6 ms·

Fuck the VCs

83 points by tortilla 18y ago

fallentimes 18y ago
I like the first comment - we deal with it every day: "Agreed 100%. And oddly enough I’ve been told precisely this by two VCs! Basically: 1. “if you want to make a massive company, get VC money” 2. “if you want to make more money than 1, on similar odds, play the lotto” 3. “if you want to make money, don’t involve VCs” "
josefresco 18y ago
Easy to say F* the VCs when they're knocking down your door. Me? I'd hear out the first caller without hesitation.
- MicahWedemeyer 18y ago
  Yeah, if only to get some external validation that you're not crazy.
  - deleted 18y ago
    [deleted]
    - swombat 18y ago
      I didn't say anything.
- tedr 18y ago
  I think John's points also addresses your feeling. He's saying why are you so crazy about just this market. Which conversely means why do you want me so badly when there is a much larger ecosystem of great development going on that you are ignoring
henning 18y ago
The other part of this, if there really is a bona fide iPhone app bubble, how will Apple react, if at all? To them, it might seem like the Champs-Élysées is getting turned into a giant strip mall. I wonder if they'd pull some kind of sudden "night of the long knives" move.
- tstegart 18y ago
  Apple's between a rock and a hard place. On the one hand, they probably want to stick with their spiel of having a better experience, on the other hand, removing apps because they are just ugly or stupid would just crush creativity. I think ultimately, openness will win out.
- jonknee 18y ago
  Continue to cash in on the 30% I'd assume. Since they partnered with a VC firm just for iPhone apps, I'm guessing they are not anti-bubble.
- aaronblohowiak 18y ago
  A bubble usually involves over-optimistic speculation. Are you suggesting that there is an irrational exuberance in iPhone apps? I think there is a bit of a land grab, but people are making real take-it-to-the-bank cash, not just hitting nebulous "soft" performance marks. For of an app Boom than a bubble, imho.
  - flipbrad 18y ago
    it's no good saying 'people' - the problem is which ones. Plenty of people were driving aorund in nice cars during the last bubble, having 'taken to the bank' investors' cash; but the whole setup was totally unsustainable and the people putting in money weren't getting it out. Is it so different this time around?
    - aaronblohowiak 18y ago
      The source of the money that I am referring to is iPhone users buying apps, not VC money.
  - netcan 18y ago
    Are there any estimates on how much total has gone into iphone apps? We know what the market's worth (approximately).
dmix 18y ago
Bubbles impact more then just VCs and entrepreneurs. Right now, almost noone is IPOing and exits are slim. Why does everyone compare bad VC investments to the dot-com bubble? Do you really think there will be a flood of iPhone app developers going public? The only impact that will have on the economy is some investors will lose some money, which happens all the time. In Silicon Valley everyone seems to think that as long as their starting a company, that VC is always an option. But its only appropriate for a certain types of businesses (high growth, exited focused, etc). I'd put the blame as much on the entrepreneurs who can't tell the difference and not the VCs who look for trends to profit off of. Besides, is it really that hard to stay "indie" developing iPhone apps? I don't see where the need for capital comes in the first place.
- hugh 18y ago
  Besides, is it really that hard to stay "indie" developing iPhone apps? I don't see where the need for capital comes in the first place. Especially if you can't even find one person that you want to hire.
time_management 18y ago
Haven't RTFA yet, but it seems like any respectable VC would recuse him- or herself from any funding decision in which personal relationships might be involved.
- time_management 18y ago
  -1?!? Seafood soup!
maxklein 18y ago
Personally, I think it's just the start. It's my opinion that we are at the very beginning of another game changing event (like the internet). Computers are going to become tiny things like the iPhone, and you come home, stick it in your docking station and your desktop pops up. Apps will have to scale from very tiny screens to massive 30 inch monitors. Things, them are going to be different real soon, like the gospel singers used to sing. Software will be deployed over the air, just like the iPhone app store. That's why google has a phone, that's why yahoo is making YUI, that's why google allows everyone use its charts API for free. They are all trying to take control of the API for this new platform. The new world is not just internet based, it's apps built to be completely internet aware and to work with the internet all the time. Software is changing. It's no longer about writing an FTP client and selling a few thousand copies - when you think of an always on internet, easy distribution, and location awareness, a whole new class of apps will emerge. It's a big markets, and the business folk can see that.
- prakash 18y ago
  In addition, my bet is that the company that beats google will probably come out of this pack.
  - vaksel 18y ago
    they may beat Google in that market, but I doubt they'll impact Google's current behemoths(Search/Adwords)
    - prakash 18y ago
