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Handling rejection

Update below with the final email in the chain where the entrepreneur apologizes (and talks about some challenges around fundraising that led to his frustration).

I just tweeted about an unfortunate email exchange I just had with a company founder, but 140 characters isn’t enough to really do the matter justice. And more important than my venting (and to be clear this post is definitely part that) is the real issue that many entrepreneurs face about how to handle a “rejection” email from a potential funder. This is an example of how not to do it.

I pride myself on answering all the legitimate emails that I receive (punctuated by the point that it’s 8:24 on a Tuesday night and I’m sitting here at my desk doing just that). I think this is getting more common amongst VCs, but I do hear from a number of entrepreneurs that they send notes off and get nothing back. I figure everyone who emails me their plan is really excited about what they’re doing and deserves a response. Sometimes it’s a quick no, sometimes it’s more extensive if I have an idea that I think is worth sharing back.

From the entrepreneurs perspective I can understand the frustration of hearing that the idea that you’re so excited about isn’t something that whoever you emailed wants to hear more about (and I can relate – Foundry raised money from investors and got plenty of “no’s” before we managed to pull together a syndicate of fund investors). But the reality is that not everyone shares your passion, not everyone is at the right time in their fund, not everyone has time vs. other things their looking at to take a closer look, etc. And with most firms having some kind of focus, there are plenty of ideas that simply fall outside of a firm’s investment bounds. And, of course, the math makes it hard as well. At Foundry we see something like 5,000 business plans every year of which probably 500 or more are clearly plans that will get funded by someone. So there is no lack of really interesting things to take a look at. But there is a lack of time and money. In our case that means making about 8 new investments a year (give or take). I’m sure many firms have a similar funnel.

Nonetheless, handling a rejection is important. Done well it can keep the door open to further engagement (I’ve had plenty of companies that I’ve turned down drop me notes with updates on their progress and asking me questions or advice) and can sometimes lead to a later investment (we have a company in the Foundry portfolio that we (I) turned down that we funded several years later). I strongly believe in the “no assholes” rule and try to live my life by it.

Below is the exchange in question (personal details redacted), posted in all its glory. Ironically in this case it looks like this is someone I gave some advice to about a prior business plan (I don’t remember the details – it was one of thousands of these sorts of emails that I have responded to over the years). Oy!

_______________________________

Howdy Seth,

Our social site based on privacy never went anywhere.
www.[redacted].com

We were right about the privacy stuff. But no one cares. Oh well, win some you lose some. I’m proud we did it, no regrets.

Check out our site:
www.[redacted].com

We make money, been around a long time, our customers love us.

There’s a big opportunity we need help with (not sure if that’s the right lingo or not).

Any interest?

Thanks

My initial response:

Sorry that the [redacted] idea didn’t take off. It’s hard to get people interested in a new social networking idea these days (even those who say that privacy is important). Good for you for moving on to something else.

.[redacted] is definitely novel, but doesn’t really fit our investment focus (see www.foundrygroup.com/themes). Big opportunity is definitely the right lingo (and what you’re searching for…).

seth

And then this is what I get back:

Howdy Seth,

Be honest.Did you even look at the site?

Just worked out a deal today that leads us into one of the two largest captive auto lenders and one of the three largest banks in the US.

But you’re not interested.

Go see the movie “Twenty Feet from Stardom”.

Then get that funding is more about who you know, pedigree, etc., than anything. Get how many talented entrepreneurs there are out there, that don’t make it. For no other reason, then they’re on the outside looking in.

One of these days, I’m going to write about it.

I could have a cure for cancer, you wouldn’t give us a dime. Because you don’t know us, you don’t anyone who knows us, and in my case, I’m too old.

You know how you could make the planet a better place? Start telling the truth to people.

I’m not angry, at least you were kind enough to reply.

Be cool.
or just be.

