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“Yes” means “no”: The language of VCs

jacobbartlett.substack.com

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Re: “Yes” means “no”: The language of VCs

#71

Post by robertlagrant »

striking wrote: post #36
aussieguy1234 wrote: post #5

"Everyone wants investment from venture capitalists". I have a bootstrapped side project, Tunnelmole, turning a small profit and growing at a slow and steady rate on its own. I'm the engineer so I only really pay hosting costs, which are covered by the revenue, although in the early days I had to cover this. While venture capital is an option, if it continues to grow, it's entirely possible the venture capitalists ma…

The very end of the article I think addresses this in a plain and direct way: > 9. VC funding is cool and all, but essentially, it is a waste of time if you haven’t validated your market: bootstrapping to get paying customers quickly is the most effective tactic available. > 10. In all honesty, you don’t want to take external funding unless you have intensely strong user growth; and being unable to hire becomes your…

> unless you have intensely strong user growth

Or you have a business that needs capital to get going.

Re: “Yes” means “no”: The language of VCs

#72

Post by yieldcrv »

ldjkfkdsjnv wrote: post #4

Rubrik for early stage: 1. No product: -> went to stanford or harvard -> funded (no questions asked) -> held director level at faang -> funded -> everyone else -> probably not funded 2. Have product: -> not prestigious -> need real ARR with good growth -> prestigious -> need a product -> everyone else -> not funded

a lot of this is reputation laundering

the outside capital is real, quickly landing a lead investor that gets the other investors to close comes from controlling the pools of capital

your family’s donor advised fund and private foundation are the lead investors, or they are the only limited partners in the private equity fund thats functionally a family office

this same capability allows for top university background too, or nonchalantly dropping out of it

in the mean time you get all the headlines in the world, alongside your PR agent, and you’re a genius star Stanford drop out that gets funded no questions asked

The “friends and family round” is actually more important than the stanford aspect, if we were really min-maxing here, but it all goes hand in hand as people with that support system do things together

the reason it is important to view it this way is because this is all window dressing for a bourgeoisie that doesnt want to be seen as different. in turn, it makes everyone else think they really have a chance of receiving the same consideration from their ambition and cognitive abilities. the answer is to just have capital and a predilection for de-risking with other people’s money.

Re: “Yes” means “no”: The language of VCs

#73

Post by behnamoh »

awesomeMilou wrote: post #57
zomglings wrote: post #24

Earlier quoted context omitted.

They do - they just have to have had larger successes. "Founding X" doesn't count for shit. Being part of a team that built a hugely successful product teaches you a lot - it teaches you about the counterintuitive dynamics of superlinear growth. That is a very important mindset to bring to the table if you want to create a successful VC-funded startup.

I had to look up "superlinear growth" because I've never seen that term used under posts with VC related topics. If you're as confused as me, Paul Graham wrote a blog post about this last October (figures): http://www.paulgraham.com/superlinear.html tl:dr: Just make a product that's so cool it'll go viral in it's respective market.

so basically exponential but fancier.

Re: “Yes” means “no”: The language of VCs

#74

Post by fonix232 »

thwarted wrote: post #56

For our two-sided marketplace startup, this meant Android and iOS apps for customers, and another pair of apps for mechanics. 6 months later, we released our fully-fledged MVP to a deafening silence from customers, mechanics, and investors. It's probably really hard to get traction when it's not obvious who your customers are, and this description reveals that. Your customers are the entities that are paying you. Is…

Yeah, I was thinking the same. Fixr seemed like a solution looking for a problem, without having an even borderline clear idea on what it is supposed to be. No wonder it failed.

Re: “Yes” means “no”: The language of VCs

#75

Post by behnamoh »

matrix_overload wrote: post #61
ldjkfkdsjnv wrote: post #4

Rubrik for early stage: 1. No product: -> went to stanford or harvard -> funded (no questions asked) -> held director level at faang -> funded -> everyone else -> probably not funded 2. Have product: -> not prestigious -> need real ARR with good growth -> prestigious -> need a product -> everyone else -> not funded

-> went to stanford or harvard -> funded (no questions asked) -> held director level at faang -> funded It's the chain of trust. It means that the investor is already 2-3 handshakes away from the founder, and hence can discuss certain things that require utmost discretion, and have reasonable grounds to believe they won't get double-crossed on that (because it would erode away the trust along the handshake path).

two precious things in this economy:

- attention

- trust

Re: “Yes” means “no”: The language of VCs

#76

Post by behnamoh »

dheera wrote: post #55
ldjkfkdsjnv wrote: post #4

Rubrik for early stage: 1. No product: -> went to stanford or harvard -> funded (no questions asked) -> held director level at faang -> funded -> everyone else -> probably not funded 2. Have product: -> not prestigious -> need real ARR with good growth -> prestigious -> need a product -> everyone else -> not funded

-> went to stanford or harvard -> funded (no questions asked) I'd edit this to -> white male went to stanford or harvard -> funded (no questions asked) Source: I know lots of female and non-white Harvard grads who didn't get funded. I'm a non-white MIT grad and also found funding very, very difficult even when we had a product. We almost continuously had to spend >1/2 of our working hours just trying to get funding.…

I'm not white either but seriously, this mindset of "victimization of non-white people" needs to stop. I'd rather be taken seriously for my merits than my minority privileges (due to DEI for example).

Re: “Yes” means “no”: The language of VCs

#77

Post by zomglings »

behnamoh wrote: post #73
awesomeMilou wrote: post #57

Earlier quoted context omitted.

I had to look up "superlinear growth" because I've never seen that term used under posts with VC related topics. If you're as confused as me, Paul Graham wrote a blog post about this last October (figures): http://www.paulgraham.com/superlinear.html tl:dr: Just make a product that's so cool it'll go viral in it's respective market.

so basically exponential but fancier.

The reason I don't use the world exponential, is that superlinear growth in a product is generally not exponential.

It is usually at best quadratic because there is some kind of network effect at play - the number of edges in a complete graph with `n` vertices is `n(n-1)/2`.

The point is that the value of your product to your users should increase with the number of users OR the marginal cost to you of maintaining the product should decrease with the number of users.

"Superlinear" captures that more effectively than "exponential".

Re: “Yes” means “no”: The language of VCs

#78

Post by pnw »

ChuckMcM wrote: post #50

They miss my favorite: "Yes, we'll invest we just don't want to be 'lead'." That is code for: "You aren't going to find anyone who shares your idea of what your valuation should be so we are safe telling you we'll invest if you find a 'lead investor' because that person doesn't exist." It gets funny/twisted when you do find a lead and go back and now there is some other goal post that is keeping them out of "this rou…

Not necessarily. It could also be code for "We can't write a check big enough to lead your round". E.g. a seed fund who writes $1m checks isn't going to lead a $5m round. The VC would be putting themselves out of a job if they wrote a $5m check when they told their LPs their fund target was $1m checks.

Re: “Yes” means “no”: The language of VCs

#80

Post by svnt »

behnamoh wrote: post #73
awesomeMilou wrote: post #57

Earlier quoted context omitted.

I had to look up "superlinear growth" because I've never seen that term used under posts with VC related topics. If you're as confused as me, Paul Graham wrote a blog post about this last October (figures): http://www.paulgraham.com/superlinear.html tl:dr: Just make a product that's so cool it'll go viral in it's respective market.

so basically exponential but fancier.

Less specific than exponential which also makes it more achievable. More positive than nonlinear.
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