Unicorns are setting up their own venture capital funds(bloomberg.com)
bloomberg.com
Unicorns are setting up their own venture capital funds
https://www.bloomberg.com/opinion/articles/2018-11-15/unicorns-starting-their-own-vcs-welcome-to-peak-tech
83 comments
Microsoft knew all about Google
Yahoo knew everything about Google
Google knew everything about Facebook
Intel knew everything about ARM
Yet disruption ensued. “Can’t be disrupted” is foolish.
Yahoo knew everything about Google
Google knew everything about Facebook
Intel knew everything about ARM
Yet disruption ensued. “Can’t be disrupted” is foolish.
Google (still) doesn't really compete with Microsoft - they're in related but different verticals, Google and Microsoft have different core businesses - while yes, they compete on the periphery, they're not in head to head competition, Microsofts successful business model soldiers on - no disruption really seen.
Facebook and Google don't really compete either - again, related, but different verticals, Googles existing business model wasnt really disrupted by Facebook appearing on the scene.
The majority of mobile processors prior to arm, wasn't Intel (it was 68k actually), again, no real disruption to the Intel Business Model.
In almost every case you've presented, you act as if a major player was displaced from a market within which they were the incumbent leader - but in every case but yahoo - it was a new line of business opening up, due to changes in the market place - where a major player in a related marketplace failed to achieve dominance - in the case of Intel, it was quite by choice - Intel saw early on that it couldn't make the margins needed to sustain itself in the mobile processor world - and while there keeps being talk about ARM coming to the non-mobile marketplace, there has been little to no actual incursion there.
The exception here is yahoo - Yahoo was pushed out of its core markets by the rise of google, where they competed head to head.
Facebook and Google don't really compete either - again, related, but different verticals, Googles existing business model wasnt really disrupted by Facebook appearing on the scene.
The majority of mobile processors prior to arm, wasn't Intel (it was 68k actually), again, no real disruption to the Intel Business Model.
In almost every case you've presented, you act as if a major player was displaced from a market within which they were the incumbent leader - but in every case but yahoo - it was a new line of business opening up, due to changes in the market place - where a major player in a related marketplace failed to achieve dominance - in the case of Intel, it was quite by choice - Intel saw early on that it couldn't make the margins needed to sustain itself in the mobile processor world - and while there keeps being talk about ARM coming to the non-mobile marketplace, there has been little to no actual incursion there.
The exception here is yahoo - Yahoo was pushed out of its core markets by the rise of google, where they competed head to head.
g-suite ate a huge chunk of Exchange's lunch, and a non-trivial part of the office lunch.
ChromeOS ate a nontrivial part of Microsoft's OS business.
Android completely obliterated any chance of a market MS had for phones.
Chrome (and Firefox, which was effectively funded by Google for a long time) dethroned IE(and edge), almost to the point of irrelevance.
It did not disrupt Microsoft's business model - but it ate huge chunks of it. Where Google didn't venture (e.g. database & server software), Microsoft is still extracting monopoly rent. Where it did (mobile OS), no one wanted Microsoft's offering, regardless of getting free money with it.
Facebook and Google totally, completely, compete with each other. If you have on-line advertising spend, you decice on the facebook/google split. They are in exactly the same vertical - extremely directed and trackable on line advertising. Don't confuse "users" with "customers".
Intel's business model was expensive high margin CPUs to all. They still do for servers. It was most definitely disrupted in the consumer space because phones exist - many people for which it would have been unthinkable a few years ago to have no PC/Laptop today, only have a phone, or have a very loe end laptop (which Intel makes very little on).
> it was a new line of business opening up, due to changes in the market place - where a major player in a related marketplace failed to achieve dominance
You have just given the usual definition of disruption. I agree existing markets were not overtaken. Mobile phones disrupted the land line business, even though that one is still alive. Linux disrupted the proprietary OS bbusines, even though that one is still alive. Amazon disrupted commerce.
Facebook killed myspace, and yahoo participated in its own killing. And there's definitely disruption all over.
ChromeOS ate a nontrivial part of Microsoft's OS business.
Android completely obliterated any chance of a market MS had for phones.
Chrome (and Firefox, which was effectively funded by Google for a long time) dethroned IE(and edge), almost to the point of irrelevance.
It did not disrupt Microsoft's business model - but it ate huge chunks of it. Where Google didn't venture (e.g. database & server software), Microsoft is still extracting monopoly rent. Where it did (mobile OS), no one wanted Microsoft's offering, regardless of getting free money with it.
