Founder & VC “Lost In Translation”, Common Misunderstandings (Rejections, Interrogations & NDAs) and Positive Sum Negotiations & Reference Checks - E262

· Purpose,Singapore,VC and Angels,Southeast Asia



"The deck is a demonstration of your thinking, and its goal is to get the meeting. The goal of the meeting is to get another meeting. There's a process, but it's a progressive learning and trust-building exercise, so a conversation is really important. Recently, I was at an interesting pitch where the founder sent over an FAQ page on top of the deck. When we started the meeting, I was already advanced in the conversation, which is a great way to build trust and move the ball forward effectively."- Shiyan Koh

"A lot of founders are very focused on the pitch deck, but it's really about the relationship and evaluation of the founder as a business leader of the new technology. Having a deck that indicates expansion plans is not really a problem per se, but it's about why it exhibits a certain judgment. It’s about the realism of the traction and how hard it is when the rubber hits the road. Any startup that's being decided today is a giant experiment being done in the process." - Jeremy Au


1. Shiyan and Jeremy discussed “lost-in-translation” interactions between VCs and founders. We highlight the importance for first-time founders and operators to specific norms and practices associated with venture-backed startups. This builds trust and prevents misunderstandings.

2. Founders can over-focus on pitch deck storytelling, and overlook how good pitch discussion reflects good business judgement. We also discuss various scenarios, for example VC “interrogations”, defensiveness and live problem solving.

3. Shiyan and Jeremy debated about whether founders should talk to a partner, principal or associate. We discuss gatekeeping, job titles and the internal workflows at VCs.

Watch, listen or read the full insight including the need for transparency in building trust, industry code of silence, and the need for due diligence at

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Jeremy Au: (01:43)

Morning, Shiyan. Another week, another episode.


Shiyan Koh: (01:47)

Morning, Jeremy.


Jeremy Au: (01:48)

I'm so curious. We started talking and debating about what we want to talk about and we landed on a theme of lost in translation and I was like, yeah, I love that suggestion because I'm a big sucker for the movie Lost In Translation. I don't know if you have watched it, Bill Murray, Scarlett Johansson.


Shiyan Koh: (02:04)

Who doesn't love Scarlett Johanssen?


Jeremy Au: (02:06)

Such a beautiful arthouse movie about two folks being isolated and lonely and lost in translation in a beautiful Tokyo setting. Love that movie, and I think we're not going to discuss the movie, we're going to discuss what you want to talk about, which is when founders and VCs are talking to each other and there's no connection or there's some disconnection or mistranslation that's happening. So, I would love to hear about what you think when you hear the phrase “lost in translation” in the startup context.


Shiyan Koh: (02:36)

Yeah, I think sometimes we forget that there's a very specific language and set of practices associated with venture-backed companies and venture financing, and we're a relatively younger ecosystem and so for many more first-time founders and perhaps maybe fewer mentors who've been there, done that before to kind of guide these first-time founders along the path, although of course there's tons of material online to peruse and get in. And so, I think sometimes, we always say 99% of our job is saying no. That's kind of what we do all day long, but you forget that for the founder this is their whole, a hundred percent of their day is working on their business.

So getting a no sometimes feels a little bit like someone's telling you that your baby is not cute. That's distressing because obviously, you think your baby is cute. You think your baby's the cutest thing on earth, otherwise, you wouldn't have gone all in to start a business. So I thought it might just be fun to explore, right? Like some of these common interactions or communications and talk through what is meant by these things and what you should take away. Talking about the various stakeholders and their incentives and motivations in the ecosystem as well can be helpful because that gives you a better understanding of where people are coming from and maybe depersonalizes some of the interactions because you can kind of understand people's motivations a little bit more.


Jeremy Au: (04:03)

Before we dive into that, I love what you said about the ecosystem is so young and so people don't really understand. A lot of VCs don't actually understand how founders feel, like you said, and a lot of founders don't understand how VCs feel. There's lots of stories of founders who print out the VC rejection email and then, they paste it on the monitor and then, I appreciate two separate stories or two different founders in Southeast Asia who have done that. So I'm pretty sure the VC had no idea, whatever they were writing was going to end up being printed on a monitor and I think having obviously been in the ecosystem for both the US and Southeast Asia, I think there's also more awareness on both sides like you said.

