4 ms·

I don't really think it's a case of CEOs good, R&D bad. I think it's more of a case of CEOs not taking no for an answer for mission critical funding. I've been

by ABCLAW 5y ago

I don't really think it's a case of CEOs good, R&D bad. I think it's more of a case of CEOs not taking no for an answer for mission critical funding. I've been on the chain for many VC connections, and in the room for maybe twenty pitches. In almost all cases a slightly neuroatypical CEO has carpet bombed sources of funding with genuine letters requesting meetings. The process often takes 6-8 months from initial contact to follow-ups, to actually getting a reply, to setting an in-person meeting, then discussing next-steps, referrals, etc. VCs aren't an API; they're VERY busy people. Make sure they know you're committed.

brainless 5y ago
That's a very nice way of putting it. I agree that VCs aren't an API. But I think there are builders and there are hustlers. We have a system which is looking to fund hustlers, even if they have zero clue of how to build. And most importantly, most hustlers want to build software products. Yet the builders of those products struggle to find minimum fund to go full time. It's like either you have a great deck and thousand emails or nothing.
- ABCLAW 5y ago
  >It's like either you have a great deck and thousand emails or nothing. Pretty much. If you can't make the deck yourself, hire a third party to mock one up for you after you've put the content together; let them do the spacing, font, background, design work. Then the emails are on you; set a timer for follow-ups, make a spreadsheet regarding appointments. You're still a builder, but you're gonna be building human connections for a bit. If you reframe things in that way, it's less jarring.
  - brainless 5y ago
    You mean just like the CEO candidate has to find a freelance to get the tech done if they can't find a technical co-founder. Valid point.
  - throwaway1556 5y ago
    An interesting exercise would be for just one fund to not care about deck spacing, font and background ... or whether they have a CEO ... or if founders are ex-FB ... A fund that just backs raw R&D ... with no referrals or exit history ... only evals the tech on merit The few pure R&D funds that do that, to my knowledge, are restricted to university spin-outs right now As things stand today -- the individuals (I know) most capabable of building awesome engineering are the least likely to get through the current VC obstacle courses -- who are all looking for the same needle in the same haystack
    - yaseer 5y ago
      >A fund that just backs raw R&D ... with no referrals or exit history ... only evals the tech on merit Define 'merit'. From the perspective of an investor, merit is commercial potential. Small traction in a large market shows commercial potential. 'Raw R&D' without commercial potential is definitely the domain of universities, not VCs.
- issa 5y ago
  I think this is true in a lot of industries. I was in the music industry and I quickly learned that it is about hustle and hype more than quality players or songs. In larger companies it is the people who play the "office politics game" that get ahead more than people with skills or good ideas. Such is life.
  - brainless 5y ago
    Welcome to the Deck side.
- kenneth 5y ago
  Considering that the top quartile venture capital as an asset class generally performs at ~20% IRR and outperforms public markets, it's empirically not true that the system funds hustlers over builders. The better VCs fund builders. If they aren't funding you, it's not necessarily that they're just ignorant and busy funding businessy hustlers; it's perhaps that there's issues with the deal that make it not investable (from targeting a market too small, to missing critical skills on the founding team, etc). (I'm a VC)
  - HWR_14 5y ago
    I have to question comparing the top quartile in one class to the average in another. The top quartile of mutual funds also produce high returns and outperform public markets. Heck, the top quartile of horse race bettors probably outperform the market as well. That said, I believe your core point. My guess is the person you are responding to is missing vital core skills or otherwise has an uninvestable company. It might be fixable (hopefully) or not.
  - throwaway1556 5y ago
    I fully understand the point you make However, having spent time with funds now -- it feels like those two criteria (market/team) are defined with heavy bias to what exists today So building some radically new tech -- that is not directly comparable to unicorn X or Y who vaguely exist in a similar space -- will fail at first funding hurdle unless you move that R&D work closer to what X or Y are doing -- to the point you're just building a clone of something successful today This potentially eliminates a lot of tech that is innovative -- try showing a VC some tech that is not SaaS right now as what you're trying to achieve doesn't lend itself to that model Same on the team front -- VCs appear to expect a founding team to be defined as B, C, D and any team that does not fit those boxes must be missing some critical skills -- leading to pressure on founders to fill gaps at start that they don't think are gaps -- just to jump through some artificial hoop set by the VCs who only seem to want to put pegs into predefined holes
notahacker 5y ago
A corollary of this and the OP's argument is that business-oriented CEOs with an idea that needs building have a lot more free time to carpet bomb prospective funders than engineers already building a product that needs more engineers to deal with the demand that's there. The idea that being too busy with product or customers to jump the hurdles they set could be a bad thing for funding doesn't reflect well on VCs (I'm the first person to argue the importance of knowing how to hunt for business is often underrated by engineers, but not every business needs networking oriented business developer types, and those that do are still better if they can dedicate more time hunting for intros to customers and less hunting for intros to investors)

