In Defense of Introverts
(Learned from being an introvert with passion and a fear of public places)
I’m not an activist. I’m not even a very sentimental person. But one thing that I feel really passionate about is the plight of introverts.
That’s because I’m one of them.
When it comes to interviews, especially interviews with startups, introverts are at a natural disadvantage. There are so many questions that candidates should ask, that they don’t. And that’s dangerous.
Have you ever wanted to ask a question in an interview but chickened out?
The mere fear of asking can prevent a person from knowing critical information that any sane person would use when making career choices. And this extends beyond introverts. It’s true for anyone that’s new to startups, anyone that’s new to the Silicon Valley, or has cultural beliefs that it’s wrong to ask the types of questions that need to be asks.
As a founder, I know exactly what I’d ask if I were interviewing. More importantly, I know why those questions are so important. Because of the power dynamic that naturally exists in interviews, it’s super awkward and unrealistic to think it’s the responsibility of the candidate to ask the questions. Without some great standard in place, it should be the responsibility of a founder to bring these questions up, and answer them for every candidate.
Here’s just a few questions that no one ever asks me, but they should.
- How much money do you have in the bank?
- What’s your burn rate?
- How many months of money do you have in the bank?
- How many employees can you hire before your options pool runs dry?
- What extra rights do your preferred investors have? Do they have participating preferred, or just preferred? Do they 1x, 2x, or some other liquidation preferences?
- How do investor voting rights work? What can they prevent from happening? What can they force?
- How many people have you fired? What does it take to get fired?
- How many CEOs has your board fired within their portfolio companies?
- Is this your first time as a founder?
- Is this your board member’s first time as a general partner?
Here’s the problem. Would anyone ever actually ask these questions? Would asking these questions lesson one’s chances of getting hired? But even if we flip the responsibility to founders — is asking founders to be responsible for bringing up and answering these questions scalable?
No, but it’s worse than that. How many people even know the right answers to these questions. What’s good? What’s bad? When you tell an employee the all-in burn rate per head is $15K/month, it’s only half the picture. How in the world would the employee know if $15k/month is good or bad. They don’t know the benchmarks — and how would they get them?
What we need is a simple, elegant, scalable solution.
Snap, crackle, pop.
One of the great joys of being an adult is that I enjoy exercising my right to eat cereal at all hours of the day and night.
Specifically, Rice Krispies.
One night while eating a bowl and staring mindlessly at the box, I was reading the nutritional guidelines.
And it hit me.
I noticed it was a perfect analogy for solving my information gap between startups and candidates. In the same way knowing a startups burn rate is $15K per head is useless without understanding the benchmarks, the same holds true for food.
But the USDA solves that for us.
Without needing to know anything, I can judge for myself whether I want to eat Rice Krispies as part of my diet. By looking at the % Daily Value provided to me by the USDA, I can easily do that, without needing a degree in nutrition.
What if we had the same thing for startups? What if every job offer included the basic stats of the company and NVCA (National Venture Capital Association) standard benchmarks? Imagine there being shared benchmarks for burn-rate per head, percent of unallocated ESOP pools, and so on.
The Employee Information Rights Act
I’d like to propose that we do this as a standard practice in the Silicon Valley. It‘s a game changer for introverts and everyone else who has ever felt disadvantaged and under-informed walking into at interview. We’ve all heard of the horror stories where people from outside the Silicon Valley come here only to be scammed by some bullshit startup.
With The Employee Information Rights Act, this would simply stop.
Imagine the difference for candidates. Now all any candidate would have to ask two — “do you adhere to the Employee Information Rights Act?” and “are your stats verified by a VC? that adheres to the NVCA standard?” If this were a standard, we’d empower an entire generation to make more informed decisions. In this new world, who would ever join a startup if they refused to share their stats? Who would ever join one with terrible stats?
How would it work?
Stage one. VCs like A16Z, Sequoia, and Greylock sign on and work together with the NVCA to choose the critical benchmarks and form the data that generates the basis of the benchmarks.
Stage two. During due diligence of any round of financing, the VC’s law firm verifies that the startup is acting in accordance with the Employee Information Rights Act — meaning they verify that the startup is sharing accurate company specific stats and the accurate benchmarks stats as part of offer letters. If they’re not, it would flag a schedule of exception item forcing the startup to comply in order to get the money.
Stage three. The NVCA, or some other standards body, posts a website where the benchmarks, the standards, and why they are important are detailed and explained to any interested candidate.
How does it benefit VCs?
A similar movement toward standardization happened in the early 2000’s when VCs got behind the idea of promoting more standard, simpler term sheets for founders. I can still remember the crazy terms, the opaqueness and the confusion in the late 90’s — you had to read a book just to make sure you weren’t going to get robbed.
Because there was a VC backed effort to simply terms, I now know that raising a 1x liquidation preference with no participating preferred is a rock solid deal. When I get a term sheet, I simply ask my lawyer to verify it’s a normal offer and if it is, then I know what it means. If I get a term sheet that is any different than my “normal” I flag and begin asking questions. Normal, in the case of raising money, is my best friend.
At Powerset we raised $10M on $42M post with standard terms from Peter Thiel and other, but had an offer at $70M with all sorts of funky terms in the deal from a no-name VC. We chose a higher quality investor that offered normal terms.
What I’ve found over the years is that the more trustworthy, higher quality VCs tend to offer more standard, transparent terms. My guess would be higher quality VCs would support the transparency we’re discussing, because such transparency would be associated with higher quality startups — something VCs always want to attract.
If we can all work together on standards, on transparency and on good old fashion honesty, we can create a paradigm shift where no one is ever harmed because they felt awkward about asking a question.
Could Angelist be the key?
