The advice I give to founders raising money for the first time — to first ask yourself "are we actually a good investment?" and answer honestly — also applies to later rounds. Don't sell. Tell the truth, and let investors read it through you.
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How did founders of "best ideas initially sound like bad ideas"-companies conclude they were good investments?
The founders themselves saw these were good ideas, so they simply had to explain what other people were missing.
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Good idea =/= good investment. Reddit, for example, could be a nice non-profit project (cf. Wikipedia), but did it look like a good money-making company? I doubt they had a credible plan to get profitable within 5 year time-frame.
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Maybe it was considered valuable by VCs which estimate valuation from number of users, but traditional investors who think in terms of earnings per share would definitely consider it a bad joke.
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Thanks! Good clarification, it seemed the investment case around Airbnb was more around the team than the idea ("someone who can sell $40 cereal will be successful")
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At the stage YC invested, it was the founders. There was no growth. But by a few months into YC it was possible to explain convincingly why it was a good idea.
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