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>>In the US, we seem to have this sense of superiority on this issue, but I think our tolerance of risk is paper-thin. It's superficial. Hmmm... Judging by the

by Surio 14y ago

>>In the US, we seem to have this sense of superiority on this issue, but I think our tolerance of risk is paper-thin. It's superficial. Hmmm... Judging by the overall comments so far, it seems every culture seems to has an acute (and accurate) sense of its own thin-skinnedness that another cultures' perception of them. Most of the points you make is validated by another article making rounds in the first page here: http://news.ycombinator.com/item?id=5270460 http://news.ycombinator.com/item?id=5270460 From the article linked to that thread: When I was raising my first round, it fell apart because an A-list investor who had given us a verbal commitment backed out. He did this because he had heard from his friend, who I had went out for beers with, said that we were struggling and unsure of what we were doing. >> The problem is that human nature is to pick leaders based on apparent success, and to ostracise failures. Given that you've framed it like so, that nails it then? Status quo as it is now, is not going to change anytime soon! Let's stop wasting our time and get on with the rest of our lives, doing whatever it is that we are currently doing, eh? :-| [wry smiley] P.S: Not being sarcastic, or picking on you in my reply. Hope that comes out clear :-/

michaelochurch 14y ago
These problems are easy to diagnose and hard to solve. The problem with VC-istan is collusion. As a group, they decide who's hot, who's credible, and who's a loser. Rather than competing with each other, VCs communicate in all sorts of inappropriate ways and make these decisions as a herd. This means there isn't a fair market. The powerful people on one side have found it more advantageous to be in each others' good graces than to compete with each other, which would favor people they don't care about. One thing I've learned having studied history is that the best thing for smart people is to create a cleavage within the elite. The Protestant Reformation was a time of high social mobility for intelligent people as the elites of Europe lost cohesion due to the Catholic/Protestant division. Henry VIII was detested by other nobles in large part because he promoted intelligent commoners (social mobility) to high offices who could assist him in his break from the Church. Then, there's the Cold War. Just think of how much scientific progress exists because of this hairline fracture in the world's ruling class. Powerful people want to glom together and form a clique at the top. The best thing that can happen for smart people is for one half of the powerful people to have a mortal hatred for the other half, so this can't happen. As the elites destroy each other, they'll hire smart people from without and that generates social mobility and a resource transfer away from the entrenched elite and toward talented people. If you want to save VC-istan, here's how to do it. Randomly assign all of the top 500 players to Red and Blue Teams. Team identity follows a person, not a firm. It's inflexible. Whichever team makes more money in the next 15 years owns all the personal financial assets (houses, bank accounts) of the other team. Even if Blue only wins slightly, it means the Reds lose all their financial assets. I don't make this as a serious suggestion, but that will get some genuine technology made.
- stanfordkid 14y ago
  What you say is hardly the case. Top 8 VC firms compete with each other incredibly hard for the best deals. The top-8 as a group make up 80% of all venture capital returns so maybe that should tell you something about their decision making criteria. The best VC firms do pick and choose what to invest in, and this is based only on what they think will make them the most money. Perhaps that isn't equivalent to "technological progress" but one can hardly call it collusion.
  - Surio 14y ago
    You should really read some of the replies from the other HN thread I placed in my reply above. It does a good job of removing the halo effect around VCs and their "decision making criteria" >> The top-8 as a group make up 80% of all venture capital returns so maybe that should tell you something about their decision making criteria. Perhaps, this is one possible explanation to that? http://news.ycombinator.com/item?id=5271839 http://news.ycombinator.com/item?id=5271839 The problem is there is so much 'dumb' money out there 'smart' money is just noise. If you have 50 million to invest then investing 200k in 250 company's at random is a perfectly reasonable choice. And 50 million is a tiny slice of a ridiculously big pie, people spend close to that doing due diligence on really big deals.
- Surio 14y ago
  You make some interesting observations, michael. But there is a small voice in the back of my head repeating " Pareto suggested that even if the wealth was redistributed equally to everyone in society, in a very short time it would revert to the 80/20 distribution". (reversion to the mean -- whatever that mean is!) Now, why is that true? You provide the answer yourself "Powerful people want to glom together and form a clique at the top." That will be very much a given! So how does one bell the cat... Your CTF analogy is a bold thesis, and I agree with your final assertion/outcome, but we both know it is not doable. >> One thing I've learned having studied history is that the best thing for smart people is to create a cleavage within the elite. History is definitely replete with examples that assert to the above, but in the end it is the classic "tying the bell to the cat" stalemate! a) Who will do it? and, b) How will they do it. Time to whip out Sun-Tzu, Arthashastra and The Prince for inspiration then ;-)

