, I think we’ve been down this path before: http://www.youtube.com/watch?v=SvmNDym6CvQ

  • http://twitter.com/jvaleski Jud Valeski

    thank you. couldn’t agree more. well said.

  • http://www.twitter.com/stevenkane Steven Kane

    Well I dreamed there was an island
    That rose up from the sea.
    And everybody on the island
    Was somebody from TV.
    And there was a beautiful view
    But nobody could see.
    Cause everybody on the island
    Was saying: Look at me! Look at me! Look at me! Look at me!

    –Laurie Anderson, “Language Is A Virus”

    • Brad

      A poetic version of the Facebook business model. 

  • http://twitter.com/jacks_whitli Jack Holt co-founder

    Sounds pretty contemptuous of your industry. I see the 500Startups types doing things like this, but not any VCs. At least, not the kind of VC I’d want to align with and thus encounter.

  • http://hireflo.com/ Rudy Lacovara

    I read something relevant, I think it was in Rework, that essentially said “be careful what you celebrate”.  Funding, the initial product launch, those things are significant but they aren’t nearly as important as getting to product market fit, acquiring you’re 10,000th customer, the things that really validate your business model.

    A lot of entrepreneurs look at funding as the destination rather than the road.  The other night a guy was telling me about his business and how he needs to raise 1.5 million and then his business will change the face of e-commerce.  So I asked him “If you had that 1.5M today, what would you do with it?”  His answer, “I’d pay myself. It’s getting really old doing this for free.”  There’s a lot of problems with that statement, but what stood out most to me is that he looked at funding as the goal, the solution to all his business problems. He never even thought beyond funding to what he could actually do with that money. Why should he? After all funding is the end of the road right?

    • Albert Hartman

      I think it was pretty honest of him. He’s saying that the thing isn’t paying its own way and his personal staying power is waning. And that if his company is to be a vehicle that changes the world, it needs some gas in the tank.

  • http://mikelewis.me pescatello

    I think it’s a problem and a lot of it starts from media and blogs. We don’t celebrate companies that are doing this well.  I only hear about them when they raise a boatload of money, never before.  If fact, i rarely hear about any B2B companies.  If the media (TechCrunch, Pando, etc.) only talk about consumer business that raise a ton of money and have big name investors, are we really surprised that this is all entrepreneurs talk about?  They are being instructed that these are important indicators.  It’s sad.  I’d love to see more quality posts on this blog about your portfolio companies that are doing well so we can celebrate the right things. 

  • Charlie Wood

    That’s it, you’re officially uninvited from our SxSW party. And I want that t-shirt back.

    • http://www.sethlevine.com sethlevine

      Damn! I didn’t mean you! And what tee shirt? Clearly I don’t rate schwag!

      • Charlie Wood

        Oh good, we haven’t sent it to you yet! Well that solves that issue. 

        • http://www.sethlevine.com sethlevine

          what? that schwag kills it! me want!

  • http://www.tenacious-pr.com/ Judy Bott

    I couldn’t agree more. I’ve been in the business of supporting startups and small companies for a long time now, and the ‘I’m awesome” level just keeps going up. Seems to be at about an 11 right now. As I continue to work with startups, I’ll do my best to help them stay focused too.

  • http://www.samedaydr.com/ Rich Weisberger

    Isnt an investment in a idea stage startup after 60 minutes just purchasing a “call option”  on the model/founder(s).     The issue, to me, is does  a portfolio approach on startups (like other asset classes) out-perform  a managed approach.  Lets look to the data to find out. The good news is that at least we are dealing with sophisticated Investors and for some this is a small part of their total asset holdings. 

    • http://www.sethlevine.com sethlevine

      Depends on how much money the investor puts in (a small amount is effectively a call option). I feel the same about these party rounds. No one has any real skin in the game but what they’re all basically saying is that if it’s completely obvious that the company is taking off, they’d like to be vying to lead the next round…

      • http://www.samedaydr.com/ Rich Weisberger

        This might help you or it make just make your eyes glaze over. 

        The notional amount of $ that you  invest in a startup does not determine whether you should look at your investments as an option.  To see the optionality of your investment, see what  expected leverage  your investment has.

         In the case of a vanilla option the option leverage is as follows: 

        Options Leverage (or Lambda) = Delta (change in option /n change in stock price) x Stock price (S) / Option price (V) 

        In your case the delta is a function of 
        the next round  valuations and the option price is your investment. 

        Hope this helps.

  • CloudDiva

    Thanks for keeping it real.  I was looking for the word “entitled” somewhere around “cool” and “shit-hot start-up”…. IMO entitlement is a dangerous and rampant mode within the start-up world that seems to be popping is ugly head up in the 2.0 bubble.

