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This phenomenon is largely due to the inability or perhaps unwillingness of venture capitalists to identify outlier businesses. The recent generation of startup

This phenomenon is largely due to the inability or perhaps unwillingness of venture capitalists to identify outlier businesses. The recent generation of startup investors turned the industry into a rent-extraction scheme by chasing growth and paper markups over identifying valuable businesses. And research now shows that most of the popular heuristics VCs' use to select startups are negatively correlated with returns. One solution is simply to disendow large VC funds, and change the processes limited partners use to select investors. https://www.wired.com/story/to-save-the-innovation-economy-break-big-venture-capital/ https://www.wired.com/story/to-save-the-innovation-economy-b... https://www.theinformation.com/articles/venture-capital-isnt-the-problem-its-venture-capitalists?rc=ovijbh https://www.theinformation.com/articles/venture-capital-isnt...

zackmorris 3y ago
Thank you for formally describing what's been bothering me about the VC system. To me, we're living in a bizarro reality that's the opposite of the original 90s vision of the web. The idea then was that geeks living in their parents' basements could build stuff like Netscape, eBay, PayPal, etc on a shoestring budget in the low $10,000s and disrupt established monopolies/evil-corps (Microsoft at that time) in the status quo. But today that's been replaced by VC gatekeeping, so now we have to live where the "network" is, San Francisco or wherever, and rub shoulders with someone who knows a VC and has access to the millions of dollars needed to start a startup and hire programmers for $150k per year or more. Maybe we build SAAS products and need a network of salespeople too. And advertising isn't enough, now we have to find an influencer to endorse our product because merit isn't enough. This is how meritocracy becomes illusion. I mean that's cool and everything, it's fun to make money, but we're still under the yoke like any other job. The dream of real independence is all but dead. We find ourselves locked into a mature and successful model whose main product is a failure rate so high that many of us haven't had a win in our entire careers. We just try to rescue project after project, fail, and our work gets thrown away. For every winner, there are 10, 100, 1000 or more losers who tried to build the exact same thing and got beaten to the finish line. I would propose that a better system looks like the opposite of all this. Rather than putting all of our eggs in one basket with unicorns, we should be casting a wide net. I still believe that nearly every programmer would work for room and board if it meant total control of their creative vision. Small teams paying perhaps $24k or $36k per year to each developer, with enough runway to last at least 2-3 years. Focusing on getting real work done above all. And most importantly, creating a pay-it-forward culture with a broad goal like providing UBI within our lifetimes to free people from servitude. Meaning something like a tech guild where members take an oath to pay some portion of their earnings into a pot shared by everyone. 1% of a successful billion dollar exit is $10 million, enough to materially change the lives of perhaps 100-1000 other developers at $10-$100k each. Imagine what could be done with 10%, or 50%.. instead of having 1 trillionaire who owns the world with all of us becoming renters. This voluntary wealth redistribution is a soft form of (cough) socialism. The inevitable conclusion of this line of thought is that our current crony capitalist system is not compatible with a benevolent future for tech workers. Currently every innovation enriches a handful of key players at the expense of everyone else. We feel this everywhere, in the long hours, lack of pay raises, ever-increasing rents, loss of personal autonomy. And soon in our unemployment as AI solves the last challenge of computer science, programming itself. This is why I've been disappointed with HN lately, for not anticipating these eventualities. I'm saddened that it's abandoned its original vision of handing out life-changing grants to a large number of promising developers and projects. And worry now that maybe its participation in the doubling-down on winner-take-all capitalism is speeding us faster towards the looming cliff. For all of their resources, if they can't change course, I wonder if they're really who they think they are, or just another arm of the status quo. I really hope I'm wrong, because I love most of what they're doing, but I can't shake the feeling that something's off. Edit: after writing this, I realized that it's aligned with academia, where successful alumni pay into a trust/endowment whose interest/dividends pay for future students' education, even at the most exclusive schools like Harvard. NASA maybe follows this model somewhat, using government funding to invent solutions used by the public. So maybe the private sector simply can't do this, and our resources might be better invested somewhere else where they can help the collective good.
- unusualmonkey 3y ago
  Sounds like this would be a good system to have a bunch of idealistic developers work on pet tech projects. This doesn't sounds like a goopd system to encourage developers to work on business problems - which are often boring and require painful work such as talking to people.
  - zackmorris 3y ago
    Let's double check your logic against the current VC system: Sounds like this would be a good system to have a bunch of idealistic developers work on business problems - which are often boring and require painful work such as talking to people. This doesn't sound like a good system to encourage developers to work on pet tech projects. You've articulated the main criticism of the status quo. That by its nature de-prioritizes the idealism that produces unicorns. Never mind the effects of that on dreamers who find it difficult to subsist in a stifling world that wasn't designed for them. This is why I feel that this is a dark future at odds with the original spirit of the web. But hey, it makes some people billions of dollars and all it cost us was the life we might have had.
    - unusualmonkey 3y ago
      What makes you think that 'idealism' is what produces unicorns? What makes you think startups are about 'dreamers who find it difficult to subsist in a stifling world'? I feel like you misunderstand startups. Startups aren't machines designed to let engineers do whatever they want. Startups are businesses that attempt to find and exploit oppertunities in the market. Since technology is new, and poorly adopted in many indistries, it tends to be used to do this. Or to flip it around - you're entirely welcome to spend as much time as you'd like building 'idealistic' software that challenges the 'status quo'. Nothing is going to 'stifle' that. However, if you want other people to spend thier time and thier resources supporting and helping you, then you need to find a way to convince them. Startups are one way to do that, but businesses are full of compromise and you may not find it suits the idealism you desire.

