Ask HN: Friend is genius, needs cash (VC), doesn't think he can get it

Smart with a good pedigree is a nice start. He'll also need some other source of social proof: people who are respected saying that they respect him, ideally enough to trust him with money. If he does not have the social connections to pull that off yet, he'd have high ROI on making those connections. One way to bootstrap those is by going to an incubator whose founding team everyone knows and trusts (hint hint).

somewhat fearful of making the leap

That's a red flag. Rightly or wrongly, VCs expect people likely to create $100M businesses in the next 3-4 years act like they're intending to create $100M businesses in the next 3-4 years. Your friend is acting like he is intending to have a secure academic job in 3-4 years. There's nothing wrong with that but it is not maximally compelling in terms of convincing people to give him money. (H'd ironically be better off poor because you were hustling in SV than poor because he was an academic. Poor hustlers can fairly easily create the illusion of forward progress. Poor academics suggest that forward progress will be deeper into academia and probably mostly lateral with respect to poverty.)

750k and two years; the vast majority of that going to processor time.

YMMV depending on who you talk to, but a software company which doesn't budget for any engineers is likely to be a hard sell.

Also: the most common outcome for commercialization of academic research is that the research has wonderful ideas with no commercial potential whatsoever. Investors are very aware of this. One sales challenge is convincing them that your friend is, unlike the other 100 PhDs with no real world experience they have talked to, actually on to something that can create money.

He has no interest in continuing academia. His stated reasons for staying there rather than taking offered positions at google etc is that he can work on exactly what he wants and bill it out to the school.

I get what you are saying about VC's expecting people to act like they are intending to create businesses. I think someone smart will be able to see the difference here between something like what he wants to do and what something like facebook or kickstarter is doing. He is pushing the edge of knowledge and literally couldn't do it without the tools that he has gained in research. I honestly believe if someone talked to him they would see everything he has done for the last 10 years has been with this type of thinking in mind.

The social proof would not be a problem, top professors in compsci and mathematics know him; and he has code to back up his claims.

750k includes 70k a year for he and another engineer. I don't think he is confident he will find another engineer capable (other than the one he has in mind) that is capable of the work he is trying to do. Its too specific of a niche and literally cutting edge in the field.

The commercial value of the research would be the easiest sell of all; the first person/company to do it right will have immediate customers from everywhere.

He has interned at google (i fear if he sees this this line will be the proof of who I am and who I am talking about) and presumably has some connection there.

The main thing he needs is cash at this point; the number crunching is CPU intensive and he wants 20k/month for sending it out to amazon.

Top professors in CS and math are not good social proof to investors unless they have a track record of involvement with successful companies and make specific representations about your friend. Some professors are good references. Most aren't. The ones that are good are unlikely to give the reference (& intro) your friend needs unless your friend has enough hustle to extract it from them.

Your friend really doesn't seem to need an investor so much as he needs a patron.

Most VCs invest in businesses, not technologies. Your friend does not have a business. He doesn't need investment; he needs a team and a plan.

Base on the responses others have given and your reaction to them, I'd say there is a bit of defensiveness in there. I don't know your friend personally so take what I say with a grain of salt but smarts (aka the genius) does not make a brilliant entrepreneur. Someone else said he's more of a employee #1 than a founder and I tend to agree base on how you've describe him even if he is the kind of person who refuses to be employee #1 of which there is nothing wrong with that. You can learn A LOT being an early stage employee rather than always having the narrow mindset of having make the leap immediately and doing it yourself.

In regards to why I think he isn't suited as an entrepreneur (at this time; important to note this distinction for now) is because he has reservations and requires someone like you to push him to make the leap. Entrepreneurs are driven to make things happen, not be convinced. That behavior will only make things more difficult if he doesn't have the conviction to try himself now, regardless of what anyone says (good or bad). And there are folks out there that no amount of convincing would they ever change. Not saying your friend is like that but as others have said, it's coming out as a red flag.

