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Which just moves the question to "why more companies / startups couldn't avoid the toxic VC influence on their business"...

RcouF1uZ4gsC 7y ago
Because access to capital matters. If you are a non-VC funded business, you need to generate a profit. How do you compete when a VC-funded business comes in and starts selling a competing product at a loss?
- tw04 7y ago
  That is in theory where the government steps in. It’s exactly why standard oil was broken up. Selling at a loss to try to create a monopoly completely breaks capitalism. I invite the folks downvoting to explain how capitalism works with a market monopoly. Since pointing out government exists to prevent just such a situation is apparently an unpopular opinion.
  - roenxi 7y ago
    In theory the company selling at a loss goes bankrupt and the people lending them money to burn lose all their money. However post-2008 world is one where (1) the government will probably step in and rescue the people who were lending the money and (2) there are lunatic low-interest policies that encourage lending to anyone with a pulse over all forms of sane weighing up of risk. So why not fund businesses that burn money? The problem in the story isn't antitrust, it is low interest rate policies that excessively favour borrow-and-spend tactics.
  - mdorazio 7y ago
    Not sure why you're getting downvoted. I guess a lot of HN voters are against the idea of regulation that would prevent a lot of startups from gaining traction ("why can't I sell my stuff at a loss to get new customers?"). In reality, regulation extending anti-dumping laws to startup-type products/services is a possible solution to this issue, it's just one that would be difficult to implement and enforce. Ex. where do you draw the line on dumping vs. acceptable marketing and how do you calculate it for something like SaaS that usually has really high margins?
    - bigiain 7y ago
      I suspect a lot of down voters have got their nosed wedged firmly in the "VC backed attempt at a monopoly" business model money/equity trough...
  - brycehamrick 7y ago
    This only applies if it’s anti-competitive, meaning if the intent is to undercut and harm a competing business. Funded startups routinely operate at losses, the point is that for many business models it isn’t possible to operate profitably from the start-making alternative ownership structures challenging.
marcinzm 7y ago
Why do you say it's toxic? The owners of most startups want roughly the same thing the VCs want. A big exit that puts lots of money in their pockets.
- toast0 7y ago
  A big exit that puts lots of money in the pockets of VCs and founders is great for them, but may or may not be great for employees and customers. The whole build a product, attract users, (big) exit, incredible journey cycle can feel pretty toxic at times.
  - bigiain 7y ago
    Exactly. In the context of the original post I was responding to talking about Mutual companies, founders and VCs aiming for 100x exits by shafting customers and employees and society - is "toxic"...
- RcouF1uZ4gsC 7y ago
  > The owners of most startups want roughly the same thing the VCs want. I am not so sure. The VC's want you to either have a billion dollar exit, or fail quickly. Most owners would be pretty happy with a multi-million dollar a year sustainable business.
  - marcinzm 7y ago
    The ones I knew would definitely prefer a $100 million exit where they made $20 million to a lifestyle business.
    - bigiain 7y ago
      Where "lifestyle business" is pretty much VC industry pejorative/derogatory jargon for "long term economically sustainable and ethical company" - as though any of that is a bad thing.

RcouF1uZ4gsC 7y ago

Because access to capital matters. If you are a non-VC funded business, you need to generate a profit. How do you compete when a VC-funded business comes in and starts selling a competing product at a loss?

tw04 7y ago
That is in theory where the government steps in. It’s exactly why standard oil was broken up. Selling at a loss to try to create a monopoly completely breaks capitalism. I invite the folks downvoting to explain how capitalism works with a market monopoly. Since pointing out government exists to prevent just such a situation is apparently an unpopular opinion.
- roenxi 7y ago
  In theory the company selling at a loss goes bankrupt and the people lending them money to burn lose all their money. However post-2008 world is one where (1) the government will probably step in and rescue the people who were lending the money and (2) there are lunatic low-interest policies that encourage lending to anyone with a pulse over all forms of sane weighing up of risk. So why not fund businesses that burn money? The problem in the story isn't antitrust, it is low interest rate policies that excessively favour borrow-and-spend tactics.
- mdorazio 7y ago
  Not sure why you're getting downvoted. I guess a lot of HN voters are against the idea of regulation that would prevent a lot of startups from gaining traction ("why can't I sell my stuff at a loss to get new customers?"). In reality, regulation extending anti-dumping laws to startup-type products/services is a possible solution to this issue, it's just one that would be difficult to implement and enforce. Ex. where do you draw the line on dumping vs. acceptable marketing and how do you calculate it for something like SaaS that usually has really high margins?
  - bigiain 7y ago
    I suspect a lot of down voters have got their nosed wedged firmly in the "VC backed attempt at a monopoly" business model money/equity trough...
- brycehamrick 7y ago
  This only applies if it’s anti-competitive, meaning if the intent is to undercut and harm a competing business. Funded startups routinely operate at losses, the point is that for many business models it isn’t possible to operate profitably from the start-making alternative ownership structures challenging.

marcinzm 7y ago

Why do you say it's toxic? The owners of most startups want roughly the same thing the VCs want. A big exit that puts lots of money in their pockets.

toast0 7y ago
A big exit that puts lots of money in the pockets of VCs and founders is great for them, but may or may not be great for employees and customers. The whole build a product, attract users, (big) exit, incredible journey cycle can feel pretty toxic at times.
- bigiain 7y ago
  Exactly. In the context of the original post I was responding to talking about Mutual companies, founders and VCs aiming for 100x exits by shafting customers and employees and society - is "toxic"...
RcouF1uZ4gsC 7y ago
> The owners of most startups want roughly the same thing the VCs want. I am not so sure. The VC's want you to either have a billion dollar exit, or fail quickly. Most owners would be pretty happy with a multi-million dollar a year sustainable business.
- marcinzm 7y ago
  The ones I knew would definitely prefer a $100 million exit where they made $20 million to a lifestyle business.
  - bigiain 7y ago
    Where "lifestyle business" is pretty much VC industry pejorative/derogatory jargon for "long term economically sustainable and ethical company" - as though any of that is a bad thing.