  • http://scobleizer.com Scobleizer

    I totally agree. So here’s what I’m doing about it:

    1. I actually meet with about 10 entrepreneurs a week (this week will be more, since I’m spending time on a startup bus, and meeting all 300 participants when they arrive in San Antonio at Rackspace’s headquarters on Thursday night). I usually put up five to 10 videos a week at http://youtube.com/scobleizer — more than 1,000 videos are up there now, most of which are with entrepeneurs with no bullshit, just talk to me about your company.

    2. At SXSW I’m throwing a party with Geekli.st. But one on the cheap and one aimed at helping entrepreneurs. Meet us in the lobby of the Hilton after midnight on Saturday night. I’ll have a peanut butter and jelly sandwich for you. No bullshit. No swag. No sponsors. No party budget. Just me and a friend handing out sandwiches. Oh, and my wife will be there too.

    3. I’m trying to both meet with the hot companies (see my latest blog post about Highlight, for instance, at http://scobleizer.com) but also many companies that usually don’t get on Techcrunch. 

    4. I’m asking tougher questions lately, and am looking for real businesses, not just ones that are gonna spend all their marketing money on a SXSW party (it doesn’t work, by the way, unless you also have a killer product and if you have a killer product, like Highlight has, why do you need a party anyway? Everyone will be using your product at someone else’s SXSW party!

    But I’d like more help Seth. You say you are tired of the BS. I’d love to know how to help you tamp down the hype and help expose just how hard it is to build a real company. I know that, which is why I turned down $500,000 in VC money last year (I just wasn’t ready to put in the time and effort) but many times people forget that it is really tough to build a company.

    I’d love more ideas on how to improve what I do.

    • Matt Cutts

      Love you Scoble, you always manage to turn a post in a self-promotional billboard. Your list reminded me of the much hated “ten blue links,” but with a Googley twist, full of ads.

      • Matt Cutts

        Just to clarify, I was having a little fun with my friend Scoble. He is a good friend and accounts for more than 50% of the non-Googler posts on Google+ so I have double respect for him.

        • http://scobleizer.com Scobleizer

          I’ll get you back someday! :-)

          • Matt Cutts

            You might get your chance soon. Me, Amit and Ben are probably going to debunk a few misconceptions about why we make changes (users first!), why we have so many ads (ads are more relevant than content so we help users!), why only advertisers rank on the first 2-3 pages (mere coincidence!) and a few other things making the rounds. I’ll let you know via G+

        • zato

          “more than 50% of the non-Googler posts on Google+”
          Gee, didn’t I read somewhere that there were 90 gagzillion people on Google+. I think it was Schmidt…

    • http://twitter.com/techprose_ca Scott Valentine

      Counted 10+ uses of the word “I” and its derivations, plus 3 links, all from someone who at least pretends to be an objective source of news and information. That’s why I un-followed you months ago, dude.

      • http://blogmutt.com Scott Yates

        Ouch, Scott. Give Scoble credit, he’s trying to so something meaningful. He doesn’t put himself out there as being “objective” just as a guy who’s trying focus on real businesses. I think he’s genuine in his desire to improve the ecosystem.

      • http://scobleizer.com Scobleizer

        Heh. +I+ also counted that I used the words “entrepreneurs, startups, and company” about that many times too.

    • JohnM

      Why are your motives scoble? Were you hired to market for that battery-draining app Highlight? Do u want to be a VC next year? What are your expectations? I’m young and stupid, so I was not around when your persona was born. Am I missing something? Btw – great post Seth.

      • http://scobleizer.com Scobleizer

        I never get paid by startups. In fact Highlight is hosted on our competitor, so I have an anti-reason to promote them. I just love the app and think it’s the best one of this genre. Period.

    • http://www.sethlevine.com sethlevine

      Good question (btw, enjoyed the back and forth below…). I like the no frills party idea. And some of the “workroom” stuff that I’ve been invited to at SX this year. I think the most interesting thing you can do it find the companies that no one has ever heard of and highlight them. Or highlight cool products that you see (I know you do this). And the most innovative things companies are doing to get noticed that 1) aren’t necessarily throwing a party and 2) are super cost effective (I bet there are a bunch of gem ideas out there that creative companies are doing to get noticed w/o spending big bucks – like your meet me after midnight for a pb&j idea). There’s a whole line around this that I think would be really interesting.

      You do this some, but definitely take the show on the road, but not to the hot event. I know you need to be at SXSW, but imagine doing the “anti-SXSW tour” – hit 5 cities during SX and talk to companies that aren’t there and ask why they didn’t make it. Or forget SXSW, just hit up some interesting and more out of the way cities (i.e., not Boulder, Seattle, Austin, etc. which have been written up enough already).

      Just some initial thoughts – I’ll keep thinking about it (and am glad you are as well).