Facebook and Google totally, completely, compete with each other. If you have on-line advertising spend, you decice on the facebook/google split. They are in exactly the same vertical - extremely directed and trackable on line advertising. Don't confuse "users" with "customers".
Intel's business model was expensive high margin CPUs to all. They still do for servers. It was most definitely disrupted in the consumer space because phones exist - many people for which it would have been unthinkable a few years ago to have no PC/Laptop today, only have a phone, or have a very loe end laptop (which Intel makes very little on).
> it was a new line of business opening up, due to changes in the market place - where a major player in a related marketplace failed to achieve dominance
You have just given the usual definition of disruption. I agree existing markets were not overtaken. Mobile phones disrupted the land line business, even though that one is still alive. Linux disrupted the proprietary OS bbusines, even though that one is still alive. Amazon disrupted commerce.
Facebook killed myspace, and yahoo participated in its own killing. And there's definitely disruption all over.
Facebook knew everything about Snapchat, and they are currently crushing them.
Microsoft at their core also wasn't disrupted by Google.
Google at their core also wasn't disrupted by Facebook.
They're all tech giants in the same (broad) industry, but they have widely varying products. Competitive BI certainly has its merits if you are trying to stay at the top of your field.
Microsoft at their core also wasn't disrupted by Google.
Google at their core also wasn't disrupted by Facebook.
They're all tech giants in the same (broad) industry, but they have widely varying products. Competitive BI certainly has its merits if you are trying to stay at the top of your field.
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Off the top of my head, Facebook is, indeed, the only giant I can think of that has not yet been disrupted; snap is indeed being crushed.
And, wrt the article, it’s not VC that gave Facebook the BI they needed to know it is happening, but rather Onavo - a BI/Spying startup masquerading as a vpn/compression suite, which Facebook purchased and which gave them insight into what their mobile users do on the internet other then facebook
It’s not illegal, but it should have been.
And, wrt the article, it’s not VC that gave Facebook the BI they needed to know it is happening, but rather Onavo - a BI/Spying startup masquerading as a vpn/compression suite, which Facebook purchased and which gave them insight into what their mobile users do on the internet other then facebook
It’s not illegal, but it should have been.
> Facebook is, indeed, the only giant I can think of that has not yet been disrupted
It's also still the youngest one of them, but yes, for a company in the social networking space they've showed a lot of staying power (they could've already fallen to what could've become out of independent WhatsApp & Instagram). Facebook (and Google) only exist as they do today because an acquisition by Yahoo didn't happen, and I think they've internalized that.
It's also still the youngest one of them, but yes, for a company in the social networking space they've showed a lot of staying power (they could've already fallen to what could've become out of independent WhatsApp & Instagram). Facebook (and Google) only exist as they do today because an acquisition by Yahoo didn't happen, and I think they've internalized that.
Microsoft was definitely disrupted by Google: by Android. Everyone used to have a Windows PC on their desk, now everyone has an Android smartphone in their pocket. Discounting the affluent minority of Mac and iOS users of course...
Windows used to be at the very heart of Microsoft strategy. They seem to have successfully managed to pivot away from it, but I still call that being disrupted.
Windows used to be at the very heart of Microsoft strategy. They seem to have successfully managed to pivot away from it, but I still call that being disrupted.
This theory basically assumes that firms cannot get smarter over time.
It assumes corporations will never get better at evaluating the market and their place in it, or have better information than previous generations.
That's a dangerous assumption, and doesn't seem to jibe with what we see in practice.
It assumes corporations will never get better at evaluating the market and their place in it, or have better information than previous generations.
That's a dangerous assumption, and doesn't seem to jibe with what we see in practice.
Here's something we see in practice:
"- In 1965, the average tenure of companies on the S&P 500 was 33 years. By 1990, it was 20 years. It's forecast to shrink to 14 years by 2026.
- About 50 percent of the S&P 500 will be replaced over the next 10 years, if Innosight's forecasted churn rate holds. "
https://www.inc.com/ilan-mochari/innosight-sp-500-new-compan...
What are you seeing in practice that makes you think the truth is the opposite of what this data suggests?
"- In 1965, the average tenure of companies on the S&P 500 was 33 years. By 1990, it was 20 years. It's forecast to shrink to 14 years by 2026.
- About 50 percent of the S&P 500 will be replaced over the next 10 years, if Innosight's forecasted churn rate holds. "
https://www.inc.com/ilan-mochari/innosight-sp-500-new-compan...
What are you seeing in practice that makes you think the truth is the opposite of what this data suggests?
