It is entirely possible to have an extremely good team and talented, knowledgeable people as leaders, but that doesn't make good businesspeople or imply a good vision.
Giving a "talented" engineer with no demonstrable business acumen tens of millions of dollars to build a profitable, sustainable business is sort of like giving a "talented" pianist tens of millions of dollars to build commercial real estate. Just because an individual has "talent" and knowledge in one area doesn't mean they have it in all areas.
> A good investor would have said to the Homejoy team "we believe in you and will back you in any viable business venture, but the home cleaning market is not a problem that will be solved by technology. Go and find something better and we will talk - here is $50K so you don’t starve in the mean time."
I think the investors think, "Hmm, I don't think the home cleaning market will be solved by technology, but the hell do I know? The last 3 times I said that, I was wrong, and my competitors made hella bank. Screw it, let's do it. They seem smart. They'll figure it out. And if they fail and make something better next time, we have the relationship."
I totally agree with you about the need for prudence, by the way. But I'm not a VC, and I haven't experienced the pressures and challenges that a VC must face. The same "it's easy to judge the man in the arena" idea applies.
VCs should take risks, but they should be evaluating risks otherwise why should they exist - if the limited partners just want to throw money around at random then they don’t need someone taking 2&20 getting in the way.
That's an efficient way to deploy a nine-figure fund if I've ever heard of one. I'm sure LPs will love it.
Actually why VCs think good ideas and good teams should come as a package has never been explained to me. The is no reason to think that the best teams will have the best ideas. If the limiting factor in success is the quality of the team then why let great teams work on anything but the best ideas.
You do not seem to understand how fund management works in the real world. A venture firm simply cannot deploy a nine-figure fund by writing $50,000 checks to keep on ice every entrepreneur it thinks has potential.
Furthermore, I don't see how you can conclude that founders who thought it was a good idea to "lock customers into discount rates that even with infinite retention won’t become profitable" represents a world-class team. The post-failure behavior of one of the Homejoy co-founders[1] is even more damning.
I don’t think the team at Homejoy was world class, but I also didn’t back them. We have to assume that the VCs that did back them thought they were a world class team or else they would not have given them the money they did.
I am more lenient towards delusional founders (especially young ones) than delusional VCs. The team at Homejoy would have done very little damage if they had not been backed.
For the record, my mom says I'm a wildly talented human being.
This is just a typical cognitive dissonance response (the author's, not yours) to "I swear they're smart! It's not that they're not smart that made them fail."