    • One

      Throw your party at a godly hour. Light exposure at night suppresses melatonin, which ups the risk of prostate/breast cancer. Look it up. And stand up while you read this (many serious long-term health consequences to prolonged sitting): http://opinionator.blogs.nytimes.com/2010/02/23/stand-up-while-you-read-this/?pagemode=print

  • http://www.rebellionphotonics.com/ Allison

    Love it Seth, big fan of your posts. Maybe you are able to keep a clear head because of beautiful Boulder? Alas, I only wish the Foundry group invested in our space.

    • http://www.sethlevine.com sethlevine

      I do think there’s an advantage to being outside of the echo chamber markets. There are great advantages to living and working in Silicon Valley, but there are also great advantages to living elsewhere. For me Boulder is the perfect middle ground. Solid business environment, close to the places we tend to invest (other than Colorado, SF, LA, NY, Seattle) and, of course, a great great place to live!

  • mariaseidman

    One word: Awesome!  Thank you for guiding us back to what really matters — building great and sustainable businesses.  Not the guest list at SXSW parties.

  • Luke

    Time tells all. Ultimately success comes to those who work hard on a good idea. Hype is fleeting. That is all.

  • http://twitter.com/Heuristocrat Kris Tuttle

    Maybe the internet has sped things up so much that people forget that it still takes a long time to build a substantial, sustainable enterprise. Getting something out that garners a million registrations is exciting but you haven’t actually done anything yet. We all know from presentations from firms like Evernote that the success is measured in years. That kind of thinking would eliminate a large portion of the parties/hoodies/high fives or whatever is going on around you (we don’t get out much.) Look at the Bezos investor letter from 2007 as an example.. and Amazon is still far from finished.

  • http://twitter.com/SwiitApps Locally for Locals

    Great Post.

    If customers say we are awesome, thats a compliment. The rest is all BULLSHIT and we hope it stops.

  • GeniePad

    It’s sad that a lot of companies base their success on how much funding they have received or the investors that they have. Almost seems that the goal is to see how much money you can get and then building a business. 

    • Richard Blackham

      Oh what a conundrum. Raise the money you don’t need now because it might not be there when you need it. If the party’s good enough you’ll get the money and likely lose it because the odds are against you anyway…because your only famous for being famous (and remarkably unexceptional).
      The best VC money is the profits you make from actually having a product and running a business.

      • http://www.sethlevine.com sethlevine

        I always tell companies that the cheapest money they can raise is by building a product that people will pay them for…

  • http://www.amazon.com/-/e/B002VH8ECQ Brian S Hall

    Great stuff although I feel you miss part of the problem. It’s not simply VCs before entrepreneur, it’s VCs funding the “tech press” (PandoDaily and others in SV) and together these two promote all things VC.

    The focus gets shifted from entrepreneurship and building a business, or even simply asking ‘how can this cool/hyped service be monetized’ into becoming a promotional tool for VCs and their needs. It’s a toxic brew.

    If the VCs are paying the bills for the tech press, guess who gets first love?


  • http://chrisarsenault.wordpress.com/ Chrisarsenault

    This actually a great post Seth. It highlights the fine line between the “needed” momentum a startup requires to rise above the noise, while not crossing the fine line of becoming noise, or bullshit as you put it. But it takes more than just hard work for a startup to build credibility and visibility in today’s market, to help it propel itself. 

    Good food for thought right before SXSW.  

  • http://thesocialjoint.com/ Lucretia M Pruitt

    Love this. Plain and simple.

    “Remember Bob from the 2010s who had those great parties? Do you remember what he did? I mean, he had a couple of startups and invested in some stuff, right?” is not a legacy. “Wow. Did you know Bob was an early investor in -product everyone knows and uses-?” is a legacy. “Wow. Did you know that Mary built -p.e.k.a.u.-? I love that. I’ve been using it for years!” is a legacy.

    Due diligence is a good thing.

  • Matt Cutts

    Good point–If I had a dollar for every “Google killer” I could have already replaced my stolen bike. Turns out we Googlers were quite smart, probably the smartest team ever assembled. Just imagine if we were doing evil things like Twitter, Facebook, Yelp or Apple are.

    • http://tomaltman.com/ tom altman

      Fake or not – I think you nailed it (fake) Matt Cutts

  • http://www.participate.com Alan Warms

    So. Spot. On.  One of the things I love about being in Chicago.  A lot less of it out here.  

  • http://www.participate.com Alan Warms

    Actually this foots I think it was Brad’s post a while back on silent killers.

  • http://clareyt.tumblr.com/ Clare Bear

    Virtual high five. The ego-driven stuff really wears on a person after awhile and I’m pretty tired of everyone trying to appeal to one another’s FOMO (fear of missing out). 

