Numbers Can Ruin A Good Story

As I was reading Josh Kopelman‘s excellent post on the seed boom and Series A bust, I got thinking of some words of wisdom Mike Arrington once shared with me. He said “numbers always ruin a good story.”

What Mike meant by this is you can raise a seed (or Series A) on a story. But at some point, you will have numbers; users, user growth, revenues, and revenue growth. You will also have a burn rate. And those numbers will become the thing you are judged on and your nice story will be “ruined” by the numbers.

Now this is not always true. You might be one of the few entrepreneurs on a real rocket ship and your numbers will be your friend. If that is true, raise while the numbers are great. Because they might not always be.

But, particularly at the Series A stage which Josh’s post is all about, the numbers aren’t always so great. And your story will conflict with the numbers. And so you’ll have to change the story to reflect the numbers. Because you can’t change the numbers to reflect the story you really want to tell.

It’s a painful experience. But as Josh explains, it’s like skinning your knee as a child. Painful but necessary.

#entrepreneurship#VC & Technology

Comments (Archived):

  1. JoeK

    Two days ago your guest post suggested not raising more that you need, while the post you link to today at one point suggests the opposite. Is there any consistent rule to it, or do circumstances trump everything?

    1. fredwilson

      Where do I suggest raising more than you need?I’m never in favor of that

      1. JoeK

        Not you, but Josh’s post that you mention at the start, does.Or am I mixing up raising more with increasing pre-money valuation?

        1. fredwilson

          I don’t agree with Josh on that. Less is better in my book when it comes to capital

          1. David Semeria

            Not always Fred. Especially if less means less than you actually need.

          2. fredwilson

            i have seen that situation force entrepreneurs to be creative in ways that were transformative for their businessescapital starvation is way better than capital obesity

          3. David Semeria

            Agreed, especially during product development. But you often need capital to get the numbers to get the A round. I’m talking from experience here, and I think there’s a big gap in the market for these “mezzanine” situations.

          4. LE

            I’m looking for ways to agree with that statement (because it is based on your experience over the years) however having more money does allow you to iterate and take chances that you can’t take if you are strapped for cash and every dollar might be your last dollar. Meaning more bets equals more potential to win as long as you don’t go bust.I think it boils down to really what the people who have the capital obesity know about spreading around that money in order to hit on something that ends up working. So the devil is in the details.Having no money? Sure it forces you to think and to be creative. But here’s the thing: You should be doing that even if you have money. Maybe that is the problem.So they question is really how do you remain creative and trans formative when you are sitting on a pile of cash?

          5. RichardF

            That is definitely the problem imo, I’ve worked in and around more than a few VC backed companies, in finance, and watched the founders bloat the company in every conceivable manner once they have raised a big round. You can tell them until you are blue in the face, doesn’t matter, a big round inflates the bank balance (for a little while!) and more importantly the ego, which tends to stay inflated for longer….

          6. Matt Kruza

            Usually I feel the same but his point (at least one of them I think) is more is better at the seed stage IF you use that capital wisely to get more runway. He is saying having 18-24 months of cash runway is much better than 9-12 months as that gives you time to correct if everything doesn’t go perfect. At Series B or later more capital I think creates problems, but IF you are going to raise a seed vs. bootstrap I think that additional runway is completely essential. Thoughts?

          7. Matt Kruza

            Josh talks about the need to manage spending so I think he really is meaning it more on the additional runway per my comment below

        2. Matt A. Myers

          Fred’s a top-tier VC. He can likely pay $1mm for something that others may need to pay $2mm+ for, so why wouldn’t he leverage that? That’d be bad business if he didn’t. That shows you the value of relationship though or having a certain reputation – and a portfolio of billion dollar companies gives a fairly good reputation; relating to actual character, it’s a gamble I suppose, though if incentives are aligned then a VC should help you succeed.

  2. JimHirshfield

    Yeah, numbers are the difference between potential and substantiated value.

  3. andyswan

    Story: “Marilyn Monroe would be a size 12 today, a larger woman was preferred before society blah blah blah!”Numbers: 5 ft. 5.5 inches tall; 35 inch bust; 22 inch waist and 35 inch hips, with a bra size of 36D.

    1. mike


    2. mike

      Story: Republicans are more fiscally responsible than demsNumbers: see chart

      1. andyswan

        Why would you chart Presidents rather than control of Congress when it is congress who controls the purse?

