Want to Do Business in Silicon Valley? Better Act Nice

The first rule of Silicon Valley venture capital is never insult a start-up. Founders are always killing it, disrupting the world or just plain 🙌🙌🙌.

If a start-up is fizzling, shuttering or caught scamming? The socially acceptable response is total silence.

Everyone knows that. Except Jason Palmer.

The start-up in question was AltSchool, a Mark Zuckerberg-backed project to turn school into a start-up experience. It had just announced it was pivoting out of existence after raising $174 million.

Mr. Palmer is in this field: He is a venture capitalist in Washington, D.C., focused on education technology. On June 29, he tweeted that AltSchool was always a bad idea, and he was glad that his firm hadn’t invested in it.

That single jab at a failed company sent the investor elite into conniptions.

“This is likely the most expensive tweet you’ll ever post,” wrote Mark Rose, at the time a product manager at Google, now the vice president of product at a biotech start-up called Ontera. “That’s the $ lesson.”

Many said Mr. Palmer should be boxed out of future deals.

A start-up founder funded by Y Combinator, an influential start-up training program and investment firm, flagged Mr. Palmer’s firm to his funders: “We might want to warn future edtech founders (YC or not) about their best practices,” Alex Bouaziz wrote on Twitter.

It goes on.

“I wish I could short your portfolio,” Michael Karnjanaprakorn tweeted. He is the founder of Otis, which facilitates investments in art and sneakers.

And on.

“Dude, you realize you are literally the worst,” wrote Steve Cheney, a founder of Estimote, which makes sensors for tracking devices.

Michael Arrington, the pugnacious founder of TechCrunch, added a note of criticism. The co-founder of an e-sports collaboration tool described “putting startups on blast” in this manner as “toxic behavior.”

Parker Conrad, the former C.E.O. of Zenefits, a human resources start-up, who has since started a similar start-up, jumped in.

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“So easy to say this from the cheap seats. No founder in edtech should ever pitch their company to you again,” Mr. Conrad wrote. “It’s so easy to predict something will fail. You’ll be right 9 times out of 10. You will never build anything meaningful.”

Inevitably, there was Mr. Palmer’s apology. It came in four self-effacing parts, beginning by thanking everyone for the feedback.

“Hi everyone — First of all, I really appreciate the feedback, both positive and negative I’ve received from this tweet all day. I believe in honest, tough conversations, and that’s what all of you have given me.”

After a few more apology missives, he apologized to the founders, who poured six years of “their heart and soul” into the project.

Mr. Palmer believed he would save his investors money by not investing in a start-up that would have lost it. He was right. But in the cacophony of venture capitalist boosting, that became about emotion, and even soul.

A founder’s soul is a surprisingly common discussion topic in the tech world, often as a defense of a particularly egregious news cycle. In social settings, debate over a company like Facebook will quickly get personal, cutting to the question of what its chief executive feels in his or her heart.

Mr. Zuckerberg, when caught in a scandal, rinses himself in apologies. He does this so often that the Washington Post made a graphic of his heartfelt mea culpas.

The rhetoric of soul and heart is a sleight of hand to distract from the boring truth that tech companies are, of course, for-profit corporations.

After Mr. Palmer’s tweet, he was shaken. He said he had no idea how upset everyone would get and that he had no intention of hurting anyone.

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“It’s been overwhelming,” he said.

He sent out a carefully worded email a few hours later.

“The biggest lesson I’ve learned is to think harder about all the people who might be affected by any tweet,” he wrote. “Founders, teachers, employees, students, they’re all real people with real lives, feelings and stories. They’re much more than 280 characters.”

By not knowing the rules, he showed exactly what those rules are, and just how the Silicon Valley positivity machine runs. For venture capitalists, Twitter is a place to sell. It’s a place to talk up portfolio companies. It’s a place to perform the industry pastime of “thought leading.”

Venture capitalists do not think of themselves this way, of course. CB Insights, a company that performs industry analysis, polled venture capitalists on this question: “Should VCs avoid public criticism of the industry / start-ups?”

The result was clear: 88 percent said investors should feel free to criticize.

So, two months after the tweet, how is Mr. Palmer feeling? The outrage that came both in public and private did not, in the end, oust him from the industry. He continues to invest.

For him, it was “a reminder,” he said, that tech entrepreneurs truly believe they are saving the world. He wanted to be clear now that he truly believes this, too. They were right. His tweet was very bad. He has been chastened.

“Tech entrepreneurs are just as mission driven as people in nonprofits,” Mr. Palmer said. “They believe they are helping the world just as much as nonprofit founders.”

But of course most start-ups fail, he added, a little quieter, and the tech world ought to learn how to talk about failure.

“In fact, most high-risk start-ups are nonprofits,” he said. “Effectively nonprofits.”

His public messages now accord with Silicon Valley venture capital norms.

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