Twitter | Pretraživanje | |
Erik Torenberg
People look at high valuations in early-stage venture and conclude there’s too much capital. Another explanation for high valuations is we’re suffering a scarcity of (great) founders. A thread on why we’re suffering from a founder scarcity and some ideas on how to solve it.👇
Reply Retweet Označi sa "sviđa mi se" More
Erik Torenberg 15. sij
Odgovor korisniku/ci @eriktorenberg
First off: Why can high prices be partially explained by a scarcity of great founders? Typically high prices signifies a scarcity of something. When oil prices are high that means there’s a scarcity for oil.
Reply Retweet Označi sa "sviđa mi se"
Erik Torenberg 15. sij
Odgovor korisniku/ci @eriktorenberg
There’s a saying in commodities that the cure for high prices is…high prices. Usually, when you raise prices, you get more demand. Pay engineers more, and you’ll get more engineers. But with founders that’s not the case. Higher valuations doesn’t mean more founders. Why?
Reply Retweet Označi sa "sviđa mi se"
Erik Torenberg 15. sij
Odgovor korisniku/ci @eriktorenberg
It's too risky! The average founder does well, but the median founder flounders. Which is partially (among other reasons) why so many people take exec jobs or want to be VCs: Exec jobs will be there. Your startup might not. VCs have a portfolio, and founders don't.
Reply Retweet Označi sa "sviđa mi se"
Erik Torenberg 15. sij
Odgovor korisniku/ci @eriktorenberg
Indeed: There are lots of VCs who could make great founders, who would actually prefer to build a business than do a financial services job, but they just prefer the economic calculus of venture capital. Others, to be sure, are unwilling or incapable of building a great biz.
Reply Retweet Označi sa "sviđa mi se"
Erik Torenberg 15. sij
Odgovor korisniku/ci @eriktorenberg
The average founder may have a good outcome, but we need to make the median under have a better outcome. How? Diversification VC firms can give upside in portfolio, or VC founders can become scouts, or they should engage in founder pooling activities. (Employees too, ideally)
Reply Retweet Označi sa "sviđa mi se"
Erik Torenberg 15. sij
Odgovor korisniku/ci @eriktorenberg
To be sure, there are many bottlenecks besides risk—perceived career risk, fear of failure, mental health, to name a few—and even within economic risk, founder pooling is just one solution. Visas, health insurance, cheap housing, child care are others.
Reply Retweet Označi sa "sviđa mi se"
Erik Torenberg 15. sij
Odgovor korisniku/ci @eriktorenberg
I think we should be doing everything possible we can to unlock more great founders. How many people are out there who, if they started a company (or a few companies), could create the next $1b company? 100s? 1000s? VCs far smarter than I disagree here on several grounds
Reply Retweet Označi sa "sviđa mi se"
Erik Torenberg 15. sij
Odgovor korisniku/ci @eriktorenberg
#1 They'd prefer some barriers They think that "security" is inversely correlated w/ success. There is some truth to this (which is why we don't give big founder salaries) There is probably a Laffer-esque Curve for security & likelihood of success, but we're not close to it IMO
Reply Retweet Označi sa "sviđa mi se"
Erik Torenberg 15. sij
Odgovor korisniku/ci @eriktorenberg
They think founder diversification will mean less "all-in" from the founders This thread best demonstrates the sentiment I'm sympathetic to it, but don't think we're close to the point on this Laffer Curve—we can allow some diversification w/o sacrifice
Reply Retweet Označi sa "sviđa mi se"
Erik Torenberg 15. sij
Odgovor korisniku/ci @eriktorenberg
#2 They don't buy that they're are great founders out there held back. If they need the support/encouragement to start, how will they scale? I'd equate it to Military: Many great soldiers "stumbled" into war & made it their mission once they got there, but they needed the push
Reply Retweet Označi sa "sviđa mi se"
Erik Torenberg 15. sij
Odgovor korisniku/ci @eriktorenberg
In terms of there incentives, wouldn't you think VCs want more founders? Maybe not. They’ll only invest in a handful of cos a year, and those cos will hire 1000s of ppl — they want great talent to join them. Their advice is often “join a break out series A or Series B company”
Reply Retweet Označi sa "sviđa mi se"
Erik Torenberg 15. sij
Odgovor korisniku/ci @villageglobal
#3 Founder Pooling has never worked. Why would it work now? Fair enough! I'd suggest it hasn't really been tried. Maybe it won't, but there are other ways to diversify. E.g. Angel/Scout investing hasn't seemed to hurt founders chances of success (cc )
Reply Retweet Označi sa "sviđa mi se"
Erik Torenberg 15. sij
Odgovor korisniku/ci @eriktorenberg
In conclusion, IMO: - We're suffering from founder scarcity, partially evidenced by rising valuations - We should systematically remove bottlenecks to starting cos - We can incentivize more founders by making median founder outcome closer to avg & by removing economic friction
Reply Retweet Označi sa "sviđa mi se"
Erik Torenberg 15. sij
Odgovor korisniku/ci @beondeck
We also should decrease cultural friction to starting companies: - celebrate starting cos as a thing for ambitious ppl to do globally - see startup failures on resumes as badges of honor instead of blemishes - create communities to find co-founders & founder support()
Reply Retweet Označi sa "sviđa mi se"
Erik Torenberg 15. sij
Odgovor korisniku/ci @BurakYngn @david__booth
Would love to hear thoughts & feedback. h/t and for conversations on the topic.
Reply Retweet Označi sa "sviđa mi se"