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Sean Parker: “Little Startups Are Ridiculously OverFunded”

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Re: Sean Parker: “Little Startups Are Ridiculously OverFunded”

#31

Post by sector »

Startups are akin to an MBA.

Running a small but ambitious company forces a serious, motivated founder to think about every business function. I don't see any meaningful downside for the founders who choose to spend some time on this task, and I see a lot of upside.

Parker's complaints strike me as absurd. If he really believes they can have more impact at FaceBook, he should find a way to create special purpose vehicles within FB that allow founders to get equity in the work of a small team, rather than just getting .00005% of the sum of FaceBook.

Re: Sean Parker: “Little Startups Are Ridiculously OverFunded”

#32

Post by nestlequ1k »

georgemcbay wrote: post #30

I don't think he is completely wrong but I think this is just another (higher-end) instance of the age-old tradition of companies saying it is too difficult to find engineers while being unwilling to pay fair value for said engineers. 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 iss…

There's a certain type of personality (very prevalent in the valley) who won't work for a big company like facebook, twitter, or google for any amount of money. I would imagine these types of people make up the majority of the YC class.

Maybe they'll get bought via a talent acquisition but as soon as their golden handcuffs are off, they are out doing their own thing again. The reason they allow themselves to get bought via talent acquisition is to be able to easily raise money in the future.

I think Sean Parker is reacting to these types of people. I think the misconception is that the increased funding sources is what is driving these people. I would suggest that they were always there, but 5 years ago they were just living poor and working their ass off to build a startup (usually unsuccessfully).

I do believe I'm part of this group. There's no amount of money that would compel me to take a corporate job. Sometimes money isn't what matters.

Re: Sean Parker: “Little Startups Are Ridiculously OverFunded”

#33

Post by wavephorm » 

  Parker suggests that one reason it will end badly is 
  because the Internet industry will ultimately consolidate
  just like the PC industry did in the 1980s and 1990s.
Why? Why does the future have to be like the past? As rich and well connected Sean Parker is, he cannot predict the future. Coincidently given his stature it makes him probably the least qualified to predict what will ultimately happen in the computing industry.

There is no reason the computing industry cannot be more flat than it has in the past. I believe it is highly likely the industry will continue to fragment. Android, IOS, Windows7, BBX... there will be more platforms in the future, not less. More diversification, not less. The game has changed forever, as it should.

Re: Sean Parker: “Little Startups Are Ridiculously OverFunded”

#35

Post by a3camero »

ericd wrote: post #23

This isn't just whining. 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 th…

Facebook was once one of those startups.

Re: Sean Parker: “Little Startups Are Ridiculously OverFunded”

#36

Post by sinope »

yummyfajitas wrote: post #26
PabloOsinaga wrote: post #12

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…

Companies only exist to minimize transaction costs. 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 reasonab…

You have completely misunderstood the OP. Stop writing and re-read.

Re: Sean Parker: “Little Startups Are Ridiculously OverFunded”

#37

Post by forzano »

jbigelow76 wrote: post #20
ghc wrote: post #4

How exactly does he expect the internet to consolidate like the PC industry? How can the internet consolidate?

What I'm wondering is, how do more and smaller startups equate to eventual consolidation? His preference seems to be that engineers would elect to become agents or enablers of consolidation by joining the very companies that have the scale to consolidate a market. His two points don't seem to have any intersection that I can see.

"What I'm wondering is, how do more and smaller startups equate to eventual consolidation?"

It doesn't, if anything it slows down any eventuality of it. He's saying it does to try and scare talent on the fence and talent that has already gone the startup route by saying its a misguided and futile effot.

Ask yourself this, if this big companies werent hurting because of these loses, would they waste time making the comments in the first place? Its cheaper to try scare tactics then to offer them more money.

Re: Sean Parker: “Little Startups Are Ridiculously OverFunded”

#38

Post by justincormack »

yummyfajitas wrote: post #26
PabloOsinaga wrote: post #12

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…

Companies only exist to minimize transaction costs. 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 reasonab…

That is a bizarre argument though, you are saying that capitalism works fine so long as companies are run as soviet states? The Soviet Union showed basically no benefits to the command economy... And the great leaders of large businesses look rather more like command economy leaders than products of a free market.

I think you need a better argument than that that large corporations are here to stay, not a passing fad due to factors like transaction costs... There have been few great leaders running large corporates, although not none, and many people just enriching themselves for doing little.

Re: Sean Parker: “Little Startups Are Ridiculously OverFunded”

#39

Post by orblivion »

MatthewB wrote: post #10

Thinking in the most simplistic form possible - how about engineers just doing what makes them the most happy? Forget about whether we could provide more value at an established company. Maybe building our own products is our passion. That alone will drive more value than doing something we're not passionate about. Just a thought. Whether early stage startups are overvalued is a different topic to be discussed.

Again that drains talent, though, if they're working on it full time.

Re: Sean Parker: “Little Startups Are Ridiculously OverFunded”

#40

Post by AdamFernandez »

a3camero wrote: post #35
ericd wrote: post #23

This isn't just whining. 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 th…

Facebook was once one of those startups.

That is exactly right. I would actually be very surprised if he believed what he was saying considering everything he has seen and been involved with. To say things will consolidate and stop as they are is extremely short sighted for one so experienced in these matters.
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