Fear VS Greed in startups

New Years is soon. Good children who have been clever all year will receive gifts from Santa Claus. Bad kids will go to the forest. And, of course, the elder on the reindeer will not forget all startups and will bring them many, many investments. Not less than a million dollars. Yes, and ask for it one percent of the future business ...

And what if the grandfather was tied up on the approach to the good guys and deprived of rights? If he got stuck in traffic? What could have happened to him? How to be those guys to whom the grandfather did not get?

They will have to write another letter to the North Pole, wait for the next year or look for a more real investor. Why am I at all?

Very simple. This article caught my eye: While McAfee and Intel were developing, we already did . Read it. Put a plus. Good thing guys are moving. Your antivirus. Such that Intel and McAfee (I'm not even talking about Kaspersky) can not repeat. But to finish it, of course, we need investments.
')
Only the developers believe that “an offer to sell a 50% stake for $ 50K” does not suit them, and promise that “in a year, we will present you with our anti-virus scanner. After a couple of years, we will refute the stupid template, which says that you need a lot of money to develop your antivirus. ”

What can I say? Through it passed all who started their startup or business. The feeling that you are sitting at night and realize your dream, an idea, and then the uncle comes with a wallet and gets half or more. These are millions of dollars in the future ... I laugh at his face on an offer of $ 50,000 for 50%.

Do not let greed ruin the idea

Once, when I was reasoning in exactly the same way, I very simply explained the essence of what was happening. In this situation, there are only two entities. Greed and fear.
Greed makes you refuse to invest. Belief in the future millions of blinds and prevents sober look at things. Greed is ruining your idea, leaving it only an idea. She just dies at birth.

What, then, is needed to prevent this from happening? There should be a healthy fear. You must realize that your idea will be implemented by competitors in a short time, and you will lose it. You must understand that now you are alone, and competitors have the means to hire ten teams. This is IT. Everything should be fast here. Today it is an innovation, and tomorrow everyone has it.

Ask yourself. Do you want to own 49% of a company that is worth millions or is it 100% of a company that has an idea already implemented by competitors?

Idea for a million

"The money ran out, and we decided to sell the emulator to some companies ... But no one bought"

I remember reading somewhere. How many people do you need to make a box office game ?! Six programmers, four artists and ... a hundred managers. It's true. In 99% of cases, that's how it is. And to think that if the antivirus is already ready and it is already worth something, then this is a delusion. Until it is sold, it costs nothing. Or rather, it is worth the costs that must be incurred in order to sell it. The only problem is that it is not yet ready and needs some work. Three years? And will it be necessary for someone in three years?

But why do investors give so little money if the idea is in a million? Forget about that thought. Nothing is ready yet and nothing is sold, it costs zero. The investor does not buy a share from you. He invests in your business. And if nothing happens, he loses them. Fully. And at the initial stage the probability that everything will turn out is very small. You say: everything will turn out 100%. We will take all the markets. And there is no risk. Then why, you do not go and do not sell, for example, an apartment? Yours Or parents. You can put it in the bank. And act! It is much easier than finding an investor (as far as I know, the creator of Odnoklassniki did just that).

From idea to product

And what if $ 50,000 is not enough? If the software is almost ready, then it should be enough. To prepare it for sale and to show that it began to be sold and generate income. And then, you will be able to attract another investor who will buy from you, for example, 10% for $ 200,000. The work will continue, your share will decrease to 44.1% and you will take the next step in turning your idea into a product.

Why did I write this? Well, first of all, articles have a positive effect on karma, and if it grows, then the probability of Santa Claus arriving to me will also increase (he also determines who he behaved as karma). And secondly, what is actually more important, I really want more good ideas to be brought to the product stage. To truly innovative ideas do not die, not having time to be born due to the fact that greed does not allow them to develop. The idea should be more important than any money. Give it a chance! Steve Jobs had 2% at Apple. But it was completely his company. He developed it not for the sake of money. Learn this, and then we will become not only the first in what we have invented, but also the first in what we have invented and realized!

