Overheard

• Palantir's founders were caught trying to "unilaterally adjust their total voting power." On its fifth S-1 amendment, Palantir tried to add a mechanism that would give its founders more power, at their will. TechCrunch's Danny Crichton spotted the change, and by that afternoon, Palantir filed a sixth S-1 update to remove it.
• Can you build a kinder internet? Ex-Quora execs including Marc Bodnick are trying with Telepath, and they say they're not afraid to build a fake-news-free social network. But with networks like #DumbHitler and #ElonMuskSucks, there's a limit to what kindness is (at least if you're a public figure).
• The award for worst idea for an "Uber for X" startup goes to Civvl: a startup that's Uber, but for evicting people.

Biz on Biz

The worst investors? Or the worst kind of rating system?

How many of you have ever felt personally victimized by VC Guide? Two weeks ago, I mentioned in Pipeline that there was a new rating site that was publishing anonymous reviews of investors, written by founders.

I jokingly called it a VC "burn book" at the time in reference to the iconic gossip journal in the movie "Mean Girls" that led to all sorts of bullying. But now founders and investors are concerned that it's not too far from the truth.

• Already, there are headlines on "The worst VCs to work with, as rated by founders" after data company Thinknum scraped the reviews on VC Guide and assigned them a sentiment score.
• I've also heard that some investors are considering therapy or switching careers after being called "frauds" (these are more junior folks at firms) as founders seem to be paying attention.
• There's criticism that VC Guide is focused on individuals, including younger associates, rather than focusing on GP or firm-level feedback. "Ruining a junior person's career when they aren't getting halfway decent training is like being angry at an employee for being incompetent when leadership isn't doing their job to bring that employee up to speed or give them professional development. Systems matter," tweeted Danielle Strachman, a general partner of 1517.
• "VC is a heavily reputation-based world, and it's very niche as well," said Battlecard founder Mathew Pregasen, who has spoken out publicly against the website and its utility for founders like himself. "It follows that when something like this pops up, it can be harmful to their career."

Pregasen takes particular issue with the anonymous rating system — and the anonymity behind the platform.

• The public-facing reviews only show a score of 1 to 10 (many are either 1s or 10s) with no real scale of what the number means. To be able to leave a review, VC Guide only allows access to founders with startup email addresses that can be cross-referenced with sites like LinkedIn, but "the reviews are through and through" anonymous, the site said. VC Guide will also highlight if a reviewer claims to have received funding, but there's no real vetting or additional data otherwise.
• Even VC Guide's founders are anonymous — to the public and to each other, according to Business Insider. They responded to questions sent by Protocol under the moniker "Harrison" and said they were a group of founders and engineers.
• "It becomes very difficult to trust the good intentions of the person running the website, especially if they shy away criticism," Pregasen said. He has tried to contact VC Guide with concerns over the site, but has had a hard time reaching the founders. (Other times VC Guide has encouraged people to reach out).
• VC Guide's founders said they're trying not to be a burn book and instead want investors to reply to reviews. "There are two sides to every story, and accountability should go both ways," they wrote.

This isn't the first time a site has tried to give venture capitalists net promoter scores. And given there's websites like Glassdoor or Rate My Professors, it's hard to argue that venture capitalists have any sort of immunity from being reviewed.

• The most famous example is The Funded, an investor rating site started back in 2007 by Adeo Ressi. The Funded ended up the target of lawsuits from VC firms, and fell out of favor a few years later.
• A more enduring approach has been Y Combinator's BookFace, which has its own version of investor ratings that it only shares with its community. The difference with BookFace's approach is that it's largely grouped by firm, rather than specific partner ratings, and is managed by Y Combinator's partners who know who the founders are and can hold investors accountable.
• There's also another new website out of the U.K. called Landscape that bills itself as a "Glassdoor for VCs." To avoid the "burn book" problem, it asks founders for ratings on 12 score factors, from approachability to close time to professionalism. It's launching first for European VC accelerators and investors in October, then coming to the U.S. in December.

The big question is how to make an anonymous review website a helpful tool for entrepreneurs versus just a place to vent.

