Raising Money, Post Script
I forgot an important thought in my previous post, Raising Money.
Sam Altman: “Every morning wake up and say to yourself: ‘They need me more than I need them.’ Entrepreneurs are the limiting reagent in the startup equation, not investors.”
Oh so true.
I previously wrote to upcoming Y Combinator companies about:
1 - Having courage to face reality and change direction as appropriate
2 - Raising their next round.
August 14th, 2007 at 11:31 am
It’s such a pleasure to read the use of a chemistry metaphor I’ve used so often.
August 14th, 2007 at 8:21 pm
In negotiation theory, this is called leverage. Check out this Wikipedia entry which I reproduced in party below (I wrote it):
–
http://en.wikipedia.org/wiki/Leverage_%28negotiation%29
In negotiation, leverage is a measure of which side, at any given moment, has the most to lose from a failure to agree.
Types of leverage include positive leverage, negative leverage, and normative leverage.
Normative Leverage
Normative leverage is the application of general norms or the other party’s standards and norms to advance one’s own arguments for one’s own good. For example, you have normative leverage when your negotiating opponent says that he only pays Blue Book value for cars and you show him that the Blue Book value is the amount your charging.
Positive Leverage
Positive leverage is a negotiator’s ability to provide things that his opponent wants. For example, you have positive leverage when your negotiating opponent says, “I want to buy your car.”
Negative Leverage
Negative leverage is a negotiator’s ability to make his opponent suffer. For example, you have negative leverage if you can threaten your negotiating opponent: “If you don’t fulfill your commitment to me, I will ruin your reputation.”
Negative leverage is an option of last resort for most negotiators, it is the “nuclear option”.
August 18th, 2007 at 6:25 pm
hi i enjoyed the read
September 19th, 2007 at 2:12 pm
So simple, yet so true. I think it’s funny when people ask us at USV if we want to see an interesting new deal. That’s like asking a fireman if he wants to see a fire.