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VC isn't VC anymore

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Re: VC isn't VC anymore

#221

Post by thoughtpeddler »

Reminds me of this post from earlier in the year (from a VC, Michael Dempsey) titled "VC-Backed Startups are Low Status"[0], which I'm inclined to agree with, having been in the industry for over 15 years now and witnessing how the vibe shifted from "techies are good" to "techies are bad" over this period.

I graduated into a tech workforce that was a celebrated part of society (i.e. "high status") to one that is decidedly not (and I'd say it's grown to deserve this disrepute).

The first main wave of the vibe going negative (at least at the heart of the 'imperial core' in the SF Bay Area) was around ~2013/14 (the 'tech co bus protests'), then again around ~2018 ("don't call SF General 'Zuck General'"), and now it's kicked into a much higher gear during this current AI wave. It spans big tech co's to startups to everything in between. Anil's post speaks to this too, when he says:

> Politicians and media still look at VC as if it works like it did 10 or 20 years ago, and cheer them on ... when their primary goal is concentrating power and wealth

It's not just VC per se, but the 'managerial class' within tech rotted into mostly career-climbing types that were a far cry from impassioned creative technologists aiming to 'do good' with tech. It became the same status-bound competition you'd find on Wall Street and elsewhere (which the Dempsey post describes well).

I have a mentality and overall life orientation that is aligned with Anil and celebrates the open web, public interest technology, and so forth, and many of my peers in tech (often from elite universities and backgrounds) look at me as a strange creature. I'll bring up the need to increase awareness about Public AI and boosting AI literacy among citizens, and I hear, "Wow, you like, really care about like, people. That's so interesting." It's unbelievable, I wish I was kidding.

Thanks for writing this Anil. I wish for better days.

[0] https://mhdempsey.substack.com/p/vc-backed-startups-are-low-...

Re: VC isn't VC anymore

#222

Post by piker »

chris_marino wrote: post #151

The article does not mention or address an important contributor to the current state of VC. The increase in regulations, post GFC, made it impractical/impossible for small companies to go public. And, until recently M&A was actively avoided. The alternative was to stay private longer offering higher returns for private investors wanting to capture a (previously non-existent) illiquidity premium. The co-dependency of…

Sarbox is a drag, but another issue is the rise of the securities plaintiffs bar. Public companies are subject to Rule 10b-5 claims on each statement they make because the market can "rely" on that statement. This means every public interview, press release, and even tweet needs to be scrutinized by lawyers or risk subjecting the company to expensive lawsuits because the founder's "misstatement" moved the stock price by 45 cents.

I've never run a public company, but my bet is the mechanical filings, etc are way less of a burden than shareholder litigation.

Re: VC isn't VC anymore

#223

Post by dv_dt »

sznio wrote: post #81
dv_dt wrote: post #73

Earlier quoted context omitted.

Of course it can fail, just like the AI circular investment moves can fail just like the Soviet Union failed. Too much decisive power in too few hands, disconnected from reality, disconnected from competition, disconnected from outside community criticism. It fails open loop. A lot of money can temporarily buffer the failure, but already we see world wide inflation and interest rate increases from the open loop decis…

or it can not fail, like North Korea

I don't have a sufficient understanding of how North Korea operates to assess that - too much my information about North Korea is propogandistic sound bites. I do know they have had famines in decades past, and don't think they have them now, so that suggests their economic/industrial strategies are a least passing a minimum threshold of being connected to reality.

Re: VC isn't VC anymore

#224

Post by watwut »

ciefa wrote: post #97
quaintdev wrote: post #91

Earlier quoted context omitted.

Sometimes I wonder if people will one day wake up and just ditch all the tech. That's seems to be the only way to be out of this mess.

Hard disagree. Societal change and more inventions are needed, not a degrowth attitude.

What societal change and what inventions, exactly? Some societal changes are for the better, others for the worst. We are heading toward the "worst" direction in full speed.

Some inventions are for the better, other mostly don't matter and yet others make the world actively worst. And the "for the better" things dont seem to come from our industry anymore. Nor for rich VCs, nor from private equity investments etc.

Re: VC isn't VC anymore

#225

Post by yakhmetzaki »

andix wrote: post #164

I think tech founders need to think smaller. Build software for a few thousand people and make a profit from it. Something niche. Something that is sustainable with a small team. VC eats up everything that's becoming bigger. And they will kill it. Their goal is not to run a healthy business that serves their customers. They try to take out as much money as possible and then trash it.

