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>But, contrary to popular belief investors aren’t total idiots who neglect basic questions Investors, particularly tech investors often do neglect basic (tech

by xevb3k 8y ago

>But, contrary to popular belief investors aren’t total idiots who neglect basic questions Investors, particularly tech investors often do neglect basic (tech DD) questions. Sometimes it’s because they’re investing in the “team” and neglect DD. Sometimes it’s because the area is hot and they need to make a play... or just because they happen to know or like the people involved. Whatever the reason, it’s dangerous to assume that the investors must have done their DD (see Theranos for example). Not saying that this is the case here, and often things work out anyway...

nickparker 8y ago
Theranos isn't the best example. DFJ invested in their seed, but the vast majority of their funds were less sophisticated non-tech investors. Using them as a poster child for Silicon Valley dysfunction is a bit off to me. Your broader point is well taken though, there are certainly cases where investors completely skip tech DD. Eg, Juicero's absolutely comical "engineering" that killed them with obscenely high costs.
- xevb3k 8y ago
  Theranos had a bunch of larger investors [1] many of them as sophisticated as any tech investor. I’m not saying SV investors are particularly dysfunctional, just that it’s pretty normal for tech DD to not get done, or get done badly. I use the Theranos example because it’s big and public (most disappear without any news). [1] https://www.crunchbase.com/organization/theranos/investors/investors_list#section-investors https://www.crunchbase.com/organization/theranos/investors/i...
- citrablue 8y ago
  While the high engineering costs are definitely comical, wasn't Juicero's failure because nobody wanted their revenue-driving product, the juice bags? Seems like a $600 device could still be profitable (and subsidized) if the core revenue driver was viable.
  - dbuder 8y ago
    They were making a loss at $600, not disagreeing though, a really good juicer you don't have to clean would find demand.

by xevb3k 8y ago

nickparker 8y ago

Theranos isn't the best example. DFJ invested in their seed, but the vast majority of their funds were less sophisticated non-tech investors. Using them as a poster child for Silicon Valley dysfunction is a bit off to me. Your broader point is well taken though, there are certainly cases where investors completely skip tech DD. Eg, Juicero's absolutely comical "engineering" that killed them with obscenely high costs.

xevb3k 8y ago
Theranos had a bunch of larger investors [1] many of them as sophisticated as any tech investor. I’m not saying SV investors are particularly dysfunctional, just that it’s pretty normal for tech DD to not get done, or get done badly. I use the Theranos example because it’s big and public (most disappear without any news). [1] https://www.crunchbase.com/organization/theranos/investors/investors_list#section-investors https://www.crunchbase.com/organization/theranos/investors/i...
citrablue 8y ago
While the high engineering costs are definitely comical, wasn't Juicero's failure because nobody wanted their revenue-driving product, the juice bags? Seems like a $600 device could still be profitable (and subsidized) if the core revenue driver was viable.
- dbuder 8y ago
  They were making a loss at $600, not disagreeing though, a really good juicer you don't have to clean would find demand.