  • http://flocial.com flocial

    Don’t get me wrong, 

    • http://www.sethlevine.com sethlevine

      The greatest thing about the time in which we’re living and working is the ability to quickly build product and “get it out there”. There’s no question that this is driving an explosion in start-ups. And overall that’s a good thing. But like blogging 5 years ago (when everyone set up a blog but not everyone should have) we’re seeing a lot of ideas masquerading as products and products masquerading as companies…

  • http://www.facebook.com/profile.php?id=619665271 Terasa Tera Hill

    Great article – well said~!  As an entrepreneur of a growing company with a supportive VC, I am flattered. I look forward to your next issue :)
    Terasa Hill

  • http://craigormiston.com/ Craig Ormiston

    A whole lot of one night stands and no real relationships. It’s a frat party out there!

    Thank you for the post, Seth.

  • http://theemob.org/ Godfather

    When is “killing it” gonna go back to being a crime punishable by a long stretch of “pivoting” in prison??

    I am almost nostalgic for Jack Welch. Almost.

    Al “Chainsaw” Dunlap was good at “killing it.” There was another “Al” who was literally great at “killing” – anyone remember Al Capone? Now there was a businessman who know a pivot when he saw one.

    I’m gonna stay in hiding until “killing” goes out of style, together with all those stupid skinny ties. 

  • http://www.cazoomi.com/ Clint Wilson

    Great read.

    ~ Clint

  • Kevin Dykes

    Great to read more perspective from respected VC’s on toning down all the hype and bs and focusing on the fundamentals of building a great company with a great team. And just at the right time, in advance of SXSW. 

  • http://www.lindventures.com/blog Brad Lindenberg

    That’s a great post but at the end of the day VC’s make their money by investing other peoples money (LP’s) in shares that have a higher liquidation preference to the entrepreneurs common stock. If the entrepreneur is such a rock-star and VC’s actually believed this, then why aren’t deals done on a common stock basis?

    I read a quote on @mungerisms:twitter that read “I don’t need to run as fast as a horse in order to arrive at the same time as the horse. I just need to sit on the horse”. 

    VC’s sit on the horse. Entrepreneurs run. 
    So its one thing to say the Entrepreneur is the star, but its another story to put your money where your mouth is :)

    • http://www.sethlevine.com sethlevine

      Fair point, although really we’re talking economic terms (preference has an economic value, just like valuation does). The theory is that we’re taking the economic risk and therefore if things don’t go well should get paid back first if there’s any money to be passed around (and typically VCs cut entrepreneurs into this as well). At Foundry we believe in relatively “generic” terms (1x, non-participating) but I can see where you’d push back and say that generic should equal common…

  • Aaron

    … sounds like you had a rough South by.

    Very odd argument. Honestly I was taken aback.  If you’re critical of all the celebrations, be critical of entrepreneurs, they are the one’s throwing the parties. And you know why they throw the parties? Because VCs couldn’t be more responsive to social proof (especially from other VCs) thats why. I can’t possibly imagine how entrepreneurs getting tons of offers is a net negative for entrepreneurs. If you haven’t met any founders who’ve been very painfully dragged along for months by VCs only to wind up with nothing (and have their business die because of it), i’ll introduce you to some. If you haven’t heard of any entrepreneur who’ve been ousted from the company they created, and were left with very little to show for it, read Mark Suster (http://bit.ly/ypcYKS).

    You’d have to believe entrepreneurs are pretty stupid to think that the more options they have worse off they are. While there can be some possible negative effects to a high valuation, high early stage valuation is pretty damn low on the list of reasons why start-ups fail. Running out of money is not. A couple of your firm’s partners were once entrepreneurs. Ask them if, when they tried to raise VC, they ever thought, “Gee, I hope these investors take a couple months before giving us a term sheet, that’s just the responsible thing to do.”What I can completely understand is that it’s frustrating for VCs when competition for deals tough. (God forbid you’re forced to offer terms which don’t let you fire the founder!). But competition is the cornerstone of the free market… And if you don’t like the free market, VC is an interesting choice of profession. 

    • JamesHRH

      Actually Aaron, I am not sure you are right.

      In 2001, I was verbally attacked by the EA of a acquaintance, who held a management position @ Compaq. She basically said to me (I was helping startups as an independent venture executive – for lack of a better label): ‘must be nice to be Mr Startup Guy now, hey?”

      My acquaintance was unimpressed with her. She was trying to make herself feel better about staying at a BigCo during the DotCom boom, at my expense.

      My answer to her applies to your comment ‘frustrating for VCs when competition for deals is tough.':

      ** “I see just as many good deals getting funded today, as I did in 1998. I just don’t see any bad deals getting funded anymore.” **

      People will likely say that about Seed funding in 3 to 5 years. There are a lot of new people to the seed / early stage funding party. They will learn how tough it is, given the industry business model, to become a VC with staying power.

      Seth’s point is correct: if you want to build a company with staying power (a great business) and you are confident you are on the path to doing so, it makes no sense to go with the hot name.

      Its too risky.

      The hot name changes in finance. You are taking a chance that you are catching them on the upswing of their ‘hotness’, not the downswing. And the hotter they are, the more likely it is that they are about to go cold.