A lot of founders actually have, a lot of them have VC experience, and they also have to understand how VCs are thinking but vice versa, a lot of VCs actually have founder experience, so they're more aware and have more empathy of that situation. So I think there's an interesting, I have hope that as the Southeast Asia system matures, I think there'll be more of this conversation that will be part of that journey for a lot of folks. So, on that note, what do you think is one common misunderstanding between folks?


Shiyan Koh: (05:06)

I think a place to start is to think about if the business venture is backable. Is it a venture-scale business, and kind of to take a step back there and think about VCs having bosses too. It's their LPs, they're limited partners and what are the return thresholds that those LPs have in their minds when they made the investment into the fund that is now evaluating a startup and so I think, for the asset class, and it varies depending on the stage of the stage that people are investing and the check sizes and things, right? A rule of thumb is you kind of have to imagine that this business can get to a hundred million of revenue in five to seven years because a typical VC fund is 10 years and so if you can't really see a path to that then it doesn't mean it's a bad business.

It just means that it might not be a venture scale business on the timeframe that investors are looking for and so I think that's something to keep in mind too, right? When people say stuff like, oh, I don't know how scalable this is. Founders get really upset, right? They're like, oh, but look at my CAC. Like look at this, look at it and you're like, yeah, but like, what would I have to believe for this to be a hundred million revenue business in like five to seven years? And you kind of do the bad calculation and it's like, yeah, I think that's pretty challenging. So one aspect is think about, there's other stakeholders here at play and then I think the other thing too is that investing isn't an absolute game. It's a relative game. So, even if your business is great, if it's not at the top, a handful of things that investor is seeing, it gets, it kind of falls off the consideration set and so I think that's the other thing that people don't think about as well. They don't necessarily, and understandably, you're a hundred percent focused on your business so you're not worrying about other people's businesses and you might not have an awareness of how fast they're growing or what kind of numbers they're putting up or things like that and so it's hard for you to get that sense but I think those are two things that are helpful framings to understand where an investor may be coming from when they're in dialogue with you.


Jeremy Au: (07:08)

Yeah, I want to respond to that. For venture-backable, I mean, recently the founder of Din Tai Fung, which was a billion dollar company.The founder Yang Bing-Yi really died. So rest in peace, and yeah, he built an amazing business for the world. My wife loves it. My first child, one third of a baby's calories was formed from Din Tai Fung cause she ate so much and I can never go to Din Tai Fung ever again because I ate way too much of it following her. It brought so much joy. It's a legacy for the family. It's a sustainable business and not venture-backable, right? I mean, it took them over 30 years to actually grow into that business that they have as a billion-dollar company.

Just from a VC perspective, they would've gotten a no. Then, by all our standard success, successful company, but that kind of business will have done well, perhaps with private equity investors or who have done with angels or a whole bunch of different investors who have made that position but for venture capital as an asset class, they have made legal contracts right with limited partners to say like, hey, we're going to return you this target rate of return within the next 10 years. So I think it's weird because sometimes you meet so many companies where you're like, yeah, this is going to be successful over 20 years or 30 years, but this doesn't need to be successful in 10 years. I think that's an underappreciated part of the pacing. So, it's not even advisable for the founder to go to talk to VCs in that sense because you can actually break a lot of businesses when you try and move too fast. I mean, a common problem, for example, is trying to change consumer behavior.

Obviously, there's a lot of rewards if you're able to change customer behavior, unlock customer behavior that wasn't going to happen in the next 10 years and make it happen in the next 10 years, then something amazing can happen but sometimes, it's going to take longer, right? To educate folks, to get people to where they are and that can be a very painful experience because you're trying to throw millions of dollars into changing people who don't want to change in the next 10 years, but it could change in 20 or 30 years and that's why all these famous stories, right? Remember was the early Amazon. There was this, 20 years too early. Lots of different stories.


