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>> First, these companies are designed to become profitable, not to exit, so compensation is profit-sharing, not the joke equity offered by VC-istan That reall

by Surio 13y ago

>> First, these companies are designed to become profitable, not to exit, so compensation is profit-sharing, not the joke equity offered by VC-istan That really, really resonated! Now for a counterpoint. When I read that remark, I recalled reading a recent interview of Groupon's COO and I quote this para: In 2007, he started Global Scholar to “help teachers give differentiated education to kids using technology. It was a fantastic experience. I raised $50 (INR 2,698.63) million in the toughest economy since the Depression. In 30 months, I gave four times returns to my investors and then sold the company in 2010-11.” On why he did so, he quips, “The moment you start a company, it is for sale… at the right price. You can’t have emotions…” (emphasis mine) Now tell me, just how exactly are you even going to combat deeply entrenched mindsets like those, which also happen foster the usual confirmation and survivor bias dreams in most, if not all aspiring "wantapreneurs"? Michael, I really commend your insight into the problem, but "you have an uphill struggle ahead of you" might be the understatement of the year. EDIT: formatting and word rearrangements and deleted some line that might be misconstrued! EDIT 2: Sigh. I really wish, that when people downvote something they don't agree with, they take a moment to tell why.

michaelochurch 13y ago
Now tell me, just how exactly are you even going to combat deeply entrenched mindsets like those, which also happen foster the usual confirmation and survivor bias dreams in most, if not all aspiring "wantapreneurs"? I don't think selling a company is a bad thing. I think building a company with the idea in mind that one must sell (because one's backers will flip out if there isn't a sale) is bad.
- kyllo 13y ago
  It sounds like a lot of what bothers you about VC startups is that they've become a way for megacorps to outsource risky marketing experiments (aka "convex work") and buy the winners while discarding the losers. But through the usual avenues of corruption it's become a rigged game where the sociopaths inside the megacorps are working with their sociopath friends in the VCs and actually picking winners instead of only buying truly viable startups. So they're closing the circle and turning it into a revolving door for an incestuous aristocracy where the amount of value you capture is a function of who you know and who owes you a favor instead of being a function of how much value you actually create. How do you stop any market from getting taken over by psychopaths who want to turn it into an incest-fest? This is also a problem in every other industry ever, and also in government. Is there a such thing as a corruption-repellent, paychopath-kryptonite system, and if so, what is it?
  - michaelochurch 13y ago
    Is there a such thing as a corruption-repellent, paychopath-kryptonite system, and if so, what is it? I doubt it. I think we have to just keep reinventing. There's no system we can set up and have it run on its own. I like the way the Scandinavians think: they hybridize between the socialist welfare state and a capitalistic market for innovation in a way we could stand to learn from.
    - kyllo 13y ago
      I don't think there's a set-and-forget model solution. But that's not what the US Constitution is, either. It was a legal framework and social contract that set up an elaborate system of checks and balances to prevent psychopaths from amassing too much political power. The democracy still running on that framework is a living, evolving thing, that has struggled to adapt with changing times, but it's done a pretty good job of keeping the psychos out of supreme ruling power (or at least keeping any one particular psycho from holding onto it very long) since 1787. Meanwhile in the corporate world, we don't have that. Most private organizations are not even remotely democratic in nature. I think that's the core essence of what needs to change. And I think that's sort of what you're getting at by advocating open allocation and profit sharing. Either that, or we need to at least strengthen the welfare state enough to decouple employment from basic livelihood, so that business failure doesn't impose the risk of homelessness/starvation, and most people aren't compelled to become MacLeod Losers, selling all their economic upside risk off in exchange for stable shelter, food, and medical care.
  - mozboz 13y ago
    > Is there a such thing as a corruption-repellent, paychopath-kryptonite system, and if so, what is it? Yes. Make the goal of your organisation a social good, and not making money.
    - ansgri 13y ago
      Won't work. To play devil's advocate: 'let's see if we can make some money alongside the social good; maybe getting a bit grey.' Then: 'It's only a "stated goal" to make social good, but this is an organization, organizations are made to wield power and make money, so let's make money!'
- Surio 13y ago
  >> I don't think selling a company is a bad thing. Neither do I see it as an inherently bad thing. There are valid and compelling reason to sell a company. E.g., There might be no "family successors". Your heart may no longer be in it. You might want to do other things. You might feel that someone else might take it to the next level better than yourself at the helm.... etc., etc.. >> building a company with the idea in mind that one must sell [........] is bad And that's exactly what was being implied here.... "The moment you start a company, it is for sale… at the right price". And I have a problem with that one too!

