Late 2015. After 18 years with the same firm, I set out on my own.
We’d been trying to raise a new, independent fund under the same brand for over a year. By summer, it was clear that it wasn’t happening.
Along the way, we experienced everything that a challenging fund raise delivers: tens of thousands of Skymiles, unreturned phone calls and emails, attendees preoccupied with phones and laptops. People who initially wanted to meet with us, but in truth, weren’t that interested in what we had to say. Dejection. Humble pie, three meals a day.
On July 21st, 2015 we’d had enough. We threw in the towel.
From 100 mph to zero overnight. Boom.
I went to Vermont with my dog. She’s the only one who really understood what I was going through, the only one I could really talk to. It was a mix of emotions. Anger, frustration, regret, embarrassment, anxiety, relief. Yes, relief.
I cleaned out my office and set up at home in the attic. It looked like my old college fraternity — a mash-up of old couches and a cast off desk. Once again, dog by side. Listening and understanding like only a yellow lab can.
I had lots of questions.
Did I still want to be a VC? I loved working with startups — loved technology and trying to invent the future — and had experienced some success in doing so.
Join another firm or start one? Our previous firm had early success and as a result had grown to over a dozen investment professionals, a portfolio of 100 companies, multiple offices and several $B under management. Every partnership on the planet has dysfunction, and the bigger the group, the worse it becomes. Joining another group with an unknown set of dynamics was not the answer.
But more fundamentally, had VC become a dirty word? “The dark side” is not a term of endearment. Young entrepreneurs are being told to stay away from VC investors for as long as possible to avoid any number of horrific endings. Who wants to be that guy?
I had been treated badly when we were fundraising — was I guilty of the same when I was the one doling out the money? Had I turned into a jack-hole? Was I rude too? To entrepreneurs? To people looking for jobs in startups? Did I check my email during meetings? Did I fail to return emails and calls? Was I rude using “busy-ness” as an excuse? I knew I was not exempt.
Over the last decades, was I helpful to up and coming new firms when we were at the top of the heap? Was I eager to take meetings with younger VCs who were just trying to break in? Did I invite them into our syndicates to help them build their portfolios and track records?
Nope. Not even close.
[p.s. — many of those “new” firms are now the leaders in this town]
Up to that point, it was a pretty good life. We had a brand name firm. Plenty of resources. More than ample salaries. We flew first class, while the CEOs of startups we backed rode in coach. We had drivers. Stayed in plush hotels. We hosted big holiday parties. We had nice, large offices with views of the reservoir. Our fridges and cabinets were full of snacks.
Entrepreneurs and corporations would return our phone calls. They wanted to meet us.
There’s a lot of power in controlling a lot of money, of deciding who gets it and who doesn’t. It can go to your head — that’s why a lot of VCs (not all VCs) are viewed as arrogant pricks. Had it gone to my head? Was I one of them? More likely than not.
And now, through the fundraising process, I had learned what the other side felt like. The side looking for money, feedback or help of any sort. And it didn’t feel good.
It was all pretty humbling.
And it was not clear at all what I should do.
What was clear, was that it needed to be different. I was no longer enjoying, nor proud of, what I had been doing.
I met a close friend during this period and shared that it had been a period of gut-wrenching failure, of self-reflection. I was starting again from a new, very naked, very uncomfortable place.
He told me I had been given a gift.
And I instantly knew it was true.
A colleague of mine would often refer to VCs as:
“you guys and your VC ways”
“you guys are screwing this up”
“you guys don’t know how hard this is”
“you guys should just tell us what you are thinking”
I decided I didn’t want to be one of “you guys” anymore.
I made a list of 35 CEOs in Boston who had built really impressive businesses. In many cases $1B businesses. Over the course of the next months I was lucky enough to meet all of them face-to-face to talk about Boston, about innovation and about the good and bad in VC.
The question was:
If you wanted to help build startups, had a clean slate, and actually wanted to both do good and be good, what would you do?
And the answer we came to was:
You’d build a firm that tried to align incentives and resources and capabilities to help entrepreneurs succeed. Give them what they need, with none of the headaches they don’t.
So that’s what we set out to do.
Six months later, we raised Pillar 1, a fund with 16 amazing CEOs as our co-founders. As much as I’d like to create the image that it just happened overnight, in truth, it wasn’t easy. Once again, a lot of emails ignored, phone calls not returned — not so different from a startup raising money.
This time, we managed to get it done.
Pillar is a startup fund investing in startups. Pure and simple.
Gone are the fancy trappings.
Our office is in a borderline-dicey corner of Boston tucked between the train station and Chinatown. It is space deserving of the startup we are, not a monument. We take modest salaries, preferring to invest in making our firm better. Our business looks a lot like the businesses we are backing. Yes, we want to make money — a lot of money — for our investors and ourselves, but as importantly for the people we back.
We structure our deals based on what’s best for the company, long-term, not what’s best for us, now. With every investment, we strive to cut out the “brain damage” of unimportant terms and conditions that drive entrepreneurs crazy, erode trust, and don’t matter in the grand scheme of things.
We invest in our Founders as individuals, helping them find mentors and advisors so they can develop as leaders. Our success relies on their success.
Importantly, we put our phones and laptops away during meetings. We try to treat people with respect. Because we’ve been reminded for most of the last three years what the alternative feels like.
Are we perfect? Of course not. We aim to get back to every entrepreneur with feedback quickly and crisply. We try to give a thoughtful response — if “no” along with a helpful intro or an idea. We’re a work in progress.
Two years in now, as far as we can tell, it’s working… Every week, we get emails from entrepreneurs saying they’ve never seen a firm like ours, an approach like ours. We feel great about what we are building — both the firm and the portfolio. The challenge will be staying true to it — as we get busier, as portfolio companies begin to experience challenges, as the pressure to deliver begins to mount.
There is no doubt in our minds that we will be successful as defined in Venture Capitalist terms. The question is whether we will be successful in human terms. Can we end up as good guys who do good and do well? Will financial success overrun the lessons of the last 3 years and the “gift” of starting over? Can we stay true to what motivated us to start this business, or will we succumb to temptation? All good questions.
Only time will tell.