        1. mike

          yep…different picture

          1. JLM

            .The only decline on this graph is when Republicans controlled Congress during the Gingrich years.It is not even Republican v Democrat (though the argument that the Democrats are “tax and spend” is well pictured)It is specific individuals, in this instance, Newton Gingrich.Nobody will ever be elected President whose first name is Newton but he was good at controlling costs.Just to be fair, the % of GDP provides an unfair picture of actual expense control because it looks unfairly attractive in times of growing GDP.JLMwww.themusingsofthebigredca…

          2. JimHirshfield

            Hi, how are ya?

          3. JLM

            .All good. Finished two books and getting them edited now.JLMwww.themusingsofthebigredca…

          4. JimHirshfield

            Nice. That sounds productive.

          5. ShanaC

            Yay. Got a publisher?

          6. JLM

            .Working with/on two agents and publishers. No firm commitments. Yet. Know any good agents or publishers?JLMwww.themusingsofthebigredca…

      2. JimHirshfield

        I’m not sure the chart shows what you think it shows.

      3. Dave Pinsen

        The W numbers being higher than Obama’s numbers are questionable. Guessing that’s a function of 1) attributing 2009’s fiscal year – which included a big part of Obama’s stimulus package – to Bush (something that Dems never did with FY 2001 in the past because it would have conflicted with the “Clinton left us a surplus” talking point), and 2) new census figures for 2010, enabling an expansion of the “per capita” denominator.

    3. JLM

      .As you well know, MM was built for comfort.Modern women are built for speed, well, except for some who are built for both comfort and speed.This is a very insensitive and crass, boorish even, comment. Please excuse me.JLMwww.themusingsofthebigredca…

      1. pointsnfigures

        If modern women are built for speed, let’s put the shoe on the other foot-what are modern men built for?

        1. JLM

          .Silly goose, modern man is made to take care of modern woman.You meet a beautiful woman, fall in love and all it costs you is every penny you make for the rest of your life, no?And why the Hell not?JLMwww.themusingsofthebigredca…

          1. pointsnfigures

            When I got married, I told my wife I would be making all the big decisions in our life. She could make all the small ones. Thankfully for my sake, in 27 yrs of marriage there never has been a big decision.

          2. JLM

            .Wow, I’m impressed. I usually just get informed as to what SHE has decided after the fact.JLMwww.themusingsofthebigredca…

          3. Kathy Pappas

            Do you agree a man still needs a woman, not just a modern woman

        2. ShanaC

          Being people just like modern women?

    4. ShanaC

      I’m semi similarly sized currently. I’m pretty sure I’m built for being shana.*shrug *

  4. William Mougayar

    “you’ll have to change the story to reflect the numbers.”What if the investors aren’t buying that “story change”?

    1. awaldstein

      Raising money is sales, selling the future and creating immediacy in the present. If you can’t close the deal, you loose.It’s that simple.

      1. William Mougayar

        that’s what I was getting at- sometimes you still can’t build a credible story with the numbers you have, or you’ll need to lower your expectations.but there’s also a flip side of this: there’s a sucker investor for every sucker story.

        1. awaldstein

          True.Sales is at its core not about credibility though. it’s about belief and urgency.

          1. pointsnfigures

            sales, but on next rounds of capital, the numbers matter. I remember looking at a liquor company. The valuation of the company is not driven by any important metric other than case sales. Hit this number, the industry is formulaic and spits out a valuation.

          2. awaldstein

            yupalthough few businesses are as predictable as that one.

        2. Joe Cardillo

          I wonder if good entrepreneurs see holding a story / #s / growth back as really painful, but also as an advantage, too. Pretty hard to put the horse back in the barn, in funding or in real life, but same goes for getting a spooked horse into another barn, too.

      2. Matt A. Myers

        People who don’t care to listen or are bad listeners, or not creative enough to understand – are the ones to avoid and you’re more likely to lose, waste time. Find the ones who understand, don’t try to convince the ones that don’t.

  5. Chimpwithcans

    I was just thinking along these lines, but in relation to Twitter and IPO’s. I think their numbers (and projections) have ruined their story.

  6. Matt Zagaja

    If you are publicly traded you can merely invent some non-GAAP numbers that fit the story better ;).

