Why Venture Capitalists Invest In Pigs, Not Chickens

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Why Venture Capitalists Invest In Pigs, Not Chickens


The following is a guest post from Jeff Bussgang. Jeff is a serial entrepreneur and currently a general partner at Flybridge Capital Partners, a Boston-area early-stage venture capital firm. Jeff is also the author of “Mastering The VC Game”.

There is an old parable about the concept of commitment when it comes to breakfast. The story goes that when looking at a plate of the traditional fare of ham and eggs, it's obvious that the chicken is an interested party, but the pig is truly committed.

When I tell this story to entrepreneurs, my point is usually to contrast the approach VCs have to start-ups as compared to entrepreneurs. The VC is an interested party, but at the end of the day, if their start-ups live or die, they typically still have their job, their office and their portfolio of other investments. The entrepreneur, on the other hand, is the pig - truly committed to the outcome, with no fallback.ham eggs

But lately I've been thinking about the parable of the pig and the chicken in the context of the characteristics that make a great entrepreneur - and the kind of entrepreneur that we VCs in general, and my firm Flybridge Capital in particular, like to back. In short, we like to back pigs - entrepreneurs who are truly and completely committed to the outcome of their venture, have a lot of stake, and no fallback.

How do we discern the difference between the two entrepreneurial archetypes? It's usually relatively easy, but sometimes subtle. Here are a few of the top characteristics we see in entrepreneurs who appear to be exhibiting behavior that suggests they're more like "chickens" when it comes to their start-up:

1) Prefer to wait to start their venture only after they receive funding ("We are ready to go, as soon as you give us your money." ...um, does that mean you won't start the company if I don't give you my money?).

2) Don't quit their day jobs before receiving funding. ("This has been a side project for a year, and I can't wait to focus on it full-time" ... um, if you can't wait - why are you waiting?)

3) Don't physically move themselves or their teammates to be in the same geography when starting their venture (think Eduardo Severin in the Social Network spending his summer in NYC).

4) Prefer to play a hands-off chairman role or look to quickly hire a COO/president in the early days rather than operate as the hands-on CEO/president. (I'll leave out the numerous examples to protect the innocent, but as a rule of thumb, companies with fewer than 40 employees don't typically need a COO).

5) Are unwilling to fully leverage their own personal and professional networks to drive recruiting, fundraising and business development.

On the other hand, the top five characteristics we see in "pig" entrepreneurs include:

1) Commit to the new company everything they have - even if that means moving their families, quitting their jobs, or even dropping our of their schools (as much as I don't want to condone or encourage this!).

2) Put themselves "out there" publicly and visibly with the industry, their relationships, family and friends. If the company is a failure, it will not be a quiet one.

3) Have not yet achieved a mega-success already and/or yet achieved wealth beyond the point of needing to work again. (I remember my mentor and boss at Open Market, CEO Gary Eichhorn, congratulating me when I became a first-time homeowner in the mid-1990s and observed: "I hope you got a large mortgage so that you are locked in and highly motivated to create wealth!").

4) Participate in a minimal set of outside interests and hobbies that aren't directly related to their business. Starting a company is a consuming, obsessive, 7x24 endeavor. Raising a family and remaining healthy is enough of a battle. When we see entrepreneurs with long lists of hobbies and outside interests, it's a red flag. One of my partners went so far as to look up the number of times an entrepreneur played golf one summer (which apparently is public information somehow, although I'm not a golfer so still don't know how he figured this out) as a barometer for how hard they were applying themselves to their new venture.

5) There exists a rare breed of entrepreneurs that have already had mega-success are so special and driven that they remain obviously hungry and scrappy. For these entrepreneurs, the key is to watch and see if they're still as hands on as they ever were (e.g., obsessed with the product, knee-deep in the financial model, out in front of the organization in selling). Again, these entrepreneurs are very special.

So what are you - the chicken or the pig? Investors clearly prefer one model over the other, not just in the founder, but in the entire team. As a result, as you are assembling your start-up team, be careful not to hire chickens. In the eyes of prospective investors, you may find it's even less kosher than hiring pigs.

