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>How do you even define the problem you're trying to fix?

The name of the problem is "uninformed decisions". Lacking real information about startups, the VCs rely on signals - social signals, their own prejudices, "common sense", that sort of thing. Had they had understanding of the field, or understanding of the emotional rollercoster that is building a new business, there would be much less reading of tea leaves. In fact, a hypothetical competent VC would inquire until he finds the weaknesses both in businesses plan and the team approach and morale, so that he knows what the problems are, rather than run away when he finds some.

To put it shortly, the problem is "dumb money".

The answer to this problem is "smart money". Raise funds from the insiders of the industry you're working in - at least they know half the game. And also from the startup veterans, as they know the other half of the game.

Dumb money has no place in the early stage business funding. The reason why dumb money saturates the startup discussion is the same reason why the interest rates are low - dumb money is at oversupply, so they are trying to get into every credible investment opportunity.

The problem is there is so much 'dumb' money out there 'smart' money is just noise. If you have 50 million to invest then investing 200k in 250 company's at random is a perfectly reasonable choice. And 50 million is a tiny slice of a ridiculously big pie, people spend close to that doing due diligence on really big deals.

Yep, that's why I meant by "oversupply". The dumb money is rather plentiful, and quite desperate for a ROI, so it's thrashing around making lots of noise.

It's also an interesting departure from the 19th century when capital was scarce and labor was plentiful. These days qualified labor, or as we call it now, "talent" is in short supply and capital is plentiful. It's as if the capitalism has ran its course and produced what it could in the end - abundance of capital. Not a bad time to be on the "talent" side of the table.

I want to offer something positive to go with that downer -- you can find people you can come to trust enough to talk to honestly. There are many investors who are great people who, once they've decided to back you, are going to be there for you and understand the roller-coaster ride and won't hold it against you. You can find co-founders who are level-headed and have the right expectations, and don't get freaked out by some straight talk. You can and should talk to family members and significant others. That way, it can be 'us against the world' rather than 'me against the world'.

The hard part is finding those people :)

How do you know when you've found those people? Some people seem completely friendly and level-headed until things go awry.

Even worse (and especially in LA) some people are completely friendly until you're not around.

have met such people indeed..

Key point: Talk straight AFTER you have money in the bank. Not before.

Make it common knowledge that anyone who pretends that they are winning all the time are frauds and hucksters?

Not that this is necessarily a good idea, but in terms of psychology it makes sense to me. Plant a kernel of doubt so that people ask real questions, and if they don't get honest sounding answers hit the door. Gives an incentive for founders to be honest with both themselves and others and less downside to doing so.

I was definitely told by several VC folks and by even the NSF grant office that if they get "overly optimistic" coming in the door, they tend to ignore what they say. Having a realistic appraisal of your problems and advantages is a sure sign of delusion and lack of maturity.

You're right that this filter already exists to a certain extent, particularly among investors.

However, there's an optimal amount of humility and self-doubt that people are looking for. Deviate too far away from it, and people run for the hills. It's just another pattern-matching tool.

> Having a realistic appraisal of your problems and advantages is a sure sign of delusion and lack of maturity.

I think you meant "Having an unrealistic ..."

You are correct. Apologies, too late for me to edit it.

I would argue that there's a difference between "overly optimistic" and "overly confident."

VCs may find overly optimistic people suspicious, but I think overly confident is met with boundless praise in most spaces.

The first is about the project and the latter is about the person. Someone can say, "Oh you know, we have x, y, and z obstacles, but I know we're going to beat them." That's admitting there's problems. But if they said a word about doubting themselves, well, no one ever applauds that. And the inability to be truly open and vulnerable as a human being seems to be the stuff that leads to desperate loneliness and suicide.

Agreed.

That doesn't help with the very real fact that suicide and depression are heavily stigmatized in our culture.

If you're down, that's fine. Everybody has rough days.

Depression, the kind that leads to suicide, is very different.

I've spent quite a bit of time around depressed and suicidal people: My brother (whose son committed suicide), both of the first two girls I fell in love with, and more than a handful of friends. So while I'm not a psychologist, I can speak from some experience as to what they go through.

A friend of mine once described depression as being this massive black ball that hangs in front of your nose that nobody else can see. It blocks out almost everything else in your vision, but nobody else believes it's there.

When you try to talk to people about it, they treat you like a crazy person, because they can't see this massive thing that is impacting your life.

The people that suffer from this are treated as if they have some type of permanent crippling disability, rather than a treatable medical condition. Oftentimes when they try to get help, they're ostracized by their peers because they're a "crazy person" because they've got a mental illness.

Mental illness. The label obliterates the person underneath.

People that talk about it, that try and get help, find that they've got fewer friends than they used to. That fewer doors open, because nobody wants to hire or invest in a crazy person, and even after that person gets the treatment they need, the stigma remains.

Many startup founders and Silicon Valley hotshots exhibit the signs of severe depression, but it's completely taboo to talk about it. Admitting that you're spending time working with a therapist or taking medication is effectively a career death sentence (unless you're already a success). And so the problem stays buried, and every now and then we hear about another bright mind that just couldn't take it anymore.

More people need to come out with these problems, so that we can talk openly about this as a community, but that process needs to start from the top, from the investors and the big-time successful entrepreneurs.

It would make it less stigmatized to admit that you're depressed and ask for advice about how to manage it if there were not as much downside financially for doing so. And here I am talking about acute, generally temporary depression, not clinical depression.

I'm the first to acknowledge the difference between acute depression and clinical depression. I wouldn't even venture to say that I have experienced depression because I consider self-diagnosis of psychological problems to be incredibly dangerous. Not to mention offensive to my friends who are clinically depressed (and yes, I have had friends and family commit suicide as well).

Me, I have anxiety issues that I have medication for. Sometimes dealing with my startups is overwhelming and I just crash and can't do anything for a week or more. But I am incredibly fortunate that this down state is not my equilibrium and that I have a strong internal correction that lets me realize I have a problem, gets me to actively try to find a problem, and which so far always has eventually gotten me back to a balanced place.

But I do know people who are clinically depressed, and they should frankly not be starting companies. If a friend who was clinically depressed were trying to start a company and came to me saying that their work was making their depression worse, I would do everything in my power to encourage them to seek professional help (which I am not), and to gently encourage them to consider alternative professions. It is not worth your health, mental included.

How do you even define the problem you're trying to fix?

The competitive nature of the marketplace has inherent perverse incentives. It doesn't get fixed, people just tend to adjust their world view in one of many potential ways that allow them to stop seeing it as a problem.

Founders can talk to therapists who won't talk to anyone else about their troubles. It's not a perfect solution, but probably better than not talking to anyone.

Not to downplay the value of therapists, but the help that a therapist could provide is different then the help one might find from a peer/colleague in the same industry/situation. the problem is therapists are always available (well, for a price) but a peer that you can trust with the same sense of confidentiality is rare.

Why would you want to hide that from an investor? Why is this guy raising a series A when he's already have these difficulties? Rather than stressing about raising money, he should put thought into what he is doing. Raising a series A when a person says "struggling and unsure of what we were doing" seems like it would only bring them up in greater strength in the future.

>And so founders who want to have the best chances at "winning" have to create an aura of momentum, of inevitable success, around themselves and their companies. That's perfectly understandable too.

Well, we can't all be Bill Fucking Nguyen thank goodness. I suppose it's expecting too much for people who are responsible for investing millions of other people's dollars to realize that sometimes people who appear "driven" and "visionary" are actually "full of shit" and "criminally insane".