      And, when they go cold, you will really understand the downside of having a VC who is all about me.

    • http://www.sethlevine.com sethlevine

      I thought my post was a pretty balanced critique of both sides of the table (to use suster’s term). And yes – I’ve been on both sides of the table. No one is talking about taking months to offer a term sheet. I’m pointing out that term sheets offered in a single meeting are not very well through through. Not sure where all the founders remarks come from, nor where you got that I’m not supportive of healthy competition….

  • http://linzlovesyou.com Lindsay Goldner

    Amazing post. To build upon your “cult of personality” point, I was actually really surprised when, after graduating college, I found that the frat boy culture was -very- much still alive in many of the startups I worked with/visited. While, granted, some of that may just be due to demographic (lots of upper middle class, 20-something white guys, etc.), it was pretty bizarre to see the crazy party culture during work hours and in the office themselves. A couple examples: the icing trend (which I definitely have seen happen more than once), kegstands and beer fridges, nerf gun wars, you name it. I’m all for grabbing a beer after work and enjoying the time you ARE at work, but it’s still work, not spring break. Unless I missed the memo because I was dodging nerf bullets?

    • http://www.sethlevine.com sethlevine

      clearly I’m not very hip. what is “icing? or do i not want to know? very good point. work should be fun. but it’s still work…

      • http://linzlovesyou.com Lindsay Goldner

        Icing was a trend that went semi-viral summer of 2010… if you google “bros icing bros” you’ll see a lot of videos. Essentially, presenting another guy with a smirnoff ice (the bigger and warmer the better) under the assumption that whenever, wherever it occurs, they have to get down on one knee and chug it. Barf.

  • http://twitter.com/Merredith Merredith

    Geez, thank you for this. 

    Last year at SXSWi my posse (okay, there were three of us) talked with the crowds at the CrowdTap.it and Copyblogger parties, and concluded that they mostly had no damned idea who was throwing the shindig or what they were supposed to take from it besides a little schwag and a hangover. I’m old enough that it reminded me of the oneupmanship parties of the first bubble. In any case your larger point is well taken: it is one thing to enjoy the journey, another entirely for the journey to become reflexive, just one in a series of shiny things that we flock to and abandon. I like your point that entrepreneurs should do their homework on whom they work with; maybe it’s not the loudest voice, but the most thoughtful one. And that won’t be heard in a party.

  • http://andybeard.eu AndyBeard

    This is the genuine Disqus account for Matt Cutts as far as I am aware

    The 4 current comments I believe are fake.

    • fil

      100% fake (: Ill try to find the real one.

  • http://twitter.com/geekles Shawn Hansen

    Also remember, nobody

  • James

    the problem is that then you read about a VC that invested 25 million in some bullshit, and you say that you have to play along with this shit if you want to get serious money!

  • http://twitter.com/Ovurmind Viktor Ovurmind

    The exceptional road is the one few take, the quick path into the rat race is what comes natural in the urban jungle we all live in.  If exceptional people enter our lives it is a real blessing, but if the big ticket item is survival, the rat race is the reality.  I can’t imagine an economic system that isn’t built largely on BS but I do imagine working in an economic system without it, and that’s because I am a dreamer.  Startups can begin with a dreamer, but most wake up, hold their noses and engage the BS. If one can hold onto their idealism through the rites of BS, I say kudos to those remaining few.


  • http://www.evbart.com evbart

    Great post, thanks for saying what lots of people are thinking.

    Behind all the hype is all the hard work that goes into making a success, and I’m afraid that those efforts will won’t be seen.  To a certain extent it sets the wrong example for all the new up-and-coming entrepreneurs to chase the wrong thing…

  • http://www.bluegurus.com/ MicJohnson

    GREAT article. There are tons of people that are full of shit….or bullshit as it were. Nice to see at least one person calling them out.

  • http://www.5o9inc.com/ Peter Cranstone

    Well for one i’d like to meet some of these VC’s who are handing out term sheets like confetti. In 22 years I’ve never met one yet (and I’ve done the road shows). In fact what i see are the same hard questions and then followed by “silence” (which means thanks for the meeting but we’re not interested).

    I’ve never seen a more difficult environment to build a real business. And let me define what a real business is – “measurable, sustainable, profitable revenue from volume”. You have to solve a real problem, you will be early to the market (because being late doesn’t cut it) and you will be rejected because you have no real customers.

    Printing a T-shirt is easy, profitable revenue from volume – not so much. 

  • http://www.moolamo.com/ Brad

    I agree completely with the sentiment, but have to say that out here in the Hinterland(Miami or not Silicon Valley, Austin, or Boston), we would kill for an investor able to make a decision in 60 minutes. That’s not to say we wouldn’t have concerns, but we don’t have parties here with fishbowls of cash. 

