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> It long since stopped being about innovation and disrupting markets and became mostly about shuffling piles of imaginary units around so a select few could ge

> It long since stopped being about innovation and disrupting markets and became mostly about shuffling piles of imaginary units around so a select few could get rich. As someone mentioned on another thread a day or two ago, just look at the latest YC batches, particularly the IT companies. They're largely "X for Y" sorts of companies that already have significant traction. It's unlikely that the Airbnb founders would be able to get into YC in 2016. > Sadly the pawns in this whole game will be all the employees holding options that are soon to be worthless... and who were convinced to take those options in exchange for taking a proper cash salary. And on the other side, once the bubble bursts and the options are exposed as worthless at many of these companies, it's going to be much harder for startups to recruit employees with equity compensation, which will only make it more difficult to control burn rates.

donkeyd 11y ago
Which seems like a good thing to me, because then maybe, just maybe, startups with steady revenue growth will get funded again.
- w1ntermute 11y ago
  Exactly - good entrepreneurs/companies can raise money and hire employees in any capital climate. It's the companies that lack basic building blocks, like a mission that resonates with employees on a non-financial level and sustainable sources of revenue, that will go under. Square is a great example of a company that people joined for all the wrong reasons. Not only are they incredibly unfocused when it comes to their mission, products and customer base, but the people joining it seemed to be doing so out of a mercenary instinct triggered by an expectation that Jack's second company would of course be a hit.
  - scurvy 11y ago
    Just like Andreesen's second company was destined to be a hit. Ex Loudclouder here. I'd say 90% of us were there for that reason.
    - w1ntermute 11y ago
      And Andreessen left Loudcloud in 2005, well before the final Opsware exit, to found his third company Ning (which he never talks about), which ate $134M in funding, only to be acquired for $150M. If you actually look at what Andreessen did at Netscape, he was little more than the pawn of Jim Barksdale and Jim Clark, who trotted him out as the "boy genius" every time they needed to do some PR or developer/community outreach. The vast majority of the code was written by the far better software engineers than Andreessen who joined the founding team (Lou Montulli, Jamie Zawinski, Ramanathan Guha, Aleksandar Totic, and more). Other than that, I'm not even sure why Clark approached Andreessen to co-found Netscape. There were multiple people who worked on NCSA Mosaic, which was itself based on open standards (and the source could be obtained). And Andreessen didn't really believe in its commercial potential at first - he moved to SV to work at Enterprise Integration Technologies, only to quit his job after a few months, when Clark emailed him.
wuschel 11y ago
I guess there is just a limited solution space for the current problems, and many possible points have been farmed at a certain point of time. Until legislative or technologic changes come in, the eco-system will go more and more into bubble mode.
- wuschel 11y ago
  Please explain the downvotes. Sure, the comment was a quick shot comment about 'X for Y' ventures, but I do indeed guess that many current IT unicorns are not straying so much into bleeding edge technology, but are following a market grab/lockdown strategy on platforms (www/mobile) that are fairly well developed. And I do not want to claim that any of those approaches are bad - people seem to speculate that they can make a lot of money from them.
jpmattia 11y ago
> and the options are exposed as worthless at many of these companies, it's going to be much harder for startups to recruit employees with equity compensation, which will only make it more difficult to control burn rates. As someone who lived through TechBubble v1: People said exactly the same thing back then. There's always a new batch of graduates with dollar signs in their eyes who believe "it's different this time".
kolbe 11y ago
I'm trying to coin the term "portmanco" for these companies. Just like a portmanteau in linguistics simply mashes two words together, a portmanco just mashes two familiar companies together and calls it a new one.
- Terr_ 11y ago
  > mashes two familiar companies together and calls it a new one. Hasn't that always been what "merger" meant? :p Edit: My joke is that corporations have been making dumb amalgamations for many many years now. Anybody remember "Mr. Sparkle" from The Simpsons, where two companies in fish vs. heavy-industries combined to sell detergent? That was amusingly-relatable even when it came out 18 years ago.
  - jstanley 11y ago
    AirBnB for Dogs isn't a merger between AirBnB and dogs.
    - Terr_ 11y ago
      Wait, I thought he said two companies merged, not a company plus an arbitrary concept. (Or is there really a company just named "Dogs" involved in canines?)
      - deleted 11y ago
        [deleted]
  - calpaterson 11y ago
    Sorry, I down-voted you before I understood your joke. :(
    - kolbe 11y ago
      I'm actually still confused about whether it's a joke or if the guy is making a pedantic criticism of my choice of words.
gutnor 11y ago
> it's going to be much harder for startups to recruit employees with equity compensation, Ageism in the valley is probably caused in part by that. Older developers have already been burnt in 2000 and are less willing to try another round (I have known a few of the virtual millionaire) and even those that have been working through the crisis are going to have a cautious approach. So that tilt the balance even more toward the younger developer working in hot startup and it becomes easy for their owner to mistake correlation for causation and assume older developer simply don't have what it takes. I remember raising my eyebrows when my grand father was skeptical of banks and government guarantees. I have now lived through banks failing, government taking money off private account, ... Today I wouldn't be so dismissive of his concerns. So easy to mistake wisdom for old age stubbornness when you only have had an uneventful short existence.
erroneousfunk 11y ago
> it's going to be much harder for startups to recruit employees with equity compensation Great. The employees who don't want to, or can't accept potentially risky future compensation for their work, no matter what the reasons, shouldn't have to. That's why investors exist. They take on the risk, you get to pay employees actual money, win/win. In addition, equity is just as much a "burnable resource" as money is. Those percents add up. If you're using it as an infinitely-growing imaginary carrot because you find that your runway is getting shorter and shorter as the months go by... well, that's probably not a good sign.