Pretty simple, Consolidation.
Companies that have information advantage will continue to push into new markets and absorb or kill incumbents.
These are complimentary phenomenon actually.
Companies that have information advantage will continue to push into new markets and absorb or kill incumbents.
These are complimentary phenomenon actually.
So what is your claim here? That most companies haven't learned these lessons but those that have will assimilate or destroy the ones that don't? What would that look like in the statistics? Are there particular companies that you think are doing this successfully?
The post you originally replied to mentioned Google and Facebook neither of which look like companies that have learned this lesson well enough to beat the trend. They both look to me like they have passed their peaks in many areas:
- Innovation
- Developer, public and political good will
- Creating (rather than buying at great expense) successful new products
- Self awareness
The post you originally replied to mentioned Google and Facebook neither of which look like companies that have learned this lesson well enough to beat the trend. They both look to me like they have passed their peaks in many areas:
- Innovation
- Developer, public and political good will
- Creating (rather than buying at great expense) successful new products
- Self awareness
That most companies haven't learned these lessons but those that have will assimilate or destroy the ones that don't?
Precisely
What would that look like in the statistics?
Something like this: https://www.investopedia.com/news/5-companies-amazon-killing...
Are there particular companies that you think are doing this successfully?
FAANG are the examples here. Look at the top 10 most used apps[1].
5/10 are Google owned
3/10 are Facebook owned
1 is owned by Apple
Amazon in clearly leading here as it has 49% of the ecommerce market share.
Microsoft has the vast majority of the IT ecosystem.
Facebook the company is doing well in this area. Google is also doing well here.
Creating (rather than buying at great expense) successful new products
I'm not sure why "buying at great expense" is relevant here. At the end of the day it comes down to longevity. The longest lasting companies are ones which have bought themselves into relevancy. That's the whole point. They have the market capacity to buy out or crush their competition.
Facebook used Instagram to crush Snapchat in pretty much every dimension because Snap wouldn't sell to them.
All your other metrics are kind of random and I'm not sure if there is anything that says those things lead to longevity. The few companies who were good at this in the past (Standard Oil, Bell, Railroads) eventually got broken up by the government.
[1] https://www.businessinsider.com/most-used-smartphone-apps-20...
Precisely
What would that look like in the statistics?
Something like this: https://www.investopedia.com/news/5-companies-amazon-killing...
Are there particular companies that you think are doing this successfully?
FAANG are the examples here. Look at the top 10 most used apps[1].
5/10 are Google owned
3/10 are Facebook owned
1 is owned by Apple
Amazon in clearly leading here as it has 49% of the ecommerce market share.
Microsoft has the vast majority of the IT ecosystem.
Facebook the company is doing well in this area. Google is also doing well here.
Creating (rather than buying at great expense) successful new products
I'm not sure why "buying at great expense" is relevant here. At the end of the day it comes down to longevity. The longest lasting companies are ones which have bought themselves into relevancy. That's the whole point. They have the market capacity to buy out or crush their competition.
Facebook used Instagram to crush Snapchat in pretty much every dimension because Snap wouldn't sell to them.
All your other metrics are kind of random and I'm not sure if there is anything that says those things lead to longevity. The few companies who were good at this in the past (Standard Oil, Bell, Railroads) eventually got broken up by the government.
[1] https://www.businessinsider.com/most-used-smartphone-apps-20...
> At the end of the day it comes down to longevity. The longest lasting companies are ones which have bought themselves into relevancy.
I think it's a little early to say whether Facebook or Google will have the kind of longevity of a GE, ExxonMobil or DuPont. Longevity on its own doesn't actually seem particularly interesting, what makes those three stand out is staying large and relevant for so long, not merely surviving.
> All your other metrics are kind of random and I'm not sure if there is anything that says those things lead to longevity. The few companies who were good at this in the past (Standard Oil, Bell, Railroads) eventually got broken up by the government.
My metrics were directed partly at that point. Microsoft was a more recent target of government. It looks much more likely today that Facebook, Google or Amazon would be targets of government action (with plenty of public support) than it did just a few years ago.
I think it's a little early to say whether Facebook or Google will have the kind of longevity of a GE, ExxonMobil or DuPont. Longevity on its own doesn't actually seem particularly interesting, what makes those three stand out is staying large and relevant for so long, not merely surviving.
> All your other metrics are kind of random and I'm not sure if there is anything that says those things lead to longevity. The few companies who were good at this in the past (Standard Oil, Bell, Railroads) eventually got broken up by the government.
