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Re: In 2012, when Butterfield was convinced he’d failed, Braccia was steadfast, said Bradley Horowitz, who put some of his own money in the game company. That’s
by sagebird 7y ago
Re: In 2012, when Butterfield was convinced he’d failed, Braccia was steadfast, said Bradley Horowitz, who put some of his own money in the game company. That’s probably because Braccia recalled what happened the last time Butterfield made a bad game. It morphed into a popular photo-sharing site called Flickr, which Yahoo! bought for around $25 million in 2005. Braccia, Butterfield and Horowitz all worked together at Yahoo.
So it worked twice for Butterfield and I think it deserves exploring. Maybe this is the pattern:
1. Find a smart technical person you trust and fund their dream project with excess cash.
2. Don’t freak out if it flops- set up an expectation that if it flops, use the leftover cash to make a more generally useful tool/service.
Maybe the first dream project is always expected to fail, but it is necessary for releasing some sort of creative pressure, building trust, and learning how to communicate honestly between investor and innovator. If it produces unicorns more often, vcs should be happy to fund the first flop as it somehow prepares the perfectionist to ditch their grand visions and get back to making something dirty that works, but doing it of their own volition instead of feeling trapped.
To clarify: it’s boring to work on a flop— to put in more effort and not get any positive feedback. I think the natural reaction is to try to take things you learned, abandon the flop and try to work on something new. And in this wanting to start something new comes more openness to creating something that gets positive feedback quickly — not making a perfectionist monument because you already tried that and felt the pain. I don’t know if there is an expression for the feeling to be liberated to make something that is not “important” according to your own aesthetics... getting over yourself?
- navigatesol 7y ago>if it flops, use the leftover cash to make a more generally useful tool/service. I think you understate the difficulty of this; it's not any easier than the "dream project".
- pavlov 7y agoI think the idea here is not to start from scratch with the leftover cash, but to make use of existing development work and data gathered as part of the dream project to find a narrow focus on something people actually want. Wasn't Slack's origin as some kind of in-game chat within the failed Glitch project?
- devonkim 7y agoThat's the story that we have as the public - Slack started as a chat feature within another project. Similarly, Youtube's supposed origin story is that it was the video part of a dating app. At that time, online dating apps were being funded by VCs (OkCupid and even HotOrNot may have been still going strong) so it makes sense. The primary point should be that to find unicorns investors should be looking for good founders and teams first and products second fundamentally because products are flexible and plentiful while talent and ambition in the same body is not. This is what I think YC is also attempting to do.
- Alex3917 7y agoWasn’t Slack originally funded with a government grant to make educational games for Canadian girls, or was that Flickr?
- skellera 7y agoJust to clarify, it was an internal company chat so the team could communicate. Essentially the idea that slack is now.
- pavlov 7y agoThanks! I wasn't sure what the story was.
- deleted 7y ago[deleted]
- falcor84 7y agoI agree that there's probably a general rule here. I remember reading that when Xiaomi was founded, Lei Jun wanted them to first work on a small software product to build the new team and get the creative process going, before beginning work on a new phone
- cableshaft 7y agoThis only works if the investors believe enough in you to keep the funding going. I worked for a startup that decided to do the 'we'll work on a small project first to get our feet wet before working on the main idea'. We did just that, put it out there, it didn't do so well, and the the board thought they weren't going to make their money back on the main idea and pulled the plug before we really got started on it. If we had just worked on the big idea to begin with they wouldn't have pulled the plug anywhere near as quick, as there would be nothing in the market yet to underperform and give them a scare. To be fair, those board members didn't have any knowledge of how a software-based startup works. They came from real estate and hospitality industries, and were openly and proudly ignorant about tech.
- moorhosj 7y agoIt’s possible that pulling the plug was still the right move.
- cableshaft 7y agoNot really disagreeing with that in my particular circumstance. But on a more general note, if you're on the startup side and trying to decide whether you should do the small warmup app or not, keep in mind that doing so will give data that the board may or may not like and give them a reason to make a case to shut things down.
- jamisteven 7y agoThat is the idea more or less, VC's dont invest in ideas and businesses as much as they invest in the teams behind them, this is because they know the chances of a pivot are likely.
- heymijo 7y agoCan't help but feel like this intellectual exercise is built on a bed of survivorship bias. https://en.m.wikipedia.org/wiki/Survivorship_bias https://en.m.wikipedia.org/wiki/Survivorship_bias
- epistasis 7y agoUnfortunately, given the low rate of success with startups, you'd probably need data from a minimum of 40 startups before any analysis can progress beyond survivorship bias.
- seem_2211 7y agoWhich is basically always the case, VC is such a niche business with such enormous power laws we'll always be able to say that things are subject to survivorship bias.
- caseysoftware 7y agoMost companies don't have "leftover cash" by the time they realize they're a flop. Often, creditors go unpaid or get pennies on the dollar. Making it to that point is exceptional and not something you can systemize very easily.
- deleted 7y ago[deleted]