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Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition

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Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition

#91

Post by beambot »

sjg007 wrote: post #30
cenal wrote: post #25

Earlier quoted context omitted.

Valuations are out of whack. They are smarter to sit back and let the unsustainable ventures die out and then invest in the viable ones after things level out. I mean, even a touch screen toaster that costs $1,500 got invested in. Who is going to pay $1500 for a touch screen toaster? http://www.juneoven.com

It will sell. It's just the beginning of the IoT revolution.

We already have Pantelligent (smart, IoT pan)... Which is bloody brilliant! Or at least, it's helped a shitty cook like me learn some skills.

Not everything in IoT is bad...

Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition

#92

Post by fosk »

patmcguire wrote: post #67
freyr wrote: post #22

Earlier 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've seen the difference, it's much more pronounced with women. I talk with drivers, a lot drive for women, they notice significantly more women on Lyft. I've heard a combination of complaints about Uber leadership being dudebros and Uber drivers sexually assaulting riders as the reason why. I don't know if Lyft actually provides a safer ride, but they don't say shitty things in public and don't have as many well kno…

Lyft has a lower volume and penetration, which means it's making way less rides than Uber worldwide. That could be a reason. Plus the media finding out that being against Uber brings more clicks.

Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition

#93

Post by ryporter »

The Mike Volpi quote is curious:

“Right now, we don’t really know what things are worth...When you don’t know what something’s worth, you don’t know whether you are getting a good deal or a bad deal, so the obvious thing to do is, not much.”

When you invest in startups (with the exception of late-stage, pre-IPO investing) you never really know what things are worth. The business model of VCs is to make a bunch of high-risk bets, most of which will fail, in order to get a couple of big winners. What's really happening is that VCs aren't willing to invest at valuations that companies expect based on recent history. This is similar to housing bust, when home owners refused to sell because they continued to believe that their homes were worth what they were before the financial crisis.

Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition

#94

Post by tarsinge »

seivan wrote: post #88
tarsinge wrote: post #77

Earlier quoted context omitted.

This is ad hominem, anything substantial about the content of the sources?

You mean apart from their financial and personal incentives? No, not much else. I'm sorry, at some part you draw a line. My line is disparaging the clock that's not even right twice a day isn't considered ad hominem. Same reason my source about racial discrimination isn't Stormfront, and my source about startups isn't Vox. Also I wouldn't take what Breitbart has to say about sexist issues at face value either. I'm ex…

I'd not give you the same treatment, I would discuss the facts (if there is any). For example, is the uber street campaign to destroy Lyft talked in the Gawker article [5] real or not ? (I have no context and no opinion on the issue, so I was genuinely interested)

Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition

#95

Post by InclinedPlane »

delecti wrote: post #3

It's really weird how this article tries to frame the situation. It's almost like the startups feel entitled to the funding. The point of funding should really be to enable faster growth than they might otherwise have been able to achieve, but if a business can't at least survive without huge influxes of investments then is it really a business that they should be investing in in the first place?

The point of funding isn't just growth, it's to keep a business afloat during the times when there's not much revenue but still lots of work to do to build the core business.

Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition

#98

Post by khalloud »

If we look at this from a risk-reward perspective and define 10 as the maximum reward for the maximum amount of risk then we have the entrepreneur who is a 10 for obvious reasons, an Angel who invests in the entrepreneur (maybe not the idea really because it might pivot a few times) maybe at an 8, then VCs at 7, bigger institutional investors at 5, and so on and so forth until the average teacher in Michigan who's pension allocates .001% of AUMs to VC at maybe .5 it becomes clear that if that structure becomes unbalanced the overall value creation cycle starts to become disfigured. In other words everyone tends to forget what's really important. For example if an entrepreneur doesn't feel that there is a great deal of risk to their personal livelihood as well as a great deal of reward for taking that risk and an inherent difficulty of having to earn every single cent (i.e. if they assume they can find easy money) then they are probably less likely to dig as deep as they can to come up with ingenious solutions to problems which is really the core of the whole tech startup scene. And then we can back trace that all the way back to the teacher in Michigan who might think that they are better off giving their money directly to someone who is a "VC" in SV. Basically the whole risk-reward equation becomes unbalanced. As a result when S#$$ hits the fan for them, everyone who doesn't really understand that model/equation will slow down. But my theory is that the ones that actually stick to the fundamental rules will keep plugging along with a small grin on their faces because they are glad that they are the ones who actually start to lead again and create value with a lot less BS!

Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition

#99

Post by Disruptive_Dave »

ryporter wrote: post #93

The Mike Volpi quote is curious: “Right now, we don’t really know what things are worth...When you don’t know what something’s worth, you don’t know whether you are getting a good deal or a bad deal, so the obvious thing to do is, not much.” When you invest in startups (with the exception of late-stage, pre-IPO investing) you never really know what things are worth. The business model of VCs is to make a bunch of hig…

Came here to say this. It's a copout. They didn't know what things are worth a year ago either, particularly early stage cos.

Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition

#100

Post by nickonline »

freyr wrote: post #22
mindcrime wrote: post #19

Earlier 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…

But there's other examples of this, McDonalds in the USA is lowest of the fast food but around the world their stores are held to higher standards and output higher quality food.

Maybe Uber has given up on the USA as a whole, the USA after all is only 300 million people in a world of 8 billion+

Why bother competing at all when you can go overseas where there's little to no competition.

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