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Comment by staunch | Hacker News Reader

The difference between a live prototype and a quirky working product is very fuzzy. Intelligent people can easily disagree. What's a good self-test?

How is quitting a very high paying, very stable, job for a much lower salary at a company that might not make it not taking a big risk?

A VC telling someone to use their savings? Why would someone pay for salaries and servers and then go to a VC later? The whole point of VCs is for them to take on the major financial risk in exchange for a large chunk of the company.

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>Why would someone pay for salaries and servers and then go to a VC later?

We did this exactly. The investment gave us capital to out-pace our organic growth once we had shown that the business had potential at a small scale.

There were two great benefits:

1) It forced us top figure out how to generate revenue from our business very early on.

2) Our valuation ended up being much higher than it would have been earlier in the company's lifecycle.

I can only speak for the first two categories... but if you look at this paragraph from the article:

> You have some people who are using the product, but who are probably not paying for it. It is a new idea. Perhaps a revolutionary idea. No one else is doing it. And it works.

That last bit of "it works" is really important. It doesn't mean that it works technically, what it means is that it works for people as a solution to the problem, that there is a good product/market fit if you want to use lean startup terminology.

I think the sooner people realize that everybody wants easy money, the better off they will be. For me personally, if I was at stage two (working product stage), I would never dream of giving up equity unless it was the last resort.

Many ideas and business models take more than just a working product to fuel through an exit, that's where VCs can add a lot of value.

> The whole point of VCs is for them to take on the major financial risk in exchange for a large chunk of the company.

VCs disagree. They think that they're in the biz of finding things that are less risky than they seem.

85% of venture backed startups aren't operating after three years. I'd say they are taking pretty big risks.

A VC has a portfolio to balance that risk over. I don't. Asking me to take opportunity risk is fair, but asking me to pony up my savings is a bit much I think.

Not that I wouldn't do it necessarily do it, but I sure as hell wouldn't respect a VC that told me to do it instead of giving me money.

A willingness to pursue an idea without investors is probably a trait that VCs like to see.

It's like asking a bodyguard to take a bullet for you, just to prove that they'd really take a bullet for you.

It would be less off-putting if they said "You put in the first $150k and build it for six months and if we invest then we guarantee that you can take your $150k off the table (if you want too)."

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