221–230 of 255 posts
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What happened with a16z is truly amazing.
what happened?
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If early capital thought they would get better risk adjusted returns holding on to companies, they wouldn't exit. When considering a trade, you have to ask yourself "what do I know about the future prospects of this asset that the other party doesn't?" For IPOs you can see how stacked this transaction is against the public.
I don't think this is right. The reason VCs exit is simple, they're VCs. They exist to invest in start ups. Their job is to invest in high growth, high risk start ups, and the risk premium reflects that, they're a certain type of asset class. That's why people give them money. People don't give money to VCs to buy Walmart stock. If a VC thinks it can get a better risk adjusted return investing in Walmart then they're…
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Yeah I was super confused by this. VCs generally don’t have all the money ready to invest. They may have raised a $300 mil fund but they don’t get that money until they call it in. If the LP says “no deals for 6 months” that’s how it is.
As an LP in a large fund: that's definitely not how it is. As an LP you pre-commit to a certain level, and when the capital call comes you perform or you will be found to be in default when a whole pile of clauses kicks in that you really do not want to have to deal with. You will have to have an extremely good reason (such as being already bankrupt) to be able to avoid a capital call that you have committed to.
Such as opening the small talk a Zoom call by saying ‘it’s been a very difficult month for us.’
There are very few VCs who won’t be influenced by a signal even as simple as this one.
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No, that's not how it is. If the LP doesn't pay their capital call they go into default and the returns on all the money they've invested so far can be taken away. The only LPs who default on the capital call are individual investors who are flat out broke. They will of course default on their capital call before their mortgage.
What if there are no returns on all the money they have invested so far? This is quite possible in a bubble followed by a downturn.
Obviously all of these scenarios tend to be covered by the contracts and if you can't read a contract of that level of complexity then you should not be playing this game.
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Assuming you are referring to the US, buy side real estate agents get paid by the sell side real estate agent (technically the real estate seller pays commission to the sell side real estate broker, which then pays the sell side real estate agent and the buy side real estate broker which then pay the buy side real estate agent).
Is buyer side real estate agent normal in other countries and what do they do except making it even more expensive to buy a house? It is still the buyer who pays even if it is the seller who pay the commission since the commissions are baked into the sell price
>It is still the buyer who pays even if it is the seller who pay the commission since the commissions are baked into the sell price
This is a trivial characterization, just like an individual who buys lettuce at the grocery store pays for the wages of the person that grows and picks and packages it.
A buyer does not have much incentive to not use a real estate agent because a seller using a real estate agent has already agreed to pay x% or $x to the sell side agent, who will give a portion of that to the buy side agent.
The reduction in costs only comes when purchasing from a home being sold without the use of a real estate agent (“for sale by owner”).
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Is buyer side real estate agent normal in other countries and what do they do except making it even more expensive to buy a house? It is still the buyer who pays even if it is the seller who pay the commission since the commissions are baked into the sell price
I only know about the US. >It is still the buyer who pays even if it is the seller who pay the commission since the commissions are baked into the sell price This is a trivial characterization, just like an individual who buys lettuce at the grocery store pays for the wages of the person that grows and picks and packages it. A buyer does not have much incentive to not use a real estate agent because a seller using a…
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I only know about the US. >It is still the buyer who pays even if it is the seller who pay the commission since the commissions are baked into the sell price This is a trivial characterization, just like an individual who buys lettuce at the grocery store pays for the wages of the person that grows and picks and packages it. A buyer does not have much incentive to not use a real estate agent because a seller using a…
What I did mean was that it seems like both the buyers agent and the sellers agent have an initiative to drive the price up
Buyers and sellers are not paying agents to maximize and minimize prices. They are paying real estate agents to increase the odds of having a transaction clear, with the buyer receiving property they want, and the seller receiving a price they want.
For an agent, trying to maximize price is only worth it up to a certain number of hours of work, after which time it is far better for a real estate agent to maximize number of transactions. An additional 2% of say $50k is only $1k of extra pay, whereas an additional 2% of a $500k sale is $10k.
(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…
I’ve often heard the modern VC route described as a Ponzi scheme with the public market being the greatest of the fools, I don’t totally buy into the idea but your 3rd point really does highlight how close it all is to a Ponzi scheme. So much value is absorbed in the VC pipe than by the time a company IPOs the chance of retail investors seeing returns is minimal to none.
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> 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.
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I agree, crypto and fintech will be the first dominos to fall - they’re in free fall already. There’s a lot of copycat B2B startups that extremely dependent on crypto and fintech for their revenue. They will be the next domino to fall. After that, it would be infrastructure, security, and analytics vendors that will face a revenue crunch and will be unable to raise another round of funding. And then, all the startups…
What can we do to insulate ourselves from this? As a software engineer at a startup