Grades
The essential role of feedback in education and angel investing
1,552 times.
That’s the number of grades I estimate the average US high school graduate receives.
That’s 129 grades per year, 16 per month, and 4 per week.
Why did I take the time to calculate this number?
Because today, we’re discussing something that is fundamental both to learning and to a world-class angel network process: feedback.
The Greatest Chemistry Teacher
A grade is, by design, a form of quantitative feedback.
It answers the question “How did I do?” in clear, unambiguous terms.
You pass. You fail. You scored 82/100. You missed 3 of 10. You got 5/5 correct.
We spend our entire childhood being asked to deposit our knowledge, problem-solving skills, and creativity onto a sheet of paper for a quiz, exam, or other test. Then, once an expert (aka “teacher”) reviews our submission, we receive feedback in the form of hard numbers. This scoring provided the invaluable function of helping us clearly identify gaps, weaknesses, and opportunities for improvement.
However, in my experience, the best teachers didn’t just write down a number and call it a day. No, the ones I remember most took the time to provide detailed feedback.
Take, for example, my favorite high school chemistry teacher: Keith Baty.
Yes, Mr. Baty gave me a score when I completed an exam, but he also left comments. He would write in the margins. He’d ask questions, explain why something was incorrect, or walk me through where it could have been improved. If it was a really bad day, he would even ask me to stay after class to chat about my performance. There were a lot of things that made him a great teacher, but one of them was without a doubt his practice of consistently sharing thorough feedback.
What if we were all like Mr. Baty?
Quick Math
According to the math I referenced in the introduction (snapshot below), a feedback instance happens to the average American student about 4 times a week for 12 years (plus college & grad school, in my case). I, like many of us, worked hard to do well, and I learned to expect decent feedback in exchange for that hard work.
But then I graduated, and everything changed.
Starving
I think most adults are starved for feedback.
We go from receiving 4 grades per week to receiving… nothing.
“How well did I do on that presentation? Was the analysis helpful? Did you like the product? Did you enjoy our meeting? Did I answer your question well enough? Did I communicate well? Did that math make sense? Did I meet your expectations?”
I could go on and on, but the point is that once we exit the education system, the volume of effective “grading” we receive tends to fall off a cliff. Instead, we’re typically left with “nice” and “civil” responses to our performance on just about everything.
“You did great, Bill.” “The product was good.” “Nice meeting with you today Kathy.”
Platitudes. All platitudes.
Comments like this, while often well-intentioned, are not helpful, and often leave the recipient more unsure than they would have been if no feedback at all was given.
That’s where the best of the best can set themselves apart: by giving and asking for transparent feedback.
Radical Transparency
In B-School, we studied a concept that has always stuck out to me: Radical Transparency. Ray Dalio popularized this philosophy through his book “Principles” and practiced it through his leadership of the largest hedge fund in the world: Bridgewater Associates. The concept centers around the idea that increased transparency is best because it enables more opportunities for growth, better decision-making, and cleaner conflict resolution.
Here’s a Dalio quote from a 2017 interview: “So when I say I believe in radical truth and radical transparency, all I mean is we take things that ordinarily people would hide, and we put them on the table, particularly mistakes, problems, and weaknesses. We put those on the table, and we look at them together. We don’t hide them.”
More recently, I read The 5 Dysfunctions of a Team by Patrick Lencioni, and his “Dysfunction #2: Fear of Conflict” hints at the same idea. Giving and receiving honest feedback is hard - it takes work on both sides.
But it’s worth it.
So where does radical feedback fit into the process at a world-class angel network? Throughout the process, but specifically during the Evaluation phase.
Allow me to explain.
Angel Ops Step 2: Evaluate, Supporting Job #3: Share Feedback with the Applicant
As a quick refresher, Angel Ops, which I introduced in this post, seeks to map an answer to the following question: What does the process at a world-class angel network look like? Angel Ops is focused on the backend process of running deals and groups the workflow into 5 core steps. Two weeks ago, I introduced the second job within the Evaluate step: Finalize Selections, which focuses on the organizational structures that allow effective decisions to be made. The overall objective of this phase is to identify which deals are a good fit for the network, which culminates in an invitation to present to network members.
