17 ms·

The terrifying rise of the political entrepreneur

149 points by chwolfe 13y ago

wasd 13y ago
I really don't like this article. I'm not saying that the author is right or wrong, but what is the author trying to accomplish? They aren't helping change the ecosystem or bring new conversations to the table. I feel like this feeds to pettiness and bitterness toward fellow entrepreneurs that you don't feel "deserve" it. Who cares what they raised? Who cares who they sold to? If you're doing what matters to you, it shouldn't matter.
- mindcrime 13y ago
  I feel like this feeds to pettiness and bitterness toward fellow entrepreneurs that you don't feel "deserve" it. Who cares what they raised? Who cares who they sold to? Yeah, it's easy to look over and see somebody else failing (or succeeding) and just express "sour grapes" and accuse them of just "playing political games". That said, do politics enter into it on some level? Yeah, I'm sure they do. And I've been "the guy" before, watching other startups that I personally judge to be of very low quality and little potential get invited to events, get press coverage, etc., when we didn't. But to sit here and say "they got XXXX because they were just skilled at playing the political game" does feel like just "sour grapes" to me. And even if it were true, what good does it do to bitch about it? Nobody cares and crying over spilt milk isn't moving us any closer to our goals. I prefer to just stay heads-down, nose to the grindstone, work my ass off, and figure that we will succeed in the end, if it's deserved. We're playing the long-game here, and if our vision is correct and we execute, we'll get what's coming to us in the long term. If not, well... then we won't. If you're doing what matters to you, it shouldn't matter. Well said.
- wmf 13y ago
  Arguably if you're competing for funding it helps to have a model of your opponents.
- dasil003 13y ago
  It definitely reads as envy or sour grapes. One thing I always have in the back of my mind is to work hard to avoid hating anyone because they're good at what they do, and it's hard work because the human psyche is tremendously good at finding justifications and pulling the blinders over oneself. Tearing someone else down is the childish and easy way to build yourself up, but it's only in your own head, it doesn't actually make you any better and it doesn't impress anyone around you. Hate should be reserved for people who really do bad things, and even then we're probably better if we can avoid the hate entirely.
  - michaelochurch 13y ago
    One thing I always have in the back of my mind is to work hard to avoid hating anyone because they're good at what they do Stop right there. None of us hate people who are good at what they do. When we find someone who's better, we seek that person out and try to learn as much as we can. I'd believe this to be especially true on HN, where there's an above-normal proportion of top-5% programmers, many of whom rarely get that opportunity to learn from someone of truly superior skill. The problem with political players is that, while they suck at what they do, they're great at hacking evaluation processes and making themselves look superior. That hurts everyone (except them) because their shitty decisions and ideas result in a widespread proliferation of crap.
    - dasil003 13y ago
      Sure, sometimes. But if your company is not doing so hot and you see some ridiculous acquisition and think to yourself how the fuck did that happen, it's easy to jump to the conclusion that it's political bullshit when in fact you don't really know the whole story. You don't know what the tech is or what the real numbers are or what the purpose of the acquisition was. I think it's very easy to jump to a conclusion on an emotional basis, and our belief in our objectivity is what makes this all the more treacherous.
johnrob 13y ago
Even if there do exist 'political' entrepreneurs, they don't come at the expense of normal ones. Get users, make sales, and you will succeed.
- mindcrime 13y ago
  Get users, make sales, and you will succeed. That's the way I try to look at it. Nobody locally (RTP, NC area) seems to pay much attention to us or give us any credit, where when I look at what we're doing I can't help but think "What? Are you people crazy? Do you realize how fricking awesome this stuff is?" But then I have to acknowledge that I'm (very) biased, and that our focus should be on identifying, connecting with, and having conversations with, our future customers. Getting press mentions, getting invited to events, accepted into accelerators / incubators, etc., all those things ultimately play second fiddle to customers. IF the day comes when we have paying customers and are growing, then the accolades and attention will come. Or not. In the end, it doesn't really matter. If we build a profitable, growing, successful business, it doesn't really matter if we get any accolades or not. Although it does pain my "inner Tony Stark" to say that, as I really want to have a big "Fogbeam Expo" one day. :-) Net-net, I just try to remember "we haven't proven anything yet".
