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> the main job of VCs is not to fuel innovation, it is to protect the money of their clients from the potential disruption. Huh? VCs clients are pension funds,

• stephc_int13 5y ago
  I don't see how this is wrong. Making a return is protecting money, and in this case this is done by hedging against innovation.
• bvoq 5y ago
  Yea but they tend to maximise profit. I was invited to join a swiss VC group and the way they do it is you don't get to have an idea. You do market analysis and form groups during 1 year of the scholarship and then build the product with a pyramid scheme return. If you have your own idea it's believed that you love the idea a little too much unfortunately.
• stephc_int13 5y ago
  I'll try to reword it in the hope of being clearer. The observation is that disruptive innovation is inevitable. The role of VCs is to protect against this risk. You can't protect money by letting it in the bank, investing and hedging is the only viable option.
  • breck 5y ago
    This is a good way to describe it. To use concrete examples, while I know there are always internal believers, perhaps decision makers at Visa invested in Stripe and at USAA invested in Coinbase to hedge downside of disruption, not because they want to encourage those technologies.
    • mbesto 5y ago
      > perhaps decision makers at Visa invested in Stripe and at USAA invested in Coinbase to hedge downside of disruption, PS - Those are examples of CVC. Which IMHO have very different goals than traditional VCs.
      • breck 5y ago
        Ah yes, I was agreeing with your points about CVC. I probably should have responded to the parent thread but had to run so clicked submit.
  • mbesto 5y ago
    > The observation is that disruptive innovation is inevitable. Makes sense, agreed. > The role of VCs is to protect against this risk. Protect who though? Are you just saying that a LP has to allocate funds to a VC asset class in order to hedge against worse returns in other asset classes? In other words, if I'm a pension fund, I don't put all of my capital into Marriott because I need to allocate some of it into AirBnb, since Marriott's market cap will likely go down as a result of ABNB's success? Hence - the hedge.
    • stephc_int13 5y ago
      I am not talking about individual VCs, but in general, all of them, their collective role is to protect money (from their clients) from potential disruptive innovation. The goal is not to create value or even to make money, but to not lose it.
      • mbesto 5y ago
        > but to not lose it. But for who? You keep saying "from their clients", but I don't think you understand how the VC model works or care to explain what you mean by "protect". Here's an example: The California State Teacher's Retirement System, or CalSTRS (called an LP) committed money into Shashta Ventures. Shasta ventures then invested in several Series A and Series B startups (presumably "disruptive innovation"). Sashta then profits from selling those companies and takes a part of that profit for themselves and gives another part to CalSTRS. So. No, they're not "protecting it from their clients". VCs clients are their LPs and their goal is purely to profit from M&A/IPO activity and return that for themselves and their LPs. There isn't any dirty little secret about the industry - its that simple.
        • stephc_int13 5y ago
          This is not a secret but a common misunderstanding about alignment. VCs (and their clients) are aligned against innovation, contrary to what we might read naïvely. They are investing in "innovative" companies to protect their money against the innovation and also to control them.
• ak217 5y ago
  To a financial manager, avoiding disruption and diversifying is the same thing.