At the risk of sounding like a jerk, it's ironic that VCs have hugely difficult time of picking winning teams. One wonders who the losers are here: the entrepreneur who can't pitch a VC, or the VC who picks teams based on guessing how well they can perform and only hits one in ten.
I wonder if this is due to the friendly doctor effect? That's where one doctor is kind and takes her time asking you questions. The other doctor is gruff and terse. Studies show that patients naturally judge the quality of the doctor by their personal perceptions of how kind they are -- which is the only thing they have to go on. i.e. in a brief presentation and interaction with a team, only superficial qualities at best are going to be demonstrated.
"One wonders who the losers are here: the entrepreneur who can't pitch a VC, or the VC who picks teams based on guessing how well they can perform and only hits one in ten."
Huh. As an exercise, take the next batch of YC companies and try a ghost portfolio. See if you can pick the ones that will provide enough of a venture return in 7 years to pay for the losers PLUS 7 years of salaries for everyone at a small VC firm.
I've never done it. But these guys are trying to effectively predict what markets are going to do AND how they team is going to work together in 5+ years. AND they have to hope that nothing catastrophic happens to the business in 5-7 years (key founder falls ill, has a bad divorce, etc) -- startups are fragile.
You don't sound like a jerk. You sound like the guy on the couch yelling at the football coach on TV: "How hard can it be to call the right plays?"
I know it's hard, almost impossible to find good teams.
My question is: how much stock are you going to put into a general feeling you have about character based on a few short interactions? Is "gut feel" that reliable? Or should you use some other criteria.
Lord knows it's tough. That's why your general feeling about the team probably isn't such a good thing to go on, right?
Ah! I think a better way to describe VCs focus on teams is this: "A great team is a necessary but not sufficient ingredient for us to be willing to invest." The thing the OP is saying that the team is usually the first/most obvious problem with the startup. It takes about 10 minutes to get a sense that a team sucks (bad salespeople, abrasive, confused, misguided, insane-- whatever), while due diligence on a product/market can be a pretty big task.
Most investors judge the whole package (market, timing, traction, product, team).
Whether general feeling of team quality is a measure of anything useful is an interesting question. Most of these guys have pretty endless deal flow. Like a company that has way too many applicants for way too few job openings, they look for early ways to thin the herd.
Being able to accurately get a feel for people and their character is a skill. From what I'm told, after a while, a few short interactions can tell you a lot. Apparently Jessica Livingston is extremely good at it. Women in general tend to be pretty perceptive, but I also know some men who are truly great at reading people.
I think there's no doubt that VC's will have an inherent bias towards people of similar backgrounds to themselves. Which I think is the biggest problem they have. Sometimes a complete outsider or wacko is what's called for. My favorite example of this is "Moneyball" - there was the conventional wisdom in baseball that was never really examined - it took a complete outsider (Billy Beane and/or Bill James) to really rethink it.
I think that is an oversimplification. Everyone has biases, some people may actually feel more comfortable with a gruff no nonsense doctor.
It is a VC's job to assess whether they want to work with a team. In the end the VC has to work with you and that one in ten hit is supposed to bring in a high return to make up for the the nine loses. If the VC is getting the return and enjoying working with everyone, even the people who fail in the end, then it's still a favourable situation.
I wonder if this is due to the friendly doctor effect? That's where one doctor is kind and takes her time asking you questions. The other doctor is gruff and terse. Studies show that patients naturally judge the quality of the doctor by their personal perceptions of how kind they are -- which is the only thing they have to go on. i.e. in a brief presentation and interaction with a team, only superficial qualities at best are going to be demonstrated.