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I don't know if this is true or isn't true, but Google Ventures' counter arguments are red herrings: "I don't know what Paul's thinking," Maris said. "It's

by vnorby 14y ago

I don't know if this is true or isn't true, but Google Ventures' counter arguments are red herrings: "I don't know what Paul's thinking," Maris said. "It's just not true. Our portfolio speaks for itself." and "We've already closed investments on companies from this class, so they don't seem to feel that way," Maris said. Neither of those things mean that what PG is saying is false. Google Ventures is a desirable investor and entrepreneurs would be willing to trade lower caps for a Google stamp of approval on their round. The question is whether it's a matter of their policy to quote a cap at half of a company's existing one, and whether that is an ethical policy. Because they are skirting the question, it certainly makes them look guilty to me.

loceng 14y ago
Guilty of leveraging their name and resources they perhaps offer?
- slurgfest 14y ago
  I am afraid that unless Google is compelling people to accept a deal by force, that using a good bargaining position is just the free market at work.
qq66 14y ago
How could it be unethical? I could offer Ferrari $500 for their latest model -- they would would tell me to stick it where the sun don't shine, but it hardly makes the offer unethical. If I was Jay-Z, they'd probably accept my offer for the publicity value, which is what Google is hoping happens to them.
- blahedo 14y ago
  It'd be unethical if you knew $500 was undervalued and you thought Ferrari didn't, i.e. if they were inexperienced and possibly accidentally undervaluing their own car. Then you would be taking advantage of them.
  - qq66 14y ago
    The article suggests that Google is offering half of what the entrepreneurs have already been offered. So the hypothetical Ferrari guy is choosing to sell to me for $500 over another offer for $1,000, even if the true value is $50,000.
  - wtvanhest 14y ago
    I disagree. The CEO of a startup is an adult, maybe a young one, but an adult no less. They need to know what is over and undervalued for their company. On the other hand, the investor has a fiduciary responsibility to get the best round possible for their fund. In Google's case it is for their shareholders. In other words it would be unethical for the VC to not work to get the best valuation.
    - blahedo 14y ago
      Interesting code of ethics you're proposing there: that it's actually unethical not to take advantage of people, and your only ethical responsibility is to the people who pay you. Convenient, I'm sure.
      - wtvanhest 14y ago
        If you invested what you consider to be a large amount of money with a VC to produce a return for you over a 10 year period would your rather they: A) Care deeply about producing the highest return for you and in doing so use their expertise as negotiators including their competative advantage as a well branded firm (google). And in doing so dilute founders and less experienced investors in the process... B) Ask them to negotiate in a way which maximizes other investors' returns and founder returns at the expense of your own returns. Both cases you are paying them a fee to do this. If you answer B, I encourage you to leave a response explaining your position. Then consider you are a pension advisor who needs high returns to make sure that you will be able to pay the pensions of fire fighters. Would you make the same decision?
        akkartik 14y ago
- archangel_one 14y ago
  Ferrari hardly need Jay-Z (or anyone, really) for publicity, they're a household name on their own. I do see what you mean, but I'm not sure the metaphor really helps because it reverses who's the big and famous player.
wololo 14y ago
Thought this was amusing: From the article: Google Ventures managing partner Bill Maris blasted back, telling BI that Graham's accusations were "patently absurd." First example from http://en.wikipedia.org/wiki/Non-denial_denial#Types http://en.wikipedia.org/wiki/Non-denial_denial#Types: Characterizing a statement as "ridiculous" or "absurd" without saying specifically that it is not true
- xanados 14y ago
  I'm a little bit uncomfortable with that heuristic because sometimes things literally are absurd. I think in this case though, Bill Maris is literally not in a position to say whether they are coming in at half the value of other players. He probably doesn't know, or at least doesn't have as many data as Paul Graham.
rabidonrails 14y ago
^^ This is dead on. Summary: PG warns that he sees a pattern at Google Ventures. Google Ventures isn't denying or confirming anything in regards to PG's statement. Seems simple enough.
atakan_gurkan 14y ago
As ugly as it may be, this is _business_, a.k.a. capitalism. Trying to interpret it as everyday human interaction using concepts like "ethics" will fail. Skip this step and try to decide whether you are comfortable or not without using these models from your past (human interaction) experience.

