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Venture Capital – No, We’re Not Normal

10 points by kjhughes 7y ago

m0llusk 7y ago
This is disturbing. Venture Capital has an established record of funding broken business models that push profitable but low margin establishments out of business before going belly up themselves. This is antisocial behavior that does serious damage to markets, yet in this analysis the only considerations are for maximizing returns on capital. There isn't even any mention of how much damage this ha ha funny not normal way of doing business does to traditional commerce. All those golly back to the drawing board scenarios competed with companies that didn't have explosions of capital to back them up. Overall enabling venture capital investment is a positive thing but as always we need to be realistic, avoid doing harm, and be eternally vigilant lest we poison our own punch bowl.
- smallgovt 7y ago
  I don't think it's so cut and dry. Many VC-backed businesses implement a growth-first pricing strategy that undercuts competitors. Some of these businesses fail and create a net harmful effect (by forcing sustainable businesses to shut down). But, some of these VC-backed businesses also go on to be wildly successful and valuable to society (in a way that would have been impossible without this growth first mentality). Before we call this pricing pattern antisocial, I'd want to see some thoughtful cost benefit analysis.
  - zzzcpan 7y ago
    > But, some of these VC-backed businesses also go on to be wildly successful and valuable to society (in a way that would have been impossible without this growth first mentality). Why would it be impossible? It would be equally possible, only wealth would not be as concentrated.
  - m0llusk 7y ago
    Exactly. Not cut and dry. Open opportunities for cost and benefit analysis. Instead of only asking what was done and whether operations endure, look beyond at the larger market. Did competitors respond to competition or disruption? Are there more or fewer options now available to consumers? Did the size of the involved markets change? That sort of thing could be extremely interesting and reveal opportunities but currently gets relatively little discussion.
projektfu 7y ago
Ok, so what's the overall rate of return for venture capital? I don't care if they hit or don't in the end if they end up winning for investors.
- ncmncm 7y ago
  The investors are not the only parties affected. VC activity imposes a tax on the society they operate in.

10 points by kjhughes 7y ago

This is disturbing. Venture Capital has an established record of funding broken business models that push profitable but low margin establishments out of business before going belly up themselves. This is antisocial behavior that does serious damage to markets, yet in this analysis the only considerations are for maximizing returns on capital. There isn't even any mention of how much damage this ha ha funny not normal way of doing business does to traditional commerce. All those golly back to the drawing board scenarios competed with companies that didn't have explosions of capital to back them up. Overall enabling venture capital investment is a positive thing but as always we need to be realistic, avoid doing harm, and be eternally vigilant lest we poison our own punch bowl.

smallgovt 7y ago
I don't think it's so cut and dry. Many VC-backed businesses implement a growth-first pricing strategy that undercuts competitors. Some of these businesses fail and create a net harmful effect (by forcing sustainable businesses to shut down). But, some of these VC-backed businesses also go on to be wildly successful and valuable to society (in a way that would have been impossible without this growth first mentality). Before we call this pricing pattern antisocial, I'd want to see some thoughtful cost benefit analysis.
- zzzcpan 7y ago
  > But, some of these VC-backed businesses also go on to be wildly successful and valuable to society (in a way that would have been impossible without this growth first mentality). Why would it be impossible? It would be equally possible, only wealth would not be as concentrated.
- m0llusk 7y ago
  Exactly. Not cut and dry. Open opportunities for cost and benefit analysis. Instead of only asking what was done and whether operations endure, look beyond at the larger market. Did competitors respond to competition or disruption? Are there more or fewer options now available to consumers? Did the size of the involved markets change? That sort of thing could be extremely interesting and reveal opportunities but currently gets relatively little discussion.

projektfu 7y ago

Ok, so what's the overall rate of return for venture capital? I don't care if they hit or don't in the end if they end up winning for investors.

ncmncm 7y ago
The investors are not the only parties affected. VC activity imposes a tax on the society they operate in.