My metrics were directed partly at that point. Microsoft was a more recent target of government. It looks much more likely today that Facebook, Google or Amazon would be targets of government action (with plenty of public support) than it did just a few years ago.
Agreed.
“Are the FAANGs the first perfect economic actors in human history?”
No. I remember people making the same arguments for mortgage back securities.
So much worship of so much snake oil.
“Are the FAANGs the first perfect economic actors in human history?”
No. I remember people making the same arguments for mortgage back securities.
So much worship of so much snake oil.
“Are the FAANGs as the first perfect economic actors in human history?”
That's a great way to put it, and my answer would be: Of course not, but they are probably the closest we've ever seen and are on a vector that keeps them getting closer.
That's a great way to put it, and my answer would be: Of course not, but they are probably the closest we've ever seen and are on a vector that keeps them getting closer.
It doesn't look that way to me, in fact they all look quite vulnerable in various ways, some common and some unique. Netflix and Facebook will be the first to stumble I suspect. I can't predict the future and I'm not an active investor but for my part my retirement savings are not going to be heavily weighted in FAANG stock. I guess we'll see how the landscape looks in a decade.
I don't really see how you could claim Facebook the company is stumbling.
Maybe Facebook the product is, but not the compliment of Facebook, Whatsapp, Instagram, Messenger, Oculus etc...
Maybe Facebook the product is, but not the compliment of Facebook, Whatsapp, Instagram, Messenger, Oculus etc...
"That's a dangerous assumption, and doesn't seem to jibe with what we see in practice."
I see exactly this in practice.
Big companies are usually totally lacking in self awareness on so many things.
'Good companies' have a strong sense of where they are, and can manage direct threats - I think FB is a good example.
But more distant threats, I don't think so.
And most companies are not 'good companies'.
Nortel, Nokia, BlackBerry, Alcatel. Just to name a few.
I see exactly this in practice.
Big companies are usually totally lacking in self awareness on so many things.
'Good companies' have a strong sense of where they are, and can manage direct threats - I think FB is a good example.
But more distant threats, I don't think so.
And most companies are not 'good companies'.
Nortel, Nokia, BlackBerry, Alcatel. Just to name a few.
There's a piece in Andy Grove's book ("Only the paranoids survive") where tells about realizing that sales of memory are slowly going down - it's still comfortable for everyone, but at this right he will be fired by the board in a couple of years. So, he thinks "my replacement will get a carte blanche; what will they do?" and realizes that it would be "concentrate on microprocessors", a small but slowly growing Intel business -- a completely heretic, "hail mary" at a point that still doesn't seem so bad. So that's what he does.
On the other hand, Intel sold their ARM business about 20 years ago because it had lower margins than they liked (and in fact, axed a lot of relatively low margin business). But, as they are slowly discovering - someone WILL eat your margins, if it isn't yourself, it is someone else.
On the other hand, Intel sold their ARM business about 20 years ago because it had lower margins than they liked (and in fact, axed a lot of relatively low margin business). But, as they are slowly discovering - someone WILL eat your margins, if it isn't yourself, it is someone else.
Also it makes sense if you're a platform, or you're an infrastructure company. You're motivated to help startups building on your platform succeed, or help prove an entirely new category you're building infrastructure for. See Stripe and Coinbase doing that now.
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Theoretically what you say makes sense, but I think in practice, it doesn't work as nicely.
Corporate M&A can do many of those things already. They have cash. They don't need 'a fund' to do that ... and yet most corporate M&A is a disaster.
I wouldn't believe it until I saw it at a large company and then it all clicked and it actually makes sense.
M&A & VC teams are considerably more removed from the strategic impetus of companies than you might imagine - these are human organizations with a lot of individual self interest. M&A teams like making deals. They are opportunistic I find more than strategic ... which can be ok, but they find something cool and want to make a big thing out of it - but the product people in the company may not want them on board.
So company A acquires company B. Now what? Aside from new branding and T-shirts ... it takes a lot of effort to integrate these things. A new product that fits well into a product line, that does not need to be integrated technically, this might work.
Sometimes companies get bought because the CEO saw the website or met the CEO and 'liked him' and the product kind of makes sense. The head of M&A wants to please the CEO and goes gangbusters to make it work.
Legal, IP and financial due diligence are all the least important kinds of due diligence! Product and cultural due diligence are what matters, and they are weirdly not on the checklist - or not as intensely as they should be.
I think instead of VC, these companies should be focused in rigorous, objective oriented, well-managed M&A activity.