Shiyan Koh: (09:10)

Cool. Yeah, I don't know. I thought it might be fun just to do like a few of these common, lost-in-translation phrases or thoughts and say like, when you hear this, what do you hear, Jeremy? What is the intent versus what is being said and how could this be interpreted or misinterpreted?


Jeremy Au: (09:34)

Yeah, I was just thinking about lots of different, I think a common misinterpretation is when a VC is asking a lot of questions pretty aggressively, within an hour, it's a good sign and not a bad sign. I think I've met a lot of founders who get very defensive in that sense, and I've been there. If they're asking a lot of questions, because when people ask questions again, it comes across as like, I don't believe you, I don't understand and it comes across as very interrogative, but what I've started to notice now is the worst case scenario is when a VC's not interested, if they're not asking questions, that's probably a really bad sign because they're kind of piecing out, they're checked out, they're just trying to wrap the meeting and be done with it. I think if someone is eally interested, they can get really excited, and it can come across as a bit of an interrogation. I'm not saying that VCs can't improve how they do it and obviously can be more charming and charismatic and warm and optimistic and positive, but I think in general, I think it is more positive when people ask more questions than it is for them to not ask questions. From my perspective, what do you think?


Shiyan Koh: (10:38)

Yeah, I mean, I would agree. You can think about venture investing or whatever, it's kind of like dating, right? You're just trying to decide whether you’re going to spend more time or money on this person or this company, and so you're trying to figure that out in the slot that you have, and if the answer is no, it's better for both parties if you just kind of get to that answer faster so no one's time is wasted. I would tend to agree that because you're trying to figure out that more questions is generally better. Because you're really kind of trying to dig into what is the heart of the business and the thesis, and I would say I think defensiveness is a red flag on the investor. Because there's just going to be so many things that are going to happen in the entrepreneurial journey that is unknown, and people are going to ask questions and it's going to be super unexpected and like being defensive generally doesn't help you solve problems faster and I think it also makes you feel like, oh, wow, what's my relationship going to be with this founder if they're already defensive on day zero?


Jeremy Au: (11:30)

That reminds me of NDAs. I just received a request for an NDA from someone who's really experienced actually, and I was surprised to get a request from the head of COPDEV, actually.


Shiyan Koh: (11:43)

What was their reason for it?


Jeremy Au: (11:46)

I think they just said to sign the NDA. Maybe they were hoping I'll sign it. Maybe, but then I just said no pretty much effectively, because it's not industry practice because, we'll talk about good reasons why, but I just said, please share the information they're comfortable sharing without an NDA and whatever you feel is NDA-able, you just keep it to the side and then let's talk from that conversation. I think, don't worry, the meeting's still happening and so, so forth but it's kind of funny because I feel like there's already so much public knowledge and from my perspective about how NDAs are not common practice. It's a bad signal often in startup land, but it still happens about once every two weeks for me.


Shiyan Koh: (12:20)

Oh wow, that's quite common. Yeah, I mean, I don't see them too much in the pre-seed, but periodically, they do. I do have a canned response that's like, please read this blog post about why we don't send NDAs.


Jeremy Au: (12:32)

Hey, one of my most popular blog post is actually a blog post about why we don't sign VC NDAs as well. So let's talk about the lost in translation aspects of it. So, what's the lost in translation aspect of NDAs?


Shiyan Koh: (12:43)

First of all, we see hundreds of companies a month, and so, the sort of legal work of tracking and enforcing what we see is just not feasible, but I think the meta point more here is if something that you told me in a 30 minute meeting could be materially threatening to your business, it's probably not that great a business and so I just find that really hard to believe. I think the one exception is maybe if it is like a corporate interaction, not a startup interaction like a corporate with some sort of heavy IP like sciencey type of thing maybe, but that's not really the realm we deal in. We're in software like today, you could tell GPT to write you almost anything. So, I think a lot of this stuff is not valuable as information and I think the second thing is like, if you think it is, that makes me worried, like then, I think you might not have a complete view of what it's going to take to build a business.

