
Dear VCs: Kill the ‘warm’ introduction - mck-
http://dearvcs.svbtle.com/dear-vcs-kill-the-warm-introduction
======
jblow
Author has no concept of what it is like to take submissions to anything. As
someone who is a member of an investment fund that gets way less attention
than a top-tier VC, I'll tell you what it is like to have open submissions:

Almost everything that comes through that channel is complete garbage. It has
negative utility to read through that stuff because it makes you tired enough
that you might actually miss something good if you see it anyway, and it
predisposes you toward negativity regarding submissions (which is
psychologically unhealthy both for your quality of life and your relationships
with potential investees.)

Our hit rate from open submissions was 0.25%, that is, it took 400 submissions
to get one company in which we would invest. And that company is one that
likely would have come to us through a more-closed submissions process.

One of the most valuable things you can have as a business owner (startup or
no) is an understanding of context. Know what the situation is like for the
people you are dealing with. Know why they do things the way they do. This
author has not built that experience/skill. He is only seeing things from his
viewpoint as someone who wants money. Guess what, this makes him isomorphic to
every other random startup founder in which a VC is not going to invest.

Use common sense: VCs are financially motivated to find good companies to
invest in! If they think something will give them an edge, they are going to
try it. The fact that they don't take open submissions should tell you
something about the dynamics of the system. You should listen and understand
what that something is, because that understanding is valuable.

~~~
throwaway90446
Great. Here is a hypothetical for you: we are a bootstrapped company with
traction and earnings, but we're located in Armpit, KS and the only people we
are networked with are our suppliers and our customers.

We want to raise from a well connected firm like yourselves to launch our next
phase of growth. How, exactly, do we do that without already being part of
your referral network?

In anticipation of your answer, "you'll find a way" is a pure blank-out.
You've already closed your circuit. How do you expect the hypothetical "us" to
break in?

~~~
raminassemi
Here's one possible way:

1\. Reach out to people who got funded by the VCs you want.

2\. Ask them for a 10 minute phone call or if you can invite them for coffee.
Do this with enough people and some WILL take the time.

3\. Be awesome when talking to the founders (so they like you and believe
you've got the stuff.

4\. Ask for an intro.

5\. Repeat 1 - 4 until you get an intro.

Details: [https://medium.com/@Steli/how-to-get-warm-introductions-
to-v...](https://medium.com/@Steli/how-to-get-warm-introductions-to-
vcs-a8fbe3affd01)

~~~
ulfw
Just playing devil's advocate here. So you suggest people waste: \- a lot of
their own time researching say 25 random other companies, reach out to their
founders (who are in a completely different field of business etc) \- fly out
to San Francisco from Armpit, KS. Waste 5 of those 25 founders time for coffee
who actually agreed to meet with you even though you have nothing in common
with them \- then tell them that you're also not interested in them really.
All you want is a backhanded intro to their investors, which they hope they
will give you

Only so that the investor will get 2-3 emails from founders who really know
nothing about you other than what they found out in a 10 minute phone call or
a rushed 30 min Starbucks on 2nd and Folsom.

Shouldn't an associate (who actually gets paid for this job) do this, rather
than waste founders who are busy building their own companies?

Don't you think that system is broken?

~~~
raminassemi
"Just playing devil's advocate here." Not sure what you're getting out of
that, but I'm happy to play along :-)

"you suggest people waste: - a lot of their own time" I wouldn't call it
"wasting time" if it gets you the result you want.

"even though you have nothing in common with them" Being startup founders is
already having a lot in common.

"All you want is a backhanded intro" I wouldn't do any of this in a backhanded
way, founders will smell it. Be transparent and upfront.

"Only so that the investor will get 2-3 emails" The question was how to get
warm introductions... these are warm introductions :)

"from founders who really know nothing about you other than what they found
out in a 10 minute phone call" ... or from follow up interactions you've had
with them after that initial 10 minute phone call...

"Don't you think that system is broken?" Nope :) I think it's an imperfect
system - but then everything in the real world is.

