Not that I’m particularly proficient in Romanian, not that my previous attempts to translate the tense and often wooden syntax of Mircea Popescu’s archived repertoire pe Trilema have gone off without a hitch, and not that there aren’t people better suited to this task than I am,i most notably MP himself, but as this little project has been open for over two years now and the call to action was just recently reiterated,ii it’s hard to imagine that my efforts to get the ball rolling will be entirely wasted.
So without further ado, with all due respect to the original, and with the to-me-untranslatable left untouched in the original,iii I present my translation of Dezavantajele finantarii , or The disadvantages of funding :
As an entrepreneur, one of the best moves you can make is to acquire external funding.
This will have various positive effects, such as improving morale as well as the material position of your group of developers, as well as confirming the business potential and the team’s competency to the public, all without the need for advertising.iv And these are just some of the more minor advantages. The main advantage is the intelligent application of professional competencies of people who are better paid than the entrepreneur in question, to say nothing of his team.
These benefits evidently depend on the quality and size of the investors. If it comes about that an Angel is a rich uncle or some kind of heir or a millionaire with his circle of friends and acquaintances (who in their feeble adolescence tend to disregard the hierarchy of social organisation that dominates adult life) the benefits are significantly limited. In general el nu poate contribui cine stie ce fonduri, nu neaparat pentru ca nu le are la dispozitie, cit pentru ca nu isi poate justifica riscul.
The reason they cannot evaluate the risk arises from their inability to thoroughly investigate the project, which is based on a poor understanding of the details and a poor understanding of the context in which it unfolds. Deh, omul bogat are treaba cu a-si conduce limuzina, ca nu poate angaja sofer, si a se tine la rind cu gura tirgului, ca nu stie la ce servesc niste secretare-spion bine alese. As such, he has no time (and mainly not much interest nor ability) to micromanage the “shitty Astorian children,” as a certain billionaire graphically described them.
But if investors are from an investment fund (as so happens in America, we [in Romania] not having this), and especially if the investment is structured with multiple participants in this ineffable thing called a “financing round” (which is defined too broadly to go into detail in the Romanian language), then the entrepreneur will enjoy the full benefit of, as I mentioned, the cleverness and professional abilities of people who are better paid than the entrepreneur in question, to say nothing of his team. Because yes, a board member who’s a partner in an investment fund has employees costing millions a year, which a developer no matter how senior will never ever touch, and which employees are additionally friends of other guys whom the developer similarly cannot touch, given that there are thousands of the former category and millions of the latter.
The benefits brought forth from the self-styled financier of the project fall into two categories : one proper and one poison. The project is the representation of its own capital. The heir/rich uncle or friend cannot argue against a capital project because it doesn’t look for their advice. What do they know ? But if you claim to be a financier in a superficial country and you can verifiably correlate your support with successful projects… well done. The market (but not necessarily other financiers) will accept this as good, and that’s it. That’s it. It becomes reality, as Groupon is a successful project,v like broadcast.com is worth six billion dollars without having any value, and as with hundreds of thousands of other examples. The market is, in the short term, a voting machine.vi
The poisonous benefits are those of organisation, representation, and financial management. Here we come and here we go : on the one hand, some entrepreneurs are quite simply idiots when it comes to business and organisational management. So it is, they’re known for their exemplary imagination in this regard. So a calm-handed intervention led by a mind that’s able to see over the trees in the vicinity is then to be saluted. The example of Fred Quimbyvii is even more illustrative in this respect, as is the counterexample of 3D Realms. On the other hand, discipline is the enemy of creativity (not for fundamental reasons, but from bad parenting on how to be creative) and as such the results are occasionally appalling.
A good example in this respect is the circumstance that we have a chance to talk about here, because yes, the entire discussion up to this point was a simple introduction. The remarkable retardation of this cultural space requires 700 introductory words to get into a position to discuss the business issue. So, talking to a friend about your business’ recent improvements is cool. Buddy is a citizen with a solid theoretical understanding of reality, and therefore the discussion revolves around mathematical representations and other theoretical approaches than around the forest with the trees in it, except with the one notable exception that the entire theoretical bubble burst once the needle struck the heart of the affairs.
E interesant de observat relativ la importanta stimularii cu karma ca dialogul nu se va muta pe dtngviii although there are optimal conditions and there do not exist limitations for producers of 10`000 messages per month.
Indeed, and I find this quite interesting. I know why this doesn’t happen, by the way : the man doesn’t want to reveal himself in the closet, he wants to reveal himself in the public square. Mommy ! MOMMY ! LOOK !!! Man wants the attention of his fellow men, and as such dtng is not to be, at least not yet.
Stuff that leads us to obvious causes for simple animations cannot be a final purpose, as there can nowhere be an end : you must have it read by somebody ! If no one reads it, then what’s the point of writing it ?
This is the strategic mistake that Facebook and Twitter, for example, haven’t managed to avoid, and as a result this is also the main complaint of their users : nobody read it anyways. As there’s really no way. It’s too messy. How is all this being graded ?
