In my opinion its a great investment Saturday, October 07, 2006
David Beisel's blog, Genuine VC, makes a succinct observation on the challenge when reviewing a new offering.
As a general reaction, I’ve found that when VCs and other non-marketing business people look at consumer-facing services offered by new startups, they often fall into one of two polar camps:
1. Overly skeptical about the ability to facilitate the adoption of a new service whatsoever. “It’s too tough to change consumer behavior” is a mantra which I’ve heard numerous times.
2. Overly positive about the chances for the adoption of a new service based on a small dataset of reactions from familiar people (like their own, their families, or the early adopter / techie TechCrunch crowd).
He's absolutely right and I've often sat in meetings where reactions fall into one of these camps. Trouble is, your own personal experiences/prejudices will always colour your view but then investment is a subjective game. Sure, the numbers & graph can provide "great insight" but until the idea/venture is exposed to real sunlight in the form of customers, it genuinely hard to be completely certain.
There are many companies whose products/services I wouldn't buy, not because the service is bad, but simply that I don't have needs/requirements that they satisfy. Yet that doesn't mean I won't be investing in them - can I envisage someone else buying the product? Who might that be and why? What do I base that judgement upon?
No one gets every investment decision right - that's part of the excitement/fear.