I have a lot of conversations with people. 1:1’s, interviews, &c. When the opportunity arises, sometimes those who’ve done startups will talk about their experiences.
There’s sometimes a flag in those conversations about startups that raises my hackles. It’s a description of the money raised as if that were a success metric. “I was at blah”, or “I founded a thing called foo”, and “we raised dollars!”
I think it’s from accepting the Venture Capital narrative as presented on Shark Tank: that businesses are competing for the pool of dollars, and that the VC’s are judges of innovation. I also think that is a false and self-serving narrative.
Venture capitalists are salespeople. They are selling a financial product, basically a fancy mortgage. You give away future equity in your house or company for upfront cash today. Good on you, salespeople who can make buying your product seem like a competitive win.
It is true that have to do your homework in order to get VC investment, and it’s more work than a mortgage: a business plan that discusses how you are going to financially swing your journey to product market fit. You also can’t get a mortgage if you don’t fill in a bunch of paperwork with indications on how you’ll pay it back.
The problem with this analogy is that you don’t have to convince a bank that your idea for buying a house is both excitingly novel and fairly safe, you just have to fit the expected cultural and financial parameters. On second thought, given the history of redlining, the analogy between mortgages and venture capital seems pretty solid.
Evidence of purchasing a product is not a signal of success or status, it is a signal of in-group membership plus basic competence.
Back to the interview context, use of this trope is a yellow flag that the candidate may have trouble recognizing or accepting that a thing hasn’t worked. If they can’t point at anything more positive than raising money, their business failed. So they’re spinning a story at me, nothing wrong with that. But I need to see an indication that they can launch a product, so I’m going to keep asking questions.
Update with this excellent thread