3 ms·

I'm a VC, so I'm definitely biased here. On the one hand, I want to be a good person and to do the right thing, so I do my best to be one of the good VCs and n

I'm a VC, so I'm definitely biased here. On the one hand, I want to be a good person and to do the right thing, so I do my best to be one of the good VCs and not one of the bad ones. (I.e. I don't leave when things get bad.) On the other hand, when VCs leave at the first sign of trouble, why is that so terrible? I think giving bad advice -- advice that a lot of founders will listen to because they often assume a VC knows what they're talking about -- is much more dangerous. If a VC gives bad advice, that can sink a company that could've been successful otherwise. If a VC walks away or stops being involved, then that seems much closer to neutral than to bad. They no longer try to help, but so what? You have their investment and that is valuable by itself -- especially compared to not having had an investment in the first place. As an analogy, let's say you go to a doctor for a rare medical condition. They suggest a few treatments, and none work. They're out of ideas. Would you rather a) have them walk away so that you can look for another doctor or try to educate yourself on your condition, or b) have them keep seeing you and either wasting your time or giving you dangerous prescriptions?

seibelj 9y ago
There is massive bias for VC's to believe they have enormous value that cannot be obtained other ways. This is disruption in real time, disrupting the very people who believed they themselves are the disrupters, and it's making them very scared. Imagine devoting your life, climbing the ladder, becoming a VC partner, having entrepreneurs begging to speak with you, and seemingly overnight a new model exists that makes you obsolete. Very scary. However, I think VC can stay around as "gold star" supporters who vouch for authenticity of a company before opening up to widespread investment and get some of the tokens in return. Even if this ICO craze dies, I think the cat is out of the bag, and being able to raise funds globally and instantly is simply too good to pass up.
- lpolovets 9y ago
  I agree that there's a lot of disruption and innovation happening on the capital side. AngelList syndicates were already doing that before ICOs. But the advisory side is not really being disrupted so far, afaik. What I do like about all of the innovations on the capital side is that over time, I think they'll drive inferior/shitty VCs out of business. Most founders would prefer to work with Sequoia to using an ICO or AngelList, but ICOs/AngelList are better than SomeRandomFundWithCrappyAdvice. So the SRFWCAs will go out of business over time, but I think the Sequoias will do just fine.
- mathattack 9y ago
  The same thing happens to lots of fields. Many types of banking and financial services have become obsolete, or will be. The market makers who manually matched buyers and sellers of stocks are one example, as are the traders in the pits.
- mathattack 9y ago
  The same thing happens to lots of fields. Many types of banking and financial services have become obsolete, or will be. The market makers who manually matched buyers and sellers of stocks are one example, as are the traders in the pits.
mindcrime 9y ago
advice that a lot of founders will listen to because they often assume a VC knows what they're talking about Why would people assume that? Maybe I'm weird, but I tend to assume that VC's know a lot about, well, VC, and pretty much squat about anything else. It's like the old saying, "Those who can, do. Those who can't, invest". OK, so that's not the original saying, but I'd assume anybody who knows anything about building a real business would rather spend their time building a business, not just investing and sitting on the sidelines acting as an "advisor".
- dboreham 9y ago
  Hmm. I'm not a big VC kool aid drinker myself, but aren't they typically former at least moderately successful entrepreneurs or industry executives?
  - mindcrime 9y ago
    The famous ones, yeah. I mean, take Andreessen. He obviously knows something about tech. But there are a lot of other VC's out there, especially when you get away from SV and Sand Hill Road. And as far as I know, there's no particular requirement to be a VC, other than the ability to convince people with money to put money into your fund.
- lpolovets 9y ago
  People tend to overvalue advice when: 1) it comes from a successful person and 2) is delivered confidently.
kemonocode 9y ago
First of all, thank you for stopping by to reply to me. >On the other hand, when VCs leave at the first sign of trouble, why is that so terrible? I think giving bad advice -- advice that a lot of founders will listen to because they often assume a VC knows what they're talking about -- is much more dangerous. I should probably have amended that statement to "Leaving at the first sign of trouble after screwing up with your business model" instead. If it was just them walking away... well, hey, it's not so bad. A warning sign for sure, but not so bad. The problem is bad VCs are also the ones that tend not to go quietly into that good night. They make concessions, they make you commit to compromises and pretend to be one-person boards of directors. I can understand wanting to give advice in that one field(s) they actually have experience with, but when you have someone on board who only ever had experience in banking, barking orders and attempting to change your entire workflow as a game development company, there's something that went horribly wrong, and you're in the uncomfortable decision of either rejecting that money and probably having to can your project, the very same project that might just be 6 months away to completion, or suck it up, take a deep breath and hope it won't be so bad. (Again, speaking from experience)
- lpolovets 9y ago
  Thanks for the reply. Sorry about your experiences with VCs; they sound very painful. If you ever go the VC route again, I hope it works out better next time.

seibelj 9y ago

There is massive bias for VC's to believe they have enormous value that cannot be obtained other ways. This is disruption in real time, disrupting the very people who believed they themselves are the disrupters, and it's making them very scared. Imagine devoting your life, climbing the ladder, becoming a VC partner, having entrepreneurs begging to speak with you, and seemingly overnight a new model exists that makes you obsolete. Very scary. However, I think VC can stay around as "gold star" supporters who vouch for authenticity of a company before opening up to widespread investment and get some of the tokens in return. Even if this ICO craze dies, I think the cat is out of the bag, and being able to raise funds globally and instantly is simply too good to pass up.

lpolovets 9y ago
I agree that there's a lot of disruption and innovation happening on the capital side. AngelList syndicates were already doing that before ICOs. But the advisory side is not really being disrupted so far, afaik. What I do like about all of the innovations on the capital side is that over time, I think they'll drive inferior/shitty VCs out of business. Most founders would prefer to work with Sequoia to using an ICO or AngelList, but ICOs/AngelList are better than SomeRandomFundWithCrappyAdvice. So the SRFWCAs will go out of business over time, but I think the Sequoias will do just fine.
mathattack 9y ago
The same thing happens to lots of fields. Many types of banking and financial services have become obsolete, or will be. The market makers who manually matched buyers and sellers of stocks are one example, as are the traders in the pits.
mathattack 9y ago
The same thing happens to lots of fields. Many types of banking and financial services have become obsolete, or will be. The market makers who manually matched buyers and sellers of stocks are one example, as are the traders in the pits.

mindcrime 9y ago

advice that a lot of founders will listen to because they often assume a VC knows what they're talking about Why would people assume that? Maybe I'm weird, but I tend to assume that VC's know a lot about, well, VC, and pretty much squat about anything else. It's like the old saying, "Those who can, do. Those who can't, invest". OK, so that's not the original saying, but I'd assume anybody who knows anything about building a real business would rather spend their time building a business, not just investing and sitting on the sidelines acting as an "advisor".

dboreham 9y ago
Hmm. I'm not a big VC kool aid drinker myself, but aren't they typically former at least moderately successful entrepreneurs or industry executives?
- mindcrime 9y ago
  The famous ones, yeah. I mean, take Andreessen. He obviously knows something about tech. But there are a lot of other VC's out there, especially when you get away from SV and Sand Hill Road. And as far as I know, there's no particular requirement to be a VC, other than the ability to convince people with money to put money into your fund.
lpolovets 9y ago
People tend to overvalue advice when: 1) it comes from a successful person and 2) is delivered confidently.

kemonocode 9y ago

First of all, thank you for stopping by to reply to me. >On the other hand, when VCs leave at the first sign of trouble, why is that so terrible? I think giving bad advice -- advice that a lot of founders will listen to because they often assume a VC knows what they're talking about -- is much more dangerous. I should probably have amended that statement to "Leaving at the first sign of trouble after screwing up with your business model" instead. If it was just them walking away... well, hey, it's not so bad. A warning sign for sure, but not so bad. The problem is bad VCs are also the ones that tend not to go quietly into that good night. They make concessions, they make you commit to compromises and pretend to be one-person boards of directors. I can understand wanting to give advice in that one field(s) they actually have experience with, but when you have someone on board who only ever had experience in banking, barking orders and attempting to change your entire workflow as a game development company, there's something that went horribly wrong, and you're in the uncomfortable decision of either rejecting that money and probably having to can your project, the very same project that might just be 6 months away to completion, or suck it up, take a deep breath and hope it won't be so bad. (Again, speaking from experience)

lpolovets 9y ago
Thanks for the reply. Sorry about your experiences with VCs; they sound very painful. If you ever go the VC route again, I hope it works out better next time.