Probably one of the most brilliantly transparent blog posts I've seen from an entrepreneur, ever.
My advice to Rand:
1) Don't overthink valuation.
2) The partner is the most important component.
3) You'd be an idiot not to take some money off the table. 4) If you're going to raise, raise now.
> That said, if the market takes a downturn, we could be looking at 3-5X valuation instead – it’s hard to know if Mark Suster’s advice (raise money now so when the party’s over, you’re sitting pretty) on this point is right and raising money in a good climate is the right thing, or if Warren Buffet’s contrarian viewpoint better applies (be fearful when others are greedy; be greedy when others are fearful).
Those two pieces of advice (raise money during bubbles vs be fearful when others are greedy) actually seem aligned. One is from the perspective of the business raising capital, and the other is from the perspective of the capitalist looking to make an investment. The business raising capital is happy to take advantage of irrational exuberance (if it puts them into an advantageous position), while the investor is wary of being irrationally exuberant.
In other words, these don't seem to be opposing pieces of advice, but rather advice coming from opposite perspectives (the capitalist vs the entrepreneur).
Comments
Probably one of the most brilliantly transparent blog posts I've seen from an entrepreneur, ever.
My advice to Rand:
1) Don't overthink valuation. 2) The partner is the most important component. 3) You'd be an idiot not to take some money off the table. 4) If you're going to raise, raise now.
> That said, if the market takes a downturn, we could be looking at 3-5X valuation instead – it’s hard to know if Mark Suster’s advice (raise money now so when the party’s over, you’re sitting pretty) on this point is right and raising money in a good climate is the right thing, or if Warren Buffet’s contrarian viewpoint better applies (be fearful when others are greedy; be greedy when others are fearful).
Those two pieces of advice (raise money during bubbles vs be fearful when others are greedy) actually seem aligned. One is from the perspective of the business raising capital, and the other is from the perspective of the capitalist looking to make an investment. The business raising capital is happy to take advantage of irrational exuberance (if it puts them into an advantageous position), while the investor is wary of being irrationally exuberant.
In other words, these don't seem to be opposing pieces of advice, but rather advice coming from opposite perspectives (the capitalist vs the entrepreneur).
Aren't these points covered if we do a SWOT analysis before we do a startup? http://www.netmba.com/strategy/swot/