• One major argument for these kinds of websites is to do away with Silicon Valley's "open secrets." Particularly in the #MeToo era, there was a lot of talk about how "everyone knew" about so-and-so and a firm's reputation. But that doesn't help new founders breaking into the ecosystem, although there have been some efforts to track things more broadly, like Geek Feminism Wiki's page that catalogues racism and sexism claims against venture capitalists.
• There's also a call for more transparency. VC Guide's founders say their idea started with spreadsheets circulated among friends, but then they wanted to bring more transparency to the "who's who black box" of venture capital. "It's too easy for founders to confuse visibility and loudness on Twitter for value-add and real expertise, and we want to disambiguate that," they said. It's also adding an LP guide with reviews from fund managers.
• Even investors like Work Life VC's Brianne Kimmel, who had received some of the earliest negative reviews on VC Guide, still believe in the idea of having a place for feedback from founders about investors and particularly a website that could connect founders with each other. "The challenging part of anonymous reviews is the person reading the review is not able to have a nuanced discussion with the person who left the review," she said.
• Kimmel's been arguing for a BookFace for non YC-companies for years, and still thinks there's value to an investor review website. Where VC Guide falls short, she says, is being able to provide more context in the reviews about whether it's a portfolio company or not, whether someone actually took a meeting in person or if it's a review about an email rejection, etc.

It may get under investors' skins, but it's already seen some results.

• While Kimmel's not the biggest fan of VC Guide in particular, one "nice thing is that it's a very strong signal that individual angel investors are measured with the same expectations as a general partner at a top-tier firm," she said.
• Other investors, like Chapter One's Jeff Morris Jr., have responded to reviews. He said that he wants to make his review score the same, whether a founder received investment or not.
• VC Guide's founders say they've also had a lot of private conversations with founders and investors who have been grateful for the reviews. "Obviously any shift in the power dynamic is likely to be met with resistance by those in power, and we have gotten our share of threatening DMs, private messages, emails, etc., from investors who have been poorly reviewed and want their reviews taken down," they said. "But we believe in holding power to account and not succumbing to those threats."

VC Guide and Landscape could open up a new era of transparency in venture capital — or follow the path of The Funded and end up with a handful of lawsuits and diminishing utility for founders. Both are a reminder though that diligence is a two-way street.

READ NOW

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Read more here.

Inside Track

• Sutter Hill Ventures jumped out as the big winner of Snowflake's IPO. But as Kevin Kwok breaks down, Snowflake's founding investor, Mike Speiser, has a playbook for incubating companies.
• Quibi's already become the butt of the joke after Jimmy Kimmel opened the Emmy's with a dig at the network, but it doesn't mean it was a bad idea. Max Child explains why Quibi could have succeeded in his defense of Quibi.
• What's the secret behind Y Combinator? Sam Altman argues it comes down to two people: PG and Jessica.

Need to Know

• TikTok isn't banned yet — but it's already felt devastating impacts. TikTok lost $10 million in advertising revenue and had 50 people turn down job offers. Daily active users have also fallen by half a million, and TikTok warns it would only get worse.
• It's Apple vs. the app developers. Spotify, Match Group, Tile and Epic teamed up to form the Coalition for App Fairness that wants to apply public pressure on Apple and Google to create a fairer app store economy. Thirteen companies originally signed on, but I'm told it's received an overwhelming response now that smaller developers are seeing safety in numbers. Stay tuned to likely see more companies join in the fray.
• Even Peter Thiel has a SPAC. In a not-so-contrarian move, Thiel filed paperwork for a SPAC and "will seek to buy a tech, financial services or media company in Southeast Asia", according to Axios. He joined the SPAC parade after Social Capital's Chamath Palihapitiya filed for three more SPACs. Meanwhile, Quibi is reportedly eyeing a SPAC merger as an early exit strategy.
• The next Theranos? Nikola, the self-driving truck company, is already drawing comparisons to Theranos (and denying them) after a short seller raised the alarm over the company's history of promises. After fighting back, its founder ultimately stepped down, and Nikola's reportedly under investigation by the SEC and Justice Department.
• Daniel Ek's moonshot on moonshots: The Spotify founder pledged to invest €1 billion (around $1.2 billion) of his personal money — roughly a quarter of his net worth — in European tech startups with big ideas in health care, machine learning, biotech, material sciences and energy.
• From Protocol: VCs have been wanting a new platform shift for years. Is it video? Inside the Zoom boom and the startups building for our new video normal.
• This week in VC history: Techmeme did my job for me when it pointed out that it's been 10 years since David Heinemeier Hansson argued that Facebook's future profits couldn't justify a $33 billion valuation. Today its market cap stands at over $725 billion.
• And your weekend reading: Magic Leap was supposed to revolutionize the AR industry. Instead, it failed and is now crumbling with a new CEO to find its path. Bloomberg has a detailed look inside how Magic Leap failed and managed to hoodwink the tech industry along the way.