- Hard to scale a celebrity fashion business in practice and as a story. A family friend started a successful jewelry company popular w/ Hollywood types and it's growing great, just nothing like Splunk, Notion, SpaceX, etc. There are outliers here - why everyone loved D2C co's like Dollar Shave Club - but gotta fit that growth model.
- Much of VC is largely story driven and, at least in b2b, rides a delegated sales/marketing motion (vs product/tech ROI motion). Once the first big money is in (pure pitch), there's a funny treadmill. Each round gets spent on artificially pumping numbers (big marketing, big sales, ...) enough to hit the next round before the money runs out. As long the #'s match what looks good in a deck, the co is largely good. However, most investors don't actually do truly deep diligence to identify whether the core is hollow, just that if there's enough that in 18mo + 36mo there's a good enough story on getting a bigger investor in. That can easily be something like "ignoring company quality, is there any sort of market demand here?" Each startup has issues and VCs often have surprisingly little time (ex: read up on Tiger), and you only hear about the Yes's and not the Passes (startups just need 1-2 Yes's), so not surprising to see some dumb/ok-money float in. So 7 years and $100M+ of funding later, sales/marketing-driven customers probably start churning out and the leads are burned, and oops... but maybe it's ok and they've exited. Bringing back to the founders, it's not that they're building a great company, but that they can sell that story and delegate operations to the 'adults' (sales/marketing/engineering) who keep the façade alive through the hollow growth of an otherwise busted product. There's probably a similarly unsatisfying set of common stories for consumer co's ;-)
- Hard to scale a celebrity fashion business in practice and as a story. A family friend started a successful jewelry company popular w/ Hollywood types and it's growing great, just nothing like Splunk, Notion, SpaceX, etc. There are outliers here - why everyone loved D2C co's like Dollar Shave Club - but gotta fit that growth model.
- Much of VC is largely story driven and, at least in b2b, rides a delegated sales/marketing motion (vs product/tech ROI motion). Once the first big money is in (pure pitch), there's a funny treadmill. Each round gets spent on artificially pumping numbers (big marketing, big sales, ...) enough to hit the next round before the money runs out. As long the #'s match what looks good in a deck, the co is largely good. However, most investors don't actually do truly deep diligence to identify whether the core is hollow, just that if there's enough that in 18mo + 36mo there's a good enough story on getting a bigger investor in. That can easily be something like "ignoring company quality, is there any sort of market demand here?" Each startup has issues and VCs often have surprisingly little time (ex: read up on Tiger), and you only hear about the Yes's and not the Passes (startups just need 1-2 Yes's), so not surprising to see some dumb/ok-money float in. So 7 years and $100M+ of funding later, sales/marketing-driven customers probably start churning out and the leads are burned, and oops... but maybe it's ok and they've exited. Bringing back to the founders, it's not that they're building a great company, but that they can sell that story and delegate operations to the 'adults' (sales/marketing/engineering) who keep the façade alive through the hollow growth of an otherwise busted product. There's probably a similarly unsatisfying set of common stories for consumer co's ;-)