4 ms·
Not sure that signaling & social status lead however to success
by nbstme 5y ago
Not sure that signaling & social status lead however to success
- m_ke 5y agoIf your goal is to maximize the rate of return you pump a lot of cash into a startup, force them to spend it on heads and marketing then ask your friend to 10x the valuation in 12 months.
- nbstme 5y agoHaha true! Although it's the "not realized rate of return." That might be good enough to raise another fund and live out of generous management fees, but it is not sufficient to realize financial performance - making money when the business sells out or IPO.
- m_ke 5y agoPublic markets have the same incentives, as long as there's growth stonks go up. Late stage firms have relationships with banks and the return of SPACs made dumping roided up donkeys easier than ever.
- nbstme 5y agoWarren Buffet claims that his mentor Benjamin Graham once wrote: "In the short run, the market is a voting machine, but in the long run, it is a weighing machine" In the long run, fundamentals matter, and only the best business thrives.
- m_ke 5y agoYes but VC funds have a fixed window, their goal is to deploy their money in the first 3-5 years and show returns in under 10.
- vanusa 5y agoIf the goal is to create a successful product, then no. If the goal is to get another round of funding from, or bought by someone with tons of cash but lazy in the diligence department -- then it can definitely "work".