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How frequently does this happen in reality? The reality is: startups are risky. Forcing the entrepreneur to take a bigger chunk of that risk than necessary lead
by tjs8rj 5y ago
How frequently does this happen in reality? The reality is: startups are risky. Forcing the entrepreneur to take a bigger chunk of that risk than necessary leads to less innovation, playing it safe, and kills many businesses before they’ve left the ground. Would Airbnb exist? Would Coinbase exist? Would uber exist? Maybe, but probably not, because the founders here weren’t rich enough to absorb the costs given the odds.
In theory, having that much skin in the game sounds like a pro with small cons. The reality is that is kills innovation, leaves the few brave enough who fail indebted and hampered for years, and makes the successful a fraction of the scale (and disproportionately founded by those already rich).
- GDC7 5y agoCompanies providing those services would exist anyways. The profile of the person founding them would be different. You'd have istrionic risk takers, borderline gamblers carrying the company for the first say 5 years, then they'd be bought out and a more stable person would be brought in. The VC model enables the economy at large to artificially skip the first step. It's artificial because Silicon Valley companies which basically start from zero and arrive in the S&P500 in 20 years or less, they have very low turnover in managment and executives. It's like a Vietcong learning how to fly an F-35.