I had an interesting call this morning with an entrepreneur who had been up until the wee hours of the morning reviewing legal documents for a big strategic partnership. He apologized about his state of mind which wasn't exactly calm and cool, and we proceeded to discuss the issues and parse out the major ones from the minor details. As I reminded him of a conversation I had with my wife several years ago, we all had a good laugh. When my wife and I first met, she asked me what a venture capitalist does. Sure, there was the usual answer of we look for great people building great companies, invest in them, and help them through strategic discussions and introductions. However, there was a subtler more nuanced answer in that a big part of being a venture capitalist was similar to being a social worker. Our business is a people business and part of that means not only knowing who we are dealing with but also understanding what makes them tick and helping them through both the good and tough times. We are part coach, part mentor, and part social worker. We need to understand the psychological state of the entrepreneurs we work with and the management teams they build. When an entrepreneur is on the ledge, looking down, and ready to jump, our job as a VC is to pull them off and help calm them down. When an entrepreneur is too cocky or overconfident, we show them the ledge, have them look down, and then pull them off. So in many ways, being a good venture capitalist is dependent on our ability to understand what drives the people we work with, how to constantly challenge them and motivate them, pat them on the back when they need it, and push them harder if they are slowing down. For that matter, these are some of the more nuanced and subtle traits that entrepreneurs need to exhibit when dealing with their employees, constantly taking the pulse of the company and key individuals, and massaging the various personalities and egos to help them stay hungry and excited to perform at their best. As much as some would like to think that being a VC is about the technology or numbers, it is all about the people. Anyway, at the end of the call my colleague and I were able to walk our CEO off the ledge and help get him prepared for his next battle. He never thought of us as also playing the role of social worker in our frequent interactions, but he certainly agreed as he thought more about it.
UPDATE-there are lots of different types of social workers but in this context think counselor or sounding board. My comparison with social workers was not meant to make all entrepreneurs sound like they have serious issues-the point is that sometimes the daily bump and grind of operating a business can get to you and having a VC who knows your business and who is part counselor/part sounding board can be an invaluable resource.