Earlier quoted context omitted.
Or it pays one skilled non-tech employee for a YEAR here in China. I'd gladly take $10k in exchange for 0.5-1% at this stage.
[deleted]
Wtf is up with these?
Things I wish someone had told me before I started angel investing
151–160 of 231 posts
Re: Things I wish someone had told me before I started angel investing
#152Perhaps the key is to invest in what you know?
Not if you want to get in on the NEXT new thing. By definition, you don't know that.
Re: Things I wish someone had told me before I started angel investing
#153There 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…
And also memory is very tricky. I imagine there are lots of people who met Zuckerberg thought he didn't have it took, but now believe they always thought we was going to succeed. That's why I suggest angel investors write down everything they thought about an encounter with someone immediately after the meeting. Why you think they'd succeed and fail? Then when you follow them in the future you can compare your notes to what happened and learn. Otherwise it's really easy for your brain to put together a completely unrealistic view of what happened in the past based on what's happened since.
Re: Things I wish someone had told me before I started angel investing
#154There 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…
And also memory is very tricky. I imagine there are lots of people who met Zuckerberg thought he didn't have it took, but now believe they always thought we was going to succeed. That's why I suggest angel investors write down everything they thought about an encounter with someone immediately after the meeting. Why you think they'd succeed and fail? Then when you follow them in the future you can compare your notes to what happened and learn. Otherwise it's really easy for your brain to put together a completely unrealistic view of what happened in the past based on what's happened since.
Re: Things I wish someone had told me before I started angel investing
#155Earlier quoted context omitted.
> 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…
Fill us in; why did they fail? I've seen a lot in business, and I never saw anything as challenging and perverse as your "creative ways the universe will come up with to screw you". The worst I heard of was law suits by patent trolls. For "secret sauce" in IT, that's in software locked up in the internals in a secure server farm. Tough to know just what is in that. Tough to get a judge to force you to present all you…
1) key employee has an old discounted investment make them independent and they take flight (didn't see that coming.. they seemed all in)
2) dot-com bubble and crash. Simultaneously freezes investment and convinces everyone that internet related startups are hokum. We survived and exited at less than a quarter what we would have had. It didn't matter that we had positive cash flow and gazillions of thrilled customers.
3) major media company quietly puts copyrighted material onto your system, sues you for copyright infringement based on that same material and spends years in discovery. You win, but lose.
4) the very clever marketing guy your investees just hired turns out to be a plant by the giant competitor who leaks your marketing plans like a sieve back to self-same giant competitor.
There are gazillions of other things the universe can do to you.
Re: Things I wish someone had told me before I started angel investing
#156Earlier 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)
Considering that "cool kid" founders do engineering themselves and that they typically don't pay salary to themselves, 10k could cover their initial hosting or say hardware prototyping costs.
"Cool kids" should not be taking 10k checks except as a favor, every investor they take on and have to maintain a relationship with is a potential distraction to the business. I'm lucky to have more than enough capital to run my business until we're done prototyping and ready to start growing.
Re: Things I wish someone had told me before I started angel investing
#157Earlier quoted context omitted.
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.
They could be awful at recognizing them and only invest when founders show up with a box pooping out bars of gold already, and not at any point before then, since they're so awful at recognizing them. so you can have a 100% success rate (investing only in founders that show up with a box already pooping bars of gold) while having a 0% ability to identify successful founders. a high hit rate does not mean you can eval…
If they keep growing into bigger boxes pooping gold, then you've done a pretty good job as an investor. It's all about IRR; if you invest and your investment grows, it doesn't matter what stage you invest at.
Keep in mind that for every Series C company that's pooping gold bars still 90% will fail, and a lot of investors are gonna lose money investing at that stage.
Re: Things I wish someone had told me before I started angel investing
#158> 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.)
Any guesses on the second way?
The best I could think of was: find dumb investors to pump it full of money and hype it. Then rely on all the hype to get it sold.
I'm hoping for a less cynical answer!
Re: Things I wish someone had told me before I started angel investing
#159>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.)
Anyone figured this out?