Exploiting Silicon Valley For Profit (and Maybe Fun) • Hacker News Board

Re: Exploiting Silicon Valley For Profit (and Maybe Fun)

#31

Post by hkarthik » Thu, Jun 21, 2012, 7:24 PM UTC

dsrguru wrote: post #22

maxko87 wrote: post #15

This is exactly why people consider the valley to be a huge bubble. This kind of "innovation" isn't sustainable at all.

But what makes it not sustainable? As long as there exist a few GooBooks, won't acquisitions continue to be sought?

The linchpin to the whole thing is the easy VC money. It's what makes both the few startups turning into GooBooks and the many startups turning into ZombiePlatypus possible.

As soon as the smart money that's currently focused on VC finds decent returns in other, less risky investment vehicles, the VC money train will stop. It's just a matter of time.

Re: Exploiting Silicon Valley For Profit (and Maybe Fun)

#32

Post by gruseom » Thu, Jun 21, 2012, 7:26 PM UTC

doug_ludlow wrote: post #3

This is easily one of the most honest and true posts I've read about Valley culture in a long, long time. Having been through this exact process, I can assure you that this is how it really works.

Would be interested in hearing about your process if you'd care to tell us.

Re: Exploiting Silicon Valley For Profit (and Maybe Fun)

#33

Post by seiji » Thu, Jun 21, 2012, 7:28 PM UTC

tptacek wrote: post #30

seiji wrote: post #23

Earlier quoted context omitted.

I think the key point was diverted from. The employees aren't doing what they want anymore, so some stable "we can always get acquihired by google again when we fail" startup is attractive. As employee 3, they will walk away with a huge 0.5% of the exit while the founders walk away with 35% each. how mouthy I was when I was 24 Welcome to The Bay Area: where self worth is measured by frat-like posturing and manipulati…

Ahhhhh there it is . Whew. I thought there was a risk that this was going to be a boring civil conversation.

It's like hypoglycemia, but for upvotes.

Anti-success or "insiders manipulating the system" rants tend to bring the love. It's all Method. I'm just another SV washout.

Re: Exploiting Silicon Valley For Profit (and Maybe Fun)

#34

Post by dsrguru » Thu, Jun 21, 2012, 7:29 PM UTC

hkarthik wrote: post #31

dsrguru wrote: post #22

Earlier quoted context omitted.

But what makes it not sustainable? As long as there exist a few GooBooks, won't acquisitions continue to be sought?

The linchpin to the whole thing is the easy VC money. It's what makes both the few startups turning into GooBooks and the many startups turning into ZombiePlatypus possible. As soon as the smart money that's currently focused on VC finds decent returns in other, less risky investment vehicles, the VC money train will stop. It's just a matter of time.

That certainly would cause the bubble to start losing air so-to-speak, but I'm not sure it would pop. If you think about it, Google and Facebook happen to be specific examples of companies that could have become billion dollar companies without VC investment. Other companies like Amazon and Tesla Motors are not.

Re: Exploiting Silicon Valley For Profit (and Maybe Fun)

#35

Post by ianterrell » Thu, Jun 21, 2012, 7:31 PM UTC

jaggederest wrote: post #27

ianterrell wrote: post #21

Earlier quoted context omitted.

$6MM invested with a 6% return provides a $360k pa lifestyle just living off the interest. That seems like quite enough for houses, spouses (well—maybe spouse; alimony could eat into that quite a bit), cars, and children.

Zero risk return is way below 6% right now. I'm not sure where you're going to find anything like that. Berkshire Hathaway is willing to guarantee you a $205,000 annual income from that sum in an annuity, which is not a bad deal at all, but it's not 'never worry about money again', it's just a really nice salary, and would be substantially depleted in the case of any inflation at all.

No need to go zero risk when the investment starts in your 20s. But of course, yes, inflation. But of course, you can draw from principal as well—that's how retirement funds usually work.

I'll put it another way: Maybe it's not 'never worry about money again'—people are prone to worrying, after all—but $6MM is more than the lifetime earnings of the vast majority of Americans.

If you can't make it on more than what nearly everyone else will ever see in their entire lives, that's your problem.

