# YC's Group Partners share their worst investor meetings

**Author:** Garry Tan
**Type:** Video
**URL:** https://www.ycombinator.com/library/JT-yc-s-group-partners-share-their-worst-investor-meetings
**YouTube ID:** ljVan7CGBiE

---

Mind games. Awkward power moves. Investors showing up hours late, only to make no effort to seem interested.

Before any of us were Group Partners at YC, [**we were founders**](https://www.ycombinator.com/people). We know how it
feels to be in the hot seat when you’re raising money, and we’ve seen just how many ways an investor meeting can go
wrong.

For this latest episode of [**Office
Hours**](https://www.ycombinator.com/blog/introducing-our-newest-video-series-office-hours/), the Group Partners are
sharing stories from their worst investor meetings. We’ll outline some of the weird plays we’ve seen investors try to
pull — but we’ll also confess times that we, as founders, bungled meetings we could’ve nailed.

## Transcript

raising money is a game that you sort of have to figure out oftentimes these meetings can go terribly awry the worst sort of investor meeting is one that makes you question why you're even doing a company anymore today we're talking about our worst investor meetings when you need money to start your business there's some pretty epic ways for it to go wrong if you're prepared for the worst though you'll be better off when it's your turn in the hot seat [Music]

I mean I did a lot of investor meetings oh my God the worst easy was one in London I won't name but um a big International fund um who had this reputation of keeping Founders waiting that was the first it was like commonly known another competitor hours flew to London and was made to wait for like six or seven hours to meet this person what I was only made to wait one hour and I felt like I got off lightly so that was the first sort of annoying thing and then he sort of

summoned his court you know five or six of his minions and he was um in the middle of eating his lunch during the meeting fine whatever busy busy person and he had his shoes and his socks off I don't really understand why um and was simultaneously like picking his feet with his hands and then eating his food with his hands and then at some point in a closed office decided to light a cigarette and smoke a cigarette in his closed office I just like it's kind of looking at

everyone like challenging anyone to say anything did he offer you a cigarette he did not I mean because I would have been polite I'm in the first polite thing maybe and then fight like it was just like this test it was just smoking it and then didn't finish it took a cigarette put it out in his lunch took his coffee and poured his coffee over his cigarette and his lunch I was just like what is this weird power play I mean and obviously he did not end up investing and it was just a bizarre bizarre experience so that was probably the worst do you

think he remembers that I think that is not the only time he has done it and so so for him this is a Tuesday yeah so when he watches this he'll be like God knows the world is full of status games and unfortunately a lot of the financial world still operates not by the truth of product problems and the ability to create but instead this kind of thing don't be shaken we're at the beginning of a shift in the way business is done you should know the best Founders in the

future will have their pick of the best builder focused VCS and the status ego game that VCS play it's just not going to work for them we're at Justin TV and we had just had a banner year so we get this meeting with the famous VC we're in San Francisco we drive down to Sand Hill Road it's like this famous Journey that everyone does yes um the shuffle we go into this very famous office and on the wall there are these like stock

certificates of these amazing companies that went public and we're like that's [ __ ] intimidating and then we get into this Investor's office and we do our kind of quick introductions you know we're nervous we want to start um pitching and before we start this investor says uh to Justin um uh Justin's Chinese says to Justin do you speak Chinese and Justin's like oh you know my parents do or maybe my mom does like I understand a little bit but I never learned how to speak and this investor

is like oh you know I'm studying um Chinese like you know do you understand this and says a little phrase and Dustin's like oh yeah that kind of yeah and then you know it felt inappropriate no no no no at the time no at that point it was just kind of like building Rapport right it was just like friendly you know um but then that continued so it was like oh well how about this phrase I'm like oh well how how would you say this and and

I can't tell how long it lasted right as a Founder in the room it felt like 20 minutes of torture I bet it was like five minutes but like five minutes in a room with the super high powered VC and literally we have this business that we're here to pitch that we think is good and you start realizing if this is the thing we're spending time this is the highest value way they can spend this one hour like maybe he he's not that interesting laughs

and so uh and it turns out that was great no they did not invest that was okay so the investor starts giving you language lessons at the start of your your pitch probably not a good sign one of the things I took away from that experience is that sometimes investors don't understand that their process is their product and in many ways how Founders experience interacting with them in the process of getting money is going to be the memory that they have of them there are a couple pieces of advice that we give to

