This is all very good but I think it misses a kind of obvious element, in that costs are real and very material in terms of trying to reach customer satisfaction.
It's borderline glib to infer that a startup 'should just do that thing to make it great' instead of seeking funding, because getting to the nice metrics costs money, not just blood and sweat.
This is a very 'software' kind of thinking, and one that applies to the kinds of products that are amenable to value capture at an early stage.
Stripe and AirBnB take a % of the transaction, right from the beginning, they're low-overhead and and 'early revenue'.
Google was the Search Engine 'everyone at Stanford was using' before they took their first check. Kudos to them for doing AdSense to make money, but still, they were 'out of the gates' before the money.
Most startups require material investment before they can get to revenue, let alone metrics, particularly those that require critical masses, or any kind of labour, working capital, esp. hardware.
Imagine this kind of thinking with amazing new Hair Restoration technology - imagine the clinical trials, FDA approvals, maybe it involves some costly tech, new distribution models, or serious economies of scale. Or frankly any Bio/Medtech.
Some industries are really hard to break into without already functional products and enterprise credibility, a lot of companies do not want to deal with fluffy startups with 10 'kids' that could evaporate the next day.
And this is doubly true for Europe, on the Continent you get about as much respect as the glory of your Tech Conference Booth. It's changing, but still.
In this context (successful) YC-model companies represent a pretty thin slice of startup world - those situation which there is the most hype and returns for investors immediately, which is super rational from an investor perspective, but misses other opportunities.
I should point out, to be fair to YC, they definitely invest in a lot of companies that don't fit that paradigm to well, so it's more a criticism of the ethos than their material investments.
It is very good advice these guys give, and every entrepreneur should contemplate it, but there's just too much of a reality gap in there: "Hey, if you have a great situation with customers who love your product, then you can get investors with leverage" - yes, we get that.
In reality, a ton of good companies need 'food', along with the bad ones.
I believe this is where perhaps 'truly model investors' come in, and that should be their ability to decipher between the 'junk' and those that actually do make sense but for which the metrics don't yet demonstrate.
To be slightly more blunt, investors who want in after the 'hot metrics' are basically just basic financiers, more like 'Early Stage Private Equity' or 'Small Scale Investment Bankers'. In an era where capital is cheap, everyone has money and everyone can see what 'hockey stick graphs' look like.
Again - it's very good advice, but I think it needs context.
All of this is true. I would just add one thing - if your peers are raising money, it's often suicidal not to accept money in the current market. The anecdotes about Google, Facebook, AirBnB are very hard to transfer to startups which are not lucky enough to have network effects to exploit.
It's borderline glib to infer that a startup 'should just do that thing to make it great' instead of seeking funding, because getting to the nice metrics costs money, not just blood and sweat.
This is a very 'software' kind of thinking, and one that applies to the kinds of products that are amenable to value capture at an early stage.
Stripe and AirBnB take a % of the transaction, right from the beginning, they're low-overhead and and 'early revenue'.
Google was the Search Engine 'everyone at Stanford was using' before they took their first check. Kudos to them for doing AdSense to make money, but still, they were 'out of the gates' before the money.
Most startups require material investment before they can get to revenue, let alone metrics, particularly those that require critical masses, or any kind of labour, working capital, esp. hardware.
Imagine this kind of thinking with amazing new Hair Restoration technology - imagine the clinical trials, FDA approvals, maybe it involves some costly tech, new distribution models, or serious economies of scale. Or frankly any Bio/Medtech.
Some industries are really hard to break into without already functional products and enterprise credibility, a lot of companies do not want to deal with fluffy startups with 10 'kids' that could evaporate the next day.
And this is doubly true for Europe, on the Continent you get about as much respect as the glory of your Tech Conference Booth. It's changing, but still.
In this context (successful) YC-model companies represent a pretty thin slice of startup world - those situation which there is the most hype and returns for investors immediately, which is super rational from an investor perspective, but misses other opportunities.
I should point out, to be fair to YC, they definitely invest in a lot of companies that don't fit that paradigm to well, so it's more a criticism of the ethos than their material investments.
It is very good advice these guys give, and every entrepreneur should contemplate it, but there's just too much of a reality gap in there: "Hey, if you have a great situation with customers who love your product, then you can get investors with leverage" - yes, we get that.
In reality, a ton of good companies need 'food', along with the bad ones.
I believe this is where perhaps 'truly model investors' come in, and that should be their ability to decipher between the 'junk' and those that actually do make sense but for which the metrics don't yet demonstrate.
To be slightly more blunt, investors who want in after the 'hot metrics' are basically just basic financiers, more like 'Early Stage Private Equity' or 'Small Scale Investment Bankers'. In an era where capital is cheap, everyone has money and everyone can see what 'hockey stick graphs' look like.
Again - it's very good advice, but I think it needs context.