
Reid Hoffman's $30M bet: Send partners, not cash, to startups - e2e4
https://angel.co/today/stories/reid-hoffman-s-30m-bet-send-partners-not-cash-to-startups-10235
======
PragmaticPulp
My experience with investor-provided talent has been very poor.

Historically, the problem is that VCs tend to send "subject matter expert"
type consultants who give advice. Startups need someone to do the work more
than they need someone to give the advice. The VC-provided talent usually
generated more work than they solved with questionable returns for the
company.

Unless Reid Hoffman has cracked the code of sending the right people to get
work done, I'm suspicious.

~~~
skrebbel
FWIW, I had the exact same experience, and I lost faith in the "operational
VC" model. Hiring the right people is hard for everybody, and the chance that
a VC can spin up an "agency" style department that somehow has the best people
is really small.

The entire model attracts the kind of "consultants who give advice" you
describe. After all, people who want to get their hands dirty, i.e. people who
are a good fit with startups, are overwhelmingly going to want to work
directly for said startups.

We also had this super weird mismatch with perceived value. The operational VC
"billed" agency-style, so by the hour, at (to us) outrageous hourly rates. It
was like 6x what we'd pay a salaried employee doing the same work. We didn't
"feel" it as bad because it cost us equity, not money. But we'd have never
hired that agency for that money, if it was cash. The moment we realized that
this was the case, we stopped the collaboration. It was a costly distraction
and nothing more.

I'm curious if Hoffman found a way around this, but I don't see it in this
article.

~~~
commoner
Hoffman has no incentive to find a way around costly billing practices, since
it benefits his VC firm (Sweat Equity Ventures).

This kind of pricing, when implemented, is a clear case where the interests of
the startup and the VC are misaligned. It's up to the founders to recognize
that the "operational VC" model is a bad deal for themselves, and reject it
accordingly.

~~~
skrebbel
> since it benefits his VC firm

That's only assuming he doesn't understand the VC model, which I doubt. The
extremely power-law nature of VC investments means he can get better returns
if he maximizes the growth trajectory of his portfolio companies, than if he
maximizes the size of his share (by billing at high rates, i.e. at the cost of
potentially less steep growth). Unless he's a moron, he'll genuinely want his
sweat investment to cause tremendous growth more than anything else.

I think that the incentives are aligned as much as they are with cash VC
investments (i.e. closely, but not entirely, because the founder has all their
eggs in a single basket and the VC doesn't). I just think he can't pull it
off. :-)

~~~
commoner
I don't think the incentives (for VCs and founders) associated with cash and
"services" investments are equally aligned. The main reason is not the
potential for overbilling, which you mentioned, but because the VC gains a
significant amount of influence over the company when the company hires the
VC's close associates, which generates a conflict of interest.

But back to the billing: it is in the VC's best interest to acquire the
largest possible percentage of the company at the lowest possible cost. When
the VC is investing "services" instead of cash, and has control over the
pricing of the services, it would be in the VC's interest to provide a smaller
quantity of services in exchange for the same amount of equity, since this
decreases the VC's cost of investment.

You're right that it would not make sense for the VC to make a deal that is
egregious enough to choke the company's growth, since that would diminish the
value of the equity, but rational VCs would not intentionally make such a
deal. Also, since the services in this arrangement cost the company equity,
not cash, I think overbilling would only hurt the company through opportunity
costs (as the equity could have been used to obtain a better offer).

Whether it makes sense for the VC to overbill for services also depends on how
much equity the VC owns. Most of my above comments operate under the
assumption that the VC owns a small percentage of the company.

~~~
skrebbel
> _Also, since the services in this arrangement cost the company equity, not
> cash, I think overbilling would only hurt the company through opportunity
> costs (as the equity could have been used to obtain a better offer)._

This is a good point that I had not considered yet. Thanks, I agree.

------
cl42
I really respect the attempt at trying something new here, but framing it
against a traditional VC model might be a bit of a mistake (on the
journalist's behalf?).

I'd suggest thinking about this as an innovation on the _venture studio_
model, or later-stage accelerator model (e.g., YC's Series A cohorts). I've
spent the last few months toying with the idea of a venture studio and the
economics are hard to swallow for some founders and for later-stage VCs... A
model like this, where you get an operating, experienced serial entrepreneur
to help you and kick your ass... I like that a lot. It's different and worth
following, if nothing more.

