Organizational Behavior
Impression Management, Venture Capital Style
Self-promotion by venture capitalists (VCs) was frowned upon until about 2009. Those who used it were criticized and called “parade jumpers.” But since 2009, VC firms old and new (such as Bessemer Venture Partners and Founders Fund, respectively) have actively engaged in impression management with investors, the media, and other VC firms. Today some of the founders and lead rainmakers in VC firms are celebrities with publicity, status, and influence to match their often immense wealth. Below are two of the reasons VC firms across the industry now pursue impression management with enthusiasm:
• Knocking on doors. Increased competition has motivated VCs to reach out to investors and entrepreneurs and differentiate themselves, in contrast to the recent past when investors and entrepreneurs needed an inside connection to get a meeting with a VC firm.
• Self-promotion. Andreessen & Horowitz, a VC firm started by the founder and an executive of Netscape (one of the first web companies), entered the market in 2009 with a completely different approach. Marc Andreessen and Ben Horowitz courted entrepreneurs, used social media (blogs and Twitter), and marketed themselves aggressively. Their approach was motivated by the belief that “each year 15 deals account for 97 percent of all venture capital profits. To be successful, they would have to pursue those 15 companies. And they would do it by aggressively marketing their expertise to the reporters and bloggers who follow start-ups.” To execute this strategy they didn’t just hire a PR firm; they made the PR firm’s founder (Margit Wennmacher) a partner in Andreesen & Horowitz and quickly became the fastest-growing VC firm in the industry.
YOUR THOUGHTS?
1. What are your thoughts about aggressively managing the impressions of investors and customers, as Andreessen & Horowitz and other VC firms have done?
1a. Think of your current employer, or a past one. With whom and how could the organization use impression management to improve or grow its business?
1b. What ethical standards would you apply to impression management? Why?