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As an entrepreneur, I find it valuable to have coffee with entrepreneurs I don't know and listen to their pitches, founder-to-founder. When I do this, just like

by yodon 9y ago

As an entrepreneur, I find it valuable to have coffee with entrepreneurs I don't know and listen to their pitches, founder-to-founder. When I do this, just like VC's, I find most of the pitches I hear are terrible ideas pitched by people with no knowledge/experience of the industry/problem they are trying to solve. Why do I find this helpful? Because I watch my own reaction to the experience. I've just met this person. They've just told me their dream, the thing they quit their job to do, invested years of their life in, and it's an absolutely terrible, terrible idea. What do I do? If I can, I give them good advice within the confines of what they are trying to do. And in almost all cases that's as far as I can go. I just met this person and they just met me. It's not my job or my place to crush their dreams and the odds are vanishingly close to zero percent they'd listen to me if I tried, so I don't (think about all those VC rejections, how many of those VC rejections caused the entrepreneur to drop the idea? The answer is probably pretty close to zero). Even with close friends, it's very dicey whether to say "I think that idea is a mistake" because most entrepreneurs are so driven by passion (and need to be). Each time I hear one of those terrible pitches, I try to remember this is why VC's don't want to tell people solid no's, and this is why I should be so appreciative for every hint of criticism I've ever received. Because people will absolutely tell you your idea is great and they'll almost never tell you what's profoundly wrong with it. I put as much truth and as much insight into my answers and observations on those painful pitches as I think the entrepreneurs can hear, and hope they'll eventually internalize it and pivot in a better direction, because "please, for the love of god and your family and mortgage, stop what you're doing now" simply isn't an ansewer the entrepreneur will be able to hear from a stranger (or probably even a close friend).

gnicholas 9y ago
Totally agree — I was recently approached by a guy who wanted me to integrate his feature (idea) into my product. Since I'm normally in the position of asking bigger companies to integrate my technology into theirs, it was eye-opening to see things from the other perspective. I found myself asking him the same questions that others ask me, and I could see how the answers I give might not be sufficiently convincing to my prospects. Talking to other founders can be very enlightening, if a little depressing.
Stratoscope 9y ago
You are doing God's work, my friend. I really appreciate your thoughtfulness about this. Hopefully you have had some influence in getting these other founders to look more closely at their plans. The same thing can happen with people you know well. Several years ago, my closest friend, an older gentleman retired and living on social security and his wife's income, got into a notorious MLM scam called Photomax. Their pitch was that for only $50/month, they would store all your photo files in a secure facility, and would even allow you to order prints at extra cost. But wait! There's more! The $50/month didn't just buy you photo storage, you would have the opportunity to sell this service to all of your friends and start making big money on your downline. Of course they also provided sales training. One day he invited me to eavesdrop on one of their training calls, where he and his cohort listened on a conference call while their upline cold-called potential suck^H^H^H^Hprospects. Of course none of these calls went well. But why let reality stop you? My friend decided that to really succeed, he needed their advanced training, which would only cost $10,000. As gently as I could, I tried to explain that this exact same service was available from multiple providers such as Flickr, SmugMug, 500px, etc. either for free or for a tenth the cost of Photomax, and this smelled very much like a scam to me. He said, "Mike, you're just being negative!" We remained friends, but I was sad to see him throw away that $10,000 and all the time he put into this.
AustinLA 9y ago
I would really like to agree with this description because it does capture part of the human element of hearing someones dream, but it misses one key element of scenario. You're chatting with them as a friend, whereas it is part of a VC's professional responsibility to take a clear position with founders. Each pitch I hear is an investment of time – mine and the founder's. Neither one of us have much incentive to drag it out if it is really not going to happen. One thing to note that may be non-obvious… Typically when I provide a detailed reason for the pass – regardless of if it's team, market, strategy, etc. – I don't exactly expect to receive the response "that's a great point we haven't considered, maybe it won't work out for us." Instead, I expect that the response will be a challenge to the point's I have made. Sometimes valid, but most often it comes down to a matter of perspective, but it is unproductive to engage in email debate with every founder where we don't pursue an investment in their company. It comes comes down to the tradeoff between professional responsibility and limitations of my time.
- yodon 9y ago
  Yes, I was sloppy in using the term VC to refer to investors generally, my comments were more targeted at angels who I generally viewed as less explicitly professional in their investing profile. With a true VC at the seed stage, I would set the bar of professionalism at a prompt and explicit desision after the pitch and/or partner meeting. Anything less is a sign the VC firm is insufficiently efficient in its own processes to be agood partner. Later stage there is more data and a bigger check to write so I'd expect the decision to take a bit longer.
ganeshkrishnan 9y ago
>"I think that idea is a mistake" There is almost no idea that is a mistake. Barring some idiotic stuff like "tinder for my garden plants" (on second thoughts this might be good. maybe users want to cross breed plants?) Twitter would sound obnoxious if it was pitched today. There have been more "snapchats" before snapchats (I think tigerchat). AirBnb was rent Air Mattress and then pivoted. Ebay was selling broken goods (started with a broken laser pointer). Everything sounds idiotic. Share my ride uber? Share my bedroom airbnb? We are all sailboats in the river of life. And money is the wind.