------
glifchits
It bothers me when people try to tell businesses how to improve their
operations, purely for personal benefit. The point of VC firms is not to fund
your business, its for VCs to generate a return on investment. VCs surely know
that by not reading all of the applications, they are missing potential
winners. But they also know that getting strong introductions is a much much
much more efficient way of finding potential winners.

It is not the system's job to work for you, it is your job to play within the
system.

~~~
rdlecler1
That's sort of the point, isn't it? VCs have generated horrible returns.
Compare that to Y-Combinator which doesn't require a warm introduction.

~~~
bradhe
Realistically are YCs annualized returns any better than a top-tier VCs?

------
mbesto
1\. This isn't feasible. A partner at CRI once told me they get 5,000 deals a
year. It's simply impossible to sift through even more than that.

2\. If you're spending your nights shipping code, then you can probably get
users/customers. If you can get users/customers, getting warm intros is pretty
easy. So much so, that VCs will come after you (see the WhatsApp/Sequoia
story)

3\. I've struggled to get funding so I can empathize with the author (among
his other various random rants) but this isn't the right way to react to it.

4\. VCs often say (at least in SV) their biggest mistakes are the "investments
they didn't make". I know very few who said "shucks, wish I woulda have gotten
a warm intro from them".

The reality is pretty simple - show growth and you'll get VC intros. If you
spend your time complaining how the system is unfit for you, then building a
venture-based tech company is probably not for you.

~~~
soneca
YC doesn't get more than 5,000 twice a year?

~~~
dm8
YC's cheque size is $20,000 at max. Most venture firms that have > $100M under
management won't write less than $1M cheque. Why? Because that's how their
business works. So for institutional investors, it's a huge risk to back
someone random whom they don't know. That's why YC is successful.

Nowadays, VCs are rarely the first money in bank. So YC and other accelerators
act as a screening step for most institutional investors. And VCs can be
successful by writing larger cheques at a later stage. So win-win for VCs as
well as accelerators.

~~~
mck-
Just for the record, YC's check had increased to $120k since April

------
paulsutter
Your story would become compelling if you share your raw revenue growth graph
and tell us what market you are in. Without these, your complaints sound like
hollow whining. I mean this in the most constructive way possible. You could
even do this without losing your anonymity.

Lacking that information, we have no data to judge the reasonableness of your
complaint. All we have is the perspective of two experts, who both said "Too
early" (translation, "Zero interest. But do come back if your business does
magically turn amazing").

------
brianstorms
"It is practically impossible for a talented, but unknown founder to get a
meeting with a top VC."

Let's break that into four buckets:

1\. practically impossible 2\. talented but unknown founder 3\. get a meeting
4\. top VC

Ok, so what's the problem? By definition, top vc's are going to be the most
sought-after, and the ones who have the pick of the investment litter. So it's
going to be hard. Real hard. It's going to be, you got it, _practically_
impossible -- but not _completely_ impossible.

If you're such a talented founder, then one of your talents is knowing how to
figure out how to get through. If you don't have that talent then maybe you're
not as talented as you think? You can sometimes make up for it through sheer
persistence -- I don't mean by relentlessly calling the office of and sending
Cuban cigars to Gordon Gekko. I mean subtle persistence. Find ways. That are
clever. That show you're talented. Securing venture capital is a hack like any
other. Make it a clever hack. In my experience a "warm intro" helps but is not
necessary. Deep research helps more. Almost all of it is out there on Google.

But I also wonder, why do you need a "top VC" in the first place? There are
bunch of smaller VCs who are superb. If your product/service is so great
(read: traction, rave reviews), it will get on the radar of investors and
media.

Earn your VC, and it won't be practically impossible.

------
joshu
Build something interesting and they will come to you.

I get 10-15 pitches a day. Most are unworkable. I reply to about one a week.

~~~
yurylifshits
Joshua, what is your take on strong (but not famous) teams in big markets with
great looking version one but before meaningful traction? Under what
circumstances do you take these meetings?

~~~
joshu
I might. Depends on the area etc.

Cold pitches almost never have working prototypes.

