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How much longer will people continue trusting venture backed startups that are almost guaranteed to go belly up within 24 months? Instead of building on all of

• dag11 5y ago
  Who do we trust for longevity? On the other end of the spectrum is Google which also shutters many (most?) of their products after 24-48 months.
  • m_ke 5y ago
    Blender, Linux, VLC, Rails, Django, Numpy, etc There's really no reason why all of this software needs to be cloud based, other than vendor lock in. For collaboration software we should have a way to self host or pay for managed hosts.
  • deleted 5y ago
    [deleted]
• softwarebeware 5y ago
  Why not? As long as we're not locked in, if a product is good and we're early adopters we're getting the benefits from it that other people who are afraid to dip their toes in the water aren't getting.
• bin_bash 5y ago
  I think the question we need to ask ourselves is if they would exist without VC in the first place. A bunch of bootstrapped startups able to eek out a living through a relatively small number of subscriptions sounds wonderful, but is it realistic?
  • dbbk 5y ago
    Of course it is. Software has a very high margin. You could get by with a skeleton staff, and make a nice profit.
    • sokoloff 5y ago
      “Relatively small number of subscriptions” may not even pay for a skeleton staff, let alone leave a nice profit afterward.
    • nostrebored 5y ago
      Some software. Do you think companies catering to public sector or the enterprise are high margin in the first few years? Consumer apps can often get away with scaling ARR and slow incremental growth, but many of these are only feasible due to the existence of VC backed SaaS.
    • bin_bash 5y ago
      It also has a high start up cost—meaning the owners would have to be able to support themselves, their families, and pay for whatever costs the company needs until people are willing to pay for the software. That is, if such a day ever comes.
      • dbbk 5y ago
        Not necessarily, you can take another job to pay the bills. Or if you're in the UK we have dedicated benefits schemes to fund people starting a business.
  • nostrebored 5y ago
    I'm planning on starting a company within the next few years. I would not do it if VC money weren't on the table. I have a family, bills to pay, exactly $0 in generational wealth, but I'm well paid. I do not have the excess capital to throw at working on problems at the scale that I want to or in the segments that I'm interested in. Any money that I spent to work on these companies would be gambling with the future financial stability I can provide for my son. Providing him with the safety net necessary to pursue atypical career paths or interests is one of my top priorities. VC funding is the only way that starting a company is possible for me. The existence of VC funding is the only reason I'm even ideating about these large problems. It's an equalizer that puts those of us without the same set of options at a level playing field.
• nradov 5y ago
  More open source contributions are always good, but they don't accomplish much in the case of SaaS offerings. Ultimately someone has to pay to run the servers.
  • m_ke 5y ago
    Sure, but 90% of software doesn't need to be cloud based and with docker and k8s it would be hard to distribute an app like friday for users to self host. AWS and GCP could be a cloud app platform where each enterprise could run all of their apps on a single cluster instead of paying for 20 different SaaS offerings running on different clusters.
• jasonnchann 5y ago
  Never understood why you wouldn't, at the minimum, open source it if you're shutting the doors
  • johannes1234321 5y ago
    for open sourcing you have to be careful about licenses. As long as you are not "distributing" it is absolutely fine to mix GPLv2, Apache License and proprietary code you got from some vendor all together. But as soon as you distribute this, it becomes messy. And then come all the question on technical integrations, ego ("ugly code!!"), ...
    • bin_bash 5y ago
      It'd be pretty hard to litigate against a non-existent company.
  • lukethomas 5y ago
    I am considering it. I have a fiduciary duty to try to fetch a fair value for the assets, but if no one wants the codebase, I'd consider opening it up. Still TBD as I just announced this a couple days ago :)
    • jasonnchann 5y ago
      That makes sense. I was mainly wondering for old/past companies that don't end up selling their code base versus for Friday specifically. But maybe thats the answer, most companies end up selling their codebase and it does get reused. Good luck on everything!
  • pininja 5y ago
    I’m a huge advocate of this, and have seen it play out well with the Linux Foundation and Mapzen. In this case, their employees seemed to be very thoughtful about how their projects could live on and be useful beyond the company lifecycle. Aside from the code getting a license and legal audit, finding a trademark sponsor was important to them too so that someone doesn’t come along and re-commercialize their free and open work under the old brand. On the flip side, this process is a lot of extra work to do in a very busy and risky time for a buisness. Efforts to open source may fail and I understand when people in charge choose to spend their time prioritizing their employee’s needs first, technology second. I can understand why the open source priority isn’t practical if the company doesn’t plan for this possibility ahead of time.
