VCs Are Destructive Predators(joelx.com)
joelx.com
VCs Are Destructive Predators
https://joelx.com/vcs-are-destructive-predators/15897/
29 comments
The article reads like a hate piece, doesnt really contain any argumentation. Yeah I hate broccoli too.
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That's not the fault of VCs or even private equity. That's the fault of decisions made at far higher levels: congress, the executive branch, and the Federal Reserve. These decisions create vast macroeconomic riptides that just drag everyone else along.
One of the things I've come to believe after being around for a while and watching a lot of humans is that we are much more at the mercy of our environment and the forces therein than we think. Individual humans are very very small, and their decisions are largely driven by the socioeconomic context they inhabit. Incentives matter a lot.
Today there is effectively a Cold War between the US, China, and to some extent other nations and nation-blocs over who can print the most money to hep up their economy the most to generate the most GDP growth. All those metrics are financial in nature. You get what you measure. You also get ghost cities (China), crazy asset bubbles (America), predatory leveraged capital (everywhere), and a financial economy increasingly disconnected from value creation, but those things are not being measured so nobody (in the political class) cares.
This creates an incentive structure best parodied in the Silicon Valley TV series: your company's product is not its product. Your company's product is its stock. The goal is to soak up as much of that financial capital as possible, because that's where the money is.
One of the things I've come to believe after being around for a while and watching a lot of humans is that we are much more at the mercy of our environment and the forces therein than we think. Individual humans are very very small, and their decisions are largely driven by the socioeconomic context they inhabit. Incentives matter a lot.
Today there is effectively a Cold War between the US, China, and to some extent other nations and nation-blocs over who can print the most money to hep up their economy the most to generate the most GDP growth. All those metrics are financial in nature. You get what you measure. You also get ghost cities (China), crazy asset bubbles (America), predatory leveraged capital (everywhere), and a financial economy increasingly disconnected from value creation, but those things are not being measured so nobody (in the political class) cares.
This creates an incentive structure best parodied in the Silicon Valley TV series: your company's product is not its product. Your company's product is its stock. The goal is to soak up as much of that financial capital as possible, because that's where the money is.
What decisions? They are just playing along. Incentives matter a lot, as you say.
True. Maybe everyone is just playing along.
https://en.wikipedia.org/wiki/Cube_(film)
This is why I wonder if humans are actually intelligent or just clever. Seems to me that a true intelligence would learn to command its own game theoretic / emergent context, not be dragged along by it to wherever the magic bus is going.
https://en.wikipedia.org/wiki/Cube_(film)
This is why I wonder if humans are actually intelligent or just clever. Seems to me that a true intelligence would learn to command its own game theoretic / emergent context, not be dragged along by it to wherever the magic bus is going.
You think we are intelligent? We are as dumb as it gets. All kinds of misery remain throughout the world. We didn't solve any of the most important matters in human existance including: hunger, literacy, dignity, health, food quality, all kinds and grades of violence, mental disease, war, child abuse, women abuse, men abuse, justice, people without a roof, dictatorships, sanitation, pandemics...
"Because the quest for profit makes men into predatory, insensitive and stupid brutes." (Raoul Vaneigem) (http://www.notbored.org/sine-mensuel.html)
Maybe we are just barely smart enough. There is a statistical argument to the effect that the species to do X will in all probability be the dumbest possible species capable of doing it. E.g. if we are ever visited by aliens they are likely to be the stupidest possible interstellar voyagers...
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Not all broccoli taste bad. Some broccoli can be tasty. It depends on the qualities of the individual broccoli and your execution.
The solution is butter, apple cider vinegar and salt.
Jokes aside: boil uncut for a minute or two. In the meantime start frying some nicely cut carrot in olive oil, cut and add broccoli to frying pan, add garlic and some seasoning, apply soy sauce or a bit of tomato sauce. Serve with white rice. Profit.
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I’d say that’s about right.
Experienced founders agree with the post... Look up ScottPorad.com, he has experience in tech and finance ranging from working with Paul Allen to founding Icanhazcheezburger and failblog.
What's the point of posting this ? Nothing insightful or useful for founders.
"Work through your business model" as a growth strategy. Brilliant.
Paid acquisition has gone through the roof as Facebook/Google are increasing monetisation. Content marketing has never been more difficult as more and more companies compete for the same keywords. More and more startups competing for the same customer.
It's not like founders like me are looking to give equity to VCs. It's because it's getting more and more expensive to grow.
"Work through your business model" as a growth strategy. Brilliant.
Paid acquisition has gone through the roof as Facebook/Google are increasing monetisation. Content marketing has never been more difficult as more and more companies compete for the same keywords. More and more startups competing for the same customer.
It's not like founders like me are looking to give equity to VCs. It's because it's getting more and more expensive to grow.
Author here. My point is that founders should avoid VC's like the plague if they can. Founders think taking $1m in funding validates their concept, but only the market can validate your concept. Premature scale will feel good at first, then destroy the founder and the employees who joined.
There are tons of methods to sell, and if FB and Google Ads (I am a Premiere partner of both) are your first avenue of selling, you will get destroyed. Try less expensive methods and only when you prove it elsewhere then try those very expensive areas.
There are tons of methods to sell, and if FB and Google Ads (I am a Premiere partner of both) are your first avenue of selling, you will get destroyed. Try less expensive methods and only when you prove it elsewhere then try those very expensive areas.
I'd be interested to hear your proposed alternatives, then. Small business loans?
The best alternative to VC money is simply getting early customers to help fund you. Do services contracting for them and you will learn a ton about their needs and the problems your solution solves. You will iterate rapidly and bring your business to actually solve customer problems.
Beyond customer funding, look at SBA loans. Or bank loans.
Avoid credit cards if you don't pay them off monthly. Your business probably won't grow as fast as your debt will if you go this way.
I personally used a combination of using my own savings (dipped into about $10k before my net worth started going up) in combination with customer funding.
Beyond customer funding, look at SBA loans. Or bank loans.
Avoid credit cards if you don't pay them off monthly. Your business probably won't grow as fast as your debt will if you go this way.
I personally used a combination of using my own savings (dipped into about $10k before my net worth started going up) in combination with customer funding.
lol it is so rare for a company that goes belly up to hurt someone's career
Pretty useless, over-generalizing piece.
I wouldn't have been able to build my startup to the size it became without venture capital support.
I wouldn't have been able to build my startup to the size it became without venture capital support.
I once had a chat with a VC bag man...
He said their policy was to invest in a 100 startups in the hope that one would go viral.
The sooner the other 99 died and stopped bleeding the happier they were.
Go big or die soon was their policy.
If the 1 went viral, they'd make back all and way more than they lost on the 99.
The fact that 99 founders were broke and broken didn't bother them at all.
He said their policy was to invest in a 100 startups in the hope that one would go viral.
The sooner the other 99 died and stopped bleeding the happier they were.
Go big or die soon was their policy.
If the 1 went viral, they'd make back all and way more than they lost on the 99.
The fact that 99 founders were broke and broken didn't bother them at all.
Did a vc get triggered by this and flagged it?