~~~
bjornsing
> I've spent the last few months toying with the idea of a venture studio

Me too. :)

> and the economics are hard to swallow for some founders and for later-stage
> VCs...

Can you elaborate on that a bit? What model are you considering and what
constraints do you see?

~~~
cl42
Sure, happy to. The concern I've had others raise + I agree with is that
really great founders don't want to give up a portion of their founding equity
to a venture studio, and "hired guns" won't be as good at this stage. I think
if the venture studio founder has a really great track record (e.g., Max
Levchin) or access to a lot of capital, then this might be different.

If I were a Series A investor, I might take issue with the initial cap table
being so diluted by a venture studio, but I' not a Series A investor.

I'm being very pithy here-- happy to discuss at any point if you'd like.

~~~
staticautomatic
I think this model is a dream for a solo founder. I'd trade equity for a team
instead of cash without hesitation. If you don't have co-founders, you're
going to spend most of the money you raise on talent anyway, and you're gonna
have to give your talent equity to boot. You might well spend most of your
money on talent even if you do have co-founders.

I would totally jump at the opportunity to take something through the early
stages with a venture studio before raising money. It makes a lot of sense for
a lot of reasons-- just probably not to certain kinds of founders or
investors.

------
jl2718
Had a VC send me this a while ago. My feedback: these guys are all finance,
operations, and management. No actual builders. It would be great to outsource
these roles to keep control and save equity, but this seems like the opposite.
It’s still a great deal for founders because of the connections that VC
brings, but it’s likely a bad deal for the company, which is now run by people
abstracted from the vision.

For more info, see: “conjoined triangles of success”.

~~~
varjag
Historically, there never was a shortage of people willing to tell other
people what to do.

~~~
bjornsing
I can’t upvote this enough. I’m putting it on a teeshirt. :)

------
ghshephard
The best role that VCs have here is in introducing the startup to a network of
domain experts that have very specialized skills that a startup needs, but
that would be very difficult to find without good contacts. Then, ideally, the
VC steps back and lets the startup negotiate their own deal with these domain
experts. Doesn't have to be a VC though, back when telecom was a thing, rather
than hiring our PBX installer directly, I was able to track down a third
party-consultant who knew _all_ the players in the valley (having been doing
this sort of thing for 20 years), and we leaned on them to help us track down
bids, sort out the competing offers, and do last-and-final negotiation at the
table. Saved us around $150K on a PBX install over what our preferred vendor
would have charged us. Another great experience was when foundation capital
brought in our initial Facilities installer - they took care of everything -
second hand furniture, installing new drywall (less than a day), server rooms
(back when those were a thing), etc..

But, in both cases, the VCs contribution was in introducing us to great
people, who were ready to work.

This approach by Hoffman feels like the situation we had at Netscape, where we
had a Business Server division, spun off from main HQ, but they were required
to use our IT services, which installed systems/networks that made total sense
for Netscape IT, but probably were overkill for a small scrappy startup. The
incentives were in conflict.

------
AndrewKemendo
I'm not suggesting this is why Hoffman et al are going this direction, but
this is almost exactly what I would do if I felt that there was an epidemic of
portfolio companies not being completely transparent about the state of their
companies.

