#3 is insane, if for no other reason than the VC is signaling that he’s likely going to try and do the same thing to you some day… even if you were totally willing to screw over your team, why would you ever get involved with that VC given you’ll then have to watch your back until the end of time?
I think a lot of people fail to recognize that they're the next target, or convince themselves they're special in some way that makes them immune. It's like when someone knowingly participates in an affair and tells themselves "Sure, they're cheating on their current partner to be with me, but after they break things off I know we'll be together forever!"
Some people really do thrive on this shit though. They know the rules of the game and want to play it. What they’re really thinking is they’ll be better at the game than their opponents.
I mean can you actually imagine the internal monologue of a guy like Sam Altman?
Because if you get involved with most VCs, you will then have to watch your back until the end of time.
None of those "worst experiences" seem all that unusual to me (though nobody will say #1 out loud anymore until after they've invested), and #3 is completely in character for Vinod.
If one partner is the core of the company, and the others the VC thinks are useless ( I am not saying in this case they were...just that the VC might have that perception) what should the VC do?
After all its just business decisions like Cloudflare recent layoffs no?
If they truly are useless that's one thing, but the ability to "impress" some asshole in a 30 minute pitch has little to do with running a successful tech company.
With what authority are VCs claiming to be capable of being an accurate judge of talent or character in less than an hour?
Sounds like said VC in your example is doing insufficient due diligence and just investing based on vibes.
Yeah, this is par for the course with VC. You should never believe your VC (even post funding) is your friend. They can be a great business partner and resource but they're never your friend under that dynamic
Because rich and powerful people also have massive egos to go with their power and money. Some of them will find your rejection a personal attack and try to actively sabotage you. Not all VCs are like that, but there are enough of them that you need to be careful about how you handle the situation.
Sadly, I've experienced this myself, and I'm aware of other people who were cut off from opportunities in similar ways. I applaud the tweet because this is important to say out loud: we are often not living in the world we think we are observing. Many people know this, but few talk about it. It's an open secret.
My pet theory is that it is more nurture than nature. These (VC) veterans have seen thousands of startups come and go, and become so desensitized to the ruthlessness.
Of course to people like the author, it seems borderline sociopathic to casually suggest such levels of betrayal. It is like trying to get into the most exclusive nightclubs, and when you're finally in the front, the bouncer will look at the group and say "You can get in, but not those two". It sucks, but to the bouncer it is just business as usual, and you're just another face.
After reading some of these stories, I don't see how you can't come away thinking that psychopathy is a trait that goes hand in hand with being a successful VC. The story about Vinod Khosla speaks for itself, but after reading #2 I clicked on Marc Andreesen's twitter profile, which currently says this:
> You’re not talking to someone who woke up a loser. That loser attitude, that loser premise makes no sense to me.
These fuckers are grotesque caricatures in human skin.
I hear story #1 periodically, but almost never see a quote. How is this stuff said specifically? It always seems like hearsay.
I'm sure it's authentic, but I'd love to hear the details on how that stuff is actually said in conversation.
More and more I see why bootstrapping is the way to go. And especially in this SaaSpocalypse with AI companies commoditizing entire companies with new feature releases like Claude Design or Codex for legal, it's better to just run your little corner of the Internet and make sustainable money over hyperscaling with millions and billions and being put out of business the next week.
One might say why bootstrappers won't get erased too but they can carve out a specific market too small for AI companies to want to touch, and still remain sustainable rather than needing to make a ton of money; and pivoting as a venture backed company can be much harder as there are more people to please like investors and your employees which you likely have more of than a bootstrapper.
As with all things, the horror stories just get the most attention. People love to rage. There are plenty of boring (good, even!) VCs out there. They just work more quietly, professionally.
I'll share a story, but its about a close friend and not me so I won't name any explicit actors and I'm going to round out the numbers. You either trust me or you don't, but this is a very direct relationship I have to both the founder and VC.
The story is this: the founder started their company outside of SV, so the lawyers weren't super familiar with startups and messed up the initial incorporation and stock plan stuff (actually super common: use Stripe Atlas or pay a startup-aware lawyer!). Went under the radar through years. This company ended up being bought for nearly $1B (with a B) after many rounds and a large board.
