Refer to #'s 3 and 4 from previous post...
3. Insisting on growth can mean sacrificing future profitability.
No one expects any startup to be profitable in its early life. But VC funding can make it difficult to ever turn a profit. That's because of what Paley calls the "marginal dollar problem." In any normal business situation, you would constantly be looking to increase revenues--so long as what you have to spend to do it makes sense. Hiring an overpaid salesperson who brings in new business but not nearly enough to justify his or her paycheck is one good example of how the pursuit of growth at all costs can destroy a company's long-term viability. That might be a worthwhile tradeoff for a VC, but it probably isn't worthwhile for a founder.
4. They push founders to sacrifice a viable present for an improbable future.
"Starting and selling a company for $100 million is an outlier event in terms of pure entrepreneurial probability, but such outcomes are viewed as well short of success in many corners of today's startup world," Paley writes in a different TechCrunch piece. So when the opportunity for a $100 million sale comes along many VCs will encourage founders to turn it down, hoping that as the startup keeps scaling, it can become a unicorn. "My advice: Don't give up your present for a future you haven't validated," Paley writes.
Ties, parkas, watch bands, mushroom leather. That's why I have asked, "what eco-novelty is next?" We shall see.
DROP-IN AND GO KBLB! HOLDING THE GOLDEN!!!
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