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Founders with breakout successes get the best terms ever now; that is true. On the other hand, investors have more power to fuck with founders' careers (even ye

Founders with breakout successes get the best terms ever now; that is true. On the other hand, investors have more power to fuck with founders' careers (even years after the venture dissolves), and founders who fail are more desperate to get back into conventional careers due to the disgustingly high housing prices that exist now. Venkat talks about the old-school serial entrepreneur: the 10x hustler who learned a little bit from each failure and finally had a huge hit on his 5th attempt (usually around age 40, at which point he'd be unfundable by contemporary VC-istan standards). That person is gone now. In contemporary VC-istan, no one gets a 3rd startup, thanks to the collusive and almost certainly illegal reputation economy that exists there. You might get a second shot if you come back to your VC bosses with your tail between your legs. That's because VCs have set themselves up as the executives of the first post-modern company: VC-istan. "Entrepreneurs" are hustling project managers. The investor/founder separation exists to hide the Effort Thermocline (the level at which jobs become easier with increasing rank, not harder) because it exists between two companies, with a distinct power relationship of one over the other. Hell, most VCs won't even talk to you if you were lack-of-fit for a regular corporate job. They want to fund banker kids who did Analyst -> Private Equity. (This is the MBA stereotype, but it's the 2nd tier of those who do MBAs. The top tier skip MBA school and become parasitic PEtards two years early.) True hustlers and technologists are second-class citizens; they work too hard and don't have the social polish to exploit "just like me" chickenhawking of their backers.

Retric 14y ago
VC's are a tiny slice of the economy and have little impact on the vast majority of companies. In the wider world there is a near surplus of capital that has been driving down investment returns for hundreds of years. Not that long ago 15% ROI was considered a poor investment now your doing good to make half that. So, if anything capital is losing most of it's power. PS: Also, VC's are managerial not capital. You don't need any mony to start one just convince a other managers that are investing still other people's money that you know what your doing.
- michaelochurch 14y ago
  Sure, but that's all there is left for a lot of people, once they're trapped in high-COL areas and unable to properly bootstrap. Bank loans want personal liability, which rules out anything that has more than a ~5% chance of failure. Even the mid-risk/mid-growth tech companies (derided as "lifestyle businesses" by VC-istan) have 10-30% 5-year failure rates. So they're out. There really isn't anything to fund these mid-risk/mid-growth companies. VCs don't like them, because the company's goal is to be independent, not an overwhelming corporate megalith. Savings/bootstrapping work if you have them, but I challenge you to find a 30-year-old in SV who (a) has appreciable savings, and (b) wasn't lifted by a connection ("acqui-hire" welfare checks count as "lifted"). Such people are fairly common outside of SV and NYC, which might surprise you. I know a few programmers out in PA who, even though they make (just slightly) less than I do in salary, they're my age and worth half a million. They were able to actually fucking save money. Perhaps I am a moron for chasing the prestige of the VC-istan and Wall Street jobs, throwing me into a city where landlords win and talent struggles. My "savings" is the career benefit of having spent my 20s in NYC, but it's questionable how much that matters. I'd rather have the autonomy that comes with money and the credibility that comes with having higher-quality work experience. VC-istan (and, to a lesser degree, Wall Street with its bonus system) are economies where, instead of savings, you put everything you have (time, money, energy) into this weird system that distributed outsized rewards, intermittently, to a lucky few. Wall Street is more decent than VC-istan, I feel like. Wall Street is some part meritocracy (esp. prop trading) and some part connections, but it's honest about what it is. VC-istan is a who-you-know economy that pretends to be a meritocracy, and if you call the lie by it's name, people fuck with your career in the worst kind of way.
  - IHaveToRespond 14y ago
