On personal brand, transparency and social contract in venture capital. Oh yeah, and blogging.
Recently I was interviewed by Andrew Perlmutter at BostInnovation. The very candid interview does a good job of capturing my views on personal brand and the use of media in venture capital, and which I republish below.
BostInno: Why did you start blogging?
FD: I started blogging for two main reasons. First, I wanted to help entrepreneurs get inside the game and understand what happens inside VC partnerships. And secondly, because I invest in consumer facing innovation, I thought investing in it without eating the dog food is a little difficult.
BostInno: How has your motivation for blogging evolved?
FD: Today, I blog primarily because I like to write. I derive a genuine pleasure from putting together my articles, it is like my personal creative space. Personal branding is also important. Though I did not start blogging with personal brand in mind, when you are 18 months into it, you begin to realize that blogging can bring very high personal branding benefits. I have walked into rooms at events for startups where 80% of the people already have a personal connection to me when they meet me. This not only helps with meeting people, but it also saves me time because people already know what I think about a wide range of issues. Bizarrely, blogging has also helped me build relationships with the press. Whether it is the Financial Times or the whole crew at TechCrunch, these are people you get to know in a different way because you are co-contributors in the eco-system. So I do think there is a lot of value in blogging that extends far beyond my initial reasons for doing it.
BostInno: What is your general view on the value of VC blogging?
FD: I do think a lot of the content is undifferentiated, unexciting, and is created because VCs feel forced to use it to push their personal brands. But the best bloggers are very genuine about it and try to be personal and differentiated. Overall, it is wonderful to build mindshare and push your personal brand outside of its normal boundaries through the blog. Nevertheless, I am still only Little Fred from Boston. There is, of course, Big Fred [Wilson] from New York, so it is still tough for me to compete on my first name only.
BostInno: What have been the biggest advantages and disadvantages to developing a personal brand through your blog?
FD: If you are a Boston-area venture capitalist, and you used to be known for how well you covered Cambridge, downtown, and a bit of Newton, your world just exploded because globalization has finally hit the venture market. There is almost perfect transparency on the venture side, so you can’t just sit back and wait for people to come through your office. You have to be out there and people have to know what you stand for. With VC being a fairly undifferentiated offering, the primary personal-brand benefit is that it helps you bring across who you are as a person, so people can understand why they may want to work with you. So I think it has become a job requirement to have a personal brand, and blogging is the cheapest and fastest path for developing it. I would also add that a VC’s overall social footprint includes Quora, Twitter, and other services, but blogging is the most substantive part.
The downside is that sometimes you are a publisher. I have landed myself in trouble sometimes because my relatively personal thoughts end up being public opinions about the industry, the economy, or startups. Blogging is a tool that requires me to be controversial sometimes, but I also have to think about the fact that I am carrying across the Atlas brand, so I have to be thoughtful. For example, there was what I considered to be a stupid article on Reuters saying that VCs are shifting from biotech to social investing, so I tweeted that I thought the article was idiotic and non-sensical. Of course it got picked up by Om Malik within a few hours, so it is very important to be careful. But overall, I don’t think there are many downsides. I mean, take a look at major influences like Brad Feld and Mark Suster. One is in Boulder and the other in LA, both of which are secondary VC markets. They have used blogging to extend their boundaries.
BostInno: How do you respond to people who argue that, at its worst, VC blogging creates a false impression of which VCs are the most active investors and best at their craft?
FD: There is no doubt that if you spend a third of your professional life essentially as a tech journalist, then you build a huge personal brand, and that personal brand will be leaps and bounds ahead of your “substance” as a moneymaker. And if you look at the Midas List, its all the Benchmark guys you never hear about and the Accel guys tweeting once a month who are all there and making the real money. Now take Mark Suster as an example. He’s at GRP, which is a phenomenally moneymaking fund, with partners that you don’t hear about who are making all the money. But what’s the negative against Mark for building a personal brand, helping entrepreneurs better understand the VC community, and generally making the ecosystem more efficient? So if in the process, he gets 135,000 “Likes” on Facebook, I say good for him. And he is also probably working like a dog. Fred Wilson famously blogs from 4:45AM through 6:45AM. Geez, you really need a lot of discipline to do that. When Fred Wilson started blogging in 2005 and said he would commit 20 hours per week to blogging, people laughed. Nobody’s laughing today after he’s done Twitter, Zynga, Foursquare, Etsy, etc.