YC Founders from talking to investors I think the first is believe the no but don't believe the why you're going to get a lot of no's when pitching and more often than not the investor will not be transparent as to why they're saying now I think the second is that we say often is you know an a grade investor is respectful Through Time response your questions makes a decision quickly and leaves you alone and there are very very very many people who aren't that good and there are very few people who really add value

and so if I were to kind of summarize Our advice it is really hard to tell whether you're interacting with a great investor or not and oftentimes as an early stage YC founder or startup founder in general you don't get to choose right like you don't have this like wealth of of choice I might say the first optimization is try to go for people who regularly invest in startups and who are respectful with your time and respect with you and move quickly and then I would say the second thing to

do is prepare your mind for the idea that it's going to take longer than you want you're going to have more meetings than you want and a lot of people are going to promise you value-add that won't come to fruition it's less about how do I find the perfect investor and it's more about how to come in with the right expectations the big inversion that YC helps companies with is that before YC it was the investors who had the leverage you couldn't get in front of that many investors and when they did want to invest they could treat you however they

want it because it was money that was scarce these days the lucky thing for you and me is that things have gotten a lot better for Founders but it's still a crapshoot remember why you're raising money you have a dream to manifest we tell these stories to you not to bum you out but to set expectations so you can build that dream Brad Flora is gonna sit with Aaron Epstein next talking about going back to his seed investors for more funding and what went wrong when he

did we want to talk about our worst investor stories because I think every founder has had some experience talking to someone about what they're working on that they hope will give them some money to fund the company and oftentimes these meetings can go terribly awry or just leave you feeling like dirt and we've been there too uh here at White combinator like everybody can relate to this for me my worst investor story uh I was running my company uh perfect audience my last

startup we launched six months ago and we'd grown the business to like a hundred and fifty thousand dollars a month in sales we're keeping 30 grand a month things were growing we only had a couple people on the team but we only had like two hundred thousand dollars in the bank and this was really stressing me out we were turning over all of our cash basically every month and so I thought you know what I'm going to do I'm going to go to my seed investors and things are going so well they'll just give me some more money like it seems so obvious right yeah hey guys give me some more money so I wrote this email and the

title of the email was Cash crunch right and I send this out to my investors and I just went and looked at the email it was so cringy hey the business is blowing up we're really tight on cash we'd love to get your advice right because someone had told me when you ask for advice you get money so I thought this is my clever thing and one of the investors wrote back um this VC fund that was based in Chicago I was in San Francisco at the time and said hey next time you're in town we'd be happy to talk to you about this and so I in my like founder crazed

optimism like uh thinking thought oh wow he's definitely going to give me some money so I said great I'll be in town this week and I got on a plane flew to Chicago and I got there and none of the partners were in the meeting it was just a bunch of of the associates so nobody with any check writing power I gave them a pitch that was terrible because I just kind of cooked it up on the Fly that week and you know predictably they had some polite questions after the meeting but there was a zero interest in investing and so here I am I've like

flown across the country given a terrible pitch to people who couldn't possibly invest in my company just a total L you got to have a game plan and there was no game plan and we we see this a lot as partners at YC where someone comes to us and says oh because of this thing that happened people should just give me more money and we have to kind of help them get organized and figure out like well like investors want to hear where this fits into the broader scope and strategy of what you're building and they're not just going to Dole out money because

something some weird thing happened with the market and I was just so unorganized and deluded about what would like motivate people to want to invest in the company at that point it's interesting because investors have so few data points oftentimes like very few touch points with you probably at that point and so for one of their main touch points to be cash Crunch and like you scrambling and disorganized yeah they're like like this seems real bad he's got a cash Crunch and he's getting on a plane to Chicago to come talk let's be desperate yeah this guy is in big

trouble yeah but of course from my point of view I'm like this is great they want to solve my problem for me and it's just not how people think about this so and again like when you're running your company you get this tunnel vision where you're just trying to make your number go up which is great but you really need to have someone around whether it's a friend an investor other Founders appear they can kind of help you get some perspective on things and so that you understand how you're coming across in something like fundraising or even sales for that matter just reminds me of how

one of the best parts of this job that we get to do is helping Founders not do that stuff please don't make those things right like uh you know sometimes it's easy to think about the founders in the batch like walking around with guns pointed at their feet and just being like yeah yeah shoot my foot shoot my foot and we can just be like no no no no no don't do that um and it's so rewarding when we help people avoid that and I I can only make that joke because like we've shot ourselves in the foot so many times doing this ourselves because it's just really hard to see what's going on when

you're in the middle of this stuff the way I like to think of what a good investor is an investor that makes a decision quickly signs the docs quickly and wires you the money quickly and you never hear from them again that's an A minus investor if all you had was a minus investors you would be fine because at the end of the day it's not your investors that are going to make your company successful it's going to be you the founders an a investor is does anything to help the business and then an A plus investor is does something to materially change the

direction of your company if all you had is a minus and above you're good you want to avoid all the C's D's E's F's that are just distracting that create a bunch of busy work for you that want to argue with you all the time there's a lot of people out there that can be a net negative to your business and those are the ones that you want to avoid that's bad money and we actually have a lot of really great tools within the YC Community we have an investor database where other Founders within the community actually give feedback on