by Surio 13y ago

michaelochurch 13y ago

Now tell me, just how exactly are you even going to combat deeply entrenched mindsets like those, which also happen foster the usual confirmation and survivor bias dreams in most, if not all aspiring "wantapreneurs"? I don't think selling a company is a bad thing. I think building a company with the idea in mind that one must sell (because one's backers will flip out if there isn't a sale) is bad.

kyllo 13y ago
It sounds like a lot of what bothers you about VC startups is that they've become a way for megacorps to outsource risky marketing experiments (aka "convex work") and buy the winners while discarding the losers. But through the usual avenues of corruption it's become a rigged game where the sociopaths inside the megacorps are working with their sociopath friends in the VCs and actually picking winners instead of only buying truly viable startups. So they're closing the circle and turning it into a revolving door for an incestuous aristocracy where the amount of value you capture is a function of who you know and who owes you a favor instead of being a function of how much value you actually create. How do you stop any market from getting taken over by psychopaths who want to turn it into an incest-fest? This is also a problem in every other industry ever, and also in government. Is there a such thing as a corruption-repellent, paychopath-kryptonite system, and if so, what is it?
- michaelochurch 13y ago
  Is there a such thing as a corruption-repellent, paychopath-kryptonite system, and if so, what is it? I doubt it. I think we have to just keep reinventing. There's no system we can set up and have it run on its own. I like the way the Scandinavians think: they hybridize between the socialist welfare state and a capitalistic market for innovation in a way we could stand to learn from.
  - kyllo 13y ago
    I don't think there's a set-and-forget model solution. But that's not what the US Constitution is, either. It was a legal framework and social contract that set up an elaborate system of checks and balances to prevent psychopaths from amassing too much political power. The democracy still running on that framework is a living, evolving thing, that has struggled to adapt with changing times, but it's done a pretty good job of keeping the psychos out of supreme ruling power (or at least keeping any one particular psycho from holding onto it very long) since 1787. Meanwhile in the corporate world, we don't have that. Most private organizations are not even remotely democratic in nature. I think that's the core essence of what needs to change. And I think that's sort of what you're getting at by advocating open allocation and profit sharing. Either that, or we need to at least strengthen the welfare state enough to decouple employment from basic livelihood, so that business failure doesn't impose the risk of homelessness/starvation, and most people aren't compelled to become MacLeod Losers, selling all their economic upside risk off in exchange for stable shelter, food, and medical care.
- mozboz 13y ago
  > Is there a such thing as a corruption-repellent, paychopath-kryptonite system, and if so, what is it? Yes. Make the goal of your organisation a social good, and not making money.
  - ansgri 13y ago
    Won't work. To play devil's advocate: 'let's see if we can make some money alongside the social good; maybe getting a bit grey.' Then: 'It's only a "stated goal" to make social good, but this is an organization, organizations are made to wield power and make money, so let's make money!'
Surio 13y ago
>> I don't think selling a company is a bad thing. Neither do I see it as an inherently bad thing. There are valid and compelling reason to sell a company. E.g., There might be no "family successors". Your heart may no longer be in it. You might want to do other things. You might feel that someone else might take it to the next level better than yourself at the helm.... etc., etc.. >> building a company with the idea in mind that one must sell [........] is bad And that's exactly what was being implied here.... "The moment you start a company, it is for sale… at the right price". And I have a problem with that one too!