Facebook establishing a venture arm to invest in startups • Hacker News Board

Re: Facebook establishing a venture arm to invest in startups

#121

Post by riantogo » Sun, Jun 14, 2020, 3:48 AM UTC

yeldarb wrote: post #88

riantogo wrote: post #69

Earlier quoted context omitted.

And that exactly is the problem. The game is rigged in favor of folks who already have access to information (or can afford to buy it), not available to regular folks. That is how billionaires double their billions faster than me essentially playing lottery/roulette with my $1000 on Robinhood.

But Facebook is publicly traded. If you truly think this is the case why not just put your $1000 in their shares and let it compound at the same rate as Zuck’s?

This is actually a good idea.

Re: Facebook establishing a venture arm to invest in startups

#122

Post by riantogo » Sun, Jun 14, 2020, 3:49 AM UTC

granzymes wrote: post #73

riantogo wrote: post #69

Earlier quoted context omitted.

And that exactly is the problem. The game is rigged in favor of folks who already have access to information (or can afford to buy it), not available to regular folks. That is how billionaires double their billions faster than me essentially playing lottery/roulette with my $1000 on Robinhood.

On the other hand, incorporating exotic or unusual sources of data makes the market more efficient for everyone. The market is first and foremost a method for price discovery and rewards actors for their contributions thereto.

It makes it beneficial to folks who can afford exotic and unusual data.

Re: Facebook establishing a venture arm to invest in startups

#123

Post by john-radio » Sun, Jun 14, 2020, 3:52 AM UTC

gimmeThaBeet wrote: post #39

a13n wrote: post #27

It's pretty interesting that FAANG doing venture capital is basically like legal insider trading. They clearly have data on web traffic, consumer usage, advertising spend, etc. that other VC firms and investors generally don't have access to. They can use this to understand entire markets, see who the incumbents are, estimate revenue/users, see who's up-and-coming, etc. Obviously within some margin of error. I wonder…

That's not really insider trading. Matt Levine pops up here all the time, and one of the really distilled mantras he has: inside trading isn't about fairness , it's about theft . Like the people who track flights to speculate on M&A, or use satellite and aerial imagery to look at parking lots. Gathering information isn't a crime, in fact gathering and acting on that information is explicitly what you want at an aggre…

> Gathering information isn't a crime, in fact gathering and acting on that information is explicitly what you want at an aggregate level. What you don't want is entities stealing or misappropriating information that doesn't belong to them. I think all the mentioned data categories are basically Fb's line of business, so if it's usable it seems like its pretty fair game.

This entire thread is getting so tangled up in what's presently legal and supportable under our exact, current implementation of capitalism that all of our brains have fallen out.

We don't need Facebook to have this much power! Why should they be allowed to keep this much capital untaxed? Why should they be allowed to own and operate Whatsapp, Instagram, Spotify, and Oculus, all as one huge entity?

Re: Facebook establishing a venture arm to invest in startups

#124

Post by riantogo » Sun, Jun 14, 2020, 3:52 AM UTC

missedthecue wrote: post #106

riantogo wrote: post #69

Earlier quoted context omitted.

And that exactly is the problem. The game is rigged in favor of folks who already have access to information (or can afford to buy it), not available to regular folks. That is how billionaires double their billions faster than me essentially playing lottery/roulette with my $1000 on Robinhood.

If you truly believe this, buy Facebook stock

Indeed and have. But I have a feeling that the returns that fb would make on their VC investments will be much higher than investment in their stock. There would of course be trickle down effect.

Re: Facebook establishing a venture arm to invest in startups

#125

Post by riantogo » Sun, Jun 14, 2020, 3:55 AM UTC

nopzor wrote: post #101

riantogo wrote: post #69

Earlier quoted context omitted.

And that exactly is the problem. The game is rigged in favor of folks who already have access to information (or can afford to buy it), not available to regular folks. That is how billionaires double their billions faster than me essentially playing lottery/roulette with my $1000 on Robinhood.

i don't really agree with your point. better information leads to better price discovery for the 'game' at large for longs and shorts (including for unsophisticated robin hood investors). it isn't just about who can 'afford' to buy it; often times it's just about being smarter, or being willing to ask questions that nobody else is asking.

Fair point. But I feel we have missed OP’s point. Which is that these are not public trades.

Re: Facebook establishing a venture arm to invest in startups

#126

Post by colonelanguz » Sun, Jun 14, 2020, 4:01 AM UTC

missedthecue wrote: post #114

colonelanguz wrote: post #77

Earlier quoted context omitted.

