> Valley VCs Sit on Cash, Forcing Startups to Dial Back Bullshit FTFY
Succinctly put.
Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition
51–60 of 133 posts
Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition
#52Earlier quoted context omitted.
Here's the somewhat ironic "catch 22" to the whole thing: If you're a startup and you don't take VC funding, then you have the luxury of simply enjoying organic growth and funding expansion by re-investing profits into the company. Well, as long as you can do that in the face of competitive pressure. Strictly speaking, unless it's a "network effect" situation like a social network, you probably don't need to grow fas…
> luxury of simply enjoying organic growth and funding expansion by re-investing profits into the company. That's a GROSS over generalization. It definitely is not rosy, not when your competitors are VC funded and releasing products for free. You can't compete with free and VCs are realizing that maybe there's no money in free products.
That's a GROSS over generalization. It definitely is not rosy, not when your competitors are VC funded and releasing products for free.
I know, hence the sentence after the bit you quote:
"Well, as long as you can do that in the face of competitive pressure."
Obviously every situation is unique, but my point is mainly just to say that not all startups have to worry about "grow fast at all costs". Sometimes - but not always - that pressure is just about the VC's wanting their returns within a certain window of time.
Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition
#53Earlier quoted context omitted.
Can anyone make a rational argument why uber-type companies are winner takes all?
The network effects come from the driver side of the market. If you have all the drivers, then you have the quickest pick-up/most availability which means best passenger experience and then most customers. This in turn means best utilization for drivers, so you get more drivers etc etc etc.
Network effect usually implies some kind of lock-in. Unless Uber is willing to go exclusive and qualify the drivers as employees, getting more drivers out on the road also means getting more Lyft and Gett drivers on the road, as most will just have multiple apps running.
Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition
#54Earlier quoted context omitted.
> unless it's a "network effect" situation like a social network, you probably don't need to grow fast. Uber seems like a weird example of this. It was said (and remains said) that they're operating in a winner-take-all space, and they expanded as if they were a social network. Despite the aggressive expansion and marketing, a majority of people I know in the Bay Area now use Lyft exculsively. The last few times I've…
I think it's popular now in the SV circles (and this site) to hate on Uber. I'm not even sure why, but I'm fairly certain it's localized. I have traveled and used Uber all over the country and internationally as well. They seem to be doing just fine.
For a while, before WW2, it looked like Germany was "doing fine" under Adolf Hitler too. Doing fine doesn't mean anything, you need to look deeper at the reasons people are hating Uber. There is growing evidence of systemic "social issues" that Uber is either amazingly still ignorant of, or more likely are being wilfully ignorant of in an attempt to maximise their profits. People are just reacting to this evidence based on their individual moral compasses.
Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition
#55Earlier quoted context omitted.
> unless it's a "network effect" situation like a social network, you probably don't need to grow fast. Uber seems like a weird example of this. It was said (and remains said) that they're operating in a winner-take-all space, and they expanded as if they were a social network. Despite the aggressive expansion and marketing, a majority of people I know in the Bay Area now use Lyft exculsively. The last few times I've…
This is really interesting to me, because I've noticed the same thing in the Bay Area. I would conjecture that Uber constantly being under attack (i.e. having lots of negative articles about them) has played a significant role in this. So when people have to pick between Lyft and Uber, they go for the one that seems "less evil". Perhaps the reason Lyft doesn't come under fire as much is because they haven't grown eno…
Uber's problems aren't caused simply by being the frontrunner. They're cultural problems that come from straight the leaders of the company itself. They've repeatedly proven that they are misogynists[1][2][3], and that they don't have the same morals that most people value[4][5].
It's a disturbing trend that some of these unicorn startups are valuing growth at the expense of morals, and that VC's are complicit in pushing for growth above all else. It gives the industry a bad name, and I wish it wasn't so.
Luckily Zenefits seems to be dismantling itself because of its antics, so hopefully it will prove to be a lesson in how not to create a company culture for others in the future.
I can't speak for others, but that's why I always prefer Lyft.
[1]: https://pando.com/2014/10/22/the-horrific-trickle-down-of-as...
[2]: http://www.buzzfeed.com/charliewarzel/french-uber-bird-hunti...
[3]: https://pando.com/2014/02/27/we-call-that-boob-er-the-four-m...
[4]: http://valleywag.gawker.com/more-proof-uber-fights-dirty-aga...
[5]: http://www.buzzfeed.com/bensmith/uber-executive-suggests-dig...
Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition
#56Earlier quoted context omitted.
Here's the somewhat ironic "catch 22" to the whole thing: If you're a startup and you don't take VC funding, then you have the luxury of simply enjoying organic growth and funding expansion by re-investing profits into the company. Well, as long as you can do that in the face of competitive pressure. Strictly speaking, unless it's a "network effect" situation like a social network, you probably don't need to grow fas…
> unless it's a "network effect" situation like a social network, you probably don't need to grow fast. Uber seems like a weird example of this. It was said (and remains said) that they're operating in a winner-take-all space, and they expanded as if they were a social network. Despite the aggressive expansion and marketing, a majority of people I know in the Bay Area now use Lyft exculsively. The last few times I've…
Coke and Pepsi or, closer to the point, Coke and "sparkling water." Choice of how to reach your destination is less about product differentiation and more about personal differentiation. Some people don't want to be "the kind of person that uses an Uber."
Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition
#57Earlier quoted context omitted.
Can anyone make a rational argument why uber-type companies are winner takes all?
The network effects come from the driver side of the market. If you have all the drivers, then you have the quickest pick-up/most availability which means best passenger experience and then most customers. This in turn means best utilization for drivers, so you get more drivers etc etc etc.
Sure, but pretty much every Uber driver I've encountered also drives for Lyft and there doesn't appear to be any mechanism by which Uber can prevent that.
Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition
#58I've been in tech only 6 years and I am already bored of these cycles of VCs becoming frenetically exuberant followed by cautious times. Their advice to startups changes depending on what time it is. It's all so predictable yet people are surprised every time. Any entrepreneur building a business factors these in and approaches fund raising based on that knowledge. I don't even know the point of these articles any mo…
I found it interesting that while VCs are peddling gloom right now, both Box and Square - 2 much criticized IPOs - both announced good results that beat expectations. Expect he herd mind to turn yet again.
Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition
#59It seems like these VC cycles are akin to a natural selection process for startups. Those with legitimate market fit and pricing schemes will have the highest fitness and thus survive; new startups will (hopefully although historically not so much) attempt to copy a similarly sustainable architecture. So in essence these cycles are beneficial to startup market health
Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition
#60Earlier quoted context omitted.
The network effects come from the driver side of the market. If you have all the drivers, then you have the quickest pick-up/most availability which means best passenger experience and then most customers. This in turn means best utilization for drivers, so you get more drivers etc etc etc.
Sure, but pretty much every Uber driver I've encountered also drives for Lyft and there doesn't appear to be any mechanism by which Uber can prevent that.
Uber is actively developing ride experiences like UberPool and UberHop that link multiple riders together in ways that can avoid a driver's car ever being empty. If the car isn't empty, they can't turn on Lyft.