I think people are afraid, I think for companies that are further along, people are afraid of their financial information being disclosed to competitors and I have two thoughts about that. One is like the integrity of the person you're talking with is really important and an NDA doesn't guarantee the integrity and yeah, if it's a first meeting, I probably wouldn't put all my detailed financial information if I'm a series B, series D company in an intro deck, right? I have some sympathy, but I think mostly for early stage companies that haven't really gotten a ton of traction yet, I find it pretty hard to believe, and, we just don't sign NDAs.


Jeremy Au: (14:33)

Yeah, when I was a founder, I could feel the desire, obviously, to keep things as confidential as possible. So on the other side of the table, I also do understand why, it means why you want to keep this confidential, because if things are going great, you don't want other people to know and hide from them and if things are going bad, you don't want to show people as well, right? So it's kind of like, where is that sweet spot that, I mean, doesn't really exist, right? So in general, I think you want to keep it tighter to that conversation. So for me, I just share with people just like, look, and every day, of course, you know when you're going on a date. With the VC as well, you're trying to understand whether they are a good faith factor, do you like them, do you want to work with them. So is this, like a date, right? You don't, well you can go to first base, kind of like a couple of dates in, so all I'm trying to say here is you can be really progressive.


Shiyan Koh: (15:14)

Wow. We're getting really risqué.


Jeremy Au: (15:15)

So what I'm trying to say here is, there's that progressive disclosure of information that you have here, and I think you can ramp up when your comfort levels over time. You can share it over DocSend and these kind of protective links that you can retract the data after the relationship has ended because it doesn't work out in terms of a deal and, share information you're comfortable sharing with. It's a conversation, right? I think it's also the responsibility of VCs to help increase the trust level, and the comfort level of founders so that they kind of feel comfortable sharing more information. The tricky part, as you said, is if you have an hour, and so, there's not a lot of time and then, I don't know. It's not an easy set of conversations for sure. Another lost in translation point I thought recently was how this scale. I think obviously that's a general version of it, but also it's a very Southeast Asian version of it, because there's so many different geographies like Singapore, Indonesia, Vietnam, Thailand, Philippines, and Malaysia, so different definitions of scale. How does this scale and expand to other countries? There often are actually very weird questions, I think, for a founder to face, especially when you're very young.

They're like in one country, and then suddenly the VC's like, how does this scale to this other country? It feels abrupt because you're like discussing the current business and suddenly the VC's like time jumping in the future, two or three years in the future effectively.


Shiyan Koh: (16:39)

Yeah, I mean I think it goes back to what we were talking about earlier, which is like, can this get to a hundred million of revenue in some reasonable timeframe? And if your home market is a small one then you have to go outside of your home market, right? So that's kind of the, like, can I believe that this thing can go there, and I don't know, I think there's a flip side to this too, which is, I think sometimes people, because of this question, they're like, "and then I'm going to launch in five countries at the same time", in month eight, and you're like, oh boy, that's tricky. I guess I think of this question more as a conversation, like how do you think about what things in your business are copy and pastable or scalable across geographies versus what things have to be started from scratch each time, and how are you going to learn about those things? So I'm more interested, like when I ask this question, I'm more interested in how somebody thinks about this than having like the pat answer.

In general, when people say they're going to launch in five countries at the same time, it makes me very nervous because basically, the scope of complexity, you then have to manage, explodes and as a small company with limited resources it becomes really, really hard and you end up spending a lot of time firefighting instead of actually making like deep substantive progress, and then sometimes people will come back and be like, oh, but I'm going to do it on the cheap. I'm going to just have one person, or I'm going to do this thing remotely or whatever. And then you're like, well then is that really an expansion? So I think it's much more of a conversation opener than like a, "Hey, I think there's some sort of perfect answer to this.”


Jeremy Au: (18:19)

That brings me to another point, which is lost in translation, is that I think a lot of founders are very focused on the pitch deck yet actually it's really about the relationship and the evaluation of the founder as a business leader of this new technology, right.

