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Part of Marc Andreesen's tweetstorm yesterday said, "Worry." Andreesen hasn't said "worry" since 2008, so between that and the fact that he is generally very bu

Part of Marc Andreesen's tweetstorm yesterday said, "Worry." Andreesen hasn't said "worry" since 2008, so between that and the fact that he is generally very bullish and optimistic (to the point that when A16Z makes a bet they can put in an order of magnitude more money than other investors would), I began to stress out more than a little bit, especially having just closed our round. This may be anecdotal to my experience, but there was a time last year when the advice we were getting from mentors changed from, "Figure out how much cash you need to meet your next milestone and go raise that with a bit of cushion" to "Money is everywhere right now; get as much as you can and build the biggest war chest possible." Neither of these approaches are particularly wrong -- it would be weird to turn down money when it's on the table, but we opted to raise significantly less than what we could have raised, and keep our team where we wanted it instead of hiring enough people to become "sexy." Part of that is because we didn't raise at a super sexy Y-Combinator valuation and didn't want to give away the farm, and part of that was intentional. In short, we wouldn't know what to do with those people if we had them. To be clear, we still have plenty of money to get stuff done. We still can pay for all the tools we need, pay ourselves enough to not have to stress about cash, and can hire top talent. We just don't have more money than we know what to do with. We have three people working full-time on product right now, and that will grow to five in the next few months. If we had raised a $3 Million seed round (if you can still call that a "seed"), we would have felt compelled to go hire a dozen people. I can think of stuff we'd like to do, but it would probably be an absolute mess if we were building it all in parallel. There may be some companies for whom building a huge war chest makes sense, but the notion of raising money for the sake of raising money (because you can) seems odd and dangerous to me.

ianphughes 12y ago
You're correct that neither approach is wrong, especially since it might largely depend upon what type of business you're building. However, I think if you have no fear in your ability to raise funding, a business may relax in the real market discovery search. a super sexy valuation is always nice...but I think profitability is always in vogue. When I read this recent article[0] about what it MVP really means, it reminded me that some people in our industry forget that finding a market for your innovation is the lifeblood of long term success. [0]https://news.ycombinator.com/item?id=8356906 https://news.ycombinator.com/item?id=8356906
- austenallred 12y ago
  The advice to build a war chest is often quite pessimistic. For example, if you think the market is going to bottom out by the next time you're going to raise money, you might as well raise it now. With all else being the same, it would have been a whole lot easier to raise money in 2000 than at then end of 2001.
  - tim333 12y ago
    >The advice to build a war chest is often quite pessimistic I think cautious / sensible might be a better description. Few people look back regretting having too much money in the bank. As long as you can avoid blowing it on dumb stuff.
31reasons 12y ago
>> it would be weird to turn down money when it's on the table really ? Its not free money. You have raised rounds so you know it will dilute your equity.
general_failure 12y ago
The issue is some one else will take the money and build your product and give it away for free. At that point you die.
ganeumann 12y ago
> Andreesen hasn't said "worry" since 2008 Of course, he was two years late that time. 2008 was a great time to start a company or invest in one. Because downturns are in large part socially constructed, it is impossible to have an accurate consensus on a downturn until it has already happened. Market predictions are guesses.

ianphughes 12y ago

You're correct that neither approach is wrong, especially since it might largely depend upon what type of business you're building. However, I think if you have no fear in your ability to raise funding, a business may relax in the real market discovery search. a super sexy valuation is always nice...but I think profitability is always in vogue. When I read this recent article[0] about what it MVP really means, it reminded me that some people in our industry forget that finding a market for your innovation is the lifeblood of long term success. [0]https://news.ycombinator.com/item?id=8356906 https://news.ycombinator.com/item?id=8356906

austenallred 12y ago
The advice to build a war chest is often quite pessimistic. For example, if you think the market is going to bottom out by the next time you're going to raise money, you might as well raise it now. With all else being the same, it would have been a whole lot easier to raise money in 2000 than at then end of 2001.
- tim333 12y ago
  >The advice to build a war chest is often quite pessimistic I think cautious / sensible might be a better description. Few people look back regretting having too much money in the bank. As long as you can avoid blowing it on dumb stuff.

31reasons 12y ago

>> it would be weird to turn down money when it's on the table really ? Its not free money. You have raised rounds so you know it will dilute your equity.

general_failure 12y ago

The issue is some one else will take the money and build your product and give it away for free. At that point you die.

ganeumann 12y ago

> Andreesen hasn't said "worry" since 2008 Of course, he was two years late that time. 2008 was a great time to start a company or invest in one. Because downturns are in large part socially constructed, it is impossible to have an accurate consensus on a downturn until it has already happened. Market predictions are guesses.