Posted by Dharmesh Shah on Thu, Sep 08, 2011


I would say that my partner is a pig and I am probably a picken. She definitely ticks 90% if not more of the boxes whereas for me family means I can't be in the same location as her and I'm definitely more of a background operations type person as opposed to K who has an amazing network of people and resources. It's been a longer, harder and more time-consuming road than any of us envisioned but I think we're getting there! And reading your article makes me feel that we are hopefully on the right track given that overall we're more pig than chicken oriented!

posted on Thursday, September 08, 2011 at 12:46 PM by Trish

Am I CraZy, stupid, or out in space? You can be the judge-I’m living it! 
I’m a pretty marketable guy. I’ve done well with my career. I live and work in NYC. I’ve been around the block a few times--never struck it rich. I got the entrepreneurial bug—I’m still at it after 1.5 years. My product isn’t in the market yet, but I’m making noise and People hear me. My competition knows me and is already battling to keep me out. Experts are challenging me. 
I don’t know anyone (personally) willing to take the risk’s that I’m taking-no, not anyone. Everyone I know thinks I’m crazy. All I talk about is the work I’m doing. It’s an old story to everyone I know. My list of “friends” is getting smaller-same old story.  
I don’t sleep much anymore-if I’m lucky, I get 3-4 hours per day. I’m nearly broke-I put it all on the line-even my retirement. I’m still at it. Why? It’s my passion and I love it. I need to see it through to the end.  
My product is nearly ready for market release. I’m hanging on by a shoe-string. So close! I’ve had several friends/acquaintances help, but everyone has bailed. It’s a lonely place.  
Why do I do this? Am I CraZy? I believe in myself and what I’m doing! 

posted on Thursday, September 08, 2011 at 1:04 PM by Michael Kaplan

Jeff - Great headline - great article. 
I know a lot of chickens and far fewer pigs - I never thought I would ever say this, but in your context, I am a pig- and hope to be bringing home the bacon soon if I can avoid making rash(er) decisions! OK enough now

posted on Thursday, September 08, 2011 at 1:11 PM by Maxine Horn

I just had a discussion with an angel...I don't really think...angels or vcs actually like pigs considering i have been one myself too.. :)

posted on Thursday, September 08, 2011 at 1:18 PM by Nidhi Shrivastava

having said that...i am still gonna be a pig..i guess its better that way..

posted on Thursday, September 08, 2011 at 1:21 PM by Nidhi Shrivastava

Jeff - I really enjoy the way you bring thoughtful to life in a creative manner. I remember reading a quote by Paul Graham where he has pondered doing new start-ups, but always stops himself because he isn't motivated by the fear of not paying the bills anymore.  
I've also heard the term unicorn used before for those Pig's who somewhat embody #5. It's generally a founder who has had a decent exit, in his/her 30's without a family yet, and wants to hit a homerun.

posted on Thursday, September 08, 2011 at 1:23 PM by Andy Cook

Thanks for this interesting article! I wonder if the point 2 is still relevant? This point was true before or at the beginning of internet, and at that time we couldn't work together if we were in different places. But nowadays, with the boom of the internet, thinks has changed, and especially concerning launching web startups. ITs (coder/developers, web-designers ...) work and collaborate together on a project but they can be physically separate and located in different countries. 

posted on Thursday, September 08, 2011 at 2:26 PM by Ari MASSOUDI

Great post. Agree with most. 
You can look up handicaps online atwww.ghin.com. The person would need to have a registered handicap through their club though. 
I chuckle at mine for this year, 10 rounds. My neighbor across the street has played 17 since July 1st. Good for him! 

posted on Thursday, September 08, 2011 at 2:29 PM by Alex Murphy

"Less than 40 employees doesn't need a COO?" What if a company has a CEO, CFO, CIO, Chairman of the Board and the only employee is the woman who keeps track of the paperwork?