- olefoo 13y ago
  I'm always amused by 'entrepreneurs' whose focus is on getting funded rather than building a business.
DoubleMalt 13y ago
As Cory Doctorow aptly stated: every good eco system has parasites. I'm sure these types exist, but they are an inevitable side effect of the properties that make the eco system successful.
- jacques_chester 13y ago
  There's a good case to be made that parasites make ecosystems, not the other way around (the "Red Queen" hypothesis).
rayiner 13y ago
The cognitive dissonance in Silicon Valley is amusing. You think VC-istan was ever not political? Where do you think VC's come from? They don't grow on trees. They grow in McKinsey and Morgan Stanley, where they learn to deftly navigate corporate politics at the highest levels. Thats not the only thing they learn, of course, but it is a fundamental pillar of the training. Silicon Valley is owned by Wall Street (what do you think it means for VC's to "raise funds?") and favors those who can play that game. Not that I think this is a bad thing mind you. It just is. It's like dating-it's futile to complain about the rules. They're just the rules. You're trying to convert capital into a successful business, so you gotta play by the rules of the people who have the capital. Which is true for pretty much everyone. Being in Silicon Valley doesn't insulate you from the reality that exists everywhere else.
- pg 13y ago
  Actually the trend among VCs lately is to hire people with operating experience as partners: Alfred Lin, Chris Dixon, Keith Rabois.
  - atdrummond 13y ago
    This has been replicated in traditional private equity as well, especially when the IPO market softened significantly during the financial crisis.
- crapshoot101 13y ago
  Wait, are you serious? Have you looked at the average VC today? Overwhelmingly, they are made up of former entrepreneurs. The analysts may come from Morgan Stanley and McKinsey, but the partner's don't. This is one of those conjectures that people state without backing up.
  - rayiner 13y ago
    Is that the average or high profile recent hires?
    - 13y ago
michaelochurch 13y ago
I feel like the douche-pocalypse described by OP has already happened. It's not a future threat. It's how most people have to live. The Apple founders would be unable to get funding these days. They wouldn't even get a meeting. VCs have set themselves up as executives (maybe more like record industry shot-callers than steel-company management) of the first postmodern corporation. If you don't take their terms, they can't exactly fire you, so they fund your competition. Tech press is a weird sort of HR organization, and so-called "startup CEOs" are merely product managers within this weird meta-corporation that is just as badly stacked against software talent as a 1970s steel company. It's having pernicious effects on the software industry, which is now a hotbed of mediocrity utterly opposed to what it used to be. I think what killed software entrepreneurialism for good was the rise in housing prices, coupled with the student debt epidemic and the cost of health insurance. Unless independently wealthy, no one can actually afford to "bootstrap" in these locations, so true entrepreneurial activity has been replaced by VC-istan careerism. I don't know where the future is, but it's not in Silicon Valley now-- no place where middle-class houses cost $1.2 million is anywhere near the future-- and it's not in New York, and it may not be in the U.S. at all. On a side note, I wish people would stop calling the VC ecosystem in the Bay Area, "Silicon Valley". That's why I use VC-istan. They're different things. Silicon Valley has a 70-year history and it hasn't always been VC-istan. VC-istan is just how it died.
- dasil003 13y ago
  I respect you a lot Michael, but don't you think perhaps you are romanticizing the past a bit too much here? I mean there was a time when tech advancements were more fundamental simply because you couldn't do as much in software. What makes you think VCs have changed so much?
