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Comment by scorchio | Hacker News Reader

The unnatural way Homejoy raised their seed rounds, with Cheung basically calling up Levchin and PG [1] was instrumental in setting up a failed business. This gave the startup undeserving social proof and let to the huge funding it should have never received.

[1] https://www.youtube.com/watch?v=lVDmyRxeGCo&list=PLQ-uHSnFig...

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Without specific reference to any company, "Convincing an investor to invest in a company which is not, at the present moment in time, either profitable or cashflow positive" is not in any way exceptional or unnatural. That's the nature of the game in early stage investing.

They're all high-risk companies which, if you simply linearly project out where they are today, will "default to dying" (to use PG's phrasing). Sophisticated investors bet that they can perceive some X factor about the business, the market, or the founders which will cause the business to actually not achieve the default outcome. Usually they lose these bets. Occasionally they bet that two Stanford gradudate students who know nothing about business will nonetheless figure out a terribly difficult CS problem allowing them to unlock money from an oversaturated low-margin business that every smart analyst correctly believes has no future. If you invest in nine $STARUP_WHICH_FAILED_INGLORIOUSLY and one Google you do very well for yourself.

To misquote the Wire: "All in the game, yo."

I agree. But such access to Silicon Valley luminaries is rare and a seed round from PG and Levchin is going to distort and inflate investment in subsequent rounds.

The initial seed round gave Homejoy more rocket fuel than was natural. I watched the speech live, and at the time I felt that Homejoy was a Mini with a jet engine. It was imbalanced and was likely to blow up.

tl;dr; summary of video -- "The theme that most people want me to talk about and which I will oblige today is ... how not to die in the context of a startup. ... Our goals (1) make people happy, (2) build a huge humungous business, which is a proxy for making a huge impact." She goes on to talk about how they spent years looking for the Homejoy idea since they did not have any personal problem that they cared enough about. At 22:00 she talks about getting $25K each from Max L. and PG: "It's like skydiving... and a hundred feet before hitting the ground, you magically get pogo sticks and bounce up. ... Now we have over 40 million in investment and we are living the dream. ... The good news is that you only fail if you stop trying." She also ends saying that her success is due almost entirely to hard work, not luck.

>"The good news is that you only fail if you stop trying"

So when did HomeJoy stop trying?

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