    IHaveToRespond > once they're trapped in high-COL areas... How is anyone trapped in a high-COL area? I understand it can be difficult to leave an area, particularly one with lots of jobs, but sometimes you don't have optimal options in life and you have to figure out which one is the least worst. In this case, the hypothetical person you're talking about is trapped by his inability to make a difficult decision. Nothing more and nothing less. > Savings/bootstrapping work if you have them, but I challenge you to find a 30-year-old in SV who (a) has appreciable savings, and (b) wasn't lifted by a connection ("acqui-hire" welfare checks count as "lifted"). I am in my early 30s, live in SV, have a liquid net worth in the low six-figures and have never been "lifted" by an acquisition or acqui-hire. I was nearly broke twice in my 20s. > Perhaps I am a moron for chasing the prestige of the VC-istan and Wall Street jobs, throwing me into a city where landlords win and talent struggles. You were not thrown into a city, you chose to be there. As you said, you chased "the prestige of the VC-istan and Wall Street jobs." And please stop this ranting about landlords. People who earned money, invested it in property and generate income by renting said property out are not gaining at your expense, at least no more than the farmer who grew the food you eat. If your rent is too damn high, move. > VC-istan (and, to a lesser degree, Wall Street with its bonus system) are economies where, instead of savings, you put everything you have (time, money, energy) into this weird system that distributed outsized rewards, intermittently, to a lucky few. Welcome to life.
tptacek 14y ago
I might be the only person on HN who has a lower opinion of VCs than you do (I credit them with killing the first company I started) but this reads batshit to me. VC's want to fund MBAs who "did Analyst -> Private Equity"? That describes nobody I know who's raised a round, but ironically describes a couple people I know who failed utterly to raise. I'm calling this comment out. I think you made that up. Show me I'm wrong. Your bit about about "nobody getting a third startup" is also directly contradicted by people I know who have done exactly that, and raised in their 40s. In fact, I think it's likely that more people raise real VC rounds in their 40s than do in their 20s, and that you're just paying attention to a small niche of social media startups.
- michaelochurch 14y ago
  I'm calling this comment out. I think you made that up. Show me I'm wrong. I won't, if only because: (a) some of these people I like, even if I find private equity (and, thus, the company they kept in their career-building years) distasteful. Associating innocent people (by name) with a problem just to make a point is something I'd rather not do. (b) the ones I hate I know well and identifying them would give information about my career history that I've chosen not to share. For example, I worked for a truly evil (management-wise; the engineers were fine) startup in 2011-12 and I've thus far kept the world from knowing which one. I have strategic reasons for keeping that way. I could probably destroy that company if I wanted to, but I'd prefer not to do so. If they succeed, it makes me rich. (I don't have equity, but I have dirt.) However, anyone who is considering working for an NYC startup can ping me and I'll do a yes/no on whether it's That One. (I have convinced a lot of people not to work for them.) You can believe me, or conclude that I'm drawing a conclusion based on limited experience and not believe me. I'm not making it up, but I don't have longitudinal data, just a large set of observations because I talk to a lot of people. I'll admit to that. Now, I will admit that all of my direct experience comes from New York VC-istan. I haven't been to California in almost 5 years. For all I know, it could be totally different out there but, based on the people I talk to on a regular basis, it seems to be same shit, slightly different stink.
  - sjwalter 14y ago
raldi 14y ago
> In contemporary VC-istan, no one gets a 3rd startup Emmett Shear, Justin Kan, and Michael Seibel all got third startups, and they're all doing pretty well with them.
- nostrademons 14y ago
  In fairness, they all founded Justin.TV. It's significantly easier to get a third startup if your second startup was a success, and I think the OP was talking about having two failures in a row.
  - raldi 14y ago
    I have nothing but respect for the justin.tv people and product, but may I ask what criteria you're using here to define it as a success? I would have called it a pivot, albeit a great one.
    - nostrademons 14y ago
      Success = has traction in a market large enough to be of interest to a VC. Usually that's the hard part of entrepreneurship; if you can demonstrate you've attained that once, getting funding for subsequent endeavors is a lot easier.
      - raldi 14y ago
        Would you say Digg was a success?
        nostrademons 14y ago
        From the perspective of "Is Kevin Rose likely to get funded again?", absolutely. From a user perspective or the perspective of one of the founders, it's less clear. I remember ojbyrne being less than happy about how it turned out. The fact that they even had users is more than 90% of startups, manage, though.

