> There is a small cadre of people who actually have what it takes to successfully build an NBT, and experienced investors are pretty good at recognizing them. Because of this, they don't have trouble raising money. That's a pretty specious statement. I don't know how he came up with that; it certainly doesn't match with a lot of reality.
> I don't know how he came up with that
By looking at history. If you look lists of the most valuable startups the vast majority of them didn't have any trouble raising money. In fact, I can only think of a single recent (last 10 years) counterexample.
The author makes good points here. While it's true that YC and other venture investors invest in many companies to increase the chances of large returns on the best of their portfolio companies, there is another significant advantage to YC having a bunch of companies in each batch - the teams that are not doing so well are a source of talent for the teams that are doing well. At some point YC can and has encouraged t…
This is a really interesting point about YC. I've heard before that in markets some companies need to fail, their talent and assets act as "fertilizer" for helping the other companies grow.
> But the cool kids don't beg. The cool kids — the ones who really know what they're doing and have the best chances of succeeding — decide who they allow to invest in their companies. The company I was an early employee of (that ended up being a "unicorn") was not a cool kid, and we certainly were begging people to invest both at the angel stage and (especially) the series A stage. And those people got a really real…
> This isn't to say there aren't valuable signals perhaps involving "cool kids" status, but there are a lot of diamonds in the rough.
Yeah, it entirely depends on where you're positioned as an investor. If you have great deal flow, then you can limit yourself to cool kids. But if you're more obscure, it makes sense to seek a comparative advantage with undervalued companies.
Seems to me acting as a lone Angel investor is not very efficient and quite limiting to the kinds of opportunities that are open to you. It's analogous to the constraints you face with as a lone founder of a startup. Maybe better to team up and benefit from each other's insight and capital.
And totally agree you have to do this seriously as a job unless you don't care about the money.
Not "in general", but there is a long list of unethical behaviors that, sadly, can contribute to success. Selling snake oil. Abusing monopolies. Flat-out lying. However, it's not good to go to the other extreme. I've seen companies fail because the CEO bent over too far backwards to be ethical and as a result let people walk all over him. One of the qualities that seems to be required in a successful founder is a wil…
It's not _required_ to be unethical, it's just really tempting when you see others get rewarded for their unethical behavior. "When circumstances demand it" is of course the excuse of all unethical people throughout history. Total weak sauce.
I agree, but there is also subtle difference between unethical and asshole. You can be ethical asshole.
Looking at what other people did and how that turned out is completely useless because the things that matter are the day-to-day details which you can only get by immersing yourself in the process full-time for a long time. So sharing that data would be worse than useless. At best it would serve to satisfy some prurient interests, and at worst it would cause someone to act on what cannot be anything other than hopele…
Are most angel investors focused on finding the 1000x companies (i.e. the NBT) that VCs are? I guess my question is what's a practical, good outcome for an angel investor when a company exits? Or what rate of return do the most successful angel investors have?
I was in denial about this for a long time, but the fact of the matter is that your overall outcome is almost entirely determined by your outliers. If you take all of the investments I've ever made, including going to work as an early hire at Google, the I've won. If I leave out Google, then I've lost. If I leave out my single biggest loss, then I've won again. If I leave out my next biggest win, then I've broken even.
Cap table economics are an equally-important reason to fear angel investing. Unless the company is very successful, angels tend to get diluted-out of the money by VC rounds. In the baseball vernacular, angel investors must pick triples and homeruns to make money. Singles and outs will result in total loss. Doubles may break even. It's a tough way to get ahead. Impossible without some insider edge (YC, pundits, stars, etc.).
It's not _required_ to be unethical, it's just really tempting when you see others get rewarded for their unethical behavior. "When circumstances demand it" is of course the excuse of all unethical people throughout history. Total weak sauce.
I agree, but there is also subtle difference between unethical and asshole. You can be ethical asshole.
"Asshole" was used in contrast to being "too ethical", so from the context it cannot mean anything except for "unethical". If the parent meant "asshole" in the conventional sense (e.g. parking in two spots) it would make no sense to bring up in this discussion.
The parent is rationalizing unethical behavior by classifying it as merely assholish. If you read the post carefully you can see the point where the cognitive dissonance takes place. The parent even said "the other extreme" is being too ethical, so he's clearing arguing that acting too ethical is undesirable.
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…
Hahaha. Work like an animal for some guy who is semi-retired. Pass on that deal.