Morals vs Greed
We are all reading about bad behavior in the venture business this summer. It is not pretty. The data is right there about how it is more difficult for women founders sitting on the other side of the investor table. Many questions are posed that are inappropriate from “do you plan on having children” to questioning the ability to grow vs seeing the opportunity. As a founder, you want to push back and change the conversation but then you have to wonder if you really want those investors to put money in your business. It is a serious catch-22. I do believe it is getting better but we are certainly not where we should be.
Every day there are new businesses coming at investors. It is an incredible time and we will look back at this time in history as a time when new businesses changed everything for the next generation. I can point to Tesla, Cryptocurrencies, and even Justin’s Peanut Butter.
As an investor, I stick to one investment per vertical. I believe that if you bet on a space, you pick one company and get behind it. Otherwise, how can an investor be involved and know information around multiple companies in one vertical that are competing with each other? This defines one’s moral compass.
I have seen more than a few investors invest in more than a few companies in the same vertical even though they have told the founders of one that they wouldn’t do it and they did anyway. Early stage investing is such a risk as it is. Mitigating your risk by putting money into several companies in the same space competing against each other is about greed and once again spotlights that investors hold all the cards. Not ok.
Greed is unattractive. When you start to look at the investors for your company there are several factors to be looked at. You want an investor who gets your business, can provide intellectual value as well as financial value, you want to connect with them and more importantly, you want to trust them. Dig deep and see what their moral compass is before you take someone’s capital. As founders and investors, we all want to see success but I can not and will not be involved with someone who has lost their moral compass.
Comments (Archived):
I simply won’t bring ethically challenged people into my life.I walked away from a few friends over the past 18 months because of this and am at peace with it.
good for you.
.The single most important decision anybody ever makes in business is with whom they are going to do business.This is true for co-founders, partners, investors, suppliers, vendors, bankers, professionals, etc.JLMwww.themusingsofthebigredca…
I have found that the one of the best ways to find out the answer to something that you want to know is not to ask questions but to tell stories. By telling a story, or an anecdote, and viewing the response (verbal, written or facial even voice tone) and then comparing to other indicators, you can find out a great deal about someone. And if done well not tip off what your intention is. Takes a bit of practice.This is also a great way to teach children as well. You don’t tell them what you think they should do or what they shouldn’t do. You tell them stories while growing up in either glowing terms or disparagement of others who made the right or the wrong decisions. And you leave out the direct lectures which obviously stand a great chance of getting ignored. Works in relationships as well.
Great post. I always thought that, coming from magazines, it’s possible to have titles that attract different audiences, so it should also be possible to have apps or companies that attract different users. Truth is the investor circle and advisors you choose bring their contacts and relationships to your company so it helps to have them solely focused on helping grow your business. I appreciate those individuals who have backed me, and Hintd, and am grateful for the mostly women who are on my team and in my corner. Thanks for this. Agree that at the end of the day, integrity is non-negotiable.
Thanks for this post. I used to think that, coming from magazines where it’s possible to have several titles in one company serve different readers, it would or should be possible for several apps in one fund serve different users. Now I realize my investors and advisors bring their whole contact list to the table and it’s helpful to have them in my corner. But the bigger reminder, which I agree with you about is this: At the end of the day, or the deal, the one thing we all have is our word. And integrity is non-negotiable.
I like that. Integrity is non negotiable
Finding the right investors = falling in love.Infidelity = Promiscuity. Dishonesty = Disrespect.Ultimately I need to tell my investors every single truth even if its not pretty.The worst thing is for my investors to hear about my startup from other sources.Similarly it is the worst thing for my investors to go write a check in my space without speaking to me.Or wanting to buy back their shares but continue to “support my mission”Conflict is not the enemy.Convenience is.
Would Mark Cuban’s investment in both Chapul & Chirps — 2 products based on cricket flour — qualify as being in same vertical and therefore a worse strategy? Seems that his investment would help expand category and provide more skus for “cricket protein” vertical.