3 ms·

The Next White Whale

21 points by dboyd 17y ago

Brushfire 17y ago
I think the biggest problem here is time. VC firms are generally not manpower heavy, and sorting through unfiltered business plans is very time consuming, if not painful. That's why they prefer the referral chain method. A GP I spoke with recently (on Sand Hill Road, potentially even one of the firms Cringely sent his plan to) put it like this: If you aren't smart enough or dedicated enough to work all possible network connections to get referred to our firm, you probably aren't smart enough or dedicated enough for us to fund you. This comes down to the idea that most VC's (not all), invest in people\teams, not ideas. A submission from Cringely followed by an article on his blog definitely qualifies as a filtered referral, so any results from his 'test' wont be very representative. At least he realizes this.
- gr366 17y ago
  I suppose now it becomes more of a test of whether a prominent blogger's post is enough to prompt these firms to look for his submission and respond. Certainly not representative of the average person. And the fact that the companies aren't named puts no pressure on them to follow through. But then this begs the question, why do the VC firms' web sites offer the ability to submit in the first place? How about an Amazon Mechanical Turk task to have people screen the proposals for them? Have the Turkers write a bullet point summary and give a thumbs up or down.
  - Brushfire 17y ago
    Good question about why they offer it, if they dont use it or look at it. I think its just for propriety. The mechanical turk thing, however, im not sure about. Understanding a good idea and good team is not something everyone can do before the idea and business is out there. If anyone could do it, anyone with money would be a successful VC. Ideally, this is what Associates at VC firms are for, but web-based sourcing is sort of the last resort.
- mixmax 17y ago
  This whole referral process with VC's seems terribly broken to me. The argument that "If you aren't smart enough or dedicated enough to work all possible network connections to get referred to our firm, you probably aren't smart enough or dedicated enough for us to fund you" appears to be born out of laziness or lack of manpower, not because it's the best process. Surely there are entrepreneurs that don't have connections on Sand hill (almost all European startups for instance) that have a compelling offer a VC would want to have a look at.
  - DanielBMarkham 17y ago
    Indeed. The only thing this does is fill a VCs sheet up with folks who are living in the right spot and good at networking. These guys are getting what they deserve: shiny teams full of great networkers who make them feel warm and fuzzy. It has as much to do with viability and profitability as my pet rock does. I imagine the end to many of these investment adventures is something like Joe and Bill sure stank at building that business, but what a great bunch of guys! Good thing we got in on that opportunity even though it didn't work out. They're going to do something big one day.
  - rjurney 17y ago
    At the same time - its not that hard to move to the bay area and get inroads into sand hill road. Why shouldn't you have to do that to get their money? How is getting in the front door of a VC's office all that different from getting in the front door of a customer's office? Why should you be the exception, when so many determined people are willing to make great sacrifices to come to the bay area and demonstrate excellence, get a good reputation and good references, build a network? I hear boo hoo talk from disgruntled middle aged men in restaurants and coffee shops around the valley and it fucking baffles me. There's more opportunity here than anywhere on earth, and yet people still grumble that it isn't quite convenient enough.
    - mixmax 17y ago
      It wasn't meant as a rant, more as a business opportunity. I agree that if you really want to get VC money you should do whatever it takes. I've done so myself with success (In Europe) and couldn't help to notice that the system is broken - say the right buzzwords, namedrop the right people and have a slick power point and your chances are good. It just seems like a bad decision businesswise for VC's to primarily invest in companies that are referred to them. They must miss some gems. There might be a startup hidden in there somewhere. Maybe you could charge to read through businessplans? Maybe you could crowdsource it?
CytokineStorm 17y ago
I really can't take seriously someone who posts flash banner ads at the top of their personal blog. It skewed my whole perception of his article.
DanielBMarkham 17y ago
I'm looking forward to seeing how this experiment works. I find the whole funding conundrum so sad as to be funny -- one of those things you just have to laugh about to keep from crying. So let's see, 9 out of 10 ventures fold. The cost for entry keeps going down. Lots of tire-kickers will submit a business plan no matter how unworkable the business or how ill-matched the VC. The response? Better web sites! And secretly even more of a reliance on networks and following the herd. Better still, up the amount of money they want to invest keeps going in the opposite direction of the amount that startups need. But damn, those websites are looking awesome.
mcantelon 17y ago
tldr version: Cringely submitted a business plan to VCs via their website and hopes he gets a positive response.

