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The world of silicon valley-style startups and tech entrepreneurship is so full of drama and intrigue. The entrepreneurship ecosystem is full of narcissists, bl

The world of silicon valley-style startups and tech entrepreneurship is so full of drama and intrigue. The entrepreneurship ecosystem is full of narcissists, blowhards, and self-important people who believe that since they are managing other people's money they therefore have more wisdom and insight than anyone else. Board members who feel that their role as board member grants them instant authority and credibility on all topics. CEOs who believe that their title means they deserve respect. And a range of hangers-on and wantrepreneurs who want to be part of the scene but have no real idea or knowledge on how to build a business. Some startups are built to grow. Some are built to flip. Some will never go anywhere but fill people's pockets and egos. But many many more just fail. There is little relationship between the alternate reality that is the startup world and the more mundane, sedate, and less interesting traditional business world. Tweet storms and email chains like these read like the startup version of Jersey Shore or Housewives of OC.

rexreed 6y ago
(replying to myself here) When will people understand that the VC industry is a form of money management? It's an investment vehicle focused on generating a particular kind of return by investing in a particular kind of company. VCs don't invest in businesses as much as they invest in return-generating vehicles. If you can find a way to turn a grilled cheese business into a billion-dollar return-generating vehicle, then the VC will invest in it. It doesn't matter if it's an actually sustainable business or even really a business at all. Heck, you could be giving away grilled cheese and putting advertisements on the bread and if it fits the VC model then VCs will invest in it[1]. This is why "businesses" like WeWork are so divorced from business reality. Because they don't need to follow the typical path of traditional businesses, which are dependent on cash flow and customers and mostly industry or region-specific competition. Banks can loan to traditional businesses they understand. VCs invest in the businesses that don't fit those molds. This is why venture investing exists - to chase those non-traditional businesses that have the promise / potential to generate huge returns. The specifics of the business really don't matter. It follows then that if you're building a VC investment-return generating vehicle then what you're doing is not the same as building a "normal" business. You're in an ecosystem dominated by the needs for big returns. Board members don't know about or care about traditional business needs. They only care about the dynamics of investment return vehicles. This reality is not the same as the traditional business reality. [1] https://www.crunchbase.com/organization/melt-shop https://www.crunchbase.com/organization/melt-shop

rexreed 6y ago

(replying to myself here) When will people understand that the VC industry is a form of money management? It's an investment vehicle focused on generating a particular kind of return by investing in a particular kind of company. VCs don't invest in businesses as much as they invest in return-generating vehicles. If you can find a way to turn a grilled cheese business into a billion-dollar return-generating vehicle, then the VC will invest in it. It doesn't matter if it's an actually sustainable business or even really a business at all. Heck, you could be giving away grilled cheese and putting advertisements on the bread and if it fits the VC model then VCs will invest in it[1]. This is why "businesses" like WeWork are so divorced from business reality. Because they don't need to follow the typical path of traditional businesses, which are dependent on cash flow and customers and mostly industry or region-specific competition. Banks can loan to traditional businesses they understand. VCs invest in the businesses that don't fit those molds. This is why venture investing exists - to chase those non-traditional businesses that have the promise / potential to generate huge returns. The specifics of the business really don't matter. It follows then that if you're building a VC investment-return generating vehicle then what you're doing is not the same as building a "normal" business. You're in an ecosystem dominated by the needs for big returns. Board members don't know about or care about traditional business needs. They only care about the dynamics of investment return vehicles. This reality is not the same as the traditional business reality. [1] https://www.crunchbase.com/organization/melt-shop https://www.crunchbase.com/organization/melt-shop