Tuesday, March 07, 2006
VC Disruption? Part Two.
VC Disruption? Part Two.: "If you can get venture capital, you'd better take it."
Like all slogans, it's oversimplified. It tries to capture one essential issue: If you're creating a business in a market that fits the VC model, one of your competitors will take the money. And use it against you.
Look at it this way: We know how you're going to make things easier for imitators: You're going to prove it's possible and remove uncertainty for a fast follower. So tell us how you're going to make life miserable for the imitator, to balance off that advantage and more. It can be a lot of things - intellectual property, brand, tying down major customers, hiring irreplaceable talent, creating a network effect of some sort. But it had better be there - we're not in the business of helping your competitors. And if you could do it, but don't take the money to make it possible, someone else may do so.
Like all slogans, it's oversimplified. It tries to capture one essential issue: If you're creating a business in a market that fits the VC model, one of your competitors will take the money. And use it against you.
Look at it this way: We know how you're going to make things easier for imitators: You're going to prove it's possible and remove uncertainty for a fast follower. So tell us how you're going to make life miserable for the imitator, to balance off that advantage and more. It can be a lot of things - intellectual property, brand, tying down major customers, hiring irreplaceable talent, creating a network effect of some sort. But it had better be there - we're not in the business of helping your competitors. And if you could do it, but don't take the money to make it possible, someone else may do so.