21 points by dboyd 17y ago

I think the biggest problem here is time. VC firms are generally not manpower heavy, and sorting through unfiltered business plans is very time consuming, if not painful. That's why they prefer the referral chain method. A GP I spoke with recently (on Sand Hill Road, potentially even one of the firms Cringely sent his plan to) put it like this: If you aren't smart enough or dedicated enough to work all possible network connections to get referred to our firm, you probably aren't smart enough or dedicated enough for us to fund you. This comes down to the idea that most VC's (not all), invest in people\teams, not ideas. A submission from Cringely followed by an article on his blog definitely qualifies as a filtered referral, so any results from his 'test' wont be very representative. At least he realizes this.

gr366 17y ago
I suppose now it becomes more of a test of whether a prominent blogger's post is enough to prompt these firms to look for his submission and respond. Certainly not representative of the average person. And the fact that the companies aren't named puts no pressure on them to follow through. But then this begs the question, why do the VC firms' web sites offer the ability to submit in the first place? How about an Amazon Mechanical Turk task to have people screen the proposals for them? Have the Turkers write a bullet point summary and give a thumbs up or down.
- Brushfire 17y ago
  Good question about why they offer it, if they dont use it or look at it. I think its just for propriety. The mechanical turk thing, however, im not sure about. Understanding a good idea and good team is not something everyone can do before the idea and business is out there. If anyone could do it, anyone with money would be a successful VC. Ideally, this is what Associates at VC firms are for, but web-based sourcing is sort of the last resort.
mixmax 17y ago
This whole referral process with VC's seems terribly broken to me. The argument that "If you aren't smart enough or dedicated enough to work all possible network connections to get referred to our firm, you probably aren't smart enough or dedicated enough for us to fund you" appears to be born out of laziness or lack of manpower, not because it's the best process. Surely there are entrepreneurs that don't have connections on Sand hill (almost all European startups for instance) that have a compelling offer a VC would want to have a look at.
- DanielBMarkham 17y ago
  Indeed. The only thing this does is fill a VCs sheet up with folks who are living in the right spot and good at networking. These guys are getting what they deserve: shiny teams full of great networkers who make them feel warm and fuzzy. It has as much to do with viability and profitability as my pet rock does. I imagine the end to many of these investment adventures is something like Joe and Bill sure stank at building that business, but what a great bunch of guys! Good thing we got in on that opportunity even though it didn't work out. They're going to do something big one day.
- rjurney 17y ago
  At the same time - its not that hard to move to the bay area and get inroads into sand hill road. Why shouldn't you have to do that to get their money? How is getting in the front door of a VC's office all that different from getting in the front door of a customer's office? Why should you be the exception, when so many determined people are willing to make great sacrifices to come to the bay area and demonstrate excellence, get a good reputation and good references, build a network? I hear boo hoo talk from disgruntled middle aged men in restaurants and coffee shops around the valley and it fucking baffles me. There's more opportunity here than anywhere on earth, and yet people still grumble that it isn't quite convenient enough.
  - mixmax 17y ago
    It wasn't meant as a rant, more as a business opportunity. I agree that if you really want to get VC money you should do whatever it takes. I've done so myself with success (In Europe) and couldn't help to notice that the system is broken - say the right buzzwords, namedrop the right people and have a slick power point and your chances are good. It just seems like a bad decision businesswise for VC's to primarily invest in companies that are referred to them. They must miss some gems. There might be a startup hidden in there somewhere. Maybe you could charge to read through businessplans? Maybe you could crowdsource it?

CytokineStorm 17y ago

I really can't take seriously someone who posts flash banner ads at the top of their personal blog. It skewed my whole perception of his article.

DanielBMarkham 17y ago

I'm looking forward to seeing how this experiment works. I find the whole funding conundrum so sad as to be funny -- one of those things you just have to laugh about to keep from crying. So let's see, 9 out of 10 ventures fold. The cost for entry keeps going down. Lots of tire-kickers will submit a business plan no matter how unworkable the business or how ill-matched the VC. The response? Better web sites! And secretly even more of a reliance on networks and following the herd. Better still, up the amount of money they want to invest keeps going in the opposite direction of the amount that startups need. But damn, those websites are looking awesome.

mcantelon 17y ago

tldr version: Cringely submitted a business plan to VCs via their website and hopes he gets a positive response.