3 ms·
> whichever of us raises more money (and in an ideal free market, this means whichever of us is willing to accept less favorable terms) wins I went through an
by Jeff_Brown 5y ago
> whichever of us raises more money (and in an ideal free market, this means whichever of us is willing to accept less favorable terms) wins
I went through an entire economics PhD program, and had never before now heard of this founders' race to the bottom of investment terms. What a remarkable insight. Is there already a name for it?
- woofie11 5y agoIt's my own insight. I have about a half-dozen similarly remarkable insights each week. If you're interested in writing an econ paper about it, I'm glad to let you take first authorship. We can call it the "Founders Race to the Bottom" or the "Brown Effect." :) If it goes viral, you'll be famous. I've made that offer before on similar insights, and so far, no one has taken me up on it. And a few of them were really insightful. Who knows? Perhaps you'll get a Nobel Prize for it. Econ give them out for less. Some of those insights were, er, less than deep. The real insight behind this came in the Wealth of Nations. Adam Smith walks through this exact logic market-by-market, and for example, his section on rents leads to a similar degeneracy, where rents rise to match what the market can bare, and working people are driven to poverty by spending all excess income on rent. It's a great read. This is very directly applying exactly his logic, just to a modern market.