11 ms·

years ago I was working on a pitch for a startup based on tech I had developed. My adviser, a successful serial entrepreneur told me not to call the tech "revol

by gmarx 11y ago

years ago I was working on a pitch for a startup based on tech I had developed. My adviser, a successful serial entrepreneur told me not to call the tech "revolutionary" (or something like that) because potential investors hear it all the time and it smells like BS. But dammit, some things are revolutionary!

graycat 11y ago
I thought about that, too. In the end, I came up with another description of the investors: Well, I can't explain that one; here we don't want NSFW material! So, I'll give a SFW version; I'll concentrate on information technology since biomedical is at least a little different: (1) The investors are not very technical people. Often we're talking people with backgrounds in business development, marketing, routine software, former CEOs of startups that were largely non-technical, etc. In contrast, the people in high end research university STEM field research know how to evaluate technical work, e.g., as reviewers and editors of good peer-reviewed journals. And if some paper is outside the field of some prof, then he will still know how to get the work reviewed by others, e.g., as the editor in chief of a journal gets the editors and reviewers to do the work. Then, just think a little about what is involved in such peer-review and, then, begin to see how hopeless it would be for the usual investors to do such work. For the VCs, such technical review work is hopeless, and they don't do it. Or for your description that they hear hype, that's not really the problem; instead, hype or not, "revolutionary" or not, they just ignore anything like research. Or look at the bios of the VCs: Could hold a convention in an airplane wash room for all of them able to do or even able to direct peer-review of STEM field research. (2) Evaluating research is something the VCs just won't do. Likely if one of their limited partners (LPs) caught one of their VCs using an evaluation of some research, then the LP would make sure that VC never got another dime, at least not from that LP. (3) Sometimes VCs make money, and sometimes they don't. On average the don't make very much. In any case, they don't try to make money with the results of research. (4) Mostly VCs don't evaluate the technical work. Instead, for early stage investing, their criteria are fairly simple: (A) Look for traction significantly high and growing rapidly. (B) Be sure the work is for a really large market. (C) Usually be sure the CEO and company HQ will be a short drive from the VC's offices. (D) Look for anything that is really wacko that would be a disqualification. If (A)-(D) look good, then contact the CEO and argue that a check of equity funding would help their growth rate enough to more than pay for the stock dilution. Have a term sheet that for the CEO is just onerous and puts the VCs in solid control, e.g., able to replace the CEO with someone loyal to the VC. For seed funding, the VCs look at the product, although not at any technical internals, and try to estimate how the target users/customers would like the product. For later stage funding, the VCs look mostly just at what an accountant does. And for any VC funding, they look at what they know about the market: Commonly VCs claim to have "deep domain knowledge"; in terms of anything technical, that is a wild belly laugh; could break a bone slapping a thigh over that one. But they do have at least a cursory, from 10,000 feet up, view of the markets. So, they have heard of viral, social, local, mobile, sharing, photo apps, own both an iPhone and an Android, have used Google, Facebook, PInterest, SnapChat, InstaGram, and Uber, have heard about tablets, laptops, Windows, Apple, Linux, have seen articles on Apple's watch, have gotten a lot of pitch decks, attended a lot of pitches, and have listened for a few minutes each to a few. For more, they know most of the other VCs on, say, Sand Hill Road, and attend morning what's hot pick-up seminars in coffee shops. For exits they know about acquihires, pitchforking, M&A, and maybe even IPOs. While in some sense the VCs understand that the need to find companies that are new and exceptional, they look for patterns they have seen from the past, patterns that must reject most new and exceptional companies. Really, they dream of a CEO of a company they funded calling them and telling them about the next SnapChat. Sometimes they make money, and sometimes they don't, but that's what they do. The VCs commonly say that their funding is not for everyone, and that is very true. While what the VCs do sometimes makes money, in no way are the VCs a broad source of innovation funding. For revolutionary technology, the VCs couldn't care less. Actually, they would prefer that anything technical not be important -- the don't want to get involved in anything technical.
- FiatLuxDave 11y ago
  So, what is an inventor to do? It sounds like you are in a similar boat to the one I am in, with a math-software based invention (mine is field crossing between telecommunications and super-resolution mathematics), for which it is hard to get attention in this day of cat-video apps and labor cost arbitrageurs. Twenty years ago I found Steve Jurvetson, who is one of those rare VCs who can actually do technical review. But unfortunately he is now too successful to evaluate out-of-the-blue opportunities,and finding the next one like him is probably going to take just as long as it took me to find him. Likely longer, since last time I was looking was not at a bubble peak with all its attendant noise and wannabes. Where do you look for funding for actual revolutionary technology, or are you just as frustrated as I am?
