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VCs are scared when they should be greedy

blog.aaronkharris.com

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Re: VCs are scared when they should be greedy

#161

Post by HWR_14 »

givemeethekeys wrote: post #71
lpolovets wrote: post #22

(Context: I'm a VC) Some great points in the post, but I also see a few additional dynamics at play: 1) The last 10 years have been great for VCs and startups, but now VCs are thinking about how to make their funds last longer. Two reasons for this: first, time diversification matters. If you think markets might go down even more, you don't want to deploy the rest of your fund quickly, you want to spread it out over…

As much as VCs and founders hate down rounds - if the public market has dropped in value by 50% for mostly macroeconomic reasons - isn't it fair to then suggest that properties on the private market should be similarly worth less? We all hate for our homes to be worth 10% less in 2023 compared to 2022, but it is what it is, no?

> We all hate for our homes to be worth 10% less in 2023 compared to 2022

Speak for yourself. If all property drops, I'm ecstatic. I'm not moving or withdrawing money with a HELOC. So lower property values just mean less taxes for me. I mean, sure, it also means I may be underwater, but who cares?

And if I decide to move, that just means the delta between my current place and a new place is smaller in absolute terms.

There is literally no benefit to most homeowners for the real estate market being higher.

Re: VCs are scared when they should be greedy

#162

Post by dustingetz »

upupandup wrote: post #81
gumby wrote: post #67

Earlier quoted context omitted.

> How many of today's startups are just servicing each other with VC money? IMHO this is mostly the a phenomenon of the SAAS/platform space. Those practices don’t really apply to more traditional businesses (including high tech ones). But you made me think of something else: this phenomenon was definitely booming in the 2000 crash, when net-related hardware companies were underwriting their own sales, which ended qui…

Isn't this what YC does essentially? YC backed SaaS companies buy each others products, write favorable case studies and use that to convince other enterprises to buy in, and to IPO quickly they raise lot of money to have the market share that commands the multi billion valuations with insane revenue multiples? Seems like this model is beginning to fail, most YC backed IPOs are now trading in deep red. ex) coinbase e…

please explain that chart? thanks

Re: VCs are scared when they should be greedy

#163

Post by chii »

MatthiasPortzel wrote: post #135
gumby wrote: post #72

Earlier quoted context omitted.

> Companies whose unit economics don't work transfer wealth from investors to customers, then get out of the way. Not always. Consider the rash of subsidized “we’ll pick up your dry cleaning and then save by doing the work at a centralized facility elsewhere). These parasites wiped out the network of local dry cleaners, in particular in SF. You could say, well, they wiped out the buggy whip makers. But actually they…

This is the pessimistic view of Uber. If Uber was just subsidizing car rides, that would be fine. But since they’re dominating the industry in an unsustainable way, they’re hurting public and private transportation infrastructure. Cities aren’t investing in trains or buses because of Uber, but if Uber goes under, we’re going to be out of luck.

> they’re hurting public and private transportation infrastructure. Cities aren’t investing in trains or buses because of Uber

i dont think you can blame the lack of public transport investment on uber. and there's no hurting private transportation infrastructure - that's just private cars! People who ditched their car because of the availability of uber isn't getting hurt if uber goes away. They can just repurchase a car (after all, they saved money not owning a car previously, so they must be ahead already).

Re: VCs are scared when they should be greedy

#164

Post by dinvlad »

chromaton wrote: post #109
excitom wrote: post #51

Earlier quoted context omitted.

pets.com, webvan, drkoop, kozmo, garden.com ... ah, the memories.

A lot of them were just early. pets.com => Chewy. Also PetSmart operates the pets.com domain now apparently. webvan => Amazon Fresh, Instacart kozmo => DoorDash, Uber Eats, etc.

Mind => blown. There are very few original ideas, it seems. Just slightly better execution maybe.

Re: VCs are scared when they should be greedy

#165

Post by gumby »

dustingetz wrote: post #162
upupandup wrote: post #81

Earlier quoted context omitted.

Isn't this what YC does essentially? YC backed SaaS companies buy each others products, write favorable case studies and use that to convince other enterprises to buy in, and to IPO quickly they raise lot of money to have the market share that commands the multi billion valuations with insane revenue multiples? Seems like this model is beginning to fail, most YC backed IPOs are now trading in deep red. ex) coinbase e…

please explain that chart? thanks

Look up the different measures of the money supply (M1, M2, M3) and then perhaps it will be clear

Re: VCs are scared when they should be greedy

#166

Post by bombcar »

grandmczeb wrote: post #136
gumby wrote: post #72

Earlier quoted context omitted.

