3 ms·

I was taking a statistics approach actually, rather than the efficient market hypothesis. For example: 20 people have a choice between X & Y. - 10 people choos

I was taking a statistics approach actually, rather than the efficient market hypothesis. For example: 20 people have a choice between X & Y. - 10 people choose X, 1 succeed. - 10 people choose Y, 1 succeed. The first person who succeeds says, "It's because I chose X" Based on the data, you can't say that this choice is what mattered, because many others made the same choice and it didn't help them. Perhaps I'm being pedantic about the title, but this is where I'm coming from. And when I heard the joke it was $20, but perhaps it's the monetary phenomenon called inflation. :-)

msandford 13y ago
That makes a lot more sense! I wonder what the numbers are between "tried not to take money" and "tried to take money" are. On the one hand trying to take money gives you a lot of focus and a short-term goal; getting enough traction to get investment. VC money probably makes a lot of companies succeed short-term that might not otherwise. Then on the other side of investment, VC money encourages a "go big" approach where you need to grow gangbusters which most people interpret as hire, spend, etc. Seems like that might actually kill some companies that might otherwise be viable as they get over-extended and don't pare back fast enough, then go broke.
- mathattack 13y ago
  My intuition is that money is better when: - There is some competitive advantage to being first. - That the advantage is enduring. - There are lots of competitors. - It is important to fail faster. For example, if you're trying to scale Google or a SaaS, and there is some kind of "Winner take all" then you need funding. Funding makes less sense when: - You're selling a service directly linked to people's time. (Consulting firms) - You have other sources of money to carry you through. - The market is less competitive. - People will take significantly less money to get equity. I kind of view funding like, "Do you need it bad enough to justify letting someone expect 30+% returns?" If it's the only way to get great growth for that individual company, great. If it's not needed, that's ok too. In terms of measurement, there are two measures. "What % succeeded with and without?" and "What was the median and mean with and without?" The funders are more likely to be stacked in the huge winners and huge losers, because funding (to use financial terms) increases the volatility.

msandford 13y ago

That makes a lot more sense! I wonder what the numbers are between "tried not to take money" and "tried to take money" are. On the one hand trying to take money gives you a lot of focus and a short-term goal; getting enough traction to get investment. VC money probably makes a lot of companies succeed short-term that might not otherwise. Then on the other side of investment, VC money encourages a "go big" approach where you need to grow gangbusters which most people interpret as hire, spend, etc. Seems like that might actually kill some companies that might otherwise be viable as they get over-extended and don't pare back fast enough, then go broke.

mathattack 13y ago
My intuition is that money is better when: - There is some competitive advantage to being first. - That the advantage is enduring. - There are lots of competitors. - It is important to fail faster. For example, if you're trying to scale Google or a SaaS, and there is some kind of "Winner take all" then you need funding. Funding makes less sense when: - You're selling a service directly linked to people's time. (Consulting firms) - You have other sources of money to carry you through. - The market is less competitive. - People will take significantly less money to get equity. I kind of view funding like, "Do you need it bad enough to justify letting someone expect 30+% returns?" If it's the only way to get great growth for that individual company, great. If it's not needed, that's ok too. In terms of measurement, there are two measures. "What % succeeded with and without?" and "What was the median and mean with and without?" The funders are more likely to be stacked in the huge winners and huge losers, because funding (to use financial terms) increases the volatility.