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Winter Is Probably Coming Soon

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Re: Winter Is Probably Coming Soon

#51

Post by jeffreyrogers »

dasil003 wrote: post #46

Of course a VC does not want you wasting his money and will finger wag all day long to try to make entrepreneurs behave. However his analysis focusing on isolated economic indicators is missing the forest for the trees (presumably willfully). Why is money cheap? Because investors have no place to put their money. The accelerating consolidation of wealth within the super rich (ie. the 0.01% funding VCs) and the pathet…

You can still put money in an index fund (e.g. anything from Vanguard) and get reasonable returns (better than most investors at least).

Re: Winter Is Probably Coming Soon

#53

Post by jjoonathan »

zxcvvcxz wrote: post #38

I think it's fair to say that this analysis applies better to web/app companies. There's just a fundamental problem with raising (and burning) millions trying to grow a site for inbound marketing, or an app for dating, or what have you, even though these are great ideas and things that people want: You likely won't be able to generate real revenue on something whose value is so immediately replicable or replaceable.…

> Fundamentally, as a society we need some technical advancement to create meaningful economic growth

Fundamentally, as a society we need a social+economic advancement that allows society to continue to function in the absence of growth.

Farms don't need growth to produce food. Power plants don't need growth to produce energy. Construction companies don't need growth to build houses. There is no good reason why the wheels should come off our economic system in the absence of growth.

The fact that the wheels do come off in the absence of growth is a bug. Plain and simple. We need to fix the bug rather than "working around" it by trying to produce unending growth.

Re: Winter Is Probably Coming Soon

#54

Post by gphil »

jeffreyrogers wrote: post #51
dasil003 wrote: post #46

Of course a VC does not want you wasting his money and will finger wag all day long to try to make entrepreneurs behave. However his analysis focusing on isolated economic indicators is missing the forest for the trees (presumably willfully). Why is money cheap? Because investors have no place to put their money. The accelerating consolidation of wealth within the super rich (ie. the 0.01% funding VCs) and the pathet…

You can still put money in an index fund (e.g. anything from Vanguard) and get reasonable returns (better than most investors at least).

Indeed, the risk-adjusted returns for VC as an asset class are bad compared to other options. I think there's more to the story than "the rich are running out of places to put their money."

Re: Winter Is Probably Coming Soon

#55

Post by cdent »

jjoonathan wrote: post #53
zxcvvcxz wrote: post #38

I think it's fair to say that this analysis applies better to web/app companies. There's just a fundamental problem with raising (and burning) millions trying to grow a site for inbound marketing, or an app for dating, or what have you, even though these are great ideas and things that people want: You likely won't be able to generate real revenue on something whose value is so immediately replicable or replaceable.…

> Fundamentally, as a society we need some technical advancement to create meaningful economic growth Fundamentally, as a society we need a social+economic advancement that allows society to continue to function in the absence of growth. Farms don't need growth to produce food. Power plants don't need growth to produce energy. Construction companies don't need growth to build houses. There is no good reason why the w…

Capitalism is cancer.

Re: Winter Is Probably Coming Soon

#56

Post by mbesto »

no_future wrote: post #19

Can somebody explain to me why every startup company(or at least every one that articles are written about) feels the need to raise as much VC as possible ASAP? There are so many options for developing scalable systems relatively easily and the cost of running an entirely web/software based company(read: 90% of the hot startups) today is comically low, especially with pay what you use PaaS/IaaS systems like those off…

> Can somebody explain to me why every startup company(or at least every one that articles are written about) feels the need to raise as much VC as possible ASAP?

1. It pays the bills.

2. Raising money is a strong signal of success both from a personal entrepreneur perspective and for the success of the team (whether you disagree with that notion or not, it's simply true). Whether that translate to success is a different story.

3. Raising money means your business exists. Many people (especially B2B) don't want to do business with vendors who aren't going to be around in 6 months.

4. The speed at which tech startups are created, also exists in reverse. Startups close down all of the time.

> Neither of them had to resort to advertising before their companies got big.

