All the Stuff That Wouldn't Fit in Redfin's TechCrunch Essay

Redfin just published an essay on TechCrunch about what we learned from venture capitalists while raising money. Some of the small-is-beautiful thinkers here in Seattle may say it’s just another how-to guide for kissing investors’ fannies rather than boot-strapping a business. Not true! Our point wasn’t to tell people how to raise money; the entrepreneurs who are focused on pleasing VCs rather than their customers or themselves are barking up the wrong tree.


Others will say that it’s another Kelman case for building Death-Star-sized startups rather than operating on a more hand-crafted scale.  This is a bit truer, though I’d like to think that a company can get big without selling its soul. We just believe that the funnest thing in the world is to take something small and make it big. Growing is better than not growing.

And of course being capital efficient is better than dilution, so we’re not trying to persuade anyone to raise money. But even if you don’t take investors’ money — especially if you don’t — it’s useful to take their mindset, at least for the five minutes it takes to read what we learned while raising money from Greylock.

Because no matter how hard I try, I get into the weeds at Redfin and forget to think strategically about what we’re becoming. The process of raising money is an antidote to that tendency. While I sometimes resented having to spend a few weeks on Sand Hill Road explaining our story, by the end of it I had decided it was a good thing to be a little scared while talking to really smart people about basic strategic questions. You have to think everything through all over again, confirm some decisions, reconsider others, and come out ready to execute like a wild animal.

Hopefully we simulated that experience in a way that is useful to you. While writing the essay, I began to reflect on how my attitude had changed about VCs.

I used to think of them as the Wizard of Oz. As a 25-year-old raising money for Plumtree in the ’90′s, I often found myself hyper-ventilating in a rented Ford Festiva parked off Sand Hill Road, saying to myself THIS IS IT, THIS IS THE BIG ONE. Back then, I looked to Greylock or Sequoia as more than just a source of money or good advice, but as the only remaining dispensary of prestige or meaning — a Harvard that could reconsider my application, an Oracle capable of anointing our little startup as The One.

You need someone to look up to. When your first job out of school is at a startup, you stop believing in the 68th-floor executive suite, the older gentleman in the bespoke suit, the whole adult world that seemed so magnificently ordered just a few years before. You’re surrounded by dingbats just like yourself. There is no Star Chamber, only a series of poorly carpeted rooms that you will progress through for the rest of your professional life. By 24, the great chain of being had become so discombobulated for me that I was no longer even sure Coke was better than Safeway Select.

Since then I’ve become more of a humanist in my career, taking comfort in the idea that we can each decide what is meaningful or prestigious for ourselves, that there is no one to believe in or beseech except other well-meaning folks like ourselves.


But I’m still a little puzzled by VCs, who now sometimes seem more like the precogs in “Minority Report,” confined for most of their lives to a sensual-deprivation chamber, lightened at one end by the flickering of an endless PowerPoint preso: formidably gifted, carefully consulted, unsplattered by the muck of Redfin’s everyday reality, and yes, still tinged with my own feelings of reverence. It wouldn’t be a job I’d ever like — I have a bet with Madrona’s Greg Gottesman that I’ll never become a venture capitalist, he doesn’t know much emotion I need to put into and take out of a job —  but even after all the ways I’ve become disillusioned about what not to believe in, it’s a perspective I value a lot.

Photo credits: Neato Coolville on Flickr, Warner Brothers, 20th Century Fox.


  • Conor Neill

    I love your post at TechCrunch on the eight best questions you received from VC. I have been developing a technical note for my classes at IESE Business School in Barcelona (#1 MBA in the world according to Economist recently) on pitching to investors to raise capital. I would love to send you a copy for review and am very interested in practical examples of experiences with the VC pitch. All the best and thanks for sharing.

  • Lateef

    Isn’t it a “sensory” deprivation chamber, not a “sensual” deprivation chamber? I’m no Dr. Ruth, but I think those are two different things.

  • Glenn Kelman

    Lateef, you’re right. It’s a sensory deprivation chamber! Conor, happy to take a look at your talk…

  • margaret

    Very well written article. I read your article on techcrunch. All the questions mentioned there are very informative. I believe, this article could help a lot to clarify the misconceptions on it.
    Thanks for sharing.

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