January 29, 2014
We spent a lot of time in 2013 working to rethink our business model and our relationship with the market in which we operate and the companies with whom we partner. We’ve been working hard to raise the bar on our expectations for ourselves as it relates to serving our customers – the companies in which we invest and the whole community.
At a fundamental level, we define ourselves by a belief that we’re in the customer service business, serving both our Limited Partner (the legal term for investors in VC funds) and founder customers. As part of that, we’re striving to provide the best experience to the founding teams we work with. That means not only delivering real impact after we invest, but also providing the best possible experience on the front end, including for founders that we don’t end up partnering with.
Like most investors, we compel the founders of our portfolio companies to actively solicit and listen to customer feedback. We understand and preach a belief that being customer-centric is a good idea for all of our portfolio companies. Hardly an earth-shattering notion, of course. But as we thought about it, we realized we weren’t sure that we did a good job ourselves at being customer-centric. With that in mind, we decided to eat our own dog food and ask the market how we were doing. So last month, we surveyed every founder that pitched us over the course of 2013 and did not receive an investment offer from us.
Admittedly, we weren’t sure what to expect, as we figured these founders were likely to skew disgruntled. We did after all decide not to invest in their companies, suggesting to these proud parents that their babies were at least a little bit ugly.
The good news is that we got a high response rate and learned a lot about how to improve.
We used a standard called Net Promoter Score (NPS) as a guide, in which customers are asked one simple question: how likely they would be to refer a given company they had interacted with to a friend. In the NPS world, 7 or higher is where you want to be, and below 5 is pretty bad. How’d we do?
- 61% of respondents gave us a 7 or better
- 32% gave us less than a 5
We also included room for open-ended feedback. There we heard a lot of positive feedback, things like:
- “Honest; would make good partners.”
- “Respectful, helpful, and thoughtful.”
- “Responsive and transparent.”
There were, however, some folks that were pretty disgruntled. Surely some of those people simply didn’t like that we didn’t invest, but we’re sure most were very appropriately dissatisfied with their experience. Fortunately, many offered very legitimate and valuable feedback. Here’s what we learned:
- We need to be more clear about the stage in which we invest – some founders came into a meeting thinking we might lead a large Series A round (we don’t).
- We need to make our pitch review process more efficient – some founders were frustrated at being asked to do multiple ‘first meetings’ as we tried to get the deal in front of the right High Peaks team members.
- We need to be consistent about providing more feedback when we elect to pass – clearly we are guilty of the unexplained pass at times.
Here’s what we’re doing to improve:
- We’ve changed the language on our website to emphasize the fact that we focus primarily on Seed stage investments, and we’re doing more pre-screening of deals before inviting people in.
- We’ve restructured our deal team more clearly into two divisions, one focusing on B2B and one on ecommerce, to create a clear and efficient opportunity escalation process.
- We’ve committed internally to taking more time for follow-up phone calls and emails when we pass.
We’ve got a lot more to learn and a lot of work to do – this surely will not lead us to 80% 7+ scores next year. But we’re living a never-ending pursuit of excellence, and we’re going to try. And most importantly, we’re going to be listening a lot more.
For those founders who meet with us this year, we hope you’ll keep us honest.