128 points by WoodenChair 2 months ago
This quote from the article stands out to me:
"A Pro invests as much money, as many times, for as long as required for the situation to attain Clarity. This Clarity allows only two outcomes, Dead or Liquid. When a Pro declines the invitation to invest in a follow-on round, it means they’ve reached Clarity: In the eyes of the Pro who declines to invest, the company is Dead, their initial stake is worthless. Write it off and move on, no tears, no recriminations."
I don't know much about VC, but it seems like this can't possibly be true. Aren't there times when a VC invests, and then declines a followup round because they still like the company but don't want any more exposure to their industry or country? And if a company is doing a follow up round valued at $X, any estimated valuation between $0 and $X-1 should be low enough that the VC doesn't invest in that round. There's no reason to assume it's always $0.
I feel like the situation JLG is talking about is specifically a down-round
Gassée is shorthanding a bit. VC is more specialized now than it was in 1990 when Be was getting funded. So now, there may be structural reasons. A seed fund isn't going to carry you through A, B, .... Still, his central point about clarity remains. But clarity will be different for different VCs with different investment hypotheses.
I actually worked at Be, in 2000. I signed up knowing full well they were in trouble: they were no longer selling BeOS as a standalone consumer product, and had pivoted to "internet appliances."
At the time, I figured: yeah, they seem to be in a bit of a pickle, but they've been in business for 10 or 11 years now. They will find a way to get through this, like they have so many times before.
Seven months after I started, the company went out of business and I got laid off. Shows how much I know!
I loved my BeBox and BeOS. Had I been braver at that time in my life I would have relocated and taken a job there.
well, i have to be honest and say that, if be had not been on the ropes, i would never have been hired. in the early days, the company was able to attract the best of the best of the best. i am a pretty decent programmer, but not at the AAAA level of the early guys. by the time of the internet appliance pivot, the superstars had all left for greener pastures.
by the time i got there, the company was pretty much dead. we were working on the Sony eVilla, which nobody believed in. it was a massive failure.
after that, i lost my taste for “the big leagues.” i am not willing to go through the standard “implement a b-tree on a whiteboard” interview, and i always want to work remotely, so no google, microsoft, facebook, amazon (etc) jobs for me. i have been working in small shops since then.
The point of the article seems to be that spending your own money and raising from friends is bad, and that professional investors are good.
But I didn't fully understand the justification for that, was it in the article and I missed it?
Is it just that:
- friends get annoyed with you if they get diluted,
- and that eventually the money runs out and you'd want to have investors with basically unlimited funds so you can go back to them for future rounds?
Or were there other reasons?
The kicker is towards the end. Be gets saved, but the terms are usurious from the early investors' viewpoint. And there's not much the latter can do about it since their own pockets aren't deep enough. Ergo, better go straight for the deep pocketed Pro, and stay friends with your relatives as a bonus.
His point on Clarity is also spot on:
> A Pro invests as much money, as many times, for as long as required for the situation to attain Clarity. This Clarity allows only two outcomes, Dead or Liquid. When a Pro declines the invitation to invest in a follow-on round, it means they’ve reached Clarity: In the eyes of the Pro who declines to invest, the company is Dead, their initial stake is worthless. Write it off and move on, no tears, no recriminations.
I think it is related to don't invest what you can't afford to lose. Also, similarly to the stock market, investing in only one business is always very risky.
old retrieval of be memos http://testou.free.fr/www.beatjapan.org/mirror/www.be.com/ab...
featuring steve horowitz
I loved BeOS, I bought a copy in 1999 or thereabouts.
I would have loved BeOS to succeed, but perhaps that memo shows a lot about why Be failed.
That note does seem totally cool on a technical level, but I wonder, was the thing that Be needed (as a company) most, at the time that memo was written, the things in that memo? I mean having "live drag" of folders is nice, but is that the sort of reason someone choose an OS or a computer?
I mean, I reckon, when developing a product, you need to focus on the "critical path" from where you are now to having a product everyone wants to buy. Live folder dragging, while nice, isn't on it I reckon. Maybe MIME content-types instead of file extensions isn't either. And while your developers are working on things that aren't on the critical path, you have the opportunity cost that they could have been working on something that was on the critical path.
What do you think?
Be fell victim to anticompetitive practices by Microsoft. There was a PC made by Hitachi that dual booted beos, and the deal was that the user was supposed to be able to choose windows or beos. Microsoft then forced Hitachi to single boot windows and the user effectively wound up with a hard drive that was literally half inaccessible to the OS because beos was there - it was difficult to activate the beos partition.
Honestly my feeling as a developer is that go to market is really hard. I know how to solve technical problems. I don't know that there is a consistent and reliable way to get customers. Be's problem was that, plus more, because of Microsoft. Microsoft is very much a different company now.
I wonder how much of the world comes back to this. The winner is the one who is willing to cross the line just enough to do so.
A potential winner can't cross the line successfully unless they have leverage. Microsoft had a heavy hammer: put up with us or lose access to the mainstream market.
Disrupting such a market is of course the goal of any small innovator who needs cooperation from the other market participants.
Hmm. Not sure this comment of mine advamces the conversation here. But anyway "willingness to be a thug" is perhaps necessary to create a singularity like Microsoft, Amazon, Google, but not sufficient. And I'm not sure it's even necessary.
You're right, at least partially, they did so when in position of power.
But even then, their IBM deal was almost a scam (exagerating of course). They sold something they didn't even have at the time.. high risk gambling mentality. It's a bit similar to roughing competition up.
It's not like there's nothing Be could have done; they could have sold and marketed their own PCs but they didn't. They thought they could draft off the Wintel PC market without doing their own marketing and it didn't work. It's a dirty market and if you want to succeed you need serious money which they didn't have.
I am not sure I understand why would a VC be suspicious of self-funding?
Roughly, "is this company so bad that they can't get any real investors?"
Sorta like a self published book, it looks like a vanity project more than a thing that can survive in the world independent of its creator.
Successful founders of the company prepare a five-year financial plan, a technology development roadmap and a combined sales funnel. With many funding options available, raising seed funds can be a confusing and somewhat overwhelming exercise.
Here I found an article there are few things to avoid while raising seed funding: https://mobinspire.com/blogs/5-things-you-should-avoid-while...
Without more context, this reads as failing upwards/humble bragging. All these powerful people helping something that seems so tenuous? That’s not a common outcome.