by ABCLAW 5y ago

brainless 5y ago

That's a very nice way of putting it. I agree that VCs aren't an API. But I think there are builders and there are hustlers. We have a system which is looking to fund hustlers, even if they have zero clue of how to build. And most importantly, most hustlers want to build software products. Yet the builders of those products struggle to find minimum fund to go full time. It's like either you have a great deck and thousand emails or nothing.

ABCLAW 5y ago
>It's like either you have a great deck and thousand emails or nothing. Pretty much. If you can't make the deck yourself, hire a third party to mock one up for you after you've put the content together; let them do the spacing, font, background, design work. Then the emails are on you; set a timer for follow-ups, make a spreadsheet regarding appointments. You're still a builder, but you're gonna be building human connections for a bit. If you reframe things in that way, it's less jarring.
- brainless 5y ago
  You mean just like the CEO candidate has to find a freelance to get the tech done if they can't find a technical co-founder. Valid point.
- throwaway1556 5y ago
  An interesting exercise would be for just one fund to not care about deck spacing, font and background ... or whether they have a CEO ... or if founders are ex-FB ... A fund that just backs raw R&D ... with no referrals or exit history ... only evals the tech on merit The few pure R&D funds that do that, to my knowledge, are restricted to university spin-outs right now As things stand today -- the individuals (I know) most capabable of building awesome engineering are the least likely to get through the current VC obstacle courses -- who are all looking for the same needle in the same haystack
  - yaseer 5y ago
    >A fund that just backs raw R&D ... with no referrals or exit history ... only evals the tech on merit Define 'merit'. From the perspective of an investor, merit is commercial potential. Small traction in a large market shows commercial potential. 'Raw R&D' without commercial potential is definitely the domain of universities, not VCs.
issa 5y ago
I think this is true in a lot of industries. I was in the music industry and I quickly learned that it is about hustle and hype more than quality players or songs. In larger companies it is the people who play the "office politics game" that get ahead more than people with skills or good ideas. Such is life.
- brainless 5y ago
  Welcome to the Deck side.
kenneth 5y ago
Considering that the top quartile venture capital as an asset class generally performs at ~20% IRR and outperforms public markets, it's empirically not true that the system funds hustlers over builders. The better VCs fund builders. If they aren't funding you, it's not necessarily that they're just ignorant and busy funding businessy hustlers; it's perhaps that there's issues with the deal that make it not investable (from targeting a market too small, to missing critical skills on the founding team, etc). (I'm a VC)
- HWR_14 5y ago
  I have to question comparing the top quartile in one class to the average in another. The top quartile of mutual funds also produce high returns and outperform public markets. Heck, the top quartile of horse race bettors probably outperform the market as well. That said, I believe your core point. My guess is the person you are responding to is missing vital core skills or otherwise has an uninvestable company. It might be fixable (hopefully) or not.
- throwaway1556 5y ago
  I fully understand the point you make However, having spent time with funds now -- it feels like those two criteria (market/team) are defined with heavy bias to what exists today So building some radically new tech -- that is not directly comparable to unicorn X or Y who vaguely exist in a similar space -- will fail at first funding hurdle unless you move that R&D work closer to what X or Y are doing -- to the point you're just building a clone of something successful today This potentially eliminates a lot of tech that is innovative -- try showing a VC some tech that is not SaaS right now as what you're trying to achieve doesn't lend itself to that model Same on the team front -- VCs appear to expect a founding team to be defined as B, C, D and any team that does not fit those boxes must be missing some critical skills -- leading to pressure on founders to fill gaps at start that they don't think are gaps -- just to jump through some artificial hoop set by the VCs who only seem to want to put pegs into predefined holes

notahacker 5y ago

A corollary of this and the OP's argument is that business-oriented CEOs with an idea that needs building have a lot more free time to carpet bomb prospective funders than engineers already building a product that needs more engineers to deal with the demand that's there. The idea that being too busy with product or customers to jump the hurdles they set could be a bad thing for funding doesn't reflect well on VCs (I'm the first person to argue the importance of knowing how to hunt for business is often underrated by engineers, but not every business needs networking oriented business developer types, and those that do are still better if they can dedicate more time hunting for intros to customers and less hunting for intros to investors)