“Specifically, founders would prefer reasonable success with high probability, while VCs are looking for fantastic hit-it-out-of-the-ballpark success with low probability. A VC fund will invest in a lot of startups. They expect about seven of them to fail, two of them to trudge along, and one of them to be The Next Netscape (“TNN”). It’s OK if seven fail, because the terms of the deal will be structured so that TNN makes them enough money to make up for all the losers.”Heinemeier Hansson:
“In the abstract, economic sense, a 30% chance of making $3M is as good as a 3% chance of making $30M is as good as a 0.3% chance at making $300M. But in the concrete sense, you generally have to make your pick: Which coupon is the one for you? The strategies employed to pursue the 30% for $3M are often in direct opposition to the strategies needed for a 0.3% shot at making $300M. Shooting for the stars and landing on the moon is not how Monday morning turns out.”It’s hard to read either essay without thinking of Twitter’s current predicament. Heinemeier Hansson indicts the unbridled ambition of the “disrupt-o-mania” mindset and references our favorite Steve Jobs phrase (emphasis mine):
Part of the problem seems to be that nobody these days is content to merely put their dent in the universe. No, they have to fucking own the universe. It’s not enough to be in the market, they have to dominate it. It’s not enough to serve customers, they have to capture them…He ends with this:
A dent in the universe is plenty.As one who has cofounded and ultimately sold a successful company that didn’t take over the world, but did allow for the founders to enjoy what Heinemeier Hansson calls “attaining the tipping point of financial stability” and having a “a life beyond work”, I appreciate the way Heinemeier Hansson puts this. As an econ major I’m not so sure about his fervent indictment of people who prefer more to less. Should everyone have the same indifference curves that I do? On a related note, I frequently cite the fact that Michael Arrington netted more on his $30 million Techcrunch sale than Arianna Huffington did on her $315 million exit. Given this, what does the Dent community think? Is anything less than what I call the “achievatron” pursuit of world domination a cop-out?