During the legal work to close the acquisition, they found out this messed up stock plan. Without going into the details, the effect was that instead of taking home $200M, the founder would take home ~$75M. The mistake the lawyer made almost a decade earlier was about to cost him $125M.
Most of the board basically said "too bad so sad, law is law." But one VC (the one I know, the one I'm talking about) basically strong armed and politicked the whole thing and eventually convinced everyone around the table to give up an equal share of their own holdings to make the founder whole.
Letter to the law: they didn't have to.
Spirit of being founder friendly: this VC went to bat hard and got everyone to yield to make things "right."
Also, look, you might argue $75M vs $200M is just "rich vs rich." Who cares? Sure. That's not the point.
You don't hear about stuff like this because honestly its not a big enough deal and feel good stories get way less clicks than pitchfork stories.
I feel as if basic Personal Integrity is now considered an anachronistic weakness, in the tech industry, and it's heartbreaking. I know that VCs can probably share similar stories [to the OP] about some of the people that pitched them, or their behavior, after getting funded.
Lotta ass, being shown, all around.
At some point in the future, I may consider smaller-scale (local) angel investing, but it seems like such an ugly field, not sure if I'll ever do it. I don't need the money; I would do it to help folks get a leg up.
Right - and if I ever go to raise VC then that's a guy I'll want to talk to. Even if they themselves don't invest, their recommendation would be valuable.
Life's too short to screw people over - reputation is one of the few things that last after we're gone.
My prospective co-founders and I were pitching to a VC firm that was, on paper, a really good fit for what we were trying to do. The partner we were pitching to was, 15 years ago, briefly my manager's manager -- some work relationship there, she remembered me and I her, but we didn't work super closely together and it had been a very long time. She had moved on at that company to more big-shot things and ultimately become a partner at a respectable VC firm.
About 10 minutes into the pitch, she cut us off, and basically said -- as absolutely kindly as something like this can be directly said -- "I am not going to invest in this, and furthermore I don't think what you're trying to do is investible at all". Then she took a bunch of her time to run us through why, help us understand some very fundamental things about the VC world we didn't quite have right, and generally be brutal but extremely useful in us framing what we were trying to do.
She didn't have to do that. She could have nodded along and then given us a polite "no" like everyone else. She could have cut us off and given us a rude "no". But she didn't -- she made sure to use the time we had to help us as much as she could, even if she very adamantly was not going to invest.
Not a big gesture or anything, but kind and helpful. There's a lot of that. But it doesn't make headlines.
The non-horror stories are usually pretty boring: VC heard the pitch, then either passed politely or wanted to be part of the round. If they joined, they wrote a check and wanted updates.
The VC landscape has changed a lot since some of these stories happened. Many years ago, there were few VCs and even good companies had a hard time getting funding. This created weird environments with some VCs raised funds and then liked having companies crawl to them to beg for the money.
There are still some VCs like that, but there has been an explosion of VC funds and money. Most VCs know they need to work hard to earn the trust of founders that they want to invest in. Leaving a bad impression could mean you're left out of the next round if you want it.
This goes against the popular idea of VCs, but most VCs I've worked with are actually pretty boring, normal, nice people.
I believe Eric Vishria is the best Series A board member of this generation. I've learned more from him about it what it means to be a great CEO over the last 10 years than anyone else. I haven't heard of another founder who has spoken as highly as their Series A investor.
I've been meaning to write up my story with him. Now is a great time with all the horror stories on others that have been coming out.
I was just an engineer at a vc backed startup but our interactions with the VCs were totally normal - they were no better or worse than when we worked with publishers or other external funding sources.
Casey Aylward from Accel has been mentioned in all void0 company posts. So she must have been very useful for the founder. (I don't have any insider information about void0, I've met her a few times and she is amazing)
Tony Conrad [1] was the VC that guided our related content engine (Sphere: a vector database before vector databases were cool) through a $25 million exit. Chump change these days but he took really good care of us, leading us through a global recession and then two acquisitions.
The best possible case is that you get a cash infusion now in exchange for giving up a huge percentage of your future revenue and control of the company.
