So...how do founders get unconflicted capital?
I don't think it exists. Rather, understand the conflict and work with and around it.
Conflicted Capital
71–76 of 76 posts
Re: Conflicted Capital
#72Re: Conflicted Capital
#73Earlier quoted context omitted.
I've seen that happen in hiring decisions as well. Junior people are in charge of screening candidates... really strong candidates, if hired, will make the average employee look bad. So, why should the person screening the candidates suggest the strongest candidates? This is why I tend to suggest equal seniority individuals should not screen candidates. It's a subconscious thing ("He's too aggressive" "She seems like…
One way to offset that is to make sure that team performance is as much of an incentive as individual performance. A stock compensation helps in that regard: hiring strong individuals will help ship a better product faster and should increase the stock value. Meanwhile traditional stack-ranking and a mostly salary compensation will encourage individuals to make sure they are seen as the top performer no matter what.
This is best - for sure; thats why I am a fan of broad equity allocations etc. The larger the company gets, the hard that can be.
But in that situation, I can give top performers more equity, but in the grand scheme of things, thats not much incremental total dilution to the average employee. We all still make more the same way - when the company makes money or is sold.
If you are at a larger company that is a going concern for a long time... it gets a bit harder and takes some more thinking.
Re: Conflicted Capital
#74Earlier quoted context omitted.
I think the big distinction is avoiding launching companies and instead launching products. I'm increasingly convinced that very few products need to be companies, and the insistence that they do is why a lot of them end up so shitty.
Having seen this model before, I think the challenge there is incentives, motivation and focus. If you have a winner, it's likely that through power law effects it makes sense to double down on it unless you have too much capital to deploy through that company. With that said, I think running a product studio before you find product market fit or the killer company is not a bad idea, especially if you can work direct…
It's still early days, and there are a lot of hypotheses that will be invalidated.
But one of my goals at the moment is to *not* double-down on winners. The thesis being, whatever is working, is clearly working.
I think a lot of products are killer, and should be left alone, and "doubling-down" or "iterating" might make them worse.
For example, Reddit v. HackerNews
Re: Conflicted Capital
#75Earlier quoted context omitted.
Having seen this model before, I think the challenge there is incentives, motivation and focus. If you have a winner, it's likely that through power law effects it makes sense to double down on it unless you have too much capital to deploy through that company. With that said, I think running a product studio before you find product market fit or the killer company is not a bad idea, especially if you can work direct…
It's still early days, and there are a lot of hypotheses that will be invalidated. But one of my goals at the moment is to *not* double-down on winners. The thesis being, whatever is working, is clearly working. I think a lot of products are killer, and should be left alone, and "doubling-down" or "iterating" might make them worse. For example, Reddit v. HackerNews
> But one of my goals at the moment is to not double-down on winners. The thesis being, whatever is working, is clearly working.
Then you will likely end up so far diluted that you won't make enough on your winners to cover your losses. It's a tricky balance to find.
Re: Conflicted Capital
#76Earlier quoted context omitted.
This is not cool - I am sorry. Investor here - they should never do that. Make sure you tell others about how this went down. If they were planning on getting rid of you, that needs to be part of the upfront discussion etc.
It was evidently Insight Partners. They led the Series A on OP's last startup: Insight Partners. They evidently led the Series A for OP's last startup, which according to their LinkedIn is Numetric. Crunchbase tells you what you need to know: https://www.crunchbase.com/funding_round/numetric-series-a--...
We need ratemyinvestor.com to weed out the flock of bad investors.