Retric 14y ago

VC's are a tiny slice of the economy and have little impact on the vast majority of companies. In the wider world there is a near surplus of capital that has been driving down investment returns for hundreds of years. Not that long ago 15% ROI was considered a poor investment now your doing good to make half that. So, if anything capital is losing most of it's power. PS: Also, VC's are managerial not capital. You don't need any mony to start one just convince a other managers that are investing still other people's money that you know what your doing.

michaelochurch 14y ago
Sure, but that's all there is left for a lot of people, once they're trapped in high-COL areas and unable to properly bootstrap. Bank loans want personal liability, which rules out anything that has more than a ~5% chance of failure. Even the mid-risk/mid-growth tech companies (derided as "lifestyle businesses" by VC-istan) have 10-30% 5-year failure rates. So they're out. There really isn't anything to fund these mid-risk/mid-growth companies. VCs don't like them, because the company's goal is to be independent, not an overwhelming corporate megalith. Savings/bootstrapping work if you have them, but I challenge you to find a 30-year-old in SV who (a) has appreciable savings, and (b) wasn't lifted by a connection ("acqui-hire" welfare checks count as "lifted"). Such people are fairly common outside of SV and NYC, which might surprise you. I know a few programmers out in PA who, even though they make (just slightly) less than I do in salary, they're my age and worth half a million. They were able to actually fucking save money. Perhaps I am a moron for chasing the prestige of the VC-istan and Wall Street jobs, throwing me into a city where landlords win and talent struggles. My "savings" is the career benefit of having spent my 20s in NYC, but it's questionable how much that matters. I'd rather have the autonomy that comes with money and the credibility that comes with having higher-quality work experience. VC-istan (and, to a lesser degree, Wall Street with its bonus system) are economies where, instead of savings, you put everything you have (time, money, energy) into this weird system that distributed outsized rewards, intermittently, to a lucky few. Wall Street is more decent than VC-istan, I feel like. Wall Street is some part meritocracy (esp. prop trading) and some part connections, but it's honest about what it is. VC-istan is a who-you-know economy that pretends to be a meritocracy, and if you call the lie by it's name, people fuck with your career in the worst kind of way.
- IHaveToRespond 14y ago
  IHaveToRespond > once they're trapped in high-COL areas... How is anyone trapped in a high-COL area? I understand it can be difficult to leave an area, particularly one with lots of jobs, but sometimes you don't have optimal options in life and you have to figure out which one is the least worst. In this case, the hypothetical person you're talking about is trapped by his inability to make a difficult decision. Nothing more and nothing less. > Savings/bootstrapping work if you have them, but I challenge you to find a 30-year-old in SV who (a) has appreciable savings, and (b) wasn't lifted by a connection ("acqui-hire" welfare checks count as "lifted"). I am in my early 30s, live in SV, have a liquid net worth in the low six-figures and have never been "lifted" by an acquisition or acqui-hire. I was nearly broke twice in my 20s. > Perhaps I am a moron for chasing the prestige of the VC-istan and Wall Street jobs, throwing me into a city where landlords win and talent struggles. You were not thrown into a city, you chose to be there. As you said, you chased "the prestige of the VC-istan and Wall Street jobs." And please stop this ranting about landlords. People who earned money, invested it in property and generate income by renting said property out are not gaining at your expense, at least no more than the farmer who grew the food you eat. If your rent is too damn high, move. > VC-istan (and, to a lesser degree, Wall Street with its bonus system) are economies where, instead of savings, you put everything you have (time, money, energy) into this weird system that distributed outsized rewards, intermittently, to a lucky few. Welcome to life.

tptacek 14y ago

I might be the only person on HN who has a lower opinion of VCs than you do (I credit them with killing the first company I started) but this reads batshit to me. VC's want to fund MBAs who "did Analyst -> Private Equity"? That describes nobody I know who's raised a round, but ironically describes a couple people I know who failed utterly to raise. I'm calling this comment out. I think you made that up. Show me I'm wrong. Your bit about about "nobody getting a third startup" is also directly contradicted by people I know who have done exactly that, and raised in their 40s. In fact, I think it's likely that more people raise real VC rounds in their 40s than do in their 20s, and that you're just paying attention to a small niche of social media startups.

michaelochurch 14y ago
I'm calling this comment out. I think you made that up. Show me I'm wrong. I won't, if only because: (a) some of these people I like, even if I find private equity (and, thus, the company they kept in their career-building years) distasteful. Associating innocent people (by name) with a problem just to make a point is something I'd rather not do. (b) the ones I hate I know well and identifying them would give information about my career history that I've chosen not to share. For example, I worked for a truly evil (management-wise; the engineers were fine) startup in 2011-12 and I've thus far kept the world from knowing which one. I have strategic reasons for keeping that way. I could probably destroy that company if I wanted to, but I'd prefer not to do so. If they succeed, it makes me rich. (I don't have equity, but I have dirt.) However, anyone who is considering working for an NYC startup can ping me and I'll do a yes/no on whether it's That One. (I have convinced a lot of people not to work for them.) You can believe me, or conclude that I'm drawing a conclusion based on limited experience and not believe me. I'm not making it up, but I don't have longitudinal data, just a large set of observations because I talk to a lot of people. I'll admit to that. Now, I will admit that all of my direct experience comes from New York VC-istan. I haven't been to California in almost 5 years. For all I know, it could be totally different out there but, based on the people I talk to on a regular basis, it seems to be same shit, slightly different stink.
- sjwalter 14y ago

raldi 14y ago

> In contemporary VC-istan, no one gets a 3rd startup Emmett Shear, Justin Kan, and Michael Seibel all got third startups, and they're all doing pretty well with them.

nostrademons 14y ago
In fairness, they all founded Justin.TV. It's significantly easier to get a third startup if your second startup was a success, and I think the OP was talking about having two failures in a row.
- raldi 14y ago
  I have nothing but respect for the justin.tv people and product, but may I ask what criteria you're using here to define it as a success? I would have called it a pivot, albeit a great one.
  - nostrademons 14y ago
    Success = has traction in a market large enough to be of interest to a VC. Usually that's the hard part of entrepreneurship; if you can demonstrate you've attained that once, getting funding for subsequent endeavors is a lot easier.
    - raldi 14y ago
      Would you say Digg was a success?
      - nostrademons 14y ago
        From the perspective of "Is Kevin Rose likely to get funded again?", absolutely. From a user perspective or the perspective of one of the founders, it's less clear. I remember ojbyrne being less than happy about how it turned out. The fact that they even had users is more than 90% of startups, manage, though.