posted on Thursday, September 08, 2011 at 2:38 PM by Fried Pig

Great article! I feel like I am much closer to a pig than a chicken. The main area that keeps me from being a full blown pig is that I still have my day job. I have invested my savings into the business, I have a family to support and although i live a very frugal lifestyle the business can't support me yet and my partner is in the exact same situation. As soon as it can support one of us, or we pick up a few more investors one or both of us will quit our day jobs and do it full time.

posted on Thursday, September 08, 2011 at 2:46 PM by Don Tarinelli

Entrepreneurs, please resist being brainwashed by this article. Sure VCs want to invest in pigs and you should be a pig if you want to raise money, but who the hell cares about raising money?  
Start your company lean, run experiments, and watch the metrics to see if the numbers tell you that you simply have to raise money. If the metrics are there, the money will come, no problem.  
Keep golfing, playing with your kids, and living life. Don't live some caricature of entrepreneurship.

posted on Thursday, September 08, 2011 at 3:33 PM by Justin Chapweske

True Justin, so true. 
My family and I moved to a city over a thousand miles away for a dream. I lived the life of a "pig" while the VC's golfed, vacationed, bought new cars on my concept and the money I helped raise. Gradually they took over and now I live like a pig, in squalor, no car, no vacation, and a broken family. 
Was it worth it? No.

posted on Thursday, September 08, 2011 at 4:46 PM by Fried Pig

@Justin - Great comment!  
To pile on that point a bit, I never liked this pig vs chicken lesson. Pigs are committed in this scenario, they are slaughtered, they're dead, they get nothing out of it. I know that isn't the point, but one of the wisest things I ever heard is 'people tell you what they really think, believe them.' I find it really interesting to talk to one investor that says don't quit your day job and another that says quit and go all in.  
I understand the sentiment around commitment, but there are other ways to show 100% commitment that don't involve putting your entire life on the line.  
Something to think about, when was the last time you had a "great idea" ... I bet you were probably doing something that was relaxing and not 100% focused on the project at hand. Balance in life frees you up to do more, not less.

posted on Thursday, September 08, 2011 at 5:14 PM by Alex Murphy

Another way to look at it is why would you invest in someone that has so little common sense that they're willing to bet their life savings, their family, and their health on something that as a VC you hope is at best a 20 to 1 long shot? Unless of course you're only investing in 25 year olds who can't make much money otherwise and aren't really risking that much when they go all in. But then you're taking yourself out of deals where the founders have actual experience and domain expertise.

posted on Thursday, September 08, 2011 at 6:00 PM by Greg

This might come as a shock to some, but some people simply have no means to sustain themselves while working on their startup. And I'm not talking about poor planning: in some countries it's the norm. You leave your job, and when your last salary runs out (sometimes in less than a month) what do you do?

posted on Thursday, September 08, 2011 at 6:10 PM by Berislav Lopac

What do you do? Public assistance. 
Once you have been branded as an entrepreneur you will never rejoin the "chickens" again. Remember, the VC people have connections. They own most of the business in your region. 
The game is different now. Most successful companies [those that don't have a five year clock] began in somebody's garage. Those people worked hard and plowed the profit back into the company. 
This will be the strategy I will use. The time that I spent prostituting myself to Angels and VC's was a waste of my life. I would be reaping my harvest now not applying for food stamps.

