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A Fundraising Survival Guide

paulgraham.com

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Re: A Fundraising Survival Guide

#61

Post by skmurphy »

netcan wrote: post #50
skmurphy wrote: post #41

Earlier quoted context omitted.

eBay was not in the first 10. First/Early mover is a very mixed bag with most of the example of "first/early" turning out to be "one that we remember now." Some other counter-examples: Palm (something like 47th PDA, well after the Newton for example), iPhone, MP3 player (iPod), Google, Microsoft (e.g. Excel, IE, Word, Powerpoint,...). See also NSF study http://www.nsf.gov/statistics/nsf04305/pdf/tab11a.pdf (hat tip t…

First/Early mover, is (I think) a more useful concept from the market perceptive then the technology perspective. eBay was the winner that emerged from the first tussle and as said above it was the first to hit a certain size. You might not want to call it a first mover but that is a semantic discussion. From the perspective of the market, it was. The iphone certainly is a late entrant any way you slice the market. L…

The short analysis: first/early is a factor but not dominant. Each of the examples I cited would be "first/early" in the popular perspective. iPhone may end up re-defining the category the way that Palm and iPod did: from a marketing perspective "whole product" is a more useful target than "first/early mover."

Re: A Fundraising Survival Guide

#62

Post by richardw »

I like bootstrapping. I think it teaches you to run a business that will bring in revenue and profit, because it's your money. I think it allows you the option of scaling up, or down, as you feel is appropriate. There's much less of a "burn rate". There are fewer surprises when things take longer than you thought they would - that can give you a second chance when V1 sucks too badly.

But yeah, I'd take money if I needed to - when the only thing between me and success is ability to grow.

Re: A Fundraising Survival Guide

#63

Post by LogicHoleFlaw »

nostrademons wrote: post #60

Consulting is the only option you can count on. I'm curious - what's wrong with the old-fashioned "having a job and living way beneath your means"? The average grad student lives on about $15-20k/year, and often does so in a startup hub with its inflated cost of living. The average entry-level programmer can make $60-80k/year. Why not work for a year, live like a grad student, and then use the accumulated savings to…

This is what I'm doing. I don't mind living cheaply. I do like the feeling of watching my runway lengthen with every paycheck.

Re: A Fundraising Survival Guide

#65

Post by skmurphy »

netcan wrote: post #51
skmurphy wrote: post #44

Earlier quoted context omitted.

Google makes money from selling ads. Advertisers want to place ads on the largest search engine sites (or one that can deliver a target audience at an effective price). It may be easy for a user to switch (although letting users know that you exist can be hard/expensive), it's less clear that advertisers will switch to a search engine with few users. Google's customers are the advertisers.

"Google's customers are the advertisers." Technically. They do a great job of monetising search traffic but that's not the bottleneck. Search engines win by attracting their customers' customers, users. Advertisers will follow the users.

Advertisers pay for a well characterized audience (which Google infers from the search terms). Who is in the audience matters quite a bit, which is one point of attack on Google: when you only have 1% (or .01%) of their audience share starting out, you are better served if that 1% represents a significant fraction of a particular market or type of buyer instead of a representative cross section of Google's total audience. That's also a potential point of attack on eBay: you have to take a niche approach. This is often a more reliable way to gain traction than "first/early" or "get big fast." Even better if the niche is initially non-customers or customers whom existing players don't find attractive so that are less likely to mount a competitive response.

Re: A Fundraising Survival Guide

#66

Post by adrianwaj »

linhares wrote: post #54
gojomo wrote: post #17

The very last sentence of the last footnote caught my eye: Oddly enough, the best VCs tend to be the least VC-like. I suspect that rather than being odd this is nearly tautological for any profession -- "the best X tend to be the least X-like". Professional stereotypes are set by the multitudes in the middle, not the highest-performing outliers. Further, atypical behavior can be both a cause and effect of excellence.…

When you have confidence (in other words, if you are really good and you know it), the incentive to look good goes down. You have a track record. Smart people know who you are. Your casual remarks impress those that haven't thought things through as much as you have. You can be yourself, using the same vocabulary and tone of voice you would use at home. On the other hand, people that are insecure or down on the statu…

"people that are insecure or down on the status ladder have a huge incentive to impress others"

One part butt-kisser and the other part arsehole (for lack of better non-slang words).