In response to another response you made, social proof is not like a letter of recommendation. It's not his professors that will grant him social proof. Social proof is validation from people that matter to the VC's in their social circle.

gotcha. I am not pushing him; to be clear. Otherwise I wouldn't be making this post, I would be pushing him.

If he follows on his path he will exit academia in the next year or two and push full steam ahead and and raise his cash and you will all know his name in the next couple years after that. I would literally bet a body part on this.

Of course you take what I say with a grain of salt; I could (and am statistically likely to be) in a pipe dream.

My assumption is basically this: if someone with a lot of cash:

- Saw the accomplishments of this person

- New the 4 year plan of this person

and

- Talked to this person for 20 minutes

They would eagerly give him money. I know there is no way to prove or disprove my assumptions. So my question is how can i drop a hint to someone?

I would be happy to hear what you think is defensive. I am fully aware than I am an anonymous schmoe on the internet. If I am defensive it's because I am looking for the answer to the question I seek just assuming that what i am saying is true.

No need to convince me I am wrong in my assesment or my friend isn't entrepenurial material. It doesn't matter. Just assuming he is, and that it is clear as glass to anyone who talks with him that he is; how do I nudge someone to talk to him.

Couple of bullet points. Most experience entrepreneurs will say this too.

1. Accomplishments in academics or otherwise hold very low bearings in success as an entrepreneur. After all, most people don't have any problems building their prototype. It's getting people to actually use their prototype. He may be a genius at what he can do and by no means am I discounting that in any way, but definitely keep in mind that that alone does not account for success or failure. Its a mixture of other things. It certainly is helpful however.

2. 4 year plans should be thrown out the window. No entrepreneur should have a plan more than 6 months out. Maybe 12 at most. And potentially a grand vision down the road. A 4 year plan is bound to fail, change, and all sorts of other things. You don't know what is going to happen with the rest of the world, changes in tech, etc etc etc... 4 years is a lifetime and planning that far ahead and bound to guarantee none of the plans will come out as you envision them. Make shorter immediate plans and adjust as things progress.

3. Now for your actual question. If he truly is interested, have him network in the Valley (assuming he's located here) and get some introductions. If people will think he's brilliant as you say, they shouldn't have any issues making the introduction. If they do, there is a clear signal. Alternatively, have him post what he's doing on AngelList. Certainly if what he is doing is that important, it will garner some attention.

Thanks. Angellist is the diamond in all of this rough that I was looking for.

Really appreciate your taking the time to respond

This problem is fairly common. I've runned into many Math Olympiad winners whose accomplishments and technical drive are without par but hesitate to start companies even after having good ideas/plans. The problem with these people (and I should know because I was one of them) is that they're so smart that they rationalize why NOT to start a company. And being so smart they find many things that should go wrong and, in turn, they never start any entrepreneurial endeavor out of fear of failure.

I'll give you a couple of tips to try to make the next "Mini-Bill-Gates" out of this genius:

- Build his confidence by engaging in a basic business with him using a smaller idea (the people often have many).

- Persuade him that business is easier than academia and that he can learn to be a far better businessman than he is a scientist.

- Point to the failures on his industry and show him that even the entrepreneurial failures ended up making more money than the 9to5ers.

- Have him patent his idea(s) as a starting point. Then he'll gain momentum on his own after he has clarified his plans.

- Give him some books about entrepreneurship and just wait it over. Analytical people often learn more thru books than people.

- If you really believe in his idea, join him. Maybe he ends up being your Wozniak.

The idea that fundraising now is easy is a myth. I'll give you that it's as easy as it's ever been but it's not easy. It requires a lot of prep work, time, and full time dedication. And unlike 10 years ago, it now requires a prototype of some sort.

If he was going around with an idea asking for money, that would be a tough sell. If you're going around asking for him, that's an impossible sell.

