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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

#191

Post by thunfischbrot »

wslh wrote: post #173
j-a-a-p wrote: post #172

Earlier quoted context omitted.

Yes, but it is not a VC. If they would, measured by asset size they would easily fit in the top-10 VCs of the US (United States).

It is not about asset size only but real experience and a portfolio leading rounds.

Sounds like those "corporate VC-sounding but not really VC-operating accelerator" investment programs some larger corporates have. Their goal seems to be funding technology development aligned with their interests, few to no strings attached, with the potential for the occasional moonshot.

If successful, acquire before any competitors even fully understand the potential. Worst case they hire the top talent if the venture fails. See Shell GameChanger[0] for an example.

[0] https://strategos.com/cases/shell-gamechanger/

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

#192

Post by throwaway2037 »

insanitybit wrote: post #162
wg0 wrote: post #138

Earlier quoted context omitted.

Yeah maybe handful of them. That too are also mostly lunatic ideas with little grounding in solid serious rigorous academic and scientific research with no feasible functioning product in sight or something financially viable on the horizon. It's not that they already have a research outcome that they need to "productize" with manufacturing and distribution channels. Things like Neura Link, Carbon capture, fusion and…

You're coming off as very biased. My startup was certainly grounded in research and rigor, I even spoke with academics at universities about the work. In many ways, my project was productizing some state of the art CRDT research by applying it to a domain that is in dire need of solutions - information security. Most founders I met were doing similarly well-founded work. You're thinking about a tiny fraction of the V…

Wild post. No trolling: What is the cross section of CRDT and info sec? Usually, "CRDT" is like catnip on HN. And, yes, I am a major fanboi/fangurl of CRDT. The first time I ever watched a networed text editor with "simultaneously" blinking cursors where two humans were editing in parallel was mind blowing. It opens your mind to many other collaborative editing ideas.

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

#193

Post by throwaway2037 »

blitzar wrote: post #181
featuregag wrote: post #66

Earlier quoted context omitted.

And if you make your success public enough in the right circles? Those same VCs will be throwing their panties at you. It’s the game.

“I LOVE THIS FOUNDER" ... "I am a 10 out of 10"

Hat tip for the SBF VC quote. If anyone else doesn't know these (now truly meme-worthy quotes), stick the quote in Google to see VCs gushing about SBF & FTX.

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

#194

Post by JohnFen »

brabel wrote: post #177
j-a-a-p wrote: post #159

Earlier quoted context omitted.

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 othe…

> But in the end in this world signed contracts and wire transfers are the only credible thing. I don't have any experience in this business, but why would anyone think otherwise? Did you spend your own money on a verbal promise of investment without any signed document??

That was my reaction, too. I have always avoided VC investment, but "it's not a done deal until the check clears" has applied to literally every deal I've ever done.

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

#195

Post by constantly »

ip26 wrote: post #116
marcus_holmes wrote: post #110

Earlier quoted context omitted.

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…

Uber seems to have created a lot of opex (30k employees, high comp) setting a pretty high bar to reach profitability, and there are many substitute goods (planes, trains, your own car, bicycles, busses, walking). So they may not be positioned to truly corner consumers with prices high enough to reach profitability, even if they monopolize cabs.

Uber is profitable as of the fourth quarter of 2023. You will also note that around the time of their financial announcement[1] their stock price gained about 50% in share price, jumping from $40/share at the beginning of November to $60/share today, about six weeks later.

[1] https://investor.uber.com/news-events/news/press-release-det...

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

#196

Post by JohnFen »

NoPicklez wrote: post #100
daft_pink wrote: post #30

Maybe 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…

It "should" but in many cases it doesn't If you have a great idea for an app or a product and you've started developing it but you need to hire more people to bring that idea to fruition. Rather than spending years of your own time and money to maybe get the idea off the ground, if other people like the idea and want to help contribute via an investment, why not? Surely your business major would have described the id…

> if other people like the idea and want to help contribute via an investment, why not?

Indeed! But VC investors are a very different animal than other investors (who may not even be investing cash -- in my past ventures, more than half of my investors were my vendors who invested in my company via their products and services instead of money).

If you're starting the sort of business that needs an enormous amount of startup capital, then VC is where you turn. If not, then you're far better off going with normal investors.

What VC wants to see is not the same as what other investors want to see, and finding the right expectation to match your business goals is a critical part of success.

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

#197

Post by JohnFen »

ford wrote: post #46
daft_pink wrote: post #30

Maybe 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…

What's confusing about how having more money might let you hire more people to build more things or build things faster? If something is an obvious winner - why handicap it by limiting investment to what it can make on its own? What if it relies on network effects, or economies of scale?

> If something is an obvious winner

As much as founders think otherwise (they have to!), there is no such thing.

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

#198

Post by JohnFen »

_heimdall wrote: post #118
daft_pink wrote: post #30

Maybe 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…

Tech companies aren't cash flow businesses, though IMO they should be. When debt is cheap tech leans hard into pre-revenue funding. Now that interest rates are more reasonable tech companies have to actually show a profit, and most don't know how.

> Tech companies aren't cash flow businesses

Most actually are. It's just that the big ones tend not to be, and there are lots of startups that want to look and act like the big ones.

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

#199

Post by 4star3star »

I think it would be important to record and review the exact language used. People have a tendency to speculate, project and misremember things. "Let us know when you have more traction," could easily (and wrongly) be translated to, "They said they want to work with us once we can prove growth," which is not the same statement.

If you asked someone on a date, and they said, "Get back to me when your abs are showing," would you actually surmise that you were a good match and just needed to do more crunches?

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

#200

Post by Galacta7 »

mrangle wrote: post #125

The show Silicon Valley well parodied this phenomenon. It implied that the evasive "no" is commonly because VCs don't want to be known for passing on an investment, outright, that then later takes off. Which would reflect negatively on their judgement, in more or less a worse manner than it would when risking money on something that fails. The implied choice then becomes to probably lose money but retain reputation,…

> "The show Silicon Valley well parodied this phenomenon."

Yup, often hilariously. Basically summarized in this scene (especially the very end of the clip):

https://youtu.be/PdCoadVSfXg?si=VVwDsNw84WoZx8XD

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