We seldom acknowledge it but I think the truth of the matter is that a lot of people become entrepreneurs because they want the recognition, the fame and the status.
As silly as it is, taking VC money gives you that in a way that is much harder to achieve with actual tangible success. You might be killing it with your product but carefully explaining your company metrics to someone over dinner is seldom more impactful than saying you took $10M from Andreeson-Horrowitz.
This is not entirely unreasonable as most people realise they are unable to judge the success or otherwise of early stage companies (even VCs struggle). Telling someone you were invested in by a great VC tells them that someone who knows their stuff things you're great. It's a marquee endorsement.
If you'd asked me whether I wanted the status I'd have always said yes. At the same time though I never acknowledged it in my life-calculations. I always wondered why I gambled on a big outcome when I knew a smaller outcome would (financially speaking) make me very, very happy. I doubt there are many people who can point to the happiness bump from the second $30M.
Acknowledging that recognition was one of my goals made it all of a sudden easier to rationalise decisions that, while optimal for my investors were actually totally sub-optimal for my personal financial utility. One of those decisions may well be having investors in the first place.
This is a really interesting point. To give an example, one of my friends in that scene thinks that 37signals is probably "not doing that well." I can only guess this is because they aren't raising tons of VC and having their name plastered all over TC.
Your friend is simply wrong. I think buying a house in italy and commissioning a custom super car is evidence that he doesn't know what he is talking about.
Sorry to post this here, but jsprinkles' profile is empty.
@jsprinkles: do you have a blog or website? Really enjoyed your xip.io comments (http://news.ycombinator.com/item?id=4082017) and would like to keep up with your adventures. On a related note, it would be nice if HN had RSS feeds for specific user submissions and comments.
I prefer to stay semi-anonymous, but a few people know who I am (it wouldn't be rocket science to deduce). When I posted under my real name folks I did not know would come up to me at conferences and argue with me about things I had said on Hacker News. People tend to get offended by my remarks because I disagree with a lot of this culture, so it's also easier to just keep that separate from my career.
Fund-raising is only a means to an end. And sometimes it's an excellent way to scale a business after the business has been figured out. But taking VC money just because it makes you feel cool and high-status is a terrible risk-reward decision. You're trading the next 4+ years of your life and a huge chunk of your company's value for bullshit short-term prestige.
I think entrepreneurs should always maintain a tunnel-visioned focus on hard results and performance, if you absolutely kill it and dominate your market, everything else will follow. Fame, recognition, and status are for tech scenesters and bloggers - not startup founders.
As silly as it is, taking VC money gives you that in a way that is much harder to achieve with actual tangible success. You might be killing it with your product but carefully explaining your company metrics to someone over dinner is seldom more impactful than saying you took $10M from Andreeson-Horrowitz.
This is not entirely unreasonable as most people realise they are unable to judge the success or otherwise of early stage companies (even VCs struggle). Telling someone you were invested in by a great VC tells them that someone who knows their stuff things you're great. It's a marquee endorsement.
If you'd asked me whether I wanted the status I'd have always said yes. At the same time though I never acknowledged it in my life-calculations. I always wondered why I gambled on a big outcome when I knew a smaller outcome would (financially speaking) make me very, very happy. I doubt there are many people who can point to the happiness bump from the second $30M.
Acknowledging that recognition was one of my goals made it all of a sudden easier to rationalise decisions that, while optimal for my investors were actually totally sub-optimal for my personal financial utility. One of those decisions may well be having investors in the first place.