21–30 of 70 posts
What does this post really say beyond "gee, there sure are a lot of different ways to think about investment in a company?"
Earlier quoted context omitted.
Aren't those clearly frauds for the people participating, but as businesses they're just somehow structured in a way to be sound investments for those on the outside?
If those were frauds, there would be ton of lawsuits by now given their history. It may or may not be immoral for participants, but illegality is a much higher bar.
Earlier quoted context omitted.
Aren't those clearly frauds for the people participating, but as businesses they're just somehow structured in a way to be sound investments for those on the outside?
If those were frauds, there would be ton of lawsuits by now given their history. It may or may not be immoral for participants, but illegality is a much higher bar.
Earlier quoted context omitted.
> pricing everyone out of homes and food The food part couldn’t be more wrong: https://www.ers.usda.gov/amber-waves/2020/november/average-s...
This is an article from three years ago lol. I see bottled water being sold for $6 for a 12 pack when it used to be $2 for a 24. Convince me that isn't price gouging. It's literally plastic and water.
- Are there no absolute red flags in online dating? (Some ex-convicts with teardrop tattoos may be fully reformed.)
- Are there no absolute red flags in getting into a taxi (Some angry drivers with alcohol on their breath may be capable of getting to the destination.)
In such situations, the thought experiment fails. Wrong decisions can be catastrophic or fatal. Past a certain point, we don't roll the dice, even if good outcomes are possible, too. And we cringe when others knowingly take those risks.
OP's argument probably works best for Y Combinator, where the financial risk per deal is small and fully bounded. (The portfolio is vast; there's no implicit commitment to fund any deal beyond $500k, and everything is so early stage that the worst investments will likely fail quietly. They won't become the reputation-ruining messes of expose journalism, indictments, etc. that will impair your ability to stay in the venture business.)
For larger VC firms, particularly ones that get most of their capital from scandal-wary limited partners at universities or state retirement orgs, it's a different story. Extreme investment outcomes (good or bad) define your reputation in ways that can last for many years. Even a single deal's red-flag implosion can hurt your credibility far longer than you'd like.
So, bravo to OP for working at a firm where periodic red flags can be safely ignored. Do be careful in your choice of taxi drivers or online dates.
The red flag inherent to venture capital is venture capital. Society recently felt government accountable to the range and gradient of human conditions was immoral so it changed the rules to let private power pick and choose and private power is pricing everyone out of homes and food, which is apparently quite moral. Nevermind the state of reality we leave behind for the future; we’ll be dead. Those old religious met…
>private power is pricing everyone out of homes Last time I checked it was the government preventing me from building more dense housing as well as requiring parking minimums.
A local twp near me as expressed in their meeting minutes let's outside interests redline and rewrite their zoning laws, given enough capital and sway. It's very specific to the municipality, the mechanisms and processes they have in law to change the current ones, and the local base it is comprised of.
Earlier quoted context omitted.
This is an article from three years ago lol. I see bottled water being sold for $6 for a 12 pack when it used to be $2 for a 24. Convince me that isn't price gouging. It's literally plastic and water.
> Convince me that isn't price gouging. It's literally plastic and water. Not that I fundamentally disagree, but your example is probably not a great one. First is that fuel costs were abnormally high for several months and water in plastic bottles isn't exactly cheap to transport. Second is that plastic is sourced from oil and guess what? It's been quite expensive until the recent leveling off. Third is that as some…
Founders are gamblers, betting they will be the one to win against the odds. Most companies fail, and the expected returns are approximately zero, with all the average returns coming from few winners. Founders that take VC money are multiplying their risk by giving away preferential shares (founder gets approximately zero if business is just mildly successful), founder radically increasing the pressure upon themselves, and if you need VC money you are usually by definition in a highly competitive market where growth-rate wins the market.
VCs are irrational because the vast majority of VC funds fail to beat the market. Fund managers do OK from their 2% fees, but a majority of VCs will not make excessive money (while some minority do make a lot). https://techcrunch.com/2017/06/01/the-meeting-that-showed-me... references slide 14[2] that shows 2% of VC funds (the top 20) rake in 95% of market returns: VC fund returns are nearly as skewed power law as founder returns are!
Power laws of returns truely suck for the majority. Think iPhone games.
[2] https://www.slideshare.net/gilbenartzy/money-talks-things-yo...