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Profitability isn't necessarily important to the strategy of a VC company. Everything is about the exit, and most exits are either acquisitions or IPOs. Neither

by Taek 6y ago

Profitability isn't necessarily important to the strategy of a VC company. Everything is about the exit, and most exits are either acquisitions or IPOs. Neither type of exit mandates profitability, and both care capable of offloading to a greater fool. A strong trend I've personally noticed with VC backed companies and something I'm highly wary of for our own company is the way it inevitably turns companies evil. I would highlight Google and Cloudflare as two examples, but the general trend seems to be that VC pressure inevitably forces you to hire 'better' people who invariably steer the company to being more focused on profit and power rather than on some intrinsic mission. Actual mission focused companies like Mozilla only seem to succeed if they stay private and stay away from VC.

skybrian 6y ago
Google went public early and with a share structure that insulated the founders from any pressure from the stock market. Venture capital has nothing to do with what’s happened since.
vlovich123 6y ago
Google had limited VC investment - a 25m round before IPO. Arguably they turned evil much later so to me the link to “VC corruption” is more specious. Re cloudflare, can you please help me understand what they’ve been doing that you see as evil? Given how Mozilla constantly struggles to stay afloat (and effectively depends on the generosity of Google as the single revenue source), I don’t know that’s an example to point to, especially since they’ve had their own share of “user-hostile” steps (albeit fewer since it’s a smaller company).
- Taek 6y ago
  I would argue that being a public company has the same pressure as being VC funded only much stronger. Cloudflare is increasingly pushing their position as the world's biggest man-in-the-middle, and things like their new secure DNS are making the situation worse. They've started taking opinionated stances and making deplatforming decisions instead of being neutral infrastructure and I think this is going to get a lot worse.

by Taek 6y ago

skybrian 6y ago

Google went public early and with a share structure that insulated the founders from any pressure from the stock market. Venture capital has nothing to do with what’s happened since.

vlovich123 6y ago

Google had limited VC investment - a 25m round before IPO. Arguably they turned evil much later so to me the link to “VC corruption” is more specious. Re cloudflare, can you please help me understand what they’ve been doing that you see as evil? Given how Mozilla constantly struggles to stay afloat (and effectively depends on the generosity of Google as the single revenue source), I don’t know that’s an example to point to, especially since they’ve had their own share of “user-hostile” steps (albeit fewer since it’s a smaller company).

Taek 6y ago
I would argue that being a public company has the same pressure as being VC funded only much stronger. Cloudflare is increasingly pushing their position as the world's biggest man-in-the-middle, and things like their new secure DNS are making the situation worse. They've started taking opinionated stances and making deplatforming decisions instead of being neutral infrastructure and I think this is going to get a lot worse.