  7. LIAD

    These are my <metrics kpis=”” numbers=””>, and if you don’t like them… well, I have others.Groucho Marx

    1. Girish Mehta

      …..Never let the facts get in the way of a good story 🙂

  8. John Fox

    Great post. At the end of the day it comes down to execution and if your investors believe in the long term vision.

  9. David Mitchell

    Thanks, Fred. Thinking of Josh’s post – given the realities of booms and busts at different stages of investment (Seed, A, B etc.) How flexible do you like to be as a firm, moving to different stages of investment, based on the market? So, if A is saturated with capital, does it tempt you to move closer to Seed? And vice versa. Or do you stay in your sweet spot no matter what?

  10. LE

    And those numbers will become the thing you are judged on and your nice story will be “ruined” by the numbers.Back in the day, in order to get these things that they called “bank loans” [1] I quickly realized that I had to push revenue from one year to another in order to not have a down trend.Sales can never go down, only up. Same with profits. So you do what you have to do to make that happen. Many ways to do that.Plus I also hypothesized that there were additionally what I called “magic” numbers whereby if, in a given year, if you had already reached $101,000 in profit (a magic number let’s say for illustration purposes) try to push and bank any additional profit until the next quarter or year. Because having $110,000 in profit is only marginally better than $101,000 in profit but $101,000 in profit is way better “it’s six figures” than having $92,000 in profit. (For real, and I’m not kidding about this. If you don’t buy it your brain is primarily numbers based vs. human nature based…)People purchase and sell all the time based on “magic” numbers. Goods are priced based on “magic” numbers. I’m not even sure that is the correct term but that’s what I always referred to it as.[1] In order to buy capital equipment, not for cash flow purposes.

  11. Richard

    Why isn’t FCF the metric? It has proven itself in the publicly traded market as superior vs earnings?

    1. JLM

      .Because FCF is often zero?JLMwww.themusingsofthebigredca…

      1. Richard

        True, but a smaller negative number is better than a larger one.

        1. pointsnfigures

          depends on the business. Is it SaaS, social media etc

  12. JLM

    .It is easier to sell a “dream” than it is to sell reality.Seed investors are often “emotional” investors. Certainly friends & family, angels and even some VCs. There are no numbers.Series A investors are “rational” investors. They look at the numbers.The screen between seed and Series A should be a thinning of the herd just due to the intrinisic high failure rate of startups.Back in the day: “Nothing fucks up a good story like the body count.”JLMwww.themusingsofthebigredca…

    1. LE

      It is easier to sell a “dream” than it is to sell reality.Inverse: Better to be thought a fool than to open up your mouth and remove all doubt.Seed investors are often “emotional” investors. Certainly friends & family, angels and even some VCs. There are no numbers.Absolutely. Psychic income.

      1. pointsnfigures

        At seed, there is evidence. There are some numbers, but certainly not a track record like a Series A. Series A investors are at the Kentucky Derby. Seed investors are at the prep races.

  13. pointsnfigures

    it was a great post-I also like the line of “interest from a VC doesn’t mean a check”. The seed-series A-Series B is certainly messed up. There are some distortions (angel tax credits, free federal reserve money, bull market). My advice used to be raise 12-18 mos of runway. Now I agree with Josh, raise 2 yrs of runway if you can. Corporate finance should be seen as a strategy just like any other part of the business. Post seed, you have to hit milestones. But make sure your valuation is right. If you go too high, the hurdles are higher. Most deals I am seeing today are going too high.

  14. LE

    got thinking of some words of wisdom Mike Arrington once shared with me. He said “numbers always ruin a good story.”Mike is a great guy. Back before he was “famous” as a result of Tech Crunch, Mike was head of a company called which essentially grabed expired domain names. In order to do that they needed the batch connections that ICANN registrars were allotted. (Think of it like “spectrum”). Mike cold called one day and kept pestering me by email and by phone to sign up with [1] Me being the tough nut to crack resisted his early attempts for a few operational reasons. But Mike persisted and didn’t give up and we finally signed with them. One of the best decisions that I ever made. Made a ton of money off of for doing nothing. Pool rented our excess registry connections and for years we would get monthly checks ranging from a high of $20,000 (profit, not revenue) to perhaps 2k to 10k. [2] All because Mike persisted and didn’t give up. For years and years. Past the point where Mike left to start TC.[1] The “thing” that lead to the thing as I like to say. Lest you think people that are where they are didn’t put in hard effort Mike did (as he did with Techcruch taking in stray entrepreneur dogs at all hours of the night at his house..)[2] Revenue went down not because the idea didn’t continue to be good, it went down because when people saw how much could be made they started registrars solely for the purposes of grabbing expired domains and the slice that everyone could make naturally went down.

