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Agreed. Bruce Schneier allocated a chapter in his last book, .A hacker's mind': "Venture capital itself is not a hack. The hack is when unprofitable companies

Agreed. Bruce Schneier allocated a chapter in his last book, .A hacker's mind': "Venture capital itself is not a hack. The hack is when unprofitable companies use VC funding to ignore the dynamics of the market economy. We don’t want some central planner to decide which businesses should remain operational and which should close down. But this is exactly what happens when venture capital firms become involved. The injection of VC money means that companies don’t need to compete with each other in the traditional manner, or worry about the normal laws of supply and demand. They can do what would normally be crazy things—give away their products, pay extravagant salaries, sustain enormous financial losses, provide a service that actually harms people—because of that external funding source. It’s basically central planning by elite investors, something that would be called communism if the government did it."

literalAardvark 3y ago
Hah, I'd given some thought to malinvestment in capitalism but never quite connected it to malinvestment under central planning. It feels about right... it's almost the same thing. Except there are multiple competing "central authorities" with money, so the ones who fuck up do get burned a lot harder than they would if they were part of the very big government.
jampekka 3y ago
That's more or less the opposite of communism.
- snapplebobapple 3y ago
  It's not really. Communism is just the super monopoly on everything by one firm (plus a bunch of kooky religious like beliefs). This subset of VC funding uses is basically abusing external funding to gain market dominance so that one can abuse your customers with product changes that make the product more profitable for you. It's very equivalent to how an oligopolist/monopolist enters new markets using money from the rest of the business to undercut everyone in the new market and push them out. It's bad for society, just like communism. This doesn't mean there's no place for VC funding, there's lots of legitimate uses for it (i.e. handling mismatched cost/revenue flows from expansion where there are a lot of upfront costs and cash flows come over the following years). Just that it's usually more profitable to be a monopolist/oligopolist and so that has been where the money has been flowing, at great detriment to society.
  - hellojesus 3y ago
    In every single example up to the parent comment, the end result is a market inequlabrium. Left unchanged, the market can have new entrants that undercut the major player. In this case, any new video playform that has fewer ads could steal market share from youtube. Rumble has entered the market to do just that. Network effects do make this challenging, but that is for the market to decide. The more creators that dual upload and then see number shifts over to a YouTube competitor, the better,as it will force YouTube back into competition. The market will solve this.
    - sweeter 3y ago
      I'm sorry to tell you this, but this is a complete fantasy that completely ignores the point that was made a couple of comments above. No one is undercutting Google. Period.and that is the point. They have a death grip on the user base. Just look at Twitter, it completely spit in everyone's faces and even still people cannot get out of its grips on them. The only platforms that have even remotely survived are platforms that also own an ad network, or some other secondary source of income (like Kick and their Crypto gambling site or Twitch with their ad stock) as a way to shovel users into that fire. The market cannot solve this and has no incentive to do so. Again, it's a complete fantasy that has not once proven true.
      - hellojesus 3y ago
        > Just look at Twitter, it completely spit in everyone's faces and even still people cannot get out of its grips on them. People can get out of them. People refuse to get out of them. Likely this is because YouTube and Twitter are still the most efficient platforms regardless of their regressions. I used to have FB. Now I don't. I used to have Twitter. Now I don't. I used to have Android. Now I have Grapheneos. I used to use gmail. Now I use Fastmail, Mailcow, and shared hosting. I used to have Instagram. Now I don't. You can decide to not be a user of a service. You can build your own! Or more easily, you can migrate to a competitor. All of this clamoring for more regulation is nonsense. We have a market that can solve these problems. But markets work by votes. The path is harder if you take the road less traveled.
keep_reading 3y ago
He's literally complaining about one of the worst "features" of fiat money but attacks Bitcoin in his other publications. Amazing.

literalAardvark 3y ago

Hah, I'd given some thought to malinvestment in capitalism but never quite connected it to malinvestment under central planning. It feels about right... it's almost the same thing. Except there are multiple competing "central authorities" with money, so the ones who fuck up do get burned a lot harder than they would if they were part of the very big government.

jampekka 3y ago

That's more or less the opposite of communism.

snapplebobapple 3y ago
It's not really. Communism is just the super monopoly on everything by one firm (plus a bunch of kooky religious like beliefs). This subset of VC funding uses is basically abusing external funding to gain market dominance so that one can abuse your customers with product changes that make the product more profitable for you. It's very equivalent to how an oligopolist/monopolist enters new markets using money from the rest of the business to undercut everyone in the new market and push them out. It's bad for society, just like communism. This doesn't mean there's no place for VC funding, there's lots of legitimate uses for it (i.e. handling mismatched cost/revenue flows from expansion where there are a lot of upfront costs and cash flows come over the following years). Just that it's usually more profitable to be a monopolist/oligopolist and so that has been where the money has been flowing, at great detriment to society.
- hellojesus 3y ago
  In every single example up to the parent comment, the end result is a market inequlabrium. Left unchanged, the market can have new entrants that undercut the major player. In this case, any new video playform that has fewer ads could steal market share from youtube. Rumble has entered the market to do just that. Network effects do make this challenging, but that is for the market to decide. The more creators that dual upload and then see number shifts over to a YouTube competitor, the better,as it will force YouTube back into competition. The market will solve this.
  - sweeter 3y ago
    I'm sorry to tell you this, but this is a complete fantasy that completely ignores the point that was made a couple of comments above. No one is undercutting Google. Period.and that is the point. They have a death grip on the user base. Just look at Twitter, it completely spit in everyone's faces and even still people cannot get out of its grips on them. The only platforms that have even remotely survived are platforms that also own an ad network, or some other secondary source of income (like Kick and their Crypto gambling site or Twitch with their ad stock) as a way to shovel users into that fire. The market cannot solve this and has no incentive to do so. Again, it's a complete fantasy that has not once proven true.
    - hellojesus 3y ago
      > Just look at Twitter, it completely spit in everyone's faces and even still people cannot get out of its grips on them. People can get out of them. People refuse to get out of them. Likely this is because YouTube and Twitter are still the most efficient platforms regardless of their regressions. I used to have FB. Now I don't. I used to have Twitter. Now I don't. I used to have Android. Now I have Grapheneos. I used to use gmail. Now I use Fastmail, Mailcow, and shared hosting. I used to have Instagram. Now I don't. You can decide to not be a user of a service. You can build your own! Or more easily, you can migrate to a competitor. All of this clamoring for more regulation is nonsense. We have a market that can solve these problems. But markets work by votes. The path is harder if you take the road less traveled.

keep_reading 3y ago

He's literally complaining about one of the worst "features" of fiat money but attacks Bitcoin in his other publications. Amazing.