There is a famous mantra from the venture capital community. “I am your investor. I am not your friend.”
Steve Blank, creator of Lean Launchpad, tells the following story: “Never take a VC meeting (as in hey, we are going to be in town, let’s grab lunch and chat) without knowing the agenda.”
Blank met his investors for lunch, they told him they were ing on investing in the next round, he was blindsided. He offered to resign. They said that was not the issue, rather “we backed a business we don’t know much about, the company is a money sink and we have no more stomach.”
Blank retorts: “But I thought you guys were my friends?!”
There is another famous line about your investor, VC or angel: “If you want a friend, get a dog.”
Over the past month I have been thinking about the word “friend.” Robin Dunbar, a British anthropologist, is known for studying relationships, and his rule (yes, it is called Dunbar’s Rule) states that we humans, given our brain size, can comfortably maintain about 150 stable relationships, but there are really only about “15 closer friends,” and at best, we end up with “roughly five friends, the ones who are willing to give you unstinting emotion.”
The reason I have been puzzling on the idea of friend is that I was dumped recently by a close friend, or so I thought, of 30-plus years. In retrospect, there were some signs, but this is not a lament like a high school girl who is ghosted by the captain of the football team. What it reminded me to consider more deeply is my relationship with my new little company.
I know all the employees (we only have about nine), and they have either worked for me before or no more than one degree of separation from the other co-founders. I consider them friends. But I think that is incorrect. Perhaps a better idea might be to consider them “family.”
And sometimes you have to send of the family away. You might still love them, but they have to leave.
For the entrepreneur/CEO, understanding that nuance is important. How you say goodbye is critical. Comion, understanding, of course, but also tell the hard truth — whether it is his/her talent or you are running out of money.
When I truly looked at the friendship that dumped me, I saw that I had allowed my own deception and looked the other way at the sign posts. I created excuses.
We all do this in varying degrees. But if you are going to run a company, I think this is a subtle trap. It favors being unwilling to call the question, to hope that it will work itself out or just go away. That is a weakness that routinely courts failure.
We recently raised some money, the infamous “friends and family” round – but no sweetie, that is not the case. They are investors, and you need to treat them as such. No slip-sliding, no arm waving, no trading on an unrealistic perception of friendship. Tell the truth, embrace reality. Whatever happens, it will end better – no matter how it ends.
I do some coaching. A young woman comes to see me. Very talented, strong track record, the complete package. Her goal is to be a founder/CEO. She then asks a classic entrepreneur question: Should I get an MBA?
There is no one right answer of course, and I have my own thoughts. I never got one, but I did offer her some data from Kristen Fitzpatrick, who oversees career development at Harvard Business School, who was interviewed for this Wall Street Journal article: “Twenty-three percent of job-seeking Harvard MBAs who graduated last spring were still looking for work three months after leaving campus.” The statistics are similar at Wharton, Stanford and NYU.
The era of the golden ticket seems to have either stalled or ended. There are no yellow brick roads. But the sun also rises. There were about 5 million new businesses created in 2024. And each of them had a CEO.
Last thoughts. Return emails and phone calls. Don’t promise and then renege or fail to perform and trade on my “friendship” asking me to forgive, forget, look the other way.
Like a family, do the dishes, take out the trash, make the bed.
Rule No. 837: What’s for dinner?
Senturia is a serial entrepreneur who invests in startups. Please email ideas to [email protected].
