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Things I wish someone had told me before I started angel investing

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Re: Things I wish someone had told me before I started angel investing

#21

Post by endymi0n »

qaq wrote: post #18
seibelj wrote: post #3

My 2 cents - As an investor or potential employee when analyzing a startup, pay close attention to how scrappy and capital efficient they are. Do they have excessively nice office space? Are the founders making too much in salary? Does it seem like the executives are working like animals, or do they have the big company mindset where they take it easy? Startups are nothing like established, revenue-generating compani…

Are any of those things issues at Angel stage?

It's pretty much the same issue as with FizzBuzz: You'd be completely shocked at the insane ratio of people passing already the very basic smoke tests of good due diligence.

Re: Things I wish someone had told me before I started angel investing

#22

Post by trevyn »

gt_ wrote: post #19
beambot wrote: post #14

Earlier quoted context omitted.

My immediate thought was more along the lines of companies that were built for acquisition -- either for the team or a technology (without business model).

Good point. I've only spent a limited amount of time in startup space but it seems this intention is usually considered more as a possible path rather than an intention. It's a common accusation but seems outlandish and unnecessary to me. If anyone thinks this is wrong, please say so. I'm interested.

This is reasonable -- I think companies that get a solid team together and then look for a quick acquisition is a way for top players to capture something closer to their market value. Or as a way to develop good tech that a big player is interested in, without having to deal with the specifics of profitably monetizing that tech.

I don't understand why he'd be cagey about telling us that, though.

Re: Things I wish someone had told me before I started angel investing

#23

Post by TheAceOfHearts »

seibelj wrote: post #3

My 2 cents - As an investor or potential employee when analyzing a startup, pay close attention to how scrappy and capital efficient they are. Do they have excessively nice office space? Are the founders making too much in salary? Does it seem like the executives are working like animals, or do they have the big company mindset where they take it easy? Startups are nothing like established, revenue-generating compani…

Surely you can succeed without working like an animal? You probably can't take it easy like with a larger established company, but it doesn't mean you have to run yourself to into the ground in order to be successful.

Re: Things I wish someone had told me before I started angel investing

#24

Post by edoceo »

seibelj wrote: post #3

My 2 cents - As an investor or potential employee when analyzing a startup, pay close attention to how scrappy and capital efficient they are. Do they have excessively nice office space? Are the founders making too much in salary? Does it seem like the executives are working like animals, or do they have the big company mindset where they take it easy? Startups are nothing like established, revenue-generating compani…

Lean, not stingy. It's about reducing waste. I'm on my third company, stingy would kill us, waste would kill us. But, gotta buy the things you gotta buy, when you gotta buy them. Critical difference between Lean and stingy. Maybe frugal is the right word.

Re: Things I wish someone had told me before I started angel investing

#25

Post by CodeWriter23 »

trevyn wrote: post #7

> There are a myriad ways to make a company fail, but only two ways to make one succeed. One of those is to make a product that fills a heretofore unmet market need, and to do it better, faster, and cheaper than the competition. That is incredibly hard to do. (I'll leave figuring out the second one as an exercise.) Is he implying some sort of unethical behavior as the second way?

It's the "do something illegal that people really want, then force politicians to rewrite laws or face the ire of their constituents" business model. Not sure if that's unethical or bold. When it comes to taxi laws, I view the laws as unethical, and challenging them as bold. OTOH, I see hotel laws as providing a necessary constraint on the cost of housing.

It worked as the foundation for several now big startups, but was the perhaps ethical breaking of said rules some kind of gateway drug to unethical behavior? Kinda looks that way in Uber and AirBNB's case.

And then again breaking perceived rules, ideas like Big Oil will be here forever or you have to be a defense firm to get a rocket launch contract, is bold and lucrative (or apparently future-lucrative). There is a fine line between bold and foolish.

Re: Things I wish someone had told me before I started angel investing

#26

Post by seibelj »

TheAceOfHearts wrote: post #23
seibelj wrote: post #3

My 2 cents - As an investor or potential employee when analyzing a startup, pay close attention to how scrappy and capital efficient they are. Do they have excessively nice office space? Are the founders making too much in salary? Does it seem like the executives are working like animals, or do they have the big company mindset where they take it easy? Startups are nothing like established, revenue-generating compani…

Surely you can succeed without working like an animal? You probably can't take it easy like with a larger established company, but it doesn't mean you have to run yourself to into the ground in order to be successful.

Normal employees should work hard but not ridiculous amounts. Executives, whose compensation is highly tied to stock value, should be animals, at least in the early pre-revenue stages. That is my opinion.

Re: Things I wish someone had told me before I started angel investing

#27

Post by FLUX-YOU »

polote wrote: post #5

Summary: beginners almost never invest well. And it is the same for stocks, many people think they will make money by investing in a specific company because their logic says it is good idea. Investment is a job, and to win you need experience

>And it is the same for stocks, many people think they will make money by investing in a specific company because their logic says it is good idea.

Probably like FizzBuzz, we'd probably be shocked at the amount of people that wouldn't default to lazy-3 or an index fund based portfolio.

I don't know of a good metric someone should study fundamentals before they'd be considered "ready" to invest in individual companies or options.

Re: Things I wish someone had told me before I started angel investing

#28

Post by LoSboccacc »

TheAceOfHearts wrote: post #23
seibelj wrote: post #3

My 2 cents - As an investor or potential employee when analyzing a startup, pay close attention to how scrappy and capital efficient they are. Do they have excessively nice office space? Are the founders making too much in salary? Does it seem like the executives are working like animals, or do they have the big company mindset where they take it easy? Startups are nothing like established, revenue-generating compani…

Surely you can succeed without working like an animal? You probably can't take it easy like with a larger established company, but it doesn't mean you have to run yourself to into the ground in order to be successful.

Most ideas don't exist in a vacuum and until you get your name associated with your market you're running the risk of someone faster stealing the buyers' hearts.

Re: Things I wish someone had told me before I started angel investing

#29

Post by eru »

polote wrote: post #5

Summary: beginners almost never invest well. And it is the same for stocks, many people think they will make money by investing in a specific company because their logic says it is good idea. Investment is a job, and to win you need experience

Depends on what kind of investment. If you want to win, but don't care how, just buy a broad index.

Re: Things I wish someone had told me before I started angel investing

#30

Post by trevyn »

lisper wrote: post #11
trevyn wrote: post #7

> There are a myriad ways to make a company fail, but only two ways to make one succeed. One of those is to make a product that fills a heretofore unmet market need, and to do it better, faster, and cheaper than the competition. That is incredibly hard to do. (I'll leave figuring out the second one as an exercise.) Is he implying some sort of unethical behavior as the second way?

Yes. [UPDATE: before you downvote this answer you should know that I am the OP.]

Something specific, or just unethical behavior in general?
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