“Show me the incentives, I’ll show you the outcome.” - Charlie Munger

Adverse incentives abound in venture. From “Founder first!” VCs shackled by fiduciary duties to “Long term capital partners!” needing liquidity in 24mo, it can be a confounding headache for the uninformed.

I think this is particularly prevalent when founders meet with Junior VCs.

Analysts/Associates are often stuck between a rock and a hard place, and many toe the line of safety to the detriment of founders. “Too early!” or “Not right now!” are often coded for “We don’t think you’re the team” or “We think this is Tinder for Dogs”. Responses are often mushy pleasantries devoid of substance.

But what leads to this behavior?

A few things:

— Venture is a long term game, and the longer you’re here, the more surprises you see. Tinder for Dogs might pivot to the Dog Walking Unicorn. Every VC is balancing feedback with keeping the door open to future conversations…

— … and many founders do not like being told their baby is ugly, even if feedback could be productive. So, many Juniors fall victim to a flawed risk-reward calculus that fizzles down to “We’ll circle back!”

— Plus, many Juniors believe they have neither the bona fides (builder experience, track record) nor the platform (founder/partner/title) to speak authoritatively in a way that will find founders receptive. Khosla can torch your idea because he’s Khosla; the proof is in the pudding. Johnny Junior can torch his reputation with a bit of spicier feedback poorly communicated.

Counterintuitively though, in seeking safety, many Juniors do injury to themselves and their brands as non-committal, wish-washy, fake, or memetic (“How can I be helpful!”).

The best investors have brands of being honest and providing quick “No’s” with actionable advice. In fearing polarity, Juniors often relegate themselves to the milquetoast pack of mediocrity.

I’ve done this. I’m not proud of it.

As I’m in the space longer, I get more comfortable with my voice, my value add, and where I think I have room to impart something thoughtful and where I should really shut my dumb mouth. But it’s still a balancing act. We’re in a very human business.

As frustrating as it is, founders should be aware of the game they’re playing and the incentives across the table.

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