Hi Saturn, OT RE: "A friend ...was promised by top tier VCs ...future funding would be forthcoming as long as certain business milestones were met. All the milestones were met, but now the VCs have reneged on their commitments since the B-B IPO market looks questionable now."
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A good VC will articulate this risk. A VC has to have the ability to do that because they have to be fiduciary responsible with the money they are investing. It's better to return money to investors then to misspend it.
Also, an entrepreneur should always have the attitude the money comes from customers - because that's what matters more than anything else. Also, customers don't take equity away, while VCs do. A VC is an excellent way for acceleration of growth and for initial deployments, but not something to lean on. I think most startups fail because they spend way too much money in the wrong direction. Sometimes VCs encourage too much waste. A good entrepreneur will not tolerate waste.
RE; "Now my friend is in a world of hurt, because he lost"
Ouch.
RE; "Anyway I admire your gutsy risk taking attitude."
It's not gutsy. Here's one of my favorite quotes (paraphased):
What is risk? An MBA student that was an executive at a public company replied, "Being an entrepreneur!" However, an entrepreneur said, "What is risk? Having one source of income! An entrepreneur has multiple sources of income from having many customers." Business owners have a set of beliefs that helps them reduce their risk or at least their perceived risk: I'm in control of my own destiny. I can solve any problem. I get stronger and wiser every day by facing risk and adversity. [Thomas Stanley]
I should really clarify that on SI, I never mention the other folks I work with and this is because I post on SI for my personal interests (recall that one of my main reasons for joining SI was back in the days when our startup was starting out and I was leaning on INTC investments, now it's the reverse). Since I go to extremes to avoid mentioning the other folks I work with, this probably gives a completely incorrect impression that I'm in it all by myself. The reality is, I'm the most junior founder out of a group of successful entrepreneurs, and we have a great board/advisors that are tremendously helpful.
RE: "You seem to be taking the right level of risk by being prepared for the possible downside."
I usually have a back up plan. When INTC was around 70, I had estimated my plans were okay unless INTC drops below 28 or 25. Because INTC has made such a huge drop, tomorrow over lunch I am actually going to briefly modify my back-up plans in case there's more to come (not because I expect this to happen, but only because I'm always prepared).
I also do the planning at work, which I really, really love doing a lot, and surprisingly to me the extent that everyone on the team loves it when I do this. Everyone gets really energized. It's a lot of fun.
RE: "the bloated dot.com stocks"
I invested a small amount in the dots (Yahoo, Broadcast.com, AOL, Amazon, etc.) awhile ago, but got out at an okay time - maybe a year ago or so?
RE: "A lot of younger people that I know, got completely wiped out during the last 9 months, because they could not fathom the downside risks."
But have they worked in high-tech for ten years?
Regards,
Amy J |
