3 ms·
The VC model is to blame, I think. The default VC calculation goes something like this. $100 million fund invested in 20 companies at $5 each. 18 or so go bust,
by gizmo 4y ago
The VC model is to blame, I think. The default VC calculation goes something like this. $100 million fund invested in 20 companies at $5 each. 18 or so go bust, break-even, get acquihired. The remaining two return maybe $100m each after 10 years. With this outcome the VC fund has a meager return, barely outperforms the S&P on a risk-adjusted basis.
What VCs are really looking for are big multibillion dollar exits. And you can't get there by selling $50 perpetual usage licenses to consumers.
It's a real shame, because most software I use can be written by a handful of good engineers in a couple of years. You can make great software that stands the test of time this way. But businesses that operate this way are not investible. And they now have to compete with free products dumped on the market by goliaths such as MS and Apple, and with free products made by venture backed companies that just want to gobble up market share, aiming for a monetizable monopoly down the road.
- civilized 4y agoSounds like VCs are going to have to either live with lower returns or get much, much better at picking winners.
- malloryerik 4y ago> It's a real shame, because most software I use can be written by a handful of good engineers in a couple of years. And what if the engineers bootstrap instead of taking VC lucre?
- cercatrova 4y agoThen they should be even more amenable to offering subscriptions. Unlike VCs, bootstrappers can't afford to sell only one time licenses to their products, especially at a sub 10 dollar price.