Skip to content

Eating Our Own Dog Food

January 29, 2014

Brad Svrluga

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

nps

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.

Advertisements

9 Comments

Post a comment
  1. January 30, 2014

    Brad-
    Thanks for sharing your survey and for insight into the process. It is demystifying and admirable that you did this work. Best regards.
    Catherine Weber
    Weber Media Partners
    cweber@webermediapartners.com
    http://www.webermediapartners.com

  2. January 30, 2014

    Brad–geez, you guys are impressive. As with any job interview or good consultative sales pitch, you can tell most from the questions asked (vs. the “tell”). The fact that you went to market to ask the questions sends the strongest message about your group’s values and added value. So very smart…

  3. Bill Bowen #
    January 30, 2014

    Your primary “value added” is the evaluation of companies for potential investment. Anything that you can do to improve that process is hugely positive. The best unfiltered advice often comes from companies that you have turned down. Your investors and potential investors should be thankful that you are placing such emphasis on continuous improvement of the evaluation process.

    • January 30, 2014

      I agree that sourcing & evaluation is the primary value add to our investors. Thanks for the comment and support on our efforts to improve. But the evaluation/selection is just the start. Key to the whole process is value add we can provide to those companies we end up backing. Thinking hard about this has been our biggest focus over the past year and the coming yearhow can we do whatever possible to improve outcomes once weve made those choices.

  4. January 31, 2014

    Great post and great values. Judging by your attention to your “passes”, I bet you guys are incredibly helpful to the startups you do end up investing in.

    It might also be a good exercise for founders themselves to survey the investors that have both passed and invested, to help them gauge how well they are communicating with their investors & boards. That’s one of the hardest things for first-time founders to learn. Often investors could give a lot more constructive feedback as to how founders can communicate better.

  5. January 31, 2014

    Brad – I love the approach you guys are taking to an otherwise very different VC model. I just wanted to point out that if you are true to NPS scoring, only a 9 or 10 is a promoter. A 6 or less is a detractor and a 7-8 are ambivalent. I would use NPS as a starting point and just trend towards a better score with the good work you are doing.

  6. January 31, 2014

    This is good stuff. Along with gathering feedback, you’ve staked your claim to seed investments. Too many VCs I’ve talked to hedge when I explicitly state, “But you say you’re only growth stage – which is it (we’re considering an A round later in the spring)?”

    We learned the importance of having a target market, which takes tons of discipline when you’re struggling for cash.

  7. February 1, 2014

    Brad, congratulations on going at this task with guts and candor. Your sharing of intentions to improve specific aspects of your customers’ experience is admirable. Also, you get today’s award for “Most Intriguing Blog Title”!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: