3 ms·

I totally agree with this piece, and anyone who knows me knows I feel this way. Giving an entrepreneur $250K-$500K to pay off credit card debt and give them a

by davidu 16y ago

I totally agree with this piece, and anyone who knows me knows I feel this way. Giving an entrepreneur $250K-$500K to pay off credit card debt and give them a bit of comfort cash, is one thing. Doing so helps make sure they are invested in the long-term success, without making them eager to sell too early, but giving someone $1mm+ before driving a business to major traction, revenue and profit is dangerous for the long-term success of the company. It removes the requisite hunger level which is a determinant for success. Moreover, it actually disincentives selling at the right time, because founders who have pulled $1mm+ off the table are likely to discard even the best offers at a time when reality would dictate the should take the offer (see: digg.com).

edge17 16y ago
makes sense, but there's some bubblicious wafting in the air, and typically when quantity increases, quality decreases. your point's well founded though.
- nickconfer 16y ago
  Actually this is a good point. Could all the talk about bubbles from some investors be in part spiking this increased interest in founders wanting to take more off the table now?
deleted 16y ago
[deleted]
deleted 16y ago
[deleted]
nickconfer 16y ago
Are you sure Digg didn't sell because of the founders? From what I can gather from Kevin's interviews in the past, it sounded like he really wanted to exit Digg at that point, but his investors saw larger potential and it was tough to argue when they where still growing like a weed.
kenjackson 16y ago
It removes the requisite hunger level which is a determinant for success. Is this true? I think the hunger is a function inherent in the person. Gates, Jobs, Zuckerberg, Page, Schmidt -- all of them could have quit years before their prime, but none did/have. The people who are hungry because they're broke are the wrong people to bet on, because if the company is even remotely successful they'll find a way to cash out. There's just no way around stopping that from happening. But if you bet on those for which shipping the next great product is what drives them then giving them some money won't cause them to lose their drive.
- arach 16y ago
  I agree with you. The people you back hopefully have inherent hunger and achieving some measure of financial success should not slow down their drive. Do we know about the dudes or dudettes who started a promising company but started relaxing after sales hit 10M$? What you could do to keep the incentive: keep the liquidity money in a trust that is accessible only after (a)a making big exit (b) hitting a key company milestone or (c) shutting down the company. This way the founders can make sure it's not a big game of double or nothing while the VCs can make sure the founders aren't shooting rap videos instead of kicking ass.
- davidu 16y ago
  I think the Gates, Jobs, Zuck breed are rare and it's hard to know when you (a) have an entrepreneur like that and (b) a business that supports longevity. Lots of entrepreneurs say they are in it for the long-haul, but very few VC-backed businesses are sustainable in the long-haul.

by davidu 16y ago

edge17 16y ago

makes sense, but there's some bubblicious wafting in the air, and typically when quantity increases, quality decreases. your point's well founded though.

nickconfer 16y ago
Actually this is a good point. Could all the talk about bubbles from some investors be in part spiking this increased interest in founders wanting to take more off the table now?

deleted 16y ago

[deleted]

deleted 16y ago

[deleted]

nickconfer 16y ago

Are you sure Digg didn't sell because of the founders? From what I can gather from Kevin's interviews in the past, it sounded like he really wanted to exit Digg at that point, but his investors saw larger potential and it was tough to argue when they where still growing like a weed.

kenjackson 16y ago

It removes the requisite hunger level which is a determinant for success. Is this true? I think the hunger is a function inherent in the person. Gates, Jobs, Zuckerberg, Page, Schmidt -- all of them could have quit years before their prime, but none did/have. The people who are hungry because they're broke are the wrong people to bet on, because if the company is even remotely successful they'll find a way to cash out. There's just no way around stopping that from happening. But if you bet on those for which shipping the next great product is what drives them then giving them some money won't cause them to lose their drive.

arach 16y ago
I agree with you. The people you back hopefully have inherent hunger and achieving some measure of financial success should not slow down their drive. Do we know about the dudes or dudettes who started a promising company but started relaxing after sales hit 10M$? What you could do to keep the incentive: keep the liquidity money in a trust that is accessible only after (a)a making big exit (b) hitting a key company milestone or (c) shutting down the company. This way the founders can make sure it's not a big game of double or nothing while the VCs can make sure the founders aren't shooting rap videos instead of kicking ass.
davidu 16y ago
I think the Gates, Jobs, Zuck breed are rare and it's hard to know when you (a) have an entrepreneur like that and (b) a business that supports longevity. Lots of entrepreneurs say they are in it for the long-haul, but very few VC-backed businesses are sustainable in the long-haul.