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VCs aren’t your friends

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Re: VCs aren’t your friends

#361

Post by rcbdev »

jorvi wrote: post #108
keiferski wrote: post #21

The way VCs filter out potential investments seems fairly similar to the way Ivy League schools filter out potential students. (Probably because they are comprised of the same people.) It is not really about technical brilliance, or innovation, or anything that is written on their website as a core value. It's more about whether you're smart enough and can follow instructions and fit into the overarching institutiona…

> can't imagine someone like Steve Jobs or Nikola Tesla passing these VC/Ivy League kinds of tests. My "favorite" "test" is the one more for soft studies (think law or public policy) rather than STEM: for example UN internships typically have no compensation and they often require you to relocate to extremely expensive CoL areas, meaning there is an automatic filter built in where only children of very well-off paren…

I used to live next to the Vienna duty station and have never heard of unpaid internships at the UN. They usually pay well above market rate (esp. IAEA and such) - can you please provide more info?

Re: VCs aren’t your friends

#362

Post by vidarh »

vessenes wrote: post #349
vidarh wrote: post #331

Earlier quoted context omitted.

I've not lost billions twice, but have definitely lost tens of millions, and worked alongside at lost one person who lost a billion once... It's an "interesting" business to be in...

Third time's the charm :)

If you ever need someone to help you lose a billion, I'm sure I can think of a few ways of doing so quickly and efficiently.

Re: VCs aren’t your friends

#363

Post by vidarh »

ska wrote: post #360
vidarh wrote: post #343

Earlier quoted context omitted.

I mean, I made the choice to join because I saw it as a good option. But even so, was an unusually risky tradeoff between an effectively low basic for a higher bet at the return. I also certainly think it's understandable that LPs want it that way. Main point is that it's only lucrative if the fund pays out on carry, and you take a high risk for something which might possibly pay out ten years in the future. If it do…

Which is effectively like old school startups when you think of it … relatively low salaries and a bunch of options that may or may not turn to gold in 10 years .

Sure, and that's fair enough as long as staff gets a big enough stake. And to be clear, we did. Every single person outside the exec team/general partners on that team had an unusually high stake in the total carry. Our main investor buying us out and turning it into a boring corporate not being the end game we had in mind aside, it was one of the most enjoyable startup experiences I've had (we were a bit of a hybrid, in that while we were operating a single fund, a lot of my work was towards getting tech in place to optimize delivery of subsequent funds).

A lot of startups think it's still ok to pay under the odds once hiring staff that are getting tiny fractions of a percent, though, and at that point, the risk-adjusted value of those options is not worth taking a cut for relative to a bigger corporate with somewhat predictable share performance and liquidity.

Re: VCs aren’t your friends

#364

Post by fragmede »

vidarh wrote: post #362
vessenes wrote: post #349

Earlier quoted context omitted.

Third time's the charm :)

If you ever need someone to help you lose a billion, I'm sure I can think of a few ways of doing so quickly and efficiently.

a billion is a lot though. I don't know that I could come up with ways to do that much so quickly and efficiently. what would be your ways?

Re: VCs aren’t your friends

#365

Post by cangeroo »

bbor wrote: post #328
mrgoldenbrown wrote: post #316

Earlier quoted context omitted.

IME it's not like McKinsey and friends are necessarily sending highly qualified people either. So it wouldn't take much to "beat" them on merit. It's frustrating to watch them get paid so much to recommend the thing we already recommended in house, except their version is missing all the hard parts because they never bothered to check whether the required infrastructure exists or can even be legally installed at the…

McKinsey is about as close as it gets to cartoon supervillains in real life. And they must know it, right? Maybe they hide their role from the rank n’ file, but I doubt it. Truly a useless industry, and a significant symptom of our corporatist malaise. The amount of money the government spends on useless contractors… shudders

Maybe it's a way to funnel government money into an obscure international entity?

Re: VCs aren’t your friends

#366

Post by davedx »

s1artibartfast wrote: post #278
davedx wrote: post #150

Earlier quoted context omitted.

