5 ms·

My view: look at most of the real problems we face today. They require solutions consisting of: 1) Engineering (what software folks call hardware), especially

My view: look at most of the real problems we face today. They require solutions consisting of: 1) Engineering (what software folks call hardware), especially cross-functional engineering across several fields, such as chemical and electrical. 2) Software, typically including applications of ML. 3) R&D. Research And Development, folks. The thing investors don't want you to do. Those types of companies will almost never come out of venture capital. They start with a small founder investment (what VCs tell us is called 'bootstrapping'), significantly supported by federal government grants and contracts (the best source of funding for true R&D), and then product development and commercialization. The ZIRP-era of pure software, VC-driven type of technology entrepreneurship tries to skip all the way to the end, scale beyond all bounds, and exit big and fast. No wonder we're experiencing groupthink, and why the Bay Area is hollowing out: in this form of technology entrepreneurship, there is no deep economic basis for growth. In short: technology entrepreneurs should take on technology risk. That means raising capital late, not early, because investors will always be skittish about R&D and longer timeframes. And it means following your own vision first and foremost, rather than letting venture capitalists define how you see the world. Investors are not where the action is. It is founders and early employees who built the likes of Sony, Qualcomm, General Atomics -- each of these, a real technology company.

rohansingh 2y ago
You captured some of the ideas that have been swimming around in my brain for a little while and really crystallized them. Couldn't agree more.
steveBK123 2y ago
Yeah I think in a generation we will look back at the ZIRP era and be bewildered by how little we got out of it. Hard physical engineering R&D, physical infrastructure improvements, mass transit, high speed rail, etc? No. We got B2B SaaS apps. If ZIRP wasn't the era we could fund such long payoff projects, then when will there ever be a possibility?
- no_wizard 2y ago
  For some of this, it shouldn't be private capital (such as infrastructure improvements) funding it, it should be public funds. The venture capital model is not a good fit for that, simply based on the evidence available, IE the distinct lack of funding for non-software solutions in the space. SpaceX is a wonderful example of this as well. Elon Musk funded SpaceX, then investors followed much later, mostly due to StarLink and its potential, I imagine. We need better government funding and we definitely need to re-evaulate how grants are structured, the funding tends to be very narrowly specified that you can't solve adjacent problems with the funding as it would be a violation of the terms of the grant. That sort of thing needs to be better accounted for and it isn't today, at least not always.
  - jordanb 2y ago
    I thought one of the underlying reasons for ZIRP was a massive public underinvestment. Basically the supply of government debt was so restricted and the demand for it was so high that people were willing in many cases to pay the government to take their money.
- threeseed 2y ago
  B2B SaaS has been around for years and genuinely solves a problem i.e. most companies struggle to run on-premise applications well. The issue for me is far more Crypto and AI where ridiculous amounts of money has been spent with little to show for it.
- jordanb 2y ago
  I suspect it was really a matter of how VC sold itself in a ZIRP environment. They were "the yield guys" in an environment where there was no yield. They could have advertised themselves as "we're making big long term investments in serious innovation that will maybe pay out in the distant future" and they probably could have raised money that way in an environment where money was basically free, but not as much. So instead we got "we're making the world a better place through paxos algorithms for consensus protocols."
- throwaway42668 2y ago

rohansingh 2y ago

You captured some of the ideas that have been swimming around in my brain for a little while and really crystallized them. Couldn't agree more.

steveBK123 2y ago

Yeah I think in a generation we will look back at the ZIRP era and be bewildered by how little we got out of it. Hard physical engineering R&D, physical infrastructure improvements, mass transit, high speed rail, etc? No. We got B2B SaaS apps. If ZIRP wasn't the era we could fund such long payoff projects, then when will there ever be a possibility?

no_wizard 2y ago
For some of this, it shouldn't be private capital (such as infrastructure improvements) funding it, it should be public funds. The venture capital model is not a good fit for that, simply based on the evidence available, IE the distinct lack of funding for non-software solutions in the space. SpaceX is a wonderful example of this as well. Elon Musk funded SpaceX, then investors followed much later, mostly due to StarLink and its potential, I imagine. We need better government funding and we definitely need to re-evaulate how grants are structured, the funding tends to be very narrowly specified that you can't solve adjacent problems with the funding as it would be a violation of the terms of the grant. That sort of thing needs to be better accounted for and it isn't today, at least not always.
- jordanb 2y ago
  I thought one of the underlying reasons for ZIRP was a massive public underinvestment. Basically the supply of government debt was so restricted and the demand for it was so high that people were willing in many cases to pay the government to take their money.
threeseed 2y ago
B2B SaaS has been around for years and genuinely solves a problem i.e. most companies struggle to run on-premise applications well. The issue for me is far more Crypto and AI where ridiculous amounts of money has been spent with little to show for it.
jordanb 2y ago
I suspect it was really a matter of how VC sold itself in a ZIRP environment. They were "the yield guys" in an environment where there was no yield. They could have advertised themselves as "we're making big long term investments in serious innovation that will maybe pay out in the distant future" and they probably could have raised money that way in an environment where money was basically free, but not as much. So instead we got "we're making the world a better place through paxos algorithms for consensus protocols."
throwaway42668 2y ago