posted on Thursday, September 08, 2011 at 6:32 PM by Fried Pig

True entrepreneurs will know the truth that rings through in this article. Start Up founders looking for funding from VC's should know that if they accept a VC's money they will need to be completely committed to the business.  
If you want to build a great profit earning business you absolutely need to commit to the business with an all in mentality. 
There is no room for half in half out entrepreneurship, if you're working with a VC. You are either in or your out.  
If your start up doesn't need funding or you want to test your business concept before seeking funding then I guess you can work it part time before leaving your job or self fund it. 
The pig vs chicken is a good analogy for the commitment required to build a successful business. 
As for the risk's? If leveraging everything you have, networth, reputation, security, and geography are not something you are comfortable risking then you probably aren't ready to start a business with outside investor money. 
I've build four companies from the ground up and never sought investor money. Two of these business allowed me to create substantial wealth. However, in each business I had to commit completely to making the business a success. That meant working 24/7 and sometime 7 days a week.  
Did this mean I needed to live a draconian lifestyle/ No, absolutely not. I've remained married to my wife of 26 years, raised a family and spent quality time during their childhood coaching all their sports, making time to do the small things a parent should do with their children, and also spending time with family and friends. You can balance total commitment with living a complete lifestyle. 
The risks on the other hand are not in balance with comfort and security. There were many times while building the successful and failed business where I did not know how we would make it through the end of a month. Its the risk that I hear in the comments above then scare people from pursuing a business in a way that will lead then to success. Get comfortable with the risks of business and you'll then be ready to start out and build a successful business. 
I've just started my 5th business after my 4th business failed miserably. That 4th business cost me my entire networth, yet because I'm comfortable with the risk of starting something with nothing. We haven't had an income for two years and have had a hard time putting food on the table and keeping the lights on. But, as a true entrepreneur I know if I don't commit fully to the business it will not survive. 
You may have different thoughts and opinions as to why I or anyone else building a business would subject themselves to such a hardship, but then I'd venture to guess you don't know what it's like to spend months sailing in the Caribbean or flying in private planes and are comfortable receiving a paycheck. 
Entrepreneurship is a lifestyle, its not a security laden vocation.

posted on Thursday, September 08, 2011 at 11:01 PM by Christopher Telles

The beauty of this article is not in the lines in there, but what is said between the lines. At the end of the day, all of us are pigs hither and chickens thither. There are no absolutes.  
Good article Mr. Bussgang, definitely makes me fell better about making the jump, and would hopefully inspire a few others who are sitting on the edge, measuring the waters.

posted on Friday, September 09, 2011 at 1:40 AM by Amarpreet Kalkat

There is a trend of late. Entrepreneurs need to more pigs and VCs getting to be more chicken.

posted on Friday, September 09, 2011 at 12:41 PM by All bacon, no chicken

Nice post. I agree with nearly all of it, except point two in your description of a chicken. Unless their already rich, most people don't have the option to quit their day job until they have at least some funding. I think if you are able to create something great, while working your day job, it actually shows an even greater level of dedication.

posted on Saturday, September 10, 2011 at 10:07 AM by Michael Brown

Agree with Michael Brown about point two. I've been working full-time at an investment bank whilst bootstrapping my startup on nights/weekends. Yes it's been extremely difficult. I've even lost a few friends because they simply cannot understand why I'd rather stay home every-spare-moment-I-get to work on my startup vs. spending time with them. But something had to give and it certainly wasn't going to be my startup (sorry old friends). In addition, being able to pay my rent, utility bills & student loans etc are really important to me. 
On the other hand, I DID just resign from the investment bank and DO NOT have a fallback option lined up so I guess I fit the "pig" criteria. But as my last day at the bank quickly approaches, so does a stomach ulcer.

posted on Saturday, September 10, 2011 at 12:53 PM by Nancy Vega

If you were committed enough you would spell "out" where you must and "our" where you should. Otherwise, you are sitting behind a glass door throwing those stones...

posted on Sunday, September 11, 2011 at 9:04 PM by Not Committed Enough to Spell Check

Basically you should not have a life...and only then this prick may invest in your venture....what a load of crap....what the author means is "you screw up your life mate...i will come and collect your blood and make money on it too....once you are unable to work anymore" .... is there no end to this greed......height of capitalistic mentality.....

posted on Tuesday, September 13, 2011 at 5:20 AM by Bangalored

honestly, I was a chicken in my past startups -- looking for the least effort for the max result. 
when i threw my whole self, publicly, into this my latest venture, it scared the $^#% out of me, still does. 
but the thrill is far greater, and i am working 100x harder in hours, intensity, and creativity. 
i wouldn't want it any other way now.

posted on Tuesday, September 13, 2011 at 7:12 AM by Brian Sowards

no offense but I wouldn't take the money on these premises. its easy enough to get money from more reasonable investors who like to go "golf" with you from time to time.