    1. JimHirshfield

      Fascinating story.Related question: Do you “monetize” parked domains? Or just buy and sell them?

      1. LE

        Yep I monetize parked domains.Here’s a funny story. I get an email from someone at Amazon yesterday saying:I’m with the Business Development team here at Amazon, and would like to speak with you about a specific opportunity (invite only) to launch your products as an Amazon seller we’ve recruited.Please contact me directly at ….. (redacted)I look forward to talking with you in detail about my team and how we can help.So at first I think it’s spam because I don’t have products to sell. But out of curiosity (and after checking the headers and seeing that it did come from Amazon) I write back “which products are you talking about”?Bizdev replies “I contacted you regarding your RC Helicopters products; specifically your Quadcopters with cameras, as there is a lot of demand for these products on Amazon. Are you interested in launching your products on Amazon with the assistance of my team? I’m happy to talk with you in more detail over the phone tomorrow morning, if that works.However bus dev is actually referring to a domain that we own which essentially is an Amazon store just a bunch of links to Amazon.At this point I will try to sell Amazon the domain. That’s probably won’t work because the bus dev person is in a different department and doesn’t get comped for doing that. So maybe I will try to give her a spiff if she can put me in touch with the proper person at Amazon and do the legwork for me.

        1. JimHirshfield

          I own some domains, but not sure they’re worth monetizing. You interested?

          1. LE

            Totally depends on the domains.Sometimes you get money just because they don’t filter out the robots clicking.

          2. JimHirshfield

            Hit you up on email, OK?

          3. LE

            Yes, you may go to the bathroom, Jim.

          4. Richard

            San you expand on this?

  15. Matt A. Myers

    What are your thoughts on raising $2.5mm seed for 18-24 months runway?

    1. JimHirshfield

      That doesn’t sound like a typical seed amount to me.

      1. Matt A. Myers

        “You’re suddenly judged on the data that you should have been collecting all along to show traction, growth, potential. So why not raise $2.5M in seed money instead of $1.5M to give yourself the best shot at perfecting this data? You should target 18 to 24 months of runway post Series Seed. The best time to raise follow-on capital is when you don’t need it, and 2 years of runway gives you the best chance to land in that situation.” – from the linked article.

        1. fredwilson

          too much runway and capital makes you fat and lazy

          1. RichardF

            first thing that happens, a whole middle tier of expensive management that expect all the toys that come with the job

          2. LE

            Human nature. So I wonder if there is a new financing vessel which could be engineered that would make it a bit more difficult to squander that money and to be fat and lazy. I bet it could be done in fact I’m sure of it.Back when I was a kid my dad had a deal with me where he would essentially pay for roughly half of anything that I wanted as long as I earned the other half of the money. It was a good system. Unless it was something that he saw no value in in which case I had to earn all the money. And anything that he saw tremendous value in he would pay for 100%. [1][1] For example he paid 100% of the Teletype that I wanted (iirc) so I could connect with the school computer system from home. Best money he every spent. I think I still have the receipt was $400 back then bought used from a accounting firm iirc. Picture of one below that I just grabbed off the net. Teletype Model 43 with 300 baud modem. I loved that thing. Only guy in college with a word processor at home.

          3. Greg Cote

            But if this is a bubble and funding will become more difficult, shouldn’t the more disciplined managers choose to raise more now at these valuations and then grow very slowly through the difficult period?

          4. Matt A. Myers

            It depends. With Fred’s logic, if you can’t be disciplined to not become fat and lazy, then no you shouldn’t..

          5. Greg Cote

            Right. It takes a disciplined team, including the board. One of the lessons of the Tech Bubble was that the companies who were smart enough to fill up the tank at the top and were good stewards of the cash made it through the nuclear winter after the bubble. And they were able to participate in markets where their weaker competitors fell by the wayside. It doesn’t mean that it was a great investment decision for the investor funding that round, nor does it mean that the company was able to legitimately grow into the valuation by the next round, but the company was still standing when the dust settled.

