aamir virani

Starting Up: What is the two-crime rule?

We went through a lot of iterations and tweaks while working on our pitch for Dropcam. One thing that friends, family, and investors liked is the initial market. At one point, though, we were trying to address concerns from an investor by discussing [our crazy new technology] and he stopped us immediately with:

Wait a sec. Now you’re breaking the two-crime rule. Do you know what that is?

No, we didn’t. What’s that?

Cops will often pull someone over for some minor offense like speeding or a headlight being out. That’s no big deal and you can usually work your way out of it… unless you’ve got some drugs in the car or are driving drunk. The second crime is the one that gets you locked up.

Huh?

Look – there’s enough uncertainty about your success in [market]. Now you want to add the complexity of [crazy new technology]? I know you guys are smart and can do a lot of stuff, but you just added to your degree of difficulty.

Obviously, this person didn’t invest… but it was some good feedback. Investors can deal with uncertainty surrounding your market or technology, but rarely both.

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