  • Damon LaCaille

    I think all entrepreneurs need to read ‘The Lean Startup’ first, then ‘Reworked’. The second is a little heavy on attitude, the first is a little too focused on their main case study (himself at IMVU), but both set the right mentality for using common sense, hard work, and intelligence to put your company in the best position to succeed.

    • http://www.sethlevine.com sethlevine

      I haven’t read “Reworked” but did read “The Lean Startup” and really liked it. And being lean drives a lot of good behavior – which I guess was the point Eric was making in his book!

  • DanRowinski

    You know, I think a lot of this is San Francisco-based hype and hysteria. Living in Boston and talking and covering the startups here for RWW, I know that the VCs here (and to a certain extent in NYC except a lot of NYC VC’s money actually resides in Boston) are more careful of who and how they give venture money to. It is about team, product, seed rounds and development. Boston VCs are more pragmatic about how they dole out funding. For instance, we have seen a lot of seed rounds recently but only a select few that make it to the series C and B levels. It seems sometimes that San Francisco A rounds look a lot like Boston C rounds. Boston startups love a good party but there is not much in the ways of “we redid our website – come celebrate!” Most of the time the parties are meetups and hackathons with the occasional neurotic party for the community (see: Tech Prom Boston last October). 

    It is a different environment here. The Boston based tech scene is close knit and helpful of the entire ecosystem. It is an odd phenomenon actually and I have been studying its evolution for some time now. The goal here is to build great companies and everybody is onboard from the venture capitalists to the venture bankers, mentors, accelerators, startups and established companies. Worth a closer look than a lot of people out West give it credence. 

    • http://linzlovesyou.com Lindsay Goldner

      Closeknit, yes. But read my comment above- that whole party scene I saw at startups? It was at the top tech startups in Boston last year. Love them, but definitely gets a bit fratty in addition to the occasional RubyRiot/Tech Prom events.

  • JohnFurrier

    So freaking great post.    Not one post about my investment vehicle out there…so damn good.  The best investor get positions in markets early and do solid transactions for PROFIT.  Yes I said it.  That being said… lots of this grandstanding is for promotional lead gen so those entrepreneurs who think that they just got mega funded just got used but “snake oil” VCs.  Lots of my friends are VCs and very successful and most don’t even know their name. 

    Great investors have vision and financial responsibility not awareness of the trends and write a blog to do link bait.. or bait and switch.

    I feel sorry for those entrpreneurs being used as “show horses” for attention starved VCs.  Just look and you can see them as clear as day.

    Nice guts Seth to write this post!!

  • http://twitter.com/dominele Larry Domine

    Thanks for sharing this…..your observations remind me of what lead to the ‘dotcom bust’. 

    During that time I said the same things with a lot of money being passed around and was concerned, and then it happened. 

    Social media and mobile apps are hot now, but pay attention to your customers, employees, product/service…..build something small to something big….or simply build what you have to last…..

  • http://twitter.com/h8thepain h8thepain

    This is exactly why I haven’t brought my product to a VC. While I don’t have the funds to completely get it off the ground, I don’t want anyone to feel entitled to say, “I did that” as if they came up with my idea/product. I don’t even want a go live party until I actually have customers on the hook. I want my product to succeed and to make a decent living off of it. Good luck to all the entrepreneurs out there! Hopefully, the sharks don’t eat you (and your product) alive when you finally get into the tank with them.

  • Elliott

    I was on the first tee going out as a single. Three guys walk up and now we have a foursome. Warming up. Stretching. The 3 guys talk and I stand off to the side. Seems that 2 of the guys are Stanford MBAs and 1 guy is a Harvard MBA. They talk amongst themselves – business talk, important talk . . . finally  time to tee off. They let me go first. I turn to the 3 of them and say, “I’ve got nothing against the Harvard MBA, he feels that he is entitled to make a living. But you Stanfrod MBAs – you feel that the world owes you a living.

    As Garrison Keillor said in his book, Pontoon, “old people don’t have answers, only stories.”

  • http://twitter.com/jrichlive Jeff Richards

    Enjoyed your post Seth.  One interesting data point – the most valuable and intriguing IPOs this year outside of Facebook will likely be WorkDay, Service-Now and Palo Alto Networks.  All three will be worth >$1B but are arguably “underhyped” and have certainly avoided many of the concepts you mention above.  You can still build a great company without the parties :)

  • narg

    In my short time here on Earth, I’ve yet to see a lot of folks that fit the mold of “Good Party Person” AND “Hard Worker”.  Just saying….

  • crosshillchris

    I absolutely agree with you, Seth. 
    This reminds me of 1999 when everyone was trying to be “e” and discussions were about the disconnect between the “new” (clicks) and “old” (bricks) economy.  By 2002, 90% of all the “e-commerce” start-ups were gone.  If I were a VC today, I’d “pivot” my investment strategy away from all the “me too” social networking based business plans and focus on defensible IP.  