This gives the an amazing amount of "insider information" that, ostensibly a
VC would have but I have found in practice VCs don't have the ability to
really get from the regular CEO/operator updates and growth boards.

~~~
otoburb
>> _This gives the an amazing amount of "insider information"_

Couple this with a proof point that specialized teams like Latacora[1] are
proving themselves out so they figure why not also get the inside scoop while
turbo-charging their portfolio companies.

[1] [https://latacora.com/](https://latacora.com/)

~~~
tptacek
I'm interested in this for the obvious reason that I co-founded Latacora but
I'm not sure what you're saying. We don't invest in our client companies.

~~~
otoburb
I was referring to the idea of even more highly specialized VC/PE operating
partners managing functions which were traditionally seen as irreplaceable.

Latacora manages a startup's entire infosec function for a period of time
allowing founders to focus on more important parts of their business. I don't
believe anybody would have thought your model would be possible during a
startup's early stages without being managed directy by a tech founder, but
Latacora's sucsess invalidates this assumption.

If infosec can be managed externally, why not other sacred cows like
engineering, marketing or other key gaps where founders need help during their
initial year(s)? I think Sweat Equity Ventures is going to explore this
question more deeply with this model.

I understand that Latacora doesn't invest in client companies -- that's where
my analogy ended.

------
katzgrau
I don't usually cling to the status quo, but I do believe that the CEO must
have the ability to set the vision and get the "right people in the right
seats." Every management book in the last decade pays homage to this idea put
forward in Jim Collins' book _Good to Great_.

I guess this model presumes that the right people will be supplied by the
investor to fill predetermined seats. Does the CEO have a say in that? Is it
possible to fill seats without the CEO in the decision making process? If they
do have a say prior to investment, then why not raise capital and hire people
of that caliber regardless?

If the issue is that some founders with good ideas are simply clueless and a
team that knows better must be built around them, it seems conflict between
the CEO and the new team will be inevitable.

~~~
taurath
How do you build trust in your own team when an investor installs or pushes
people they have a long relationship with into your company? Where will
loyalties lie?

~~~
milansuk
They have to be 'A' players. They are loyal to the project/company. They don't
play "games".

~~~
toss1
True, the question is, how do we ensure that they are in fact A_Players, and
what is the recourse if they are found not to be A_Players or not loyal to the
project/company or are in fact starting to play games, or even just
inadvertently stray from the goals without mal-intent?

The tangle of thorns surrounding trying to get any kind of satisfaction
guarantee, or complete alignment of interests seems rather broad, tall, and
deep...

------
cheerioty
This sounds like a very bad idea. I hardly believe any VC has any great
builders just sitting around to jump on and off to the next thing. I'd also
not feel trusted but more like watched all the time. I'm lucky that all the
investors I had in the past always trusted my and the team's ability to build,
grow and push things forward without suggesting putting their people in. I
might be wrong, but it feels the only people that could think this is a great
idea are coming from the venture side :) It just sounds very wrong to me tbh.

------
brenden2
Maybe I'm missing something here, but it sounds like they aren't putting any
skin in the game. The VC will benefit from all of the upside while literally
taking none of the risk.

How could this possibly be good for entrepreneurs?

If someone approached me with this idea to help my startup, I would promptly
move that email to my junk folder and stay focused on building a great
product. If someone wants to invest money, sure I'd be happy to take it, but
the last thing I need is more "advice" from armchair experts.

~~~
clintonb
> The companies pay SEV in common stock shares, the same held by the startups'
> rank-and-file employees, and SEV's team, in turn, get paid salaries by the
> firm and also receive part of the firm's carry like a traditional venture
> model.

The VC pays for employees. The company pays the VC in the form of stock. The
risk to the VC is the stock they've received is worthless or worth less than
the cash they have paid employees.

~~~
unishark
So it's as if they give you funding in return for stock, but you can only use
that funding to pay salary to their guys and nothing else.

~~~
cwp
First, most of the money raised by early-stage software startups goes to
salary anyway, so that's not as restrictive as it sounds.

Second, you didn't have to do any recruiting. This is huge. Recruiting soaks
up the time of existing employees who could be working on the product. It
takes money for ads, sourcing, sponsorships etc. It takes calendar weeks or
months before you actually get somebody to start, which is a big opportunity
cost to a start up. And it's _hard_. If you have first-time founders, not
knowing how to recruit effectively is probably one of the biggest risks the
company faces.

