
What I look for in a pitch - toptalkedbooks
https://news.greylock.com/what-do-i-look-for-in-a-pitch-866355bddb3
======
modi15
There is a difference between what VC's claim they look for, and what they
actually look for. What they actually look for is momentum and all these
conditions are 'bent' when that weird FOMO feeling takes over.

Anyone who thinks that all this data is pertinent to make the investment
decision will most likely never say yes to any startup.

~~~
AndrewKemendo
_What they actually look for is momentum and all these conditions are 'bent'
when that weird FOMO feeling takes over._

Yup, this exactly. MAYBE your team matters depending on who you are talking
with, but if some VC gets a whiff that you have 2MM users, are growing 5x MOM
for the past 6 months with 1% churn and high engagement they will literally
hunt you down to throw their money at you.

~~~
shanev
Can confirm. And they'll call you on your personal cell. VCs are tracking us
just as much, if not more, as we are tracking them.

~~~
elmar
_Gurley spoke again and again on not getting Google, being put off by its
valuation as many were back then. “[We are] looking for positive black swans
if you think you see one any price is kinda any price,” he said of the
mounting valuation mania around unicorns. “The Google round-- because I was
there went down-- $80 million-$90 million [pre-money valuation] with no
revenue and it seemed crazy. You can only lose one time your money the real
losses are the missed outcomes. You have to teach yourself to be more
optimistic than maybe you were programmed to yourself because there’s way more
cost to a false negative.”_

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staticelf
I don't understand.

> What’s the difference between a great idea, and a early-stage VC-fundable
> business?

Well, an early-stage business in my mind is a business that has some kind of
product or service already built or at least a prototype.

But hopefully they already have customers.

> If the customer base grows, then you suddenly need to build a company that
> can support that growth — an executive team of leaders and an organization
> that can operate and adapt effectively without the founder driving every
> decision.

In my mind I want to build a company with as little employees as possible with
as much profits as possible. Is the way to do that really by employing an
"executive team of leaders"? Isn't it just better to hire people that are
productive and don't really need supervision in order to get things done?

Later on the author writes about an IPO, which is something that feels so far
from the initial founding stage that it is useless to think about?

I wouldn't want to build a company if the only goal is to complete an IPO as
soon as possible but maybe that's just me.

~~~
jasode
As others already mentioned, it sounds like your preference is building a
bootstrapped company from day one without need for any VC funding. You're not
the intended audience for the author's blog post.

But to respond to your other questions...

 _> Is the way to do that really by employing an "executive team of leaders"?_

Yes. Many founders can't delegate and end up obsessively micromanaging others
which puts a ceiling on growth.[1]

 _> he author writes about an IPO, which is something that feels so far from
the initial founding stage that it is useless to think about?_

The IPO thinking at the very early stage isn't necessarily premature because
the founders may make early decision to offer equity (stock options) to
employee #2 instead of a higher market salary. (Because they have no money to
pay high salaries.) If so, they've basically chosen the fork in the road
towards an IPO. If the employee can't eventually sell the stock (liquidity
provided by IPO), there isn't much point to offering equity.

[1]
[https://en.wikipedia.org/wiki/Founder%27s_syndrome](https://en.wikipedia.org/wiki/Founder%27s_syndrome)

~~~
dasil003
Offering equity is nothing more than giving a stake in the company. An IPO is
only one way that can pay off, and these days probably not even the most
likely.

Of course VCs want you to believe that an IPO is the only successful exit,
because they want moonshots. But as a founder you need to keep your own
council as to the wisdom of pursuing growth at all costs.

~~~
jasode
_> Of course VCs want you to believe that an IPO is the only successful exit,_

Yes IPO is not the only way. VCs will also consider an acquisition by
Google/Facebook/Microsoft/Amazon at a good price to be a "successful exit" and
will explicitly go over those possible scenarios with the founder.

But there are other motives behind exploring the acquisition scenarios:

1) VC is actually asking in a more roundabout way if the founder has an answer
for the above giants cloning the feature and rendering his startup obsolete

2) VC wants to gauge founders' openness to sell to earliest buyer or has plans
to stick it out and stay independent until the end

I don't think Sequoia VC is complaining too much that WhatsApp never went to
IPO. They still got a good return when Facebook bought it.

Also, I don't think VCs are actually that single-minded about IPO-or-else...
especially for SaaS/enterprise type of startups. They will tell the founder
that the more likely exit scenario is a bigger company acquiring them. This is
not a big secret.

~~~
dasil003
You can also grant equity in a bootstrapped or angel-funded company where the
goal is not an exit, but to build a profitable business. The main thrust of my
point is that granting equity to employees is not only for VC-funded companies
in the typical moonshot case study.

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rafiki6
The feeling I get reading this, is that there's lots of groupthink and a whole
lot of luck among VC's...

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gwbas1c
> What’s the difference between a great idea, and a early-stage VC-fundable
> business?

I think we forget that a restaurant can be a great idea. It only makes sense
for a restaurant to be an "early-stage VC-fundable business" if it's going to
turn into a huuuuuuge chain.

But more importantly, the story of McDonald's rings true: McDonald's founder
didn't do the work of expanding the chain.

In the VC world, a successful investment has a 10x return on the investment. A
great idea may turn into a great small business with organic growth. It can
provide for a career without needing VC investment! This can be a small group
of consultants, or someone who builds an SAAS business.

(Edit) But, the thing about restaurant vs tech is that there's plenty of room
for 1000's of small burger joints to co-exist with McDonald's. It's a lot
harder for 1000s of "Joe's Git hosting" to co-exist with Github. Thus, it's
often harder to see how a "great idea" in tech can turn into a small no-VC
business.

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abakker
The cynicism in this thread makes me feel a little more confident that even if
there was a bubble, its going to deflate, rather than pop.

A theory of mine is that really what we're seeing is a change in attitude
about corporate governance and business building as the VC money from
_outside_ the SV bubble becomes increasingly relevant.

Discussion of founder-friendliness recently seem to back that up in my mind.
If FF attitude is going away, it is because of declining influence of the SV
venture crowd controlling the narrative about their own special sauce and the
right way™ to form a company.

Increasing diversity of LPs and VCs from outside SV are bound to have an
effect on the attitudes toward companies being founded. Posts like this seem
like justifications for existing behaviors, rather than a playbook based on
any evidentiary burden.

~~~
tweedledee
The average person in SV is a cynic but the average dollar is metered by VCs.

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hbcondo714
The link to the Blitzscaling[1] article interviewing Reid Hoffman is a nice
read. Good comparisons how Microsoft / Amazon / Google scaled up in terms of
company org and even more insight with PayPal's customer service growth
outside of Silicon Valley.

[1]
[https://hbr.org/2016/04/blitzscaling](https://hbr.org/2016/04/blitzscaling)

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johan_larson
I read that page as "Here are a bunch of reasons why our answer might be no.
Don't do this stuff. Don't talk to us if you haven't figured out these basic
issues." It's not about how to get to yes. It's about how to get past no.

You get to yes by already being pretty successful, or for complicated
subjective reasons that add up to apparent promise.

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gist
The 'no market need is key'. I am remembering when I started my first business
after graduating college. It was a retail business. The day before we even
opened people were knocking on the door wanting to come in. Everything else
that happened afterwords just flowed from that. It was really just
simplistically executing and making it happen.