    I’d look upstream to the headwaters of innovation – the technology transfer offices of our major research universities.  I would focus on developing repeatable processes to commercial the treasure trove of technologies that are gathering dust because they are immature and aren’t an obvious “home run” in their current stage of development.   

    There is huge opportunity in this space.

  • Guest

    huh? aren’t you at the epicenter of all this? Isn’t this a little like Santorum criticizing the media for talking about social issues instead of jobs?

    • Aaron

      Yeah. I every VC I know hates SXSW, but plenty of them seem to show up.

  • Ykzfcana

    Could it be to do with your other posts about who gets hired in VC? The nature of the industry seems to have changed and the $ involved is bringing in the same old wall street people from the same old 10 colleges.

  • Guntis

    It’s so damn true!

  • Me-Male

    Imagine being a 50+ co-founder in the middle of a bunch of “dick-head” tech guys who are more interested in the tech than the user experience!  When did “killing it” mean something good, or by calling something “sick”, actually means it is awesome. So I guess “dick-head” tech guy really means what a great guy you are!

  • Amlikethewind

    Thank you for writing this.  The tone of spin/hype/breathless pr out of the tech world has become annoying, if not deafening.

  • Joe Hogan

     Are you that poor of a writer that you need to put a vulgarity in your headline to attract readers?   Do you think that your parents are proud of you for using such filthy language? 

    It’s truly sad how far the world is falling in it’s respect for others and it’s need for self importance.  The WSJ / Dow  used to be such a well respected news organization.

    • http://www.sethlevine.com sethlevine

      The point of the title was to grab people’s attention (which clearly it did). You’ll have to be the judge (as will everyone else who reads my blog) about whether or note you think I’m a good writer…

  • http://twitter.com/paulcimino Paul Cimino

    I was a CEO from 95-02 and am again 09-present and it’s like deja vu all over again in terms of hype and unchecked hubris. Thanks for level setting Seth.

  • Mike

    How about starting by not going to events like SXSW to find companies?

    Every business has to do something better than the alternative and/or solve a problem of some sort.  The reality is most companies are solutions to problems that don’t exist.  But even if you happen to have a solution to a problem that does exists, the next question is can the good or service serve customers in a cost-effective way that allows the company to turn a profit?

    The reality is most viable serious start-up businesses don’t have the resources to spend traveling the country and globe just to be able to rub elbows with all the cool kids.  They are hunkered down working on building their businesses, scratching together whatever resources they can to make progress and gain traction.

    • http://www.sethlevine.com sethlevine

      It’s not that I object to companies going to SXSW. I’d just like to see less overall hype and more work. And more creative ideas – do something at SX that isn’t a party, for starters…

  • McCheeseFist

    rofl 90% of these companies are destined for the crapper…

    enjoy investing.

  • http://www.facebook.com/brandondwight Brandon Dwight

    I’m not a VC, but you could pretty much use this as a philosophy for any endeavor, be it business, athleticism, spiritualism…you name it. The moral of the message is, don’t be a poser.

  • Alejandroaugustocontreras

    So true for LATAM too.And what about some (not all) or the new kinder type of mentoring so called accelerators. They chear every graduations as mini IPO’s. Reminds me the nineties and the soooo cool First Tuesday Events. Then, once I went two the states to sell a company and as an entrepreneur my angels told me, we need a big press release folder, instead of a plan, and or executed milestones. Some time is like a déjà Vu.

  • http://twitter.com/denisehterry Denise Terry

    I love this post for its sobering wake-up call to reality for VCs and founders alike. Technorati, take heed as well – lest you only write about the new kids and hot startups ‘killing it’ while you beer goggle them. The ‘honeymoon phase’ in an early startup’s lifecycle is fleeting at best, and a deceivingly bad predictor of long-term, future company success. After the media hype and party rounds quiet down as they inevitably do, entrepreneurs (and their employees) and VCs must get back to the real and very hard work of building products and companies that customers love. Growing a business successfully year after year, long after the honeymoon is over is worth celebrating, but that’s not usually what gets celebrated these days — that’s unfortunate for the thousands of unsung heroes and heroines who are too busy working to rub elbows with you at SXSW or at that party you’re at tonight, dear reader.

    • http://www.sethlevine.com sethlevine

      this honeymoon effect is a really interesting one. we see this in boulder through hiring cycles. some company becomes the “hot” company to work for. but then the real work begins (and as you point out, it’s clearly very real work) and the luster wears off. not because the company isn’t doing well, but because it’s hard. and not new and fresh. sometimes we all act like cats, chasing the latest bright shiny object all over the place…

  • http://www.facebook.com/people/Robb-Smith/690127358 Robb Smith

    Anyone who funded and built companies from 2001-2003, and I mean really was in the hard thick of the hangover from the silliness of the late 90s, looks at the current crop of folks, and their behavior, and just wonders, could you really have forgotten that quickly? The hype, the parties and the buzz is not even remotely interesting. We have some real issues to solve and it’s going to take some grounded, serious entrepreneurial leaders to move the needle at this moment on the planet.

