6 ms·

What Nikola Tesla vs. VCs video says about the state of Silicon Valley

108 points by mkuhn 13y ago

nickpinkston 13y ago
If you want to hear how Tesla, Edison, etc. actually went about funding / building their companies - check out: "American Genesis" It's a history of the human / social part of this period of technology. So interesting to hear about J.P. Morgan essentially angel investing in Edison / Tesla + all the other unknowns like Elmer Sperry, etc. [1] http://www.amazon.com/American-Genesis-Invention-Technological-Enthusiasm/dp/0226359271/ref=sr_1_1?s=books&ie=UTF8&qid=1369077550&sr=1-1&keywords=american+genesis http://www.amazon.com/American-Genesis-Invention-Technologic...
- EvilLook 13y ago
  Noblesse Oblige is dead. The ultra-rich hoard their wealth. They won't even invest in their own country by paying their taxes without tax shelters. What makes you think they would invest in something that might benefit others?
  - sgrove 13y ago
    Bill Gates? Warren Buffett? Laurene Jobs? Zuckerberg? Ron Conway? I don't know what qualified as ultra-rich, but "investments" the wealthy/rich bracket in SV (including new-comers) also fails to back up your assertion.
    - k__ 13y ago
      The problem is, we let them choose where to spend their money, so everyone in need depends on their mercy. They're like the Kings and Queens of our time.
  - nickpinkston 13y ago
    JPM wasn't doing this out of obligation - he wanted to make money too! Noblesse Oblige is alive and well - it's called crowdfunding now! ;-)
kepano 13y ago
This begs the question, how did Tesla actually do it? Ultimately he was driven by the inventions themselves, not the business models. This was his genius and his failure. Licensing the patents worked but it's also worth looking at Tesla's relationship with George Westinghouse who became a patron more than an investor. What's the avenue for a Nikola Tesla today?
- ChuckMcM 13y ago
  Are you suggesting he would look a lot like a patent troll today? Could be heretical talking there. Generally fundamental infrastructure improvements are very very hard for the individual contributor to capitalize on. Part of that is because there are usually alternatives for everything so its pre-commoditized and thus hard to extract value from, and partly because the legacy of 20th century was rent seeking businesses which polluted the waters for everyone.
  - JoeAltmaier 13y ago
    Troll! That's preposterous. He INVENTED those things; he didn't buy up batches of vague patents and file frivolous suit. And his patents were detailed, precise, and often accompanied by a model.
- SkyMarshal 13y ago
  That video was a cariacature of bad VCs. A real Tesla of today should approach VCs like Thiel or Andreesen, if they're not already at DARPA or some other well-funded government blue sky R&D lab (or, say, inventing memristors at a corporate research division).
  - deleted 13y ago
    [deleted]
- ricardobeat 13y ago
  http://begthequestion.info/ http://begthequestion.info/
- 13y ago
michaelochurch 13y ago
Venture capitalists these days go on social proof largely because of their career incentives. You don't "make it" as a VC unless you get into a black albatross deal early, and there's one of those per decade. That's why all the horrible note-sharing and co-funding goes on. All the VC resources are chasing the career needs of the agents, not maximizing return on investment (which is impossible to predict anyway). Someone is going to win big by working with the mid-risk/mid-growth "lifestyle" businesses (that currently make most of their money consulting) but it's not going to happen in VC-istan, nor will it be in Silicon Valley or New York. Boston has a shot; I'd also say Austin, Seattle and Chicago are in the running.
- rdl 13y ago
  There are angel investors in Silicon Valley (and elsewhere) who focus on smaller but less risky wins. It's not a horrible strategy, I think, if you make only a few investments and do it for reasons other than getting rich. (If I were in a position to invest, I'd be happy investing in businesses which were sustainable/profitable but not the next $500mm exit IFF I wanted the beneficial side effects of those businesses. Even down to the scale of a single individual, sort of the "patronage" model. I think it's entirely reasonable that a single person could accomplish great solutions to small to midsize problems, like say a good zerocoin implementation. Sadly, I'm not right now, and probably won't be for several years.) Plenty of angels seem happy with longer term or potentially ongoing revenue streams -- the kind of people who invest in restaurants, dry cleaners, consultancies, etc. Seems like it only makes sense if you really like the industry/product or the team, though.
- sp332 13y ago
  I think that's "black swan", but I like the idea of a black albatross :)
- n00b101 13y ago
  > Someone is going to win big by working with the mid-risk/mid-growth "lifestyle" businesses I don't think that's what this Tesla video was about though. Quite the opposite, it explicitly laid out the need for large capital outlays, etc.
johnrob 13y ago
The internet and mobile have created opportunities to make large amounts of money faster than ever. You can't blame the VCs for choosing a quick billion vs a slow billion. Along the same lines, the referenced VC deals of the past (Khosla + Juniper) were not comparing those opportunities with the hyper growth startups that we see today.
orbital303 13y ago
Should've shown the invention first ... or maybe the slides. It says a lot about the garbage that is being built here by engineers treated like slaves who report to clueless idiots. These problems are an epidemic here and a pandemic across the world. In the 60's we put people on the moon. Now, money is basically given away by committee (couldn't think of a better way to make bad decisions) to any company to play with it and fail. This model of expecting constant growth out of even the ones they do and out of the area as a whole (or the world as a whole) is insane and unsustainable, especially as salaries have actually dropped in the last two years. Can you say bubble? Because the housing market's screaming it loud and clear.
justhw 13y ago
If you're wondering, here is the kickstarter to the video. http://www.kickstarter.com/projects/dorrian/a-statue-of-nikola-tesla-in-the-silicon-valley http://www.kickstarter.com/projects/dorrian/a-statue-of-niko...
NoPiece 13y ago
They’re all looking for the next Facebook or the next Twitter, but no one wants to look for the next Juniper or the next Intel or even the next ARM. The author didn't substantiate this claim. The only actual example he came with was the Tesla hypothetical. I'm sure it is true that there is a lot of money chasing easy short term ideas right now, but his only real world example of clean tech shows there is money out there for big ideas. Even bad big ideas. I'd like this article if it were actually about some companies with big ideas who needed money and couldn't get it.
justinhj 13y ago
You change tack not tact although maybe some companies should change both
deleted 13y ago
[deleted]
jk4930 13y ago
62% unrelated: Nikola Tesla vs Thomas Edison (Epic Rap Battes of History): http://www.youtube.com/watch?v=gJ1Mz7kGVf0 http://www.youtube.com/watch?v=gJ1Mz7kGVf0

