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The Big Lie of Venture Capital
31–40 of 41 posts
Re: The Big Lie of Venture Capital
#32The real tension is that if you go out and focus on signing paid customers instead of growing at all cost (literally maxing out your credit cards), you'll be less attractive to many VCs. They'll say you're a "mom-and-pop business" and not one that can achieve venture scale. Basically, they want to write big checks to companies that are swinging for the parking lot (not just the fences) — not companies that want to ta…
I think this is just false. If you pitch a VC on a business that grows in a nice linear line to tens of millions of dollars in revenue, they're going to turn you down no matter what your go-to-market is, because the math of a venture capital firm simply doesn't work unless the few winners win so spectacularly that the gains swamp the losses from the losers who make up the majority. You have to commit to shoot the moo…
I'm confused — what exactly do you think is false? It seems like you're agreeing that VCs aren't interested in a "stable business" — only the shoot-the-moon idea that might be built on top of that. But as you say, they're not going to fund the stable business since it would never become the unicorn that they seek.
Re: The Big Lie of Venture Capital
#33This reads like a rant out of frustration for not being able to raise money (and newsflash, if raising money is hard, no doubt raising in Montreal is near to impossible), but I think the author nailed it with this paragraph: "The problem, with the Big Lie, is that it kills a lot of startups that end up building their strategy around a capital infusion that will never come, and end-up wasting a lot of time trying to f…
> bootstrapping success stories often remain unknown Bingo. I don't even want to be noticed (hence this throwaway account). My startup has taken over an entire national B2B SaaS market segment but our major competitor hasn't realised yet. They deal in many segments and are a classic incumbent dinosaur, and were recently acquired so their attention is elsewhere. We've done no marketing, never been mentioned in any pre…
Sounds like a good strategy. Are you profitable at this point?
That's too bad about "bootstrapping" - it's a good userID!
Re: The Big Lie of Venture Capital
#34This reads like a rant out of frustration for not being able to raise money (and newsflash, if raising money is hard, no doubt raising in Montreal is near to impossible), but I think the author nailed it with this paragraph: "The problem, with the Big Lie, is that it kills a lot of startups that end up building their strategy around a capital infusion that will never come, and end-up wasting a lot of time trying to f…
This is just another article that causes me to kick myself. I graduated from Stanford in 2010 but now am a pretty average, non-Silicon Valley programmer because I didn't want to do anything after graduating from college.
Well, take heart that just being from Stanford isn't a guarantee. If anything the middle-of-the-road job you have now is more of an ironclad guarantee than any VC-funded startup. Plus, you got to do what you wanted after college instead of flailing around and getting burned out.
On the other hand, a Stanford degree is a signal, and will still serve you well for quite a few years yet. My name-brand diploma is decades old but I'm pretty sure it still gets me second looks and interviews more often than I'd care to admit.
Re: The Big Lie of Venture Capital
#35Earlier quoted context omitted.
I think this is just false. If you pitch a VC on a business that grows in a nice linear line to tens of millions of dollars in revenue, they're going to turn you down no matter what your go-to-market is, because the math of a venture capital firm simply doesn't work unless the few winners win so spectacularly that the gains swamp the losses from the losers who make up the majority. You have to commit to shoot the moo…
I'm confused — what exactly do you think is false? It seems like you're agreeing that VCs aren't interested in a "stable business" — only the shoot-the-moon idea that might be built on top of that. But as you say, they're not going to fund the stable business since it would never become the unicorn that they seek.
You said "The real tension is that if you go out and focus on signing paid customers instead of growing at all cost (literally maxing out your credit cards), you'll be less attractive to many VCs.".
I think what @tptacek is saying is that you absolutely CAN go out and focus on signing paid customers instead of growing at all costs. You can 100% start/run your business that way for as long as you want. However, the moment you want to seek venture capital, you have to sell a different story. You can't sell the same linear growth story that got you to this point. That's the only difference between seeking VC and not seeking VC.
Your original quote implied that all businesses have to be started or be run in a particular way far before raising venture money, but that's not the case.
Re: The Big Lie of Venture Capital
#36Earlier quoted context omitted.
