I heard this line this past week, and it’s been like a catchy lyric playing over and over again inside my head: “Their profile is ahead of their proof.”
Written another way, when Profile > Proof.
It could apply to a company, a startup, a venture fund, and of course, an individual. And it reminded me the profile of any of these entities can be built up, pumped up, and broadcast widely for not much money or effort. The age of social media is in full-swing, as we all know too well — entirely digital brands are going direct to consumers, disrupting traditional brick and mortar stores; traditional media outlets such as newspapers and cable television are being replaced by celebrity- and influencer-driven “channels”; and “startup culture” is now defacto corporate culture, with early-stage, well-funded startups executives on the coasts commanding compensation packages at many multiples of what their counterparts may make across flyover country.
There are countless ways this phenomenon of beefing up a profile ahead of an event — a launch, a new hire, a new funding round, etc. — manifests in startup land. The manner in which I encounter it most is around early-stage financing. In the Bay Area in 2018 (and yes, I concede it’s radically different elsewhere), there really is a lot of money floating around and even more startups who are seeking it. But this isn’t just a few $100,000 dollars here and there — we are talking about rounds with 2-person teams getting oversubscribed and ballooning from $1M upward. VCs don’t help the cause, as they’re on the hunt for ownership percentage to hit their targets.
This is the local market today. I don’t complain about it, because it is what it is. What does surprise me, however, is how folks who are super early in their company journey start to conflate “being oversubscribed” with a real signal, or investors who believe they’re entitled to the next fund based on very little from the previous fund. At some point on the funding treadmill, people begin to discount the profile and look for evidence of proof. You could perhaps categorize early rounds or early funds as evidence that some folks believe in the profile enough to deliver proof — but in today’s age, it’s significantly easier to create a profile and, paradoxically, much harder to demonstrate proof.
Perhaps the reason this line “Profile > Proof” stuck with me is because I have felt it myself. Although it sounds nice for a second, I do have folks telling me “Congrats on your success!” — and after those few seconds ware off, I am immediately snapped back into my normal paranoid resting state, usually retorting with “Ah, you mean congrats on surviving!” I mean this wholeheartedly. New investors like myself are still totally unsure of what the results — the proof — will look like in the future, but we have all these interim indicators out there. Folks can often judge others on proxies — not always the real thing. Of course, I see this also take root from the inebriation of many oversubscribed rounds spilling over into future rounds.
What I’ve ultimately concluded for myself, and I would guess this applies for all other entities, too, is that there is no substitute for proof. Someone can package all the interim markers and proxies they want to, and we all spend a great deal of energy in that exercise, but without the proof, it’s likely all moot.