Sure. They are usually just very boring: you made a pitch, got funded. The VCs used their connections to get you good advisors and/or introduce you to prospective clients.
Well he did retweet another tweet that kickstarted the convo, very possible he saw that tweet, said to himself "I have some of these to share!" and then proceeded to... do so.
The first I heard of Cloudflare was a recommendation from someone who used to DDoS websites (and yes they've been arrested for related crimes, long story), and I thought "what the heck is Cloudflare" then over the coming years, I kept seeing other friends using it. It's really interesting that Cloudflare was able to pop into a market that Akamai could have snagged for themselves or outright tried to buy out Cloudflare.
It's a bit crazy in hindsight that companies would have avoided investing, considering this is a space someone like Akamai occupied, and clearly there is value in this space. It's incredible to see how Cloudflare has grown over the years, kind of happy they grew as much as they did, a bit surprised by some of those VC nightmare scenarios.
Cloudflare is fantastic at marketing, and pretty good at technology. I evaluated them twice for enterprise contracts and both times picked a competitor. The first time, it was DosArrest for DDOS protection, which was a much better value per dollar (but they sucked at marketing.) The second time, we needed a CDN with particular features and Fastly was a better fit.
My point is that it’s very very hard to know in advance that a startup is going to be awesome at marketing. Their tech was not, on its own, a giant moat or a “must have” standout. So I can see why some VCs shrugged.
Getting extreme wealth is more so about luck in various forms than competence/intelligence. If it were just about the latter everyone who's intelligent/competent would be rich. You don't hear about boring wealthy people either.
https://en.wikipedia.org/wiki/Affinity_fraud among other factors - being someone who talks right and plays metaphorical ball with the correct people matters more than any amount of intelligence or competence.
In many cases the GPs are not, at least nowhere near as much as you’d think. Obviously there are power laws here as well. Non partners, forget about it.
The other thing is it is maybe the most nepotistic industry out there. Which somewhat makes sense given the actual job is so relationship based.
Competence, intelligence, merit have little connection to wealth. Wealth at that level is attained through arguably unfair means, not from reward for hard work. Conversely, poor people are not poor as punishment for lack of intelligence or merit
I could write a book with the horror stories I have of VC and LP behavior, and some of the wild stuff I’ve either been asked to do, verified others were asked to do or say it’s just totally unhinged.
I don’t know if Angel investing groups are really still around like they were in there 2010s but the variance in the types of insanity and weirdness for those groups is really unmatched.
I mean can you actually imagine the internal monologue of a guy like Sam Altman?
For example, if you go off with the cheating partner, don't expect it to not happen again
None of those "worst experiences" seem all that unusual to me (though nobody will say #1 out loud anymore until after they've invested), and #3 is completely in character for Vinod.
After all its just business decisions like Cloudflare recent layoffs no?
https://blog.cloudflare.com/building-for-the-future/
With what authority are VCs claiming to be capable of being an accurate judge of talent or character in less than an hour?
Sounds like said VC in your example is doing insufficient due diligence and just investing based on vibes.
Of course to people like the author, it seems borderline sociopathic to casually suggest such levels of betrayal. It is like trying to get into the most exclusive nightclubs, and when you're finally in the front, the bouncer will look at the group and say "You can get in, but not those two". It sucks, but to the bouncer it is just business as usual, and you're just another face.
> You’re not talking to someone who woke up a loser. That loser attitude, that loser premise makes no sense to me.
These fuckers are grotesque caricatures in human skin.
One might say why bootstrappers won't get erased too but they can carve out a specific market too small for AI companies to want to touch, and still remain sustainable rather than needing to make a ton of money; and pivoting as a venture backed company can be much harder as there are more people to please like investors and your employees which you likely have more of than a bootstrapper.
In my experience, a more interesting friction is that VCs are pursuing a diversification strategy while founders are pursing a singleton strategy.
I'll share a story, but its about a close friend and not me so I won't name any explicit actors and I'm going to round out the numbers. You either trust me or you don't, but this is a very direct relationship I have to both the founder and VC.
The story is this: the founder started their company outside of SV, so the lawyers weren't super familiar with startups and messed up the initial incorporation and stock plan stuff (actually super common: use Stripe Atlas or pay a startup-aware lawyer!). Went under the radar through years. This company ended up being bought for nearly $1B (with a B) after many rounds and a large board.
