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Everyone's talking about how the founder got lucky that his investors let go of their $800K liquid preference. My guess is that this wasn't all luck. The VC's

Everyone's talking about how the founder got lucky that his investors let go of their $800K liquid preference. My guess is that this wasn't all luck. The VC's in this case knew how transparent this founder was being in reporting his startup journey. They knew that this decision would get publicity. With this knowledge, the VC firm probably made a calculated decision to forego their liquid pref in return for the good will generated by the founder's transparent PR. It's cool to see the founder being financially rewarded for his transparency.

taphangum 6y ago
Long term thinking. I can't think of a better advertisement for these VC's. Calculated or not, it is a great move
GoRudy 6y ago
yep and good chance these two VCs are the first check in his next business in 24 months.
sonofaragorn 6y ago
If letting go the $800k was purely PR, then that's some expensive PR. Who reads these blogs, a couple thousand people maybe?
- exolymph 6y ago
  10k+ people will read the post, probably more. HN alone can send that much traffic (I speak from personal experience). And it's more about who than how many.
- fairity 6y ago
  If they do this 10 times, they will establish a well-known reputation for being founder friendly. This would cost $8M. They are investing $1B over all their funds. Will the impact a founder-friendly reputation has on deal flow and close rate increase their fund's ROI by 0.8%? Almost certainly.
  - probe 6y ago
    Yeah close rate is a good alternative way to look at it. GC can always have Josh as a founder reference to chat with a founder on the fence - at current market they could probably turn over in one deal (i.e. opp to invest in another business they wouldn't have won otherwise, at the same amount as Baremetrics). Great move for everyone!
- bigiain 6y ago
  There's a _huge_ difference in the PR value for General Catalyst of a couple of million random New York Times readers compared to a couple of thousand HackerNews readers. This is _brilliantly_ targeted PR. (To the extent that I suspect part of the deal with General Catalyst was that he blog about it and do his best to get it on the front page here...)
hajimemash 6y ago
Very interesting to see the benefit of transparency materializing into real touchable cash.

taphangum 6y ago

Long term thinking. I can't think of a better advertisement for these VC's. Calculated or not, it is a great move

GoRudy 6y ago

yep and good chance these two VCs are the first check in his next business in 24 months.

sonofaragorn 6y ago

If letting go the $800k was purely PR, then that's some expensive PR. Who reads these blogs, a couple thousand people maybe?

exolymph 6y ago
10k+ people will read the post, probably more. HN alone can send that much traffic (I speak from personal experience). And it's more about who than how many.
fairity 6y ago
If they do this 10 times, they will establish a well-known reputation for being founder friendly. This would cost $8M. They are investing $1B over all their funds. Will the impact a founder-friendly reputation has on deal flow and close rate increase their fund's ROI by 0.8%? Almost certainly.
- probe 6y ago
  Yeah close rate is a good alternative way to look at it. GC can always have Josh as a founder reference to chat with a founder on the fence - at current market they could probably turn over in one deal (i.e. opp to invest in another business they wouldn't have won otherwise, at the same amount as Baremetrics). Great move for everyone!
bigiain 6y ago
There's a _huge_ difference in the PR value for General Catalyst of a couple of million random New York Times readers compared to a couple of thousand HackerNews readers. This is _brilliantly_ targeted PR. (To the extent that I suspect part of the deal with General Catalyst was that he blog about it and do his best to get it on the front page here...)

hajimemash 6y ago

Very interesting to see the benefit of transparency materializing into real touchable cash.