~~~
nordsieck
> First, most of the money raised by early-stage software startups goes to
> salary anyway, so that's not as restrictive as it sounds.

> Second, you didn't have to do any recruiting. This is huge. Recruiting soaks
> up the time of existing employees who could be working on the product. It
> takes money for ads, sourcing, sponsorships etc. It takes calendar weeks or
> months before you actually get somebody to start, which is a big opportunity
> cost to a start up. And it's hard. If you have first-time founders, not
> knowing how to recruit effectively is probably one of the biggest risks the
> company faces.

That does actually sound really good, at least in the beginning. I think it
could lead to some awkwardness if the start up sees success and needs to
expand (which company are the VC funded employees loyal to?), but those are
good problems to have.

------
Ace__
Hello.

The investor provided talent could be a good approach to provide more relevant
and needed support. In reality on many occasions I have had to question what
the hell is going on:

1\. I have come across many of the talent, where what they lacked in talent
was compensated by strength of personal connection.

2\. People just sprouting some inspirational fluff, and whose attitude is I am
here, listen to me, do as I say, don’t question, without even getting into the
trenches.

3\. Then they start talking about the sacrifice and hard-ship, when they have
no real comprehension and haven’t walked that path.

4\. As for getting paid in equity, that is between startup and whomever,
although I personally don’t like it, and won’t do it.

5\. You can’t come in and work with early stage startups and charge them what
you charge more established startups, and certainly not what you charge VC or
family offices.

Drop your rates man, and come correct. There are enough leeches on, and
vultures hovering around, startups and founders.

Cheers, Ace.

------
milofeynman
I can't imagine any founder with a few years of experience with VC would want
a VC mole in their day to day business. This might work with early startups
who don't know any better.

Also will other VCs invested in the same business benefit or lose out from a
situation like this.

------
rdlecler1
Most founders will have no interest in this. (1) 90% of VCs add negative or
zero value. Okay maybe you have a part time employee but how much equity are
you really going to give up for that? (2) Top founders don’t need you. They
can attract their own talent at market rates and they don’t want someone
running their business. (3) Startups need to pay their people.

------
jayd16
This shifts allegiances in interesting ways. Key employees are no longer
employees but contractors hired by the VC.

As stated, the contractors are not startup employees but gain any research
knowledge are on patents. Do these partners still have non-compete contracts
with the start up or can they freely leave with IP?

It seems like this system allows the VC to pull support easily. You can't
force someone to continue to work for you. If the partners are time splitting
how would you approach that situation? Can you fire them?

Seems much more complex than cold, hard cash.

------
rexreed
This sounds like an acknowledgment of defeat of the "just throw a ton of cash
at it" SoftBank approach that is proving to really be a bust. If I'm not
mistaken A18Z also has that same philosophy of find the winner-that-you-want
and then throw-all-the-money-at-it-until-it-wins approach. Then dump it on the
market and hope it can stand on its own.

Whatever happened to invest capital in good founders with good products in
good markets and let the founders do their thing, with investors supporting
them? Or has that venture approach which seems to have worked from the 1970s
through the 1990s (and maybe early 2000s) stopped working well enough?

The 1970s-early 2000s produced some real companies providing real value and
are still around for the long haul. I'm not so sure about the post-recession
VC-inflated startups that seem to be more about big money and big egos than
big value.

------
bcrosby95
I'm somewhat dubious about this.

The sorts of technical decisions modern startups tend to make primarily make
sense if you're looking at the company from an "eat the world" point of view.
So if you squint hard enough at their decisions they look good from the POV of
that you have barrels full of cash and the only way you're going to succeed is
when you have thousands of people working for you so you may as well build for
that case from the start.

