Insight
Western: Founders amass more wealth through frequent, smaller startup exits
“We think that most founders can actually use the overfocus on growth to their advantage, like a judo artist, either by more often choosing the lifestyle option, or by having a more sober approach to their relationship with their companies and with VCs, by actu…”
Insight
Western: VCs are incentivized to force startups into unicorn outcomes
“So, if you're a VC, you have the incentive, no matter where you think the company might initially fall on this rank, force ranking of multiples of invested capital, you have an incentive to try to force every company to be a unicorn, to try to shoot for the st…”
Insight
Western: Raising VC funding removes attractive mid-tier startup exits
“Each time you raise VC funding, each time you bring more investors into your cap table, each time you have to introduce greater and greater growth projections in order to justify that valuation and get to the next step, you take more and more options off the t…”
Insight
Western: VC-founder incentive misalignment forces hypergrowth and ruins startups
“We at Think Three think that there is an incentives misalignment, fundamentally, between most VCs and founders, and that that incentives misalignment is pushing companies to grow too much too fast, and it's ruining great companies like PowerDrive.”
Insight
Western: VCs push portfolio companies harder during market downturns
“Because ironically, if and as things start to turn sour, VCs actually have to push harder to make up the losses.”
Insight
Western: Most B2B startups should prioritize customer retention over growth
“Most companies aren't necessarily in situations where they can grow that quickly, so we find they're usually better off actually focusing on retention, not on growth, but they can't make that trade-off because they feel a lot of pressure from their venture cap…”
Insight
Western: Founders secretly prefer lifestyle businesses but feel market pressure
“Most of the founders we talk to actually want to choose the lifestyle option, but they're almost sort of embarrassed by it, given the market we're in, so they feel like they have to sprinkle a little bit of big leagues into it, and that just makes their lives …”
Assertion Not checkable as stated
Western: Only 0.02% of VC-backed startups become unicorns
“There was some now famous research done by Cowboy Ventures into outstanding VC-backed startups, and they found that 0.02% of VC-backed startups become unicorns, and our own research suggests that only about 10% are ever on escape velocity trajectory or above t…”
Insight
Western: Founders should sell early, move on, and start anew
“Founders should more often be selling their companies more quickly and moving on to start more companies because they get a lot better every time they do it.”
Assertion Partly supported
Cowboy Ventures: 90% of Unicorn Startups Never Pivoted
“Cowboy Ventures also found, and I'm plagiarizing their stuff that once they were in the Unicorn Venture, 90% of those startups never pivoted, and a hundred percent of those startups were always above the Mendoza line, the escape velocity trajectory.”
Insight
Western: Pursuing rapid growth merely introduces volatility and widens outcomes
“Growth is another word for introducing volatility. Widening the fan of outcomes for that company.”
Prediction Not checkable as stated
Western predicts PowerDrive founder Marco will lose his company
“Marco's gonna lose his company.”
Assertion Supported
Western: One or Two Portfolio Companies Drive Entirety of VC Fund Returns
“They follow a power distribution where literally one or two companies drives the entirety of the returns. 20 to 30% plot along and return between one and two X, and two thirds actually lose money.”
Assertion Partly supported
Cowboy Ventures: 90% of unicorn founding teams worked together previously
“Interesting corollary from the same Cowboy Ventures research that 90% of unicorn teams had worked together previously, and the average age of a founder was 34.”
