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'Fundraising Rounds Are Not Milestones' (ycombinator.com)
Michael Seibel, a partner at Y Combinator, writes in a blog post: I'd like to make the point that success isn't the same as raising a round of financing. Quite the opposite: raising a round should be a byproduct of success. Using fundraising itself as a benchmark is dangerous for the entire community because it encourages a culture of optimizing for short term showmanship instead of making something people want and creating lasting value. I believe founders, investors, and the tech press should fundamentally change how they think about fundraising. By deemphasizing investment rounds we would have more opportunity to celebrate companies who develop measurable milestones of value creation, focus on serving a customer with a real need, and generate sustainable businesses with good margins.
Multiple fundraising rounds indicates that the business has not found a way to make a profit.
Yes, there is a time where more money can expand the business, but multiple rounds for a startup are more likely to indicate a lack of success so far
I remember a conversation with our Columbia MBA founder stating our success was evident in our expanded workforce. No mention we had zero sales--zilch. I miss the good ole days :D
I've always said English was my second language. Had Romeo and Juliet been written in C, I might have understood it.
Damn right, business would be so much easier if it wasn't for that pesky customer actually wanting some product for his money. For fuck's sake, ain't there a law that we're entitled to his money without having to provide one?
And if not, how much do you think such a law would cost?
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
shut up and keep blowing that hot air into the bubble; we don't keep you around for your "conscience" or moral insights. i have a nephew to whom i just gave a modest $10M seed money to get into investing, and he goddam better have an IPO or two within a year.
"They were pure niggers." – Noam Chomsky
"Startup: A Silicon Valley Adventure" by Jerry Kaplan is one of my favorite books about Silicon Valley startup culture. Kaplan's pen-based computer company, Go Corp, got torn apart in the end from subsequent funding rounds as shareholders pushed the company in different directions. Company went through $75M in funding before closing.
Book: https://www.amazon.com/Startup-Adventure-S-Jerrold-Kaplan-ebook/dp/B00L0M749M/
Go Corp: https://en.wikipedia.org/wiki/GO_Corp.
In all the years I was running companies, I always felt like the need to beg for outside money wasn't necessarily a positive indicator. ;) I grew my businesses organically, reinvesting profit.
All of my several companies stayed small. Profitable, but in a very small way. I now see, probably too late, the value of *growth*. If you want to be successful in a big way, it's perfectly okay to focus on getting big first, if you have a solid plan for profitability. A major funding round is a landmark of getting bigger, which is an essential part of big success.
Specifically, in new markets - a new product category, a new geographical market, etc, the correct course is to quickly establish market share, borrowing as necessary, then shift to a sustainable, profitable strategy as the market matures. An example would be smartphones ten years ago vs today. Ten years ago, it would have been a good idea to spend (lose) a hundred million dollars in the course of becoming a significant player in the brand new smartphone market. A few years later (2012-today), you'd shift to making money from your strong position in the market.
Obviously getting confused and investing heavily to become a player in a shrinking market would be dumb. If a company is losing money in order to enter the desktop PC market, that's probably a mistake. But if they are "losing money" developing a practical quantum computer, that may be very good and a new round of funding that allows them to grow and do more R&D is good news. Tesla is a good example - they are losing tons of money, but for the purpose of becoming the dominant company in an expanding market, electric cars.
"deemphasizing investment rounds"
"making something people want"
"creating lasting value"
"sustainable businesses"
Sounds like Communism to me.
Your argument is logically unsound. With things built to last, you have the option to stick with it. You don't HAVE to either keep or replace them.
With things made with built-in obsolescence, such as cell-phones with unaccessible lithium-ion batteries (i.e. a technology with a limited lifespan), you're gonna be screwed in say 3 years whether you want to keep the phone or not. i.e. you don't even have the option.
I also don;t agree with your sentiment that newer tech is necessarily better. For example, call me a freak but I personally prefer cars with zero built-in technology. I don't want a car that is always connected to the manufacturer and spying on me, or has half a ton of expensive electronics that I had to pay for, can't fix myself, weighs the car down and goes obsolete. The problem is that no manufacteres even make a single car without all that crap anymore, so I buy old ones, back from the time when cars WERE built well, and to last. I currently have a 1997 Toyota 4 runner that I boutght usefd for 5k. it has 180k miles on it and shows no sign of stopping, and everything works.
Compare that to a 2008 car of a brand that will remain unnamed. It cost $115k new. Its bluetooth won't even talk to modern phones and they don't even make navigation DVDs for it since 2013.
Its a $115k car. Sorry but I'm not going to throw it away every 3 years.
Even toasters, a simple machine, have advanced.
But I seriously doubt that toaster engineers of yesteryear thought about obsoleting them to keep innovations moving into the market. The thermometer was the state of the art at one time so they went with it, unaware of when newer sensor technology might become available. The lifespan of the product was a tradeoff between cost and the market's perception of quality. When newer, non-toast-burning tech became available, older toasters would be replaced as customers perceived the additional feature to be worth the investment in a new unit. Nobody sits at home with a functioning 40 year old toaster burning their bread and praying for the day that it will go titsup just so they can buy a new one.
Have gnu, will travel.