Here are some red flags for investors: - Do I want to invest in someone who's risk averse and will likely give up when things get tough? (and things will get tough) - What's his track record for product execution and how can he prove he can build a product in a reasonable amount of time? (i.e. not two years) - What's his team or reference that can confirm the genius behind the man?

It sounds like your friend is more of an employee #1 person than a founder, which is fine. Maybe instead of looking for money you should be looking for someone who can kick off the prototype and can later help with the fundraising process. In any case, your friend needs to be the one speaking.

Good luck!

There is a prototype; its more than an idea.

I should have made this clear. The chance that this man will ever be employee #1 is zero.

The genius is clear enough. Flawless marks through the hardest programs, and working code pushing the boundary of human capability is all already existing.

I have no intention of going around asking. I more want to do something like say, "here is his github, here are his results, here is his published papers, and this is his idea on how to commercialize it"-- to someone who is investing money.

"It sounds like your friend is more of an employee #1 person"

Please explain this. I really don't see why someone with the knowledge and skill is supposed to be an employee taking orders from someone else. This sounds like wishful thinking on your part, as no one holding all the technical marbles is going to be an employee.

Few thoughts.

1) A real genius can figure out things, including how to get cash. If he can not get cash/investment, he is not genius enough.

2) PhD from top school gives a person good foundation to be a professor or some positions that require PhD. But that does not mean too much in business world. Education is important for any success, but please note education and schooling are different things.

3) PhD making 150K+ in finance is not news.

4) Money is always available for good investment for every single year, regardless the market.

5) If his machine learning is really working, he can train the machine to make money (including initial capital) for him.

6) Real academic research is usually years ahead of its time. Success in business usually needs massive adoption which means right at the time. That is one of reasons that a lot of smart people are not rich.

Overall, all you are talking about is "your friend is kinda smart and plan to stay in research (for some years)". Nothing more, nothing less.

Firstly he probably doesn't own any IP for the work he's done at the university, PhDs and post-docs normally assign rights to their university as part of their contracts.

However this also has it's upside, any top-tier science/engineering university is going to have a department whose sole job it is to commercialize research. And they'll not only be able to sort out the IP side and help with the productization, but they'll also have the contacts with investors who understand about investing in this type of company. Find out who these guys are at his university and put him in touch with them!

He needs to learn how to make money himself to fund his vision. This is key. Is he a good market trader? Can he do little things to setup his life and fund his big vision? Can he use up Amazon's AW3 service? Can he make more efficient algorithms? Can he make better guesses to not need so much capital and time?

I think the VCs are not a good fit for him at this stage. Maybe when his ideas are further along (giving him enough leverage to hold on to most of the company) then he'll be ready for venture capital.

It's much more important for you to help your friend come up with a real world problem that he can solve (whether or not it uses his technology), and for him to start solving that real world problem for customers. Dont bother thinking about VCs until he has a proven scalable business opportunity.

I'd be happy to help brainstorm that (sutter at gmail)

Arcane machine learning challenges, by themselves, aren't very interesting to VCs or customers. But solutions to real world problems are.

I'm sorry, but this post boils down to: "I have a friend who's invented anti-gravity. He's reluctant to start an anti-gravity company right now. What is your advice?"

Your friend's reluctance might mean he's a lot less confident in his technology than you are. The two years of processing time it would take to come to fruition suggests to me he's right to have reservations.

I think it's closer to 'my friend has invented anti gravity; but its big and huge and clunky and extremely expensive and he is going to spend a couple years in a lab working on it before he tries to raise money. i think he could raise money instantly; how do i get people with money to look at the antigravity thing'

but maybe you are right that he is right to have reservations.

VC isn't the answer. It's a different set of problems. Bootstrap, bootstrap, bootstrap!

He doesn't have the capital to bootstrap. He needs 500k in number crunching time. One of the main reasons he is staying in the school is he is billing all that out to them and using their servers