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"for less than they had raised" - that's actually not true and sloppy journalism from the journalists that wrote it. If you look at North's funding - the diffe

"for less than they had raised" - that's actually not true and sloppy journalism from the journalists that wrote it. If you look at North's funding - the difference between the suspected purchase price of $180M and what they raised ($200M) is a $24M loan they received from the government of Canada [1], which was called back shortly after (because of layoffs) [2]. The remaining $4M difference is probably interest on a standard debt financing loan of $40M they received [3] and some rounding error in the $180M suspected purchase price. It seems Google bought them for the exact amount raised, in both debt and funding. [1] https://www.itworldcanada.com/article/north-receives-24-million-investment-from-government-of-canada/411840 https://www.itworldcanada.com/article/north-receives-24-mill... [2] https://www.therecord.com/business/2019/02/22/federal-government-freezes-investment-in-wake-of-north-inc-layoffs.html https://www.therecord.com/business/2019/02/22/federal-govern... [3] https://www.crunchbase.com/organization/north-8daa/company_financials https://www.crunchbase.com/organization/north-8daa/company_f...

908B64B197 6y ago
North's performance didn't beat inflation. It's worth less today than the money it raised in the past.
- arcticbull 6y ago
  Ok, but, like, that's a rounding error. They were acquired for what they raised, to within a rounding error. And as they say in Vegas, a push is a win.
  - asdfasgasdgasdg 6y ago
    Sorry for the quibble, but it's only a win in Vegas because the expected value in Vegas is negative due to the house edge. The expected value of human effort is typically positive, so a push is not a win in the development of companies.
    - bearcobra 6y ago
      Given that analogy, I'm curious how a VC would view this kind of exit. Is breaking "even" seen as some kind of success given the higher failure rate for venture backed companies?
      - PopeDotNinja 6y ago
        I suspect a push is a VC failure. A friend of mine was CTO as a startup that raised like $100 million. They knew it was gonna flop after a while, and wanted to wind the company down and return 50% of the VC’s money. The VC told them to take extreme risk and/or drive the company into the ground before returning the cash. A 100% loss was expected, but a 50% loss was somehow an embarrassment.
        Natsu 6y ago
        Pretty sure PG has talked about this and said something to the effect that all of their money is made on the extreme outliers rather than the ordinary failures or modest successes. Knowing that, it kinda makes sense that they'd rather see the startup push and try to go big rather than just going home.
        waterhouse 6y ago
        Well, it depends on the numbers involved. If they estimated a 5% chance of getting $2 billion, then that would be a 2x expected return on a $50 million cost, which is entirely rational for investors with huge pockets. But if they estimated a 1% chance of getting $2 billion, then that's a 0.4x expected return (an expected loss of $30 million), which is irrational, unless the "embarrassment" is a significant factor for the VCs, and that would be interesting.
        Natsu 6y ago
        Yes, that's a fair point--the numbers for the potential upside and downside matter a lot here. I was only trying to make the case that in some cases, the downside risk may not hold a candle to the potential upside. I also think that they want to see founders who are willing to charge up those hills rather than to shirk away from challenges that seem to be too big for them. Sort of like burning your ships behind you in terms of morale--if it's go big or go home and you can't go home, there's only one choice left.

908B64B197 6y ago

North's performance didn't beat inflation. It's worth less today than the money it raised in the past.

arcticbull 6y ago
Ok, but, like, that's a rounding error. They were acquired for what they raised, to within a rounding error. And as they say in Vegas, a push is a win.
- asdfasgasdgasdg 6y ago
  Sorry for the quibble, but it's only a win in Vegas because the expected value in Vegas is negative due to the house edge. The expected value of human effort is typically positive, so a push is not a win in the development of companies.
  - bearcobra 6y ago
    Given that analogy, I'm curious how a VC would view this kind of exit. Is breaking "even" seen as some kind of success given the higher failure rate for venture backed companies?
    - PopeDotNinja 6y ago
      I suspect a push is a VC failure. A friend of mine was CTO as a startup that raised like $100 million. They knew it was gonna flop after a while, and wanted to wind the company down and return 50% of the VC’s money. The VC told them to take extreme risk and/or drive the company into the ground before returning the cash. A 100% loss was expected, but a 50% loss was somehow an embarrassment.
      - Natsu 6y ago
        Pretty sure PG has talked about this and said something to the effect that all of their money is made on the extreme outliers rather than the ordinary failures or modest successes. Knowing that, it kinda makes sense that they'd rather see the startup push and try to go big rather than just going home.
        waterhouse 6y ago
        Well, it depends on the numbers involved. If they estimated a 5% chance of getting $2 billion, then that would be a 2x expected return on a $50 million cost, which is entirely rational for investors with huge pockets. But if they estimated a 1% chance of getting $2 billion, then that's a 0.4x expected return (an expected loss of $30 million), which is irrational, unless the "embarrassment" is a significant factor for the VCs, and that would be interesting.
        Natsu 6y ago
        Yes, that's a fair point--the numbers for the potential upside and downside matter a lot here. I was only trying to make the case that in some cases, the downside risk may not hold a candle to the potential upside. I also think that they want to see founders who are willing to charge up those hills rather than to shirk away from challenges that seem to be too big for them. Sort of like burning your ships behind you in terms of morale--if it's go big or go home and you can't go home, there's only one choice left.