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Is lower goals really more founder-friendly? I'm not so sure. A bit perplexing, but in my experience, VCs who aim lower will often put far more stress and pres

by nxb 11y ago

Is lower goals really more founder-friendly? I'm not so sure. A bit perplexing, but in my experience, VCs who aim lower will often put far more stress and pressure on founders to meet short-term milestones and ramp up revenues immediately. Since the distant billion dollar goal is gone, it becomes all about the short-term. Aiming for a billion is a great filter too. At the early stages, you desperately need to be associated at least a few investors / founders / employees who absolutely believe you're on the path to something huge. Low goals allows more people to get involved who have extremely misaligned interests, who are often looking for something medium sized to milk, instead of something huge to help grow.

rubidium 11y ago
No. Great innovators are shooting for something they're pretty sure they can get to. They know what it takes, and know their market. It's by limiting your scope and achieving quality innovation that you get black swans. The success will typically be a surprise, not a plan.
rcarrigan87 11y ago
Generally I agree, but when it comes to VC this isn't so true. VC's looking for billion dollar exits are less patient which often times can prevent middle outcomes. Good businesses swing for the fences and end up outright failing instead of taking it a bit slower and really nailing their product/market.
- deleted 11y ago
  [deleted]
ThomPete 11y ago
Thats not how business work. You don't build a business by setting out to be Facebook. You build a business by setting out to create thefacebook for universities. Whether that will end up with a billion dollar company is a matter of way to many factors. Edit: I can see you edited your post a little. My response here is to what you wrote originally.
- smikhanov 11y ago
  > You don't build a business by setting out to be Facebook. > You build a business by setting out to create thefacebook for universities. Paul Graham is the only person in the world who can get away with spreading this, please don't repeat after him. In practice, the difference between building a billion dollar company and building a 10 million dollar company is marginal. You still need to constantly raise money, you will ruin your culture and so on; everything that OP describes as awful downsides of SV mentality is just as present. The author seems to hint towards bootsrapping ("figure out how to earn your first dollar", etc), but examples that he gives, with the exception of 37Signals are just smaller and less successful versions of Facebook with all downsides included.
  - ThomPete 11y ago
    Sorry not sure what you mean? Did he say that? There are plenty of other bootstrapped companies out there; I know a few of them and they are doing very well. Not sure what you mean with downsides. These bootstrapped companies have freedom to do whatever they want and they are mostly built on actual problems that others have not kept artificially alive by the funding game.. That in itself is worth quite a lot, at least to some.
  - fweespeech 11y ago
    > In practice, the difference between building a billion dollar company and building a 10 million dollar company is marginal. As someone who works at a company that was acquired in the 8 figures range... You don't know what you are talking about.
    - smikhanov 11y ago
      Care to elaborate on the difference between the two that you have observed? I'm genuinely interested.
      - fweespeech 11y ago
        * The value/importance of a 1% increase in efficiency can make or break team performance. 1% of an 8 figure company isn't enough to fund a multi discpline, multi-person team looking to improve efficiency for a year. The parent company literally employs a team whose sole purpose is internal efficiency/performance improvements where "single digit percentage" improvements are enough productivity to justify a multi-million dollar budget. Sure it "exists" in theory in a smaller company but it no one is paid to perform the job because the cost/benefit isn't there. * The mindset change in regards to accounting, legal risks, etc. * The amount of red tape & interaction with state/federal governments. No one cared what we were doing when we were just an 8 figure company. * We actually care about PR when it, frankly, didn't matter before. Sure, you "care" about these things as a smaller business but you don't have dedicated teams of people solely to manage them. Building dedicated teams solely to perform function X vs. having teams that are more general purpose is a huuuuuuuuge practical difference imo.
idlewords 11y ago
With lower goals you don't necessarily need VC
joesmo 11y ago
If you're not aiming for a billion dollars (or even hundreds of millions) in a software business chances are you don't have to raise VC money so none of the above matters. I think that's the main point of the article.

by nxb 11y ago

rubidium 11y ago

No. Great innovators are shooting for something they're pretty sure they can get to. They know what it takes, and know their market. It's by limiting your scope and achieving quality innovation that you get black swans. The success will typically be a surprise, not a plan.

rcarrigan87 11y ago

Generally I agree, but when it comes to VC this isn't so true. VC's looking for billion dollar exits are less patient which often times can prevent middle outcomes. Good businesses swing for the fences and end up outright failing instead of taking it a bit slower and really nailing their product/market.

deleted 11y ago
[deleted]

ThomPete 11y ago

Thats not how business work. You don't build a business by setting out to be Facebook. You build a business by setting out to create thefacebook for universities. Whether that will end up with a billion dollar company is a matter of way to many factors. Edit: I can see you edited your post a little. My response here is to what you wrote originally.

smikhanov 11y ago
> You don't build a business by setting out to be Facebook. > You build a business by setting out to create thefacebook for universities. Paul Graham is the only person in the world who can get away with spreading this, please don't repeat after him. In practice, the difference between building a billion dollar company and building a 10 million dollar company is marginal. You still need to constantly raise money, you will ruin your culture and so on; everything that OP describes as awful downsides of SV mentality is just as present. The author seems to hint towards bootsrapping ("figure out how to earn your first dollar", etc), but examples that he gives, with the exception of 37Signals are just smaller and less successful versions of Facebook with all downsides included.
- ThomPete 11y ago
  Sorry not sure what you mean? Did he say that? There are plenty of other bootstrapped companies out there; I know a few of them and they are doing very well. Not sure what you mean with downsides. These bootstrapped companies have freedom to do whatever they want and they are mostly built on actual problems that others have not kept artificially alive by the funding game.. That in itself is worth quite a lot, at least to some.
- fweespeech 11y ago
  > In practice, the difference between building a billion dollar company and building a 10 million dollar company is marginal. As someone who works at a company that was acquired in the 8 figures range... You don't know what you are talking about.
  - smikhanov 11y ago
    Care to elaborate on the difference between the two that you have observed? I'm genuinely interested.
    - fweespeech 11y ago
      * The value/importance of a 1% increase in efficiency can make or break team performance. 1% of an 8 figure company isn't enough to fund a multi discpline, multi-person team looking to improve efficiency for a year. The parent company literally employs a team whose sole purpose is internal efficiency/performance improvements where "single digit percentage" improvements are enough productivity to justify a multi-million dollar budget. Sure it "exists" in theory in a smaller company but it no one is paid to perform the job because the cost/benefit isn't there. * The mindset change in regards to accounting, legal risks, etc. * The amount of red tape & interaction with state/federal governments. No one cared what we were doing when we were just an 8 figure company. * We actually care about PR when it, frankly, didn't matter before. Sure, you "care" about these things as a smaller business but you don't have dedicated teams of people solely to manage them. Building dedicated teams solely to perform function X vs. having teams that are more general purpose is a huuuuuuuuge practical difference imo.

idlewords 11y ago

With lower goals you don't necessarily need VC

joesmo 11y ago

If you're not aiming for a billion dollars (or even hundreds of millions) in a software business chances are you don't have to raise VC money so none of the above matters. I think that's the main point of the article.