~~~
yurylifshits
That's encouraging :-)

We are working on mobile education. I see you investing in Codecademy and
AltSchool.

If education+mobile is in your interests, we can get an intro to you. We have
~15 mutual connections.

------
diego
Man, you're selling an investment to a VC. If a stock broker cold calls you to
offer you an awesome deal, you hang up. Venture capitalists are just like you
in that sense; they have a practically infinite number of investment options
and a limited amount of time. They owe you absolutely nothing.

------
yesimahuman
I think you give VCs too much credit for being good at being bad. In my
experience it's more that many VCs are just mediocre at their job, much like
any other field. I think the great ones don't really fall into some of these
traps, but their associates and junior partners do.

As an example, I recently had a VC continuously email me for months which I
ignored (mainly because I knew we weren't a fit and didn't want to waste
either side's time), only to set up a meeting and have them blow me off. I
found it pretty funny.

The reality is there are a lot of companies on the radar for these firms, and
it's a lot of work to individually vet each one. They are only human, and I
would just try not to take it personally and keep on kicking ass.

This is why it takes even great startups months to fundraise. All we hear
about in the news are the rare super-hot startups which skew our perception of
the fundraising game. The reality is fundraising sucks for most startups and
you just described why (not that they can't improve though).

------
philipjoubert
It appears the author doesn't realize that VCs are normal businesses trying to
turn a profit. If there was a profitable opportunity to find "99.99% of
talented, unknown founders" by accepting cold emails, then some VCs would
start doing it.

I would guess the reason they don't is because the authors assumption is
wrong. If you're a talented, driven founder with a growing startup then it's
not really that hard to get a meeting with a top tier VC.

The problem with accepting cold emails is the sheer volume. Unless there is a
standard filtering process, partners will waste too much time with crappy
startups.

A solution to this would be to create a standardized format (kind of like the
YC application) which founders could submit to multiple VCs. Fortunately,
AngelList is already busy solving this problem.

------
code4tee
If the author wants people to be impressed there needs to be something to be
impressed about. Build an actual product with actual value and actual adoption
by the market (even just a smallish test pool) and people will talk to you. If
it's just an idea, well those are a dime a dozen.

VCs want to invest in real products. Does passing over a bazillion pitches
about concepts mean they might pass up the next 'big one'? Sure, and the VCs
know this. Their job is not to find the next big one as much as it is to make
a solid positive return for investors and the best way to do that is focus
primarily on real products showing something to be impressed with.

The effort wasted on writing this ranty post could have been put towards doing
something to impress the VCs and have them calling you. Just saying.

------
te_chris
This feels like the definition of wishful thinking. If I, a nobody, tend to
dismiss cold enquiries then why on earth would someone in high demand not?

------
zbowling
VCs are not like your local bank with all the time and willingness to hear all
the potential business plans and pitches that can be thrown at them. Also
their system isn't just spawned out of some kind of elitist mindset to keep
you out of the in-crowd. Just keep working at it.

------
Ologn
In 1996 I worked at a small Internet Service Provider. We were known for being
one of the cheapest (if not the cheapest) ISP's in New York City.

Back then if you wanted a machine on the network, you'd get a 10MB uplink to a
T-3 (which was better speed than a lot of the other low-tiers). A port fee was
$500 a month to be able to transfer 1 gig a month, up to $3000 to transfer 100
gigs a month. Then you'd have to lease a machine as well.

Nowadays, I can get a 125MB uplink on Linode, with 2000 gigs allowed a month -
for $10 a month. No lease for a machine - the VPS comes with it for free - and
is much faster, has more storage, memory etc. than anything I could have
gotten for a reasonable price back then.

It costs next to nothing to put a product out nowadays. Google Play and the
App Store. 100 million people want to download your app from Google Play? No
worries - it's hosted on their infrastructure.