by yodon 9y ago

gnicholas 9y ago

Totally agree — I was recently approached by a guy who wanted me to integrate his feature (idea) into my product. Since I'm normally in the position of asking bigger companies to integrate my technology into theirs, it was eye-opening to see things from the other perspective. I found myself asking him the same questions that others ask me, and I could see how the answers I give might not be sufficiently convincing to my prospects. Talking to other founders can be very enlightening, if a little depressing.

Stratoscope 9y ago

You are doing God's work, my friend. I really appreciate your thoughtfulness about this. Hopefully you have had some influence in getting these other founders to look more closely at their plans. The same thing can happen with people you know well. Several years ago, my closest friend, an older gentleman retired and living on social security and his wife's income, got into a notorious MLM scam called Photomax. Their pitch was that for only $50/month, they would store all your photo files in a secure facility, and would even allow you to order prints at extra cost. But wait! There's more! The $50/month didn't just buy you photo storage, you would have the opportunity to sell this service to all of your friends and start making big money on your downline. Of course they also provided sales training. One day he invited me to eavesdrop on one of their training calls, where he and his cohort listened on a conference call while their upline cold-called potential suck^H^H^H^Hprospects. Of course none of these calls went well. But why let reality stop you? My friend decided that to really succeed, he needed their advanced training, which would only cost $10,000. As gently as I could, I tried to explain that this exact same service was available from multiple providers such as Flickr, SmugMug, 500px, etc. either for free or for a tenth the cost of Photomax, and this smelled very much like a scam to me. He said, "Mike, you're just being negative!" We remained friends, but I was sad to see him throw away that $10,000 and all the time he put into this.

AustinLA 9y ago

I would really like to agree with this description because it does capture part of the human element of hearing someones dream, but it misses one key element of scenario. You're chatting with them as a friend, whereas it is part of a VC's professional responsibility to take a clear position with founders. Each pitch I hear is an investment of time – mine and the founder's. Neither one of us have much incentive to drag it out if it is really not going to happen. One thing to note that may be non-obvious… Typically when I provide a detailed reason for the pass – regardless of if it's team, market, strategy, etc. – I don't exactly expect to receive the response "that's a great point we haven't considered, maybe it won't work out for us." Instead, I expect that the response will be a challenge to the point's I have made. Sometimes valid, but most often it comes down to a matter of perspective, but it is unproductive to engage in email debate with every founder where we don't pursue an investment in their company. It comes comes down to the tradeoff between professional responsibility and limitations of my time.

yodon 9y ago
Yes, I was sloppy in using the term VC to refer to investors generally, my comments were more targeted at angels who I generally viewed as less explicitly professional in their investing profile. With a true VC at the seed stage, I would set the bar of professionalism at a prompt and explicit desision after the pitch and/or partner meeting. Anything less is a sign the VC firm is insufficiently efficient in its own processes to be agood partner. Later stage there is more data and a bigger check to write so I'd expect the decision to take a bit longer.

ganeshkrishnan 9y ago

>"I think that idea is a mistake" There is almost no idea that is a mistake. Barring some idiotic stuff like "tinder for my garden plants" (on second thoughts this might be good. maybe users want to cross breed plants?) Twitter would sound obnoxious if it was pitched today. There have been more "snapchats" before snapchats (I think tigerchat). AirBnb was rent Air Mattress and then pivoted. Ebay was selling broken goods (started with a broken laser pointer). Everything sounds idiotic. Share my ride uber? Share my bedroom airbnb? We are all sailboats in the river of life. And money is the wind.