Delaware companies do. See, e.g., Frederick Hsu Living Tr. v. ODN Hldg. Corp., 2017 WL 1437308, at *18 (Del. Ch. Apr. 14, 2017) (“[T]he fiduciary relationship requires that the directors act prudently, loyally, and in good faith to maximize the value of the corporation over the long-term for the benefit of the providers of presumptively permanent equity capital . . .”). Facebook is a Delaware company.

"maximize the value over the long term" isn't the same as "upend the company to pick up a couple dimes"

I agree! Were you attempting to respond to my comment, or just venting?

Re: Facebook establishing a venture arm to invest in startups

#127

Post by csallen » Sun, Jun 14, 2020, 4:04 AM UTC

riantogo wrote: post #118

csallen wrote: post #112

Earlier quoted context omitted.

The game isn't rigged because it isn't zero sum. Billionaires getting richer doesn't normally impact your ability to get richer. And as long as you're free to maneuver how you'd like, it shouldn't really matter to you that someone else is succeeding faster or slower. Also, it's generally the case that there are more opportunities to turn $1 into $2 than to turn $1B into $2B.

Great. I would like to discuss couple multilevel marketing schemes that might be of interest to you. Mostly the top of the pyramid makes money but you can earn dozens of dollars too. You are free to maneuver how you’d like. In fact that is their recruiting line, “be your own boss”.

What makes MLM schemes bad is not that the people at the top make money faster, but that people who aren't on the top tend to not make any money at all. This is a direct result of the fact that many MLM schemes are actually pyramid recruiting schemes, where you profit primarily by recruiting people beneath you. If everyone is doing this, then recruiting grows exponentially, and it doesn't require many levels before you run out of people to recruit, which prevents anyone below the top levels from making significant money.

Obviously capitalism doesn't have that problem, since it's driven by the sale of goods and services, not by one-time recruiting commissions that we'll some day exhaust.

TL;DR — Your analogy doesn't hold, as the market is not a fixed pie zero-sum game.

Re: Facebook establishing a venture arm to invest in startups

#128

Post by smabie » Sun, Jun 14, 2020, 4:13 AM UTC

tomdell wrote: post #104

ISL wrote: post #74

Earlier quoted context omitted.

There is probably a useful fact that you know that billionaires don't. It is probably local or related to your technical expertise. Peter Lynch famously researched companies by watching to see where his family spent pocket money. I recall reading analyses of trading performance by members of Congress -- they generally did about the same as everyone else except in companies associated with their districts. Anecdotally…

On the large scale, wealth reliably collects progressively higher percentages of return the higher the base capital.

The absolutely dismal performance of most hedge funds indicates otherwise. In fact, it's probably easier to generate alpha using small amounts of money. When you're managing billions and billions of dollars, you're severely constrained in the types of strategies you can actually run. This is why, for example, that RenTech's Medallion fund is capped at 10bn.

Just by investing in an index fund, retail investors are getting a pretty great investment, essentially freeloading off of all the hard work the active funds are doing.

Re: Facebook establishing a venture arm to invest in startups

#129

Post by smabie » Sun, Jun 14, 2020, 4:16 AM UTC

crubier wrote: post #119

kortilla wrote: post #110

Earlier quoted context omitted.

No, it’s not worth it for them to spend $50k in someone’s salary getting them up to speed on the local culture of a place to discover a trade that might be worth 150k.

If it’s not worth it tot hem it’s not worth it to us either then. The rules of ROI are the same for billionaire or for me.

A hedge fund needs to post good returns on the capital it has with the man power it has. They simply do not have enough resources to spend time on netting 100% returns on 50k investments. And they can't hire the problem away either, unless they pay each new employee less than 50k.

Re: Facebook establishing a venture arm to invest in startups

#130

Post by smabie » Sun, Jun 14, 2020, 4:19 AM UTC

riantogo wrote: post #122

granzymes wrote: post #73

Earlier quoted context omitted.

On the other hand, incorporating exotic or unusual sources of data makes the market more efficient for everyone. The market is first and foremost a method for price discovery and rewards actors for their contributions thereto.

It makes it beneficial to folks who can afford exotic and unusual data.

No, it benefits you too. By just holding an index fund you are freeloading on all of their work. You get efficient allocation while doing and paying virtually nothing.

I think people misunderstand how great and powerful index funds are for retail investors. Moreover, I people massively overhype this alternative data thing. Using alternative data to generate alpha is mindbogglingly difficult. If you just buy from a 3rd party firm, most likely all the alpha has been sucked up. So you need to source it yourself, clean it, analyze it, etc etc. It's really fucking difficult, and very expensive.

Trust me, you're not missing out. Your index fund is probably beating the returns of many firms with billions of dollars in capital and dozens of research analysts.