I had a delightful lunch yesterday with Howard Hartenbaum, a general partner at August Capital. The lunch was offered as a “prize” during Lunchster‘s six-minute product launch at DEMOfall. I’d agreed to have lunch with whomever won the draw, even these are the sort of promises that can pretty rapidly go bad. You have no idea who you’ll end up sitting across from, wishing that you’d suggested Taco Bell drive through as a speedy alternative to the white-linen dinning you had to endure.
When I got the email that Howard would be my lunch date, I felt like I was the winner. I’d first met Howard as part of the team that launched Public Minds’ response aggregation system at DEMO 2001. Since that time, he’d made the move from entrepreneur to VC and scored his “big win” – an early investment in Skype. His choice of Palo Alto’s Tamerine Restaurant only confirmed that Howard still picks winners; it’s a local favorite of mine).
Most charmingly, Howard didn’t seem to want to monopolize the conversation with shop talk. Instead, shared restaurant tips, swapped medical mystery stories, railed on litigation-happy parasites, and concocted an elaborate story of long-suppressed love unleashed by a chance encounter courtesy of Lunchster.
Since I was pretty sure no one would believe that last yarn, I asked Howard what he didn’t like about being a VC. “I don’t like saying no,” he responded without hesitation, adding that it’s made worse by the fact that as a VC one must “say ‘no’ 99% of the time.”
Okay, I’m a bit cynical when it comes to what venture guys say and what they do, and in my experience, most VCs don’t say no. They say things like “I need you get more customer traction” or “this deal is too early for us but come back in six months” or “I’ll need to get my partners on board with this” or a couple dozen variations on these themes.
Howard seemed to sense what I was thinking. “Venture capitalists have two responses to entrepreneurs,” he said, “yes and everything else.”
To his great credit, Howard decided to take on “no” head on. “In life and in work, when there is something that makes me really uncomfortable, I make a point of doing it in the hopes that I’ll become inured to it.”
So when he decides to take a pass on a company, he calls the entrepreneur directly and tells him no. Has it gotten any easier? “No.”
But he does it. He does it because he respects entrepreneurs. He does it because he isn’t going to waste their time. He does it so that entrepreneurs know the why behind the no.
A “no” is such a rarity in the venture hunt that entrepreneurs may not know how to act. Here’s my advice: don’t argue, don’t debate, don’t tell a guy like Howard that he’s wrong.
Listen for the no and be glad for it. That VC is saving you time and heart ache. Listen to it, accept it, and move on.
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