4 ms·
Revenue is a bad predictor of future value for a network effect business (here a literal network). VC is supposed to seek high risk / high reward investments ov
by joewadcan 4y ago
Revenue is a bad predictor of future value for a network effect business (here a literal network). VC is supposed to seek high risk / high reward investments over 5+ year periods - especially ones that have a self-reinforcing moat like a physically distributed network.
- erulabs 4y agoI understand what the logic is - I'm only suggesting that there is a gross disconnect between the capital available to grow small but profitable businesses and the capital available to gamble on a high-risk / high-reward situations where the "reward" is a share of a quasi-monopoly that more or less executed a hostile market takeover. That isn't so much capital allocation as something else entirely.
- delabay 4y agoSounds like your issue is with capitalism and not helium
- dcolkitt 4y agoThere's plenty of capital to grow small but profitable businesses. But it generally comes from in the form of a small business loan from a regional bank. Venture capital is explicitly a model seeking homeruns not singles. Being mad at a16z for not investing in your online t-shirt business makes about as much sense as being mad at Warren Buffet for not investing in complex interest rate derivatives.