• alexose 5y ago
  I would love to see startups adopt a "poison pill" clause that automatically switches their code over to the MIT license the moment a company goes under. The bigger risk however isn't just that a company goes poof, but that the IP gets purchased for pennies on the dollar by some other company. This is an escape hatch that I don't think many investors would give up willingly.
  • m_ke 5y ago
    Yes, that's definitely an issue with my company. We serve a pretty small niche and provide services to a few well funded competitors, I've gotten a few acquisition offers that would have really hurt my other customers if the deal went through. Since it's a core feature but not a differentiator for their businesses I'd love to just make all of it open source and charge all of them to keep maintaining it but there's not an easy way to do that currently without devaluating it.
  • rsstack 5y ago
    Code escrow and SaaS escrow are both guarantees that exist. Larger customers can negotiate it if they aren't sure what will be the future of the company. Redis (back when they were called RedisLabs) used to offer that for their proprietary components several years ago, although in hindsight it clearly wasn't needed in their case.
  • ezekg 5y ago
    Sounds like a cool startup idea -- a company like codekeeper.co but for documenting and open sourcing a product given they go poof. All the legalese that would entail and integration with source control included, of course.
• duxup 5y ago
  Developers like to try new things. People generally don't want to pay for things / fund things themselves. For now on the internet this is the way, and IMO we as the users of the internet are somewhat the cause too.
• mountainofdeath 5y ago
  The VC model requires continuous unicorns with clean exits in a sea of misses to be able to hit the typical 30% IRR they promise to pension funds, endowments, Bill Gates and Co, etc. Lifestyle businesses are actively avoided for this reason. It's one if the reasons I avoid working for bootstrapped startups or startups with no-name VCs.
  • m_ke 5y ago
    Yes continuous stream of pump and dumps that get marked up at every round and never make a profit but make early shareholders rich.
    • mountainofdeath 5y ago
      Ideally no and traditionally it wasn't. VC was originally intended for big, high-risk, high-reward technical ideas like semiconductors (Intel, Nvidia), widespread software e.g. Google, medical devices, biotech, etc. In general, taking a novel approach to something or doing something totally new. Only in recent times did pumping and dumping yet another B2B SaaS app become in vogue and usually by not tier-one funds. There is a reason the big, famous funds are oversubscribed and limited to big, famous institutional investors.** ** The same applies to other funds e.g. Hedge Funds. Only the very top consistently perform anywhere near their promises and the rest are ways for groups to try to get their foot in the door.
      • m_ke 5y ago
        Precisely "was". Top tier firms are actually the ones most guilty of it these days. They raise huge funds (thanks to Softbank) and attempt to buy their way into monopoly positions by selling dollars for 50 cents, manufacturing growth and then dumping the companies on the public market (these days through SPACs). Public markets are no different than private, it's the same group of individuals just further down the chain, with the same incentives to push up valuations knowing that stonks can only go up and when things go bad we'll be on the hook to rescue them, or if things are not catastrophic they'll just write off the losses or let main street investors on robinhood catch the falling knife.
• epolanski 5y ago
  > How much longer will people continue trusting venture backed startups that are almost guaranteed to go belly up within 24 months? A lot. We are raising generations that hail hashes representing urls to some origin server hosting a picture of a stylized horse (till the origin server doesn't shut down or changes the resource) over real estate, traditional stocks or even just luxury or anything you can touch or use. We hail as heroes few dozens of crazy dudes putting all their life savings into meme stocks and picture them as heroes fighting against "the system". We hail as heroes controversial entrepeneurs, generally sociopaths full of themselves, rather than hard working common people. We are creating generations of ever more connected but lonely individuals desperately trying to find their place in the world, and somehow, we tell them that money is the answer for finding that place and purpose. There is no shortage of people desperate for "making it" with ease and willing to take huge risks. Go on reddits or boards related to personal finance, risky crypto speculation and meme stocks are discussed more than taxes, education investments or simple funds. I think VC craziness is going to increase a lot and spread to places and countries where it wasn't the norm, that's up to you to decide whether it's good or not.
  • frankthedog 5y ago
    Who is we? I sure don’t. The vocal minority that lionizes this behavior is just that, a minority.
    • epolanski 5y ago
      Our society, especially in western cultures.
• lpolovets 5y ago
  Isn't this a risk with apps in general, not just VC backed ones? I skimmed the blog post and it sounds like they had a hard time monetizing the product. That could happen with a bootstrapped project too: someone builds something cool in their spare time, launches it, gets enough users to spend more time on it for a while, then realizes it's too hard to monetize or they want to work on something else or whatever and shuts the project down.