So I think having a deck that says, oh, we're going to expand to five countries is not really a problem per se in that sense, but it's really about why it exhibits the judgment. It’s about the realism of the traction of how hard it is when the rubber hits the road about to build one country, let alone five, for example, and then how is that person thinking? Is this person doing it to overpromise? Is this person doing it because they really think it's doable and very easy? Good decks are actually good crystallization of good business judgment, which shows up in the Q&A. It shows up in the conversation. It shows up in the decisions, and I think it also shows up in the, actually the growth history of the company, and so to some extent, a lot of people kind of focus on a deck, as the deliverable when it's really, about there's a lot of judgment needed, and any startup that's being decided today is a giant experiment being done in the process. So I think that's a lot of thinking there.


Shiyan Koh: (19:36)

Yeah, I totally agree. I think the deck is a demonstration of your thinking and so like if you think about what the goal of the deck is, the goal of the deck is to get the meeting, right? Then the goal of the meeting is to get another meeting, which, because no one's going to read a deck and be like, yes, here's the money. There's a process, but it's a sort of progressive learning and trust-building exercise, and so I think that conversation is really important.

I was at a recent pitch which, I thought was pretty interesting, where the founder actually, in addition to the deck, actually sent over a page of FAQs. Like, here are questions that other investors have asked me. Here's what I said. So that basically when you start the meeting, you're kind of already advanced in the conversation, which I actually thought was a great way to kind of move the ball forward in an effective way and trust building too, because it wasn't all sugar-coated. It was like, yeah, they asked me this. I don't actually know the answer to this, but this is how I would figure it out, I think that's a very good answer because it helps display thinking.


Jeremy Au: (20:44)

That's actually a good point, which is how should VCs react when they're getting a ton of information immediately? So I think it's quite common for founders to feel like VCs don't get it and I definitely felt like that when I was pitching, and in retrospect, it's because I was getting in this totally new industry. Totally redefining the problem, dropping them a solution, and then processing that on the fly. It's hard for them to get it right unless they already have been thinking about a problem. So, I'm not saying that the optimal approach is to send decks beforehand, et cetera, but I think sending some kind of pre-read before a meeting and, and truth is, not every VC is going to read all of it, but I think the good VCs that a bit conscientious, well obviously don't send it like an hour before because nobody's going to read it during that timeframe or even check the email, but I think you send something out like a few days before, I think it's quite consistent for the VC does this kind of scan and read it and kind of like think through the dimensions.


Shiyan Koh: (21:41)

Yeah, I'd agree with that and I think, I don't know all the other thing I would also say is just like VCs make mistakes all the time, so, I don't consider myself an arbiter of truth or whatever. It's just with the information I have and what I know, here's like my best guess I generally hope that everyone is successful and so, I try to give feedback in that spirit.


Jeremy Au: :(22:03)

Ooh, I like that one. Here's my best guess. Maybe I should say that more often as well, because when I was a founder, I took all this feedback very personally. That's one, but also you take it as truth, in that sense, and the tricky part is there's some truth within it because they're seeing something, there's some independent judgment and in general, VCs are trying to be generalist experts, and pattern matching. So there's some aspects about it, but you can't take the whole thing and just take it at face value, and say like, oh, that's a beyond and all to my business.

Like, oh, five people said it is definitely a no, but I think the more mature way would be like for me to sit down and just be like, okay, what are the consistent parts and what do I need to work on? Is it a communication issue, or is it a part of the business? I didn't know. Are they seeing something in a macro market that's, divergent from what I'm thinking about? So I think that's, asking for feedback is actually a good way. I didn't want to hear no, I think trying to set up a call for half an hour just to be like, hey, can you just walk me through your few reasoning and what you're seeing in the market? This can be a very helpful exercise to figure out the difference.


Shiyan Koh: (23:05)

Yeah. I guess the other thing that I always try to tell people is you didn't start a company to raise money. You started a company to make money, and so rather than, I mean partially like here we are talking about like what VCs are saying or communicating or whatever, but like how does this, how does what they are saying help you make money faster? Or, like less about if you frame the problem less about like, how do I get them to agree with me and more about like, is there anything in what they're saying that actually strengthens my business, strengthens the quality of my thinking around my business or what I would try or do.