investors that they've worked with so this encourages good investor Behavior and it also is an incredible source of information when you have investor meeting schedule and you're trying to figure out who should I prioritize who would I like to take money from based on the feedback from other Founders that have taken money from them yeah and then the thing that enables all that is the fact that because we have demo day at the end of the batch Founders for the first time for many of them have investors coming to them either ahead of demo day hoping to like get in early or at demo day or after demo day and so for

maybe one of the only times in your career as a Founder you have a list of people that want to talk to you and learn about your company and so you can use things like the investor database to pick and choose who you want to talk to and in what order and kind of have some control and agency in the fundraising that you're doing it's actually pretty common for Founders to hate fundraising and if you fall in love with fundraising like that's probably not a good sign too because you should be focused on talking to your users and building your product and actually getting your company to work and spend as little time as possible trying to get the money that

you you need to be able to grow and execute on your business the money's just a tool it's not the means to the end I know a lot of times people like to celebrate the fundraising wins and things like that but it's just one Milestone on the journey that you're trying to to build a really big company VC and investing is a service business but just as Founders need to think through the experience and empathize with their users they can apply that same understanding of people and business situations to their own relationships with their investors this

is why investor updates can be so helpful great investors not merely stay out of your way but they also give you more capital and connect you to the next round but that only happens if a they actually are a plus investors and B you do a good job of keeping them in the loop next up is serbi sarna sitting with Jared Friedman on some of the funny Mind Games investors play just to see how you might react you want to tell us about the worst investor meeting that you pitched in looks there's this uh uh big

name VC in the valley who we won't say who it is yeah leave them unnamed but it I was I was so nervous to meet them and I really wanted to make a good impression and you know first time founder 24 years old at the time so I'm super nervous going in I prep as much as I can and he's sort of known for testing Founders in various ways for me well I remember presenting to him and right in front of him he had a bowl of

candy and in the middle of me pitching he reaches over and first of all he like slowly reaches for it and then he grabs some piece of candy and slowly comes back and then he just proceeds to open this candy with this loud rapper as slowly as he possibly can like the whole it's like wrinkle wrinkle wrinkle and then I noticed whenever I stopped talking he stopped trying to open it and then when I started talking again he would like

open it so he really was testing you with a candy wrapper yes it wasn't that he was just going going for the candy and the opening of the candy last in like 10 minutes Adventure they called us the candy wrapper I don't know I would say that every investor has their own unique Styles so if one investor had a style that tripped you up a little bit try not to carry it into the next meeting it just means that you and that particular investor are not a good fit for one another and there's plenty of fish in the sea remember every investor meeting you

might take is as much about them interviewing you as you interviewing them it's a two-way street next up I'm sitting down with Gustav to talk about one of my mega bad investor meetings this time with the heads of Andreessen Horowitz there's a scale of investors there's a great ones and they're not so great ones it's much worse to have a bad one then it is great to have a great one if you end up getting an investor who's going to hurt the company and there are many many ways an investor can hurt the company and if you end up one of those that is infinitely worse than having a

difference between having a good or a great investor Gary what was your worst investor meeting you ever had as a Founder so I have a story for you which is uh actually not one where the investor did anything wrong and it was very depressing for us at the time because we were so excited to meet these investors we had all the metrics Preposterous which was a Blog platform at the time we had been growing you know 10 to 20x year on year where servers were on fire we're sort of you know being buzzed about and

you know people were buzzing about posterous and the right parties we're on Sandhill Road sitting down with uh Ben Horowitz final partner meeting like everyone's excited like this is the last thing we need to do and seemingly we will be getting a series a from one of the hottest series a firms it goes well we think we have it in the bag and then at the end uh you know and this is something that we should have known we should have done our research and we should have just had the answer for but we had not figured it out yet and this

is a big question who is the CEO and we said both of us and that ended the meeting on the spot it was obvious that we had said the wrong thing so we had spent years working on this thing we had the metrics but we had still not had that awkward conversation which is who's the CEO definitely by series a the board member who makes the decision to pull the trigger they're going to want to know who am I actually working with in that case the VCI I was meeting with was Ben