I don't even know who a good example would be - it used to be Cisco, I'm not sure anymore.
Corporate M&A can do many of those things already. They have cash. They don't need 'a fund' to do that ... and yet most corporate M&A is a disaster.
I wouldn't believe it until I saw it at a large company and then it all clicked and it actually makes sense.
M&A & VC teams are considerably more removed from the strategic impetus of companies than you might imagine - these are human organizations with a lot of individual self interest. M&A teams like making deals. They are opportunistic I find more than strategic ... which can be ok, but they find something cool and want to make a big thing out of it - but the product people in the company may not want them on board.
So company A acquires company B. Now what? Aside from new branding and T-shirts ... it takes a lot of effort to integrate these things. A new product that fits well into a product line, that does not need to be integrated technically, this might work.
Sometimes companies get bought because the CEO saw the website or met the CEO and 'liked him' and the product kind of makes sense. The head of M&A wants to please the CEO and goes gangbusters to make it work.
Legal, IP and financial due diligence are all the least important kinds of due diligence! Product and cultural due diligence are what matters, and they are weirdly not on the checklist - or not as intensely as they should be.
I think instead of VC, these companies should be focused in rigorous, objective oriented, well-managed M&A activity.
I don't even know who a good example would be - it used to be Cisco, I'm not sure anymore.
> They don't need 'a fund' to do that
Having dealt with both, there is a difference. Corporate M&A is corporate finance. Their teams come from investment banking backgrounds and are not equipped to evaluate early-stage investments. They therefore don’t get pitched them.
Corporate VCs, on the other hand, exist to evaluate young companies and write small checks. The market know that, and therefore shows them early-stage deal flow. (Whether this be founders pitching directly, competitors mentioning them, or investors or their LPs or lawyers getting chatty.) This flow provides different investment and intelligence opportunities from the corporate finance flow.
Practical example: if you’re pitching corporate M&A, it tends to start with an NDA and a data room full of financial models. If you’re pitching a corporate VC, a one-pager and high-level deal terms can kick directly into negotiations.
Having dealt with both, there is a difference. Corporate M&A is corporate finance. Their teams come from investment banking backgrounds and are not equipped to evaluate early-stage investments. They therefore don’t get pitched them.
Corporate VCs, on the other hand, exist to evaluate young companies and write small checks. The market know that, and therefore shows them early-stage deal flow. (Whether this be founders pitching directly, competitors mentioning them, or investors or their LPs or lawyers getting chatty.) This flow provides different investment and intelligence opportunities from the corporate finance flow.
Practical example: if you’re pitching corporate M&A, it tends to start with an NDA and a data room full of financial models. If you’re pitching a corporate VC, a one-pager and high-level deal terms can kick directly into negotiations.
Do "corporate VC" people have the mindset of a VC in that they're aware that most investments will fail and that's ok as long as a few "moonshots" go really well?
Was Yahoo! buying tumblr an example of corporate VC? How about Facebook buying Instagram?
Was Yahoo! buying tumblr an example of corporate VC? How about Facebook buying Instagram?
> Do "corporate VC" people have the mindset of a VC in that they're aware that most investments will fail and that's ok as long as a few "moonshots" go really well?
In my experience, the VCs themselves do. Their bosses say they do (hence why the corporation started a VC arm). But after a few failures, that tends to change. (Analog: why many corporate cultures try and fail at emulating Skunkworks.)
> Was Yahoo! buying tumblr an example of corporate VC? How about Facebook buying Instagram?
No, that’s M&A. Generally when one says Company A bought Company B, that’s corporate finance.
GM investing in Lyft is corporate VC. Tyson investing in Beyond Meat is corporate VC. Minority stakes, early-stage companies and a strategic motive describes corporate VC.
In my experience, the VCs themselves do. Their bosses say they do (hence why the corporation started a VC arm). But after a few failures, that tends to change. (Analog: why many corporate cultures try and fail at emulating Skunkworks.)
> Was Yahoo! buying tumblr an example of corporate VC? How about Facebook buying Instagram?
No, that’s M&A. Generally when one says Company A bought Company B, that’s corporate finance.
GM investing in Lyft is corporate VC. Tyson investing in Beyond Meat is corporate VC. Minority stakes, early-stage companies and a strategic motive describes corporate VC.
In my fund we do, even our CEO reminds us that it’s ok some of our bets will fail, but the rest of the organization is a bit less in tune and thinks we just are a new stage to the M&A process
In my experience, M&A people are not often bankers, they're glorified biz dev types or lawyers.
Also 'corporate VCs' are generally terrible VCs.
