whattheydontteachyouatstanfordbusinessschool.com

** 10 VCs and their secret FICO Scores **

by Larry Chiang on November 2, 2010

Larry Chiang closes deals in rooms that he was not even invited into. He edits the Bloomberg BusinessWeek channel “What They Don’t Teach You at Business School”. After Chiang’s Harvard Law keynote, Harvard Business wrote: “What They Don’t Teach You at Stanford Business School“ (its the same title as his NY Times bestseller. If you read his scandalously awesome “What a Supermodel Can Teach a Stanford MBA” and “How to Get Man-Charm”, you will like his latest post:

By Larry Chiang


This is the last week of Financial Literacy Month and a VC (Venture Capitalist) is the last person you’d think would worry about their FICO score.

You’d think with those millions under managment that they’d be bastions of good credit, educationally prepared and able to navigate Fair Isaac’s scoring model.

Nothing can be further from the truth… here are 10 VCs and their secret FICO Scores

-1-  Mr 15 Hour Work Week. 
Travels so often for boondoggles
that his mail weighs 25lbs by the time he checks it.  Went to
college in the 90s and doesn’t know you can get credit card bills
emailed to you.  Pays about $200/year in late fees that he has his
WSGR.com attorney litigate/berate/dispute away is late fees. FICO = 678

-2-  Mr Socialite VC. 
Sits on about 10 boards and can
fundraise $30mm from a payphone with phone numbers memorized under his
perfectly groomed head of
hair.  He has a house in Woodside but also an apartment ‘crashpad’
in SF.  Gets sms bill reminders from duck9 that he forwards to a
male ass’t to pay for him on-time out of the expense account kept separate from The Fund.   FICO = 805

-3-  Mr Dual HomeOwner
By dual I mean has four homes in two cities in the US and two cities
abroad.  Hates real estate as a ‘fools investment’ and shorts real
estate derivatives (whatever that means).  Amount of mortgage = $0, but has a manging partner living in the servant quarters of
two homes.  Prepays his power bill but comes “home” to a powerless
place 1x/yr due to non payment.  Owns no car and paying ontime to
your limo service builds no credit-sorry.  FICO = 730

-4- Mr South Africa. 
From one of those countries that speaks english, but isn’t American.  His freshness of citizenship coupled with his affinity to use US cash (currency that is ALL the same color and size- so weird!) gives him a fico of 520.

-5- The VC turned Entrepreneur. 
She made her exits in the 90s with a slew of IPOs.  For those of you that’ve only working since Sarbanes Oxley went into lockdown, an IPO is a sale of stock to the public versus sale of stock to more VCs.  Cosigned her daughters 3 series so +40 FICO points and has a home equity line still open from ’97 +55.  FICO = 815

-6- The X-founder. 
Is it possible to be worth north of $100mm yet have a FICO under 600>> yes!  Has wife with a FICO
GREATER THAN 800 (that’s why he married her–cuz girls with $20k in
credit card debt don’t profile right).  Good news is that his FICO‘s rising cuz I taught him to borrow $270k against the $3mm Oakland Hills house.

-7-  the VC-turned-product-manager-to-get- Operations-Experience. 
Has perfect credit:
1) GSB school loans
2) drives a VW he leased
3) ownes a home cuz he liquidated a trust fund and bought a $1.5mm, 2BR bungalow in Palo Alto

-8- Angel Investor that Deal Flows in China/India/Isreal/UK. 
Has no FICO.  His fund is Caymen/BVI (British Virgin Isles) based with LPs making up only 10% of his fund.  Takes advantage of
the $10,000 currency limit by carrying in $12k/ in-bound US trip.
 His over-the-hill travel companion with more legitimacy than him,
mules in another $12k.

-9-  Mr DDSS VC. 
DDSS is “dumb it down, sandbags for
success”.  Lives with three roomates and denies ever having
started/sold Zip9/$380mm while holding 80% equity himself.  Lives
spending less than $80k/year but spends $210k on 6 weeks of tier one vacations.  Fico = 794

-10- You the Future VC.
Right now you are dabbling and moonlighting but the time from ‘start’ to “sell” has never been shorter.  Your FICO is still over 750 and in the 90th percentile according to duck9 (in the 50th percentile according to Fair Isaac http://www.usnews.com/blogs/alpha-consumer/2008/3/ 25/boosting-credit-scores-for-a-fee-take-2.html?msg=1)

Conclusion: average VC FICO = 650.  The national US average is 585.  So although VCs have a larger nut than you, rest knowing that when it comes to FICO, you’re neck-and-neck.

** Fico Credit Tips for VCs **
1- NEVER EVER KEEP DEBT TO BOOST FICO
2- take two credit cards and charge $20 / month. Reporting makes little distinction between $20 or 20k paid on time
3- dispute things in writing
4- duck 9s (9s are charge-off, where bank gives up trying to collect on
your dead-beat ass) on your credit report.  I know an indian VC
who refuses to pay a CellOne bill for $400.  Most charge-off in
America are for under $200
5- don’t close an account
6- effen download the form and physically see your credit report… did
you graduate without ever seeing your transcript?  Get a physical
copy. AnnualCreditReport.com not Free CreditReport dot con.  It’s like
Iceland Greenland where one really is green.
7- Meet me at Fraiche Yogurt with your Experian /Equifax/Trans Union
and $8.00 (no I don’t have more than $20 in change) and we’ll voodoo
your score a couple points higher

If you’re from the industry and hate that I bring light to credit
truth, flame and troll me in the comments… I won’t even delete it no
matter how wrong LINK “no matter how wrong” to NATIONAL AVERAGE IS 723 http://www.creditscoring.com/creditscore/other/plu s/fake-o-fico-funk.html

*** BONUS ***
a party invite for you:
http://economist.eventbrite.com/
What a Supermodel Can Teach a Harvard MBA
If you liked this…

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Larry’s mentor Mark McCormack wrote this in 1983. His own book came out 09-09-09. It is called ‘What They Don’t Teach You At Stanford Business School‘

This post was drafted in an hour and needs your edits… email me if you see a spelling or grammatical error(s)… larry@larrychiang com

Larry Chiang started his first company UCMS in college. He mimicked his mentor, Mark McCormack, founder of IMG who wrote the book, “What They Don’t Teach You at Harvard Business School”. Chiang is a keynote speaker and bestselling author and spoke at Congress and World Bank.

Text or call him during office hours 11:11am or 11:11pm PST +/-11 minutes at 650-283-8008. Due to the volume of calls, he may place you on hold like a Scottsdale Arizona customer service rep. If you email him, be sure to include your cell number in the subject line. If you want him to email you his new articles…, ask him in an email
You can read more equally funny, but non-founder-focused-lessons on Larry’s Amazon blog .

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