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VCs aren’t your friends

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Re: VCs aren’t your friends

#251

Post by j45 »

Not all VCs have the same investment thesis.

Alignment and mutual fit is important.

Being undiscovered and being found by a process is partially a positioning piece too.

VCs want a transaction in a short number of years depending how far they are into their current fund.

It’s not always about any one idea, but rather what idea can be the winner to make up for the others that didn’t win big.

Also, knowing the difference between investors and VCs is important - investors tend to often give more personalized support than VCs.

If you’re ready to go big and be supported to do so, VCs can be just what’s needed.

Increasingly, VCs are a feeder system to private equity and you may be able to position yourself for that long term.

Re: VCs aren’t your friends

#252

Post by humansareok1 »

alephnerd wrote: post #205
jorvi wrote: post #108

Earlier quoted context omitted.

> can't imagine someone like Steve Jobs or Nikola Tesla passing these VC/Ivy League kinds of tests. My "favorite" "test" is the one more for soft studies (think law or public policy) rather than STEM: for example UN internships typically have no compensation and they often require you to relocate to extremely expensive CoL areas, meaning there is an automatic filter built in where only children of very well-off paren…

VC Analyst Internships are very well paid because they are competing with IB Analyst and FAANG SWE/PM internship offers. Imo the easiest way to get a VC Analyst internship is to do EECS@Cal/MIT or CS@Stanford with a Business (or in Cal+Stanford's case Econ or MS&E) minor, do a SWE internship in Frosh summer, and be prominent in your university's entrepreneurship or hackathon scene. That said, my question would be WHY…

The number of Stanford Juniors with 1 summer internship at a VC posting 'deep' Startup insights or advice is shocking. Like what do these kids with literally no experience running or starting anything know about companies? It's mind boggling.

Re: VCs aren’t your friends

#253

Post by max_ »

dpflan wrote: post #236
max_ wrote: post #28

Earlier quoted context omitted.

VCs like Don Valentine & The founder of Atari actually passed on Steve Jobs because "they were not impressive". It was only after Steve Jobs exploited their preferential attachment & tendency of VC to succumb to herding effects that he was given investment.

Would you mind expanding upon this, detailing the exploitation: "It was only after Steve Jobs exploited their preferential attachment & tendency of VC to succumb to herding effects that he was given investment."

There is a very good documentary called Something Ventured[1].

It's really good. I think everyone into Startups must watch this. It's not second hand narration but the real VCs them selves telling the stories so I find it very reliable.

So in the documentary there is a section about VCs meeting Steve Jobs & Wozniak for the first time.

They passed on the investment saying that they were "not impressive".

One of the VCs (that refused to invest) was begged to show up at some computer conference to see how people were interacting with the Apple Computer.

The VC saw a very huge crowd of people around the Apple booth waiting for a turn to use the Apple computer.

The VC then completely changed his mind & decided to invest in Apple. When he did so, even the likes of Don Valentine now begged to enter the round.

My suspicion is that the crowd was artificial, Steve Jobs knew that if he could prove (or construct) some kind of hype around his Apple computer at the conference. It would conjure fear of missing out in the VCs or something akin to traction.

Note that everything else remained the same the product, the founders etc. He just added an ounce of hype.

[1]: https://youtu.be/7eV2L7CHCSQ?feature=shared

Re: VCs aren’t your friends

#254

Post by AlienRobot »

renegade-otter wrote: post #194
caseyy wrote: post #20

Most business founders don’t need VC money and are worse off for taking VC money. I find the mindset “my pitch deck was 2 months old so I didn’t get funding” very out of touch of business realities. It is far more likely that that type of business doesn’t need VC funding. Your SaaS can probably be built with your daytime developer salary. No VC ever says “wow, what a great investment opportunity, one of the best, but…

As someone who took more than a year off to build his SaaS - the days of stitching together a prototype at night are pretty much over. You need to be an incredible hustler and have a really good insight into a desperate business need. Customers today expect polish and few bugs right out of the gate. I spent months on polish alone. If you don't, your product is going to be savaged like this: "Former Yahoo CEO Marissa…

Before: I had no idea this app existed.

Now: I know this app existed.

Having no polish can't be worse than having no app.

Re: VCs aren’t your friends

#255

Post by fsloth »

davedx wrote: post #149
fsloth wrote: post #61

Earlier quoted context omitted.