  - michaelochurch 13y ago
    I don't know whether VCs have changed, so much as they've either pushed themselves or been pushed into an inappropriate role. A large part of it is that big companies have given up on trying to innovate (they just buy innovations, at a panic price) and the people from whom innovation typically came are now a pariah caste of almost-unemployable miserable geniuses. Even worse, those people can't raise funding anymore because they've been outcompeted (for attention, press, and funding) by people with superior social polish but shittier ideas. VCs are private equity guys. For deciding whether two $300-million biotech companies should merge, they're probably the best people out there. It's not that they're "good" at making those calls, but that the companies are so complex and unusual that almost no one is, and they're the most adept at figuring out what's going on amid the chaos. They might be able to tease out a +0.02 correlation in decision-making while the rest of us would get zero. For figuring out who has the competence to start a tech company? They're in the dark. Not a clue among them. It's not what they learned in business school or McKinsey. They'd do 100 times better to have a person like me do the talent scouting/vetting, but for a variety of reasons that will never happen. The real evil isn't VCs so much as it's the replacement of R&D by M&A, representing a wide-scale trend of engineer disempowerment. Being a software engineer used to be an R&D job because non-engineers understood that they didn't know how to do that job, so it got a lot of autonomy and trust. Now, it's being treated as commodity work, and the result is a catastrophic dilution of the industry. VCs aren't singularly to blame for this, but they certainly didn't stop it. It was actually a lot better, for engineers, to be in R&D labs of large companies than it is to be an engineer at a VC-istan startup. You had more career growth and more opportunities to learn stuff. Don't be fooled by the bullshit equity handed out now. Sure, these R&D engineers didn't get rich at 27-- they had to strike out on their own to do that, and many were happy being upper-middle-class technology researchers as a lifelong career, so most never did-- but most VC-istanis don't either. We need to bring back the R&D flavor of the software industry, or we'll have lost the industry for good.
tbrownaw 13y ago
I don't get it. Convincing people to give you large sums of money has always been based on gaining their confidence. And people being what they are, that confidence has always been based more on how you present yourself than on any objective logical measures.
- bitanarch 13y ago
  What if I tell you that, there're a bunch of people who do nothing but present themselves? And, when they're co-founding a company with you, they still do nothing but present themselves (not your company)?
basseq 13y ago
The sweeping generalizations and alleged industry-crossing trends in this article undermine a very basic truth: that a small minority of people are successful by kissing ass rather than kicking it. The author has set up an imaginary "nobility" (including himself, presumably) of people who's intentions are—by his definition—"pure". You're either an entrepreneur or a "corporate stooge". There is no middle ground. There is no one in a Fortune 500 company who is responsible for delivering results, apparently. (Unless we're defining "entrepreneurs" as "anyone who is not a corporate stooge," which seems like a stretch.) Moreover, there's apparently no one who can both play the "political game" and deliver results. As if the mere presence of the former taints the well, so to speak. I think the fact of the matter is the politics—relationships, perception, track record—do matter and should matter. If you think you can build a good product and people will beat a path to your door, you're horribly naive. As a VC faced with two equal products, would you rather back someone who's already built a product and had an exit, or someone who's doing this for the first time? The former is certainly lower risk...
