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> "Why don’t you sell your house/company/whatever if you believe that much in your product?" How is believing in your product an excuse for not trying to minim

by div 15y ago

> "Why don’t you sell your house/company/whatever if you believe that much in your product?" How is believing in your product an excuse for not trying to minimise risk. Especially if you know that most startups fail, there's no good reason not to hedge your bets when it comes to stuff that's at the base of the Maslow triangle. edit: logic error :)

larholm 15y ago
"I'm trying to minimise my risk by hedging my bets" sounds like a relatively straightforward answer. Add a comment about how venture capital usually comes with advise and connections, and it's a perfect explanation.
BerislavLopac 15y ago
One more thing: selling a house or other property is not the same as selling a company, which (probably) requires a certain amount of time to maintain in order to generate value. The time that affects the founder's commitment to the startup he is trying to fund.
themenace 15y ago
"How is believing in your product an excuse for not trying to minimise risk. Especially if you know that most startups fail, there's no good reason not to hedge your bets." Would you agree that this would not be a good answer even if it is the reason? Some gentler ways to answer: - Keeping my house gives me a feeling of security so I can devote all time and energy to the startup. - My heavily mortgaged house is not nearly enough to fund the startup. - Keeping my house is not unreasonable when I am already investing an enormous amount of my time and energy and my life into this. - I might indeed sell my house but I don't think I'll need to. I feel that this startup is a great investment, and I think investors will agree. Anyone got a better response?
- deleted 15y ago
  [deleted]
- mluiten 15y ago
  How about: the security provided by an unconditional roof over my head and food on the table allows me to use my abilities in problem-solving and creativity, according to Maslow's hierarchy. [1] [1] http://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs http://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs
tejaswiy 15y ago
One more thing: Not a founder, but people say startups have incredible highs and equally bad lows. Would you really want the possibility of loosing everything playing on your mind during one of those lows? Huge chance that it'll become a self fulfilling prophecy and ultimately hurt the company in that case.
amirmc 15y ago
Bear in mind that these guys are from Croatia and there's a big cultural difference. Being willing to put a very large chunk of your own money in (by risking your house etc) is likely part of showing how committed/serious you are (i.e. nobody wants to lose their house). Hence it may be seen as a legitimate question. If you imagine it from that mindset, then anyone who makes excuses about 'security/risk/stress/etc' is either not serious or doesn't really believe in what they're trying to sell you (I mean 'you the investor'). I'm not trying to suggest this is right or wrong, simply that the cultural expectations are different. I know I've read a post that summarised these types of differences but I can't recall where (I think it was either an Estonian or Slovenian startup).
- jeffreymcmanus 15y ago
  Sounds like a good reason to not go with those guys from Croatia I think this notion that you have to suck up to investors and tailor what you do to jump through their arbitrary hoops is toxic. Focus on making your business so awesome that investors see value and can't resist the opportunity. Everything else is hand-waving and cargo-cult thinking.
  - BerislavLopac 15y ago
    Unfortunately, there is a lot of cargo-culting, on both sides of the table (entrepreneurs and investors), regardless of the culture. Although the precise form may differ: in SV it's recently been "a billion dollar company" with hoodies and other Social Network copycatting (as Paul Carr nicely described), while in Europe (including Croatia) it's been Groupon and Zynga cloning (there are over 40 Groupon clones currently in Croatia only, which is one on each 100k people...). Regarding cultural differences, in Croatia nearly everyone (over 30) owns their house or appartment; it is not customary to rent, and only students or those with no other choice do it. It's traditional that even young people enter 30-year property loans as soon as they get their first job; property is considered the only viable long-term investment. People often seek some sort of security first, even young ones, and only then, perhaps, look to "play" with some kind of business idea, usually because it's fashionable and seems like it could be fun. So this question by the investors has the purpose to weed out such "fashion-followers" and find those really dedicated to their cause (it's not a silver bullet of course; it's one of a number of questions with the similar purpose). I don't know of any investors who would require that from their entrepreneurs.

by div 15y ago

larholm 15y ago

"I'm trying to minimise my risk by hedging my bets" sounds like a relatively straightforward answer. Add a comment about how venture capital usually comes with advise and connections, and it's a perfect explanation.

BerislavLopac 15y ago

One more thing: selling a house or other property is not the same as selling a company, which (probably) requires a certain amount of time to maintain in order to generate value. The time that affects the founder's commitment to the startup he is trying to fund.

themenace 15y ago

"How is believing in your product an excuse for not trying to minimise risk. Especially if you know that most startups fail, there's no good reason not to hedge your bets." Would you agree that this would not be a good answer even if it is the reason? Some gentler ways to answer: - Keeping my house gives me a feeling of security so I can devote all time and energy to the startup. - My heavily mortgaged house is not nearly enough to fund the startup. - Keeping my house is not unreasonable when I am already investing an enormous amount of my time and energy and my life into this. - I might indeed sell my house but I don't think I'll need to. I feel that this startup is a great investment, and I think investors will agree. Anyone got a better response?

deleted 15y ago
[deleted]
mluiten 15y ago
How about: the security provided by an unconditional roof over my head and food on the table allows me to use my abilities in problem-solving and creativity, according to Maslow's hierarchy. [1] [1] http://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs http://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs

tejaswiy 15y ago

One more thing: Not a founder, but people say startups have incredible highs and equally bad lows. Would you really want the possibility of loosing everything playing on your mind during one of those lows? Huge chance that it'll become a self fulfilling prophecy and ultimately hurt the company in that case.

amirmc 15y ago

Bear in mind that these guys are from Croatia and there's a big cultural difference. Being willing to put a very large chunk of your own money in (by risking your house etc) is likely part of showing how committed/serious you are (i.e. nobody wants to lose their house). Hence it may be seen as a legitimate question. If you imagine it from that mindset, then anyone who makes excuses about 'security/risk/stress/etc' is either not serious or doesn't really believe in what they're trying to sell you (I mean 'you the investor'). I'm not trying to suggest this is right or wrong, simply that the cultural expectations are different. I know I've read a post that summarised these types of differences but I can't recall where (I think it was either an Estonian or Slovenian startup).

jeffreymcmanus 15y ago
Sounds like a good reason to not go with those guys from Croatia I think this notion that you have to suck up to investors and tailor what you do to jump through their arbitrary hoops is toxic. Focus on making your business so awesome that investors see value and can't resist the opportunity. Everything else is hand-waving and cargo-cult thinking.
- BerislavLopac 15y ago
  Unfortunately, there is a lot of cargo-culting, on both sides of the table (entrepreneurs and investors), regardless of the culture. Although the precise form may differ: in SV it's recently been "a billion dollar company" with hoodies and other Social Network copycatting (as Paul Carr nicely described), while in Europe (including Croatia) it's been Groupon and Zynga cloning (there are over 40 Groupon clones currently in Croatia only, which is one on each 100k people...). Regarding cultural differences, in Croatia nearly everyone (over 30) owns their house or appartment; it is not customary to rent, and only students or those with no other choice do it. It's traditional that even young people enter 30-year property loans as soon as they get their first job; property is considered the only viable long-term investment. People often seek some sort of security first, even young ones, and only then, perhaps, look to "play" with some kind of business idea, usually because it's fashionable and seems like it could be fun. So this question by the investors has the purpose to weed out such "fashion-followers" and find those really dedicated to their cause (it's not a silver bullet of course; it's one of a number of questions with the similar purpose). I don't know of any investors who would require that from their entrepreneurs.