Checking In With The Market And Rorschach Tests

Hi everyone. I’m at an offsite down in southern California. Yesterday, I briefly tweeted something that was on my mind (during a break at the offsite) just to get it out of my head. I didn’t check Twitter for hours after that, and then got a private message that went something like, “Hey, man, you may want to blog about a topic like this rather than tweeting it.” Whoops!

The tweet in question went like this: “Independent of runway, it’s important for a startup to fundraise every 12-24 months, to “check in w/ the market.” The act of convincing a new investor to get conviction & set a price is a healthy checkpoint for all parties – founders, early employees & existing investors.”

It turns out, a *lot* of people on Twitter really disagree with this. To be fair, I probably should’ve blogged about this vs tweeting it, but I didn’t see it as controversial or emotional content, it was literally just a through-away thought that’s been on my mind. I was surprised to read some folks commentary on Twitter (folks I like and respect) who said the tweet was “catastrophic” or made them feel “sick.” I didn’t really see the tweet or the subject matter as so charged. I’m glad I didn’t publish the tweet in my drafts folder about killing baby bunny rabbits!

We can debate the merits of the tweet until we are all blue in the face. I don’t think that will help folks (or myself) come to terms with what the reality is. So, instead, after sleeping on it, I think the tweet was more of an inadvertent Rorschach test: A Rorschach test is a psychological test in which subjects’ perceptions of inkblots are recorded and then analyzed using psychological interpretation, complex algorithms, or both. Some psychologists use this test to examine a person’s personality characteristics and emotional functioning.

In reading through all the replies and dunks, it was fascinating to me to see and feel the distrust and disdain for venture capital investors. I felt a lot of frustration seeping through the replies, frustration for the distraction a fundraise can cause, frustration toward looking for VCs as validation (versus focusing on customers), frustration in the perception that an investor just wants markups to earn credibility and raise subsequent funds, frustration toward a culture of raising money from lenders (like VCs) versus tuning a product and business to become profitable.

There’s another conversation for us to have about the tweet in question, but maybe we need some time to lapse before we go there. At least with the investors I often co-invest with or who follow our deals, I don’t really encounter the behaviors cited above in the reactions. Often what I see is that a fundraise process can actually help an early-stage team (who doesn’t yet have enough customers, for instance) get organized and marshall their resources. That doesn’t mean folks should raise huge amounts ahead of plan, or that they should allocate all their time to this, or that they shouldn’t focus on customer relationships. It was a surprise to me, but some words in that tweet really triggered a reaction like a Rorschach test is designed to do. While it was not intended to be such a test, the replies are a gift, I am grateful folks actually care to read what I write/think, and I will reflect on this topic more and the underlying psychology of why so many folks reacted in this manner. Again, thank you for reading and back to the offsite.