  - graycat 11y ago
    I didn't start with the math I derived. E.g., there's a lot of math I could derive that I couldn't turn into business. So, to derive new math, I want that math to be powerful and valuable for a new business. So, I started with the business idea, the really short, simple one from 50,000+ feet up. Right, John Doerr, that idea by itself is worthless. I'd like to say that I did the planning for the math next, then the business model, then the user interface/user experience (UI/UX), then the computing, all in some such order, but no such thing would be correct. Instead I did a fitting, did the planning of the whole by planning all the pieces so that they all fit together; e.g., the math fits because it is the crucial core, enabling technology that lets the rest work and the whole be valuable. Or, I don't want to do research without good plans for a happy trip to the bank. I derived some math, but I'm not trying to be a math researcher. I wrote some software, but I'm not trying to be a programmer. Instead, I'm trying to be a businessman, that is, to make money, the green kind, and there the math, computing, Moore's law, the infrastructure software, the Internet, mobile, the software I wrote, etc. are all business advantages, that is, make my chances of getting rich better than, say, running a pizza shop, being a math prof, or being a programmer. But there was another criterion: I needed to bring my project to nice profitability just from my checkbook where I did all the work. It was in that context that I derived the math and wrote the code. If you have some good technical work, then maybe you'd like to turn it into a business. To do that, it can help if you can do all the work to good profitability alone funded just by your own checkbook. And it is crucial that the technology can help you get to the necessary happy users/customers. A model is the guy who did the Canadian romantic matchmaking service Plenty of Fish. He was long just one guy, two old Dell servers, ads just via Google, and $10 million in annual revenue. He grew, hired a staff, and recently sold for $575 million in cash. Maybe for his matchmaking he had some clever ideas -- maybe. Some good, new technology can be a big advantage, maybe even crucial. But really you need a feasible path all the way to "The Pay Window". From a background in high end work in the STEM fields, it's easy to guess that, when some high end STEM field work has some new results that clearly should be the crucial, core of a valuable new business, there is some funding for that. In a word, nope. Exception: Some guy with a lot of background in fusion has a plan where as little as $500 million equity might get to a prototype fusion reactor that generates energy, and get one on one with a dozen or so billionaires who will pull out their personal checkbooks. Otherwise, essentially nope. VC? Sure, if look at their Web sites, can get the idea that they fund ambitious, change the world, brilliant, new, disruptive, ideas. Yup, and they also fund tall, short, thin, and fat people, too. But the reason they fund is to follow making money their way which is to buy, on terms onerous for the founders, a fraction of a business with traction significant and growing rapidly. That's what they do. Maybe their LPs make sure that that is exactly what they do, no more and no less, and no funding off the back of a napkin. In particular, it appears that almost universally VCs just will not fund software development. Instead, they want the software running and in use, with significant traction growing rapidly. As IIRC Sam Altman put it recently, VC funding is to let a growing business grow faster. Bringing good, powerful new STEM field research to market? Nope. The idea that good technical work is valuable, etc. seems to come heavily from the massive funding of research for US national security of the past 75 years, some from the best work of Bell Labs, a little from Xerox PARC, and a lot from NIH. Sure, I didn't pay even a dime tuition for my Master's or Ph.D. So, where'd the money come from? Sure, Congress via NSF, etc. And what was Congress thinking? Sure, the bomb, the hydrogen bomb: "Now then, Dmitri, you know how we've always talked about the possibility of something going wrong with the Bomb. The Bomb, Dmitri, the hydrogen bomb." and Sosus, passive sonar, much better jet engines, the submarines, GPS, the fighter and bomber airplanes, the high end radar and infrared systems, etc. It's a big system with layers -- the STEM fields of the research universities, the DoD laboratories, the Federally funded research and development centers (FFRDCs), the large aerospace companies, etc. And while that funding is definitely what built Silicon Valley, now Sand Hill Road is more interested in some clever, novel, viral, social, local, mobile, photo/video, private, in-group, sharing app. Or at least that is what they think. The good news is the computing, storage, processing, data volumes, data rates, OS software, etc. that $1000 can buy. So, that can be a heck of an advantage. Heck, of you could have a robot mow a 1/2 acre lawn for $2, then you could make a big splash in the grass mowing business. Well, now there's a lot of data, and if can think of something valuable to do with it, then maybe can make a big splash, and fortune, in computing. Some good, new research in the STEM fields can be a big advantage.