> Companies whose unit economics don't work transfer wealth from investors to customers, then get out of the way. Not always. Consider the rash of subsidized “we’ll pick up your dry cleaning and then save by doing the work at a centralized facility elsewhere). These parasites wiped out the network of local dry cleaners, in particular in SF. You could say, well, they wiped out the buggy whip makers. But actually they…

> These parasites wiped out the network of local dry cleaners, in particular in SF. Huh? I’ve never had an issue finding a dry cleaning shop in SF and there’s tons that pop on Google maps - hardly seems like a dry cleaning “desert”.

They mean "actual" dry cleaners that clean in the shop - almost all those you find are fronts for some massive cleaning warehouse somewhere else (check to see if they have any machines on-site).

Re: VCs are scared when they should be greedy

#167

Post by HorizonXP »

I'll say this, as a YC founder, given the current situation, I've never been more excited.

I'm currently working with a Fortune 100 client in a recession-proof space. We have a team that's knocking it out of the park with them, that they simply cannot find an equivalent replacement for. We are cash-flow positive. And we have a route to securing more clients in the next year. We are delivering technology & innovation to companies that are decisively lacking in this area.

Once we prove out our MVP with future clients, I plan to raise seed funding, and remain cash flow positive. Our path to Series A will involve a lot of sales, and that's an area where VCs and the right networks can definitely help. We know we can solve the technology hurdles and build the product that our users actually want.

Raising funding might be tough given the macro situation. But I know our value, and we have plenty of time to wait out nervous investors. What's more likely is that we'll close our round without them, since we shouldn't need the money. We need the help.

Re: VCs are scared when they should be greedy

#168

Post by bombcar »

wyre wrote: post #159
JumpCrisscross wrote: post #93

Earlier quoted context omitted.

I agree with the premise. Success is never immortal. The gap, however, is in societies being intended to be immortal. If you let companies run amok, so the thinking goes, when goes the company so goes the country. Limiting companies’ power let’s them creatively destroy one another without threatening the culture at large.

I have an easier time seeing the fall of the US before I see the fall of Amazon.

Amazon would have to be eaten by a three-prong (or more) attack, but I could see it fall quite quickly.

AWS is probably the biggest moat they have, but not often what people think of by "Amazon".

Re: VCs are scared when they should be greedy

#169

Post by aetherson »

upupandup wrote: post #81
gumby wrote: post #67

Earlier quoted context omitted.

> How many of today's startups are just servicing each other with VC money? IMHO this is mostly the a phenomenon of the SAAS/platform space. Those practices don’t really apply to more traditional businesses (including high tech ones). But you made me think of something else: this phenomenon was definitely booming in the 2000 crash, when net-related hardware companies were underwriting their own sales, which ended qui…

Isn't this what YC does essentially? YC backed SaaS companies buy each others products, write favorable case studies and use that to convince other enterprises to buy in, and to IPO quickly they raise lot of money to have the market share that commands the multi billion valuations with insane revenue multiples? Seems like this model is beginning to fail, most YC backed IPOs are now trading in deep red. ex) coinbase e…

But your examples of bad companies are Coinbase and Uber -- these aren't B2B companies that are caught up in some kind of ouroboros of everyone mutually basing their growth on each other's business. Both are consumer businesses.

What's the example of a company that's actually failing from this hypothesized mode of depending on other startups? I mean, better, what are five examples -- I mean, if this is a group of companies that are mutually dependent, then it can't just be one failing.

Re: VCs are scared when they should be greedy

#170

Post by bombcar »

ethanbond wrote: post #158
kypro wrote: post #150

Earlier quoted context omitted.

> Uber is a prime example of a company that seems destined to fail. I'm not a fan of Uber, both as a company and as an investment thesis, but I think this is far too strong. Uber isn't prioritising profitability at the moment, so obviously the unit economics isn't going to work. I think the important question to ask here is if people continue to want to pay & hail taxis from their phone? If the answer to that is yes…

> I think the important question to ask here is if people continue to want to pay & hail taxis from their phone? If the answer to that is yes then Uber will be fine so long as they're one of the apps that people continue to use to hail taxis [and they figure out how to get their unit economics to work] If they don’t get their unit economics figured out, not only will they not be Google/FB/etc., they will be nothing a…

The name, maybe even the company "Uber" can and probably will continue; the question is if it goes through a bankruptcy/restructuring first.
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