dangrover 13y ago
I've gotten hung up on this before, but after two years away from the Valley, I realized a lot of this stuff is small potatoes. We've all seen companies that have been involved in multi-million dollar transactions on pure hot air and politics alone. These can seem discouraging to people who want to build actual businesses, and deals like Tumblr and Instagram are in another league entirely. But, for most of them, you really have to look at the actual magnitude of these things (on a financial level) before you decide to be indignant about them. As a thought experiment, if you take the amounts of money involved in typical fundings and even a lot of exits, and compare it to amounts of money involved in things outside the startup ecosystem, it can be thought-provoking, even if you're comparing apples to oranges. For instance: - The project budgets of large consultancies. (e.g. I worked on a routine project at a consultancy once where the budget was $12M.) - Smaller government agencies and civil engineering works (e.g. new Central Subway on 4th St is around $900M [how much politics do you think is involved in that?]) - Real estate listings - The amounts invested in even smaller hedge funds/mutual funds. (I think Zed Shaw had a piece on this) - The profits of bigger SV companies that actually are profitable (Google, Apple, etc). Or, the budget of some given department in such a company. - Real acquisitions outside of tech (see the WSJ on an average day for figures that can make your head spin). I know these things are obvious, but it really needs to be stated sometimes. It's hard to rationalize big numbers unless you really think about it. And you can get tunnel vision living in the Valley. $5M here and there is chump change in the grand scheme of things in the world that venture capitalists and large enterprises inhabit. There is bound to be a certain amount of noise you see observing these transactions, and definitely politics. Fun to watch and comment about, but not really important. While these aren't grave injustices, I guess I would concede that when taken wrong, it does have some chilling effects for people like the OP and myself. The current business climate does create some awkward and unnecessary dilemmas for people in the uncanny valley between being an entrepreneur and an employee. There are plenty of smart people who, in a perfect world, might go for starting a fairly medium-risk/medium-return sort of business. But with all the "smart money" on crazy startups impacting everyone's salaries, the rents, and the news cycles, it changes things. If you do go ahead with it, you might be tempted optimize your business at least partially for a potential acquisition and spend more on generating hype than on the fundamentals. Or you might get such a compelling offer from one crazy, poorly-proven but well-funded and well-connected startup that you forgo your perfectly viable plan entirely. So, the odd politically-motivated acquisition or funding shouldn't make you feel bad, but the cumulative effects can be suffocating for sure!
orangethirty 13y ago
The rise? Has anyone not paid attention to history? Entrepreneurs have always directly influenced policy.
venomsnake 13y ago
Well ... I think it is much simpler than that - startups are in a buyer's market. We have oversupply of startups concentrated in few relatively narrow classes of problems. So the most connected people win. Which is paradoxical because the uncharted areas today are bigger than ever - but there are not much ships sailing there. Maybe the "solve problems that you have" mantra is becoming too influential. So we have two tracks - one of people with common problems and the tech skills to solve them and the other - much bigger - people that have real problems but lack the skills to solve the problems. But we got success stories like Raspberry Pi - when people tried to solve a problem they didn't have but created something awesome in the process. And just today Google bought a flying wind turbine startup - and it does not look like aqui-hire.
pg 13y ago
This would be accurate if time were going backwards. The world it describes is how things were in the 90s. For the last two decades, at least, the power of hackers/makers relative to MBAs/smooth talkers has consistently increased, and that trend shows no sign of slowing down.
- amarghose 13y ago
  > hackers/makers relative to MBAs/smooth talkers I think the article is more referring to Hackers/Makers that are also smooth talkers. Obviously an MBA/Business guy with no technical experience/knowledge is not going to be able to pull off any sort of political entrepreneurship in VC-istan.
  - nostrademons 13y ago
    A hacker/maker who is also a smooth talker is always going to do better than one who isn't a smooth talker, though. That's like saying "A person who builds useful stuff but also has an Ivy-League degree will be hired over someone who builds useful stuff but doesn't." Duh, but it doesn't mean that building useful stuff is less useful than having the Ivy-League degree (or being a smooth talker).
  - tptacek 13y ago
    I stopped trying to parse this comment just before it gave me an aneurysm as I tried to resolve what "VC-istan" might refer to and how non-tech MBAs had no influence there. VC's fund tons of companies headed by operators with no technical experience (look at some 2012 portfolios to see this). It is eas-ier to get external funding if you're a tech with no company operating experience, but it still not eas-y to do that. So it's probably not "obvious" that MBA/business types have no influence wherever "VC-istan" is. Which is I think a good reason not to start calling it "VC-istan".
    - MisterWebz 13y ago
      The word "VC-istan" has been used a lot in this thread and even elsewhere, I don't understand why you put so much emphasis on not understanding what it means.
