HN user
We work with companies in the trenches helping them discover their business. We are comfortable with all aspects of a startup, technology, business models, partnerships etc and roll up our sleeves to do some heavy lifting. All hours are office hours. We invest our muscle and our money in the early days when the companies need it most.
We work with a very small set of companies at a time and we have a very high rate of getting companies to exits (over 90%).
Netbooks with great usability and gizmos that make for interesting apps(gps, touch etc) combined with a billing system that allows for subscription pricing for services would be as explosive as an iphone and the app store. It would be great way for companies to drive up the revenue beyond what they get from laptops today.
For companies that need significant teams and years to get traction this is a reasonable model that has worked for years. The VC’s are optimized for plays that have 10’s of millions in and 100’s out.
There is a new breed of companies that are far more nimble and don’t need 10’s of millions in. The main issue for these companies is how do they extend the team and get the (limited) capital they need to execute the business beyond the product.
At Tandem Entrepreneurs we have a model that works for such companies (there are probably others models out there as well).
We serve as the extended team for founders. The result is that the founders get to keep a much larger chunk of the company as the extended team doesn’t add burn. We also serve as the investors so there is no time wasted raising money or hiring.
While is it true that Zumodrive by default uses local storage as a cache, if you have enough space you can set it to keep everything local.
These slides seem to suggest that the exits will be smaller for while. They are missing one critical slide - one that tells entrepreneurs to look at their cap table and terms and if they don't make sense at a small exit, get recapitalized or go home (take off the suit, put on some jeans and apply for the next YC session)
You should check out Tandem Entrepreneurs. We are not an angel group but co-entrepreneurs. Have done a couple of YC companies.
True. Causality vs Correlation. I would imagine that many if not most big successes had an acquisition offer along the way but could it be that becoming a google, apple, microsoft or oracle is much more a function of good strategy, good execution, good markets, good timing and good luck than a function of an entrepreneur walking away from an acquisition offer?
We recognized this gap in the capital for young companies a while ago when we started Tandem Entrepreneurs and I could go on about this in great detail. However I will just highlight that the gap isn't just with financial capital, it is with human capital too. Beyond the founders, there are very few who would join these startups as employees? Why wouldn't a talent entrepreneur not just do his own? The basic equation of go raise some money and then go hire people breaks down.
Moving to risk, they key driver here is that investors must take themselves out of the equation when investing.The company must make sense even if they are not involved. This makes them cautious when things are still iffy. Tandem address this problem through a co-entrepreneurship model. We invest both human and financial capital. The human capital is to find our way to clarity together. This gives a greater comfort in taking risk. We feel much more like an entrepreneur.
Of course the Tandem model is not very scalable; we can’t even do the 30-40 that YC will do. We do a handful a year and only where we know our human capital will bring an edge.
I don’t think the VC’s have much incentive to do a co-entrepreneurship model, when they can make nice salaries doing what they do. It is obvious in hindsite that the short haul model of Southwest Airlines was a good business but it was a long time before the incumbent airlines paid it heed. I wouldn;t hold my breath for the VCs to change.