Evaluate
Job: Identify which deals are a good fit for the network.
Progressive Outcome (PO): Invite - The best applicants are invited to present.
Within each core step, there are 3 “supporting” jobs-to-be-done that contribute to the primary job. This week, we’ll explore the third and final supporting job within the second step: Share Feedback with Applicant.
Scoring Something Requires a Rubric
The best angel networks know what they’re looking for. The worst ones don’t. Both still have the job of sharing feedback with applicants, whether they move forward in the pipeline or not.
Does every network operator successfully complete that job?
No.
But operators at the best angel networks do, just like Mr. Baty did. Once these leaders have done the hard work of setting up a strong process with clear selection criteria, developing helpful feedback is a fairly straightforward process. They simply compare the applicant’s information to the investment thesis and filtration criteria.
I’ve even seen some groups that go so far as to automate the process. For example, if a startup is domiciled outside of the US, a group’s system automatically recognizes this and the founder is sent a response within moments indicating that they are not a fit as a result of their location. Many have prepopulated emails, systems, and other mechanisms to help them save time and ensure all founders receive clear feedback throughout the process.
Furthermore, if a founder is invited to proceed, leaders will often share notes from screening/selection meetings, specific coaching with regard to their network’s preferences, and any other relevant insights gathered so far in the process. Talk about helpful!
Operators at weak angel networks, on the other hand, have a much tougher job, since there is no clear rubric upon which to base feedback. There also tends to be a fairly poor process for communicating and documenting those comments, so as a result, much of the feedback burden falls to the lead operator (typically the executive or managing director). Given that many groups are processing dozens or hundreds of applications per month, that’s a tall order. These overwhelmed and overworked leaders can’t do everything, so sharing feedback tends to fall to the wayside in order to focus on supporting more “core” functions of the network.
This failure to share leaves founders in the same hungry state, asking questions like “Am I a good fit for this network? Is this network a good fit for my cap table? Why was my application rejected? Should I reapply? What was attractive about my presentation? How should I adjust my messaging to cater to this unique community? What would need to change for this opportunity to be more compelling to your members?”
Takeaway: don’t skip the feedback.
Final Thoughts
A few weeks ago I commented on the importance of respectfully declining an application that is not a good fit. In that discussion, I touched briefly on the importance of including feedback within that communication. Today, we’ve gone deeper and discussed how we’re trained to expect a grade and why thorough feedback made Mr. Baty a great teacher. We also broke down how most of us quickly discover that good feedback is rarely given outside of the educational sphere, that it can be a powerful tool for growth, and that the best angel networks have a solid process in place to make sure they deliver.
What do you think?
What was some of the best feedback you’ve ever received? Why was it so helpful?
Weekly Observations: 3 Lessons Learned
Life can change pretty fast.⏩
This week I had the opportunity to reconnect with 3 classmates from business school. We graduated 8 months ago. None of them are doing what they thought they’d be doing at graduation.
Custom research is a lot of work. 🔨
This week we wrapped up the first draft of a fairly thorough analysis of several specific markets within the nonprofit space. It’s been an excellent project, but it has taken twice as much work as we thought it would. Lesson learned: next time we take on custom research I’ll 3x the amount of time spent developing the upfront scope, will protect that scope fiercely, and will price to allow a bit more breathing room.
Communicating the essence of a business in 60s or less is very hard. 📬
This week I had the honor of hearing two dozen veteran entrepreneurs pitch their businesses in 60 seconds or less. I was reminded how hard that is to do and was impressed with how many were able to get it done in time. It’s easy to forget how much work founders put into consolidating and condensing their messaging, so this was a great reminder of one of my favorite sayings: “If I had more time, I would have written a shorter letter.”
About Me
I cultivate flourishing.
I'm also the CEO of PitchFact, where we help angel networks conduct efficient and collaborative diligence. I'm a proud husband, aspiring father, and grateful friend. My love languages include brisket, bourbon, and espresso.
About PitchFact
PitchFact helps angel networks conduct efficient and collaborative diligence.
Learn more at pitchfact.com.