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Related question: What happens when funded startup decides they want to completely change directions? For example, Flickr was some sort of online game at first
by matt1 17y ago
Related question:
What happens when funded startup decides they want to completely change directions? For example, Flickr was some sort of online game at first, right? Assuming they had investors, is it as simple as saying to the board of directors "Hey, we want to drop the idea you funded us for completely shift directions for these reasons..."?
On the other hand you have funded starts that, for various reasons, decide to shut down the business all together. For what reasons would you do this vs change directions like Flickr?
In short, as a founder of a failing funded startup, how do you decide whether to close the company and start a new one or whether to come up with a new gameplan for the existing company?
Also, how does having closed down a previous company vs shifting gameplans affect future investors?
- apgwoz 17y agoIf I remember the interview from Founders at Work, with Max Levchin (PayPal), correctly, PayPal's investors trusted them enough to radically change directions, and it of course payed off. I think this is probably dependent on who you and your investors are.
- jasonlbaptiste 17y agoOne of the benefits of top tier angels is their knowledge and experience in knowing "things often change". If you get angel investors who don't have that much experience as entrepreneurs in the web space, let alone the angel space, they're likely to flail their arms around in fear.
- notso 17y agoThere was no radical direction change. They put up a web interface, just for the heck of it, and soon a lot more people were using that than PDAs. It doesn't involve needing trust when you look at the numbers and see that Y is a lot more profitable than X.
- imp 17y agoIt also sounds like you're describing the Odeo->Twitter transition. There's been a lot written about that, so reading some of those articles might answer your questions.
- jeromec 17y agoThis is a great question. I'm fairly new to this site, but as I read and explore around I'm finding myself in agreement with Paul Graham. In the How to Apply section for funding he explains a key thing he looks at is the founders, because initial ideas can and often do change. I think the optimum mix for a successful project is: competent key people, great idea, and market readiness. If all of these line up optimally I feel the venture will likely end up becoming a billion dollar company (youtube is an example). However, I think of all those the people component is most important, because smart competent people can make a success out of things lacking in other areas, but without competent people even great ideas will likely be bungled and flop (friendster and napster come to mind).