21–30 of 133 posts
The problem isn't overfunding small startups, it's going after markets that are all hype and have little to do with innovation.
Our smartest engineers should be working on ARPA-funded energy projects not how to create a new feature to keep Facebook relevant.
My theory is that 500 2 person companies have a worse chance at making a real splash than if the 100 best ideas from that group had 10 good people working on them. That's part of what he's saying - it's harder now for good startups to grow when everyone wants to and is incentivized to make their own web startup.
The other part he's saying is that people can have a larger marginal impact on the world working at a place like Facebook than they could in their own startup. For the median case, this is true.
For later round investors it's undoubtedly in their interest to encourage these engineers to join larger firms rather than being on their own. In NYC it's especially competitive given the competition between more mature companies, early stage startups and the money wielding finance industry. The combination could lead to a 'glass ceiling' of sorts for larger companies because of the inability to attract talent; that is, until some of the smaller companies fail and these individual engineers likely end up at a larger spot.
It mirrors the consolidation of an industry. It just takes longer than some investors (like Parker) would prefer, which is the inspiration for statements like this.
I don't see what's wrong with larger companies having a hard time attracting talent. A good read: http://en.wikipedia.org/wiki/Theory_of_the_firm As transaction costs go down (in general), it makes less sense for us as a society to have production/value creation organized in larger organizations (firms, companies, etc) - instead in a bunch of independent smaller groups. Companies only exist to minimize transaction co…
I think this is a bit of an overstatement. Another purpose of companies is to provide the benefits of a command economy (e.g., the ability of a great leader to jump from a local to global maxima) with less of the dangers of a command economy (great leader robs/kills you, poor planning screws everyone over).
E.g., central planning in the food supply can work reasonably well, but this is hardly guaranteed. Market discipline gives us the benefits of McDonald's 5 year plan, but a McBankruptcy rather than Soviet Union style food shortages if the 5 year plan fails.
Interestingly, we (http://feefighters.com) had 2 of our 4 interns leave us in the past week because they got accepted to YC (2 different projects). I guess we should feel good because we're picking smart people who want to work for us, but we'd rather have them with us!
Make hay when the sun shines. It will start raining in the future, and there might not be a lot of warning.
Let's not forget that this entrepreneurial activity is forcing the big guys (Google, FB, etc) to be more innovative than they would otherwise be - either to attract talent or to compete with startups.
To be clear, I know that Facebook does pay quite well by industry standards (offset somewhat by the bay area cost of living) for top talent, but if this situation is causing them an issue then what they are paying (or offering in general -- money isn't always the only thing) still isn't enough.