Being Able to Say No to VCs

Bastian Lehmann, CEO of PostMates, recently shared at Startup Grind and with Business Insider, his experience ignoring VCs and it struck me as one of the greatest reminders of the year. The ability to write a check by no means makes one right but neither does it make them wrong.

Particularly in Austin, evident in a string of recent exceptional articles about Texas Venture Capital from Richard Bagdonas, joahspearman, there is a tendency to heed the advice of those that write checks where capital seems constrained. And on the surface of that, it may make some sense; after all, why would we not take the advice of those that clearly have been successful and now hold a key to our success? And yet, I don’t think you can disagree with me that the people least qualified to provide the right advice are those not working in your business. Advice is perhaps particularly hard to ignore (or even more provocatively outright disagree with) when it comes from the people with the money (or those claiming to make it available: mentors, incubators, and accelerators); always remember, the ability to write a check by no means makes one right.

“If I had to take on face value all the advice VCs gave us the last two years, we wouldn’t be here,” Lehmann said at the Startup Grind conference in Silicon Valley.

I suppose my point and encouragement is that, as a founder, your first and perhaps only priority is really just figuring everything out. Validation and traction are just two of the things to figure out; knowing how to succeed is much more difficult. Wrap your head around that. Validation and Traction do NOT = success. Most ventures fail even after finding that measure of success because of inconsistent expectations, upside down cap tables, distractions, other interests, and most often, a change in the market, over which you had no control and could only prepare and pivot through whatever comes your way. Fail to know how to work through every possibility and even success meets failure.

So perhaps, harder than pitching VCs, is being able to say no to them, and thus, being able to say no to them is evidence that you’re on the right path. After all, how can you be bold enough to say no to the millions in working capital you need unless you know the direction they’re encouraging is wrong?

Then again, that too is just advice and I’m the first kind of person Lehmann ignored as I’m always pushing Austin to better understand the role of growth and reinvestment in it.