In the tweet the wrong date was not a red flag due to lack of detail as such, but because it signaled: a) they had been raising for a while now b) the recipient was not their first choice (ouch, you can hear the ego taking a glancing hit) So ”the market” did not consider the startup investable, and they did not think about their sales pitch strategically enough … this VC would have liked to be sold to, not just a sou…

> b) the recipient was not their first choice (ouch, you can hear the ego taking a glancing hit) We can be as cynical about this part as we want, but I think what is meant here is that startups should try to raise investment from VC's or investors who are a good match. If I'm down to the 20th VC on my list - that list is sorted a way for a reason by the startup founders. It's easy to assign this to ego but I think be…

Absolutely true I think. My intent was not to be too cynical (but feelings do matter though, especially if all you have are weak signals meaning you have to call it by gut feel).

Re: VCs aren’t your friends

#256

Post by d_burfoot »

This is probably a good reminder. But you could write an article like this about every institution:

- The police aren't your friends

- Your employer isn't your friend

- Your colleagues aren't your friends

- The government isn't your friend

- Small businesses aren't your friends

- Big corporations aren't your friends

- Elon Musk isn't your friend

- Your landlord isn't your friend

- Your professors aren't your friends

There's no such thing as a relationship where the interests of both parties are perfectly aligned. And the pain caused by any misalignment will be more intense when the stakes are higher, such as startups/VC.

Re: VCs aren’t your friends

#257

Post by NickC25 »

keiferski wrote: post #203
benreesman wrote: post #201

Earlier quoted context omitted.

I think “nepotism” might be more succinct?

Nepotism to me implies a kind of incompetence, in that people are selected purely for their relationship to the decision maker. I don’t think these people are generally incompetent at all, although certainly some exceptions exist. It’s more that the filtering mechanism eliminates anyone that doesn’t color in the lines exactly.

I don't think it implies incompetence, but rather, an ability to not know the world outside of the one that was made for the recipient of the nepotism.

I grew up in a fabulously wealthy suburb of NYC, a town often dubbed the "hedge fund capital of the world". I went to school with the kids of people who managed or worked at some of these funds, or worked on Wall Street. These kids were not and are not dumb, let alone incompetant by any stretch. I'm talking top scores on SAT & AP exams, Ivy League acceptance, Consulting/Banking internships, and top tier jobs out of college. Some extremely book smart people, and some with a degree of street smarts too. They all ended up working for the same types of businesses their peers and parents worked at. People would hire their golfing buddy's kids without blinking.

However, there's something these kids all lacked: practical real world knowledge and a complete inability to see outside their biases and inability to perceive outside of their bubble. It's not on them though, not at all - it's just how their experiences shaped them.

It takes an outsider to see the value in another outsider. Insiders are clouded by their own experiences that they can't understand disruption or change in an unknown way.

That same disruption or change is what oftentimes makes for startups whose early investors see insane returns.

Re: VCs aren’t your friends

#258

Post by thfuran »

humansareok1 wrote: post #252
alephnerd wrote: post #205

Earlier quoted context omitted.

VC Analyst Internships are very well paid because they are competing with IB Analyst and FAANG SWE/PM internship offers. Imo the easiest way to get a VC Analyst internship is to do EECS@Cal/MIT or CS@Stanford with a Business (or in Cal+Stanford's case Econ or MS&E) minor, do a SWE internship in Frosh summer, and be prominent in your university's entrepreneurship or hackathon scene. That said, my question would be WHY…

The number of Stanford Juniors with 1 summer internship at a VC posting 'deep' Startup insights or advice is shocking. Like what do these kids with literally no experience running or starting anything know about companies? It's mind boggling.

It's sophomoric, which probably shouldn't be all that surprising from those so recently sophomores.

Re: VCs aren’t your friends

#259

Post by noashavit »

mef wrote: post #73
michaelt wrote: post #69

Earlier quoted context omitted.

> the recipient was not their first choice (ouch, you can hear the ego taking a glancing hit) It baffles me that a person successful enough to get put in charge of an investment fund can have such incredibly thin skin. How would you even function in the real world if you were so easily offended?

consider that this is sending a negative signal to the VC that other VCs have already passed, rather than that it hurts their feelings

Add to that how “small” and tight knit the VC community is and that’s a major signal.

Re: VCs aren’t your friends

#260

Post by verticalflight »

knifie_spoonie wrote: post #99
mef wrote: post #73

Earlier quoted context omitted.

consider that this is sending a negative signal to the VC that other VCs have already passed, rather than that it hurts their feelings

> other VCs have already passed Is this really a sensible factor to consider? Canva's was founder was rejected 100 times before someone took a chance. Is there any hard evidence that founders who secure funding earlier are more likely to provide a VC with a successful exit?

This is the smart comment. If, as a VC, you know the outliers are hard to find, would you really get distracted by someone being on the market for 1-2 months?
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