> I don't believe its a stretch at all to think that me and a buddy could build something like Snapchat or Instagram in a couple of weeks and throw it up on App Engine.

Heh, if it's that easy then, ummm, go build it? Chucking millions of dollars at these startups isn't necessarily about building the product, it's about supporting their growth to get network effects ASAP. Achieving "the network effect" means you've got a nice big moat around your business, which VCs and entrepreneurs love. You're right, they didn't have to do advertising, but they did have to pay for shit-hot SRE people to make sure 1bil tweets could be sent every week (or whatever).

Re: Winter Is Probably Coming Soon

#57

Post by ryandrake »

Tyrannosaurs wrote: post #43
zxcvvcxz wrote: post #41

Earlier quoted context omitted.

>Can somebody explain to me why every startup company(or at least every one that articles are written about) feels the need to raise as much VC as possible ASAP? >The only reason I would postulate for this trend is an increasing amount of non-technical founders who need to pay for developers to make and maintain their product, but don't want to give these developers significant equity in the company. I think this is…

I think there are a couple of reasons why cash is a major motivator for start ups: 1) People understand the true value of equity which is to say in most cases, really not that much. As someone who was a non-vested dollar millionaire back in 1999 (and if you were working then who wasn't...), this time round I'm just far cannier about what that might be worth. 2) Big companies are getting wise to the vision thing. Mayb…

Unfortunately, you can't pay your rent or student loans with underwater stock options or "cool company vision". Most companies have something interesting or unique about their vision or product, so that's rarely a differentiator. And, the equity portion of a job offer usually ends up being close to worthless unless you're employee #1-10. So, at the end of the day, cash is king.

Re: Winter Is Probably Coming Soon

#58

Post by jjoonathan »

cdent wrote: post #55
jjoonathan wrote: post #53

Earlier quoted context omitted.

> Fundamentally, as a society we need some technical advancement to create meaningful economic growth Fundamentally, as a society we need a social+economic advancement that allows society to continue to function in the absence of growth. Farms don't need growth to produce food. Power plants don't need growth to produce energy. Construction companies don't need growth to build houses. There is no good reason why the w…

Capitalism is cancer.

Capitalism, like cancer, can't be avoided. Economics is more like the laws of physics than a game of Monopoly: you can't really opt out of it because it simply describes the way things "want to" work (people competing for scarce resources).

Unlike cancer, I suspect that if we're sufficiently clever we can figure out a way to manage the symptoms in perpetuity.

Re: Winter Is Probably Coming Soon

#59

Post by Iftheshoefits »

zxcvvcxz wrote: post #41
no_future wrote: post #19

Can somebody explain to me why every startup company(or at least every one that articles are written about) feels the need to raise as much VC as possible ASAP? There are so many options for developing scalable systems relatively easily and the cost of running an entirely web/software based company(read: 90% of the hot startups) today is comically low, especially with pay what you use PaaS/IaaS systems like those off…

>Can somebody explain to me why every startup company(or at least every one that articles are written about) feels the need to raise as much VC as possible ASAP? >The only reason I would postulate for this trend is an increasing amount of non-technical founders who need to pay for developers to make and maintain their product, but don't want to give these developers significant equity in the company. I think this is…

On the other hand a good litmus test for the worth of the company is whether it can afford to pay market rate (or more), and offer appropriate equity along with that "something worth working on."

This whole industry has a serious problem with compensation and startups are particularly egregious offenders. People are expected to work "for their passion" rather than for fair compensation for giving up quite literally a portion of their lifespan (time). It's absurd.

Re: Winter Is Probably Coming Soon

#60

Post by chromaton »

no_future wrote: post #19

Can somebody explain to me why every startup company(or at least every one that articles are written about) feels the need to raise as much VC as possible ASAP? There are so many options for developing scalable systems relatively easily and the cost of running an entirely web/software based company(read: 90% of the hot startups) today is comically low, especially with pay what you use PaaS/IaaS systems like those off…

There is a whole world of businesses out there, many of them online, that don't raise VC money and don't necessarily get written about on Hacker News and the like. Check out (for example) the Startups for the Rest of Us podcast.
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