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> Have you ever wished that you had somehow invested in Facebook, Twitter, or Google before those companies became billion-dollar brands, back when they were fi

by tansey 15y ago

> Have you ever wished that you had somehow invested in Facebook, Twitter, or Google before those companies became billion-dollar brands, back when they were first getting started? Replace those company names with Color, Pets.com, and Webvan. Do you really think the public is capable of properly assessing the risk of such investments? The qualified investor regulations were put in place for a good reason. I believe there are also loopholes for domain experts who do not meet the financial qualifications, so most HN users are not actually barred from investing in startups. So really, it's just a matter whether unqualified investors should be allowed to risk a substantial portion of their net worth on a startup. Keeping in mind that a large number of people still fall victim to Nigerian 419 email scams, I am not so sure this capability is really a benefit to society.

IanDrake 15y ago
>Do you really think the public is capable of properly assessing the risk of such investments? No, but now ask me if I think the government should get to tell me if I'm capable.
sologoub 15y ago
What I'm reading in your sentiment is that you believe that such regulation prevents the "hard sales" approach of getting people to invest wonderfully demonstrated by the junk bonds and Boiler Room movie. And I agree with you - such crap tactics are what ruins it for the rest of us. But I also don't believe that simply barring access is the right way to go. In an environment where barriers to entry are falling everywhere, the funding aspect still remains the most difficult. A talented small group of engineers can put together solutions that rivals the best of fortune 100 companies, but those same engineers are usually not capable of marshaling the resources they need to execute, often more efficiently than their big company counterparts. Start-ups are super risky. If people understand that, and have means to diversify, than we have a good model. To me, Kickstarter is an awesome way to crowdfund for a product or a finite project. By promising something in return, you essentially get a head start on sales revenue, and use it to fund the development.
- asmithmd1 15y ago
  Do these boiler room operations hurt any more people than what is going on at big banks? Bank of America tellers are only too happy to suggest that a retiree who happens to have a few thousand in the their checking account speak to the nice Merrill Lynch representative.
  - a3camero 15y ago
    To be fair to big banks (this doesn't sound like me...), the boiler room operator steals all of your money and the bank doesn't. You might not get the return you're expecting but at least they won't straight up steal from you. It is different.
littlegiantcap 15y ago
I understand your concerns, but much of this risk could be mitigated by using a smart platform to root out scams. Beyond this, I reject this idea that people aren't smart enough to figure out what to do with their own money. The government should not be in the business of telling people whether or not they can invest in startup, and as long as there's a smart platform on which to facilitate such transactions that stresses due diligence on the part of the investor I fail to see the problem.

by tansey 15y ago

IanDrake 15y ago

>Do you really think the public is capable of properly assessing the risk of such investments? No, but now ask me if I think the government should get to tell me if I'm capable.

sologoub 15y ago

What I'm reading in your sentiment is that you believe that such regulation prevents the "hard sales" approach of getting people to invest wonderfully demonstrated by the junk bonds and Boiler Room movie. And I agree with you - such crap tactics are what ruins it for the rest of us. But I also don't believe that simply barring access is the right way to go. In an environment where barriers to entry are falling everywhere, the funding aspect still remains the most difficult. A talented small group of engineers can put together solutions that rivals the best of fortune 100 companies, but those same engineers are usually not capable of marshaling the resources they need to execute, often more efficiently than their big company counterparts. Start-ups are super risky. If people understand that, and have means to diversify, than we have a good model. To me, Kickstarter is an awesome way to crowdfund for a product or a finite project. By promising something in return, you essentially get a head start on sales revenue, and use it to fund the development.

asmithmd1 15y ago
Do these boiler room operations hurt any more people than what is going on at big banks? Bank of America tellers are only too happy to suggest that a retiree who happens to have a few thousand in the their checking account speak to the nice Merrill Lynch representative.
- a3camero 15y ago
  To be fair to big banks (this doesn't sound like me...), the boiler room operator steals all of your money and the bank doesn't. You might not get the return you're expecting but at least they won't straight up steal from you. It is different.

littlegiantcap 15y ago

I understand your concerns, but much of this risk could be mitigated by using a smart platform to root out scams. Beyond this, I reject this idea that people aren't smart enough to figure out what to do with their own money. The government should not be in the business of telling people whether or not they can invest in startup, and as long as there's a smart platform on which to facilitate such transactions that stresses due diligence on the part of the investor I fail to see the problem.