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Best read of the day...so many lessons

Discussion in 'BlackHat Lounge' started by netmoney1, Jan 21, 2015.

  1. netmoney1

    netmoney1 Executive VIP

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    Read this post.

    It hammers so many things.

    1. Why all the crazy high pre-revenue evaluations are useless
    2. How not to run a business
    3. How not to treat your employees

    I'm mind-blown.

    Their site is pure SHIT. Their concept is pure shit. They went in thinking they could rent "sports sites" with RSS feed content to people for $20k a month.

    Anyway, read it...something in there for everyone.

    It is worthless "companies" like this that suck VC money and never produce a dime. Comical.
     
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  2. BreaknBrix

    BreaknBrix Power Member

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    Well, CEO's are the #1 most psychopathic profession in the world... with lawyers standing right behind them at #2. So it's hilarious yes but unfortunately I can't say I was all too surprised.

    This guy is most definitely a psychopath. :)
     
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  3. tony_d

    tony_d Elite Member

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    I Googled it after I saw your post, and it turns out you're on the money, if the Time magazine article is to be believed... fascinating stuff :)

    I just read the article in it's entirety. The guy is just an idiot. That's all there is to it.

    It's unpleasant having to tell people bad news, and that was apparently his biggest shortcoming - he just couldn't tell his staff that they weren't going to be paid anymore. So he didn't. He lied instead.
     
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    Last edited: Jan 22, 2015
  4. Trepanated

    Trepanated Supreme Member

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    Reading through the article it doesn't sound like he ever had any VC funding. I think he wanted it, but I imagine the VCs all turned him down because they knew the concept was terrible. And it is really terrible, because VCs have been throwing money at anything they can recently.

    I've seen that psychology playing out before and it tends to be either someone who is on the con from the start or someone who is honest to begin with and then refuses to accept the truth when their business model turns out to be bollocks.
     
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  5. netmoney1

    netmoney1 Executive VIP

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    Yeah, I just meant this is a prime example of a "company" that isn't a company at all...and VCs will throw HUGE money at anything these days. I know a group that is coming out with an App that secured MILLIONS...and they have no fucking plan. No monetization plan. No exit strategy. They are two single moms. They have no in-house developer. It is mind blowing. I want to put my head through the wall when I hear them speak. They are paying themselves a nice juicy $350k yearly salary though...fucking mind blowing...oh, and their "company" is leasing a couple new range rovers on top of that....they will go under within 12 months, guaranteed. Spend that VC money like it is water.
     
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  6. Trepanated

    Trepanated Supreme Member

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    Yes, that happens all too often. It amazes me that the VCs are either too stupid to realise, or too useless to monitor it.

    There are 2 types of VC investments, long-term business investments and speculative 'media-frenzy' investments whose sole exit strategy is to sell out as soon as the crazy valuations start - and they are both good strategies. But projects like the one you mention are beyond me. There is no due diligence, no oversight and clearly no financial restrictions on the founders (who patently have no track record and should me closely monitored).

    Perhaps I am missing something obvious, but I don't understand why VCs make those investments. There is zero exit strategy - unless you count keeping your fingers crossed as a strategy.
     
  7. LostConnection

    LostConnection Senior Member

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    Good God. I need to start a random company and go for some VC funding. That is just plain sad.
     
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  8. spasovski

    spasovski Regular Member

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    Makes you think about it.
    With all the management experience you've collected while building online businesses and successfully outsmarting google, facebook, twitter, pinterest... we actually have a much higher change of establishing real and successful startups with serious business plans and development/growth strategies. If these morons can secure millions from VC's, with absolutely no innovative ideas, no business plans nor proof of value, why shouldn't we proceed to the next level and actually execute Blackhat thinking into white hat companies and strategies, secure large investments and actually make them profitable for everyone. I know so many people here that given a million dollars they will triple it within a year!

    We know how to build strategies and execute them...
    We know how to analyze our competition better than they know themselves
    We actually know how to build great websites with great user interface.
    We know how the internet works and how sales are generated online
    We know how search engines and social networks work, and by that we know how to utilize on them
    We are exceptionally dedicated and highly motivated
    We are smart and we know how to manage funds
     
  9. dannyslimited

    dannyslimited Registered Member

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    Fake it until you make it. There motto.
     
  10. tony_d

    tony_d Elite Member

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    The problem, of course, is that from the VC's side, the gems all looked like that.

    Except for the 'two single moms' part, your above statement describes Google perfectly, at the time that Kleiner Perkins handed over $25m. They had no idea how they were going to earn money, nor did they have an exit strategy.

    I'm sure they had a lot more than the pair that you describe - however, I'm also sure that the pair that you describe are the exact type of people that VC's can bank on, because 1 in 20 will hit it out of the park, while the other 19 will crash and burn.

    I can absolutely understand that VC's side of it.
    I mean - if someone had pitched me Angry Birds, I would have told them to f*** off and stop wasting my time. Nobody wants to be the guy that tells the next Angry Birds to naff off.
     
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    Last edited: Jan 23, 2015
  11. Trepanated

    Trepanated Supreme Member

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    There's a big difference between the example Netmoney gave and the Google example.

    Kleiner Perkins already had a track record in Search and knew that sector well. Don't forget, they had already cashed out in a big way on Netscape. They also did due diligence, knew who the Google founders were and knew they were very smart, focussed and determined guys.

    In Netmoney's example though, it sounds nothing like that. Just two people with a vague idea, no history, no experience, no technical knowledge and no strategy. And as he said, they are now more focussed on big salaries and cars rather than execution - huge alarm bells. Any investor worth his salt would see that is a doomed project. And an investor who knew what they were doing would put controls in place to ensure the money does not get pissed away.

    Yes of course VCs know that 90% or more of their investments will fail, but that doesn't mean they would invest in businesses they know are guaranteed to crash and burn. And from what Netmoney has said, that business was a failure before it began.

    Either:

    1. It's a VC fund whose sole revenue model is their fees - meaning they are dodgy
    2. It's a VC Broker and not a VC, who again only make money from fees - and are possibly dodgy
    3. There is something I am missing.

    If there is something I am missing I'd love to know what it is because I hear of these awful, funded startups regularly and it constantly shocks me.
     
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