The poisonous benefits are those of organisation, representation, and financial management. Whereas the only measurement currently used in business represented before the market is the number of users, the amount of activity, and brief animations, finance puts pressure on optimising (on the upside) the animation. At the expense of everything. And anything. If the number of posts on Twitter increase from 10 mn to 10.5 mn, the financier will consider that the service has progressed. Even if the average number of people who read the messages fell from 10 to 0.1, and even if it means that the service collapses into a vacuum next month.
Economics is the science of optimisation, and this is nevermore the case than after variables are tracked and measured, which is why it’s perfectly capable of producing disasters such as Easter Island. The economy cannot follow benefits, only elaborate versions of intellectual masturbation. As such, economists need entrepreneurs, for what is called “vision” : the ability to intuit, and intuit correctly, well, beyond the veil of numbers, smoke, and mirrors. In comparison, entrepreneurs do not really need economists : their gifts are too often poisoned.
If investors like myself are on board, we could never impose a measure like the former one without screaming, fist fights and mass violence. And we probably wouldn’t have given up, being stubborn as all financiers are, but rather fight. The good news is of course that what emerges is a lovely position, and while it could enter into an area that would sink an incompetent team, it didn’t, and while it could enter into an area that would sink an incompetent investor, it didn’t. At least not yet.
The disadvantages are that it will finance th stone around your neck, a stone that has devilish abilities that cannot be properly measured in time. To use a metaphor, if you’re accepting a 5 kg stone around your neck, you’ll calculate the necessary muscular strength and go to the gym to improve your sternocleidomastoids, so you’ll know that you can swim with a stone of 5 kg around your neck X distance, so when you have to swim Y, where Y is less than half of X, you’ll figure that you can do it. Then Y turns out to be in the swampy waters filled with mangrove roots and the rock turns out to be in the shape of a railroad tie. And so you’ll drown, not because of the weight of the stone, but from its form. Who would have predicted that ?
The experienced entrepreneurs. I mean, in other words, you. The new and improved you.
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- It must be disclosed that I’ve never personally been offered funding for a business that I’ve either started or been in a leadership role in, so I’ve yet to experience the first-hand trade-offs of such an “investment.” This having been said, I am in a leadership role of a firm that is passively seeking external funding and speaks openly of “buy-outs” and the like. As such, this topic is of considerable personal interest.
As this article’s subject matter may also be of interest to you, Mr. Entrepreneur, and yet you haven’t the stomach for either MP’s candour nor his native tongue, allow me to bridge the gap. It’d be my pleasure. [↩]
- The whole of You know what gets no airplay ? Unflattering truth, where said recent reiteration of said open project was made, is highly recommended reading for aspiring entrepreneurs. [↩]
- Should suitable translations be left in the comments section, I’ll gladly fills in the gaps accordingly. Go community ! [↩]
- We really can’t proceed on any discussion about advertising without this gem :
First off, advertising generally is a horrible waste of money. Among that sad field, online advertising is the absolute utter worst. In fact, advertising expense is such a bad move for a new company, you can comfortably short anyone doing it and never lose money.
Second off, even if it worked, advertising is a provably loser move in a “nascent” anything. A dollar spent by Coca-Cola today to keep the pop guzzlers guzzling pop is not terribly likely to help Pepsi. In fact, it’s likely going to hurt it. But if you’re advertising “cellphones” in 1995, or personal computers in 1985, you are in fact driving the market not your own product. Every dollar you spend helps your competitors too, maybe not a dollar’s worth… or maybe more! It’s unqualifiable, and for this reason a horrible fucking idea.
Third off, “network effect” as understood by noob “investors” is bullshit. Nothing works that way in reality. If you actually wanna do sociology, well then guess what sonny! You have to actually learn sociology. You know, the trade, a profession of sorts. At the very least study the god damned TvTropes wiki, preferably starting with hype backlash and stuff. They know a little more about “network effects” than twitter entrepreneurs do.
- Yes, the same Groupon with the dead empty office in Sydney and probably a boatload of other dead empty office in other major cities around the world (how better to blow VC dough ?). And yes, the very same “let’s make coupons cool!” scam that lasted all of a year and shortchanged no small number of small business owners, quite exactly like Facebook does. For at a little bit longer, at least. Then, of course, there’ll be something else. Something the likes of which the world has never seen. Had the world been born yesterday. Hurr. [↩]
- And like every other voting machine, the value of the market in the short-term is very, very small indeed. Over the long-term, however, the market turns out to be the best tool with which to assess and analyse value, whereas voting machines never really acquire this feature no matter how many times you try to revolutionise all the thingz. [↩]
- For more on Mr. Quimby, you’ll probably want to read Fred Quimby and ancient evils. [↩]
- Not sure what “dtng” is here… but I hope to god it isn’t Degrassi: The Next Generation. If that awful Canadian TV show made it to Romania, I’d be sadder than you know. Can’t we at least be known for Celine Dion ?!!1 [↩]