

The product lens - olivercameron
http://cdixon.org/2012/12/02/the-product-lens/

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gavanwoolery
You can put any hat (or lens) on it, but the amount of money raised tells me a
few things * :

1) If you can't build your product with a few $100k (or less), it is probably
not that great of an idea. Google, Facebook, Myspace, Amazon, Apple,
Microsoft, and more were all built on very small initial budgets. And no,
these were not edge cases - thousands more successful startups were lean from
the start.

2) If your business plan demands millions in financing, its probably because
you are buying customers / marketing. I know very well the value of both, but
none of the aforementioned companies launched with marketing budgets. Step 1:
build prodcut; step 2: scale. You may also be building some magical super
computing cluster that will revolutionize search, but we all know how Color
turned out.

3) You have raised an excessively large round because VCs benefit from it.
Schemes like "2 and 20", "10x exit" and so forth mean that VCs try to
overvalue companies from the start. Raising capital is also a good way to
dilute founder equity. VCs also _have_ to make investments, or else their
capital collects dust. This means they will try to invest as much as they can
in promising companies, just so they aren't forced to invest the cash on less
promising ones.

TL;DR: it is in a VC's best interest to pump as much cash as they can into
your company (assuming they think they can flip it for a profit). Always start
small, test for traction, then scale.

*Keep in mind we are talking about software here.

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rdl
This might be why it is so depressing when someone with deep domain knowledge
and insights in a product area (say, hardware, or security, or something else
like that) decides based on a perception of the funding market to do something
else entirely, like another local/social/mobile photo sharing site for cats.

I know of at least one awesome company with great engineering founders who
were for some reason working on a consumer application for a while, before
pivoting back to a harder engineering problem. They've been quite successful
so far at the latter, which sort of justifies how sad I felt when they were
doing the other thing.

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talGX
What Chris is saying is that there are two different lenses. It's almost
impossible to have a correlation between these two - your customers are
looking for different things than your VC. I always split my product into 2 -
the main one for customers and a second one for VCs (with a more vision,
sometimes different business model). When I raised VC money I used a different
product demo than the beta which was already in use by the customers.

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kloncks
The best investors should understand this too, which is why you should pay
special attention in the financial lens to go after only smart money.
Otherwise, you could be pushed for more vain metrics rather than the real
ones, like product & customers.

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Empro
36 points and not a single comment? Well, I'd summarize it all by just saying:
focus on your customers more than your investors.

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mattdeboard
High upvote:comment ratio is a quality indicator, IMO.

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Danieru
Or voting cabals; it goes either way.

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j0j0r0
or, the most important 3 things about product development: customer, customer,
customer