          6. Matt A. Myers

            So in reality by that logic if that $2.5 million is spread out over heavily ambitious plans, you’re staying lean and not lazy because you’re busy as fuck. Got it.

          7. Joe Cardillo

            @FakeGrimlock:disqus …

    2. fredwilson

      don’t love iti like the sub $1mm seed for 9-12 months

      1. Matt A. Myers

        I don’t hate it and understand it. I think the seed nowadays is meant to accomplish much more than building a product that shows traction, especially if you’re building a complex platform that requires many features (instead of a “single feature” app). In reality I imagine most already need to show traction and market fit before getting this level of money.And what do you think about his point that raising more giving you more lead time gives you an advantage in the Series A crunch? True if you can get good traction and numbers with $1mm then cool, but if you get good numbers with $1mm and you have another $1.5mm to strategically allocate – why not?

      2. awaldstein

        Fred–we are talking pure tech or a biz where the costs are development, sales and marketing I presume.Game changes a lot if you require money suckers like build out and commercial leases, capital equipment and the like.

        1. fredwilson

          that’s not my kind of investment to be honest so i’m not a good judge on that one

          1. pointsnfigures

            The salivating landlords could cost you $1M in real estate expense in SFO or SV!! (a joke but at $72/sq ft maybe not so much)

  16. ErikSchwartz

    Bubbles are the worst time to start companies. We made a $1.5M seed last nearly 3 years back before we had to overpay everyone.

    1. LE

      Bubbles might be the worst time but what is the alternative? Besides you are talking about an active opportunity not a passive one [1]If you are in a position to start a company (and there are plenty of reasons not to like you have a sucky gamble of an idea) then start the company.Don’t start the company because you are in a bubble if the idea is right and if you are in a position (family, living, cofounder wise) to start a company.When the bubble ends, and the situation is better financing wise, the idea might not be still good, or the people you need to work with may not be around anymore, or you might be married, have kids and so on. Plus you will be older and have more to lose. Or golden handcuffs etc.[1] Passive being you are an attorney and you want to invest in real estate but you have your day job so you wait to invest when the market is right. Sure bubble no good.

      1. ErikSchwartz

        Start when you have the good idea. Of course.That said…There are a lot of people starting companies now with meh ideas because seed money is relatively easy for those with the right pedigree. They are blowing through that seed money fast because salaries and rent are inflated by all the other people getting easy seed.You can afford to do a whole lot more experimentation when your average employee is making $90K rather than $160K

        1. LE

          There are a lot of people starting companies now with meh ideasI actually sold that domain to Matt Rutledge the guy who sold to Amazon. I also helped him buy the name of his holding company. Matt self financed all of this. He is in Austin Texas JLM should pay him a visit.Great site by the way. I just bought the headphones on it today:http://www.meh.comAnyway back to your point “blowing through”. My experience dealing with those founders on a fairly regular basis is that they appear to be quite judicious in how they spend money at least from my dealings with them. The ones that I have dealt with that are sitting on piles of cash are interested in payout over time and often I have to convince them they will get a much better deal by not paying the amount out and buying for cash.

          1. ErikSchwartz

            It’s not a matter of judicious or not judicious spending. It’s a matter of the market is what it is for talent. You need talent to make progress. That talent costs money. That talent costs much more money (but is no more, and perhaps less, productive (job hopping etc)) in a bubble.You will make much less progress with the same amount of money in a non bubble climate than in a bubble climate.

          2. LE

            You need talent to make progress. That talent costs money. That talent costs much more money (but is no more, and perhaps less, productive (job hopping etc)) in a bubble.First the bubble is only relative to the startups. The rest of the world isn’t in a bubble (for this).And that is for the “usual suspect” talent anyway.That’s one of the problems in this industry. Everyone thinks that they have identified the best and the brightest. That there is no talent other than the talent who has already self identified as wanting to live the life. And all the good people apply to XYZ already so no sense in any outreach to try and find them (like they do in sports from what I hear what do they call it “talent scouts”).Fact is in a country this size (this isn’t Iceland) obviously that isn’t the case.I’ve heard that people will post projects on github and do all sorts of things to get noticed as people who are in the game and clued in. But the fact is those people aren’t any more skilled at what they do because they decide to take that step (they are just clued in, smart, and motivated as opposed to just clued in and smart). And not everyone needs developers that are 100x as productive either. (At least to launch).That said of course it’s harder. But maybe that’s good because as Fred said in another comment “it makes you be more creative” which I say “you should be doing anyway”.

