Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The venture capitalist's dilemma

newsletter.mollywhite.net

Post reply on HN
Print view View original

61–70 of 94 posts

Re: The venture capitalist's dilemma

#61

Post by JumpCrisscross »

AnimalMuppet wrote: post #59
JumpCrisscross wrote: post #57

Earlier quoted context omitted.

When a bank runs, you run. Trying to pin the blame on depositors is misguided. There are real villains to the SVB story. Regulators. Senior management. Goldman Sachs.

Can you explain why Goldman Sachs?

> Can you explain why Goldman Sachs?

They bought SVB’s loans at a $2bn loss to SVB [1] and then advised them to go to market with non-binding capital commitments [2][3][4] all while billing SVB $100mm for the trouble [5]. In short, they gave terrible advice, tanked the bank and then made bank, all while West Coast punditry began blaming depositors.

[1] https://www.ft.com/content/84728014-c900-48cd-be87-8defbf557...

[2] https://ir.svb.com/news-and-research/news/news-details/2023/...

[3] https://www.ft.com/content/7e7fdddb-724c-42fd-98ee-5d7248d53...

[4] https://www.wsj.com/articles/how-goldmans-plan-to-shore-up-s...

[5] https://www.nytimes.com/2023/03/15/business/dealbook/goldman...

Re: The venture capitalist's dilemma

#62

Post by plagiarist »

surgical_fire wrote: post #26
cornholio wrote: post #15

Capital is just another name for power and powerful people fight to maintain and accumulate more power - welcome to the world, summer child. It's woefully naive to expect individuals to give that power up for social-positive goals, it practically never happened throughout human history. We achieve social-positive goals by behaving as a society and limiting what the powerful can do with their power - democracy, market…

> And it just so happens that the current system we came up with - a mixed market with a strong, democratically elected public authority, yet freedom for individuals to pursue taxable profits This is naive to the point of absurdity, when the rich and powerful quite often are gifted loopholes for the profits to not be taxable, with a wink and a nudge from the "democratically elected public authority". I would certainl…

Everything from wage theft to dumping millions of gallons of crude oil in bodies of water is little more than a fine if you are a registered corporation.

Re: The venture capitalist's dilemma

#63

Post by surgical_fire »

JumpCrisscross wrote: post #47
surgical_fire wrote: post #26

Earlier quoted context omitted.

> And it just so happens that the current system we came up with - a mixed market with a strong, democratically elected public authority, yet freedom for individuals to pursue taxable profits This is naive to the point of absurdity, when the rich and powerful quite often are gifted loopholes for the profits to not be taxable, with a wink and a nudge from the "democratically elected public authority". I would certainl…

> naive to the point of absurdity, when the rich and powerful quite often are gifted loopholes for the profits to not be taxable This is not how I read OP. You’re reading a Panglossian “we’re in the best of all worlds.” I read we’ve found a good solution, but it’s a work in progress. Democracy alone has evolved through the centuries, ranging from electoral fetishism to enlightened autocracy. Progressive taxation, mea…

The rich will always be powerful. The irony is that we do live in the best of all worlds, but it still sucks. There's no utopia, there's only dystopia.

And I disagree that democracy will ever be improved, at least not with humans at the helm.

Re: The venture capitalist's dilemma

#64

Post by RamblingCTO »

> I would probably argue that venture capitalists are not good for society regardless of what they’re investing in

That's kind of a stupid and black and white argument. It can be good, might not be. Overall customers decide. If society deems slavery ok, then some VCs can and will make money with it.

Shitting on VCs from someone that advocates for crypto and "aLtErNaTiVe MoDeLs". This bullshit can only come from someone who never dealt with funding in a startup. I'd rather have a bunch of VCs getting me and my idea instead of having to manage investor relations for thousands of crypto bros. Also: crowdfunding fails if you have complex special solutions which no one understands. The probability that there's a low number of VCs even getting your idea is way higher than getting a critical number of crowdfunders to get your idea so you can even try.

Re: The venture capitalist's dilemma

#65

Post by mikekoscinski »

> “I mean, I would probably argue that venture capitalists are not good for society regardless of what they’re investing in.”

Definitely. Personally, I have __never__ purchased anything from Amazon, looked anything up with Google, shipped anything with FedEx, gotten somewhere with Uber, received a COVID vaccine from Moderna, used an iPhone or Android cell phone, played an Atari or EA video game, used a Mac or Windows computer, used any program that relies on NVIDIA GPUs, sent money via Paypal/Venmo/CashApp, contacted someone using a Cisco phone or router, found a job or closed a sale via Linkedin, watched a video with YouTube, shared a file with Dropbox/Google Drive/OneDrive, stayed in an Airbnb, booked travel with Kayak/Expedia, bought a home that I found on Zillow, bought anything online via Stripe/Shopify, bought anything in-person via Square terminal, looked a Facebook/Instagram/Snapchat/Twitter post, bought groceries with Instacart, ordered food with Doordash, hosted code on Github, made a video call with Zoom, looked at a Figma/Sketch design for work.

It was, in any case, of course certain that all of these things would exist.

> For all the talk of unbridled innovation, venture capital services only very specific types of innovation: those that stand to produce large exits for investors, and with relatively low risk, regardless of whether the business itself holds much promise or provides any societal benefit.

