Lesser Angels
The other day I was listening to an angel investor, and I got to thinking about my reaction to what he was saying. He was explaining to a group of small business people how it works. He loans businesses, for example, $10,000 for 5-7 years, expecting that they will be bought out by some huge corporation at the end of that time and pay him back $100,000. Most of his investments will not make it to this, but with a pool of ten, as long as one does it, he’s broken even, so he’s hoping for two or three.
I felt a strong sense of misalignment, and wondered why.
First of all, when you take angel money, lovely as it sounds, you’re taking on the values of venture capitalism, which is grow huge, fast, so you can get this guy his money back. I started working for myself precisely because I was over making some rando a ton of money.What does success look like? Did you go to school to learn, or to get grades? A lot of us spend decades of our adult life trying to undo the poor learning habits we got when we believed that grades were important. If profit is the only metric of success for a business, no wonder so many of them fail.
What makes a product special? What makes it take off? What makes a company functional? What makes it last long enough to do the work it set out to do? If everyone could easily make something and turn it over for a couple hundred thousand to a million, everybody would do it. The special thing that makes a business take off and sustain is authenticity. A computer can do accounting. Only people can bring and receive value, which is profit, and much more than profit. Distilling a business to money instead of value, chasing a number don’t sustain a business, and undermine what it needs to be successful for real—how it’s seen by people, you know, carbon-based monkey life forms. What angel capital sets up is a system where a bunch of people emphasize the wrong thing and hope to win the lottery. Sometimes they do. 70% of lottery winners lose their money within seven years, and there’s a high rate of suicide and violent death, so is that goal worth reconsidering? A business that emphasizes money to the exclusion of other values is a miserable place to work. A business that has to do that in order to jump through investment hoops is not contributing anything to the world. A business whose entire reason for being is to make money cannot communicate (for long) the value of its service or product, because it doesn’t really have one.
The immediate knee-jerk response will be that profit is critical. I don’t disagree. Blood is critical to our bodies, too, and their role is similar. But a bag of blood is not a functioning human.
The best part of the group, for me, was when the moderator said pleasantly and neutrally, there are all kinds of investment, and maybe this works for you, which is fine. But venture capitalism only started in the 1970s. There were businesses for centuries before that, so it’s one of a number of options. Angel investment has gotten a lot of ink. Let’s see more of those other options.
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