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The more relevant factor IMO is not time vs. money but the proportional risk. A year of my time is a much larger fraction of my net worth than the typical VC's
by alecbz 5y ago
The more relevant factor IMO is not time vs. money but the proportional risk. A year of my time is a much larger fraction of my net worth than the typical VC's investment is a fraction of their net worth.
- alisonkisk 5y agoThis is a Marxist labor theory of value argument, disregarding market forces. For a different supply-demand function, labor could get paid far more than investors (imagine a 0 interest rate environment while inflation is happening.)
- alecbz 5y agoWell, sort of. There's an argument to be made that people should realize how much better a deal VCs are getting and stop settling for worse ROI. Part of the problem is exactly that supply is high, possibly because of a lack of knowledge/negotiation leverage.
- banannaise 5y agoLabor supply is high because it is forced to be high, in a way that capital supply is not. Investors can stop investing and simply live on their hoards, or even a tiny fraction of their hoards. Laborers cannot stop laboring and do the same.
- alecbz 5y agoThat explanation seems off? (Anyone who has enough to live off of can just do that, witholding both their capital and their labor.) But anyway I meant supply of labor for startups specifically. Like, people are too willing to forgo FAANG comp for low equity numbers at startups.
- midasuni 5y agoYet investors have made a fortune over the last year while there’s interest rates below inflation.