Aside from that things like Github are around. There are open source libraries
that do everything, and with foreign function interface you can use libraries
from almost any language. A lot of your coding is done for you. A lot of what
I do is hooking two libraries up together, put a UI on it, and then maybe a
little bit of my own code. Voila, a product.

I have no idea why anyone who can code would feel dependent on investors.

Get in a hurry to where you, or you and your co-founder(s), are "ramen
profitable", and then devote yourself 100% to building up revenue and getting
product/market fit.

In high school, I used to have to sneak into the Columbia University
engineering library to read the 1978 Bell System Technical Journal articles
about how Unix worked. Now I can go down to my local bookstore and there is a
shelf of books on it. I don't even have to leave my home, I can get the
information on my PC. Not even that - all the information I want to know about
Unix is on my phone at any time I want - which runs Unix.

It's like people are looking for someone to tell them "no". Every day that
passes by, it gets easier and easier to build a product that hundreds of
thousands of people want. You don't need a lot of capital, it's practically
free. You just need to know a little programming and get to it. Of course, the
more programming you learn, the easier it will be.

------
anigbrowl
_QQQ was featured on national TV. A junior partner at Firm #1, who happened to
watch this feature, reached out to set up an ‘introductory’ meeting. Junior
Partner #1 ended this introductory meeting by stating that QQQ was
“interesting, but too early” for Firm #1. I was strongly encouraged to “keep
Firm #1 in mind for (our) upcoming Series A.”_

Having already been rejected by Firm #1 previously, perhaps you should have
employed some strategy of your own at this point - display ambivalence about
Junior Partner's overtures and make Firm #1 chase _you_ a bit instead of you
chasing _them_. It's a truism of human psychology that people feel more
intense desire for what they can't have. Another approach might have been to
make it clear that QQQ was a time-limited opportunity and if Firm #1 was not
inclined to invest, then the door would be closed to them, forever. Nothing
personal or spiteful about it - just the filter that you use to put a cap on
your time investment in any given lead.

As written, and notwithstanding some good points, this comes across as 'I have
____ and ____ desirable qualities, so why can't I find love?' And like love,
if it's obviously the #1 thing on your mind then that means you must be coming
up short. That's a problem because it's difficult for potential prospects to
get a sense of who you really are behind the neediness. So if you want
investment capital, talk about your organic growth strategy or your vision for
employee-owned cooperative, like firms X and Y that found success that way. If
the VC wants to talk money than you talk product, if the VC wants to talk
growth you tell them you're very excited about the upside potential and then
change the subject. Leave first. If you're at dinner (which you should be) let
the other person order dessert, then get coffee and the check for yourself.
Either pick up the tab or let the VC insist, but beat a path out of there.

------
dm8
I'm not a VC.

1\. Not all startups/business can be venture backed. Venture backed startups
are expected to have 10x returns within 5-8 years of financing and swing for
fences.

2\. If you kill warm introductions then how are they going to do screening?
There is so much noise that it's humanely impossible for institutional
investors find right kind of signal (i.e. venture backed businesses)

3\. Financing is hard in every situation. Be it mortgage for your house or
financing your startup.

4\. If you build something successful and fits into the definition of venture
backed business, they will come.

5\. Accelerators YC/Techstars/Angelpad successfully hacked this warm
introductions problem by inviting everyone to apply. These accelerators will
make warm introductions for you.

------
lpolovets
I'm a VC, although by no means a "Top VC". (Well, not yet!) I fully agree with
the spirit of the post, which is that getting a warm intro shouldn't be
_required_ to talk to a VC. What I will say is that most cold emails are not
very good. When they are, many VCs, including myself, will reply and meet with
the founder and treat it like any other startup pitch. Just last week, I
talked with 3 founders who contacted me with an intro.

Requiring a warm-intro is simply an easy way to filter our a bunch of noise.
FWIW, I would say that ~50% of warm-intro pitches that I see are good, and
maybe ~5% of cold pitches are of a similar quality. About 1/3 of the pitches
that I get come in cold.

~~~
iandanforth
Is there any automated process by which people can apply for your time? Are
there tools that serve the VC space to make filtering easier and to broaden
your net?