Obviously it totally pissed me off (thus the tweet and the rant here). This was my response:

I’m debating whether to answer or not given the tone of your email. But I didn’t want to let your belligerent, tactless note pass. I did look at the site – and you have no reason to rudely call me out on having not done so. If you looked at our website you’d understand why this isn’t a fit for us (seewww.foundrygroup.com/themes - we’ve written extensively on what we’re interested in and what we’re not). And yes – if you had a cure for cancer we wouldn’t be a good target for you because health sciences isn’t in our investment focus (which, again, you would know had you done any research on us). We get over 5,000 business plans submitted to us each year (and fund about 8 new ideas). That’s why we’re so deliberate about what we’re interested in (and good at) and what we’re not. We have entrepreneurs of all ages and “pedigrees” (whatever exactly that is). And have funded people we’ve never met before or who don’t have 1 degree of separation with us. You can believe otherwise if that makes you happy. But there’s no need to be an asshole about it.

Good luck with your idea and with your life. I’m sorry it has left you so bitter and angry.

____________________

</EOR>

Postscrip below. Final email from the entrepreneur below. Felt that I owed it to him to include it here.

Yes, rejection sucks.

Yes, I have feelings about VC’s that are…real for me and plenty of others.

For me, they come from how I grew up, poor. They emanate from coming into the tech world in 1988, the hard way. From being turned away at the door so many times, because I didn’t go to Stanford, didn’t come from the right family, didn’t have the right friends.

All these years I’ve financed my business with SBA and bank loans. So has everyone I know. So I don’t know anyone in the venture world, neither does anyone in my circle. You have no idea, how hard it is, to break into this world of yours from the outside. Nowadays, it’s just impossible. Throw in that I’m 54 now…

There’s discrimination in the tech world now. The tech world makes those on the inside richer, and it keeps those on the outside — there. It never used to be that way and yes, I’m angry about that. I need to deal with it.

No one talks about that the chances of getting funding if you aren’t in the know (went to the right school, worked for the right founder, know people in the VC world), are older, are slim and none. Instead, the VC’s have websites that create a false sense of hope. It’s bs and no, I’m not going to apologize for the truth.

That’s what you should write about. That’s, what no one writes about.

But I do apologize for making you wrong. You do what you do. I need, to deal with it.

Go see the movie. I drove two hours to see it. Background singers and entrepreneurs on the wrong side of the tracks, are on the outside looking in, have so much in common.

You’re right, I got anger.

Damn.

July 23rd, 2013     Categories: Fundraising    
  • Andy Sack

    Ahh…another late night at the office. Thanks for sharing

  • heyehd

    “rejection” has such a personal connotation to it. the reality is that there is just a mismatch of goals.

  • http://sotirov.com Emil Sotirov

    Here is part of a post by Mark Suster from a few days ago… seems relevant to this story:

    “If you are a super young, well-connected, Stanford CS or EE, worked at Facebook early, have a bit o’ dosh and have VCs chasing you … you are exempt. Or anybody who remotely resembles you.

    Why? Because at least while the VC spigot is open and flowing for high-potential individuals that fit a pattern that some VCs seem to favor they can access cheap capital that isn’t terribly dilutive and can use the to fund development and swing for the fences with limited focus on monetization.

    Ok. That leaves 99.99% of you.

    Ring the freaking cash register.”

    http://www.bothsidesofthetable.com/2013/07/16/ring-the-freaking-cash-register/

    • http://www.sethlevine.com sethlevine

      That’s a great post (as most of Mark’s are!). Thanks for linking to it here.

      • http://sotirov.com Emil Sotirov

        True… but the pain (and often life ruin) of the 99.99% is not something to be dismissed. Nassim Taleb has some relevant thoughts about the critical role of those 99.99% for the whole system to work so wonderfully for the top 0.01%. So… next time a 54 year old rants about his lot… consider not ranting publicly about your problem with handling email rants.

        • http://www.sethlevine.com sethlevine

          If he had simply ranted about the process that would be one thing. But the attack was personal and completely uncalled for. My calling it out only highlighted that his message got lost in the attack. And that didn’t serve anyone (since he does bring up some interesting points that are actually worth digging into).

      • Quentin Ware

        I can’t thank Mark enough for his sound advice to startups.

