Interesting funder's point of view | Hacker News Reader

Interesting funder's point of view

32 pointstomerb18 comments

Yossi Vardi is the biggest known Angel of internet start-ups in Israel. One of his famous success stories was ICQ which was funded by him and sold for $287 million dollars in June 1998.

I read an article about him in the Israeli "The Marker", which points out a few interesting things about the entrepreneur - funder relationship.

I've translated a saying of his that was quoted in the article:

"When I hear a pitch by an entrepreneur I look for a few things in them. First, they have to be very talented. I'm not interested in good or great entrepreneurs. I want them excellent. They have to be nice people, since some investments don't ripe in early stages. I always tell my wife that in case the investment fails in early stages, at least we gave a "scholarship" to a good guy and not to some idiot. Moreover, they have to be focused on the arena I like which is the internet. If they meet those criterias, there is a good chance I will invest in them. What exactly they are doing is less important. Business plans are a wonderful part of science-fiction. They are developed for people who love sausages and don't know what are they made of. How can one conduct a 'due diligence' on something that is only in his mind."

I would love to hear your thoughts, Tomer.

Sounds to me like this is pretty much the YC investment strategy: Fund good teams, and ignore the business plan because that's almost certainly going to change anyway.

See, there's one thing I don't really understand about the "fund good teams, ignore the business plan" strategy: can you ever consider a team to be "good" if they can't present you with at least a plausible business plan? Yes, the business plan will likely change, and being adaptable enough is important, but can a team be "good" without demonstrating the most basic ability to plan ahead?

Perhaps if they have a good track record, e.g. past exits.

I think he does not mean don't build a business plan. The process of building a business plan is a great exercise for any startup. It helps them figure out a lot of holes in their plan or lack thereof.

In a startup things are constantly changing so having a good team means they will do anything to overcome any obstacle. It is a quality that far exceeds any business plan.

Seems like "build one to throw away" doesn't apply only to programs.

I'll second that writing the business plan is extremely helpful for the business itself. Like almost anything else, when we applied high standards to what we wrote, we uncovered a lot of unchecked assumptions, and good ideas, and manner of argument for your business. In the process of writing the plan, we also created it. We managed to nail down many of the engineering milestones we'll want to hit before our next round, went through a half dozen design iterations, including the introduction of two technologies that may be significant breakthroughs, created a multi-physics computer model of our engine and drivetrain, located automotive design and CAD contractors who've been providing us great schematics and visual concepts, and have clarified the entire development, procurement and hiring schedule.

Not overly sure if it's comparable, but anyone watch X-Factor/American Idol?

Making the comparison: 1. great team = likeability of the singer as a person 2. great business = their ability to sing

How many singers have 1. but still fail? How many seem to have both and still fail?

I think you have to be top dog in both areas.

But then I'm not an investor :p

I love this guy. Yossi keeps it so real. He says he's lost so much money funding "great" business plans that he doesn't give a shit about them anymore.

He invests in great teams. That keeps it simple.

i would consider finding great people harder than finding a good business plan or idea. you're essentially banking on the "diamond in the rough". hoping the people you find will produce something outstanding. it's risky both ways, and i guess you have to go with your instincts.

Well, this sucks for all the shy guys here. Guess we'll have to go to Diana King for our funding.

Nice doesn't exclude shy. I know lots of shy people that are really nice. Usually you just have to get them one-on-one and spend five minutes talking about something they find interesting and poof the shyness is gone.

I guess it also depends on how good you are at assessing people as opposed to plans.

Given how hard people find interviewing, I'm not sure it's that obvious to spot great people.

I guess he doesn't considers people who have a hard time interviewing as "excellent" as he said.

Sorry, I meant "interviewing" from the perspective of the interviewer. Reliably selecting good people to join your company is often thought of as a difficult task.

He's trying an analogous evaluation of the founder - and giving it more weight than the paper plan. Possibly quite reasonably, but it seems the success of the approach relies heavily on something people seem to find difficult.

Absolutely true! Great companies are a result of smart and hard-working entrepreneurs who form great teams. I believe being nice does not exclude neither the confident nor the shy types. But being confident should not mean cocky or arrogant. In a start-up you should be willing to learn everyday and sometimes you won't hear nice things. Those who learn and adapt fast, and are also nice thrive and build great companies.

I must say that it's the first time I see a funder not really worried about the business plan. And I must agree 100% with what he says; If the team is excellent and passionate with what they are building, then there is a good chance that something great will come out of it. How you will make money from it becomes almost secondary, since it will show itself during development.

Isn't it obvious?

Common sense is not common.

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