~~~
lpolovets
There's stuff like DataFox and Mattermark to help with filtering. Also, bigger
firms often have associates who do a lot of filtering work.

There's no automated process to apply for my time. Emails work fine. :)

------
softdev12
The author makes some really good points. It is incredibly hard to meet a
well-connected VC if you, yourself are not well-connected. It's the classic
double bind.

However, the article seemed to imply that somehow the "goal" was raising money
from a VC, instead of making a great product. There were tons of companies
started before the VC industry even existed. Businesses can and should be
self-sustaining - creating profit that can fund operations. Just because most
tech companies nowadays are money losing for years, doesn't mean this has to
be the case. And if the company is profitable, it can exist without a warm
introduction.

------
wmichael
The replies to the letter are silly. NOBODY has done a conclusive study
showing that "warm" introductions result in a better deal success ratio.
Ageism is the same thing. Until just 2 weeks ago, nobody had done a study to
refute the rampant and overt ageism- of course, now we all know that companies
founded by folks in their 40's and 50's have a substantially greater chance of
succeeding. So not only is the ageism wrong, it is not remotely "best
practices"\- something VC's owe their investors. Neither is the "warm"
introduction.

------
w1ntermute
Regarding the lack of email contact info on VC sites, you can usually find
ways around this. For example, the a16z contact page[0] has generic email
addresses that probably just point to black holes. But a little bit of
creative Googling will tell you that Marc Andreessen's email address is
pmarca@a16z.com. I couldn't find Ben Horowitz's or Chris Dixon's, but based on
their Twitter handles, I would guess they're bhorowitz@a16z.com and
cdixon@a16z.com, respectively.

0: [http://a16z.com/contact/](http://a16z.com/contact/)

------
robryan
I wonder how many deals that are already series A size opportunities are out
there which have so far avoided the typical tech startup route of picking up
seed funding/ advisors which will avoid any introduction issue?

It certainly is possible, such as bootstrapping to early profitability or
taking some money from those outside of regular crowds. The question would be
I guess is this group big enough that it would make sense for VCs to put
people on to sift through the volume of pitches to find those companies?

------
kenrikm
It's pretty simple you need one of two things: Growth or Connections. I you
don't want to play the connections game then metrics talk.

Both don't hurt.

As a note: this place (the valley) is small.. you run into people you know
randomly and often. You're not going to run into these people or meet people
who can help you or that you can help (it goes both ways pay it forward) if
you're sitting in your home in Wisconsin or Florida or Oklahoma. Boots on the
ground make it a reality.

------
jwilliams
I think there is a pervasive culture that investment is a game that is almost
completely separate from actually executing. Like the killer pitch deck wins
the money. Or the best elevator pitch. Or most persistent founder.

There are a lot of stories that validate this, so I can see why. However,
these kind of narratives are terribly distracting for a company. It's trite
stuff, but stick to the fundamentals.

------
staunch
From
[https://twitter.com/sama/status/530880914708897793](https://twitter.com/sama/status/530880914708897793)

> _whenever i hear VCs say "we will only meet people with a referral" i think
> "more opportunity for YC!"._

------
chrisyeh
VCs are your customer. You are trying to sell them your stock. Do retailers
make their customers do all the work? Or do they serve up buying opportunities
on a silver platter?

If you don't put effort into selling, don't act surprised when you don't sell.

------
kumarski
Ycombinator does a great job of abstracting investor emotional shtuff. At the
same time, I think 'signals' are bad.

For example, just because a founder is non-technical and ivy league, is no
reason to fund them or meet with them. Seen it happen too many times.

------
fphhotchips
Are you based in the US? Yes? Congratulations, you have access to a pool of
investors practically unrivalled by any other country (or, at least,
Australia). At least you have the opportunity to get warm introductions to
them.

~~~
capex
Is it harder in Australia?

~~~
fphhotchips
Sorry for the late reply, but if you see this, yes. The VC/Angel culture just
isn't here, and the money that is available is handled _very_ conservatively.