But yes, investing in is different than buying in.
Anyone care to indicate a corporate VC model that has actually worked well strategically? As far as I remember - could be wrong - even Google's VC arm is there to 'make money first' less so strategic. Or I could be wrong.
Also 'corporate VCs' are generally terrible VCs.
But yes, investing in is different than buying in.
Anyone care to indicate a corporate VC model that has actually worked well strategically? As far as I remember - could be wrong - even Google's VC arm is there to 'make money first' less so strategic. Or I could be wrong.
In my opinion this is why Microsoft bought github - lots of private repositories of now successful companies to mine when they were startups. Imagine being able to match private repos on Github with successful companies and make early purchases...
The amount of intel VCs know about the industry is really shocking. I'm super jealous!
If you are a VC and one of your investments is doing this then next time why wouldn’t your investors cut out the middleman (i.e. you) and go straight to them?
And people still say dolphins are the second most intelligent species on Earth.
Big tech companies will do anything to avoid paying out more dividends.
As long as the money keeps flowing.
I didnt think much into this until the start up of a friend(yc backed, if i am not mistaken) failed. They did have their own venture fund to boost up the drone companies, but eventually they shut down.
Good thing to look out for.
Good thing to look out for.
A lot of blockchain tech startups raise money and then turn around and invest in other startups.
I think we're gonna look back at this in 5 years and collectively say, what were we thinking?
I think we're gonna look back at this in 5 years and collectively say, what were we thinking?
"I think we're gonna look back at this in 5 years and collectively say, what were we thinking?"
Many of us are already thinking that :)
Many of us are already thinking that :)
> we're gonna look back at this in 5 years and collectively say, what were we thinking?
We did that after the housing bubble in 2008 (low down payments, flexible credit ratings, etc.)
The big question is: could this also be a systemic risk to the economy? No one liked bailing out the banks, but it was necessary to save the economy. It is not clear tech or crypto are similarly critical.
We did that after the housing bubble in 2008 (low down payments, flexible credit ratings, etc.)
The big question is: could this also be a systemic risk to the economy? No one liked bailing out the banks, but it was necessary to save the economy. It is not clear tech or crypto are similarly critical.
I think it's already pretty clear that crypto doesn't need bailouts.
The total cryptocurrency market size is at 1/4th of what it was at the beginning of the year, and there haven't been any significant results because of that. I would wager that the remaining 1/4th could be wiped out and it's still pretty much the same. Crypto projects were always very removed from the real world, both in valuation and usage (so if crypto vanishes it doesn't impact other companies).
The biggest result of the crypto market correcting will probably be software engineer salaries becoming a bit lower again (outside of SF).
The total cryptocurrency market size is at 1/4th of what it was at the beginning of the year, and there haven't been any significant results because of that. I would wager that the remaining 1/4th could be wiped out and it's still pretty much the same. Crypto projects were always very removed from the real world, both in valuation and usage (so if crypto vanishes it doesn't impact other companies).
The biggest result of the crypto market correcting will probably be software engineer salaries becoming a bit lower again (outside of SF).
Tech? Probably not. But there is a lot of novice (polite term) money in crypto now.
Protocol Labs (best known for developing FileCoin & IPFS) launched a $5M crypto grant program.[0]
[0]https://www.coindesk.com/blockchain-startup-protocol-labs-an...
[0]https://www.coindesk.com/blockchain-startup-protocol-labs-an...
I think grants are a whole different thing, especially in the cryptocurrency space. A lot of your value depends on how interoperable with other systems/protocols in the space, and grants can incentivize prioritized work on that interoperability.
Protocol Labs grants are again a different thing since they are essentially traditional academic research grants.
Protocol Labs grants are again a different thing since they are essentially traditional academic research grants.
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Why, let the US sink itself in inequality if that's what university people want. So much for the liberal arts major navigating society, the dream is gone, the song is over.
No better evidence you’re in a bubble market if the billions flowing into self-driving cars and blockchain didn’t convince you. If investors are willing for their startups to use their capital in this way then there really is just way too much money floating around.
Blockchain sure, but why do you think self-driving is a bubble?
Exactly my question. I have yet to see real use cases for blockchains beyond speculation and some light crime. And I think true self-driving cars (SAE Level 5 in specific) are 10-30 years out. But I think there's enough value to be had in lower, more achieveable levels that I expect some of the companies investing in those technologies now will be long-term financial winners.
There's probably a profitable use case in there somewhere for level 4 cars. I'm thinking office parks and corporate campuses. But I share this belief that self driving cars are way over-hyped and aren't going to be here any time soon.
