A VC’s Tale in Five Shoes
If you actually know me, you know I have a bit of a shoe obsession. If you are old enough to remember Imelda Marcos’ closet, just know she has nothing on me. My obsession started pretty early, as I worked in a shoe store throughout high school and college. This is the old time equivalent of a stoner working in a medical marijuana dispensary, but my addiction is even more expensive and harder to break. In fact, I don’t even try to break it. Give me liberty or give me more shoes. To hell with it, I’ll just take the shoes. When I die, bury me in a Manolo Blahnik box and just put me in the wall in Neiman Marcus’s shoe department.
And with this as a backdrop, now I can tell my tale.
I was walking through the office the other day on my way to a pitch meeting (where entrepreneurs pitch their business plans) and glanced down approvingly at my shoes. I noted that they are covered in multi-colored frogs, which I like because they are funny and colorful. But it then occurred to me that these shoes, together with several of their brethren, tell the tale of my job in an entirely perfect way. I didn’t plan for this, but perhaps it was subliminal for me to end up with shoes that tell my current career story all too well. I may have backed into my perfect personal narrative by accident, but at least I backed into it in some fabulous shoes.
So here goes: the tale of venture capital in five pairs of shoes:
You Have to Kiss a Lot of Frogs: the frog shoes, by the brand Irregular Choice, are colorful and fabulous like so many entrepreneurial pitches I see. The frogs are represented in a rainbow of bright colors against a background that is the color of money. And that’s my day to day in a nutshell: watching a parade of founders promote their colorful fairytales where the ending is always green, up and to the right. Truth is, you have to kiss a lot of entrepreneurial frogs before you find your ideal investment targets and even then, they don’t always turn into princes (note: they turn into princesses at an even lesser rate given a dearth of female CEOs). But kiss you will, until you find the most pleasing frog and then….
Down the Primrose Path: … founders and investors launch off together holding hands and singing Kum-ba-ya down the garden path surrounded by flowers and verdant hopes, just as these shoes from Manolo Blahnik suggest. At least at first. Everything looks rosy and the garden is certain to be fruitful after an investment round closes. Sunshine and bright colors reign. Everyone sits around waiting for the flowers to bloom, the bees to pollinate and the fruit of the vine to turn into the aforementioned money pile. Does money grow on trees? Perhaps, you think, if you take this analogy to its most ridiculous conclusion. Time passes. And then you come to a fork (or should I say shoe tree) in the road….
As investments mature, there are basically only three paths for them to follow: they are fabulously prosperous, they are mediocre at best, or they become toxic and meet with a miserable end. I have shoes for each and every such occasion, as it turns out. Couldn’t have planned it better if I tried.
The High Fliers: Behold my Sophia Webster unicorn shoes, which represent the best of the best – those investments which achieve levels of value only whispered about in the bar of the Rosewood Hotel or hallowed halls of MIT. A rare few investments achieve actual the unicorn stage (there are only a handful of these in healthcare), in which the company is valued at over a billion dollars. Apparently, there is now an even more desirable category than unicorns: cockroaches, defined as an indestructible business that could survive a nuclear war and which builds slowly and steadily from the get-go, keeping a close eye on revenues and profits (according to merchant banker Tim McSweeney). Spending is kept in check so that it can weather any funding storm. I am going to have to add to my collection it seems. Though really, where do you wear cockroach shoes without grossing out your friends and colleagues?
Now I’ll admit that my unicorn shoes, rad as they are, are not entirely comfortable. They are precipitously high and effective mainly for wearing from the celebratory Tesla ride to the closing party table. One could not walk around in these all day, as it would be difficult to navigate the slippery slopes of Sand Hill Road. And as a result, they are particularly prophetic footwear since the rarified air of unicorn-ville is not always breathable for long. Sometimes it ends so well you really need Pegasus shoes. Sometimes those unicorns try to hit the dirt. But let’s keep it uplifting for this pair, sky blue as they are.
The Mediocre: Everyone has an off day where they just can’t be bothered to be fabulous in the shoe department. For those days, and representing the middling 1x-2x cash-on-cash outcomes, there are some reliable beige shoes in my closet, courtesy of Kate Spade. Well they are almost boring; they do have a bit of a giraffe print on the heel but it’s subtle, especially for me. Practical as they may be, these beige babies don’t get out much despite likely being the most metaphorically appropriate for a large portion of healthcare investments. Like so many of these companies, these shoes kinda hang out in the middle of the closet (aka portfolio) most of the time, producing neither big bags of green nor piles of ash. Everyone’s venture portfolio has a place for beige, like it or not. Sometimes reality is not all rainbows and unicorns. And when it comes to money, beige beats red any day.
The Toxic Mess: And for those deals that sounded great at the beginning but which cannot defy gravity’s pull, there are these fabulous articles by Tanya Heath. The skull and crossbones are usually featured prominently on either pirate ship flags or poison bottles. In this case, I’m going with the latter, as companies that crash to the ground tend to do so with a flare for the dramatic where everyone loses, Romeo and Juliet style. The pirate ship metaphor also works if you assume that it’s a ship with a massive cannonball hole in its side.
It’s always tragic and fascinating to watch these startup death marches unfold, as there is so much misery, waste and regret, much of which could have been avoided with faster decision making, more meticulous operational execution and better management teams. All investors, at some point in their careers, have to don the black hoodie and scythe and come into companies slashing and preparing for shut down. It’s never fun and particularly when you know that people will be losing their jobs on the one hand and their money on the other. These seem to me the perfect shoes for the occasion. Notably they are quite comfortable and easy to wear, which may be a metaphor in and of itself for how easy it is to steer young companies off the rails into the abyss. By comparison, one has to work hard to navigate in the unicorn shoes.
Now what I don’t have, and clearly must purchase, are shoes depicting actual money on them. Or software code for my forays into SaaS. Or medical products of of any kind. Those would be excellent and detail-appropriate additions to my collection so feel free to send them along (size 7 ½-8, depending on brand). Meanwhile, if you see me out in the wild in my skull and crossbone shoes, think twice before approaching.
Contributing author Lisa Suennen is a venture capital investor and the managing partner of Venture Valkyrie Consulting, LLC, which provides advisory services to venture and private equity funds, healthcare companies and not-for-profit healthcare organizations. She is also a mentor for Rockstart’s Digital Health accelerator program. You can read more of her blog articles here. This is a republished piece from May 14th.
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