by Surio 14y ago

michaelochurch 14y ago

These problems are easy to diagnose and hard to solve. The problem with VC-istan is collusion. As a group, they decide who's hot, who's credible, and who's a loser. Rather than competing with each other, VCs communicate in all sorts of inappropriate ways and make these decisions as a herd. This means there isn't a fair market. The powerful people on one side have found it more advantageous to be in each others' good graces than to compete with each other, which would favor people they don't care about. One thing I've learned having studied history is that the best thing for smart people is to create a cleavage within the elite. The Protestant Reformation was a time of high social mobility for intelligent people as the elites of Europe lost cohesion due to the Catholic/Protestant division. Henry VIII was detested by other nobles in large part because he promoted intelligent commoners (social mobility) to high offices who could assist him in his break from the Church. Then, there's the Cold War. Just think of how much scientific progress exists because of this hairline fracture in the world's ruling class. Powerful people want to glom together and form a clique at the top. The best thing that can happen for smart people is for one half of the powerful people to have a mortal hatred for the other half, so this can't happen. As the elites destroy each other, they'll hire smart people from without and that generates social mobility and a resource transfer away from the entrenched elite and toward talented people. If you want to save VC-istan, here's how to do it. Randomly assign all of the top 500 players to Red and Blue Teams. Team identity follows a person, not a firm. It's inflexible. Whichever team makes more money in the next 15 years owns all the personal financial assets (houses, bank accounts) of the other team. Even if Blue only wins slightly, it means the Reds lose all their financial assets. I don't make this as a serious suggestion, but that will get some genuine technology made.

stanfordkid 14y ago
What you say is hardly the case. Top 8 VC firms compete with each other incredibly hard for the best deals. The top-8 as a group make up 80% of all venture capital returns so maybe that should tell you something about their decision making criteria. The best VC firms do pick and choose what to invest in, and this is based only on what they think will make them the most money. Perhaps that isn't equivalent to "technological progress" but one can hardly call it collusion.
- Surio 14y ago
  You should really read some of the replies from the other HN thread I placed in my reply above. It does a good job of removing the halo effect around VCs and their "decision making criteria" >> The top-8 as a group make up 80% of all venture capital returns so maybe that should tell you something about their decision making criteria. Perhaps, this is one possible explanation to that? http://news.ycombinator.com/item?id=5271839 http://news.ycombinator.com/item?id=5271839 The problem is there is so much 'dumb' money out there 'smart' money is just noise. If you have 50 million to invest then investing 200k in 250 company's at random is a perfectly reasonable choice. And 50 million is a tiny slice of a ridiculously big pie, people spend close to that doing due diligence on really big deals.
Surio 14y ago
You make some interesting observations, michael. But there is a small voice in the back of my head repeating " Pareto suggested that even if the wealth was redistributed equally to everyone in society, in a very short time it would revert to the 80/20 distribution". (reversion to the mean -- whatever that mean is!) Now, why is that true? You provide the answer yourself "Powerful people want to glom together and form a clique at the top." That will be very much a given! So how does one bell the cat... Your CTF analogy is a bold thesis, and I agree with your final assertion/outcome, but we both know it is not doable. >> One thing I've learned having studied history is that the best thing for smart people is to create a cleavage within the elite. History is definitely replete with examples that assert to the above, but in the end it is the classic "tying the bell to the cat" stalemate! a) Who will do it? and, b) How will they do it. Time to whip out Sun-Tzu, Arthashastra and The Prince for inspiration then ;-)