        2. ShanaC

          Yup. But cola should have gone up nationwide

    2. fredwilson


    3. pointsnfigures

      Yes. Better be working for the equity, not the pay.

  17. Sam

    Thinking about the relevance of these trends and the Seed/A round insights if we truly are “late cycle” and things are about to change dramatically.

    1. fredwilson

      timing is impossible to predict

  18. Girish Mehta

    The comment about seasonality is interesting – if 40% of your sales is in the Christmas Buying season, plan for your next fund raising in Feb after the sales numbers from the buying season are in that you can show the investors, and not before.Its of course the right thing for the founders to do.But I’ll say this from the other side – While leading a team across multiple markets with different buying seasons, this was also one of the things I was watchful to avoid for. That is – to avoid any ‘gaming of success’ that leads to incorrect future investments. Especially where, unlike Christmas, you have buying seasons based on events that don’t fall on the same day every year. Often business metric dashboards are setup to look at week-to-week results, and also at year-to-year metrics (to account for seasonality). But buying seasons tied to festivals in different markets don’t fall on the same day every year – e.g. Chinese New Year (China, Singapore, Malaysia..), Diwali (India)…even the late March Buying Season in Japan (tied to the Sakura (cherry blossom) festival and back to School season in Spring…but not an exact date like Christmas).I remember when one of the country markets proposed a radically different pricing lineup+ marketing campaign to launch 3-4 days before a festive buying season. The same season the previous year was off by 3 weeks. I said…I already know this is going to reflect as a smashing success in every dashboard a week from now – on both week-week and year-year metrics. Then we are going to conclude all these changes were right and lock them in for the following month. And three weeks later, the numbers are going to tell a different story…but our plans/media will be locked in.p.s. the point wasn’t that we didn’t go hard for growth in the buying season…we did. But rather to separate out any radical new initiatives whose positive outcome would lead to lock in of investments in future period, and run those initiatives in a more “neutral” buying period.this became a longer comment than I expected :-).

  19. daryn

    Very true, but it’s amazing to me how far some people can take just a story, whether in terms of capital raised or deferred time to good/sustainable revenue. And on big vision, while scary, that runway might be what you need to ultimately win.

    1. Joe Cardillo

      True, and raises an interesting query – what kinds of metrics investors look for at seed vs. A or B.

  20. Kirsten Lambertsen

    Wow, some disappointing and low brow commentary here today. Wish I could say I was surprised.

    1. Anne Libby

      Seriously. Not what I stop by for…

        1. Anne Libby

          Thanks, Fred. That’s brilliant, and more at the level of discussion I appreciate.

        2. Kirsten Lambertsen

          Thank you – just read it. Poses a very good question worth thinking about.

    2. ShanaC

      It happens

  21. george

    Under the circumstances, I think it’s critical to show sequential improvement. In part, that should help smoothen the numbers discussion/argument-the arrows are pointed in the right direction.Demonstrating sequential progress can help offset investor concerns regarding execution risk.