Re: Exploiting Silicon Valley For Profit (and Maybe Fun)

#36

Post by lukejduncan » Thu, Jun 21, 2012, 7:35 PM UTC

dsrguru wrote: post #12

bengl3rt wrote: post #6

Earlier quoted context omitted.

Also, $6m really isn't that much these days. Might get you a nice house in the Silly Valley and a few years of living expenses, but that's not "set for life" money if you're in your 20s.

Hacker News is one of the few forums where being able to lock in a six-figure salary (100k USD) for 60 years isn't viewed as being set for life. The wonders of entrepreneurship and the cost of living in the Bay Area.

This always amazed me too. There will always be greener grass somewhere. I was surprised to find that my mid-west mindset could be so stark in comparison to some of the valleys. For me, two years ago my dream was to do exactly what I'm doing now: writing code at a reputable tech company and learning more every day. That, and I make enough money to do everything else I want if I don't blow it on an overpriced car or .

Building a company and walking away with 6 million is life changing. Too many people seem to think selling your company means you should never need to work again. What it means, is that you're freer to continue to pursue the projects you want. Seems like a huge inflection point to me.

Re: Exploiting Silicon Valley For Profit (and Maybe Fun)

#37

Post by hkarthik » Thu, Jun 21, 2012, 7:35 PM UTC

dsrguru wrote: post #34

hkarthik wrote: post #31

Earlier quoted context omitted.

The linchpin to the whole thing is the easy VC money. It's what makes both the few startups turning into GooBooks and the many startups turning into ZombiePlatypus possible. As soon as the smart money that's currently focused on VC finds decent returns in other, less risky investment vehicles, the VC money train will stop. It's just a matter of time.

That certainly would cause the bubble to start losing air so-to-speak, but I'm not sure it would pop. If you think about it, Google and Facebook happen to be specific examples of companies that could have become billion dollar companies without VC investment. Other companies like Amazon and Tesla Motors are not.

Google becoming a billion dollar company without VC investment is possible, but it wouldn't have happened nearly as quickly, and it's quite possible that it would have been acquired by Yahoo or Microsoft.

I disagree completely on Facebook becoming a billion dollar company without VC. VC funding is what allowed Facebook to monetize much later and gain huge cash reserves by selling tiny portions of equity at extremely high valuations.

Re: Exploiting Silicon Valley For Profit (and Maybe Fun)

#38

Post by lukejduncan » Thu, Jun 21, 2012, 7:39 PM UTC

diego wrote: post #7

tptacek wrote: post #4

So I liked this, like everything else Diego writes, but this graf doesn't ring true to me: Joe and Wayne work on building something they know GooBook could acquire without looking stupid. Something they might be able to do in-house, except their most talented engineers are desperately working on ways to extract more money out of ads, or to reduce the costs of their gargantuan infrastructure. Some are stationed in Ant…

Of course it's awesome to work on those problems. The point I was trying to make is that in this case the company has to choose between innovating for the long term, and solving urgent problems that mean lots of $ in the short term. Internal venture projects tend to be put on the back burner when your best engineers could save 50M by optimizing the hell out of your backend.

I'm continually reminded of Neal Stephensons remark "I saw the best minds of my generation... writing spam filters." He talks a lot lately about how we've stopped trying to solve the really hard problems and instead are continually trying to sell digital "sugar water."

*Source: https://plus.google.com/116416314233992548280/posts/NxCMjiQX...)

Re: Exploiting Silicon Valley For Profit (and Maybe Fun)

#39

Post by rudiger » Thu, Jun 21, 2012, 7:39 PM UTC

Except this isn't how people are making 5+ million dollars in practice.

Re: Exploiting Silicon Valley For Profit (and Maybe Fun)

#40

Post by horsehead » Thu, Jun 21, 2012, 7:41 PM UTC

bengl3rt wrote: post #10

vertr wrote: post #8

Earlier quoted context omitted.

Are you serious? $6m sounds like more than enough to retire on at any point for most people.

If you want to live like a 20-something for the rest of your life, sure. Your cost structure changes as you get older and have things like houses, spouses, cars, and children.

Bullshit. I live on roughly $18k a year net. buy a house, maybe doubles or PERHAPS triples my housing allowance. Have a wife and kids and things, in total, probably triple.

I don't think people understand how to not waste money any more.