“Entrepreneurs get distracted by fundraising, so I just did that part first.”
betabeat.com
betabeat.com
It is like a Hollywood diva saying (after getting into the 'circles'): "Women's hands get ugly because of the lot of washing and cleaning, so I've bought myself people to do that for me. What matters is how great I am: I can do this because I am great."
Venture capitalists are a parody of themselves. You have to have social proof, or you have to be already profitable to gain their attention. Basically they give money to people who do not need it.
A rich founder is less likely to take an early exit, and more likely to want to swing for the fences. Think of @ev refusing to sell Twitter to Google as an example.
Also, an already successful entrepreneur is less risky from a VC standpoint. He was able to endure the process of taking a startup from zero to something. He's more likely to have "what it takes" to succeed.
That said, this guy is not acting rationally by flaunting his ability to raise money. Like he admits, he doesn't have a team yet. My due diligence in applying for a job as an early employee would uncover this article, and it would be a red flag concerning the personality of a potential boss.
I don't know the answer.
Netflix, redfin, and twitter are 2nd acts by "already successful" folk. Yahoo, HP, Amazon, Google, Disney, Apple, Cisco are by first-timers. (Disney had several failures under his belt.)
I don't know about Walmart. Sam Walton had been a regional manager for another chain but I don't know for sure that he hadn't been a "successful entrepreneur".
To answer your question you want the distribution of outcomes for both sets. VCs have to have good estimates of that data.
Not necessarily a bad way to attract some good hackers though. Ideas are like babies, no-one wants to feed and change someone else's so I guess the one thing this phenomenon has going for it is that he'll attract developers who think they can sire the company vision.
He'll end up with a lot of cooks though - will probably lead to a bit of a frankenstein product
He told me during his first week, the team all just sat around a table and thought up ideas to pursue for days on end. The only way I can fathom that being possible if they were a pre funded team. I'm pretty sure they split up within a year or so of him working there.
Yeah right, thats what a good founding team is for that actually HAS an idea on what to build.
Lets face it, no first time founder or anyone without a big hit like vimeo would ever get a deal like that.
But I hope that aspiring entrepreneurs raising funds realize what an incredible anomaly this type of capital raising is.
Heaven forbid we get a whole slew of entrepreneurs saying "I heard that you can raise money without a business". It's bad enough we have people running around trying to raise money for features, not even companies. This takes it back even further, which is probably fine for him, but not for the people I fear are going to take this to heart.
A good analogy is the music industry. Lots of bands just starting out want to be signed to a major record label. They do everything they can to attract the attention of major record execs. A very tiny minority are successful and actually gets a contract, but they end up making almost no money, because they weren't able to negotiate from a position of power. The alternative is the band who sets up their own sales and distribution and builds their audience. Now they can dictate what deals (if any) they take. They don't need the major label anymore, but they're in a position to take advantage of it, if there's a favorable deal there.
Suggesting that entrepreneurs raise money early is bad advice almost always. Regardless of the initial deal you might be able to get, having a more developed product with traction will get you a better deal.
Just build it, eat ramen noodles and take a second job if you have to. Meet with investors early and often, but not to ask for money. Let them see the trajectory of what you're building, so that when you want/need to raise money, they know you and see how far you've come and what you're capable of. There seems to be way too much focus on raising money early, and articles like this only exacerbate that.
I just about spat out my coffee until I realized he was joking.
Someone call Captain Obvious - he's got some competition.
To everyone thinking he's crazy for raising before coming up with an idea, the idea is irrelevant.
Your first raise doesn't validate your idea, it validates how good of a pitch man you are.
Your second raise validates your idea as a business.
http://techcrunch.com/2011/04/01/angel-investors-counter-y-c...
Except, it's actually real this time...
Reminds me when @joshu raised and spouted a bunch of jokes for the idea he was pursuing (1).
I can't imagine being in that position and NOT using the media as a vehicle for your personal amusement.
(1) http://techcrunch.com/2010/08/01/feeding-frenzy-as-delicious...
Mydunks.it, really?