UPD: As I expected, there were many interesting comments and I would like to answer them here:

1. “Judging by previous articles, a person does not seem to be an investor, but it looks like a dirty bargaining - an attempt to find fearful and convince that 50 thousand (2 person-years in Russia in DC are an average programmer, but not developers of this level) are worth a controlling stake shares. I think they know how to make money on food, and in the meantime, the investors' line-up will line up as their development goes and the results are shown. ”

The queue of investors will never line up by itself. Very naive thought. It was like in Soviet times they liked to grind schoolchildren, they say, be smart, learn well and then they will notice you, come and make you happy. All by itself you will succeed.

And then the person does not understand why it is with red diplomas he lives worse than people who do not have them. Or why is he all so beautiful, just the director of the new branch (for example) was not appointed him.

Throw this nonsense. We need to work in all directions and stop believing in Santa Claus, who himself will arrive. Develop a product, move it yourself, sell it yourself. Users, investor. And then you get the desired result. And the idea that you will develop 10 years and someone will notice you is wrong. It will not be this.

As for bargaining. This is the market value at this stage of the company's development. After users appear and the first sales go, it will be possible to get more.

Reduce the risks of the investor and you will increase the price tag. Now the investor risks very much. The product will not be completed and the money will be wasted, the product will be completed, but no one needs it, the idea has already been patented and courts with other anti-virus companies are waiting for you.

Complete the first version. The risk is reduced. Sell ​​it at least a hundred users. The risk is again reduced and the investor is ready to invest more. I hope my thought is clear.

There are no goals to bargain on my part. There is a goal to inform that an unfinished house is cheaper than an unfinished one. A house in which it was possible to sell part of the apartments is more expensive than a house in which there is not a single buyer.

2. > competitors have the means to hire ten teams

Yes, at least twenty, when it comes to innotations, in the foreground are competent specialists, not Indians. Jobs you do not replace even if you bring all the Indians together and make them work.

If the innovation is completed, that is, a working product is already ready, users have started using it, and this number of users is growing, then you are right. And while this is just an idea, it is not.

I will give an example of Youtube. Was it possible to repeat their idea? Easy. That's just to take away users from them within a reasonable time will not work. Therefore, they were bought. Just like Bing now can’t pick up Google or Yandex users. Although there is money.

Only here is the reverse side. Now there are a dozen of known antiviruses with a huge client base. There are large development teams that cost at least $ 100K per month. How to convince the investor to invest in another antivirus, if he does not have any clients?

3. This is a greedy investor.

100% true. The investor is also a man. And he also has fear and greed. Greed makes him ask for a large stake in the project. But if he is intelligent, he should understand that if the share is too large, then the motivation of those who develop the idea will be much lower. And at some point they can simply leave, open the same or another business. This is his fear (besides the fear of losing money). But he also fears that if programmers who have never done business have nothing to do, then he will need to invest even more. Take control in your hands. And then you need control in the company.

4. Wrong thoughts you have in basis, dear Coolver ...
Investments need to be taken only if they really give a qualitative breakthrough.
and if they offer $ 500 thousand for 50%, and this is not enough according to the calculations (“should be enough,” and CALCULATION), then they are also not needed as $ 50 thousand and vice versa, if $ 30K is enough - take 30 for 30%, if you really can not trade an investor.
Getting an investment should be no less thought out than issuing it. It is also not bad to ask yourself questions of who gives them out, for what purpose, and so on ...

This is the case. If you have an undershoot when jumping through a 50-cm precipice, is it a lot or a little? You can not jump over the abyss 99%. You need these 50 cm. And if they help you jump over, and there are no other options. We must take. Otherwise, of course not. You can not manipulate the categories a lot or a little. It should be: enough or not enough for ... and then the goal.