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I'd say that VC funding may be an inappropriate tool for that. VCs want you to either grow fast, or fail fast. Not necessarily to bring profit fast, but to visi

by nine_k 1y ago

I'd say that VC funding may be an inappropriate tool for that. VCs want you to either grow fast, or fail fast. Not necessarily to bring profit fast, but to visibly capture the market (see Uber). Move fast, break things, rework things every week, trigger that wave of sign-ups. Agriculture is much slower, every iteration may be is a year, or (in tropical climates) half a year. Microelectronics is comparably slow, and even more unforgiving about making mistakes. Building robots does not scale ls easily as producing chips, let alone software. These areas need a different model of investment, with a longer horizon, slower growth, less influence of fads, better understanding of fundamentals. In some areas, DARPA provided such investment, with a good rate of success.

bix6 1y ago
It shouldn’t be that way though. Venture capital is only for SaaS? It should be for technology in general. But the IRR demands are too much so it concentrates to SaaS.
- nine_k 1y ago
  VC capital is like a detonator. It seeks explosives, and when it finds them, produces spectacular fireworks that illuminate the entire industry, or even the entire world. It also ends up with a lot of duds, but it's OK by them. What VC capital is not interested in is regular fuel, which can burn steadily and expand gradually, without a shock wave. Such companies can be quite important. Say, GitHub was such a company for many years, before it took a large VC investment and got acquired MS. Investing in such companies requires much more diligence and foresight, maybe too much predictive power to work at mass scale. VCs' math only works because a single 1000x hit easily pays for a hundred of duds. If ROI per hit is 2-3x, and research required is 10x more deep, the prospects likely start to seem too bleak for folks with billions seeking return.
  - 0xDEAFBEAD 1y ago
    People in this thread act like VC is the only way to raise capital. Ever heard of getting a business loan? Even a lot of companies in the Valley could probably get one more easily than they might think, if they're profitable. You don't have to give up equity either.
    - BobbyTables2 1y ago
      Yeah, but how does one get a business loan, with real stuff at stake, when VCs are burning money like there’s no tomorrow? I especially dislike the way VC funded startups use VC dollars to effectively be a “loss leaders” for years to choke out the rest of the market. Who wants to risk their own capital or privately pooled funds against THAT?
      - 0xDEAFBEAD 1y ago
        >how does one get a business loan, with real stuff at stake Show them your finances and collateral to demonstrate that you'll be able to pay off the loan. >I especially dislike the way VC funded startups use VC dollars to effectively be a “loss leaders” for years to choke out the rest of the market. It's a fair point, but it's a point which does not apply to the industries we are discussing, which do not receive VC investment. I actually really like your point about Masayoshi Son-style investments which are just an attempt to entrench a monopoly. I'm no socialist, but if socialists called for identifying and taxing such investments, I wouldn't object. The trick is to distinguish between the WeWorks of the world, and the Boom Supersonic type companies which genuinely need gobs of capital for breakthrough innovation.
        galangalalgol 1y ago
        Wouldn't being aggressive about antitrust chill auch investments in the first place? Uber wouldn't have been so eager to overcome lyft if it knew that it would mean getting broken up or fined into unprofitability.
        0xDEAFBEAD 1y ago
        That's another approach. However, I think it's worth distinguishing if a company acquires market dominance because of merit, vs because it got a big infusion of cash. I somewhat dislike antitrust because it requires judgement calls on the part of regulators. I prefer simple, elegant rules. Just like in software development. Law should ideally be elegant, just like code.
- graycat 1y ago
  Early on, with a good technical background, I guessed that, of course, the key to success in technology was some good technology but soon discovered that VCs just want to make money, a lot of money, quickly, and otherwise will hear from the investors in their fund. Just heard of Palmer Luckey. Hmm! Money? No big staff, not much equipment, essentially just one person?? $1B+, quickly? Example: Taylor Swift. Did she ever hear of Linux???
  - graycat 1y ago
    Addition: Omitted the reports that Swift is worth $1B from her singing.
fxtentacle 1y ago
Yeah, it's almost as if prioritizing returns on investment over EVERYTHING!!! else has bad side-effects for the economy as a whole.
- MichaelZuo 1y ago
  It seems really unlikely so many elements of American society decided to prioritize returns simultaneously… but more like those who didn’t… eventually couldn’t compete anymore and left the market. Leaving behind only those completely focused on returns.
  - Fade_Dance 1y ago
    I'd reframe that slightly. There is a vast foundation of stable, optimized businesses that are in commoditized/low-growth ares. They function as the underpinnings of the American economy. When turning the spotlight to capital that is seeking returns, it is true that these areas may be mediocre places to deploy fresh capital, but it doesn't mean that these players aren't competing, and they will probably be cranking out sheet metal and port cargo logistics optimization well after 90% of the AI startups fold. The caveat is of course Private Equity, which is about 10 trillion in assets. They can derive high returns from these areas, but it requires leverage.
    - graycat 1y ago
      Okay, "logistics optimization"??? In the US there have been a few, i.e., apparently less than 20, universities with an applied math program up to date in and teaching optimization. Sooooo, anyone at all seriously interested, long, for decades, would, could, should visit some of those math programs, meet some of the profs, get recommendations for their former students, call them, chat, and offer a job better than their current lawn mowing, fast food restaurant kitchen cleaning, or car washing. Instead of just the US, might also consider Waterloo in Canada. Actually the Chair of my Ph.D. orals committee specialized in optimization in logistics. After sending 1000+ beautifully written resume copies and hearing back nothing, can begin to conclude that optimization is not a hot field and for highly dedicated optimizers who want to sleep on a cot in a single room, forgo bathing, most days eat bread, other days peanut butter, have no children, wife, or family contact, don't own a car, and must get any needed medical care from some of the last resort special clinics. Ah, real optimization!