During the legal work to close the acquisition, they found out this messed up stock plan. Without going into the details, the effect was that instead of taking home $200M, the founder would take home ~$75M. The mistake the lawyer made almost a decade earlier was about to cost him $125M.
Most of the board basically said "too bad so sad, law is law." But one VC (the one I know, the one I'm talking about) basically strong armed and politicked the whole thing and eventually convinced everyone around the table to give up an equal share of their own holdings to make the founder whole.
Letter to the law: they didn't have to.
Spirit of being founder friendly: this VC went to bat hard and got everyone to yield to make things "right."
Also, look, you might argue $75M vs $200M is just "rich vs rich." Who cares? Sure. That's not the point.
You don't hear about stuff like this because honestly its not a big enough deal and feel good stories get way less clicks than pitchfork stories.
I feel as if basic Personal Integrity is now considered an anachronistic weakness, in the tech industry, and it's heartbreaking. I know that VCs can probably share similar stories [to the OP] about some of the people that pitched them, or their behavior, after getting funded.
Lotta ass, being shown, all around.
At some point in the future, I may consider smaller-scale (local) angel investing, but it seems like such an ugly field, not sure if I'll ever do it. I don't need the money; I would do it to help folks get a leg up.
Life's too short to screw people over - reputation is one of the few things that last after we're gone.
About 10 minutes into the pitch, she cut us off, and basically said -- as absolutely kindly as something like this can be directly said -- "I am not going to invest in this, and furthermore I don't think what you're trying to do is investible at all". Then she took a bunch of her time to run us through why, help us understand some very fundamental things about the VC world we didn't quite have right, and generally be brutal but extremely useful in us framing what we were trying to do.
She didn't have to do that. She could have nodded along and then given us a polite "no" like everyone else. She could have cut us off and given us a rude "no". But she didn't -- she made sure to use the time we had to help us as much as she could, even if she very adamantly was not going to invest.
Not a big gesture or anything, but kind and helpful. There's a lot of that. But it doesn't make headlines.
The VC landscape has changed a lot since some of these stories happened. Many years ago, there were few VCs and even good companies had a hard time getting funding. This created weird environments with some VCs raised funds and then liked having companies crawl to them to beg for the money.
There are still some VCs like that, but there has been an explosion of VC funds and money. Most VCs know they need to work hard to earn the trust of founders that they want to invest in. Leaving a bad impression could mean you're left out of the next round if you want it.
This goes against the popular idea of VCs, but most VCs I've worked with are actually pretty boring, normal, nice people.
I've been meaning to write up my story with him. Now is a great time with all the horror stories on others that have been coming out.
He sticks through his companies for over a decade, which is rare in this business: https://x.com/ericvishria/status/2051459386372149506
https://voidzero.dev/posts/voidzero-cloudflare#acknowledgeme...
[1] https://about.me/tonyconrad
https://x.com/gregisenberg/status/2061794787825479818
Some QTs:
https://x.com/dunkhippo33/status/2062768969560510486 https://x.com/typesfast/status/2062791307094048937 https://x.com/awxjack/status/2062605286683336757 https://x.com/travisk/status/2062224472426365045 https://x.com/mark_cummins/status/2062293061426663612
source: most of the bullshit i surface up nowadays
https://xcancel.com/eastdakota/status/2062860530360959273
It's a bit crazy in hindsight that companies would have avoided investing, considering this is a space someone like Akamai occupied, and clearly there is value in this space. It's incredible to see how Cloudflare has grown over the years, kind of happy they grew as much as they did, a bit surprised by some of those VC nightmare scenarios.
My point is that it’s very very hard to know in advance that a startup is going to be awesome at marketing. Their tech was not, on its own, a giant moat or a “must have” standout. So I can see why some VCs shrugged.
Is it the money that makes them stupid or smth?
The other thing is it is maybe the most nepotistic industry out there. Which somewhat makes sense given the actual job is so relationship based.
I don’t know if Angel investing groups are really still around like they were in there 2010s but the variance in the types of insanity and weirdness for those groups is really unmatched.