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Investors should do no harm
A founder running a company is like a chess grandmaster who plays the match 60 to 80 hours a week and sees many moves ahead. An investor is a chess enthusiast who checks on the match once every three months. Because the investor wants to make a mark on the world, each visit comes with an opinion about what to do.
Nobody walks up to Jordan to tell him how to dunk or dribble. But everybody has an opinion, and anyone not in the game all the way, 12 to 16 hours a day, doesn't see what the person inside sees.
Investors are glamorized and have a seat at the table, which gives them real power to make a mark. If an antelope limps across the Serengeti, a lion takes it down even when it isn't hungry, because that is simply what lions do. Many investors treat a limping founder the same way, sometimes without knowing why.
Being helpful is a higher bar still. By the same guess, about one in a hundred investors is helpful, and the real help comes in hard times, with something like personnel, where it is hard for an investor who isn't in it that deep to participate.
Why do lions target limping prey?
Lions hunt opportunistically, and a limping animal is a safer, cheaper catch than a healthy one. A healthy zebra or wildebeest can kick or gore a lion, and an injury can be fatal to a predator that depends on hunting. The biologist George Schaller documented lion hunting behavior in the Serengeti in the 1960s. His 1972 book The Serengeti Lion remains a standard reference on the subject.
How do chess grandmasters see so far ahead?
Researchers William Chase and Herbert Simon found in 1973 that chess masters recalled real game positions far better than novices did, but did no better with randomly placed pieces. That result suggested masters store patterns in chunks instead of memorizing single pieces. Seeing a chunk lets them recognize a position and jump ahead to likely continuations. Simon later estimated that a master carries about 50,000 such chunks.
Why do lead investors get board seats?
A lead investor in a venture financing usually puts in the largest check, and a board seat gives that investor a formal vote on major decisions. Boards approve budgets, hiring of top executives, and later financings. The National Venture Capital Association publishes model legal documents for these deals, and they provide for board seats tied to investor ownership.
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