[charlesdm]

And you'd let the company you sourced know, of course, what kind of person they're dealing with.

Do you really want to take an investment from an angel or firm who just screwed someone over for a 2% commission? The answer is nearly always no. People who screw others over generally don't last that long, and they tend to do it everywhere (i.e. it could happen to you in your next investment round)

[lsc]

> And you'd let the company you sourced know, of course, what kind of person they're dealing with.

You realize, of course, that most nerds will be kinda bitter that you get a cut of their money just 'cause you know a guy and they don't. Most nerds would see this as a sign that the VC in question was ruthless in a good way, cutting out the middlemen.

Business people, on the other hand, well, they are nothing but money and relationships... so they probably would think getting a commission for a lead is completely normal and okay.

Jumping this values divide is really one of the harder things about being a nerd and moving into business. I imagine it's difficult the other way, too, for business people understanding how to motivate nerds.

[charlesdm]

You're right. I guess it depends on how you look at it. There is so much money in the world; most business/wealthy people would love getting access to a good deal and have no problem paying an x% transaction fee. Once you get past a few $100m in net worth, you can't go looking for deals yourself anymore. Success fees are awesome, because they perfectly align incentives.

As a nerd myself, I had a great mentor who taught me a lot about traditional business. I'm extremely grateful for that. It's really eye opening to talk to someone whose entire business model is based on knowing people, and connecting them. Limited use of e-mail, just a lot of talking on the phone/a lot of sitting in restaurants and bars/meeting new people/going to a lot of "parties".

Wait, so this Russian billionaire wants a $100m property in London and he asked you to look into it, because a mutual friend invited you to one of his parties? You actually found something and just got paid 3% of the property value to handle the deal? That's $3m right there, by knowing the right people. Well, probably more like $1.5-2m, because a billionaire knows how to negotiate. Cool. Oh, and now his buddy wants a pied-à-terre as well, since you put it all together so fast?

Nerds do need to understand that who you know is as important (probably more) than what you know. Plus, they might not have even gotten the meeting without the intro. Yes, solve an interesting problem and you can change the world, but it'll be much easier if you have access to the right people.

[lsc]

Yeah. I experimented with the jump myself; Some day I will write about my failures as a business person and why I failed as hard as I did. I know a lot of really good technical people, and am pretty good at talking them into taking a job. (I mean, part of this is that these are my friends, mostly, and while I'll bully an unemployed friend into taking a high-paying job near me rather than taking some more time off far away, I'm not the sort of person who'd bully someone out of a good job into another job that is about as good because it would make me a few bucks.)

I mean, I'll hire these people for my projects if they get desperate enough to work for the sort of money I can come up with, and I have all the payroll/insurance infrastructure down. that part is pretty easy; it's a matter if what is a pretty small amount of money compared to what you make as a silicon valley nerd.

And I do pretty regularly hook these people up with recruiters (usually recruiters who are after me) - I've only gotten paid for doing this once, and it was a $2500 referral fee, which seemed great to me, but was probably a small fraction of what the person who knew the business people got paid.

But... that's just background. not the hard part. The hard part is, you know, how you get on the authorized vendors list at a company. Now, paying a referral fee, in that world, seems likely... but bribes are complex - you can't just walk in with a giant wad of cash and say "who do I gotta pay to get on the preferred vendors list" - It's be rude, and I'm pretty sure that it'd be against company policy at the very least, and depending on jurisdiction and details, maybe a criminal issue, too.

That's the problem. I mean, clearly, you buy your way into the authorized vendors list; but how do you buy your way into the authorized vendors list? I'm pretty sure I could give someone who wasn't an employee of the company a referral fee or even a cut of my revenues, but as soon as we get to employees of my prospective customer, the people with the power to actually do things, things get shaky.

So, even if you decide that you want to be the sort of person who "Monetizes" your "Relationships" - and I am not 100% sure that's really what I want, even then it's a pretty complex sort of thing, and it's a place where my ethical intuition doesn't really work.

that might be the hardest part, for me. As a nerd, a technician, an engineer... as someone who builds or maintains a thing, my responsibilities and ethical obligations are very clear.

When you shift over to primarily dealing in relationships, this isn't clear at all.

[charlesdm]

> I mean, clearly, you buy your way into the authorized vendors list; but how do you buy your way into the authorized vendors list?

Example: Let's say you want to get on the preferred vendor list of AT&T. Whenever AT&T hires a contract software developer, they contact the 2-4 recruiters on that list for that specialization.

The CEO could easily put you on the list if he wanted to. Let's say I'm buddies with the CEO, and if I asked my buddy, he wouldn't mind doing that for me. I'd owe him one. How much would that be worth to a recruitment company, maybe $5-10m a year? How much should the person facilitating that be paid? Probably quite a lot, maybe 20-30% of the value of that deal, i.e. $1-3m? How does it get divided if a friend of mine needs a favor from my buddy the CEO?

Now, would you rather put the deal together or go source the people? :)

Replace CEO with some high powered VP - that would work as well. Or a friend of a friend.

Ethics aside of course, because this all gets very grey very fast. Though if you provide quality service, it doesn't matter all that much.

[lsc]

See, this is why my ethical intuition doesn't work here. I'm sure that the deal, as you propose, is legal and above board, assuming nobody looks too closely at what you "owe" the CEO over it.

However, if we take that same scenario, but instead I hand you a wad of cash equivalents, you take some percentage and pass the rest on to the CEO directly in exchange for getting me on the list, most people would agree that this is very unethical; at the very least the CEO would be liable to his or her shareholders, and at most, you, I and the CEO might all face criminal charges for defrauding the shareholders of T.

My ethical intuition doesn't see any difference between those two situations, even though one is completely normal and probably legal, while the other is certainly not

[rmah]

Not positive, but I think not disclosing a commission for arranging financing is illegal.

[charlesdm]

Isn't disclosing a normal thing to do?

If I say, I can try and help you get financing through my network, and if we put together a deal, I'd like a small commission (2-3-4% success fee), that seems entirely fair. Obviously laws differ based on the country, but I don't see anything being wrong with that if you're being transparant with both parties.

This is very, very common in the traditional business world.

[GFK_of_xmaspast]

It's called 'disruption.'

[w1ntermute]

Or 'doing things that don't scale'.

[charlesdm]

Good thing it pays well. :)