The Cognitive VC

by Sarah Dillard

In my last post, I wrote about cognitive startups.  A cognitive startup balances vision and feedback by utilizing the frontal cortices of its founding team to think through genuinely new situations and building a limbic system to supply real-time data on how best to react (or not) to familiar situations.  For any product connected to the internet, building the limbic system is no longer the hard part.  It’s figuring out what to do with all that data.  If you believe HP CEO Mark Hurd, “more data will be created in the next four years than in the history of the planet.”

But what about for VCs?  Their work is different.  Whether a fund succeeds can play out over a decade.  Moreover, there can be a high noise to signal ratio when sorting through failures and successes and trying to draw conclusions.  This is why the cognitive VCs are hackers.  Not coders, but hackers.  They hack the world around them to give them more feedback to be wrong more often to learn faster to move faster.     

How VCs hack the world around them:

·     They close loops.  Brad Feld is advising on UpStart, an organization I’m launching to create a path for more talented young people to work at startups.  Earlier today, I met with Brad for the first time in person. He explained that he is intrinsically motivated “to the extreme” and gets his kicks from learning.  He continued, “I don’t care if you take my suggestions, but I care if you tell me what happened.  I want the data back so that I can learn.  Learning is what motivates me.”  For everyone in Brad’s stable, he sets an immediate expectation that you contribute to his learning.  My guess is that the more he learns from you, the more time you get, and that the average learning per person he interacts with trends toward an ever-higher mean.

·     They ask you what you think.  At a January meeting at KleinerPerkins as part of HBS’s WesTrek, the first thing that happened was a show of hands on whether a variety of companies were hot or not.  The next thing that happened was a request for a list of questions that were on the audience’s minds—before the presentation had even started.  And after the presentation, with time already up, the partner leading the meeting insisted we go around the table and each say which of their portfolio companies we were most interested in and why.  They were the only company on my WesTrek itinerary that got as much information from us as we did from them.

·     They bend their environment to get better information.  As @NPixie tweeted of Jeff Bussgang’s maiden venture as an HBS instructor, “Impressive set of cold calls and classcard data references from @bussgang in LTV today.”  Jeff did the most impressive set of classcard calls I’ve ever seen at HBS—for example, calling on @EmilyKramer at just the right moment to bring in her marketing experience.  Everyone in the room, Jeff included, learned more because of it.

·     They turn echo chambers into reflection chambers.  During Fred Wilson’s talk with LTV, many of us tweeted out his thoughts in real time.  He reviewed the stream and subsequently blogged no fewer than eleven thoughts that struck him as “good enough to share.”  Rather than basking in his many @mentions, @fredwilson took a step back and thought about which ideas were new and valuable. 

We already knew the best engineers are hackers.  So are the cognitive VCs.