Hacker News new | comments | show | ask | jobs | submit login

I don't know about Qwiki, but these sort of seemingly unlikely capital rounds are often something that happens to well connected startups with business management savvy people behind it (either in the company's executive team or among its early stage investors). These people simply know how to raise money and spin businesses around, and they have access to sources of capital that the average hacker doesn't.

To a hacker trying to get a complex project off the ground on pocket money, $8 million sounds like a fantastic sums, but there are many circles in which investing this amount of money in people you're connected to is trivial, regardless of market mood. It's not even necessarily the case that this is bad investment. If the investors believe, for whatever reason, in the company's executive team, it's probably because they are counting on them to somehow grow the company into a viable business. Many such companies, for example, will be spun into consulting, services or b2b companies you'll never read about on techcrunch, but which at the very least make a modest return on their investment. The fact that Qwiki is very unlikely to become the next huge internet phenomenon doesn't mean that it's a bad investment - it only has to not die and grow into a business worth more than its current valuation.




Unfortunately, there's only so much that a great team can do with a really lousy idea. One of the things pets.com was supposed to have going for it was a CEO (Julie Wainwright) who had been successful at multiple previous ventures, who'd been specifically picked out for the post by one of the VCs (Ann Winblad of Hummer Winblad). That wasn't enough to keep the business going.


pets.com is an amusing piece of Internet history, but it is also a rounding error. For every pets.com there are thousands of companies that lost a (relatively) small sum of money and hundreds that made a small return.


actually I think pets.com might have been Hummer Winblad's first losing investment. in any case they admitted afterwards that it was a mistake on their part -- they were worried they were getting to the opportunity late and overcompensated. so it really was a classic bubble situation.


And that's the problem. Being good at "raising money and spinning businesses around" doesn't mean these guys are good at making new technologies or constructing profitable businesses in the long term.


Of course, but this is extremely common. Most money changing hands in the form of investments isn't very productive. Ultra successful hacker startups are the exception, not the norm.




Guidelines | FAQ | Support | API | Security | Lists | Bookmarklet | DMCA | Apply to YC | Contact

Search: