4 ms·

The cure is simple. Stop being greedy?

by tabeth 10y ago

pfarnsworth 10y ago
Silicon Valley is the greediest place on Earth. That's why we're all so "successful". If making more money, either because we want all the nicest things, or because we just want to keep our heads above water, weren't on the top of our minds, no one would be working as hard as we do.
- user5994461 10y ago
  It's not a valid explanation when you see the usual equities and salaries people get at startup nowadays.
- phil21 10y ago
  The funny thing is - this wasn't the case even 20 years ago. Silicon Valley was still a place you went primarily to work on cool stuff, secondarily to hopefully get lucky and build a company worth a shitload of money. You went there to change the world and work with the best, money was a decent side benefit but not required. Most took a pay cut (after cola) to move there and work on these awesome computer things everyone was talking about. Now it's 100% about the money - just look at what is being funded. Almost no real "tech" companies - just a bunch of folks writing slightly different variations on how to sell ads. I have to try to keep a straight face when I have some obviously-way-more-talented-than-me engineer telling me about some silly worthless app they are working on. It obviously does not move humanity forward or progress the art of their profession in any way - it's just a lottery ticket people have deluded themselves into thinking they are "making the world a better place". The change in tech startups has been extremely sad for me to watch. What used to be inspiring is essentially now one step removed from fraudulent. This take is not completely fair - there are a lot of startups also doing interesting things - but it's closer to reality than not - and nothing like what you envisioned as a "startup" even just before the dot com era.
- closeparen 10y ago
  Renting a room in a shared apartment in a sketchy neighborhood (Mission/SOMA), depending on the company cafeteria for most meals, and riding the bus to work, i.e. the standard startup employee lifestyle, is a marginally lower standard of living than that of a typical grad student. Maybe the Macbook Pro you carry will be kept slightly more up to date. University campuses typically have everywhere you'll need to go within a compact walkable envelope, and you can generally live within a short walk of one of the edges. The grad students are coming out ahead, in my view, since they don't have to contend with flaky and crowded transit. If startup employees are being greedy, they're doing an exceptionally poor job of it. They would enjoy much cushier lives as, say, mechanical engineers and accountants in the Midwest.
ryanSrich 10y ago
So is everyone being greedy? The startups taking the money are greedy and to blame, but also the VCs are to blame for investing in so many startups? I don't think it's that cut and dry. You could replace your sentence with "stop supporting capitalism".
openmosix 10y ago
The problem is when you bootstrap your startup business, and your competitor is a VC backed startup. They don't need to think about revenue, they can build a product they give away for free - and you need to price it reasonably to pay salaries. Competition with a free product always leads to a race to the bottom. A few years later, these competitors will burn, but you cannot wait years to turn in a profit.
- staticautomatic 10y ago
  I take your point. But as a practical matter, this is a foolhardy (and somewhat tautological) approach to building a business. It is to say, "We must raise too much money in order to compete with other companies who raised too much money, even though it will almost certainly lead to both of our companies ultimately going out of business." Moreover, it seems that the people who (perhaps intentionally) get their companies into these situations cannot publicly acknowledge the grim reality of what they're doing (if they even understand the consequences) while raising the kind of money they'd need and pretending to their employees about the company's rosy future. It's fuckery all around and the only people I feel bad for are those unfortunate enough to be suckered into working at these places.
  - openmosix 10y ago
    It's somehow the prisoner dilemma applied to startups. I've raised ~30M$ as a founder in my past startup. For my next adventure, I'd love to bootstrap (with personal savings from my last exit). But here is the (prisoner) dilemma: if I start something that needs to be profitable and my competitor(s) are also bootstrapped businesses that needs to be profitable, game on. If my competitor is a VC-backed startup, I might be in serious trouble. So either I find an industry VC won't touch (porn?) or the prisoner-dilemma for startups is hanging over my head.
    - staticautomatic 10y ago
      I don't think it's fair to assume that a war of attrition must be fought by parties with equal resources. I can't think of any reason why a patient enough small player could not wait long enough by the river. There is also the option of aiming for a segment of the giant market a la 37 signals. Me, I don't think I would ever go after one of these giant markets if I truly believed that the only way forward was to raise 8-9 figures and pray that my competitors die first. It's unreasonably risky.
rglover 10y ago
Bingo. Also would be nice to see VCs start to set existing–not projected-revenue requirements before investing. If it's not making money, it's not a business.
- nitrogen 10y ago
  That's sort of antithetical to the purpose of venture capital, which I understand to be moonshot research projects that create something new, something that might take years of work before it sees revenue.
- runako 10y ago
  The problem with this philosophy is that it would have caused investors to miss very successful investments. Since the number of big wins is limited, there is a very real risk to professional investors to NOT being in wins. This approach also basically rules out entire classes of investments (e.g. biotech). It may be apocryphal, but Google (market cap: $567B) is rumored to have taken its first investment before it had incorporated, and well before it started making money. I'm sure there Google is not alone in this respect.
- mildbow 10y ago
  This misses the point. The whole point of investing is that you are doing so based on potential. Regardless of what the current value is. In fact, the lower the current value is the better! The fact that the pendulum has swung too far doesn't mean the approach is spurious.
  - rglover 10y ago
    Founders can invest their own money first, though. The only caveat is like some above who mention investments in research-level projects (not software startups). Depends on the company, but in the context of Zenefits they clearly blew the extra cash on nonsense.
deleted 10y ago
[deleted]

The cure is simple. Stop being greedy?

by tabeth 10y ago

The cure is simple. Stop being greedy?

Silicon Valley is the greediest place on Earth. That's why we're all so "successful". If making more money, either because we want all the nicest things, or because we just want to keep our heads above water, weren't on the top of our minds, no one would be working as hard as we do.

user5994461 10y ago
It's not a valid explanation when you see the usual equities and salaries people get at startup nowadays.
phil21 10y ago
The funny thing is - this wasn't the case even 20 years ago. Silicon Valley was still a place you went primarily to work on cool stuff, secondarily to hopefully get lucky and build a company worth a shitload of money. You went there to change the world and work with the best, money was a decent side benefit but not required. Most took a pay cut (after cola) to move there and work on these awesome computer things everyone was talking about. Now it's 100% about the money - just look at what is being funded. Almost no real "tech" companies - just a bunch of folks writing slightly different variations on how to sell ads. I have to try to keep a straight face when I have some obviously-way-more-talented-than-me engineer telling me about some silly worthless app they are working on. It obviously does not move humanity forward or progress the art of their profession in any way - it's just a lottery ticket people have deluded themselves into thinking they are "making the world a better place". The change in tech startups has been extremely sad for me to watch. What used to be inspiring is essentially now one step removed from fraudulent. This take is not completely fair - there are a lot of startups also doing interesting things - but it's closer to reality than not - and nothing like what you envisioned as a "startup" even just before the dot com era.
closeparen 10y ago
Renting a room in a shared apartment in a sketchy neighborhood (Mission/SOMA), depending on the company cafeteria for most meals, and riding the bus to work, i.e. the standard startup employee lifestyle, is a marginally lower standard of living than that of a typical grad student. Maybe the Macbook Pro you carry will be kept slightly more up to date. University campuses typically have everywhere you'll need to go within a compact walkable envelope, and you can generally live within a short walk of one of the edges. The grad students are coming out ahead, in my view, since they don't have to contend with flaky and crowded transit. If startup employees are being greedy, they're doing an exceptionally poor job of it. They would enjoy much cushier lives as, say, mechanical engineers and accountants in the Midwest.

ryanSrich 10y ago

So is everyone being greedy? The startups taking the money are greedy and to blame, but also the VCs are to blame for investing in so many startups? I don't think it's that cut and dry. You could replace your sentence with "stop supporting capitalism".

openmosix 10y ago

The problem is when you bootstrap your startup business, and your competitor is a VC backed startup. They don't need to think about revenue, they can build a product they give away for free - and you need to price it reasonably to pay salaries. Competition with a free product always leads to a race to the bottom. A few years later, these competitors will burn, but you cannot wait years to turn in a profit.

staticautomatic 10y ago
I take your point. But as a practical matter, this is a foolhardy (and somewhat tautological) approach to building a business. It is to say, "We must raise too much money in order to compete with other companies who raised too much money, even though it will almost certainly lead to both of our companies ultimately going out of business." Moreover, it seems that the people who (perhaps intentionally) get their companies into these situations cannot publicly acknowledge the grim reality of what they're doing (if they even understand the consequences) while raising the kind of money they'd need and pretending to their employees about the company's rosy future. It's fuckery all around and the only people I feel bad for are those unfortunate enough to be suckered into working at these places.
- openmosix 10y ago
  It's somehow the prisoner dilemma applied to startups. I've raised ~30M$ as a founder in my past startup. For my next adventure, I'd love to bootstrap (with personal savings from my last exit). But here is the (prisoner) dilemma: if I start something that needs to be profitable and my competitor(s) are also bootstrapped businesses that needs to be profitable, game on. If my competitor is a VC-backed startup, I might be in serious trouble. So either I find an industry VC won't touch (porn?) or the prisoner-dilemma for startups is hanging over my head.
  - staticautomatic 10y ago
    I don't think it's fair to assume that a war of attrition must be fought by parties with equal resources. I can't think of any reason why a patient enough small player could not wait long enough by the river. There is also the option of aiming for a segment of the giant market a la 37 signals. Me, I don't think I would ever go after one of these giant markets if I truly believed that the only way forward was to raise 8-9 figures and pray that my competitors die first. It's unreasonably risky.

rglover 10y ago

Bingo. Also would be nice to see VCs start to set existing–not projected-revenue requirements before investing. If it's not making money, it's not a business.

nitrogen 10y ago
That's sort of antithetical to the purpose of venture capital, which I understand to be moonshot research projects that create something new, something that might take years of work before it sees revenue.
runako 10y ago
The problem with this philosophy is that it would have caused investors to miss very successful investments. Since the number of big wins is limited, there is a very real risk to professional investors to NOT being in wins. This approach also basically rules out entire classes of investments (e.g. biotech). It may be apocryphal, but Google (market cap: $567B) is rumored to have taken its first investment before it had incorporated, and well before it started making money. I'm sure there Google is not alone in this respect.
mildbow 10y ago
This misses the point. The whole point of investing is that you are doing so based on potential. Regardless of what the current value is. In fact, the lower the current value is the better! The fact that the pendulum has swung too far doesn't mean the approach is spurious.
- rglover 10y ago
  Founders can invest their own money first, though. The only caveat is like some above who mention investments in research-level projects (not software startups). Depends on the company, but in the context of Zenefits they clearly blew the extra cash on nonsense.

deleted 10y ago

[deleted]