Re: A Fundraising Survival Guide

#67

Post by 2bStealthy »

I read this essay. Then I re-read it. This is a superb effort to analyze the funding experience for startups!

For the last 4-years we lived this, down to moving into a consulting role to survive. If funding ever arrives, we will thrive.

We are lucky to have 2 founders - I focus on fund-raising, business development, IP, and operations. The other focuses on the technology and product development. My keeping him out of morale-threatening situations, we have a kick-ass product. I learned not to take the multitude of rejections personally. The ignorance of the product and market conspires to keep most investors away.

The one addition I would add is this: Those investors who do "get it" and are supportive in both dollars and participation should be treated the highest-level of respect. We are extremely lucky to have a stable of such investors!

There is a great forum at http://thefunded.com/ where entrepreneurs can share their funding experience, terms sheets, and good leads. Also, those VCs who like to rope-a-dope entrepreneurs are highlighted there so we can avoid them.

I highly recommend this essay be linked there!

Re: A Fundraising Survival Guide

#68

Post by mark-t »

pg wrote: post #33
gojomo wrote: post #17

The very last sentence of the last footnote caught my eye: Oddly enough, the best VCs tend to be the least VC-like. I suspect that rather than being odd this is nearly tautological for any profession -- "the best X tend to be the least X-like". Professional stereotypes are set by the multitudes in the middle, not the highest-performing outliers. Further, atypical behavior can be both a cause and effect of excellence.…

I've been thinking about that. It's not true of all fields. It's true of painters, but not mathematicians. Maybe it depends on whether a field has a lot of fakers. Painting and VC both do. Math has few to none (I can't judge well enough to say for sure).

The trouble with math is that the exceptional mathematicians (including theoretical physics/computer science) are the stereotype, and the regular mathematicians are actually quite different from that. So in fact it's the stereotype that's wrong, not the claim that exceptional mathematicians are not very mathematician-like.

Re: A Fundraising Survival Guide

#69

Post by bootload »

asdflkj wrote: post #57
cperciva wrote: post #45

Earlier quoted context omitted.

It's true of painters, but not mathematicians. I'm not sure about that. The words "homeless drug addict" don't exactly bring "mathematician" to mind, but thats' exactly what Erdos was, and he certainly qualified as one of the best mathematicians of the 20th century. EDIT: Oops, it wasn't methamphetamine; it was dl-amphetamine and methylphenidate. Somehow my brain squished those two together.

Erdos was a drug user, not a drug addict. He famously quit drugs for a month just to show that he was not an addict. And though he was technically homeless, he was not what most people imagine when they hear this word. He merely preferred to spend his life traveling, and had many friends everywhere (which comes with the territory if you're eminent). His most salient characteristics--eccentricity and lack of concern f…

"... Erdos was a drug user, not a drug addict. ..."

There is no distinction.

Re: A Fundraising Survival Guide

#70

Post by netcan »

skmurphy wrote: post #65
netcan wrote: post #51

Earlier quoted context omitted.

"Google's customers are the advertisers." Technically. They do a great job of monetising search traffic but that's not the bottleneck. Search engines win by attracting their customers' customers, users. Advertisers will follow the users.

Advertisers pay for a well characterized audience (which Google infers from the search terms). Who is in the audience matters quite a bit, which is one point of attack on Google: when you only have 1% (or .01%) of their audience share starting out, you are better served if that 1% represents a significant fraction of a particular market or type of buyer instead of a representative cross section of Google's total audi…

True. From the perspective of most advertisers, they only care about their niche. If you your search engine or auction site is the place to go for tradesmen (plumbers, electricians etc.) or some other big money niche, you'd be able to make a lot more then you would with a much larger all purpose engine.
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