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Sean Parker: “Little Startups Are Ridiculously OverFunded”

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

#121

Post by gaius »

dylangs1030 wrote: post #90

I disagree entirely. Here's why: 1. Social psychology shows us that, smaller, more focused groups perform better and have superior productivity to larger groups, which tend to become disorganized and derailed. ( http://sgr.sagepub.com/content/40/2/247.abstract ) Startups tend to have fewer employees (this is universal), and, even in hugely successful companies like Google, work is divided into highly productive nucle…

each of those outsourced functions is done on a much more quality level than if the company tried to do it all on its own

Ho ho ho. There is a long, long list of companies who have discovered to their cost, the opposite. And amusingly, it's getting longer.

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

#122

Post by gaius »

justincormack wrote: post #38
yummyfajitas wrote: post #26

Earlier quoted context omitted.

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…

The Soviet economy was in practice run as if it was one huge company, with each industry being one division of the company, all the revenue flowing up to HQ then being allocated in budgets for each division, targets for each set, and so on.

This is "efficient" as it reduces friction - but when HQ makes mistakes in budgets or targets, the entire economy fails, whereas in the West, the failure is isolated to one company, and over the long term, that redundancy is massively more productive. In fact in the West, the assets of the failing company would most likely be bought by a rival, and no productive capacity would be lost. In the Soviet system, you might end up with a million tractors but no crops to harvest!

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

#123

Post by shareme »

more interesting concern..

What happens when all the developers with extremely low debt loads are snapped up by the Big firms to start-ups attempting to acquire tech co-founders and dev talent?

It is not that anyone is over funded, its that those with low debt loads and dev talent is in fact a finite amount and when its gone from the market prices adjust upwards..

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

#124

Post by DuncanIdaho »

nl wrote: post #120
davidhansen wrote: post #75

Earlier quoted context omitted.

Not just the independence aspect, but the hubris with which he complains about the most brilliant minds choosing to not work on, well, a social network site . It's 2011; we are traversing inflection points of development in solar energy, nanotechnology, bioinformatics, and seeing the early, dramatic fruits of stem cell research, and Parker is bitching that the best of the best aren't keen on improving software that s…

To be fair, many regard that same social networking site to have been a critical factor in at least two of the Arab Spring revolutions. One would almost dare to think that helping people communicate is useful or something crazy like that!

Many have regarded Earth to be center of the universe. Many still do.

What do people's beliefs and perceptions have to do with reality?

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

#125

Post by mattdeboard »

rcoder wrote: post #102
mattdeboard wrote: post #82

Earlier quoted context omitted.

Uh, I dunno. I lived in the Bay Area (Santa Clara & San Jose, specifically.. far from the city but still enjoyably commutable by rail) for a couple years. I then moved to Indiana and took a 65% pay cut. The bay is expensive, but it's not THAT expensive. As long as you live within your means and understand that 80k in the bay area is not the same as 80k in Indiana (where I live now) you can have a very nice lifestyle.…

As someone who just moved from Portland OR to the Bay Area in order to take a "corporate" engineering job in SF (and got a >40% raise in the process) I can say with confidence that the cost of living here, even outside the city (specifically Berkeley for me) is easily 2.5x what is was back in PDX, even with a 60 minute commute and meals comped at the office. It's not just housing (which costs easily 2x what it does i…

Cost of living 2.5x??? Berkeley is not, iirc, exactly the nexus of affordable living. I don't know; maybe I just have cheaper tastes? I agree that rents can be MUCH more expensive; I'd probably pay between 1200 and 1500 for the apartment I live in now (2-2.5x what I currently pay). But I just never felt like it was that dramatic for me.

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

#126

Post by orblivion »

jbjohns wrote: post #114
orblivion wrote: post #39

Earlier quoted context omitted.

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

Good. No one has the right to having employees. If you want employees, you pay what it takes to attract them. Parker is trying to manipulate the market here to get prices down to what he wants to be paying.

Yeah I was going to respond with a point based on economics, but I think you have me here. The point I was responding to was about value for the engineer. If the engineer creates a lot of value from working for themselves, it would just take that many more dollars to pull them away from it. (This has applied to me as well.)

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

#127

Post by yummyfajitas »

justincormack wrote: post #107
yummyfajitas wrote: post #65

Earlier quoted context omitted.

That is a bizarre argument though, you are saying that capitalism works fine so long as companies are run as soviet states? No, I'm saying that embedding command economies (structured as companies) in a capitalist economy allows us to gain the benefits of a well run command economy while mitigating their harms.

Yeah thats what I meant. First prove there is such a thing as a well run command economy then, and then that the company system will generate such a thing...

Walmart serves as an existence proof for both your propositions.

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

#128

Post by niketdesai »

suivix wrote: post #96
niketdesai wrote: post #88

Earlier quoted context omitted.

That's a fair goal, and I believe the answer breaks down like this: You can work for a big company that serves billions of people, claiming that you are making an impact on the world, while in reality doing nothing. On the other hand you can start your own company, perhaps only directly impacting a few hundred people, and still accomplish the goal of maximizing your change on the world (as that was your ceiling).

If you write software for a big company then that piece of software could impact the lives of millions of people.

Yes this is true, and that is what the HFT developers say to themselves as well. Just a point of data.

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

#129

Post by chwahoo »

jroseattle wrote: post #81
chwahoo wrote: post #16

Earlier quoted context omitted.

I suspect he means that investors are overvaluing small startups (relative to their chances of becoming successful). The consequence he worries about is that having too much funding available makes the opportunity too appealing to the best engineers, making it harder for ventures that will succeed to keep/attract talent.

His arguments seem a big reach, though. Lots of investment means opportunity recognition, and there are a finite number of engineers, so supply/demand takes it course. He's arguing against capitalism, and not making a very good one at that. While trying to sell this as an industry-wide issue, I suspect his real concerns are more immediate -- for his own ventures.

He's not arguing against capitalism. He's saying that the market is currently overvaluing certain kinds of businesses, causing resources to be misallocated. That's it.

You may be right that he is either wrong or making his argument for self-serving reasons. Or he might be right.

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

#130

Post by psychotik »

jbjohns wrote: post #115
psychotik wrote: post #50

At Startup School, the Sequoia guy showed a bunch of slides which had two main points highlighted: - Companies like Microsoft, Google, Yahoo, LinkedIn raised very modest amounts of funding and has multi-billion dollar IPOs - Cost of creating a company (and associated technology) is down over 90% from what it was back when a lot of these companies were started. Given these two, it's amazing to see VCs pouring in milli…

>Companies are ridiculously over funded, and VCs are doing a disservice to their investors as well as to their portfolio companies by giving more money than they need. No they're not. They're following the market. If they were doing a disservice to their investors, do you think the investors would just sit back and lose millions?

The proof is in the pudding. If they're making more ROI, on average, in investments made in the last 2-3 years then clearly things are fine. If they're not making as much, on average, as they did 10 years ago, then there is inflation/bubble/etc. Sadly, it'll takes a few more years to do such analysis.
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