But if you take away those barrels full of cash those decisions no longer look
good. Maybe they can offer technical advice on how not to do this and plan and
build their product in waves to optimize each step in growing the company. But
in my experience there is a huge lack of people that can accomplish this in
the startup ecosystem nowadays.

~~~
cortesoft
I am guessing these wouldn't be the only investors... the cash would come from
some other investors.

------
vinay_ys
Worst thing that can happen in a startup is trust issues affecting focus and
ability to get stuff done. I see many conflicts that need to be addressed for
this model to succeed.

By having their people directly within the organization (potentially at very
senior operational levels), there is inherent information asymmetry that
favors SEV over founders and other VCs.

Founders will have to figure out how they will protect themselves from SEV
insiders screwing them over other startups in SEV portfolio.

I'm very curious to see what would be SEV's pitch to the talented people they
hire to deploy in these startups would be and how would the three party
contract between this talent, SEV and startup would be setup.

------
CalChris
I don't understand this.

Sending a partner is sending someone who is fully committed to the VC and not
fully committed to the startup. If the VC sends money, that money will be
fully committed to the startup.

VCs have entrepreneurs in residence, a bankable executive without an idea.
Matching an EIR with a startup is midway between sending a partner and sending
money. But still, this EIR isn't fully committed. They're committed to both
the VC and the startup, two masters.

This is just not a good fit at this time.

------
jimkri
I actually interviewed at a company recently that brought in an Exec because
the company had no direction and the founders were too inexperienced. (This is
what the exec told me) It was really interesting to hear his perspective on
the company and what needed to be done, compared to what others said during
the interview.

But from that experience one person will have a lot of trouble guiding a
company if the other execs are not on board with what they are trying to do. I
was going to join the company but was really worried about the inexperience of
the other team members, but I really liked the guy that the VCs brought in.

------
hobofan
That doesn't sound too different to what some VCs already do. E.g. from what I
heard about Rocket Internet from some of their portfolio company, they act in
a very similar way.

Yes, they also provide cash as part of the funding deal, but they will most
likely place one C-level executive in your startup. They'll also happily
provide you with more headcount than you probably need and if your numbers
aren't where they are supposed to be, you are expected to buy consulting
services from them, so in the end a good chunk of the funding amount flows
back to them. That's why a lot of their companies are as soulless as they are.

------
roosterdawn
At first blush, this looks like new lipstick on the old pig of the venture
studio. The issue with venture studios is the same as with corporate
"intrapreneurship" \-- lower rewards and lower risks. Savvier founders will be
more capable of either hiring the right talent and upselling equity, or having
access to enough cash to hire the right talent outright. Consultants won't
mind additional free leads, but good ones will do just fine without. So, the
unit economics just don't work out as well for savvy founders or consultants,
so you end up creating a market for lemons.

The problem with this model is that consultants will want to be paid in liquid
cash, companies will want to pay in illiquid equity, and someone would have to
step into the middle and establish valuations and liquidity. This is the
bigger problem with the increasing illiquidity associated with VC funded
startups. Savvier would-be employees or consultants risk adjusting shares even
further towards the direction of worthlessness and insisting on cash.

With that said, perhaps the main silver lining I see here is of VCs playing a
role in creating some kind of liquidity for shares. By establishing a three
party transaction like this pegging exchange rates between hours of labor,
shares and dollars, they're setting at least a stated valuation that allows
companies to pay with either shares or cash to prospective employees and
service providers, with the risk underwritten by the VC.

------
drenginian
This scheme disconnects the founders from responsibility for the outcomes.

God the politics that would arise from this would be soul crushing.

Imagine being in a company like this..., _who is really the boss_? Is the
founder in charge, or is the line of reporting to the VC via the injected
people?

The sense I getfrom a scheme like this is that the VC knows best and the
founders need the brains of the VC to succeed - that dynamic I think might
sink the company.

Imagine being a founder with someone injected by your investors constantly
second guessing you and telling you how to do it right. Ugh....

------
gt565k
I can see this work very well.

It's like a very hands on incubator where the VCs are basically providing
human resources and are invested in getting the start-up off the ground and
moving by providing exactly what the start-ups need.

Instead of giving start-ups cash to hire, they provide the expertise as
needed. Marketing gurus, tech gurus, generalists, etc... It can save money and
time, especially if the VCs have good technical leaders that have lots of
experience building products efficiently.

