If there’s one irony to Silicon Valley, it’s this: A lot of fundamentally (and sometimes proudly) anti-social people are stuck playing a really, really social game.
The first half of that sentence is perhaps an unfair, sweeping statement. But the second one isn’t. If you were led to think that the startup world is a game of lone wolves, contrarians, outliers, and data-driven decisions. . . You just got here.
Startups are people-driven, not data-driven. They are more people-driven than traditional businesses, because they are personal. They are outgrowths of a founder’s dreams, quirks, needs, personality, and unique outlook on the world. And because of the cult of the founder culture in the Valley, all of that is encouraged, not discouraged.
Here’s the other reason why it’s so personality-driven: When a startup is an idea, no one really knows if it’ll work or not, and no one even knows if the startup will be doing the same idea in another six months. Most startups pivot. This isn’t failure: It’s often failure not to pivot.
PayPal, Twitter, Meta, Instagram. All pivots.
So if you can’t bet on the idea, who can you bet on? The people.
If you think startups are inherently social, consider the world of venture capital. There are billions of dollars sitting in thousands of firms, and these firms are all “selling” you the same thing: Money for equity. They all have the exact same product. How do they differentiate?
You can try to find a company no one else wants to fund. That works sometimes. You can try to pay a better price than other people. That can work too.
But really, it all comes down to your social game. Are you the VC who has the most cache? Are you the VC who has the most connections? Do you have the best founder-friendly reputation? Does a founder “owe you one”?
If you are coming into the startup world thinking you are joining the land of the social misfits and leaving the land of office politics, think again. It’s just a new type of politics.
Dan G. had a great recent LinkedIn post that hammers home how few nodes there are through this social game. His warning was about entrepreneurs talking sh*t about competitors, other investors, lawyers, and any professional ties in the ecosystem. Just like high school, it’s likely to get back to them.
His evidence:
There are only a few banks that serve startups
There are a few other venture debt players, but not many
Most startups and VCs use the same handful of lawyers
Just thirty VCs raised 75% of all venture capital in the US in 2024, according to PitchBook.
This goes beyond the most obvious point: Why, despite cycle after cycle, is San Francisco always the main hub of activity?
Relationships.
Our business is equipping the scrappy new breed of emerging managers to win at this game, and you need to understand this as much as any founder does. The benefit of writing small checks is that you can be the mouse weaving around the ankles of the elephants. If you play this game right, you can work your check into oversubscribed rounds that a mega firm can’t get into.
But you have to know how to play the social game, and how the telephone works in Silicon Valley.
The Decile Group develops industry-leading offerings to transform venture capital into an ethical force for good in the world, including VC Lab, Decile Hub, Decile Partners and Decile Capital.
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