Horowitz he had written blog posts and even a whole chapter in a book about how important it was to have a single CEO you should know who you're meeting with at least take a look at what they've written and what they believe we had walked right into that Investor's worst pet peeve we're trying to prepare you for the worst so you can do your best that's one of the best things about YC that it gives you choices about who you work with most people are truly not so

lucky especially for their first time starting today now can you give me an example of your worst investor meeting so when we're fundraising was in 2017 investors where at their most best behavior because this was right after uh that was the metoo movement right after metoo movement so I think that we're kind of in the best behaviors didn't have any of the weird woman founder kind of thing and but I did get this awkward question I don't think the investor thought it was like

awkward he just kind of asked it and blurred it out but I thought it crossed like a personal line what did you ask so my co-founder uh is a guy so you just made the Assumption it's like oh are you guys dating I was like what did you just ask that that's like not professional asking personal questions the first time we meet and like that's one of the first questions you asked and not about the business that was just awkward and I think that's one of those things with personal questions that shouldn't really be asked

and I think investors not knowing that it might make Founders uncomfortable like is this really what you're asking is evaluation for a business to get the meeting started do you take that money no I think the mistake the founders do is really looking up to investors and putting them in a pedestal right yeah I think the investors know better because they have met so many companies but actually the investors are not experts in your business you are good investor is going to challenge you but always be

respectful about who you are and that you make the calls a good investor is never going to force you to do something against your will but it's still going to tell you what they think so that you can make the best decision investor meetings are a two-way street they're like auditions you come correct and if they come correct then maybe just maybe you can make beautiful music together also remember this is not purely and entirely about raising money though mechanically that is what you were trying to do in that moment your whole Endeavor the bigger one is to

create an incredible business not to Ace the test and raise money on its own the worst sort of investor meeting is one that makes you question why you're even doing a company anymore it actually is like tremendously demotivating where you're like why am I doing this with my life um it's like you know what I'm saying it transcends the level of even talking about your company it's more it's okay I feel like if you if you're on the other side of like someone asking you hard questions or engaging and pushing back

on stuff but there's someone who just clearly doesn't want to be there at all yeah like someone put it on their their sister put on their calendar and they're like I don't know what who are you like what why are we meeting and I went to a few of those where I can remember one in particular was exactly like that I have one but it was like me being on it that's that it was very I was we were very young so I first start up um and we were like you know we basically our office was our apartment there was like five of us in a two-bedroom apartment

just like living and working all the time and we set up a meeting with a VC uh who really wanted to meet us at our office so we're like oh yeah of course like yeah um just come by uh we it was a morning meeting so that was the number one mistake uh we just worked all night we were always up late and we fell asleep and we didn't have any furniture so we would sleep in like the hallway on these air beds um we slept through the meeting and we woke up to an email saying hey um I came by this morning at 10 A.M but

you guys were busy so you know let's reschedule um obviously what happened is they had come in opened the door and just seen us sleeping on air beds in the hallway and laughed again both parties should bring an air of professionalism like this is ultimately a professional type conversation and you want investors to have to be professional again don't show up late don't make people wait don't cancel don't no show and then the founders on the other side need to be the same way and so the extent both parties are on board to be professional everyone's

gonna be much happier whether whether the investment happens or not investor tractions is not how you should be keeping score and you should not be getting your validation if your startup is good if you are good if you're idea is good based on the reception of investors too many Founders the barometer for how excited they are about their startup is 100 based on investor feedback and nothing good comes of this it's like completely the wrong barometer you have to realize what we tell people to prepare is when when you're going in

expect all no's expect all bad feedback expect people not to get it if you're surprised on the upside great but prepare your mind for a lot of like rough times so that you don't fall into this trap of actually getting discouraged and giving up on your really promising startup just because you got a bunch of investors that were not enthusiastic right that's what I experienced there's also another really bad outcome here which is I think it's a very fine line between being smart and adjusting your pitch based on

investor feedback um and going too far and adjusting your product based on investor feedback I think we've probably both seen examples of companies that had a promising enough idea they went out to pitch it didn't get the initial reaction from investors that they wanted but they did keep taking on board all the investor feedback oh have you like considered this or this and then you end up with this sort of Frankenstein idea that no one actually wants but investors are really excited about you can actually raise money for that we see that happen right but like now you're stuck with a whole bunch of money and like invest their intention without any actual like

traction or a product that people want this happens a lot during hype Cycles as you and I both know where people will sort of triangulate what investors want to hear yeah they'll be excited if they can like con people into investing in their thing but then they wake up and they have to actually like make the business work the sophisticated Founders recognize that to some extent in raising money is a game that you sort of have to figure out and it is smart to play up parts of your startup that are in Vogue

right now like um it's smart to do that but you have to keep attention to what you're actually building um and that's where you see it fail right less sophisticated Founders will play up the stuff that's hot in the moment but then actually change their strategy around it as well whereas the Smart Ones separate the two things out yeah it's almost like you can talk a big game as long as you can back it up the point of your startup is not to raise money or gain status the point is to create something that actually solves a real problem if you

choose to raise money you too will pile stories up just like what the YC Partners have detailed here but Don't Take Your Eye Off the Ball we are here to make something people want if you like this video don't forget to click subscribe and the bell icon so you can see every single YC video we make for you we're here to help you build the future I'll see you next time foreign

[Music]
