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Ask HN: How do VCs behave when you fail?

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Re: Ask HN: How do VCs behave when you fail?

#21

Post by tonystubblebine »

I've been apart of two failed (or mostly failed) startups.

Wesabe closed down recently and they did open source almost all of their code. I think that speaks well for their main backers, OATV and Union Square.

Odeo struggled for five of the seven months I was there. I think it was pretty clear we were a bit lost and the board was very kind about it, i.e. they knew they weren't going to come up with the the innovation that was going to turn into a big success. George Zachary from CRV was the primary guy there. I like him personally a lot.

For some reason I feel like the board gets crazier the more success you have, in other words they're not going to fight with you over how you lose your last $100k, but they're damn well going to fight you to make sure you don't blow your $100M valuation. I don't have much more than anecdotal evidence for that though.

Re: Ask HN: How do VCs behave when you fail?

#22

Post by j_baker »

tonystubblebine wrote: post #21

I've been apart of two failed (or mostly failed) startups. Wesabe closed down recently and they did open source almost all of their code. I think that speaks well for their main backers, OATV and Union Square. Odeo struggled for five of the seven months I was there. I think it was pretty clear we were a bit lost and the board was very kind about it, i.e. they knew they weren't going to come up with the the innovation…

Sounds about right: http://en.wikipedia.org/wiki/Loss_aversion

Re: Ask HN: How do VCs behave when you fail?

#23

Post by jonknee »

tonystubblebine wrote: post #21

I've been apart of two failed (or mostly failed) startups. Wesabe closed down recently and they did open source almost all of their code. I think that speaks well for their main backers, OATV and Union Square. Odeo struggled for five of the seven months I was there. I think it was pretty clear we were a bit lost and the board was very kind about it, i.e. they knew they weren't going to come up with the the innovation…

> Odeo struggled for five of the seven months I was there. I think it was pretty clear we were a bit lost and the board was very kind about it, i.e. they knew they weren't going to come up with the the innovation that was going to turn into a big success.

Humorous considering Twitter was launched by Odeo (though I'm not sure how the IP ended up, I know there was a clever spin off fairly quickly). When were you there?

Re: Ask HN: How do VCs behave when you fail?

#24

Post by po »

jiganti wrote: post #5
Elite wrote: post #3

Their business model assumes most of their investment doesn't take off, with a few rock stars that make up for the losses. Incidentally, which is one reason cash flow positive startups should really think before accepting VC money. VC's are happy with a 10% success rate. You on the other hand, need a 100% success rate. Interests are not wholly aligned.

So you're saying that the founders should be wary that VC's aren't as risk-averse in this sense?

VC's are diversified… you aren't.

Re: Ask HN: How do VCs behave when you fail?

#25

Post by tonystubblebine »

jonknee wrote: post #23
tonystubblebine wrote: post #21

I've been apart of two failed (or mostly failed) startups. Wesabe closed down recently and they did open source almost all of their code. I think that speaks well for their main backers, OATV and Union Square. Odeo struggled for five of the seven months I was there. I think it was pretty clear we were a bit lost and the board was very kind about it, i.e. they knew they weren't going to come up with the the innovation…

> Odeo struggled for five of the seven months I was there. I think it was pretty clear we were a bit lost and the board was very kind about it, i.e. they knew they weren't going to come up with the the innovation that was going to turn into a big success. Humorous considering Twitter was launched by Odeo (though I'm not sure how the IP ended up, I know there was a clever spin off fairly quickly). When were you there?

It supports the idea that boards should be easy going before "product market fit". I think if the board had pushed for milestones we would have locked ourselves into podcasting. I was there for the last seven months of Odeo, which included the first two or three months of Twitter (it was a simple product but we had to wait for the SMS application process).

Re: Ask HN: How do VCs behave when you fail?

#26

Post by davidu »

tptacek wrote: post #20
davidu wrote: post #19

Earlier quoted context omitted.

I hope those guys aren't still VCs. I've never heard of something so stupid. VCs aren't in the business of holding onto IP.

They don't think they're in that business either. That doesn't mean the founders get the company's IP when it fails, though.

My experience and of those around me is quite different. Maybe Silicon Valley is different. It's quite easy to liberate IP from a worthless company.
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