~~~
reustle
Agreed, I think the model could work very well and look forward to seeing the
results here.

Essentially, why throw money at me as a founder and hope I spend it wisely,
when you could instead lend me your vetted team members to help directly.

------
ticmasta
This seems like doubling down on the part of taking VC funding that most
recipients are the most concerned with; losing control and direction.

The post frames it as "having trouble guiding the company through growth"
which is a real thing, but I have to ask, who's setting the goals in this
model? It really seems like it could ultimately lead to more "successful"
startups of the type a lot of us really don't want to see.

------
decentralised
One of the first examples of this "expertise-sharing" approach I can recall
was from Toyota who sent some of their lean experts to help a NY charity run
more efficiently.

story: [https://www.nytimes.com/2013/07/27/nyregion/in-lieu-of-
money...](https://www.nytimes.com/2013/07/27/nyregion/in-lieu-of-money-toyota-
donates-efficiency-to-new-york-charity.html)

------
tempsy
Seems like it’d only make sense if you had a hard time hiring senior people
because of lack of brand and/or funding, but a startup would still need to
raise money so how does that fit in with this? Wouldn’t you still raise a
traditional round? And what would those investors think if you diluted your
stock with something like this?

------
victor9000
So they wanna trade equity for a couple of bags of hot air? That hardly seems
like a good trade-off.

------
altrum
This is a fascinating concept, but I wonder how it can impact the overall
culture of a startup. More and more, I’m inclined to believe that the initial
group (say, first 10-15 employees, including the founder) are the most
important.

This, in turn, almost looks like a more specialized version of contractors.
For those startups in the early incubation stage, I’m concerned this may
actually hurt their chances of possibly—prolific development.

If carried out properly, however, I think this has really great potential;
cash can often be a double-edged sword that also limits creativity and
innovation. An effective “mentor” in this sense, will be way more beneficial
than straight, cold, cash

------
facethrowaway
There’s a VC firm that already uses this model with their billion-dollar
investments. It’s called Benchmark. Several of their former portfolio company
founders can tell you all about how it’s worked out for them.

~~~
drenginian
How about you tell us?

How did it work out?

You can’t allude to something juicy and say nothing.

------
ChicagoDave
I'm not sure how I feel about this. On the one hand, every startup needs an
experienced mentor. In the past, my business attorney (M&A guy in Chicago)
helped me with all of my entrepreneurial endeavors.

On the other hand, startups need cash and the founder should really be enabled
to execute their vision. Someone full-time that can exert pressure may dilute
the original vision for their own ideas.

As a founder, I really want to be in charge of strategy, any pivots, and all
major decisions.

I wouldn't turn this down out of hand, but I'm pretty sure I'd value funding
more.

------
PopeDotNinja
If you want cash, ask for advice. If you want advice, ask for cash.

------
afinlayson
This works really well, if it's partnered with cash. Like a competitive
advantage of why you'd want to work with his VC company, but without money
it's worthless.

------
t_mann
Sounds a bit like the Silicon Valley version of McKinsey.

~~~
55555
how so? does McKinsey regularly get paid in equity for consulting services
instead of cash?

