Shortly after wrapping up our PhDs from Stanford CS, my peer group had a running inside joke. Whenever we would meet at an event, we would greet each other with “Doctor, Doctor, Doctor.” It’s hard to describe in words, but you have to imagine a bunch of geeky guys standing in a circle and shaking each others hand and saying “Doctor,” as they nod their head. It was funny to us, and to date if a group of us end up together the tradition continues. The title of today’s post is a riff on that inside joke.
Every so often, I’ll meet with a founding team and they will tell me that they met with a “Partner” at a VC firm. I generally try to keep track of who the movers and shakers are in the VC world, and so I’ll ask “Oh, who are you talking to?” The response often surprises me, because I know that the person they named is not really a decision maker at the firm. However, the first time founders didn’t know that.
So it’s time to expose another VC trick. If I wasn’t riffing off of an inside joke that’s funny to me, I’d boringly call this post “Understanding the use of the Partner title in the VC industry.” Yikes, that almost sounds like an academic paper!
Understanding titles in the VC industry was hard enough to begin with. Fred Wilson has a nice post (What do VC titles mean?) from 2006 that did a good job of explaining how things used to be. Back then you had Managing Directors/General Partners, Venture Partners/Partners, and then Principal/Associates. It started to become a little more confusing when some firms started assigning banking-like ambiguous titles like “Vice President.” I’m guessing a “Vice President” at a VC firm is somewhere on the higher end of the Principal/Associate group, but quite honestly I don’t know the right pecking order either.
VCs and firms know that entrepreneurs often receive the advice that “they shouldn’t waste time talking to analysts or associates at VC firms.” (I’m not going to comment on that itself. You can find lots of other posts that already talk about it.) To make things even more confusing these days several of the larger firms have started calling almost everyone in their firm “Partner!” I’m not kidding, ask for a business card from someone you know who just graduated high school (okay I’m exaggerating, it’s probably someone who just dropped out of college 😉 ) and their business card will say “Partner.”
It sounds silly, but there’s now been enough occasions when I’ve chatted with founders who thought they were further in the process than they actually were because of the confusion around the persons title. In some cases they hadn’t even cleared the gatekeeper to get to a decision maker.
If you’re a founder, you need to make sure you understand whether the person you are talking to at a VC firm has the authority and the decision-making power to drive an investment decision. That person is the real partner in the firm. This is something that is often very hard to determine from titles. Please don’t get duped by titles. Titles are only one bit of information to factor in.
When you are in a meeting, or better yet when you’re setting up a meeting, feel free to ask a person to explain how the process works in their firm. By asking the question that way, you’re not disrespecting anyone, and yet at the same time you’re arming yourself with a better understanding of what are the hoops you need to jump through to get to an investment decision.
Different firms have different team and partner dynamics. In some firms, even though someone may be a general partner, the internal dynamics of the firm may be such that only a handful of senior partners really call the shots. Your best bet to understanding this dynamic is to use the backchannel to reference check the person you are speaking with. Sometimes checking who serves on the boards of some of the most visible portfolio companies of the firm can also be a good signal as to who is really driving decisions.
In my view the firms that use the title “Partner” loosely and almost promiscuously are doing a disservice to entrepreneurs. They should be more transparent about how the process works in their firm and if part of that process is to get through some gatekeepers, then that’s okay too.
N.B. At K9 I’ve decided that I do not want any gatekeepers between me and founders. No associates, no principles, no junior partners, and certainly no faux-partners. If I choose to engage with a company, they engage directly with me. The corollary is that I have to limit how many teams I can engage with. To help manage that I publish my investment criteria, so that the founders can self-select whether or not K9 will be a good fit for them.
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