I've met Douglas a few times at JS Conferences, and he is an excellent engineer (read up on his work on the NES version on Maniac Mansion). However this passage about starting a company and trying to raise capital from VCs demonstrates that even excellent software engineers can be surprisingly myopic, dismissive, and naive about software businesses.

> Douglas: For me, the most difficult thing was raising money. You’re constantly going to Sandhill and calling on people who don’t understand what you’re doing, and are looking to take advantage of you if you can, and they’re going to do that, but you have to go on your knees anyway.

> I found that stuff to be really hard, although some of them I really liked. And sometimes I’d be sitting in those meetings and I’d be thinking, “I wish I was rich enough to sit on the other side of the table, because what they’re doing right now looks like a lot more fun than what I’m doing right now.” And it was even more difficult raising money then, because at this point, the.com bubble had popped and all VCs had been hurt really badly by that. So they were only funding sure things at that time, in late 2001, early 2002.

> And I thought we were a fairly sure thing, because we had already implemented our technology. And by this point, Chip and I understood the problem really well. And we had a new server and JavaScript libraries done in just a few months. And we had demonstrations. We could show the actual stuff. So it wasn’t like we were raising money so that we could do a thing. We had already done the thing, we needed the money so that we could roll it out. And that wasn’t enough for them. They wanted to see that we were already successfully selling it. And I was like, “If we could do that, we wouldn’t need you.”

Only they hadn't. They had built a demo of what we would later call a web 2.0 app. It wasn't even an application that solved a business problem or did anything specific. It was just showing the concept. That's not a product and that's not a business. The VC's point was: Show us proof that this idea has tangible benefits people will pay for.

The biggest misconception of VC's is that you raise money to "successfully sell" something you've built. You don't. You raise VC money to scale something that has value. So you need to communicate the business value, and ideally have proof-points (either in the form of sales, or data) that prove the value.

Of course Douglas found raising money difficult. But he doesn't seem to have the self awareness that this was probably due to him, and not the rich suits on the other side of the table.