------
azinman2
very interesting. But they’ll still need cash to hire, pay rent, purchase
equipment, buy advertising, pay for bandwidth, create hardware prototypes, etc
etc. Is the idea you find the cash elsewhere? What happens if the partners
don’t get along with the founders or the current roadmap? How much influence
do they have? Can it be retracted if it goes poorly?

~~~
cl42
I'm not here to defend the model (just posted my own comment supporting it),
but just one note on the "getting along with founders". This is true for board
members, early employees, etc. and I don't think their model makes this part
any different.

Opex for the VC fund, on the other hand, I'm not sure about.

------
semerda
This assumes all problems are solved by throwing people at them.

Isn’t this also one of the common reason why startups fizz out burning
unnecessary capital too early? Grow grow grow at all expense.

I see the value in having someone else help with recruiting et al but also see
possible tension from burning unnecessary cash on headcount for the sake of
growth too early.

What I miss?

------
ticmasta
Fitting old onion post: [https://www.theonion.com/americas-homeless-want-a-
hand-up-no...](https://www.theonion.com/americas-homeless-want-a-hand-up-not-
a-handout-vs-i-w-1819594266)

Replace the Good Samaritan with Reid Hoffman and the homeless with startups

~~~
commoner
Hilarious piece, but I don't think the analogy is a good fit.

The Good Samaritan ("William Wolcott") is asking people to offer homeless
folks money in exchange for labor, instead of giving cash handouts without
anything in return. In contrast, Hoffman is offering "services" in exchange
for equity. Hoffman is not offering founders any money, and since VCs are for-
profit, Hoffman is not doing the founders a charitable favor.

It's also a disservice to founders to compare their startups to the homeless
("Ed Schenk"), since most founders are very much willing to put in work to
make their businesses successful.

------
ghc
Example of how "co-founding" a company with a VC can be a successful model:
[https://www.thirdrockventures.com/](https://www.thirdrockventures.com/)

The difference is Third Rock also sends tens of millions in cash, so...

------
haakonhr
Doesn't it sound a bit like private equity, but for startups and without skin
in the game?

------
zweep
When I had a VC-backed company what I really wanted was something like this...
where everything that was "commodity" would be delivered from the VC, who can
negotiate better terms for it. Office space, internet, payroll services,
accounting, recruiting, etc... all should come from a VC who can get it in
bulk.

Even one level deeper... if it's a consumer Web or enterprise SaaS startup...
it could probably be all built on the same tech stack. Why not have the VC own
60% of the business and provide the tech infrastructure and have only the
frontend and business logic implemented by the operating team?

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lowdose
And risk it all for 40% with another founder? It's not that AWS has a special
tier for VC's.

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zweep
It would make the chance of success more than twice as high if done right.

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yveys
Smart/sweat capital usually turns into a bad deal.

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ehead
This is an interesting concept. Another thing that would be interesting is if
recruiting firms started operating like this...

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sub7
I personally know some of the Talent partners hired at this firm and they are
A+ people with amazing candidate rolodexes.

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danbrooks
That sounds a lot like working at a startup!

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alexfromapex
Just like Russ Hannemann

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HacklesRaised
Being diluted by a round of funding is dispiriting!! But this!!

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say_it_as_it_is
This idea worked out really well for Friendster

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rjsen
How is this not just management consulting?

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godzillabrennus
[http://Hf.cx](http://Hf.cx) hackers founders

They pioneered this model.

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saadalem
What is this $30M for ?

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ykevinator
This is really insulting.

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anthm1988
Cynically, this sounds like a way to further concentrate the rewards at the
top and ensure rank and file employees get nothing more than a salary.

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dclowd9901
Wow, these CEOs and founders really actually do think they’re special. My
guess? VC substituted startups are far less effective than ones backed with
considerable funds. Why? With luck being equal, money is the real break.

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anthm1988
> Wow, these CEOs and founders really actually do think they’re special

Do you not realize what site you're on?

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irjustin
Finding good experienced, talent/knowledge is difficult, so I'm on board with
the idea here.

In place of cash seems backwards to me. Maybe if the companies that you invest
into are great cash cows but need talent to accelerate? But if that was the
case, you can usually afford talent.

A medium injection of cash + talent can go incredibly far in setting up your
investment for success.