[dead]

Re: VC isn't VC anymore

#226

Post by palata »

carlosjobim wrote: post #181
palata wrote: post #160

Earlier quoted context omitted.

> If you had gotten rich from the stocks you wouldn't have complained here. Duh. > That you wanted to gamble on that What makes you think I gambled at all?

You said that you worked for a low salary at startups and feel scammed because of that. You could have worked somewhere else instead for a higher salary if you weren't gambling. Or if nobody would have hired you for a higher salary somewhere else, then maybe your salary at the startups wasn't so low after all?

If you want to go with that tone... I wonder if you did not understand my English or if you lack basic logic?

I did not say that I felt scam because of my low salary. I said that I felt scam because the founders got rich and what I got didn't compensate the low salary.

Said differently, the founders got rich and I didn't get much at all. When I say "not much", it means "not nothing, but not a lot".

Re: VC isn't VC anymore

#227

Post by estearum »

claytongulick wrote: post #204
estearum wrote: post #193

Earlier quoted context omitted.

Also a founder raising currently and big +1. VCs are off their fucking rockers. Mad FOMO, listening to, believing, and benchmarking against actual liars (both obvious and non-obvious).

Is it different than the crypto days? I was part of a couple raises back then and I remember every founder was being forced to find some blockchain application, no matter how inappropriate, to get any attention from the fad-tech VCs

AI is sucking up orders of magnitude more capital than blockchain. So it's not like there is a segment of VCs who are fad-tech and obsessed with AI. The entire ecosystem is distorting around mega-companies and people who can believably say (usually by lying) that they will be a mega-company. And "mega-company" means something much much much bigger than it did even 5 years ago.

Re: VC isn't VC anymore

#228

Post by otterley »

slowin wrote: post #207
otterley wrote: post #205

Earlier quoted context omitted.

Why is anti-Zionism necessary if your business fundamentals are strong?

Some of us care about the ethics of those we work with. Being a Zionist is also a brand risk. Just look at Vercel when their CEO met with Netanyahu. Many people canceled their accounts and now will never use Vercel. Mainly I don't want to work with people who are enthusiastic about committing genocide, as so many VCs are.

I don’t follow the logic. Since when does the act of meeting with someone mean you’ve adopted their beliefs? Do you adopt the beliefs of everyone you’ve met?

What if you've met both a Zionist and an anti-Zionist? What does that make you?

Re: VC isn't VC anymore

#229

Post by lotsofpulp »

palata wrote: post #163
BeetleB wrote: post #104

Earlier quoted context omitted.

> But it doesn't, really. Because you get diluted. At this day and age, if you don't understand dilution before you join, it's entirely on you. This isn't a new concept - it was the case decades ago. Even when I left school over 15 years ago, the standard advice when trying to get a job with a startup was "Get a good salary and value the equity at zero." And class A vs class B isn't even a rich vs everyone else thing…

> At this day and age, if you don't understand dilution before you join, it's entirely on you. I don't know what to tell you. Young graduates get an offer to work at a startup, nobody tells them how it works. They are just excited, as I was. And they don't think about "what happens if the startup is successful" because they do know it probably won't be. And when the startup is successful (happened to me) is when they…

>That does not say AT ALL that the founder gets rich when you get nothing. It says "be careful, most startups fail, so make sure you get a salary".

That one is covered under the standard advice of "comparison is the thief of joy".

>Usually that salary is subpar.

If it was subpar, then the salary would not have been accepted.

Re: VC isn't VC anymore

#230

Post by bix6 »

FiatLuxDave wrote: post #187
bix6 wrote: post #25

I’m a VC and agree with much of this. The mega firms have totally warped VC and the desire for massive cash appreciation has led to a host of bad characters getting involved. I still love working with early stage companies but it is hard to cut your own lane when these mega groups control so many aspects of the stack and have such outsized capital and political influence. There are so many issues destroying early sta…

I'm guessing you located are in the bay area? If so, that is one thing under your control that you could change. The early SV VCs didn't build the industry by staying in NY (where the capital concentration at that time was). They had to get away from that scene to do what they did. It might be easier to cut your own lane if you weren't sharing the same turf.

I left the bay many years ago :)
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