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

    Reminds me of an acquaintance here in Chicago who asked me for some help (he was unemployed). We sat down and I went through his resume. For every question of mine of why did you leave, I heard “they were jerks!” or “bad people!” I told the guy no one will ever hire you if that is your answer to everyone.

    In this day and age of twitter, facebook, blogs, linkedin, it is *easier than ever before* to get to the right people, meet the right people, form relationships, and make impressions.

    There are 1200 blogs that all say the same thing – don’t “cold” email a VC, but get introduced!

    I say kudos to you for even replying Seth – shows the kind of guy you and your partners are.

    I have had the unfortunate experience of multiple what seemed like good energetic meetings and zero, I mean zero follow up (no replies to emails or calls) from the VC.

    The bigger point is, you get knocked down, you get back up, you prove them wrong, and you never ever ever burn bridges. I feel bad for this guy.

    • http://www.sethlevine.com sethlevine

      searching for the disqus “like” button on this one Alan. great comment!

  • StartupBook

    I’d really like to hear more about this founder’s story…a 54-year-old founder has probably got a lot of crazy anecdotes to tell.

    http://startupbook.co/2013/07/25/a-mysterious-54-year-old-founder-just-ranted-to-seth-levine-of-the-foundry-group-about-privilege-power-and-money-in-silicon-valley/

  • http://www.lisaabeyta.com/ Lisa Abeyta

    I think one of the things that helped most prepare me for raising venture capital was working for 10 years as a freelance writer in a previous career. On average, a writer who is actively pitching across multiple platforms can receive hundreds of rejections before getting an acceptance for a pitch. Taking any of those rejections as anything other than a mismatch is a time waster and can burn a bridge that could’ve been useful for a project in the future that was a better match. Entrepreneurs who are seeking investment cannot afford to allow ego, panic, anger or any other emotion to cloud their reaction to rejection, because it will – and should – come from all sides, including potential clients, employees and investors. It is finding the right combination of garnering more positive reactions that helps hone the pitch, focus and quality of a startup. Be classy – it is the easiest, most effective PR strategy that only requires a bit of self-control.

  • aboer

    I have to come to think of unprovoked negative, angry feedback like this as a kind of gift. Most people won’t give you honest feedback or will hold things back. Angry people will let you know everything that bothers them. This harms them, as they eliminates themselves as someone you will work with, and benefits you, because this kind of feedback always has elements of truth, once you separate out the irrational parts.

    For example, what do you think it was about your rejection that pushed him in this direction? You seemed to listen and pay attention. Does an approachable, open, empathetic online persona work against you, by creating a false sense of intimacy, enthusiasm, and personal connection with entrepreneurs — that isn’t really reflected in a 1-100 chance? Are the odds of success much lower than implied by the process?

    Not saying you should change, just saying there is insight to be found here.

    • http://www.sethlevine.com sethlevine

      I think you’re right on with this insight. And it’s clear to me now that I’ve had both some time to think about it as well as a bit more perspective from the entrepreneur that this stems from a history of having been either mistreated by investors or feeling like he was “on the outside” with no way in. I just happened to give him the opening (to your point) and the provocation to unleash that emotion. I’m not happy to be a punching bag for it, but I actually think that the underlying cause of the reaction is something worth exploring and addressing (I’m planning on writing a post about it next week).

      • CMKelly

        Sometimes people read what they expect to see in e-mails, and don’t see what’s actually there. So it’s possible that, even though you stated quite clearly that the idea was not in your sweet spot, and it was obvious the odds of a yes were near zero, that didn’t even register with the guy. All he saw was yet another rejection, like a kid applying to college getting a lot of thin letters. At first I thought you might want to include the statistics (8/5000 success rate) in your initial reply, but it probably wouldn’t have registered. I can think of a few replies I’ve received that at first glance seemed negative, and a couple of days later, I can see that they were actually offering to help me, even if they weren’t giving me exactly what I’d been hoping for. Looking at replies with fresh eyes could turn them into opportunities. (And in this case, a less anguished response would have kept the door open for another opportunity with you.)

        • http://www.sethlevine.com sethlevine

          Insightful comment. I’ve had some follow-up from this entrepreneur and I think that’s exactly what was going on (and to some extent what happened to me too, as I reacted to the response).