Then you're likely to advance the business faster. It's sort of like when people ask me what do VCs want to hear or see? And I'm like, well, what do you want to hear or see in your business? Because ultimately you're the one who has to operate this business and that I think ultimately, be the final thing, because you are the one holding the bag and so, if I were a founder and people are like, this segment is really hard to sell into, here are some data points. I would either try to like validate that myself, and be like, no, you're wrong. I have this other thing. Or you're like, oh yeah, they might be right. They've seen five companies try to sell at this. I might try to pick a different segment, it's sort of like, I think that will help you. So maybe you don't spend like 24 months pounding your head into a wall and instead like find something that's like a little bit easier to get momentum in.


Jeremy Au: (24:37)

I use the phrase, don't let the tail wag the dog. Don't let venture capitalists wag the business as you, as the leader. The founders are in charge. The founder builds a great business. All the VCs will come in and tell you how amazing you are and how a no-brainer and super obvious that you know it was going to be a success. If your business is not doing well, then everybody can have an opinion. So, what I always say is like, hey, build a business that you think makes sense. Let a customer be the true feedback loop here, and then it'll show up. It'll show up in your revenue numbers, it'll show up in your growth. It'll show up in your team. It'll show up in your understanding of the customer and then, the VC's not a customer. The VC is an observer and, kind of like trying to understand and, obviously make a decision. What are other lost in translation moments from your perspective?


Shiyan Koh: (25:29)

Oh, here's one. I don't know if you get this one. I only want to speak with a partner, so some people are like I don't want to talk to junior people and I think there's two sides. Everything has two sides to a coin, right? So I think on the one hand, as firms get bigger, they bring on more investment team members and so those people are all part of the evaluation process and often non-partner do a lot of work in verticals and can know a lot about a specific set of areas and generally more enthusiastic, I would say less beaten down and, trying to bypass them to go to the partners sometimes can backfire because they are part of the process. I would say the flip side of that is having been an associate at a venture fund, I think if you are dealing with more seasoned founders it can feel a little bit weird.

Like why is this 22-year-old questioning me on my business that I've been in for 20 years? And then I think the onus then is on the investor to basically be prepared and be respectful, because I think at the end of the day, this is the relationship. The relationship that you're setting the groundwork for is at least a 10-year relationship for the life of this investment, and you want everyone in the firm to kind of be on your side helping your business, but I think on the investor side, you need to make the founder feel like they're respected as well, and not just that, hey, I'm the guy with the capital, so I could do whatever I want. I think that's also not a great place to start a relationship, and so going back to like the meta thing this is a trusted relationship. How do you build trust with each other, and how do you find the right partners to be on the journey together with?


Jeremy Au: (27:07)

Ooh, this one. I mean, I think there's some truth to it as well. I think when you meet a partner, it's just one decision, right? There's no lost-in-translation moment. When you give the data to an associate, the associate may or may not filter correctly based on the partner's judgment, and then, it gets lost, because the partner is a bunch of other stuff. So I think if you can talk to a partner directly, to take the opportunity. So if the partner has office hours, go for it. If the partner is having a talk and there's a chance for you to interact with 'em afterwards, and you have your elevator pitch down flat to a minute, do it. If you happen to run into the VC at the reception counter and you recognize the person, I actually did that, by the way. I literally was like reading this VC, the blog and then I recognized the VC while we were checking in at reception and then I just had to quickly double-check my phone to make sure I wasn't talking to the wrong person, and after that, I pitched him and he worked out.

If you can get the partner opportunity, take it. I think you should be, like you said, it's the partners are so swamped with talking to their bosses at LPs, managing the fund, et cetera. That data themselves are, I don't know, that's a sweet spot. I would say don't talk to an associate who joined one month ago. This is maybe like, probably new to the company, probably a little bit.