That's what university research and small self driving cars people always say - "it'll be used at airports and campuses" - but in reality there are very few campuses that would benefit, and airports mostly already have internal transit solutions.
Why do you say that few campuses would benefit? In San Francisco alone, USF, UCSF, SFSU, AAU, and CCA all have shuttles. And that's in a city with good public transit.
As best I can tell, Waymo's upcoming service is Level 4 with a remote backup driver for times when the software can't cope.
Venture beyond the top 100 on coinmarketcap and you'll see some products that benefit from using a blockchain than not.
I've tried that and didn't find anything.care to share some examples?
Bernstein.io [1] is using it for patent and trade secrets verification. I've also seen an internal system with Merkle-tree-structures to verify digital safety inspections (e.g. that all devices can check the integretity of those checks and no supervisor can "modify" the database)
Light crime, as in buying drugs, is one hell of a market. I don't have solid data, but it seems that 90-95% of all drug-related transactions go through bitcoin nowdays, at least on the consumer level.
It's a good market in some sense, but it's a bad market for businesses that want to do things like IPO. It's also not a great market for people who want to stay alive in that many existing competitors are known for their violence, and if they come after you calling the police is not a great idea.
I'd assume a large part of drug consumers still buys from their dealer in person, and why would you use Bitcoin then?
Among drug consumers I know personally or follow in social media, there's not a single one who buys in person. Compared to picking up a ziplock in designated location, it's unsafe to a ridiculous degree.
This sentiment on blockchain is posted very often. Have the authors studied all startups in the top 100 on CoinMarketCap? How about top 500?
Yes, we've all met people who read about Bitcoin and Ethereum in the WSJ and felt incredibly smart when both declined from their highs.
But what about the ICO money raised in 2018? It's likely over 5 billion at this point.
Yes, we've all met people who read about Bitcoin and Ethereum in the WSJ and felt incredibly smart when both declined from their highs.
But what about the ICO money raised in 2018? It's likely over 5 billion at this point.
Ah, the "there has to be a pony in there somewhere" [1] theory.
Am I going to look at every MLM scheme or perpetual motion machine to explain in detail why this new one is just as bad as the rest? No. I looked at a bunch, formed a general impression and a reasonable theory as to why they're all bunk, and have stopped wasting my time.
If somebody has a specific one that they'd like to argue is different I'm willing to listen. But I'm not going to look at 500 supposed startups and figure out the flaws one by one.
[1] https://quoteinvestigator.com/2013/12/13/pony-somewhere/
Am I going to look at every MLM scheme or perpetual motion machine to explain in detail why this new one is just as bad as the rest? No. I looked at a bunch, formed a general impression and a reasonable theory as to why they're all bunk, and have stopped wasting my time.
If somebody has a specific one that they'd like to argue is different I'm willing to listen. But I'm not going to look at 500 supposed startups and figure out the flaws one by one.
[1] https://quoteinvestigator.com/2013/12/13/pony-somewhere/
atomical(1)
If you want to make a case for blockchains, maybe you shouldn't lead with the proven pyramid schemes that are ICOs?
"They ripped off over 5 billion dollars in cash, that means it's not a bubble." Well, doesn't that actually tell you the opposite? That people threw money at obvious scams just because the scams used fancy technology and a buzzword?
"They ripped off over 5 billion dollars in cash, that means it's not a bubble." Well, doesn't that actually tell you the opposite? That people threw money at obvious scams just because the scams used fancy technology and a buzzword?
And maybe you shouldn't lead with a generalization. Not all of them were scams.
Like perpetual motion machines, some are scams and some are just run by sincere fools. And it's entirely possible that there are some real businesses run by smart people who needed funding and the blockchain bits are just window dressing. So not scams, exactly, but more the kind of marketing fraud that, in the marketing world, barely counts as fraud at all.
If you have proof that one of them is a) a real business, b) is likely to succeed, and c) is using a blockchain in some way where it's both necessary to the business and superior to other ways to store and verify data, then please share it. Otherwise you're the one making hazy, unsupported general statements.
If you have proof that one of them is a) a real business, b) is likely to succeed, and c) is using a blockchain in some way where it's both necessary to the business and superior to other ways to store and verify data, then please share it. Otherwise you're the one making hazy, unsupported general statements.
The only proven use of blockchain is to transfer value from one person to another over the internet without relying on a central bank account. Doesn’t that validate the tech to some degree?