NoPiece 13y ago
Now, I’ve decided to refrain from naming names, since any specific mentions would almost certainly induce a wave of denials and distract from identifying and, hopefully, ending the underlying trend. You've identified a "terrifying" trend, but you don't want share any names or substantiation because it would distract from the important discussion you think we need to have. That's really shoddy journalism.
lettergram 13y ago
If anyone read the Fountainhead you can call those groups Keating's and Toohey's
tudorconstantin 13y ago
The OP is presenting this as if the objective of every startup is to get fundings or to get acquired. It's not. The objective should be to help a big number of users with something and make profit. Funding should be just a tool to help you achieve that if you can't bootstrap your business. If there are VCs who fall for tricky presentations, they'll soon realize that it is not that fun to lose money investing in startups with no future.
pshin45 13y ago
It's both surprising and alarming to me how many VCs cite "emotion" (rather than logic) as a main if not primary factor in their decision to fund a startup or not. I'd venture (no pun intended) to say that this is the root cause of much of the "politics" and cronyism described by the OP, and I don't think YC is immune to this either. Sure, we can talk all day about "human nature" and how "those are the rules of the game", but there's gotta be a better way for investors to make funding decisions than "trusting your gut" or "I have a good feeling about this team." Yes, VC has changed and evolved over the years thanks in part to new institutions like YC, but the overall VC landscape still reminds me way too much of that scene from the based-on-the-book film "Moneyball" where a bunch of old baseball scouts are sitting around a table discussing who to recruit for next season, and they keep recommending players based on fluff and BS like how good a guy looks swinging the bat (vs. actual hitting stats), how confident he looks, how good he he looks with his shirt off, etc. This all leads me to believe that, while things are getting better, there's still a long ways to go before Silicon Valley and michaelochurch's so-called "VC-istan" can be considered anything close to a true meritocracy.
- hga 13y ago
  The problem I see with your complaint is that any early venture funding is a bet on people ("I have a good feeling about this team") and there's no escaping that. The real Moneyball was based on using better metrics to choose players ... in a rigorously constrained game. Starting a business of the sort we're talking about is entirely different, and I see little in the way of opportunities to apply logic to the choosing people question.
  - pshin45 13y ago
    I agree that baseball is easily the most "rigorously constrained game" there is, but I don't think that's reason to dismiss the use of more/better metrics in assessing startup founders and teams. The same argument you make was once used to dismiss the value of metrics in other more free-flowing and less-constrained sports like basketball, but analytics has become a staple of the sport ever since. [1] And since then, advanced metrics have even found their way into Mixed Martial Arts (MMA), of all things. [2] Sure, starting a company is obviously very different from sports and building a sports team, but I don't think it's THAT different. Sports is essentially a simulation of real life, and I think the move to using advanced metrics in startups is inevitable. If you think about it, even startups are a highly constrained and simplified (i.e. smaller-scale, less people, more uniform "path", etc.) version of running a big business. I see no real reason, besides general skepticism, why metrics cannot be used to improve the startup fundraising process. [1] http://en.wikipedia.org/wiki/APBRmetrics http://en.wikipedia.org/wiki/APBRmetrics [2] http://www.sloansportsconference.com/?p=8966 http://www.sloansportsconference.com/?p=8966
Aqueous 13y ago
Everything is political, because everyone else is political, except for me - I'm not political. The winners of the political game are the same individuals who reinforce the political game, and the people who complain about the politics are inevitably the ones who can't muster the energy for fake affection, enthusiasm, flattery, obsequiousness and therefore lose the political game. As soon as something has become a culture in itself it is already too late - it is and will forever be political, til the very beginning of the next big culture shift, which will also inevitably become political. It's self-selecting, and it's been going on since the beginning of history. The only answer is to not give a shit. To not complain about politics, or if you happen to be a winner of politics, to be self aware enough not to then turn around and reinforce the game that you just won at.
jezclaremurugan 13y ago
Its not as scary as it first appears as VCs have a huge incentive to correct this while in the corporate world, the incentive to correct it is quite less.
skreech 13y ago
If there are two camps, these would rather be 'those who want to build a business' (sending invoices, paying customers, etc) and 'those who want to make a big flip' (with major financial rewards) Since VCs (and indirectly LPs) are in the business of growing money, they will follow the money.

