- The video discusses the worst investor meetings experienced by the speakers.
- One speaker had a meeting with a London investor who kept them waiting, ate lunch, picked his feet, and smoked a cigarette during the meeting.
- Another speaker had a meeting with an investor who spent a significant amount of time speaking Chinese with them instead of discussing their business.
- The video emphasizes the importance of finding respectful investors who respond quickly and make decisions efficiently.
- It also advises founders to have realistic expectations and be prepared for a longer fundraising process.
- The video highlights the shift in power dynamics between investors and founders, with founders now having more leverage.
- One speaker shares their experience of approaching seed investors for more funding but receiving no interest.
- The video concludes by emphasizing the need for founders to have a game plan and understand what motivates investors to invest in their company.

- The speaker reflects on their own experiences with investors and fundraising, highlighting the importance of being organized and presenting oneself in a positive light.
- They discuss the different types of investors, ranging from A-minus to A-plus, and emphasize the need to avoid negative investors who can be a distraction to the business.
- The speaker mentions the benefits of the YC community, including an investor database that provides feedback on investors and helps founders prioritize who to talk to.
- They advise founders to focus on their product and users rather than becoming too obsessed with fundraising.
- The speaker shares anecdotes about challenging investor meetings, including one where the investor tested the founder's reaction to a candy wrapper and another where the founders failed to answer a crucial question about the CEO.
- They mention the importance of researching investors and understanding their preferences before meeting with them.
- The speaker also mentions an awkward personal question asked by an investor and highlights the need for professionalism in investor meetings.

- Founders should not put investors on a pedestal and should remember that they are the experts in their own business.
- Investor meetings are like auditions and both parties should bring professionalism.
- Founders should not base their validation on investor feedback and should expect rough times.
- Adjusting the pitch based on investor feedback is important, but founders should be cautious of going too far and changing their product based on investor feedback.
- The point of a startup is to solve a real problem, not just to raise money or gain status.

The video discusses the worst investor meetings experienced by the speakers and emphasizes the importance of finding respectful investors. It advises founders to have realistic expectations and highlights the shift in power dynamics between investors and founders. The video also mentions the benefits of the YC community and advises founders to focus on their product and users rather than becoming too obsessed with fundraising. The speaker shares anecdotes about challenging investor meetings and mentions the importance of researching investors before meeting with them. Founders should not put investors on a pedestal and should remember that they are the experts in their own business. Adjusting the pitch based on investor feedback is important, but founders should be cautious of changing their product too much based on investor feedback. The point of a startup is to solve a real problem, not just to raise money or gain status.

For this latest episode of 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. 

We’ll discuss what differentiates a truly great investor, and shed a bit of light on something we rarely talk about publicly: the YC Investor Database. 

Apply to Y Combinator: https://yc.link/OfficeHours-apply
Work at a startup: https://yc.link/OfficeHours-jobs

Chapters (Powered by https://bit.ly/chapterme-yc) - 
00:00 - Coming Up
00:37 - Keeping Founders Waiting
02:23 - Status Games
05:16 - Advice For YC Founders
06:37 - Investors Leverage Before and After YC
07:46 - Have A Game Plan
11:31 - Who Is A Good Investor?
13:53 - Investor Updates
14:34 - Investor Known For Testing Founders
16:09 - Investor Meeting Is A Two-Way Street
16:44 - Who Is The CEO?
18:51 - Awkward Question Crossing Personal Line
20:58 - Worst Investor Meeting: Why You Are Doing A Company Anymore
22:36 - Being Professional
23:53 - Being Smart vs Adjusting Pitch Based On Investor Feedback
25:27 - Outro

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 1 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.

I mean, I did a lot of investor meetings.

The worst, easy, was 1 in London, I won't name, but a big international fund who had this reputation of keeping founders waiting.

It was like commonly known, another competitor of ours flew to London and was made to wait for like 6 or 7 hours to meet this person.

I was only made to wait 1 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, 5 or 6 of his minions.

And he was in the middle of eating his lunch during the meeting.

And was simultaneously 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, just like kind of looking at everyone, like challenging anyone to say anything.

I mean, because that would have been polite.

That would have been the first polite thing, maybe.

He was just smoking it, and then didn't finish it, took his 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 did not end up investing.

And it was just a bizarre, bizarre experience.

that is not the only time he has done it.

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.

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 gonna 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 St.

It's like this famous journey that everyone does at some point.

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 fucking intimidating.

And then we get into this investor's office.

And we do our kind of quick introductions.

And before we start, this investor says to Justin, 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 Chinese, like you know, do you understand this?

And says a little phrase and Dustin's like, oh yeah, that kind of, you know.

No, no, no, no, at the time, no, at that point, It was just kind of like building rapport, right?