------
api
While he's right, I imagine VCs get such an unbelievable volume of cold e-mail
that sorting through it is really time consuming to the point of
impossibility.

~~~
soneca
Because they use a generic email address.

Why not create a smart form, YC style, that take some time to fill and provide
the most important data about a startup for them in an easy to read format?

A simple "submit your AngelList page" might go a long way.

~~~
mrjaeger
Full Disclosure: I work for FundersClub

We had this problem for a long time. We had a generic cold inbound form and
got such an abundance of email with no good way of filtering it that we just
gave up on it. However we realized that with a bit of focus we could turn this
into a good way to get some great deals we would have otherwise missed.

We now again have an founder application form
([https://fundersclub.com/founders/apply/](https://fundersclub.com/founders/apply/)).
It asks some generic questions followed by more specific metrics based
questions depending on what type of company you are (Consumer, B2B etc.). We
can then filter based on these to surface what we believe to be good
opportunities to the top. Would love any feedback on the metrics we ask for -
we try to keep them as data focused as possible, as once you start asking more
qualitative questions you go right back to being overwhelmed.

~~~
anigbrowl
I'm just curious - why don't you delegate the cold pile to junior staff and
make them do brief (39 min) writeups of incoming proposals? Film production
firms (my field) are like VCs in that they receive many awful proposals and
only a few of the good ones will actually work out, but they employ people to
read incoming scripts and work up short summaries to indicate which ones might
be worth their personal attention.

------
azifali
The silicon valley culture where every VC demands an introduction sucks. I
concur.

------
graycat
My short response would be:

How to Jerk the Chain of a Seed/Early Stage Venture Partner.

Consider US _information technology_ (IT) venture capital (VC): It is easy to
understand that the author of the original post (OP) is frustrated, etc., but
my guess is that with reasonably high probability can get a response from a
seed/early stage VC partner if (1) have a product/service developed, about
ready to get users/customers and revenue, and that a VC partner can "play
with" and (2) send the VC partner some e-mail with a short description of the
project together with an easy way, say, just a URL, the VC partner can use to
"play with" the product/service.

Then the VC partner may evaluate the potential of the project by pretending
that they are a user/customer, that is, evaluate how well many users/customers
will like the product/service. If the partner likes what they see, then more
communications are reasonably likely.

For a little more, since most VC firms do publish their phone numbers on their
Web sites, can call and, give name, say are an entrepreneur, and ask for
"office of" a VC partner are interested in. Then may get a person, often a
really sweet, young woman, and explain a little of the work and ask how can
send e-mail. Often can send e-mail to the woman. Also, often, if call the VC
firm after closing hours can leave a message on the phone of the VC partner.

Should, of course, check the interests of the VC partner to see if those
interests do cover the project. And likely should pick a VC partner without
very many current investments or board seats.

For a little more, once the results of a project have obtained some publicity
and traction, VC partners may notice and call the entrepreneur.

The key in all this is just (1) above, that is, have the project that far
along.

But, more generally, for such contacting a VC partner, my view is that an
entrepreneur with a project about to get users/customers should try hard not
to accept equity funding and, instead, just continue to own 100% of the
business. I explained more in

[https://news.ycombinator.com/item?id=8640126](https://news.ycombinator.com/item?id=8640126)

Whatever VCs are doing, tough to expect them to change if they are getting
good returns on investment (RoI), but as in

[http://www.avc.com/a_vc/2013/02/venture-capital-
returns.html...](http://www.avc.com/a_vc/2013/02/venture-capital-
returns.html#disqus_thread)

actually on average VC RoI is poor.

My view is that US IT VC is missing out big time on much bigger RoI. The main
reason is that VCs just will not fund the work before there is a
product/service ready to "play with". Much of the reason here is that VCs
can't/won't evaluate plans for such work, and likely the main reason here is
that they do not believe that such evaluations could be at all accurate in