    • http://sotirov.com Emil Sotirov

      Very good point. Angry feedback is a sincere one – better than “grinfucking” anyway (http://www.feld.com/wp/archives/2012/02/grinfucking.html).

      Angry customer feedback can be extremely useful.

      And of course, offensive/hate stuff is not feedback.

  • http://www.justanentrepreneur.com Philip Sugar

    Great post. I am always awed when somebody gets mad when I give them a clear no to an ask. This isn’t limited to VC’s it happens in everyday life.

    Its why most people don’t give clear no’s. They instead give some ambiguous answer that keeps you wasting time and hoping to get to a yes.

    To everyone out there. If you get a clear no, whether it be from a VC or a prospect or potential parter: be happy.

    You will never find a yes unless you hear many no’s.

  • Amanda

    Putting aside the expressed motions, I am taken back by the informal wording and lack of pitching in the original email. Should have at least included a very short blurb on his startup and why Foundry would be a great fit. The lack of this and his subsequent emails immediately led me to think how he handles rejection of potential customers, recruits etc.

  • http://byJess.net/ Jess Bachman

    I hate it when people claim that success is about who you know. If that’s true or you suspect that is the case… then get to know the right people! It’s not that difficult.

  • http://bothsider.com/ Mark Gavagan

    A quick ‘no thanks, because…’ sentence is a million times better than a long drawn-out maybe. It doesn’t feel good the moment it’s received, but it’s truly good for everyone.

  • http://www.heyheyrenee.com/ Paul Kulas

    Howdy Seth,

    Not sure if your blog is good for pop culture. But Paul Allen (you know, the Microsoft guy) and the Underthinkers have a great new record coming out tomorrow, here it is:

    http://music.broadwayworld.com/article/Paul-Allen-and-the-Underthinkers-Release-Debut-Album-20130522

    The benefits all go to Allen’s museum, which rocks.

    KVNF is playing tracks from it now, it’s beautiful.

    http://kvnf.org

    • http://www.sethlevine.com sethlevine

      nice

  • ajcamp

    Sometimes when you’re doing business, you find yourself writing a message while your blood is running hot. Take heed. Anger goggles (similar to beer goggles) are masking your own tone from you. This person obviously regrets his own words in retrospect, though he has a hard time admitting it.

    This rule has saved me before: Send the reply to someone other than the intended recipient. This outsider should be someone who has no context in the conversation, so they can’t be drawn into the anger trap along with you. That person will be able to tell you in two seconds if you sound like an asshole. If they don’t give you a thumbs up, sleep on it and rewrite the message tomorrow.

  • http://simplifilm.com/ Chris Johnson

    I read this – a month or so ago. and I’m still pissed at this perception. The whole startup ecosystem is a delight, and it’s biased towards inclusion.

    Because I am a nobody from a nothing school. I got started less than 2 years ago. and I’ve worked with 500 startups alums, tech stars alums. I got mentioned by Sarah Lacy, and I got to work with Robert Greene, Seth Godin, Brian Clark, Marc Ecko etc etc etc etc etc.

    It was easy. I sent an email thanking Brad for a talk in PDX I updated him because he inspired me to run, and I ran a sub 10 minute mile for the first time since my 20s. Etc.

    Tiny gestures of good will- wanted to encourage. Later, I got to do a few paid trailers for the Startup___ book series. Fun. I wasn’t insincere or kissing ass to get that, I was happy to do it, but it wasn’t the point of engagement.

    I have done this in TV, fashion, etc. It hasn’t taken being smarmy, people WANT TO HELP. They HOPE THAT YOU ARE GOOD. They DON’T WANT TO REWARD THEIR FRIENDS….they want the best, and are gonna hear people out – people that have no earthly right to be heard out.

    It’s so easy to become connected that I guess someone that’s not able to see what’s what without resentment shouldn’t be considered because they may lack some basic preconditions that would yield a successful business..

    Anyway, this idea pisses me off because it’s so fucking easy to have great mentors, access, it’s ambient, everyone WANTS TO help as long as you aren’t stupid about asking.