So it was like, oh, well, how about this phrase?

And like, oh, well, how would you say this?

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 5 minutes, but like 5 minutes in a room with a 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

And so, and it turns out that was correct.

if the investor starts giving you language lessons at

the start of your pitch, probably not a good sign.

1 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 when 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 no.

I think the second is that we say often is you know an A-grade investor is respectful with your time, responds to 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?

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 respectful 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 gonna take longer than you want, you're gonna have more meetings than you want, and a lot of people are gonna 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 wanted 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.

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, here at Y Combinator.

For me, my worst investor story, I was running my company, Perfect Audience, my last startup.

We'd launched 6 months ago and we'd grown the business to like $150,000 a month in sales.

We only had a couple people on the team, but we only had like $200,000 in the bank.

We were turning over all of our cash basically every month.

And so I thought, you know what I'm gonna do?

I'm gonna go to my seed investors and things are going so well, they'll just give me some more money.

And the title of the email was Cash Crunch.

Because someone had told me, when you ask for advice, you get money.

And 1 of the investors wrote back, 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, I'd be happy to talk to you about this.

And so I, in my founder crazed optimism 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 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 predictably, they had some polite questions after the meeting, but there was 0 interest in investing.

I've flown across the country, given a terrible pitch to people who couldn't possibly invest in my company.

And 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, 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 motivate people to want to invest in the company at that point.

It's interesting because investors have so few data points oftentimes, very few touch points with you probably at that point.

And so for 1 of their main touch points to be cash crunch and you scrambling and disorganized.

He's got a cash crunch and he's getting on a plane to Chicago to come talk to us?

But of course, from my point of view, I'm like, this is great.

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, a peer, 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 1 of the best parts of this job that we get to do is helping founders not do that stuff.

Like, 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, should I shoot my foot?

And we can just be like, no, no, no, no, don't do that.

And it's so rewarding when we help people avoid that.

And 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 does anything to help the business, and then an A plus investor 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.

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 meetings scheduled 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 get in early, or at demo day, or after demo day.

And so for maybe 1 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 need to be able to grow and execute on your business.

I know a lot of times people like to celebrate the fundraising wins and things like that, but it's just 1 milestone on the journey that you're trying 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 in 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 Surbhi Sarna sitting with Jared Friedman on some of the funny mind games investors play, just to see how you might react.

Want to tell us about the worst investor meeting that you pitched in?

Look, so there's this big name, Facey in the Valley who...

But I was so nervous to meet them, and I really wanted to make a good impression.

And first time founder, 24 years old at the time, so I'm super nervous going in.

And he's sort of known for testing founders in various ways.

For me, 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 then he grabs some piece of candy and slowly comes back.

And then he just proceeds to open this candy with this loud wrapper as slowly as he possibly can.

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 and

It wasn't that he was just going for the candy.

And the opening of the candy lasts in like 10 minutes.

In venture they call this the candy wrapper

I would say that every investor has their own unique style.

So if 1 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 1 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.

Next up, I'm sitting down with Gustav to talk about 1 of my mega bad investor meetings.

This time with the heads of Andreessen Horowitz.

There's a great ones and they're not so great ones.

It's much worse to have a bad 1 than it is great to have a great 1.

If you end up getting an investor who's gonna hurt the company, and there are many, many ways an investor can hurt the company.

And if you end up 1 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 actually not 1 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 for Posterous, which was a blog platform at the time.

We had been growing 10 to 20x year on year.

We're sort of being buzzed about, and people were buzzing about Posterous and the right parties.

We're on Sand Hill Road sitting down with 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 1 of the hottest Series A firms.

It goes well, we think we have it in the bag, and then at the end, 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 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 VC 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.

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 1 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.

So, Diana, can you give me an example of your worst investor meeting?

So, when we were fundraising, it was in 2017.

Investors were at their most best behavior because this was right after...

So I think they were kind of in the best behavior, so they didn't have any of the weird woman founder kind of thing.

I don't think the investor thought it was awkward.

He just kind of asked it and blurred it out.

But I thought it crossed a personal line.

That's not professional, asking personal questions the first time we meet, and that's 1 of the first questions you ask, and not about the business?

And I think that's 1 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 as evaluation for a business to get the meeting started.

I think the mistake that founders do is really looking up to investors and putting them on a pedestal.

Yeah, they think the investors know better because they have met so many companies.

But actually investors are not experts in your business.

A 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 is still going to tell you what they think so that you can make the best decision.

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 1, is to create an incredible business, not to ace the test and raise money on its own.

It actually is like tremendously demotivating.

Where you're like, why am I doing this with my life?

It transcends the level of even talking about your company.

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Startup Experts Share Their Investor Horror Stories