108 points by mkuhn 13y ago

If you want to hear how Tesla, Edison, etc. actually went about funding / building their companies - check out: "American Genesis" It's a history of the human / social part of this period of technology. So interesting to hear about J.P. Morgan essentially angel investing in Edison / Tesla + all the other unknowns like Elmer Sperry, etc. [1] http://www.amazon.com/American-Genesis-Invention-Technological-Enthusiasm/dp/0226359271/ref=sr_1_1?s=books&ie=UTF8&qid=1369077550&sr=1-1&keywords=american+genesis http://www.amazon.com/American-Genesis-Invention-Technologic...

EvilLook 13y ago
Noblesse Oblige is dead. The ultra-rich hoard their wealth. They won't even invest in their own country by paying their taxes without tax shelters. What makes you think they would invest in something that might benefit others?
- sgrove 13y ago
  Bill Gates? Warren Buffett? Laurene Jobs? Zuckerberg? Ron Conway? I don't know what qualified as ultra-rich, but "investments" the wealthy/rich bracket in SV (including new-comers) also fails to back up your assertion.
  - k__ 13y ago
    The problem is, we let them choose where to spend their money, so everyone in need depends on their mercy. They're like the Kings and Queens of our time.
- nickpinkston 13y ago
  JPM wasn't doing this out of obligation - he wanted to make money too! Noblesse Oblige is alive and well - it's called crowdfunding now! ;-)

kepano 13y ago

This begs the question, how did Tesla actually do it? Ultimately he was driven by the inventions themselves, not the business models. This was his genius and his failure. Licensing the patents worked but it's also worth looking at Tesla's relationship with George Westinghouse who became a patron more than an investor. What's the avenue for a Nikola Tesla today?

