Eric Paley
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Articles by Eric Paley
Commentary: Mass. can lead the nation in hiring veteran talent
Approximately 200,000 service members transition out of the military every year. State officials say skills-based hiring can bridge the gap between their expertise and civilian jobs.
Confidence: The currency of acceleration – TechCrunch
Eric Paley Contributor Eric Paley is a managing partner at Founder Collective. More posts by this contributor Imagine you’re a billionaire starting a new company. You’re happy to bet your entire fortune on it. As a result, capital is no constraint. How fast should you burn money? You probably wouldn’t use the generic startup math of dividing your available capital by 18 months and burn $55.5 million a month — though it would be fun.
Redefining dilution
Eric Paley is a managing partner at Founder Collective. More posts by this contributor Everyone generally agrees that dilution should be avoided. VCs insist on pro-rata rights to avoid the dreaded “D” word. Executives often complain, after a new financing, that they should be “made whole” to offset the dilution that came with the new round. Founders work as hard as they can to maximize their valuation at each financing event to avoid painful dilution. Dilution = bad.
When venture capital becomes vanity capital – TechCrunch
Eric Paley Contributor Eric Paley is a managing partner at Founder Collective. More posts by this contributor I’ve written a lot about the benefits of efficient entrepreneurship. I’ve explained my view conceptually, tried to illustrate the mechanics of how excess capital kills promising companies, and shared data from 71 IPOs that demonstrates that even in success, more capital raised is not correlated with better outcomes.
Author: <span class="vcard">Eric Paley</span>
Eric Paley Contributor Eric Paley is a managing partner at Founder Collective. More posts by this contributor When venture capital becomes vanity capital The plague of rationalization Eric Paley Contributor Eric Paley is a managing partner at Founder Collective. More posts by this contributor When venture capital becomes vanity capital The plague of rationalization I’ve written a Failure doesn’t usually happen “to” startups. It happens when founders rationalize problems until it’s too late.
The plague of rationalization
There are many reasons startups fail. Unfortunately, the customers just didn’t care enough about our offering. Unfortunately, the channel just wasn’t economically efficient. Unfortunately, I had the wrong person running engineering (or marketing, sales, finance etc.). Unfortunately, we were screwed anyway so we just decided to throw a Hail Mary pass. Unfortunately, I thought layoffs would ruin morale, so we just burned too much for too long.
Learning to embrace conflict as a part of startup culture – TechCrunch
Eric Paley Contributor Eric Paley is a managing partner at Founder Collective. More posts by this contributor A startup is a journey of questions with as yet unidentified answers. Most startups fail because they never find true enough answers to succeed. Startups succeed when the founders are focused on finding the truest answers to their most important problems. What is the best way to engineer a product that will delight customers?
Learning to embrace conflict as a part of startup culture
A startup is a journey of questions with as yet unidentified answers. Most startups fail because they never find true enough answers to succeed. Startups succeed when the founders are focused on finding the truest answers to their most important problems. What is the best way to engineer a product that will delight customers? What is the most efficient channel to get that product into your customer's’ hands?
Toxic VC and the marginal-dollar problem – TechCrunch
Eric Paley Contributor Eric Paley is a managing partner at Founder Collective. More posts by this contributor Venture capital should come with a warning label. In our experience, VC kills more startups than slow customer adoption, technical debt and co-founder infighting — combined. VC should be a catalyst for growing companies, but, more commonly, it’s a toxic substance that destroys them. VC often compels companies to prematurely scale, which is typically a death sentence for startups.
The Platform Paradox
I often hear VCs say that they don't back products, they back platforms. I find that logic backwards and in many ways dangerous for founders. Platforms can provide a durable competitive advantage, and it's easy to understand why startups would want to create one. But great platforms are nearly always born from companies first creating great products with narrow, but compelling use cases.
Github for Greyhounds: Our Investment in Embark – Founder Collective – Medium
Snorkie, Miniboz, Cavazoo, and Scoodle would all be passable startup names, but they’re actually relatively new canine crossbreeds and represent just a fraction of the entrepreneurial energy recently invested in designer doggies. The Labradoodle, a hypoallergenic mix of Labrador retriever and poodle, the favorite dog breed of Miley Cyrus, the Norwegian crown prince, and the Paley family, only bounded onto the scene in 1955.