  22. Pete Griffiths

    One problem with numbers is that a company can become enslaved by metrics.Lets take an example – Quora. Quora has a very clear mission:”Quora’s mission is to share and grow the world’s knowledge.”This is a statement of admirable simplicity and clarity. So the question becomes – how does an organization with that mission go about its business? And here we run into problems. The site is overflowing with gibberish. Trolling is widespread. Idiotic questions pour onto the site and many are clearly stated in a provocative fashion. I don’t think many people who have used the site much would disagree that trolling is a problem.Is this a problem that is addressable? I think so. Quora already has a stated policy that makes it a condition of using the site the people are polite and respectful to each other. Users can flag rude comments and this policy is fairly aggressively monitored. It would be extremely easy to let users flag questions that are inconsistent with Quora’s mission statement. Hence if I read a question that asks ‘Do atheists eat their children?’ I can flag it and hopefully it can be deleted. This is so easy to do one wonders why it hasn’t been done already. But the fact is that there is little if any evidence that the trolling issue is being addressed. Rudeness is monitored but dumb trolling isn’t. And here, I think, we run into the metrics issue.All activity on the site counts as activity/engagement. Moronic trolling questions are still questions and the frustrated responses they are designed to evoke still count towards engagement metrics.Hence the Quora management are caught on the horns of a dilemma. They have a mission which I imagine they care about but if they police the site aggressively in the attempt to ensure that the content furthers that mission their metrics will suffer – engagement will drop. What to do? I can only judge Quora by its expressed behavior and the fact is that this problem with trolling has been going on for years (and getting worse) and there has been no change that suggests they wish to pay the price to remedy the problem. They have become enslaved by their metrics.I think this is a more widespread problem than is obvious. Metrics can pressure management into acting in a way that goes against the very core of their business ideals. It takes a strong team to pay the price.

  23. ShanaC

    What of lies lies and statistics

  24. joemedved

    I recall Josh’s partner Phin Barnes saying something similar at a panel we were on, which he attributed to someone else – “Nothing kills a dream like data.”

  25. Albert Hartman

    Raising a lot or a just enough funding should not have a bearing on how fast it is spent. A disciplined founder will spend cash as necessary and isn’t swayed by money burning a hole in their pocket. But having more than you think you need can let you take advantage of unforeseen opportunities that may come up, where too little cash does the opposite. Therefore the prudent path seems to be raise as much as you can under the most advantageous terms while you still can. At least as seen from the entrepreneurs viewpoint. For sure when the times change, VCs won’t hesitate to pile on the onerous terms when things swing in their favor (ref past behaviors).

  26. PJ Kershaw

    As I was told many years ago ‘Cashflow solves almost all problems’… that will never ever change.

  27. Kenny Fraser

    I also like Josh’s post – thanks for sharing. Numbers can work for you as well. If your story is backed up by a track record of achieving early milestones it really helps.

  28. kenberger

    Josh’s skinned knee analogy reminds me of, going further with the sentiment, Johnny Cash’s “A Boy Named Sue”.

  29. awaldstein

    Oh so true.Exactly what I’m doing now.

  30. Matt Kruza

    I agree in theory, but in reality has there been a billion dollar (unicorn) in the last decade that got profitable with minimal venture capital? Almost seems like there are very few… so yeah if you don’t want to get venture capital then capital from customers matters, but if you take venture capital the story is “grow at all costs”. The companies will either eventually go public or be bought out before developing a sustainable / fully-profitable business model. Hell, Salesforce and twitter (something like $80 billion in market cap) are not profitable. I get that they get money from their customers but that wasn’t there strategy until way after early financings? (probably after what Series C.. or later?)

  31. pointsnfigures

    top line revenue cures a lot of ills

  32. PhilipSugar

    Spoken from somebody that knows

  33. panterosa,

    Same here.

  34. Girish Mehta

    Cures some ills.Hides some ills.Sometimes, hides some long enough to cure later.Sometimes, hides some long enough to become incurable.

  35. Joe Cardillo

    It also depends a lot on what you’re building – if you’re doing B2B (and at times I wish I were…because, startups…) it’s a lot easier. But if you’re doing anything where your customer is hidden, like a social platform, that gets tricky b/c you have to interpret things that aren’t as obvious as hitting their credit card. Having said that, totally agree w/your point Charlie. The percentage of startups that could possibly hit that addressable market on slide 7 of their pitch deck, that is super low. Mistakes and/or unknowns in your operations plan, community building, and team can kill that potential in a heartbeat.

  36. Joe Cardillo

    Yup. Wasn’t hassling you just thought a little extra context helps. Though, to your original point, whoever’s paying you money and how often they’re doing it / are likely to continue, that’s really the metric that matters. Realistically it’s not in every entrepreneur’s constitution to deal with the uncertainty of that, like how keeping both happy in a 2-side marketplace is a whole other ballgame from just direct customer relationships.

  37. ShanaC

    Too true

  38. ShanaC

    Epic systems. Healthcare tech. No vc

  39. Matt Kruza

    Ok good point, and a good story. Took them 35 years I believe (founded 1979), which there is absolutely nothing wrong with. Judy is quite famous and quite an interesting person from everything I have heard.