zackmorris 3y ago

Thank you for formally describing what's been bothering me about the VC system. To me, we're living in a bizarro reality that's the opposite of the original 90s vision of the web. The idea then was that geeks living in their parents' basements could build stuff like Netscape, eBay, PayPal, etc on a shoestring budget in the low $10,000s and disrupt established monopolies/evil-corps (Microsoft at that time) in the status quo. But today that's been replaced by VC gatekeeping, so now we have to live where the "network" is, San Francisco or wherever, and rub shoulders with someone who knows a VC and has access to the millions of dollars needed to start a startup and hire programmers for $150k per year or more. Maybe we build SAAS products and need a network of salespeople too. And advertising isn't enough, now we have to find an influencer to endorse our product because merit isn't enough. This is how meritocracy becomes illusion. I mean that's cool and everything, it's fun to make money, but we're still under the yoke like any other job. The dream of real independence is all but dead. We find ourselves locked into a mature and successful model whose main product is a failure rate so high that many of us haven't had a win in our entire careers. We just try to rescue project after project, fail, and our work gets thrown away. For every winner, there are 10, 100, 1000 or more losers who tried to build the exact same thing and got beaten to the finish line. I would propose that a better system looks like the opposite of all this. Rather than putting all of our eggs in one basket with unicorns, we should be casting a wide net. I still believe that nearly every programmer would work for room and board if it meant total control of their creative vision. Small teams paying perhaps $24k or $36k per year to each developer, with enough runway to last at least 2-3 years. Focusing on getting real work done above all. And most importantly, creating a pay-it-forward culture with a broad goal like providing UBI within our lifetimes to free people from servitude. Meaning something like a tech guild where members take an oath to pay some portion of their earnings into a pot shared by everyone. 1% of a successful billion dollar exit is $10 million, enough to materially change the lives of perhaps 100-1000 other developers at $10-$100k each. Imagine what could be done with 10%, or 50%.. instead of having 1 trillionaire who owns the world with all of us becoming renters. This voluntary wealth redistribution is a soft form of (cough) socialism. The inevitable conclusion of this line of thought is that our current crony capitalist system is not compatible with a benevolent future for tech workers. Currently every innovation enriches a handful of key players at the expense of everyone else. We feel this everywhere, in the long hours, lack of pay raises, ever-increasing rents, loss of personal autonomy. And soon in our unemployment as AI solves the last challenge of computer science, programming itself. This is why I've been disappointed with HN lately, for not anticipating these eventualities. I'm saddened that it's abandoned its original vision of handing out life-changing grants to a large number of promising developers and projects. And worry now that maybe its participation in the doubling-down on winner-take-all capitalism is speeding us faster towards the looming cliff. For all of their resources, if they can't change course, I wonder if they're really who they think they are, or just another arm of the status quo. I really hope I'm wrong, because I love most of what they're doing, but I can't shake the feeling that something's off. Edit: after writing this, I realized that it's aligned with academia, where successful alumni pay into a trust/endowment whose interest/dividends pay for future students' education, even at the most exclusive schools like Harvard. NASA maybe follows this model somewhat, using government funding to invent solutions used by the public. So maybe the private sector simply can't do this, and our resources might be better invested somewhere else where they can help the collective good.

unusualmonkey 3y ago
Sounds like this would be a good system to have a bunch of idealistic developers work on pet tech projects. This doesn't sounds like a goopd system to encourage developers to work on business problems - which are often boring and require painful work such as talking to people.
- zackmorris 3y ago
  Let's double check your logic against the current VC system: Sounds like this would be a good system to have a bunch of idealistic developers work on business problems - which are often boring and require painful work such as talking to people. This doesn't sound like a good system to encourage developers to work on pet tech projects. You've articulated the main criticism of the status quo. That by its nature de-prioritizes the idealism that produces unicorns. Never mind the effects of that on dreamers who find it difficult to subsist in a stifling world that wasn't designed for them. This is why I feel that this is a dark future at odds with the original spirit of the web. But hey, it makes some people billions of dollars and all it cost us was the life we might have had.
  - unusualmonkey 3y ago
    What makes you think that 'idealism' is what produces unicorns? What makes you think startups are about 'dreamers who find it difficult to subsist in a stifling world'? I feel like you misunderstand startups. Startups aren't machines designed to let engineers do whatever they want. Startups are businesses that attempt to find and exploit oppertunities in the market. Since technology is new, and poorly adopted in many indistries, it tends to be used to do this. Or to flip it around - you're entirely welcome to spend as much time as you'd like building 'idealistic' software that challenges the 'status quo'. Nothing is going to 'stifle' that. However, if you want other people to spend thier time and thier resources supporting and helping you, then you need to find a way to convince them. Startups are one way to do that, but businesses are full of compromise and you may not find it suits the idealism you desire.