Shiyan Koh: (28:25)

We were all that associated once.


Jeremy Au: (28:27)

So you're angry at me now. I'm like perpetuating a cycle of ignorance.


Shiyan Koh: (28:34)

Just because someone is new in their career doesn't mean they know nothing, and so like, you can use that as an opportunity to learn more about the funds investment process, like what they're focused on right now. What are the things but also I think getting clarity on that process and moving along that funnel is also important.


Jeremy Au: (28:54)

I think principles are the good, sweet spot, right? Like folks who are all these senior associates, people who have been with the fund for a couple of years. Then I think to some extent they've really absorbed what the fund is looking for, I think they're a little bit more comfortable giving advice and patterns, for example as well as more efficient in their processes in terms of communications and less risk for misunderstandings. So, I'm just saying, I think there's truth to it. If you can partner opportunity, go for it, but I think it's just tough. I think partners are so gated these days. So who are the gatekeepers, right? In a sense, I don't know.


Shiyan Koh: (29:27)

Well, I don't, I don't have an associate, so feel free to talk to me.


Jeremy Au: (29:37)

Oh yeah, and I think one thing of course I think we were talking about as well is like lost in translation. A little bit that's correlated to this is like, is this normal or not? Because is this something that was lost in translation or is this actually not industry standard? It's actually bad faith, it's actually out of the norm, right? So how do we figure out what's something that's normal or not normal?


Shiyan Koh: (30:09)

I think you'll want to try to understand people's incentives and motivations, and I think it goes back to do I want to be in business with this person for the next 10 years? So like, what are people's motivations? Of course, an investor's motivation is they want to get the best price for the deal at which they can win the deal, and so you can't really fault them for that because that is their obligation to LPs, but then how do they do that? How are they achieving their goal, I guess, and do you believe that the way by which they achieve their goal is representative of their future behavior?

So is it like, hey, we're going to bring comps in and say like, based on this, here's like what I think your business is valued. Or, are they trying to hurry you along so that you don't generate competition for the deal and kind of they get bit up, and it's hard, right? Because like once they are investors, they're technically, they're supposed to be on your side, but in this sort of preamble to that, you're kind of on opposite sides of the fence. So I think it's a tough one, but I think you need to like, it's like a relationship. You have to determine what is their motivation and where is that coming from and whether is this going to be reflective of their future behavior.


Jeremy Au: (31:29)

That's a tough topic, right? Because it's hard to tell. I mean, when I was a founder there were good investors and there were bad investors. Bad in the sense that they're not good in, they're like not smart slash not good in terms of value creation investors, and they were professional investors and there were non-professional investors and I think those are kind of like interesting. I mean, it's easier to judge whether you're professional or not, so you could be a professional investor. Is this not savvy slash not value add? That can be a bit hard to evaluate, but also I think there's actually a lot of tough moments that happen because as you said, there's an investor dynamic, but then eventually they become board members. They're supposed to be helping you build the business and those are kind of like two different skill sets, I would say, right?

When did you tell me about a date thing? Yeah, I think at one level, if you have a really bad first date, it's probably predictive that it's not going to be a good marriage, probably because it's the sea crystal. It's kind of like showing the pattern for the future, especially after the second of that date, but just because you have really good dates and you kind of get engaged doesn't necessarily mean that it's going to be a good marriage to raise kids together. I'm turning into a dad, but yeah.


Shiyan Koh: (32:47)

Yeah, I think this is a place where diligence can help. So talking to founders who have worked with an investor to ask them what their experience was working with them and then, I think investors do this too, right? Like due diligence, a person by back channelling with their prior colleagues or bosses, people they've worked with to get a feel of who they are as a person and so I think that's also something to think about as you're sort of collecting term sheets and trying to make a decision on who is going to be on your cap table.