  • http://www.heyheyrenee.com/ Bowlhiker

    Howdy Seth,

    Here’s what I’m worried about.

    Back when I came into tech 24 years ago a kid with dropped out of high school who’s only skills were a love of code and the phone could make it. Those days are just about gone and that’s wrong.

    Now, that same kid couldn’t even get an interview, let alone a meeting at your place. No pedigree? It’s the rejection email you have saved. 

    There’s really no mentoring going on in tech now. Everyone is so selfish, all about the money. I long for the old days, when we used to share code on CompuServe. I’ll never forget the cyber person who helped me restore an NT box all via chat. Then called me to make sure I was good. He stayed up with me all night. Unbelievable experience.

    That would never happen today.

    Today it’s all about making something average at best then selling it. Cash out and start a blog.

    So how’s about you and your gang start spending some time at Denver North High School and helping out those who come from…less than ideal circumstances? 

    It’s easy for rich kids, kids in the know and kids from the right schools. How much time do you spend outside of this cushy circle? How much time do you and your crew spend evangelizing tech to kids who didn’t go to Stanford, who are having trouble paying tuition at Metro State? 

    You’re a man of who has a lot to say. What would you say to them? 

    • http://www.sethlevine.com sethlevine

      I don’t think you have this correct at all. The days where a love of code and a sharp, inquisitive mind getting you places are not over in the slightest. In fact software engineering is one of the most egalitarian pursuits in technology (as opposed to, say “business development” where pedigree does still matter). And I think you’d be hard pressed to find a town that’s more collaborative or supportive than Boulder is (we’ve worked hard to make it that way). There’s an unbelievable amount of mentoring going on here. In fact one of the things that I think makes Boulder so amazing is the fact that people here are so ready to help each other out. Just this week I’ve been going back and forth with two different friends on ideas to bring a better programming curriculum to high schools (in particular the type of high school you mention below). There’s a lot going on out there – I’d encourage you to check it out. You’ll discover that things haven’t changed as much as you think they have…

      Seth Levine

      • http://www.heyheyrenee.com/ Bowlhiker

        Good afternoon Seth,

        I disagree.

        When was the last time you funded a black kid? When was the last time someone you know went into a poor school and helped kids understand tech? 

        You say there’s mentoring in Boulder, fair enough. But is it mentoring between two rich kids? If so, is that really sharing the wealth? I don’t think it is. 

        Remember. In tech, the idea is make someone else less fortunate better off. I define mentoring is finding some kid who otherwise would not have broken into the circle and help them. I don’t define mentoring as one wealthy kid helping another, wealthy kid.

        And why does pedigree have to matter? Isn’t that a beltway mentality? Doesn’t that keep insiders rich and outsiders out? 

        Once again, not ragging on you. But I don’t need money from you, so I’m not here to throw rose petals at your feet like some others here.

        Does that work for you? 

  • Julia LeStage

    Startup dance is like dating. Most take it where they can get it. Those who succumb to one liners usually get what they deserve. Those who hunker down for a proper courtship, make wise unions.

  • bob

    my damn grill wont light

  • Richard Jordan

    Love this post. The cult of the celebri-vc is as tedious as the myth of founders’ heroic overnight success. I think in the post-“The Social Network” world we all live in the tech industry is way too tied up with TMZ-style nonsense at the moment. Turning an idea into viable product & business model, getting customers and keeping them, getting to profitability, finding an appropriate exit for the investors who’ve helped you get there – these things are REALLY HARD and take a lot of work and effort, and while it’s good to celebrate successes, there’s way too much credit being givn for just taking part.

    • http://www.sethlevine.com sethlevine

      Completely agree. Glad you liked the post.

  • heyehd

    technology for technology’s sake – scratch that. networking for networking’s sake – scratch that too. self promotion for self promotion’s sake – forget it. why not just shut up, get to work, and let the product speak.

  • Bond

    Most of you on here are immature young men with no life.
    What a sad state of affairs to think its fulfilling trying to make profit with boring organization of pre existing products called technology. Yippie f in do dah.
    Who cares.
    Find a real career.

  • ABC

    I just read your blog ( a little late). VC’s are nothing but support unless they actually have management experience in start-ups. Unfortunately , many have finance backgrounds and no successful marketing experience. The are over-glorified bean counters and not visionaries. They are an important of the business if they truly understand their role- they are support- not dictators of the business, Like you mentioned, if they knew how to build a business, then they should do it and not just sit behind desk and crunch numbers.

    • http://www.sethlevine.com sethlevine

      Amen! I have another rant about a very specific VC behavior that I can’t stand that’s going up later this week – stay tuned…

  • Dennis L

    Hey Seth, when are all you kindergartners going to quit talking & partying like high school kids and actually create some jobs?