      My bet is that it will be at least an order of magnitude more than google since a combination of mobile + apps + search/Adwords will have: 1. more information about you (location, etc.), 2. relevant & time based local ad inventory (e.g.: 3 pm you are in a mall near an ice-cream store and hence a free 2nd scoop coupon advertised to your phone) 3. much higher click through rates since it's more actionable and more importantly, useful i.e. ads that even hackers click on 4. In some cases might result in much higher CPM's, and a huge increase in ad volumes even for lower CPM's So, companies like Loopt are better positioned to take on Google than say Cuil, but hey, what do I really know.
hugh 18y ago
The article itself is a bit of a rant/whine (rhine?) but I found the bit of dialogue in the section "The VC mentality" interesting. To some extent I think the VC might actually be right here. I think some people get too caught up in the idea that there's a tiny minority of "great" programmers who can perform miracles, and everyone else is a mindless drone unworthy of coming anywhere near your code. I'm not saying that all programmers are equal, but if this guy can't even find _one_ programmer in the whole of Silicon Valley that he thinks is worthy of working on his project (which appears to be an iPhone-based grocery list -- not exactly the most intellectually demanding project in the world) then he might be looking for something that doesn't exist.
- thaumaturgy 18y ago
  I don't think it's unreasonable to say, "We're having trouble finding one great programmer". If a programmer is pretty good at what she does, then odds are she's already got a secure, comfortable, well-paid job. The VC might have suggested that extra money could attract a great programmer, but he didn't. I think it comes down to Ambrosia versus Microsoft. The author would prefer to produce software the way Ambrosia does. The VC prefers the Microsoft way.
  - hassy 18y ago
    > If a programmer is pretty good at what she does, then odds are she's already got a secure, comfortable, well-paid job. Especially so if the programmer in question is a Mac/Cocoa programmer. There are few of them around, and chances are they are either working at Apple or doing their own thing.
jazj 18y ago
It's the Internet, you can swear here
pkaler 18y ago
You don't really need VC funding to launch most iPhone applications. The cost of development is so low compared to other types of development. I'm the lone programmer at my startup at the moment. However, I just left a team of 35 programmers trying to ship a PS3 game. I could see maybe 4-8 programmers top on an iPhone application project. There were 9 programmers on the last Sony PSP project I worked on. VCs don't want to fund that type of development either. They may fund an app that integrates somewhere in the cloud and also has a web interface. That's a bet that is actually big enough for them to care.
pg 18y ago
It's a sign of this guy's inexperience that he treats VCs as if they were all the same. In fact one of the most distinctive things about the VC world is how much variation there is in it. Partners at the top firms are clever and honest and expect to make money mostly from the fund's returns. Whereas the bottom half are basically in the business of generating management fees.
- wheels 18y ago
  An essay topic I'd find really interesting: A field guide to VC evaluation Your last essay was rather apt for where we're at right now (just getting into the fundraising waters), but terms like someone reputable are kind of hard to gauge -- especially in the somewhat inbred world of investment when you don't know who's buddies with whom and as such whose opinions are worthwhile. Here a lot of companies seem to be run by serial entrepreneurs, which often seem to be a little too buddied up with investors to side with first-timers when trying to shake out info about what dealing with them is like.
  - pg 18y ago
    That would be a short essay. You just have to judge whether they're smart and honest. The reason that's hard is not that you need special techniques to do it, but that it's hard to judge someone during a brief meeting when they're also judging you. We just tell YC founders to ask us, and that probably is the most effective way to judge a VC: ask people who know him.
- fallentimes 18y ago
  Just like hedge funds.
- comatose_kid 18y ago
  DFJ is often considerd a top firm, but reading the first chapter of Founders at Work (Sabeer Bhatia's experience with DFJ) sure made me feel like they were out to screw Hotmail's founders.
  - 18y ago
river_styx 18y ago
YES!! electric guitar riff
tedr 18y ago
Wow, this brings me back. Nothing makes VCs hotter than a nascent business with traction in a hot sexy space. They'll cool fast when they see the world isn't suddenly going to all get iPhones and leave everything else behind, but they are on it like spider monkeys right now

83 points by tortilla 18y ago

I like the first comment - we deal with it every day: "Agreed 100%. And oddly enough I’ve been told precisely this by two VCs! Basically: 1. “if you want to make a massive company, get VC money” 2. “if you want to make more money than 1, on similar odds, play the lotto” 3. “if you want to make money, don’t involve VCs” "

josefresco 18y ago

Easy to say F* the VCs when they're knocking down your door. Me? I'd hear out the first caller without hesitation.