Yes. Anyone who has ever worked for or invested in a startup can attest to how low-risk and predictable they are. If only they were more volatile: then my life would be more interesting.

3% of seed-stage startups eventually exit? If only I could count on success like that each time I drive my car, take a flight, or cross the street.

Re: The venture capitalist's dilemma

#66

Post by plagiarist »

foverzar wrote: post #29
surgical_fire wrote: post #26

Earlier quoted context omitted.

> And it just so happens that the current system we came up with - a mixed market with a strong, democratically elected public authority, yet freedom for individuals to pursue taxable profits This is naive to the point of absurdity, when the rich and powerful quite often are gifted loopholes for the profits to not be taxable, with a wink and a nudge from the "democratically elected public authority". I would certainl…

> the rich and powerful quite often are gifted loopholes for the profits to not be taxable. Those loopholes aren't free and their nature is typically temporary. One example would be tax cuts in exchange for committing to provide N jobs.

They get a tax cut and commit to paying N people less than the value they create for their companies, what's the cost? You must have accidentally erased that part while editing.

Re: The venture capitalist's dilemma

#67

Post by RamblingCTO »

polygamous_bat wrote: post #27
blippage wrote: post #23

[flagged]

> VCs, and capitalists in general, put money at risk in the hope of generating wealth above their initial capital. , absent the internet-controlled juice-squeezers. You're so close to getting the point, yet so far. The whole point of the article is that there is nothing in the VC handbook that has anything to do with the "benefits society" part of your "They produce goods or services that benefit society" statement.…

> In fact, if slavery is magically made legal today

Then society deems it ethically ok. You're argument is void. If society thinks things are ok, why are VCs the heavenly instance to rectify that?

> And we need people like Molly White to keep them accountable

You mean crypto shills will enforce ethics? Lol

Re: The venture capitalist's dilemma

#68

Post by surgical_fire »

tobias3 wrote: post #46
surgical_fire wrote: post #26

Earlier quoted context omitted.

> And it just so happens that the current system we came up with - a mixed market with a strong, democratically elected public authority, yet freedom for individuals to pursue taxable profits This is naive to the point of absurdity, when the rich and powerful quite often are gifted loopholes for the profits to not be taxable, with a wink and a nudge from the "democratically elected public authority". I would certainl…

“Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time.” Applies to the democracy + capitalism combination, as well. We can try to improve upon it, but should be carefull to not kill th…

One can believe that the combination of democracy and capitalism is the best thing humanity could come up with, and realize it still sucks.

Humans are tribal above all else. We evolved to cooperate on small bands hunting animals in some African savannah, not to cooperate in large scale as the world we create requires. Any government system we come up with will become dysfunctional because we are unfit for the world we created.

My point still stands. The ruling class is as powerful as they always were, and operate on rules designed by them, so that they can better oppress the lower classes. And I don't advocate that a different system would be any different. There will always be a ruling class.

Re: The venture capitalist's dilemma

#69

Post by JumpCrisscross »

surgical_fire wrote: post #63
JumpCrisscross wrote: post #47

Earlier quoted context omitted.

> naive to the point of absurdity, when the rich and powerful quite often are gifted loopholes for the profits to not be taxable This is not how I read OP. You’re reading a Panglossian “we’re in the best of all worlds.” I read we’ve found a good solution, but it’s a work in progress. Democracy alone has evolved through the centuries, ranging from electoral fetishism to enlightened autocracy. Progressive taxation, mea…

The rich will always be powerful. The irony is that we do live in the best of all worlds, but it still sucks. There's no utopia, there's only dystopia. And I disagree that democracy will ever be improved, at least not with humans at the helm.

> I disagree that democracy will ever be improved, at least not with humans at the helm

Again, this is an easy and thoughtless take without a proposed alternative. (Benevolent AI is just benevolent dictatorship with a veneer.)

It's also gratingly at odds with very modern history. History that, granted, is not part of our public education corpus.

Re: The venture capitalist's dilemma

#70

Post by actually_a_dog »

ncallaway wrote: post #9
roenxi wrote: post #6

I broadly like the things Molly is bringing attention to, but there are some problems here: 1) This is presenting a bank run like it is a bad outcome for the people involved. It isn't obvious why that would be so; SVB is now one of the safest banks to park money in, and the dust hasn't settled but it seems plausible to me that the bank equity holders and directors are part of some incestuous Silicon Valley relationsh…

> If the game is set up so that everyone rich gets a bail out, you'd have to be an idiot not to take the bailout. But that's explicitly *not* how the game was set up. The game was set up so everyone gets insured up to a limit, and if you're rich enough to be beyond that limit, then you should be paying market rate for insurance on those funds (which is, like, a thing they could have done). They chose to forego insura…

> But that's explicitly not how the game was set up.

Sorry, but yes, it was. It might not have been written down, but if all it took was for a few people to "scream bloody murder demanding the government make them whole," we need to look deeper at the implicit assumptions surrounding that system. And, part of those assumptions is that truly wealthy individuals get a greater level of service from that system than the rest of us, including bailouts like this. The same goes for "too big to fail" type institutions (viz JPMC and other big banks who are directly benefiting from a loss of confidence in institutions like SVB).

Post reply on HN