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Really even if VCs were utterly rational their model already incentivizes "go big or go home" on a grand scale. You as a founder would be perfectly fine with a

Really even if VCs were utterly rational their model already incentivizes "go big or go home" on a grand scale. You as a founder would be perfectly fine with a "mere" 10% chance of a "just" 10M$ company to early retire, work with independence to be able to walk away at will, or bootstrap depending on ambitions. VCs would win more amortized over all of their funding a 0.01% chance for a $100B company. That fits with the current big money model of trying to pump up a given service with no business model to get user base and then have it collapse after they alienate their users trying to monetize it. It looks utterly stupid and may be a form of economic resource misallocation (both as a matter of opinion and derth of comparable data) but it benefits the VC.

Axsuul 7y ago
This may be the case for some but not for all. There are some business models that do require funding. Many of the services and software that you use on a daily basis wouldn't be around if it weren't for VCs. Not everything is bootstrap or die (disclaimer: I'm a bootstrapped founder).
gowld 7y ago
> You as a founder would be perfectly fine with a "mere" 10% chance of a "just" 10M$ company to early retire No way. Assuming a 4 year investment that's lower pay than a low risk bigcorp job.
- Drdrdrq 7y ago
  But waaaay more interesting. :)
- anthm1988 7y ago
  The vast majority of people aren't making 2.5 million a year even at the biggest corporations.
  - mercutio2 7y ago
    I was about to say the same thing, then I realized the point is that a 10% chance of $2.5M/year == $250k/year expected return, which IS lower than your expected return working for a BigCo (there’s a distribution of income depending on how you perform, there, too, but it’s much lower risk). This is a little bit disingenuous, because I’m pretty confident outside the 10% best case, there’s a pretty broad distribution where you work long hours and come away with SOME return, so I suspect the expected return may be close to even for passionate founders, albeit probably with more stress in the overall effort. Of course, the people starting companies usually aren’t guessing they have a 10% chance of success; you need to believe you’re an outlier to be successful in the startup game, it seems to me.

Axsuul 7y ago

This may be the case for some but not for all. There are some business models that do require funding. Many of the services and software that you use on a daily basis wouldn't be around if it weren't for VCs. Not everything is bootstrap or die (disclaimer: I'm a bootstrapped founder).

gowld 7y ago

> You as a founder would be perfectly fine with a "mere" 10% chance of a "just" 10M$ company to early retire No way. Assuming a 4 year investment that's lower pay than a low risk bigcorp job.

Drdrdrq 7y ago
But waaaay more interesting. :)
anthm1988 7y ago
The vast majority of people aren't making 2.5 million a year even at the biggest corporations.
- mercutio2 7y ago
  I was about to say the same thing, then I realized the point is that a 10% chance of $2.5M/year == $250k/year expected return, which IS lower than your expected return working for a BigCo (there’s a distribution of income depending on how you perform, there, too, but it’s much lower risk). This is a little bit disingenuous, because I’m pretty confident outside the 10% best case, there’s a pretty broad distribution where you work long hours and come away with SOME return, so I suspect the expected return may be close to even for passionate founders, albeit probably with more stress in the overall effort. Of course, the people starting companies usually aren’t guessing they have a 10% chance of success; you need to believe you’re an outlier to be successful in the startup game, it seems to me.