BostInno: But what does it mean for a venture capitalist to have 135,000 Facebook fans?
FD: We have entered the age of the celebrity everywhere. There are people who are far more famous for what they say than the substance of what they have done. And there is a bit of show business in the VC industry. Entrepreneurs sometimes put people on a pedestal. So I can tell you about some entrepreneur champions involved in the early-stage ecosystem who have astonishing personal brands but are complete assholes. There is nothing you can do about them. People removed from them think they are god-like in their ability to support entrepreneurs while people who have worked with them have vowed never to work with them again. But so what? Some people play the show business game well. So if you have substance and can play the media game well, which is Fred Wilson-like, that positioning is highly sustainable. Fred Wilson not only likes entrepreneurs, but he is on the Midas List too. So this guy has bridged both worlds and created a very difficult position to assail as the go-to VC in New York. Suster has done a wonderful job of building awareness, so if he supports that by building a great portfolio, then again he will have proven people wrong and bridged the two worlds. If he doesn’t, then he will be like many of us in the venture community, a so-so VC who has done a great service to the entrepreneurship community by helping people understand how it functions.
BostInno: Has VC blogging truly made the VC industry more transparent to entrepreneurs? And if so, have it helped them in a material way?
FD: The transparency in general is factor of the past 10 years and not just VC blogging. This transparency really helped entrepreneurs get more sophisticated. At the same time VCs fell off their pedestals because, to a certain extent, they were not adapted to the changing times and were removed from young tech founders. So the VC as a mythological beast has been slain and replaced by super-angels, who are themselves no different from VCs, making everyone confused about definitions. But seriously, transparency has been a massive factor. Entrepreneurs now get better deals, they negotiate hard on the terms that really matter, and the social contract is a lot stronger.
I love these results because they make negotiations very speedy. It is really easy now just to tell entrepreneurs, “hey, we don’t do any of the nasty stuff you read about online, yes we will have a preference, but it will be non-participating, and no we will not have a convertible cap.” Check. Check. Check. It almost takes negotiation out of the equation because best practices pervade the industry. This is great for me but it is also great for entrepreneurs. I often hear them say, “if I had only known this 10 years ago.” In general, we are finally moving away from bespoke deals towards a liquid marketplace. This is a wonderful development because it helps people focus on what matters, which is entrepreneur-investor fit and not whether your terms make sense.
BostInno: It seems like some VC firms designate one Partner as THE firm blogger. Does that strategy work?
FD: My answer is that I would rather shoot myself in the head than be the designated Atlas Venture blogger. I think such a designation defeats the purpose. I am not blogging for Atlas, I’m blogging for me. I work for Atlas and love my partnership, so it comes into play sometimes. But the partnership-centric blog is a waste of time, a waste of space, and it is not what people want. They want to hear personal opinions. I sometimes disagree with my partners. I sometimes even send them messages through the blog. So we have never done that.
BostInno: Have any firms had success with a firm blog rather than a designated blogger?
FD: It usually fails. These company blogs always feel contrived. A few firms like Union Square Ventures and First Round Capital have done a good job using social media. That being said, if you view blogging as a dynamic publishing paradigm and think that venture should not be static, then a blog-based platform might not be a bad thing for venture firm websites. There is nothing worse than the “we update our website every five years” VC model.
BostInno: How powerful a tool is a VC’s social media presence for promoting his portfolio companies?
FD: There is no silver bullet in marketing. Is it helpful that Fred Wilson has 120,000 Twitter followers? I bet you it has a lot of SEO value that gets back to the companies website. I bet you it’s probably the biggest awareness impact thing the company will do that week. I think it definitely does help. I have been able to pass fairly structured messages to the press through the blog about my companies. So if a VC wants to add context to the story on one of his companies, he gets quoted on TechCrunch, which links back to the blog post. This adds a lot more depth to the story. VCs can absolutely influence the message and how its shaped.
Another thing is that if I write a blog post on one of my companies, it is hard to contradict the details I provide. If a journalist is writing a piece on the company and I have already explained the story in a candid way, people cannot go and write bullshit about the company because I am the inside baseball guy on those companies. So if you want to disagree with me, you better have good data, because my brand is based on the notion that I never lie and I don’t try to paint a pretty picture of my companies. In that way, a VC can be the author of record on his companies and cut off bullshit allegations as long as he does not sell shit himself. The VC has to be absolutely authentic. You might ruffle a few feathers, but if I have learned anything from blogging, it’s that you have to be honest.