by gmarx 11y ago

graycat 11y ago

I thought about that, too. In the end, I came up with another description of the investors: Well, I can't explain that one; here we don't want NSFW material! So, I'll give a SFW version; I'll concentrate on information technology since biomedical is at least a little different: (1) The investors are not very technical people. Often we're talking people with backgrounds in business development, marketing, routine software, former CEOs of startups that were largely non-technical, etc. In contrast, the people in high end research university STEM field research know how to evaluate technical work, e.g., as reviewers and editors of good peer-reviewed journals. And if some paper is outside the field of some prof, then he will still know how to get the work reviewed by others, e.g., as the editor in chief of a journal gets the editors and reviewers to do the work. Then, just think a little about what is involved in such peer-review and, then, begin to see how hopeless it would be for the usual investors to do such work. For the VCs, such technical review work is hopeless, and they don't do it. Or for your description that they hear hype, that's not really the problem; instead, hype or not, "revolutionary" or not, they just ignore anything like research. Or look at the bios of the VCs: Could hold a convention in an airplane wash room for all of them able to do or even able to direct peer-review of STEM field research. (2) Evaluating research is something the VCs just won't do. Likely if one of their limited partners (LPs) caught one of their VCs using an evaluation of some research, then the LP would make sure that VC never got another dime, at least not from that LP. (3) Sometimes VCs make money, and sometimes they don't. On average the don't make very much. In any case, they don't try to make money with the results of research. (4) Mostly VCs don't evaluate the technical work. Instead, for early stage investing, their criteria are fairly simple: (A) Look for traction significantly high and growing rapidly. (B) Be sure the work is for a really large market. (C) Usually be sure the CEO and company HQ will be a short drive from the VC's offices. (D) Look for anything that is really wacko that would be a disqualification. If (A)-(D) look good, then contact the CEO and argue that a check of equity funding would help their growth rate enough to more than pay for the stock dilution. Have a term sheet that for the CEO is just onerous and puts the VCs in solid control, e.g., able to replace the CEO with someone loyal to the VC. For seed funding, the VCs look at the product, although not at any technical internals, and try to estimate how the target users/customers would like the product. For later stage funding, the VCs look mostly just at what an accountant does. And for any VC funding, they look at what they know about the market: Commonly VCs claim to have "deep domain knowledge"; in terms of anything technical, that is a wild belly laugh; could break a bone slapping a thigh over that one. But they do have at least a cursory, from 10,000 feet up, view of the markets. So, they have heard of viral, social, local, mobile, sharing, photo apps, own both an iPhone and an Android, have used Google, Facebook, PInterest, SnapChat, InstaGram, and Uber, have heard about tablets, laptops, Windows, Apple, Linux, have seen articles on Apple's watch, have gotten a lot of pitch decks, attended a lot of pitches, and have listened for a few minutes each to a few. For more, they know most of the other VCs on, say, Sand Hill Road, and attend morning what's hot pick-up seminars in coffee shops. For exits they know about acquihires, pitchforking, M&A, and maybe even IPOs. While in some sense the VCs understand that the need to find companies that are new and exceptional, they look for patterns they have seen from the past, patterns that must reject most new and exceptional companies. Really, they dream of a CEO of a company they funded calling them and telling them about the next SnapChat. Sometimes they make money, and sometimes they don't, but that's what they do. The VCs commonly say that their funding is not for everyone, and that is very true. While what the VCs do sometimes makes money, in no way are the VCs a broad source of innovation funding. For revolutionary technology, the VCs couldn't care less. Actually, they would prefer that anything technical not be important -- the don't want to get involved in anything technical.