ChuckMcM 13y ago
Are you suggesting he would look a lot like a patent troll today? Could be heretical talking there. Generally fundamental infrastructure improvements are very very hard for the individual contributor to capitalize on. Part of that is because there are usually alternatives for everything so its pre-commoditized and thus hard to extract value from, and partly because the legacy of 20th century was rent seeking businesses which polluted the waters for everyone.
- JoeAltmaier 13y ago
  Troll! That's preposterous. He INVENTED those things; he didn't buy up batches of vague patents and file frivolous suit. And his patents were detailed, precise, and often accompanied by a model.
SkyMarshal 13y ago
That video was a cariacature of bad VCs. A real Tesla of today should approach VCs like Thiel or Andreesen, if they're not already at DARPA or some other well-funded government blue sky R&D lab (or, say, inventing memristors at a corporate research division).
- deleted 13y ago
  [deleted]
ricardobeat 13y ago
http://begthequestion.info/ http://begthequestion.info/
13y ago

michaelochurch 13y ago

Venture capitalists these days go on social proof largely because of their career incentives. You don't "make it" as a VC unless you get into a black albatross deal early, and there's one of those per decade. That's why all the horrible note-sharing and co-funding goes on. All the VC resources are chasing the career needs of the agents, not maximizing return on investment (which is impossible to predict anyway). Someone is going to win big by working with the mid-risk/mid-growth "lifestyle" businesses (that currently make most of their money consulting) but it's not going to happen in VC-istan, nor will it be in Silicon Valley or New York. Boston has a shot; I'd also say Austin, Seattle and Chicago are in the running.

rdl 13y ago
There are angel investors in Silicon Valley (and elsewhere) who focus on smaller but less risky wins. It's not a horrible strategy, I think, if you make only a few investments and do it for reasons other than getting rich. (If I were in a position to invest, I'd be happy investing in businesses which were sustainable/profitable but not the next $500mm exit IFF I wanted the beneficial side effects of those businesses. Even down to the scale of a single individual, sort of the "patronage" model. I think it's entirely reasonable that a single person could accomplish great solutions to small to midsize problems, like say a good zerocoin implementation. Sadly, I'm not right now, and probably won't be for several years.) Plenty of angels seem happy with longer term or potentially ongoing revenue streams -- the kind of people who invest in restaurants, dry cleaners, consultancies, etc. Seems like it only makes sense if you really like the industry/product or the team, though.
sp332 13y ago
I think that's "black swan", but I like the idea of a black albatross :)
n00b101 13y ago
> Someone is going to win big by working with the mid-risk/mid-growth "lifestyle" businesses I don't think that's what this Tesla video was about though. Quite the opposite, it explicitly laid out the need for large capital outlays, etc.

johnrob 13y ago

The internet and mobile have created opportunities to make large amounts of money faster than ever. You can't blame the VCs for choosing a quick billion vs a slow billion. Along the same lines, the referenced VC deals of the past (Khosla + Juniper) were not comparing those opportunities with the hyper growth startups that we see today.

orbital303 13y ago

Should've shown the invention first ... or maybe the slides. It says a lot about the garbage that is being built here by engineers treated like slaves who report to clueless idiots. These problems are an epidemic here and a pandemic across the world. In the 60's we put people on the moon. Now, money is basically given away by committee (couldn't think of a better way to make bad decisions) to any company to play with it and fail. This model of expecting constant growth out of even the ones they do and out of the area as a whole (or the world as a whole) is insane and unsustainable, especially as salaries have actually dropped in the last two years. Can you say bubble? Because the housing market's screaming it loud and clear.

justhw 13y ago

If you're wondering, here is the kickstarter to the video. http://www.kickstarter.com/projects/dorrian/a-statue-of-nikola-tesla-in-the-silicon-valley http://www.kickstarter.com/projects/dorrian/a-statue-of-niko...

NoPiece 13y ago

They’re all looking for the next Facebook or the next Twitter, but no one wants to look for the next Juniper or the next Intel or even the next ARM. The author didn't substantiate this claim. The only actual example he came with was the Tesla hypothetical. I'm sure it is true that there is a lot of money chasing easy short term ideas right now, but his only real world example of clean tech shows there is money out there for big ideas. Even bad big ideas. I'd like this article if it were actually about some companies with big ideas who needed money and couldn't get it.

justinhj 13y ago

You change tack not tact although maybe some companies should change both

deleted 13y ago

[deleted]

jk4930 13y ago

62% unrelated: Nikola Tesla vs Thomas Edison (Epic Rap Battes of History): http://www.youtube.com/watch?v=gJ1Mz7kGVf0 http://www.youtube.com/watch?v=gJ1Mz7kGVf0