A wise man once said to “Seek first to understand, then to be understood.” It seems increasingly rare to find leaders who harness this mindset. Seeking to understand others first is not anyone’s natural tendency. I think this is why it stands out so much when we experience it, especially in business. That’s why building effective relationships should be a primary focus for all entrepreneurs, especially in VC.
In the VC world, we often speak of both sides of the table: the operators and investors. Each side holds different perspectives but share substantial common ground. In the end, we want the same thing – a lasting partnership that leads to building an amazing company.
One of the most important, yet overlooked, aspects of the fundraising process is getting to know the founders of a business, and vice versa. Investors and entrepreneurs often partner for the better part of a decade. Many investors often equate an investment in a startup to a marriage, which is the basis of building effective relationships.
The truth is, investment pitches rarely result in an investment, it’s simply the law of numbers, unfortunately. However, incredibly constructive conversations and learning can still take place for both sides. When the pitch itself derails, it is predominantly due to one prevailing theme: lack of perspective.
Perspective is powerful. Perspective is what leads to understanding.
Pitching Without Perspective
More often than you think, we meet with a founder who is so intent on powering through every slide in their pitch deck, that they never stop to catch their breath, read the room, or invite questions and feedback. The best pitches that I’m a part of quickly morph into a conversation about the current state of the business and the vision for the future. Unfortunately, founders often fail to realize that our team analyzes a few thousand deals a year, and meets with hundreds of entrepreneurs. This means we only invest in 1-2% of deals that we see.
First impressions do matter, and one of the biggest elements that we consider in our investment criteria is quality of the management team. The most common failures that I encounter are when an entrepreneur has not done their homework, and ultimately, lacks perspective, and misses on the opportunity to relay their story effectively. At the same time, I am always impressed by leaders who can tactfully balance their technical horsepower with soft skills that demonstrate maturity and emotional intelligence.
Unfortunately, I can be equally guilty of not stepping into the shoes of the entrepreneur. My VC peers can sometimes catch a bad rap for this very reason. This is why my number one goal when meeting with founders is to applaud them on their work – building a business is no joke. It’s one of the hardest jobs on the planet. I also realize they are the domain experts in their business, and I am there simply to add a dose of fresh insight, not tell them how to run their business. The opportunity I have to meet and work with incredibly smart and talented individuals on daily basis is without question one of the most rewarding aspects of my job. In fact, many days, it’s the fuel that keeps me going.The best investment pitches quickly morph into a conversation. Click To Tweet
Two Ears. One Mouth.
I have come to the conclusion that we often overvalue speaking skills, and undervalue listening skills. Candidly, it’s been one of the most difficult skills for me to learn throughout my career (as my colleagues will tell you, I’m still a work in progress) which has given me great respect for leaders who do it extraordinarily well.
In fact, the best salespeople I’ve encountered are the best listeners, not talkers. As a leader, one of your principal jobs is to empower and influence others. Without understanding the needs of others through listening you can never accomplish this well, or develop an empathy for the problems.
When you are seeking first to understand, you are not only willing to listen and learn from others, you actually seek out opportunities to practice it. You crave honest and meaningful feedback. You better yourself from the people around you. Empathetic leaders garner the mindset to learn any situation and from any person. Wow, can this be harder than it sounds.
As a young leader, I was bull headed. I remember viewing any form of negative feedback as an invitation for debate, to defend myself. Now, I recognize constructive feedback as one of the greatest gifts I could receive. It has allowed me to unlock an entire new level of potential personally and professionally. One of my favorite sayings is ‘feedback is a gift’. Seriously, how do you improve without meaningful feedback?
Because I truly believe feedback is a gift, I make sharing direct thoughts with entrepreneurs one of my top priorities… telling people what they want to hear, or making up excuses is a form of feedback as well. Frankly, this is the easier way out, to not invite confrontation. But, I have found that entrepreneurs actually crave the honest feedback that they know comes from the heart. This is the only way they can improve. Regardless if we end up investing, it creates a meaningful connection, and is usually appreciated.As a leader, one of your principal jobs is to empower and influence others. Click To Tweet
In this context of feedback, I think of the term radical candor – which balances caring personally and challenging people directly. When people care about your development, they are truthful and direct. Finding people who care enough about your development to challenge you is hard. Being open to what they say is also hard.
I believe that a culture of radical candor is actually built by leaders who possess empathy. Empathetic leaders demonstrate openness to giving and receiving feedback, which results in a culture that invites others to the table. This is transferrable in many ways inside a business including how customers are heard, how ideas for improvement are acted on, and how employees feel about their work and their development.
In an environment of openness, understanding, and candid feedback, it is much easier to understand where your strengths lie, especially in relation to your team. Taking an inventory and understanding the landscape around you enables you to understand how you can best maximize your impact. When your understand this, you are much more secure in your work and leadership. It gives you license to take pride in the value and impact you are creating. It also allows other team members to feel the same confidence, creating a multiplying effect.When people care about your development, they are truthful and direct. Click To Tweet
Beyond the Pitch
As a VC, I am often reminded of the power of perspective which gave me the inspiration for this post. But, don’t miss the forest for the trees. The importance of perspective matters greatly beyond investment pitches. Inside a company, seeking outside perspectives and being empathetic to your customer needs is one of the best ways to improve what you’re doing. Being in tune with the needs of your customers and intimately knowing their problem enables you to deliver products and services that speak to the heart of their needs.
Receiving feedback also takes confidence to sort through what applies and what doesn’t, and how you receive the feedback. In short, it takes humble confidence. It’s about humility because you have to be open-minded enough to welcome feedback, and confidence because you need thick skin to execute on what matters, not get lost in how it may have been delivered. Confidence also impacts your ability to execute on the feedback, which is what really counts.
Remember, feedback is a gift and having mutual perspective is powerful. When you walk in someone else’s shoes for a mile, the way you see the world changes.Feedback is a gift and having mutual perspective is powerful. Click To Tweet