MicahWedemeyer 18y ago
Yeah, if only to get some external validation that you're not crazy.
- deleted 18y ago
  [deleted]
  - swombat 18y ago
    I didn't say anything.
tedr 18y ago
I think John's points also addresses your feeling. He's saying why are you so crazy about just this market. Which conversely means why do you want me so badly when there is a much larger ecosystem of great development going on that you are ignoring

henning 18y ago

The other part of this, if there really is a bona fide iPhone app bubble, how will Apple react, if at all? To them, it might seem like the Champs-Élysées is getting turned into a giant strip mall. I wonder if they'd pull some kind of sudden "night of the long knives" move.

tstegart 18y ago
Apple's between a rock and a hard place. On the one hand, they probably want to stick with their spiel of having a better experience, on the other hand, removing apps because they are just ugly or stupid would just crush creativity. I think ultimately, openness will win out.
jonknee 18y ago
Continue to cash in on the 30% I'd assume. Since they partnered with a VC firm just for iPhone apps, I'm guessing they are not anti-bubble.
aaronblohowiak 18y ago
A bubble usually involves over-optimistic speculation. Are you suggesting that there is an irrational exuberance in iPhone apps? I think there is a bit of a land grab, but people are making real take-it-to-the-bank cash, not just hitting nebulous "soft" performance marks. For of an app Boom than a bubble, imho.
- flipbrad 18y ago
  it's no good saying 'people' - the problem is which ones. Plenty of people were driving aorund in nice cars during the last bubble, having 'taken to the bank' investors' cash; but the whole setup was totally unsustainable and the people putting in money weren't getting it out. Is it so different this time around?
  - aaronblohowiak 18y ago
    The source of the money that I am referring to is iPhone users buying apps, not VC money.
- netcan 18y ago
  Are there any estimates on how much total has gone into iphone apps? We know what the market's worth (approximately).

dmix 18y ago

Bubbles impact more then just VCs and entrepreneurs. Right now, almost noone is IPOing and exits are slim. Why does everyone compare bad VC investments to the dot-com bubble? Do you really think there will be a flood of iPhone app developers going public? The only impact that will have on the economy is some investors will lose some money, which happens all the time. In Silicon Valley everyone seems to think that as long as their starting a company, that VC is always an option. But its only appropriate for a certain types of businesses (high growth, exited focused, etc). I'd put the blame as much on the entrepreneurs who can't tell the difference and not the VCs who look for trends to profit off of. Besides, is it really that hard to stay "indie" developing iPhone apps? I don't see where the need for capital comes in the first place.

hugh 18y ago
Besides, is it really that hard to stay "indie" developing iPhone apps? I don't see where the need for capital comes in the first place. Especially if you can't even find one person that you want to hire.

time_management 18y ago

Haven't RTFA yet, but it seems like any respectable VC would recuse him- or herself from any funding decision in which personal relationships might be involved.

time_management 18y ago
-1?!? Seafood soup!

maxklein 18y ago

Personally, I think it's just the start. It's my opinion that we are at the very beginning of another game changing event (like the internet). Computers are going to become tiny things like the iPhone, and you come home, stick it in your docking station and your desktop pops up. Apps will have to scale from very tiny screens to massive 30 inch monitors. Things, them are going to be different real soon, like the gospel singers used to sing. Software will be deployed over the air, just like the iPhone app store. That's why google has a phone, that's why yahoo is making YUI, that's why google allows everyone use its charts API for free. They are all trying to take control of the API for this new platform. The new world is not just internet based, it's apps built to be completely internet aware and to work with the internet all the time. Software is changing. It's no longer about writing an FTP client and selling a few thousand copies - when you think of an always on internet, easy distribution, and location awareness, a whole new class of apps will emerge. It's a big markets, and the business folk can see that.