donkeyd 11y ago

Which seems like a good thing to me, because then maybe, just maybe, startups with steady revenue growth will get funded again.

w1ntermute 11y ago
Exactly - good entrepreneurs/companies can raise money and hire employees in any capital climate. It's the companies that lack basic building blocks, like a mission that resonates with employees on a non-financial level and sustainable sources of revenue, that will go under. Square is a great example of a company that people joined for all the wrong reasons. Not only are they incredibly unfocused when it comes to their mission, products and customer base, but the people joining it seemed to be doing so out of a mercenary instinct triggered by an expectation that Jack's second company would of course be a hit.
- scurvy 11y ago
  Just like Andreesen's second company was destined to be a hit. Ex Loudclouder here. I'd say 90% of us were there for that reason.
  - w1ntermute 11y ago
    And Andreessen left Loudcloud in 2005, well before the final Opsware exit, to found his third company Ning (which he never talks about), which ate $134M in funding, only to be acquired for $150M. If you actually look at what Andreessen did at Netscape, he was little more than the pawn of Jim Barksdale and Jim Clark, who trotted him out as the "boy genius" every time they needed to do some PR or developer/community outreach. The vast majority of the code was written by the far better software engineers than Andreessen who joined the founding team (Lou Montulli, Jamie Zawinski, Ramanathan Guha, Aleksandar Totic, and more). Other than that, I'm not even sure why Clark approached Andreessen to co-found Netscape. There were multiple people who worked on NCSA Mosaic, which was itself based on open standards (and the source could be obtained). And Andreessen didn't really believe in its commercial potential at first - he moved to SV to work at Enterprise Integration Technologies, only to quit his job after a few months, when Clark emailed him.

wuschel 11y ago

I guess there is just a limited solution space for the current problems, and many possible points have been farmed at a certain point of time. Until legislative or technologic changes come in, the eco-system will go more and more into bubble mode.

wuschel 11y ago
Please explain the downvotes. Sure, the comment was a quick shot comment about 'X for Y' ventures, but I do indeed guess that many current IT unicorns are not straying so much into bleeding edge technology, but are following a market grab/lockdown strategy on platforms (www/mobile) that are fairly well developed. And I do not want to claim that any of those approaches are bad - people seem to speculate that they can make a lot of money from them.

jpmattia 11y ago

> and the options are exposed as worthless at many of these companies, it's going to be much harder for startups to recruit employees with equity compensation, which will only make it more difficult to control burn rates. As someone who lived through TechBubble v1: People said exactly the same thing back then. There's always a new batch of graduates with dollar signs in their eyes who believe "it's different this time".

kolbe 11y ago

I'm trying to coin the term "portmanco" for these companies. Just like a portmanteau in linguistics simply mashes two words together, a portmanco just mashes two familiar companies together and calls it a new one.

Terr_ 11y ago
> mashes two familiar companies together and calls it a new one. Hasn't that always been what "merger" meant? :p Edit: My joke is that corporations have been making dumb amalgamations for many many years now. Anybody remember "Mr. Sparkle" from The Simpsons, where two companies in fish vs. heavy-industries combined to sell detergent? That was amusingly-relatable even when it came out 18 years ago.
- jstanley 11y ago
  AirBnB for Dogs isn't a merger between AirBnB and dogs.
  - Terr_ 11y ago
    Wait, I thought he said two companies merged, not a company plus an arbitrary concept. (Or is there really a company just named "Dogs" involved in canines?)
    - deleted 11y ago
      [deleted]
- calpaterson 11y ago
  Sorry, I down-voted you before I understood your joke. :(
  - kolbe 11y ago
    I'm actually still confused about whether it's a joke or if the guy is making a pedantic criticism of my choice of words.

gutnor 11y ago

> it's going to be much harder for startups to recruit employees with equity compensation, Ageism in the valley is probably caused in part by that. Older developers have already been burnt in 2000 and are less willing to try another round (I have known a few of the virtual millionaire) and even those that have been working through the crisis are going to have a cautious approach. So that tilt the balance even more toward the younger developer working in hot startup and it becomes easy for their owner to mistake correlation for causation and assume older developer simply don't have what it takes. I remember raising my eyebrows when my grand father was skeptical of banks and government guarantees. I have now lived through banks failing, government taking money off private account, ... Today I wouldn't be so dismissive of his concerns. So easy to mistake wisdom for old age stubbornness when you only have had an uneventful short existence.

erroneousfunk 11y ago

> it's going to be much harder for startups to recruit employees with equity compensation Great. The employees who don't want to, or can't accept potentially risky future compensation for their work, no matter what the reasons, shouldn't have to. That's why investors exist. They take on the risk, you get to pay employees actual money, win/win. In addition, equity is just as much a "burnable resource" as money is. Those percents add up. If you're using it as an infinitely-growing imaginary carrot because you find that your runway is getting shorter and shorter as the months go by... well, that's probably not a good sign.