“Hustling is the art of practicing capitalism without capital”
Originally published on Scrappy & Strange, the Founder Collective Newsletter?—?Sign up here! David Frankel relayed this quote from Regie Gibson, which was delivered at Cue Ball Capital’s annual gathering, as a reminder that capital is a constraint?—?though probably not the biggest constraint facing most startups. Hustle tends to be in much shorter supply.
There’s No Shame in a $100M Startup – Hacker Noon
The era of unicorn startups has created a distorted view of entrepreneurial success. All the talk about billion-dollar exits has inflated the numbers that define a win. Starting and selling a company for $100 million dollars 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.
There’s no shame in a $100M startup – TechCrunch
One of our portfolio companies recently sold to a tech giant for just over a hundred million dollars. The acquisition gave us an exciting multiple in a short period, and each of the co-founders made more money than LeBron James last year. This sale was quite possibly the best realistic outcome the company could have expected and a huge win for all parties.
Welcoming Andy Palmer – Founder Collective – Medium
Today, we’re proud to announce that Andy Palmer has joined Founder Collective as our newest Founder Partner (and be sure to read Andy’s post explaining his motivation for joining FC.) David Frankel recently explained what we look for in this role: entrepreneurs who are wholly-focused on building their own companies and partner with our firm on a part-time basis to invest in other entrepreneurs (and in Andy’s case, the Cambridge/Boston startup ecosystem).
What Startups Can Learn from the Top 100 Kickstarter Campaigns
Data from the last five years of tech IPOs shows that startups that raise large sums of venture capital don’t perform any better than companies that raise small amounts. It turns out that the concept of “Efficient Entrepreneurship” also applies to crowdfunding. Among the top 100 projects in Kickstarter’s eight-year history, there are two clear venture-scale wins; Facebook acquiring Oculus for $2B and Electrolux acquiring sous vide manufacturer Anova Culinary for $250M.
Billions in Crowdfunding, Only Three “Venture Scale” Exits
Data from the last five years of tech IPOs shows that startups that raise large sums of venture capital don’t perform any better than companies that raise small amounts. It turns out that the concept of “Efficient Entrepreneurship” also applies to crowdfunding. Among the top 100 projects in Kickstarter’s eight-year history, there are two clear venture-scale wins; Facebook acquiring Oculus for $2B and Electrolux acquiring sous vide manufacturer Anova Culinary for $250M.
Announcing Collective Wisdom - Collective Wisdom
Despite what the movies show, startups aren’t born painlessly from inspiration on the back of a napkin to instant global domination. We’ve backed over 200 startups, including Uber, Buzzfeed, The Trade Desk, Coupang, MakerBot, PillPack, and SeatGeek and while each is unique, we have observed one common theme: startups are made, not born. Startups are built step by step. Often painfully. Some very quickly and others more slowly.
Lessons from 71 IPOs
Venture capital is a hell of a drug. Used properly, it's like adrenaline energizing many of the greatest companies of the past fifty years. Used incorrectly, it creates toxic dependencies. The conventional wisdom in the startup community is that when building the very best companies, more capital can be leveraged to accelerate even greater growth. But does this "go big or go home" approach stand up to scrutiny?
Venture capital is a hell of a drug – TechCrunch
Eric Paley Contributor Eric Paley is a managing partner at Founder Collective. More posts by this contributor There has been a lot of money sloshing around the startup world for the past few years. Cheap and accessible capital has advantages: More founders get the opportunity to pursue big dreams and previously “unfundable companies” not only raise huge amounts of money, but some ultimately achieve unicorn status.
The Probable, The Possible, The Delusional
Posted on 13 febbraio 2016
The Probable, The Possible, The Delusional
In 1961, President John F. Kennedy told a joint session of Congress that before the end of the decade, America would put a man on the moon. This was not an empty political promise to get elected, but a commitment of a sitting president boldly exposing himself to political ridicule in the face of failure. If we can take ourselves back to that moment, it would be fascinating to analyze the probability that such a feat could be accomplished.
When Burn Rate Outweighs Enthusiasm
Many business critics of Uber contend that the company is spending “unsustainably.” Despite that nearly all venture-backed startups burn capital unsustainably, Uber’s level of spending is viewed as particularly problematic among its naysayers. Negative press notwithstanding, Uber has now raised billions of dollars — many times over. How is this possible? Uber’s investors, myself included, are still wildly enthusiastic about the unprecedented velocity of the company.
