A brilliant article about lessons to be learned from Nigerian email scammers:

Essentially, scammers face an optimization problem. Touching a huge number of potential victims is easy. The real cost is the time spent converting a prospective victim into an actual victim. The scammer has to spend time to build the victim’s confidence to the point where they wire some amount of their money to the scammer. The opportunity cost here is massive. Spending time on a prospect that ultimately gets cold-feet is the worst possible outcome for the scammer. Not only did they fail to collect any money, but they wasted a bunch of time getting a “no.” The longer that victim took to ultimately back out, the higher the scammer’s cost. Since time is a real constraint, finding a way to steer clear of people who start a conversation but won’t ultimately send money is just as important as nurturing the rare victim who will end up handing over his or her cash.

…

Now, re-read the preceding two paragraphs, and replace the word “scammer” with “entrepreneur”, and the word “victim” with “investor”.

I’ll wait while you do it.





Full piece here: http://venturebeat.com/2012/06/25/what-entrepreneurs-can-learn-from-nigerian-email-scammers/