prakash 18y ago
In addition, my bet is that the company that beats google will probably come out of this pack.
- vaksel 18y ago
  they may beat Google in that market, but I doubt they'll impact Google's current behemoths(Search/Adwords)
  - prakash 18y ago
    My bet is that it will be at least an order of magnitude more than google since a combination of mobile + apps + search/Adwords will have: 1. more information about you (location, etc.), 2. relevant & time based local ad inventory (e.g.: 3 pm you are in a mall near an ice-cream store and hence a free 2nd scoop coupon advertised to your phone) 3. much higher click through rates since it's more actionable and more importantly, useful i.e. ads that even hackers click on 4. In some cases might result in much higher CPM's, and a huge increase in ad volumes even for lower CPM's So, companies like Loopt are better positioned to take on Google than say Cuil, but hey, what do I really know.

hugh 18y ago

The article itself is a bit of a rant/whine (rhine?) but I found the bit of dialogue in the section "The VC mentality" interesting. To some extent I think the VC might actually be right here. I think some people get too caught up in the idea that there's a tiny minority of "great" programmers who can perform miracles, and everyone else is a mindless drone unworthy of coming anywhere near your code. I'm not saying that all programmers are equal, but if this guy can't even find _one_ programmer in the whole of Silicon Valley that he thinks is worthy of working on his project (which appears to be an iPhone-based grocery list -- not exactly the most intellectually demanding project in the world) then he might be looking for something that doesn't exist.

thaumaturgy 18y ago
I don't think it's unreasonable to say, "We're having trouble finding one great programmer". If a programmer is pretty good at what she does, then odds are she's already got a secure, comfortable, well-paid job. The VC might have suggested that extra money could attract a great programmer, but he didn't. I think it comes down to Ambrosia versus Microsoft. The author would prefer to produce software the way Ambrosia does. The VC prefers the Microsoft way.
- hassy 18y ago
  > If a programmer is pretty good at what she does, then odds are she's already got a secure, comfortable, well-paid job. Especially so if the programmer in question is a Mac/Cocoa programmer. There are few of them around, and chances are they are either working at Apple or doing their own thing.

jazj 18y ago

It's the Internet, you can swear here

pkaler 18y ago

You don't really need VC funding to launch most iPhone applications. The cost of development is so low compared to other types of development. I'm the lone programmer at my startup at the moment. However, I just left a team of 35 programmers trying to ship a PS3 game. I could see maybe 4-8 programmers top on an iPhone application project. There were 9 programmers on the last Sony PSP project I worked on. VCs don't want to fund that type of development either. They may fund an app that integrates somewhere in the cloud and also has a web interface. That's a bet that is actually big enough for them to care.

pg 18y ago

It's a sign of this guy's inexperience that he treats VCs as if they were all the same. In fact one of the most distinctive things about the VC world is how much variation there is in it. Partners at the top firms are clever and honest and expect to make money mostly from the fund's returns. Whereas the bottom half are basically in the business of generating management fees.

wheels 18y ago
An essay topic I'd find really interesting: A field guide to VC evaluation Your last essay was rather apt for where we're at right now (just getting into the fundraising waters), but terms like someone reputable are kind of hard to gauge -- especially in the somewhat inbred world of investment when you don't know who's buddies with whom and as such whose opinions are worthwhile. Here a lot of companies seem to be run by serial entrepreneurs, which often seem to be a little too buddied up with investors to side with first-timers when trying to shake out info about what dealing with them is like.
- pg 18y ago
  That would be a short essay. You just have to judge whether they're smart and honest. The reason that's hard is not that you need special techniques to do it, but that it's hard to judge someone during a brief meeting when they're also judging you. We just tell YC founders to ask us, and that probably is the most effective way to judge a VC: ask people who know him.
fallentimes 18y ago
Just like hedge funds.
comatose_kid 18y ago
DFJ is often considerd a top firm, but reading the first chapter of Founders at Work (Sabeer Bhatia's experience with DFJ) sure made me feel like they were out to screw Hotmail's founders.
- 18y ago

river_styx 18y ago

YES!! electric guitar riff

tedr 18y ago

Wow, this brings me back. Nothing makes VCs hotter than a nascent business with traction in a hot sexy space. They'll cool fast when they see the world isn't suddenly going to all get iPhones and leave everything else behind, but they are on it like spider monkeys right now