> bootstrapping success stories often remain unknown Bingo. I don't even want to be noticed (hence this throwaway account). My startup has taken over an entire national B2B SaaS market segment but our major competitor hasn't realised yet. They deal in many segments and are a classic incumbent dinosaur, and were recently acquired so their attention is elsewhere. We've done no marketing, never been mentioned in any pre…
Sounds like a good strategy. Are you profitable at this point? That's too bad about "bootstrapping" - it's a good userID!
That's one thing about bootstrapping, your P&L practically mirrors the cashflow statement so we had to be profitable from the get-go. We're well past that take-off stage where I was unsure if the business was going to fly or not, so now I'm following the Bezos strategy of re-investing all earnings back into the company (sure beats coughing up income taxes). So yes, with the caveat that I'm not paying myself a cent, since as majority shareholder I think of equity as my comp, it's profitable.
It helped a lot that on Day One we had $5000 of AWS credits, two founders with spare time and tons of business & tech experience, a market segment ripe for the picking, an enthusiastic (and well-connected) launch customer for the MVP, and disruptive home-grown IP that created more customer value (even in MVP form) than anything else on the market. I couldn't have asked for better initial conditions for a bootstrapped company.
(yes I was surprised the account ID wasn't taken already. maybe I won't throw it away)
Re: The Big Lie of Venture Capital
#37Earlier quoted context omitted.
Why does this make you kick yourself? This is a guy writing an internet rant about how frustrated he is with the life you choose not to live.
I think the implication is that as a Stanford grad he had a pedigree that would have increased his chances of getting funded... but he didn't have any ideas, so now he's using his name-brand degree to do the type of work that a degree from any school would have been fine for.
If he or she does have some good ideas later, that real-world industry experience might come in handy.
Re: The Big Lie of Venture Capital
#38> So, unless you come from money, attended a prestigious university in the States or sold your previous startups for a lot of money, you should assume that you’re never going to raise early-stage capital. Most founders are none of those things. It’s hard to raise money, of course, but the author makes it sound like it’s impossible. I’ve seen plenty of crappy companies with not much to show raise an angel round on not…
The whole article is just an I-fail-because-the-world-is-so-horribly-unjust whinge, and to make himself feel better, he wants you to believe that you will also fail if you try, because that's a much easier way for a person to digest failure.
Re: The Big Lie of Venture Capital
#39Earlier quoted context omitted.
I'm confused — what exactly do you think is false? It seems like you're agreeing that VCs aren't interested in a "stable business" — only the shoot-the-moon idea that might be built on top of that. But as you say, they're not going to fund the stable business since it would never become the unicorn that they seek.
You said "The real tension is that if you go out and focus on signing paid customers instead of growing at all cost (literally maxing out your credit cards), you'll be less attractive to many VCs.". I think what @tptacek is saying is that you absolutely CAN go out and focus on signing paid customers instead of growing at all costs. You can 100% start/run your business that way for as long as you want. However, the mo…
Huh, I thought it was clear that I was pointing out a tension between building the type of business that the author suggests and building the type of business that VCs fund. I don’t think I indicated that if you build a stable business, you can’t then build a venture-fundable business on top of that.
Regardless, I’d be curious to hear about businesses that started out stable and then raised VC money to build a moonshot!
Re: The Big Lie of Venture Capital
#40Earlier quoted context omitted.
You said "The real tension is that if you go out and focus on signing paid customers instead of growing at all cost (literally maxing out your credit cards), you'll be less attractive to many VCs.". I think what @tptacek is saying is that you absolutely CAN go out and focus on signing paid customers instead of growing at all costs. You can 100% start/run your business that way for as long as you want. However, the mo…
Huh, I thought it was clear that I was pointing out a tension between building the type of business that the author suggests and building the type of business that VCs fund. I don’t think I indicated that if you build a stable business, you can’t then build a venture-fundable business on top of that. Regardless, I’d be curious to hear about businesses that started out stable and then raised VC money to build a moonsh…
What's the "big lie" of VC's not funding businesses that you literally can't finance with venture capital?
But that's not why I replied. I replied because you suggested that actually trying to build a business would make you less attractive to VCs. It will not. Even people who eventually hope to raise should still use common sense and basic good business planning to acquire customers.