posted on Tuesday, September 13, 2011 at 10:29 AM by stephen cronin

I do agree with the post above. Love the analogy. 
Michael - I'm in the same boat as you. Nearly ready to launch to market, about 15 months on..... 
Re the post - you do need to be committed otherwise nothing will work. And I have two others on sweat equity, a designer and developer and I have to manage and lead effectively, otherwise everyone will loose out. I have put myself in a position where I've sold a vision to them, which they've bought into, and now I can't let them down either. We're a team now in this together. 
Saying this, talking from my circumstances where I threw a career and everything in to do my startup, probably a little too quickly without thinking medium to long term how I'd pay the bills to do my start-up, found myself in somewhat difficulty after 10 months, which also put the entire project at risk. If I hadn't have taken on some consultancy work a few days a week, I wouldn't have a roof over my head now. And then I'm not sure how a homeless Founder would do justice to a start-up and leading a team! I'd have no broadband to continue building the platform! 
Bills don't decide to stop coming through the post box and as much as passion and determination can take you so far, there has to be a sensible line drawn about taking on project / consultancy work to pay the bills. 
I do agree that there are ways and means, so you can quit the busy full time job and take on work that enables you to continue with your work, which is what I've had to do.  
If an investor or indeed anyone see's this negatively, then frankly their living in a different World entirely.  
No team member is going to do anyone any good if they they're homeless on the street. 
That said passion and determination and the want to never give up and make something happen are the only things that will ever see something become fruitful. 

posted on Tuesday, September 13, 2011 at 5:07 PM by Jonathan Geitner

This is so much self-serving drivel! Let me see if I have this straight...Mr. Startup, you go ahead put everything on the line, family, savings, sleep....I have a portfolio of suckers like you, and it doesn't really matter whether you succeed or not. Some one will, and therefore I will. Oh, by the way, I am doing this with "Other People's Money". Give me a break!  
Go start your gig, bootstrap it, rev share it, commission share it, find passive sources of income. Unless you need to create a new Chip or need to build a manufacturing plant you can bootstrap most plays, and get money in on your terms not on leech terms.

posted on Wednesday, September 14, 2011 at 12:32 PM by Portfolio Pig

Hope to meet these VC's someday... Till then enjoying being a pig :)

posted on Wednesday, September 14, 2011 at 2:49 PM by Nrip Nihalani

That's quite offensive to call entrepreneurs "suckers" Portfolio Pig. 
Typical investor.

posted on Wednesday, September 14, 2011 at 5:56 PM by Jonathan Geitner

1. This breakfast parable has been used many times in the business/ tech context - its typically used to explain the role of participants in Agile development 
2. This articulates clearly the possibility of taking VC money and becoming a slave to the new grind (in some worse than typical day-jobs!) rather than enjoying any sort of entrepreneurial freedom that would have motivated the individual in the first place. The guy who's tracking golf trips of an entrepreneur is using bad data instead of experience/ expertise in the field to make an investment call. Control freak = bad investor!  
3. Pseudo-formulaic reduction of "successful" characteristics is dangerously simple. If going down that path, perhaps Steve Jobs' comment is better (stay hungry, stay foolish)

posted on Sunday, September 18, 2011 at 11:49 AM by sirius

You may have different thoughts and opinions as to why I or anyone else building a business would subject themselves to such a hardship, but then I'd venture to guess you don't know what it's like to spend months sailing in the Caribbean or flying in private planes and are comfortable receiving a paycheck.  
clearly your doing it for the money

posted on Sunday, September 25, 2011 at 6:56 AM by matt

We run a virtual (cloud) company that allows us to have employees anywhere. However, our key employees are all nearby. 
My wife and I began this new venture 12 years ago with one of us working to pay the "rent" and the other working on the business. We switched roles a few times. 
When our online science labs were ready, in our opinion, for the big time, we went all in and even sold our house and tapped our retirement to fund ourselves. 
The education marketplace is truly a difficult place. You really earn your entrepreneur stripes here! Now, we're ready to expand with hyper growth having been doubling for the last few years. 
We will change the way the world learns science and make tons of money doing it. It took 12 years of sacrifice, half of them extreme, but we're there. Take heart, those of you who hare having troubles after only a few years.

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