Earlier this week, The New Yorker wrote a scathing piece on the VC industry with the above title (link in comments), looking at VCs through the WeWork debacle. If you were a cynic, you could write it off as cherry-picked writing in the “tech Vs media” battle that’s plaguing the Valley.
But it does highlight some issues with VC pretty well. Yet it isn’t saying anything new. The problems in VC are quite apparent — concentration of big capital with fewer funds, a power shift towards maverick founders, VCs becoming less confrontational to be seen as founder friendly, lack of principled & authoritative boards, a growth-only gospel, and an undying hope that continuous scale will trump everything else.
Planning to spend time every Saturday with 2-3 startups at idea/prototype stage, starting this weekend. If you’re a founder ideating or very early in execution & need a small sounding board session, hit me up. DMs are open.
Friends/network: Kindly help reach right founders.
Firstly, a Happy Dhanteras! Today it makes sense to talk about the “money” side of entrepreneurship. Many people have the needed skills, experience & passion to be great founders. Yet they’re unfit to be one. Why?
It’s to do with “founder financial viability”. While there’s an appreciation by most founders for a need to bootstrap & work without market salary for some time, usually they grossly underestimate this duration to be a few months till first round of funding arrives.
Failure is hard. But a lot of times founders make it harder for themselves by not being open about their & the startup’s struggles with their team till it’s too late. By nature founders are ever-optimists about overcoming their challenges, so wouldn’t like to spook the team needlessly. And they also would like to project an image of being in control. A feeling of being judged isn’t great. But an opaqueness about the startup’s fortunes slowly gets ingrained in the culture and the ‘team’ turns into ‘employees’.
Of late, have come across multiple early-stage startups making a basic accounting error. While digging their choppy monthly revenues, I realized these startups book revenues in the month cash was received, and not when the product/service was delivered. While this seems very tactical to founders early on, it’s important.
Examples – a SaaS startup charged & booked annual revenue upfront, while clients could cancel any month with refund.