71–80 of 90 posts
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It shouldn't be frightening. It should tell us all what we already know - ideas are worth exactly nothing and execution is worth everything.
> ideas are worth exactly nothing and execution is worth everything Unless you make an SMS based concierge service and call it Magic
...even if the rest of us think it's a tad silly.
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Every VC firm has different interests from the firms that it invests in. That's the major pitfall of accepting investor money, their goals and your goals will never be perfectly aligned and sometimes are very much not aligned. Beware of who you accept money from, especially if that money comes with strings attached (board seats, various preferences and so on).
If I understand correctly you agree that there are potential conflict of interest considerations. (This may be tempered by a belief that in practice these potential conflicts are not a problem for various reasons.) This is the distinction my initial comment sought to clarify -- in bootstrapping (as I understand it) a company is funding itself so there is only one party and hence no conflict of interest. When a VC fir…
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How can it be a conflict of interest if it is in the end their own money ? They get to spend it any way they want it and of course they will spend it on those that they know better more readily than elsewhere. It's not as if VCs are distributing public funds and those VCs that have taken public funds (or pension funds) would likely never engage in a deal like this. If you think you're 'in competition' with the VCs pa…
Is it their own money? I thought the general partners are using money from limited partners. As the article put it: "I would love to ask the investment officers at a firefighter’s pension fund in Wyoming what they think of venture capital GPs using their money to fund their colleagues’ personal projects."
I totally agree, poor moral standard is at the root of a lot of shady investors. I run a VC backed bitcoin startup myself and more then one of the investors we pitched to as early back as two years ago have gone on to create their own bitcoin-related companies in suspiciously similar product verticals to ours.
There's lots of other unfair things in the Valley when it comes to privilege like this.
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If I understand correctly you agree that there are potential conflict of interest considerations. (This may be tempered by a belief that in practice these potential conflicts are not a problem for various reasons.) This is the distinction my initial comment sought to clarify -- in bootstrapping (as I understand it) a company is funding itself so there is only one party and hence no conflict of interest. When a VC fir…
What makes you think VCs do not have clear conflict of interest policies? That you're not aware of any implies that you're not a partner or capital supplier to some fund because in that case you'd be in a position to either demand such clarification if they want you to supply your money or you could pass in case they don't. This concerns the capital suppliers and the partners, it definitely does not concern the seeke…
I have no particular knowledge of the frequency with which VC firms have sensible conflict of interest policies, but my naive assumption would be that this is again similar to having good HR policies. (Which is to say I am not particularly suprised when a company gets into public trouble in this regard.)
It seems perfectly reasonable, however, for the article author or anyone else to opine on how they'd prefer to see the VC industry run. For comparison, though I am not a resident of Texas it's perfectly reasonable for me to have an opinion about Texas's education policy, especially when the secondary effects impact the entire country.
I am somewhat frustrated and dismayed by (what I perceive as) an inability on your part to respond to my points or questions and a tendency to assign to me ideas I don't hold. As such, I'm tapping out of this discussion here.
Two differing thoughts: I'm not sure I would think the LPs would be all that concerned with this. After all, a VC firm is going to live and die by its performance reputation, so if their funds fail to return gains, it will haunt their firm for a long time. What I do buy though is Kevin's other point in the conflict of interest of potential entrepreneurs walking into VC offices and pitching a great product (editing ou…
The edge case of a VC launching a company themselves is so rare that we're talking about a single instance of when it happened. Let's not forget every day some entrepreneur goes in to pitch an idea, and a VC picks up the phone and calls a portfolio company and says "hey I have an idea for you." "VCs will steal your idea and launch it themselves" is not a real risk, especially relative to existing risks. The issue of…
A. You went to the same ivy league schools as VCs
B. You have a certain look
C. They give you the opportunity to work with them & you take advantage/work the opportunity to get funded.
Case in point, while I was participating in an incubator, there was a 20 year old mentor. He was mentoring a 40 something first time female founder. He had millions in funding and he went to sell his company for millions.
How did that happen when he had no previous experience. Well for one he graduated from the same top school as his VC (one of the biggest), who in which gave him a job working at the firm, who then funded his company and steered it to a huge sale using his huge/immense network.
Start-ups can be very unfair if you don't look the part, gone to the same ivy league school, given an opportunity to work with X huge VC & make the most of it and or struck gold/got lucky by publishing the next big thing you had no idea would take off.
VC is definitely a boys club filled with all the popular people from your high school who left you out & talked trash about everyone who didn't fit their part.
I think the author's Simon Cowell example actually disproves his point. If you wanted someone to win American Idol who would choose to do it? Someone who who you have to train to sing well and coach them on the judges preferences? Or would you choose the person who has worked with the judges for years, knows exactly what makes contestants win or lose, and helps to make the decision themselves. I would choose Simon Co…
As an investor in a venture capital firm, though, you would expect the firm to award funding to the best, not to the insiders. As a politician interested in fostering a successful startup environment in your district, you would expect the firm to award funding to the best, not to the insiders. As a fledgling startup yourself, you would expect the firm to award funding to the best, not to the insiders. As Simon Cowell, you would want to pick yourself. Therein lies the issue. Only Simon Cowell wants Simon Cowell to win over other, more qualified startups.