Not to me, as that's not an actual user need. Legitimate money transfer needs are things like, "send money to my cousin back home" or "buy a thing". Despite Bitcoin being around for a decade, it has made approximately zero inroads into those markets.
I'll grant Bitcoin has some utility for light crime, like buying drugs or evading capital controls. And it's the technology of choice for ransomware and some kinds of electronic fraud. (It's bad for serious crime as it leaves too much of an audit trail.) But I don't think crime is a very good domain for running real businesses, so that doesn't count for me either.
I'll grant Bitcoin has some utility for light crime, like buying drugs or evading capital controls. And it's the technology of choice for ransomware and some kinds of electronic fraud. (It's bad for serious crime as it leaves too much of an audit trail.) But I don't think crime is a very good domain for running real businesses, so that doesn't count for me either.
I'm attacking the part of your argument that it's a scam based on your own limited knowledge.
You then respond by asking me to present proof to you as if your own ignorance is somehow compelling.
You then respond by asking me to present proof to you as if your own ignorance is somehow compelling.
Sorry, perhaps I didn't understand. Are you saying Eich's startup meets all three of those criteria?
As I said, I'm not saying all of them are scams. Indeed, I specifically mentioned two other possible classes they could fall into. And as I think is clear from my initial comment, I'm open to the possibility that someone will find a use for blockchain that enables some sort of viable business that couldn't be done with other tech.
You of course don't owe me any explanations. But you're the one who jumped in with a variety of handwaving contradictions to my comments. So if you want to to be taken seriously, backing you agitation with evidence would be a good step.
As I said, I'm not saying all of them are scams. Indeed, I specifically mentioned two other possible classes they could fall into. And as I think is clear from my initial comment, I'm open to the possibility that someone will find a use for blockchain that enables some sort of viable business that couldn't be done with other tech.
You of course don't owe me any explanations. But you're the one who jumped in with a variety of handwaving contradictions to my comments. So if you want to to be taken seriously, backing you agitation with evidence would be a good step.
What happens to the unicorn's equity stake in a unicorn-backed company if the unicorn itself goes out of business? Does that equity get re-distributed to the unicorn's investors?
Seems like an asset that would be liquidated to pay failed co's creditors, preferred stockholders per liq prefs, and common if anything is left.
I think sometimes they get spun into their own legal entity, I'm thinking about Yahoo's and Naspers. In Naspers case their investment in Tencent is worth so much that actually Tencent's value is what drives most of Naspers stock price
https://en.wikipedia.org/wiki/Naspers
https://en.wikipedia.org/wiki/Naspers
So Silicon Valley’s version of the CDO or better yet and the even worse — synthetic CDO
> So Silicon Valley’s version of the CDO
Not really.
If by “CDO” you mean “multiple assets in another asset,” then every company is a CDO. If by CDO you mean “tranching,” then pref stacks create (or for that matter, any company that issues debt is) a CDO. CDOs are differentiated by the kind of debt they buy and their tendency for having a tiny senior tranche and leveraged buyers of their riskiest tranches. That doesn’t apply here.
(The latter might apply, since the loss-making unicorns buying start-ups’ equity need to raise new money to stay alive, but that’s just classic leveraged buying.)
Not really.
If by “CDO” you mean “multiple assets in another asset,” then every company is a CDO. If by CDO you mean “tranching,” then pref stacks create (or for that matter, any company that issues debt is) a CDO. CDOs are differentiated by the kind of debt they buy and their tendency for having a tiny senior tranche and leveraged buyers of their riskiest tranches. That doesn’t apply here.
(The latter might apply, since the loss-making unicorns buying start-ups’ equity need to raise new money to stay alive, but that’s just classic leveraged buying.)
"When beggars and shoeshine boys, barbers and beauticians can tell you how to get rich it is time to remind yourself that there is no more dangerous illusion than the belief that one can get something for nothing."
- Bernard BaruchThis makes sense when your business strategy requires that you create a vibrant business ecosystem and the current support for these businesses is broken or inadequate. Focus and domain expertise become a competitive advantage and you can reap value from both the fund and the main business by creating value in the ecosystem.
So they've got cash and no ideas? If I were an investor I would be livid.
How is this different from blowing your funding round at a blackjack table?
How is this different from blowing your funding round at a blackjack table?
Venture is one of the best ways to spot trends in your own market(s), and lead run any future competition with an acquisition, new product or product changes.
This is one of the major things that distinguishes major 21st century companies today from major companies in the past. If you know all of the up and coming competitors, or an entire new market that could threaten you, you can't be disrupted.