Re:First Round Capital Open Application for Startups
by jasode on Wednesday April 22, 2015 @05:21PM
(#9423653)
Yes, the "signaling mechanism" is one of the oldest kind in civilization: if others you know & trust see something of value, then you give tremendous weight to that opinion.
A parent would rather hear about a good babysitter referred by a friend rather than watch 10 video presentations of babysitters that nobody in her circle knows. The same goes for finding doctors or lawyers. Your colleagues opinions on professionals they know will be more helpful than watching 10 videos from unknown attorneys. An investor is not any different in preferring referrals over videos.
Check out the importance that Larry and Sergey placed on being referred to Sequoia and how they needed help to make it happen. It is a story told by investor Ron Conway from one of the YC startup videos:
A parent would rather hear about a good babysitter referred by a friend rather than watch 10 video presentations of babysitters that nobody in her circle knows. The same goes for finding doctors or lawyers. Your colleagues opinions on professionals they know will be more helpful than watching 10 videos from unknown attorneys. An investor is not any different in preferring referrals over videos.
Check out the importance that Larry and Sergey placed on being referred to Sequoia and how they needed help to make it happen. It is a story told by investor Ron Conway from one of the YC startup videos:
https://www.youtube.com/watch?v=uFX95HahaUs&feature=youtu.be...
https://www.youtube.com/watch?v=1z87RGFGuxQ&feature=youtu.be...