
Founders Now Take the Money and Maintain Control - robg
http://dealbook.nytimes.com/2011/04/07/founders-now-take-the-money-and-maintain-control/?hpw
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pg
This is an important trend, and I think it's permanent, because it's not, like
valuations, driven simply by this being a hot market. The smarter investors,
like Sequoia and Accel, have realized that it actually works better to have
founders in control. Or more precisely, that the biggest outcomes (which
financially are the only ones that matter in the VC business) tend to come
from founders remaining in control.

See number 4 here for more about this idea:

<http://paulgraham.com/bubble.html>

and this for the present state of things:

<http://paulgraham.com/control.html>

(The reference in the 2004 essay to 26 year olds who are ready to rule the
world if they can find someone to handle the paperwork for them sounds like a
reference to Zuckerberg, but it isn't. I don't think I'd heard of him then.)

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abbasmehdi
This is very good to know! As a founder dealing with VCs I feel like a puppy
that fell in a shark tank.

It would be enormously relieving to know before a meeting that they are a) not
trying figure out how to boot me out of my own company, b) not going to force
me to make decisions that might make a quick buck in the short run but hurt
the company in the long run (if I'm in it for the long haul), and c) not going
to structure the deal in a way that they get unfairly larger returns on their
investment and leave me broke (reminds me of a line from the Kanye West song
Gold Digger - "Win the Super bowl and drive off in a Hyundai". ;)

~~~
pg
It depends on the VCs. So far only the top VCs have realized it's best to
leave founders in control. Below the top 15 or so, their thinking is 5 years
behind. Plus lower ranking VCs tend to be less scrupulous generally.

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asadiqbal
Why We Prefer Founding CEOs: <http://bhorowitz.com/2010/04/28/why-we-prefer-
founding-ceos/>

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chopsueyar
I am curious to see their exit strategies.

Say what you will about Broadcast.com or Myspace, but their founders did quite
well, giving up any delusion of building on online legacy through said
domains.

Take the cash and move on.

Particularly with Groupon, I really don't understand how a global company can
compete at a local level if a local 'Mom & Pop' groupon clone takes Groupon
on. Are the economies of scale there? (Please note I am talking about smaller
towns, not major cities like Manhattan, Chicago, etc.)

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gyardley
The daily deal space is technically simple and has low barriers to entry - get
a WordPress account and MailChimp, and you're more than halfway there.
However, driving traffic and sourcing deals is ridiculously capital intensive.

Local Groupon clones around the world have been doing more or less well
depending on their country's access to capital -- if there's sufficient VC
available, they can hold their own, but if not, they've been getting
steamrolled when a Groupon or Living Social enters their country.

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neworbit
This seems to be true nearly only in Silicon Valley. Do these sorts of deals
get done elsewhere?

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nhangen
I guess what stuck out to me about this article is why would Google want to
spend that much money on a social network that no one uses?

