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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

#121

Post by prostoalex »

austenallred wrote: post #81
mindcrime wrote: post #65

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. I really do question this. The "problem of induction"[1] comes into play when you start talking about pattern matching and learning from "experience". That is, there's no guarantee that the future will look like the past. Before Zuckerberg was Zuckerberg, I wond…

Well Sean Parker and Peter Thiel seem to have picked up on it in the very early days. Not to mention the fact that the two biggest/best VC funds co-investing for the first time, letting them take money off the table. It's fair to say those weren't average reactions.

Every successful company will have a list of early investors. But not only is the list of those successful investors inconsistent (some startups were backed by Founders Fund, some by Sequoia, some by KLCB, some by Benchmark), the list of companies within the portfolio of a single investor (Founders Fund, to pick your example) is far from being 100% homeruns.

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

#122

Post by lisper »

cakedoggie wrote: post #117
lisper wrote: post #9

Earlier quoted context omitted.

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…

> Like I said in the OP, you will be shocked at how things can fail. (And this is far from my only horror story.) Did I miss the story, did you talk about it somewhere?

Paragraph 6 (but no, I did not get into specifics)

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

#123

Post by [deleted] »

shykes wrote: post #115
empath75 wrote: post #112

Earlier quoted context omitted.

How is it that a $10k check even gets a startup to take your call? That pays like one engineer for a month, if that. (Genuinely curious)

In my experience founders taking a 5-10k check often do it as a favor to an advisor they like and who can't afford to invest more. Maybe the advisor helped them out in the past, or their personal brand or connection are relevant to the startup.

[deleted]

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

#124

Post by justinsb »

Ron was one of our investors in FathomDB, and that turned out to be a bad financial investment, much to my personal dismay & regret.

However, something that I think the essay modestly overlooks is the non-financial elements. The investors made a huge difference in my life & that of the others that worked for FathomDB. I like to think that we moved the industry forward a little bit in terms of thinking about modular services (vs a monolithic platform-as-a-service) although it turned out that the spoils went mostly to the cloud vendors. Many of the ideas developed live on in open-source today.

Of course, this all serves Ron's point in that it doesn't make for a good investment. But that doesn't mean that no good came of it - and it makes me want to work harder next time so that it is both a good outcome and a good investment.

So: thank you to Ron and all our investors. It is no accident that you are called angels.

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

#125

Post by greglindahl »

nickpsecurity wrote: post #104
greglindahl wrote: post #90

Earlier quoted context omitted.

You have an unusual set of ethics there. What you're describing for patents is not violating patent law , and I doubt you'd find many people in the tech industry who would equate potentially infringing someone's patent to adopting source code you don't own into your product in a copyright-infringing way.

" What you're describing for patents is not violating patent law" The law says I can't reproduce what's in a patent without permission/license from the patent-holder. The law also says that your intent doesn't matter: unknowingly infringing is also a violation but with less penalties. The big players defining markets or entering mature ones file patents on as much of them as possible to maximize chance new competitio…

You're explaining patents to someone who has a bunch of them! "Breaking the law" or "violating the law" is generally used to indicate a criminal case; patent lawsuits are not criminal cases.

By the way, my patent lawyers (both in startups and at a big tech company I worked at) tell me that patent cases are crapshoots and there's no good way to predict what's going to happen in them. This also means that I really don't have any idea if I'm actually infringing someone's patent, even if I knew about it. Which I don't, because that advice to never read anyone else's patents is good advice for any inventor.

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

#126

Post by dbcurtis »

seibelj wrote: post #116
dbcurtis wrote: post #77

Earlier quoted context omitted.

Well, it's a marathon, not a sprint. A CEO that isn't taking care of him/herself isn't taking the long view. Sacrificing your health and not making time for thinking big thoughts is a bad way to lead a company.

There's a big difference between working super hard and working so hard that your health fails. If you aren't pushing 60 hours a week, you aren't even trying. At a startup, so many things are out of your control, but one thing you can control is working hard. All that time and effort, and failing because some other company out-hustled you is the worst reason to fail of all.

Burn-out is a thing. A CEO that isn't making time for focussed reflection can very easily get stuck in 24x7 fire-fighting mode. A tired, burnt-out CEO won't be finding creative solutions to problems.

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

#127

Post by cbhl »

empath75 wrote: post #112
birken wrote: post #38

> 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…

How is it that a $10k check even gets a startup to take your call? That pays like one engineer for a month, if that. (Genuinely curious)

A $5k check will give a super-early-stage "startup" (two or three college kids) with no salaries and about $1000/month burn rate ("living expenses" in the right market outside of SV) about four months of runway. You'd have to approach at a sufficiently early stage (like so: http://velocity.uwaterloo.ca/funding/velocity-fund/).

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

#128

Post by arikr »

logicallee wrote: post #107
arikr wrote: post #69

Earlier quoted context omitted.

OP didn't claim that the cool kids always succeed, or that the uncool kids never succeed. Just that they have higher odds.

the article-writer OP claimed "There is a small cadre of people who actually have what it takes to successfully build an NBT [next big thing], and experienced investors are pretty good at recognizing them." which is hilariously and demonstrably wrong. we already have one person chime in with a counterexample (the person you replied to) and that is a very common experience. No, experienced investors are not pretty goo…

Benchmark Capital has a pretty small number of bets, and a pretty high hit rate, from my perspective. They certainly seem better at picking than most.

Though I'd say a lot of that is of course positive selection - the best founders self-select to Benchmark/Sequoia/A16Z, and to Greylock/Accel.

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

#129

Post by Jessica454 »

justinsb wrote: post #124

Ron was one of our investors in FathomDB, and that turned out to be a bad financial investment, much to my personal dismay & regret. However, something that I think the essay modestly overlooks is the non-financial elements. The investors made a huge difference in my life & that of the others that worked for FathomDB. I like to think that we moved the industry forward a little bit in terms of thinking about modular s…

I just got paid $6784 working off my laptop this month. And if you think that's cool, my divorced friend has twin toddlers and made over $9k her first month. It feels so good making so much money when other people have to work for so much less. This is what I do, ====http://www.joinmate2.com

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

#130

Post by [deleted] »

lisper wrote: post #120
graycat wrote: post #82

Good news: I can agree with some of the OP. Much better news: I do believe that it's fairly obvious that there are good solutions to the most important problem mentioned in the OP. First a remark on scope: I'm talking about information technology (IT) startups based heavily on Moore's law, the Internet, other related hardware, available infrastructure software, etc., and I'm not talking about bio-medical technology w…

> We can outline a simple recipe in just three steps for success as an IT startup: You might as well put a sticker on your forehead that says, "SUCKER." Four of my investments (including a startup of my own) were absolute slam-dunks according to your process: large, well-established markets, orders of magnitude price-performance improvement over the competition, good IP protection. They all failed. Like I said: unles…

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