FiatLuxDave 11y ago
So, what is an inventor to do? It sounds like you are in a similar boat to the one I am in, with a math-software based invention (mine is field crossing between telecommunications and super-resolution mathematics), for which it is hard to get attention in this day of cat-video apps and labor cost arbitrageurs. Twenty years ago I found Steve Jurvetson, who is one of those rare VCs who can actually do technical review. But unfortunately he is now too successful to evaluate out-of-the-blue opportunities,and finding the next one like him is probably going to take just as long as it took me to find him. Likely longer, since last time I was looking was not at a bubble peak with all its attendant noise and wannabes. Where do you look for funding for actual revolutionary technology, or are you just as frustrated as I am?
- graycat 11y ago
  I didn't start with the math I derived. E.g., there's a lot of math I could derive that I couldn't turn into business. So, to derive new math, I want that math to be powerful and valuable for a new business. So, I started with the business idea, the really short, simple one from 50,000+ feet up. Right, John Doerr, that idea by itself is worthless. I'd like to say that I did the planning for the math next, then the business model, then the user interface/user experience (UI/UX), then the computing, all in some such order, but no such thing would be correct. Instead I did a fitting, did the planning of the whole by planning all the pieces so that they all fit together; e.g., the math fits because it is the crucial core, enabling technology that lets the rest work and the whole be valuable. Or, I don't want to do research without good plans for a happy trip to the bank. I derived some math, but I'm not trying to be a math researcher. I wrote some software, but I'm not trying to be a programmer. Instead, I'm trying to be a businessman, that is, to make money, the green kind, and there the math, computing, Moore's law, the infrastructure software, the Internet, mobile, the software I wrote, etc. are all business advantages, that is, make my chances of getting rich better than, say, running a pizza shop, being a math prof, or being a programmer. But there was another criterion: I needed to bring my project to nice profitability just from my checkbook where I did all the work. It was in that context that I derived the math and wrote the code. If you have some good technical work, then maybe you'd like to turn it into a business. To do that, it can help if you can do all the work to good profitability alone funded just by your own checkbook. And it is crucial that the technology can help you get to the necessary happy users/customers. A model is the guy who did the Canadian romantic matchmaking service Plenty of Fish. He was long just one guy, two old Dell servers, ads just via Google, and $10 million in annual revenue. He grew, hired a staff, and recently sold for $575 million in cash. Maybe for his matchmaking he had some clever ideas -- maybe. Some good, new technology can be a big advantage, maybe even crucial. But really you need a feasible path all the way to "The Pay Window". From a background in high end work in the STEM fields, it's easy to guess that, when some high end STEM field work has some new results that clearly should be the crucial, core of a valuable new business, there is some funding for that. In a word, nope. Exception: Some guy with a lot of background in fusion has a plan where as little as $500 million equity might get to a prototype fusion reactor that generates energy, and get one on one with a dozen or so billionaires who will pull out their personal checkbooks. Otherwise, essentially nope. VC? Sure, if look at their Web sites, can get the idea that they fund ambitious, change the world, brilliant, new, disruptive, ideas. Yup, and they also fund tall, short, thin, and fat people, too. But the reason they fund is to follow making money their way which is to buy, on terms onerous for the founders, a fraction of a business with traction significant and growing rapidly. That's what they do. Maybe their LPs make sure that that is exactly what they do, no more and no less, and no funding off the back of a napkin. In particular, it appears that almost universally VCs just will not fund software development. Instead, they want the software running and in use, with significant traction growing rapidly. As IIRC Sam Altman put it recently, VC funding is to let a growing business grow faster. Bringing good, powerful new STEM field research to market? Nope. The idea that good technical work is valuable, etc. seems to come heavily from the massive funding of research for US national security of the past 75 years, some from the best work of Bell Labs, a little from Xerox PARC, and a lot from NIH. Sure, I didn't pay even a dime tuition for my Master's or Ph.D. So, where'd the money come from? Sure, Congress via NSF, etc. And what was Congress thinking? Sure, the bomb, the hydrogen bomb: "Now then, Dmitri, you know how we've always talked about the possibility of something going wrong with the Bomb. The Bomb, Dmitri, the hydrogen bomb." and Sosus, passive sonar, much better jet engines, the submarines, GPS, the fighter and bomber airplanes, the high end radar and infrared systems, etc. It's a big system with layers -- the STEM fields of the research universities, the DoD laboratories, the Federally funded research and development centers (FFRDCs), the large aerospace companies, etc. And while that funding is definitely what built Silicon Valley, now Sand Hill Road is more interested in some clever, novel, viral, social, local, mobile, photo/video, private, in-group, sharing app. Or at least that is what they think. The good news is the computing, storage, processing, data volumes, data rates, OS software, etc. that $1000 can buy. So, that can be a heck of an advantage. Heck, of you could have a robot mow a 1/2 acre lawn for $2, then you could make a big splash in the grass mowing business. Well, now there's a lot of data, and if can think of something valuable to do with it, then maybe can make a big splash, and fortune, in computing. Some good, new research in the STEM fields can be a big advantage.