Your title is one of those things that reminds me why our industry is so short of women
Wait, really? Please explain this
Also, the actual title or the one HN moderated it to?
“Yes” means “no”: The language of VCs
151–160 of 217 posts
Re: “Yes” means “no”: The language of VCs
#152I think it was Paul Graham who gave a good indicator if the VC was saying yes. “Look down. Is there a term sheet in front of you?”
I like that, but from my experience I’d go as far as saying “is their money in your bank account?”
Terms sheets are not legally binding.
Money talks.
Re: “Yes” means “no”: The language of VCs
#153I've never understood the cult around tech VCs, the ratio of self-regard to actual value delivered to the world (or even their own firms) has always seemed staggeringly out of scale with reality. And that's even true in a world that seems to have no shortage of unearned self-regard. I guess if you play the game you can get your hands on a lottery ticket with pretty good odds. But seriously fuck these people and their…
VCs are just a different target market. Similarly, you can build a business with grant awarding bodies as your customers. The problem with both is that generally you have to pivot to selling to customers who actually want the product you've been pitching.
Re: “Yes” means “no”: The language of VCs
#154Maybe it's my business major background and my skepticism of all these tech companies that have no reasonable business model to make $'s, but unless there is an obvious need for investment like buying a large amount of real estate or machinery, why would you need VC money to build an app after you've already spent several months doing it? It should run on it's own and not need investor money. You shouldn't be focused…
Because the SV VC business model isn't to build a traditional profitable business that beats the competition by providing a superior product/service for a competitive price. It is to dominate the competition by subsidizing the real cost to consumers, until you have taken over the market and can raise the price and lower the quality of the product/service. Edit: Or the business model is to be acquired by a FAANG who f…
A less cynical take is that it allows you to run at a loss for a very long time as you build revenue and market share. This can be right up to the time that you exit.
Re: “Yes” means “no”: The language of VCs
#155Earlier quoted context omitted.
Because the SV VC business model isn't to build a traditional profitable business that beats the competition by providing a superior product/service for a competitive price. It is to dominate the competition by subsidizing the real cost to consumers, until you have taken over the market and can raise the price and lower the quality of the product/service. Edit: Or the business model is to be acquired by a FAANG who f…
Does that even work as an investment model? The poster child for this has got to be Uber, and they've shown that this is a lot harder to achieve than it appears. The huge wins have all been IPOs where the business is still growing/trying to dominate the market, and not where they're in that monetisation phase. At least that's what I've seen. I don't think there's a single case yet where the "dominate and then monopol…
It worked for Facebook, but they were a lot more intentional about growth vs revenue.
Re: “Yes” means “no”: The language of VCs
#156I played the VC game. We were attending every opportunity to give 10% of our business for $200K. No one would bite. Gradually, it felt it was easier to land customers than VCs. Then there came a moment that I wish for every founder. Our revenues started not only paying the bills, but also fueling growth. It felt as if a veil was lifted from my eyes. Now, it feels like all those pitches were a waste of time.
If you hang out on HN long enough, it's easy to fool yourself into thinking that you need VCs to fund your startup and there's no way your business will survive without it.
Very important to remember that when you go into fundraising mode, you are dedicating a bunch of time to doing this, and that the time you will spend doing it is time you will not spend building your product or focusing on your customers.
200k is pre-seed level. When I raised a 500k pre-seed for my latest startup, I explicitly avoided VCs (too much effort), went only to angels. Pitching to them taught me what I should focus on, and when I understood the potential of what I was building (and saw the enthusiasm to go with it), I cut the fundraise short at 100k: No more time to waste, I had to build.
Also worth mentioning that constraints are good. Having too much cash to build your MVP is like having no deadline. A fire under your ass (in the form of bootstrapping) can force you to be creative and focus on immediate revenue.
Re: “Yes” means “no”: The language of VCs
#157Earlier quoted context omitted.
Because the SV VC business model isn't to build a traditional profitable business that beats the competition by providing a superior product/service for a competitive price. It is to dominate the competition by subsidizing the real cost to consumers, until you have taken over the market and can raise the price and lower the quality of the product/service. Edit: Or the business model is to be acquired by a FAANG who f…
A less cynical take is that it allows you to run at a loss for a very long time as you build revenue and market share. This can be right up to the time that you exit.
> A less cynical take is that it allows you to run at a loss for a very long time as you build revenue and market share
You're saying the same thing as the grandparent comment and in various places in the world this would be considered dumping/subsidizing and illegal.
Yet here we are and the enshittification continues.
Re: “Yes” means “no”: The language of VCs
#158I feel like this a SV/California culture of 'conflict avoidance' and general pleasantry rather than something specific to VC culture. It just so happens that most big VC players are in California.
Re: “Yes” means “no”: The language of VCs
#159Earlier quoted context omitted.
Top tier VCs will definitely tell you “no” and they’ll often get there quickly. It’s more often the small funds, the inexperienced family offices, and the junior associates that don’t have authority who string companies along forever. They don’t have as much authority or funds to actually work with, so they have a lot of time to string you along. Lumping all VCs together really doesn’t lead to accurate descriptions o…
This is the most accurate comment I've seen here. Sequoia, Benchmark, Kleiner, etc. will all tell you "no" and why with minimal turnaround time. The same is true for second-tier players like Craft, smaller shops started by breakaways from the big firms, and scouts. Good VCs are professionals and have no interest in wasting your time or theirs. A "no" now never precludes future participation anyway; they don't need to…
Hmm, my experience with one of the largest investors in NL was a full verbal 'yes'. The investor was actively involved in the hiring process (that is how I got in). A founder put in his cash (think a small apartment) for a lower single digit percentage of agreed valuation. I signed for something smaller / similar but without bringing in cash.
In reality the money never arrived, they forked in few times 250k. The other investors who bartered a deal all brought in their share. My takeaway is that even the most reputable investor has absolutely no limit in saying yes and doing no.
The motivation for everybody was greed, and that was buzzing around due to the fact a large investor was involved. They know that and they used it. But in the end in this world signed contracts and wire transfers are the only credible thing.
Re: “Yes” means “no”: The language of VCs
#160Maybe it's my business major background and my skepticism of all these tech companies that have no reasonable business model to make $'s, but unless there is an obvious need for investment like buying a large amount of real estate or machinery, why would you need VC money to build an app after you've already spent several months doing it? It should run on it's own and not need investor money. You shouldn't be focused…
> why would you need VC money to build an app after you've already spent several months doing it?
As someone who raised VC money for a SaaS, the answer is that operating a SaaS requires employees. I had two choices - attempt to operate it myself and incur a lot of personal costs, or raise money to pay for those operating costs at no personal cost.
Contrary to the other posts, the goal was in no way to operate at a loss for a long period of time or to get some sort of exponential growth at all costs or whatever. It was literally "do I personally want to spend 10s of thousands of dollars and attempt to operate a complex system 24/7, or do I want to take literally 0 financial risk and be able to pay other people to help me".