4 ms·

Seems like in SF you just need a ridiculous idea to get funding. No working product, nothing. Funny but also quite sad.

by 20andup 10y ago

nikanj 10y ago
They invest in the story and the founders, so you need a great story (Zenefits etc), a Zuckerberg lookalike (Clinkle etc) or something similar.
- Snowdax 10y ago
  The three usual metrics that are used are "Team", "Market" and "Product" with investors focusing more on one or the other. I'm fairly certain that investors who focus on team and market over the product metric are the ones who will continue to get burned by this sort of scenario. This isn't the last company that will try to peddle vaporware and get away with it for an extended period of time.
jessedhillon 10y ago
You're hearing about the outrageous stories because they're outrageous. Crunchbase and Angel List are filled with unsexy companies with low profiles, doing good work and generating returns. Those don't make for enticing front page stories, though.
- 20andup 10y ago
  Maybe I made too big of a generalization. Yes, lots of unsexy companies out there doing good work. You don't have to have a big market potential to be a startup. I prefer startups that generate real returns than those that promises the world. But the idea that a startup even got funded millions of dollars by some very famous investors kind of makes you think about the concept of venture capital in SF. Are they really as "expert" as they say they are?
  - jessedhillon 10y ago
    So far as I know, the pitch of VC is that they target outlier returns, and therefore will make highly unlikely bets in the pursuit of those returns. So it's not particularly revelatory that a VC-funded idea turned out to be unfeasible, because that's what you'd expect with such a strategy. The claim of expertise comes from the idea that VCs can generate magnitudes better returns than the market. This is a true claim when talking about top firms, and I don't see how the fact of VCs making a bad bet disputes that -- unless your standard is that experts never lose money.
    - 20andup 10y ago
      I don't think we are arguing different points here. Some VC place bets on outliers companies like uBeam and Theranos. The problem that I have is that they didn't do their due diligence. You can bet on outliers no matter how unfeasible it seems, but you still need to do your research. The fact that uBeam is argued by many to be physical impossible, supported by facts rather than opinions, strikes me as surprising. Expert is not always winning. It means not betting on outliers just for outliers sake. Can these VC firms go back to their shareholders and convince them that they did their due diligence? Reading from these articles, its painfully obvious they were not being transparent with their investors. These companies have all been around for a few years, and the fact that none of them have seen a reliable working product is another surprise. Mark Cuban has said he has never even seen a working prototype from uBeam.

Seems like in SF you just need a ridiculous idea to get funding. No working product, nothing. Funny but also quite sad.

by 20andup 10y ago

Seems like in SF you just need a ridiculous idea to get funding. No working product, nothing. Funny but also quite sad.

They invest in the story and the founders, so you need a great story (Zenefits etc), a Zuckerberg lookalike (Clinkle etc) or something similar.

Snowdax 10y ago
The three usual metrics that are used are "Team", "Market" and "Product" with investors focusing more on one or the other. I'm fairly certain that investors who focus on team and market over the product metric are the ones who will continue to get burned by this sort of scenario. This isn't the last company that will try to peddle vaporware and get away with it for an extended period of time.

jessedhillon 10y ago

You're hearing about the outrageous stories because they're outrageous. Crunchbase and Angel List are filled with unsexy companies with low profiles, doing good work and generating returns. Those don't make for enticing front page stories, though.

20andup 10y ago
Maybe I made too big of a generalization. Yes, lots of unsexy companies out there doing good work. You don't have to have a big market potential to be a startup. I prefer startups that generate real returns than those that promises the world. But the idea that a startup even got funded millions of dollars by some very famous investors kind of makes you think about the concept of venture capital in SF. Are they really as "expert" as they say they are?
- jessedhillon 10y ago
  So far as I know, the pitch of VC is that they target outlier returns, and therefore will make highly unlikely bets in the pursuit of those returns. So it's not particularly revelatory that a VC-funded idea turned out to be unfeasible, because that's what you'd expect with such a strategy. The claim of expertise comes from the idea that VCs can generate magnitudes better returns than the market. This is a true claim when talking about top firms, and I don't see how the fact of VCs making a bad bet disputes that -- unless your standard is that experts never lose money.
  - 20andup 10y ago
    I don't think we are arguing different points here. Some VC place bets on outliers companies like uBeam and Theranos. The problem that I have is that they didn't do their due diligence. You can bet on outliers no matter how unfeasible it seems, but you still need to do your research. The fact that uBeam is argued by many to be physical impossible, supported by facts rather than opinions, strikes me as surprising. Expert is not always winning. It means not betting on outliers just for outliers sake. Can these VC firms go back to their shareholders and convince them that they did their due diligence? Reading from these articles, its painfully obvious they were not being transparent with their investors. These companies have all been around for a few years, and the fact that none of them have seen a reliable working product is another surprise. Mark Cuban has said he has never even seen a working prototype from uBeam.