by vnorby 14y ago

loceng 14y ago

Guilty of leveraging their name and resources they perhaps offer?

slurgfest 14y ago
I am afraid that unless Google is compelling people to accept a deal by force, that using a good bargaining position is just the free market at work.

qq66 14y ago

How could it be unethical? I could offer Ferrari $500 for their latest model -- they would would tell me to stick it where the sun don't shine, but it hardly makes the offer unethical. If I was Jay-Z, they'd probably accept my offer for the publicity value, which is what Google is hoping happens to them.

blahedo 14y ago
It'd be unethical if you knew $500 was undervalued and you thought Ferrari didn't, i.e. if they were inexperienced and possibly accidentally undervaluing their own car. Then you would be taking advantage of them.
- qq66 14y ago
  The article suggests that Google is offering half of what the entrepreneurs have already been offered. So the hypothetical Ferrari guy is choosing to sell to me for $500 over another offer for $1,000, even if the true value is $50,000.
- wtvanhest 14y ago
  I disagree. The CEO of a startup is an adult, maybe a young one, but an adult no less. They need to know what is over and undervalued for their company. On the other hand, the investor has a fiduciary responsibility to get the best round possible for their fund. In Google's case it is for their shareholders. In other words it would be unethical for the VC to not work to get the best valuation.
  - blahedo 14y ago
    Interesting code of ethics you're proposing there: that it's actually unethical not to take advantage of people, and your only ethical responsibility is to the people who pay you. Convenient, I'm sure.
    - wtvanhest 14y ago
      If you invested what you consider to be a large amount of money with a VC to produce a return for you over a 10 year period would your rather they: A) Care deeply about producing the highest return for you and in doing so use their expertise as negotiators including their competative advantage as a well branded firm (google). And in doing so dilute founders and less experienced investors in the process... B) Ask them to negotiate in a way which maximizes other investors' returns and founder returns at the expense of your own returns. Both cases you are paying them a fee to do this. If you answer B, I encourage you to leave a response explaining your position. Then consider you are a pension advisor who needs high returns to make sure that you will be able to pay the pensions of fire fighters. Would you make the same decision?
      - akkartik 14y ago
archangel_one 14y ago
Ferrari hardly need Jay-Z (or anyone, really) for publicity, they're a household name on their own. I do see what you mean, but I'm not sure the metaphor really helps because it reverses who's the big and famous player.

wololo 14y ago

Thought this was amusing: From the article: Google Ventures managing partner Bill Maris blasted back, telling BI that Graham's accusations were "patently absurd." First example from http://en.wikipedia.org/wiki/Non-denial_denial#Types http://en.wikipedia.org/wiki/Non-denial_denial#Types: Characterizing a statement as "ridiculous" or "absurd" without saying specifically that it is not true

xanados 14y ago
I'm a little bit uncomfortable with that heuristic because sometimes things literally are absurd. I think in this case though, Bill Maris is literally not in a position to say whether they are coming in at half the value of other players. He probably doesn't know, or at least doesn't have as many data as Paul Graham.

rabidonrails 14y ago

^^ This is dead on. Summary: PG warns that he sees a pattern at Google Ventures. Google Ventures isn't denying or confirming anything in regards to PG's statement. Seems simple enough.

atakan_gurkan 14y ago

As ugly as it may be, this is _business_, a.k.a. capitalism. Trying to interpret it as everyday human interaction using concepts like "ethics" will fail. Skip this step and try to decide whether you are comfortable or not without using these models from your past (human interaction) experience.