"Dear Dumb VC... You don’t realize you are going out of business."
With these fighting words, Andy Dunn, CEO and founder of Bonobos, and founder of Redswan, makes his case that the venture capitalist model for funding enterprises is broken. Much of the VC industry skirts along on mediocrity, and 98% of the firms in existence will likely not be around 15 years from now, he claims.
In his post that created a firestorm across the blogopshere, Dunn chides these firms for micro-managing entrepreneurs on how to run a business, which they often are incapable of doing themselves. "Why would I want your advice on how to make my business viable, when you can’t do the same for yourself?" Dunn says. "You are going out of business, but you work in an industry where mediocrity gets a long sunset."
On top of that, many VCs take up a lot of entrepreneurs' time while never deciding, and some never even try out the product, he adds. "The top 2% of VC firms never do this," he points out. "They don’t have time to waste on white board sessions which don’t create any value anyway."
The takeaways from Dunn's rant is that VC firms need to exhibit the same devotion to extraordinary customer service as any other type of company that wants to succeed. Ultimately, enterprises receiving seed or expansion funding are customers, just as if they were bank customers. Acting haughty only leads to disruption as customers or businesses seek better ways of doing things.
Just to be fair, Dunn also takes a swipe at entrepreneurs, or "nontrepreneurs" as he calls them. These are the types who diss their investors likely including the VCs -- "these people back you, you become successful, and then you forget who got you there in the first place: your founding investors. You don’t offer them updates or the honor of your attention because you’re too busy for them now."
Pleasing customers is hard work. Mark Suster, a VC who also spent time on the startup side, begs to differ. "Many people love their VCs but hate the industry," he points out. But VCs tend to work hard for what they get:
"I see the hours and hard work put in by my peers. I see how much time they spend on the road away from their families. I see them on conference calls at any hour –- even from vacation. It’s hard being an entrepreneur and making money. It’s hard being a VC and making money. In reality neither side is evil."
Again, common sense is called for -- treat customers and business associates with the respect and attention they deserve. Dazzle and wow them. Too few businesses really go this extra mile.
This post was originally published on Smartplanet.com