Super Investor Miko Matsumura on "Why VCs Behave the Way They Do"
Super Investor Interview Series – Episode 01: Miko Matsumura
Interviewee:
Miko Matsumura, Managing Partner, gCC (gumi Cryptos Capital)
Interviewers:
Manasvini Kothari, Media Director at the Bay Area Founders Club
Komal Vij, Director of Partnerships at the Bay Area Founders Club
Paul Fang, Founder of the Bay Area Founders Club
Journalist:
Komal Vij, Director of Partnerships at the Bay Area Founders Club
Watch the Full Interview Here:
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Long-time founder to VC
“I'd been on the entrepreneurship side for many, many years. . .I really got interested in you know, how the other side thinks, and right now that's one of my biggest passions is that VCs have their own culture and it's pretty mysterious to entrepreneurs, right?”
Addressing the Founder/VC Cultural Gap
“So entrepreneurs are often wondering why VCs behave as they do. And you know, having seen both sides, I do see that there's a really deep and fundamental cultural gap. And I think that there's huge misunderstandings between these two groups. So I'm very interested in and passionate in kind of trying to explain why VCs behave the way they do because there are reasons.”
Why VCs “Ghost” Founders
“So VCs are super famous for ghosting, right? So basically you're talking to a VC and then they just stop responding, right? So. Why do they do that? So, you know, in a sense, it's rude, right?
And entrepreneurs are often very frustrated that this happens, right? It turns out that entrepreneurs as a class are uniquely persistent. They really see any negative signal as an objection that they have to overcome, right?
And then they're very dogmatic about their beliefs. Right. And so the reward for engaging in an entrepreneur that you don't want to invest in is actually. . .potentially very negative. And there's very few scenarios where a VC gets any benefit at all, and it usually is a big minus.”
Overabundance of Money, Underabundance of Time
“So what usually happens is that you tell an entrepreneur something about their business that you think is a concern, right? And the bottom line is, is that VCs aren't correct, right? They just have their own views. They have their own opinions, right?
And, you know, so the fact of the matter is, is that entrepreneurs generally know a lot more. . .especially about their particular vertical segment, right? So like most of the time, VC opinions are actually not that well informed or that good of opinions, right?
So if a VC gives their not that well informed opinion about why the company isn't interesting to invest in, right, then there's two common reactions. And one common reaction is, is that the entrepreneur just doesn't care. Latches on and just keeps talking, you know, and keeps trying to overcome the objection, right?
Which is using time, right? So in a sense, the thing that's crazy is, is that a VC is someone who has an overabundance of money and an underabundance of time. So time spent engaging with an entrepreneur that you've already decided you won't invest in is basically, if you do that, you will kill your fund, like, like you have to focus, otherwise, if you're spending time fruitlessly, you will underperform your cohort, like all other VCs will outperform you.”
VC is a Game
“Anything where you can potentially cause, like, material harm to another person is not a game, right?
So driving a car is not a game, because you can hit someone and that's very bad, right? So that's not a game. But, all other scenarios where you can't cause material harm to people, it's a game. Those are all games. So, VC is a game, right? Now, it's a professional game, right? So like, for example, uh, you know, uh, NFL football is a game.
And it's a professional game, a very serious game. And people get very serious about it, and you know, if you're in a Super Bowl halftime locker room, and your team's down by 17 points, you know, coaches can have things to say, right? So it's, it's a serious game, but it's a game, right? I think the reason why I'm emphasizing this is that people should first of all know that this is a game, and then they should understand what the rules are, and then they should play.”
VCs Under “Weird and Unique Pressures”
“I think that one of the weird things that happens is a lot of entrepreneurs kind of want to fully deconstruct this and be like, they just approach a VC and they're like, I don't have slides. Like, I just want to talk, like, let's be friends, you know, this kind of thing. And, you know, I already have like too many friends and I'm not able to spend enough time with.
So like, I'm not out looking for new friends. Like, we're trying to conduct ourselves professionally. So like, you know, so that's another potential misunderstanding. There's definitely a lot of coaching and one of the biggest things I would advise is if you do get advice on how to approach VCs, don't take the advice from any non sitting partner advisor.
Like people, VCs that themselves are not VCs are not going to send you well. And oftentimes like you know, if an entrepreneur does something really strange, I'll often ask them like, who told you to do that? You know, and they'll often say, Oh, it's such and such advisor, you know, and it's often someone who just doesn't know.
So, you know, I think if you are going to get advice, get it from a sitting partner at a venture firm, you know, that advice will be more pragmatic and more realistic because VCs are under very weird and unique pressures, especially now, by the way. Because, you know, when you look at yield internal rate of return compression in VC funds. . .the pressure's very real.
So like, you know, these, these individuals generally are not and should not be too relaxed.”
The AI Era and Custom Software
“My belief is that in the AI era, that all small companies will have custom software. Right? So we, we develop our own data systems in house. Now, we do have kind of platform providers, but we innovate around them. Right? So to me, I think the future state of software is that there are, you know, essentially cloud databases with really good APIs and all the business logic is custom and it's for each company has its own pure business logic, small or big, because I think what happens so to me, like if there is a vendor that has solved a problem for all VCs, it's probably a bad thing.
And what I mean by it's probably a bad thing is that it just means that. That's the competitive bar, right? So if you, if you're using what everyone else is using, vanilla, then you're not competitive.”
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