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> He's now a VC. He wants to diminish the stigma around talent acquisitions. Why? Because that's how VCs get paid in the vast majority of cases. I've never met

> He's now a VC. He wants to diminish the stigma around talent acquisitions. Why? Because that's how VCs get paid in the vast majority of cases. I've never met a VC who was excited about a talent acquisition. Maybe a very early angel, but this is not what most VCs are looking for.

ebiester 14y ago
Perhaps, but how many of the talent acquisitions are situations where if the team just kept going, it was going to turn the corner? Certainly, we don't know, but I suspect most of these cases are making the most of a bad situation. If your downside is now 1x rather than losing everything, that's a major win for investors. Eliminating downside does not suck. That said, I think there may be room in this space for some competition. What if you had groups of friends that wanted to work together, but not necessarily take on the risk of a startup? What if you could have some sort of way to develop side projects together in a blatant attempt to market the team, not the product?
- tptacek 14y ago
  The evidence suggests that a 1x return on an investment is essentially a writeoff. The whole model counts on the fact that most startups fail; the "winners" have to pay for the losers, not just themselves. The convention wisdom says this is important to understand for at least two reasons: (i) You aren't going to make a compelling pitch to a VC by focusing on the likelihood of a 1x-2x return, since you'd essentially be pitching a failure to them. (ii) A 1x-2x return may be lifechanging for you, but since it's essentially a failure for your investors, they will tend to tack your company away from those returns and towards much riskier strategies. If you think 1x is a major win, you should consider avoiding VCs.
  - ebiester 14y ago
    I was thinking the other way around. One 50x and 49 flops is half as much money as one 50x and averaging your money back on the rest of your investments through talent acquisitions. If you have a lost cause that you can get something out of, it is foolhardy not to do so.

ebiester 14y ago

Perhaps, but how many of the talent acquisitions are situations where if the team just kept going, it was going to turn the corner? Certainly, we don't know, but I suspect most of these cases are making the most of a bad situation. If your downside is now 1x rather than losing everything, that's a major win for investors. Eliminating downside does not suck. That said, I think there may be room in this space for some competition. What if you had groups of friends that wanted to work together, but not necessarily take on the risk of a startup? What if you could have some sort of way to develop side projects together in a blatant attempt to market the team, not the product?

tptacek 14y ago
The evidence suggests that a 1x return on an investment is essentially a writeoff. The whole model counts on the fact that most startups fail; the "winners" have to pay for the losers, not just themselves. The convention wisdom says this is important to understand for at least two reasons: (i) You aren't going to make a compelling pitch to a VC by focusing on the likelihood of a 1x-2x return, since you'd essentially be pitching a failure to them. (ii) A 1x-2x return may be lifechanging for you, but since it's essentially a failure for your investors, they will tend to tack your company away from those returns and towards much riskier strategies. If you think 1x is a major win, you should consider avoiding VCs.
- ebiester 14y ago
  I was thinking the other way around. One 50x and 49 flops is half as much money as one 50x and averaging your money back on the rest of your investments through talent acquisitions. If you have a lost cause that you can get something out of, it is foolhardy not to do so.