> Even with hindsight, funding Tesla was a bad decision for investors return wise. He invented the brushless motor and types of transformers that were instrumental to building Westinghouse's empire. When Westinghouse was running low on money Tesla tore up the patents he'd sold to him to save the company. Tesla was definitely not a "bad decision for investors", the ROI for his inventions is some significant fraction o…

>Tesla was definitely not a "bad decision for investors", the ROI for his inventions is some significant fraction of the economic value of the global electrical system. But yeah, a couple of his projects failed at some point. Surely a terrible investment! I feel like this is soo close to getting it. Yes, for those investors it was a bad investment. Their goal isnt global economic value and the success of other projec…

My point was Westinghouse benefited immensely from Tesla's patents. His AC transmission network wouldn't have been possible without them.

My second point was not every investment in a founder will yield a huge result - many will fail. It's a game of numbers, and just because some of Tesla's projects didn't work out didn't mean he was a "terrible investment".

Does that make more sense?

Re: VCs aren’t your friends

#367

Post by davedx »

pjlegato wrote: post #333
davedx wrote: post #150

Earlier quoted context omitted.

> Even with hindsight, funding Tesla was a bad decision for investors return wise. He invented the brushless motor and types of transformers that were instrumental to building Westinghouse's empire. When Westinghouse was running low on money Tesla tore up the patents he'd sold to him to save the company. Tesla was definitely not a "bad decision for investors", the ROI for his inventions is some significant fraction o…

Investors don't operate charity funding to accrue value for the mutual collective benefit of some global system. Investors MUST accrue ROI to their own account and/or that of their own investors, the limited partners. If they do not, they're done. Going bankrupt personally while providing huge value to the world at large is a TERRIBLE outcome for any investor. Tesla invented great things that provide huge positive RO…

But that's not how VC funding works! Many to most of their investments will fail - that's completely normal. In the case of Tesla, that was also true - and then some of them (e.g. his transformers) resulted in massive wealth creation for Westinghouse's companies at least.

JP Morgan understood that as well as anyone. Venture capital is a numbers game.

The world is full of examples of founders whose first few companies failed and they then went on to start companies that were successful. The very nature of the US's system that allows failure is why it has such a booming startup ecosystem...

Re: VCs aren’t your friends

#368

Post by padthai »

rcbdev wrote: post #361
jorvi wrote: post #108

Earlier quoted context omitted.

> can't imagine someone like Steve Jobs or Nikola Tesla passing these VC/Ivy League kinds of tests. My "favorite" "test" is the one more for soft studies (think law or public policy) rather than STEM: for example UN internships typically have no compensation and they often require you to relocate to extremely expensive CoL areas, meaning there is an automatic filter built in where only children of very well-off paren…

I used to live next to the Vienna duty station and have never heard of unpaid internships at the UN. They usually pay well above market rate (esp. IAEA and such) - can you please provide more info?

I know a bit about the situation in Geneva, and I can confirm that paid UN agency internship seems to be rare.

Re: VCs aren’t your friends

#369

Post by staticautomatic »

aussiegreenie wrote: post #350
max_ wrote: post #28

Earlier quoted context omitted.

VCs like Don Valentine & The founder of Atari actually passed on Steve Jobs because "they were not impressive". It was only after Steve Jobs exploited their preferential attachment & tendency of VC to succumb to herding effects that he was given investment.

VCs or Record companies missing "Superstars" is as common as mud. Here is a fun article showing everyone makes errors. https://medium.com/mba-chronicles/the-vc-antiportfolio-top-m...

Record companies are the worst. They use the same “spray and pray” strategy as the VCs but charge the artists money to mitigate their risk. Monopolies…

Re: VCs aren’t your friends

#370

Post by vidarh »

fragmede wrote: post #364
vidarh wrote: post #362

Earlier quoted context omitted.

If you ever need someone to help you lose a billion, I'm sure I can think of a few ways of doing so quickly and efficiently.

a billion is a lot though. I don't know that I could come up with ways to do that much so quickly and efficiently. what would be your ways?

It really depends

Spending a billion dollars take a lot of effort (or so I assume; I've "only" spent millions). People will ask annoying questions like "where is the billion dollars coming from, I had no idea you were a billionaire", and ask about AML etc.

Conversely, driving down the value of a company that's already worth billions is "easy": Just publicly demonstrate your willingness to drive the company totally into the ground.

Or if you want speed, and have access to the funds, the super-fast way would be transferring a billion worth of crypto to a random address.

For my part, my biggest "losses" were paper values in startups that failed or didn't get the exits we'd hoped for. There it's also "easy".

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