Jeremy Au: (33:19)

Yeah. I think reference checks about who's good, and who's bad when they're actually on the board are quite key, I think I discussed this as well in the previous BRAVE episode Q&A for those interested, but I think reference checks are interesting because there's a little bit of a court of silence, right? So we talked about it before, which is I think that there are bad behaviors, right? By both founders and by VCs and I always hear about it in conversation. It's like, oh, this person did this, this person did that. This person inflated the numbers and stepped through the transaction. This person inflated accounting and it was, we found out two years down the road and then we swept it under the rug. So, I think sweeping a lot of stuff gets swept under the rug. So how do you feel about that?


Shiyan Koh: (34:02)

It sucks. I feel like it sucks. Look, I think we just want to do business with people of high integrity who are trying their best and I want to hope that that's true of everyone, but I do think there's some times there are people who are playing a game that they feel like they'll be rewarded if they inflate their numbers and they can sort of play the game long enough that, reality can catch up to what they're projecting and I think that's a dangerous game to play and I'm not smart enough to play that game.

So, I prefer that we just live in reality and we can be honest with each other what we tell founders when we write the check is, we've been in your shoes before, and generally startups, something is going wrong all the time, so you don't have to paint a rosy picture because we know something is blowing up right now and it's much better that you tell us what's going wrong earlier rather than later because then we have a better shot of helping. Often with Asian founders, they don't like to tell you when things are going badly, and when I've pushed them on this, they'll say stuff like, well, I didn't just want to come with a problem, I wanted to come with a solution, and you're like, that's admirable, but like, I'm on your side. I'm trying to help you problem solve and so we're not going to be helpful with every problem.

That's not possible, but to the extent that we can help you we would like to, but also if you get into a pickle later and you've been telling some people that like, everything's going great, and suddenly you're like, wait, I need emergency bridge financing now. Then you're like, wait, but you told me everything was going great. It doesn't build trust basically, right? Versus sort of like more transparently saying, this is what's going well in the business, but here are the things that are really hard for us right now. Here's how we're trying to fix it, do you have any thoughts? Then, the next month's report comes in, it's like, oh, remember, A, B, C, we were struggling with, we fixed A, we're still working on B and C. Here's kind of how it's tracking. All these, I think intermediate data points give people a lot more confidence so that like when you are in a pickle, it's a lot easier to help because then you can say, then the partner is willing to go to their partnership and be like, hey, this person's been up and up the whole. We should put it in this bridge financing.

We should extend our reputation to help these people and I think that's the world that I hope for, right? Like we want this sort of positive-sum world where entrepreneurs can all be successful. They are all creating value that didn't exist before. They're hiring and employing people who didn't have those jobs that didn't exist before. It's not a zero-sum game, right? Yeah, unfortunately, I do think that there are people who don't feel comfortable doing that and it's really bad, right? Because then people who are more honest, they feel like, well, I'm not comfortable inflating numbers, but those guys who are getting funded, they feel very upset with that.


Jeremy Au: (36:50)

So, yeah, I totally agree and I think it's not just Asians, but also I think professional services backgrounds. So, I was trained as a consultant to always have the answer, to always have been, show your expertise, have the answer, have a very clear agenda and agenda is basically like, know exactly by the end of the meeting, what you're going to get after the meeting, and I remember I got hard checked by actually I think to James Chan, so founder, VC, great guy, and I was building again, and he basically likes to say exactly what you just said. We're here to discuss what the problem is and, help each other and you're coming to me like a consultant.

You have to hold all the answers, right? So, we're not going to get to where we want to be unless we open up the aperture right on this agenda I really appreciated that advice and I think I shared advice often with other folks, because how do we build something together? That's the crux of it and I think at the end of the day, it requires good faith effort by both founders, especially VCs as well, because I think VCs are going to be an ecosystem for 10, 20, 30, 40, 50 years and I think it's really on us to be good faith, long-term game good people at the end of the day. On that note, we're going to wrap things up and want to do two shout outs. First of all, if you have any other ideas about lost in translation moments, let us know and we'll be happy to dissect that more in the future. Two, is a shoutout to Yuhan Xie for being a listener who gave us some feedback that has helped us launch this show and make things better, especially for our website and for a lot of community members.


Shiyan Koh: (38:17)

Thanks, Jeremy.