Be forewarned — it’s “not for the faint of heart” (be prepared to have preconceived assertions challenged, flogged, beaten down and then cussed out for good measure). It’s from Dave McClure of 500 Startups, who advises investing before the product/market fit and then doubling down after.
He uses as an example the Michael Lewis book (and soon to be Brad Pitt movie) Moneyball, which chronicles the analytical approach of the Oakland A’s under GM Billy Beane to field competitive teams while operating under inherent revenue disadvantages. Here’s an excerpt:
IMHO, whether or not your fund is large or small is not the primary issue in consumer internet investing. While my biased belief is $10M-100M seed funds are a lot easier to manage & more entrepreneur-aligned than “traditional” $250-500M+ funds, there will likely be a few winners and LOTS of losers at both ends of the spectrum. Probably more BIG fund losers than small fund losers, but still there are many other factors than fund size that will predict for success or failure.
No, the primary issue is that investors of all shapes and sizes have become incredibly lazy and complacent over the past two decades, measured by both activity and by IRR. Meanwhile, the consumer internet has brought a tsunami of technological & behavioral change which has resulted in stunning reductions in time & cost needed to distribute products and services to the over 2-3B connected people on the planet.