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Yes, investors should be putting twenty-something would-be founders who think it's a good idea to "lock customers into discount rates that even with infinite re

Yes, investors should be putting twenty-something would-be founders who think it's a good idea to "lock customers into discount rates that even with infinite retention won’t become profitable" on $50,000 retainers to come up with ideas that they can then fund. That's an efficient way to deploy a nine-figure fund if I've ever heard of one. I'm sure LPs will love it.

danieltillett 11y ago
Well considering the 50K is basically a rounding error to most VCs the money is not an issue. Given the difficulty of assembling a world class team to let one disintegrate just because their current idea is poor is not a good use of a limited resource. Actually why VCs think good ideas and good teams should come as a package has never been explained to me. The is no reason to think that the best teams will have the best ideas. If the limiting factor in success is the quality of the team then why let great teams work on anything but the best ideas.
- 7Figures2Commas 11y ago
  > Well considering the 50K is basically a rounding error to most VCs the money is not an issue. Given the difficulty of assembling a world class team to let one disintegrate just because their current idea is poor is not a good use of a limited resource. You do not seem to understand how fund management works in the real world. A venture firm simply cannot deploy a nine-figure fund by writing $50,000 checks to keep on ice every entrepreneur it thinks has potential. Furthermore, I don't see how you can conclude that founders who thought it was a good idea to "lock customers into discount rates that even with infinite retention won’t become profitable" represents a world-class team. The post-failure behavior of one of the Homejoy co-founders[1] is even more damning. [1] https://news.ycombinator.com/item?id=10468700 https://news.ycombinator.com/item?id=10468700
  - danieltillett 11y ago
    VCs don’t have to lock up every entrepreneur, just those they think are world class with a bad idea. If the team truly is world class then they should be as rare as unicorns. To let a world-class team explode over just because they had a bad idea is silly if 50K would keep them going until they came up with a good idea. I don’t think the team at Homejoy was world class, but I also didn’t back them. We have to assume that the VCs that did back them thought they were a world class team or else they would not have given them the money they did. I am more lenient towards delusional founders (especially young ones) than delusional VCs. The team at Homejoy would have done very little damage if they had not been backed.

danieltillett 11y ago

Well considering the 50K is basically a rounding error to most VCs the money is not an issue. Given the difficulty of assembling a world class team to let one disintegrate just because their current idea is poor is not a good use of a limited resource. Actually why VCs think good ideas and good teams should come as a package has never been explained to me. The is no reason to think that the best teams will have the best ideas. If the limiting factor in success is the quality of the team then why let great teams work on anything but the best ideas.

7Figures2Commas 11y ago
> Well considering the 50K is basically a rounding error to most VCs the money is not an issue. Given the difficulty of assembling a world class team to let one disintegrate just because their current idea is poor is not a good use of a limited resource. You do not seem to understand how fund management works in the real world. A venture firm simply cannot deploy a nine-figure fund by writing $50,000 checks to keep on ice every entrepreneur it thinks has potential. Furthermore, I don't see how you can conclude that founders who thought it was a good idea to "lock customers into discount rates that even with infinite retention won’t become profitable" represents a world-class team. The post-failure behavior of one of the Homejoy co-founders[1] is even more damning. [1] https://news.ycombinator.com/item?id=10468700 https://news.ycombinator.com/item?id=10468700
- danieltillett 11y ago
  VCs don’t have to lock up every entrepreneur, just those they think are world class with a bad idea. If the team truly is world class then they should be as rare as unicorns. To let a world-class team explode over just because they had a bad idea is silly if 50K would keep them going until they came up with a good idea. I don’t think the team at Homejoy was world class, but I also didn’t back them. We have to assume that the VCs that did back them thought they were a world class team or else they would not have given them the money they did. I am more lenient towards delusional founders (especially young ones) than delusional VCs. The team at Homejoy would have done very little damage if they had not been backed.