Top IoT Companies: Startup How-To from SimpliSafe's CEO
This is a guest post by Founder Collective managing partner Eric Paley. For more coverage of Founder Collective, go here. For more coverage of SimpliSafe, go here. With all the talk about the Internet of Things, it’s easy to reach the conclusion that there have been many successes in the space. Unfortunately, the truth is just the opposite. Outside of Nest, Fitbit and a handful of other companies, the contenders have found limited success.
The Platform Paradox – TechCrunch
Eric Paley Contributor Eric Paley is a managing partner at Founder Collective. More posts by this contributor I often hear VCs say that they don’t back products, they back platforms. I find that logic backwards and in many ways dangerous for founders. Platforms can provide a durable competitive advantage, and it’s easy to understand why startups would want to create one. But great platforms are nearly always born from companies first creating great products with narrow, but compelling use cases.
The Platform Paradox
Posted on 28 novembre 2015
When Burn Rate Outweighs Enthusiasm
Posted on 13 gennaio 2016
Steering your startup through a downturn
Last month, the startup world was chattering about free money, and founders and investors alike were on their toes driving growth at all costs and trying to push valuations to unprecedented heights. This week, after the Dow dropped 1,000 points to start trading on Monday, the same people are on their heels, worried the party might be over. So what’s this all about? Why does the mood shift so dramatically every few years? This is the economic cycle.
Wasting Time With The Joneses – TechCrunch
Eric Paley Contributor Eric Paley is a managing partner at Founder Collective. More posts by this contributor Starting a company is like attempting to bend the world to your will. There are obstacles at every turn, and it’s never easy. Fundraising is one of those huge obstructions. Not only is the process of finding the true believers akin to finding the proverbial needle in the haystack, it’s also incredibly distracting.
Wasting Time With The Joneses
Starting a company is like attempting to bend the world to your will. There are obstacles at every turn, and it’s never easy. Fundraising is one of those huge obstructions. Not only is the process of finding the true believers akin to finding the proverbial needle in the haystack, it’s also incredibly distracting. Read More
Running Out Of Money Isn’t A Milestone
Nearly all startups use the same methodology to figure out when to raise their next round of capital. The founder projects the planned burn rate and estimates the day they will run out of cash. Then they subtract a margin for fundraising approximately four months from the date the company’s bank account will be empty, and declare the difference the fundraising-process start date. While logical, this method is highly flawed.
The Fine Line Between Success And Bankruptcy
When seed capital hits the books, the outlook of every startup is one of unbridled optimism. Founders, team members and investors are inspired by a singular vision and believe it can materialize into a world-changing company. If things go right and the product gets amazing results, optimism turns into euphoria. There are few experiences more rewarding than making big collective bets and winning together. This is the ideal of every startup that we all aspire to be out of the gate.
After Funding, Watch Burn Rates And Beware The Tyranny Of Incrementalism
After struggling for months or years without any financing, most startup founders relish the opportunity to finally have the seed capital to accelerate the plan. The first term sheet often feels like such a big accomplishment, not because the founder confuses the funding with success, but because the period before funding feels so excruciatingly slow. Hitting the gas is a dream come true. Unfortunately, the challenges of that opportunity are often unclear at that moment.
What to Expect When You're Expecting (Funding)
Nearly every week, I receive an email from one of our portfolio founders that reads something like: “Hey, Eric, great news! We just got out of a meeting with Dave from AwesomeVC and he loves what we’re doing. I have a good feeling he’s going to lead our Series A round.” Not long after, a few more superenthusiastic emails follow about the high probability that other VCs are also very interested and how the founder expects to wrap up the round quickly and painlessly. Then the balloon deflates.
How Not to Get Fired
Getting fired from the company you created is probably the last thing you can imagine. Unfortunately, it's a fairly regular occurrence that can have devastating effects on both you and the company. Dismissing a founder is never an easy decision for a board to make. In general, investors have good reasons to want to see you lead the business to long-term success.
A Great Idea Is Never Enough
Back in 1995, I purchased a used Mac laptop via auction on the Internet. The company that enabled that transaction doesn't exist today. That same year, eBay was founded and today is worth $68 billion. Amazon wasn't the first company to sell goods online. Google didn't invent search, and Dropbox wasn't the first server-based storage offering. Pick a successful company, and you can almost always point to the sad story of a failed predecessor that had the same core idea.
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