by nine_k 1y ago

bix6 1y ago

It shouldn’t be that way though. Venture capital is only for SaaS? It should be for technology in general. But the IRR demands are too much so it concentrates to SaaS.

nine_k 1y ago
VC capital is like a detonator. It seeks explosives, and when it finds them, produces spectacular fireworks that illuminate the entire industry, or even the entire world. It also ends up with a lot of duds, but it's OK by them. What VC capital is not interested in is regular fuel, which can burn steadily and expand gradually, without a shock wave. Such companies can be quite important. Say, GitHub was such a company for many years, before it took a large VC investment and got acquired MS. Investing in such companies requires much more diligence and foresight, maybe too much predictive power to work at mass scale. VCs' math only works because a single 1000x hit easily pays for a hundred of duds. If ROI per hit is 2-3x, and research required is 10x more deep, the prospects likely start to seem too bleak for folks with billions seeking return.
- 0xDEAFBEAD 1y ago
  People in this thread act like VC is the only way to raise capital. Ever heard of getting a business loan? Even a lot of companies in the Valley could probably get one more easily than they might think, if they're profitable. You don't have to give up equity either.
  - BobbyTables2 1y ago
    Yeah, but how does one get a business loan, with real stuff at stake, when VCs are burning money like there’s no tomorrow? I especially dislike the way VC funded startups use VC dollars to effectively be a “loss leaders” for years to choke out the rest of the market. Who wants to risk their own capital or privately pooled funds against THAT?
    - 0xDEAFBEAD 1y ago
      >how does one get a business loan, with real stuff at stake Show them your finances and collateral to demonstrate that you'll be able to pay off the loan. >I especially dislike the way VC funded startups use VC dollars to effectively be a “loss leaders” for years to choke out the rest of the market. It's a fair point, but it's a point which does not apply to the industries we are discussing, which do not receive VC investment. I actually really like your point about Masayoshi Son-style investments which are just an attempt to entrench a monopoly. I'm no socialist, but if socialists called for identifying and taxing such investments, I wouldn't object. The trick is to distinguish between the WeWorks of the world, and the Boom Supersonic type companies which genuinely need gobs of capital for breakthrough innovation.
      - galangalalgol 1y ago
        Wouldn't being aggressive about antitrust chill auch investments in the first place? Uber wouldn't have been so eager to overcome lyft if it knew that it would mean getting broken up or fined into unprofitability.
        0xDEAFBEAD 1y ago
        That's another approach. However, I think it's worth distinguishing if a company acquires market dominance because of merit, vs because it got a big infusion of cash. I somewhat dislike antitrust because it requires judgement calls on the part of regulators. I prefer simple, elegant rules. Just like in software development. Law should ideally be elegant, just like code.
graycat 1y ago
Early on, with a good technical background, I guessed that, of course, the key to success in technology was some good technology but soon discovered that VCs just want to make money, a lot of money, quickly, and otherwise will hear from the investors in their fund. Just heard of Palmer Luckey. Hmm! Money? No big staff, not much equipment, essentially just one person?? $1B+, quickly? Example: Taylor Swift. Did she ever hear of Linux???
- graycat 1y ago
  Addition: Omitted the reports that Swift is worth $1B from her singing.

fxtentacle 1y ago

Yeah, it's almost as if prioritizing returns on investment over EVERYTHING!!! else has bad side-effects for the economy as a whole.

MichaelZuo 1y ago
It seems really unlikely so many elements of American society decided to prioritize returns simultaneously… but more like those who didn’t… eventually couldn’t compete anymore and left the market. Leaving behind only those completely focused on returns.
- Fade_Dance 1y ago
  I'd reframe that slightly. There is a vast foundation of stable, optimized businesses that are in commoditized/low-growth ares. They function as the underpinnings of the American economy. When turning the spotlight to capital that is seeking returns, it is true that these areas may be mediocre places to deploy fresh capital, but it doesn't mean that these players aren't competing, and they will probably be cranking out sheet metal and port cargo logistics optimization well after 90% of the AI startups fold. The caveat is of course Private Equity, which is about 10 trillion in assets. They can derive high returns from these areas, but it requires leverage.
  - graycat 1y ago
    Okay, "logistics optimization"??? In the US there have been a few, i.e., apparently less than 20, universities with an applied math program up to date in and teaching optimization. Sooooo, anyone at all seriously interested, long, for decades, would, could, should visit some of those math programs, meet some of the profs, get recommendations for their former students, call them, chat, and offer a job better than their current lawn mowing, fast food restaurant kitchen cleaning, or car washing. Instead of just the US, might also consider Waterloo in Canada. Actually the Chair of my Ph.D. orals committee specialized in optimization in logistics. After sending 1000+ beautifully written resume copies and hearing back nothing, can begin to conclude that optimization is not a hot field and for highly dedicated optimizers who want to sleep on a cot in a single room, forgo bathing, most days eat bread, other days peanut butter, have no children, wife, or family contact, don't own a car, and must get any needed medical care from some of the last resort special clinics. Ah, real optimization!