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Invest in Lines, not Dots (2010)

48 点作者 josephpmay将近 3 年前

4 条评论

josephpmay将近 3 年前
I'm submitting this to HN because I think as the pace of funding slows down, this is going to become increasingly important advice
alangibson将近 3 年前
What he says is all probably true, but the idea of dropping in to chew the fat with investors seems like very SV-centric advice.<p>12 years after this was written I&#x27;d like to read an update on strategies for fully remote entrepreneurs.
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the_arun将近 3 年前
The title is a great punch line in real life too.
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graycat将近 3 年前
Yes. investors like to see a graph, &quot;up and to the right&quot;.<p>Two remarks from a startup entrepreneur:<p>(1) Even just for the initial <i>dot</i>, the entrepreneur had to have for himself some good evidence of potential, i.e., that a good <i>line</i> was on the way. This evidence was maybe based on an observation that there was a need in the market and maybe some of his unique technology with a competitive strong advantage for meeting the need.<p>It is this thinking that has the entrepreneur working on his startup and his creation of the first <i>dot</i>. And if the entrepreneur develops a <i>pitch deck</i> for VCs (venture capitalists), he may explain this thinking. But VC M. Suster in the OP is essentially saying, in my experience I&#x27;d say <i>confirming</i>, that he and any VC will ignore such thinking and pitch deck. I.e., that thinking is not &quot;up and to the right&quot;.<p>(2) Now suppose some time has passed and an entrepreneur has several good <i>dots</i>, enough to make a good <i>line</i> &quot;up and to the right&quot;, and hears that he might do better to accept some VC equity funding, in the analogy in the OP, to get &quot;married&quot;.<p>(a) The VCs didn&#x27;t want to do the basic thinking back at the beginning during the construction of the first <i>dot</i>. As the company grows, there stand to be more needs for thinking, for more <i>dots</i>. The entrepreneur may be concerned that such a VC on the BoD (board of directors) who was not ready, willing, and able to think effectively early on still won&#x27;t be and, thus, will be a drawback to progress for the business.<p>Or, to be more clear, the entrepreneur, now founder and CEO, can see the situation clearly like on a train track with 5000 HP of Diesel power in an engine coming toward him at 80 MPH: Some months have passed and for various reasons the CEO wants to bet much of the company on some idea for another <i>dot</i>. The CEO has been thinking hard and has some ideas, maybe some back of the envelope arithmetic, but nothing like a <i>line</i> &quot;up and to the right&quot; for the idea. So he has to present his thinking to the BoD, with some VCs who long ago showed that they are not ready, willing, and able to do good thinking and, instead, want only &quot;up and to the right&quot;. Did I mention the Diesel engine?<p>(b) It used to be that for an Internet&#x2F;Web startup, the entrepreneur needed some expensive capital equipment, from Sun, Cisco, etc. and for those expenses needed VC equity funding. Now, not so much: By the time the entrepreneur has the <i>line</i> VCs want to see, he may no longer need VC cash.<p>E.g., the first server I plugged together for my startup has a processor from AMD, an FX-8350, with 8 cores and a standard clock of 4.0 GHz, for $100 at Amazon. How does that compare in cost per instructions per second with one of the Sun servers? Similarly for mass storage, router and ISP (Internet service provider) data rates, etc.?<p>Looks like some VCs what to place a bet at long odds on a horse that just won the race. &quot;Sorry, that race has already been run. You can bet on another race if you want to.&quot;