3 ms·

I post regularly promoting single-founder businesses, and think it's useful to see this sort of post from someone who is generally respected among early founder

I post regularly promoting single-founder businesses, and think it's useful to see this sort of post from someone who is generally respected among early founders. But the core lesson is not what Fred thinks it is. It's that most managers have no idea how to value technical work (either development or management). And funders who view the business from the distance are notoriously bad at it. I've seen this play out few times now and have been personally affected once. In the worst case a non-technical manager replaced his CTO and doubled the size of the tech team on getting funding, only to end up firing the entire new team for non-performance about eight months and several hundred thousand dollars later. The business has yet to recover and probably never will. I'm sure Union Square Ventures serves a purpose in helping some companies grow, But I hope those considering taking funding from them will read Fred's post and realize that when push comes to shove, Fred thinks he knows how to run and manage their business better than they do.

fredwilson 16y ago
i don't know how to run a business at all. i've never done it and have no desire to do it. i think what allows me to build healthy and constructive relationships with entrepreneurs is that i know that i can't run a business and don't pretend that i can
- trevelyan 16y ago
  Then you shouldn't be giving advice on how to fire a cofounder.
- jseliger 16y ago
  This is interesting to me because Diego Gambetta wrote a book called Codes of the Underworld about how mobsters and mafia members often depict themselves as utterly incompetent and incapable at doing anything other than being a mobster. Their purpose: to signal that they have no desire to take over businesses because they lack the capability to run them. As long as you, the business owner, pay the mobster, you know that the mobster will not eventually take 100% of the profit because the mobster can't run the business effectively. And if the mobster tries to extort 100% of the profit, he knows that you'll quit or do something extreme, like go to the police or fight back or find another mobster. The book has a lot of useful and subtle points and is much recommended: http://jseliger.com/2010/01/07/codes-of-the-underworld-how-criminals-communicate-%E2%80%94%C2%A0diego-gambetta http://jseliger.com/2010/01/07/codes-of-the-underworld-how-c... . I leave it to the reader to imagine how this aspect of the book might apply to the situations being discussed.

fredwilson 16y ago

i don't know how to run a business at all. i've never done it and have no desire to do it. i think what allows me to build healthy and constructive relationships with entrepreneurs is that i know that i can't run a business and don't pretend that i can

trevelyan 16y ago
Then you shouldn't be giving advice on how to fire a cofounder.
jseliger 16y ago
This is interesting to me because Diego Gambetta wrote a book called Codes of the Underworld about how mobsters and mafia members often depict themselves as utterly incompetent and incapable at doing anything other than being a mobster. Their purpose: to signal that they have no desire to take over businesses because they lack the capability to run them. As long as you, the business owner, pay the mobster, you know that the mobster will not eventually take 100% of the profit because the mobster can't run the business effectively. And if the mobster tries to extort 100% of the profit, he knows that you'll quit or do something extreme, like go to the police or fight back or find another mobster. The book has a lot of useful and subtle points and is much recommended: http://jseliger.com/2010/01/07/codes-of-the-underworld-how-criminals-communicate-%E2%80%94%C2%A0diego-gambetta http://jseliger.com/2010/01/07/codes-of-the-underworld-how-c... . I leave it to the reader to imagine how this aspect of the book might apply to the situations being discussed.