4 ms·

As a founder of a company that's raised $25M combined over our seed, Series A, and Series B, I think Sam's coming from the right place. We raised a $2.5M seed r

by vecter 12y ago

As a founder of a company that's raised $25M combined over our seed, Series A, and Series B, I think Sam's coming from the right place. We raised a $2.5M seed round and a $7.5M Series A. At no point during our seed and Series A (the time period you're talking about) would it have made any financial sense for the founders to cash out even a penny. We felt this way because we had and still have genuine intentions of building a huge company, and every penny should be invested in growing the company. If we had instead felt differently, we would have tried to cash out some of our equity (which we didn't), and that should have been a red flag for investors to stay away. There's nothing wrong with trying to build a company to flip it for a few million in a year. Even better if you can do it without taking any outside money. If I were even an angel investor though, I would run away if I had any suspicion that that was the case. Also, if your company is worth $5M on paper due to investor term sheets, there isn't any really meaningful way you can achieve financial security unless you sell almost your entire stake in the company, which investors obviously wouldn't want to partake in. $5M from a term sheet doesn't meant $5M of liquidity. As an aside, I think your reply is incredibly immature, but I'm not going to use that as an argument for why you're wrong.

toasted 12y ago
Congrats. You guys have a great product and deserve your success. Tomorrow Youtube or Twitch could expand their offerings to include your business model and you may find yourself irrelevant within 6 months. I had a liquidity event last year in which I had the opportunity to sell either none, a part, or all of a holding in a product I strongly believed in for $6 million. I cashed out $2 million, kept 2/3rds equity. Since then, despite my belief in the product, it has lost most of it's value. I am very relieved (as is my girlfriend!) that I took (some) money and ran. When you are young you can feel a sense that success is inevitable and you want to keep doubling down, but there are a truckload of people in their late 30s and 40s and 50s for whom things just never quite worked out who would give anything for the security that a couple of million dollars provides.
- vecter 12y ago
  Congrats on the liquidity! There will always be competition. I'm a huge fan of both YouTube and Twitch. I spend most of my leisure hours watching videos on those sites. They may enter the space, but even if they do, they'll have a long way to go before they can make us irrelevant. If we were ever to become irrelevant, it would most likely be due to other things, not those players.
- ridgeguy 12y ago
  This. Your last paragraph. Absolutely.
- tptacek 12y ago
  Wait: doesn't the third graf of this comment answer your original question upthread? You cashed out 2MM, which came directly out of the hides of investors, who lost most of their investment. How is this a good story? When you take substantial money from an investor, your job is to earn them a return. That's not a moralism; it's definitional. I "got liquid" 2 years ago. I don't have to worry about whether I served the best interests of my investors, because we didn't take funding. If your instinct is to say "fuck VC", you shouldn't be taking their money either.
  - jacques_chester 12y ago
    > How is this a good story? A professional investor is likely to shrug and move onto the next thing if investments 1-9 of 10 don't pay out. The 9 founders who bet their lives on it, less so.
    - tptacek 12y ago
      This appears to be a story about someone who created no actual value walking away with 2MM. That's fine; it's not per se unjust. It's just not, like, a moral imperative that it happen that way. Also: speaking as someone who has been doing startups since 1995 and only recently had a significant success: I call total bullshit on the idea that founders "bet their lives". We're some of the most employable people in the world.

by vecter 12y ago

toasted 12y ago

Congrats. You guys have a great product and deserve your success. Tomorrow Youtube or Twitch could expand their offerings to include your business model and you may find yourself irrelevant within 6 months. I had a liquidity event last year in which I had the opportunity to sell either none, a part, or all of a holding in a product I strongly believed in for $6 million. I cashed out $2 million, kept 2/3rds equity. Since then, despite my belief in the product, it has lost most of it's value. I am very relieved (as is my girlfriend!) that I took (some) money and ran. When you are young you can feel a sense that success is inevitable and you want to keep doubling down, but there are a truckload of people in their late 30s and 40s and 50s for whom things just never quite worked out who would give anything for the security that a couple of million dollars provides.

vecter 12y ago
Congrats on the liquidity! There will always be competition. I'm a huge fan of both YouTube and Twitch. I spend most of my leisure hours watching videos on those sites. They may enter the space, but even if they do, they'll have a long way to go before they can make us irrelevant. If we were ever to become irrelevant, it would most likely be due to other things, not those players.
ridgeguy 12y ago
This. Your last paragraph. Absolutely.
tptacek 12y ago
Wait: doesn't the third graf of this comment answer your original question upthread? You cashed out 2MM, which came directly out of the hides of investors, who lost most of their investment. How is this a good story? When you take substantial money from an investor, your job is to earn them a return. That's not a moralism; it's definitional. I "got liquid" 2 years ago. I don't have to worry about whether I served the best interests of my investors, because we didn't take funding. If your instinct is to say "fuck VC", you shouldn't be taking their money either.
- jacques_chester 12y ago
  > How is this a good story? A professional investor is likely to shrug and move onto the next thing if investments 1-9 of 10 don't pay out. The 9 founders who bet their lives on it, less so.
  - tptacek 12y ago
    This appears to be a story about someone who created no actual value walking away with 2MM. That's fine; it's not per se unjust. It's just not, like, a moral imperative that it happen that way. Also: speaking as someone who has been doing startups since 1995 and only recently had a significant success: I call total bullshit on the idea that founders "bet their lives". We're some of the most employable people in the world.