predicting financial success.

So, essentially all the work in IT the VCs see is what could be done by 1-3
guys in a garage before equity funding, and this situation is for high RoI
just devastating. Moreover, about all the VCs can do when evaluating such
projects is to look just superficially, at only the cover and not really the
book, and the superficial look hurts evaluation accuracy and, thus, average
RoI.

Part of the extreme tragedy of this situation is that quite broadly in our
applications of the fields of science, technology, engineering, and
mathematics (STEM), we know quite well, thank you, how to plan projects,
present the plans just on paper, and evaluate the projects, just from the
paper, with high accuracy, much higher than that of IT VC. Or, we can do such
evaluations for the largest engine, ship, or airplane ever built, the tallest
building or dam ever built, the longest bridge, tunnel, canal, or pipeline
ever built, etc. Heck, the ancient Egyptians planned the pyramids, and we
don't see a lot of evidence of a lot of partially completed, failed pyramid
projects.

Here's an outline of something IT VCs could do that huge evidence from history
clearly shows would yield much higher Roi; the outline is in steps (a)-(d):

(a) Problem.

Pick a good problem, one where the first good or a much better solution will
be a _must have_ , not just a _nice to have_ for many users/customers, so that
in total, from number of users/customers and revenue per each, can build a
business worth $1+ billion.

Here is an example of such a problem: Find a safe, effective, cheap one pill
cure for any cancer.

For this _must have_ , there should be very little doubt; if there is much
doubt, then pick another problem. In particular, we do not want to struggle
over _product-market fit_.

(b) Solution.

For the needed solution, do some STEM research. We're talking real research
here, of quality that would qualify as a Ph.D. dissertation in a good research
university, a paper in a good journal, maybe a grant from NSF, DARPA, etc.
Yes, there is training for such research, the Ph.D. degree. Right, mostly here
we're talking a good research university STEM field Ph.D. prerequisite.

With the research, want to create some _proprietary intellectual property_ ,
_secret sauce_ , STEM technology difficult to duplicate or equal, that is the
crucial, core of the solution and the business and, for competitors, a severe
barrier to entry. Protect the work as a trade secret (with corresponding
software securely locked up inside a server farm) or patents.

For this solution, there should be very little doubt that it is the first good
or a much better solution to the problem. If can't find such a solution, then
return to (a) and pick another problem.

It should be possible to give a quite accurate evaluation of the solution and,
thus, the project from the research for the solution presented just on paper.

(c) Software.

Since we're considering IT, with Moore's law, etc., to provide the
product/service to users/customers, write the software for servers and user
devices. Given the solution, the software should be routine.

(d) Launch.

Now we are sure we have the first good or a much better solution for a problem
where such a solution is a must have.

Get publicity, users/customers, revenue, earnings, and a company worth $1+
billion.

For (a)-(c) here, there are some great examples from medicine and US national
security.

For the second, there was the SR-71: The problem was to do surveillance of the
USSR. The intended solution was an airplane that could fly at 80,000+ feet, at
3.0+ Mach, for 2000+ miles without refueling. Kelly Johnson of the Lockheed
Skunk Works showed up with an armload of papers showing the plan for the
solution. The project was approved, and for years the SR-71s flew as designed.

Another example was Keyhole, basically a Hubble but before Hubble and aimed at
the surface of the earth. Another example was GPS.

Technology? Nearly beyond belief. Value? World changing. Batting average? Very
high, much higher than VC.

Gee, if the US DoD had wanted to sell the results of Hubble or GPS, wonder if
they could have gotten any revenue? Are we talking _must have_ here? How 'bout
that?

Of course, the work in (b) and (c) needs accurate evaluation, but the US is
just awash in people that can do that in the best research universities, via
editors of appropriate peer-reviewed journals, via problem sponsors in NSF and
DARPA, etc.

After (a) and (b), it really is possible to know with quite high accuracy VC
firms should look to fund projects just after success with these two steps.

That's how to do (a)-(c) of projects. To be sure the launch in (d) works, do
the work as outlined in (a)-(c).