149 points by chwolfe 13y ago

wasd 13y ago

I really don't like this article. I'm not saying that the author is right or wrong, but what is the author trying to accomplish? They aren't helping change the ecosystem or bring new conversations to the table. I feel like this feeds to pettiness and bitterness toward fellow entrepreneurs that you don't feel "deserve" it. Who cares what they raised? Who cares who they sold to? If you're doing what matters to you, it shouldn't matter.

mindcrime 13y ago
I feel like this feeds to pettiness and bitterness toward fellow entrepreneurs that you don't feel "deserve" it. Who cares what they raised? Who cares who they sold to? Yeah, it's easy to look over and see somebody else failing (or succeeding) and just express "sour grapes" and accuse them of just "playing political games". That said, do politics enter into it on some level? Yeah, I'm sure they do. And I've been "the guy" before, watching other startups that I personally judge to be of very low quality and little potential get invited to events, get press coverage, etc., when we didn't. But to sit here and say "they got XXXX because they were just skilled at playing the political game" does feel like just "sour grapes" to me. And even if it were true, what good does it do to bitch about it? Nobody cares and crying over spilt milk isn't moving us any closer to our goals. I prefer to just stay heads-down, nose to the grindstone, work my ass off, and figure that we will succeed in the end, if it's deserved. We're playing the long-game here, and if our vision is correct and we execute, we'll get what's coming to us in the long term. If not, well... then we won't. If you're doing what matters to you, it shouldn't matter. Well said.
wmf 13y ago
Arguably if you're competing for funding it helps to have a model of your opponents.
dasil003 13y ago
It definitely reads as envy or sour grapes. One thing I always have in the back of my mind is to work hard to avoid hating anyone because they're good at what they do, and it's hard work because the human psyche is tremendously good at finding justifications and pulling the blinders over oneself. Tearing someone else down is the childish and easy way to build yourself up, but it's only in your own head, it doesn't actually make you any better and it doesn't impress anyone around you. Hate should be reserved for people who really do bad things, and even then we're probably better if we can avoid the hate entirely.
- michaelochurch 13y ago
  One thing I always have in the back of my mind is to work hard to avoid hating anyone because they're good at what they do Stop right there. None of us hate people who are good at what they do. When we find someone who's better, we seek that person out and try to learn as much as we can. I'd believe this to be especially true on HN, where there's an above-normal proportion of top-5% programmers, many of whom rarely get that opportunity to learn from someone of truly superior skill. The problem with political players is that, while they suck at what they do, they're great at hacking evaluation processes and making themselves look superior. That hurts everyone (except them) because their shitty decisions and ideas result in a widespread proliferation of crap.
  - dasil003 13y ago
    Sure, sometimes. But if your company is not doing so hot and you see some ridiculous acquisition and think to yourself how the fuck did that happen, it's easy to jump to the conclusion that it's political bullshit when in fact you don't really know the whole story. You don't know what the tech is or what the real numbers are or what the purpose of the acquisition was. I think it's very easy to jump to a conclusion on an emotional basis, and our belief in our objectivity is what makes this all the more treacherous.

johnrob 13y ago

Even if there do exist 'political' entrepreneurs, they don't come at the expense of normal ones. Get users, make sales, and you will succeed.

mindcrime 13y ago
Get users, make sales, and you will succeed. That's the way I try to look at it. Nobody locally (RTP, NC area) seems to pay much attention to us or give us any credit, where when I look at what we're doing I can't help but think "What? Are you people crazy? Do you realize how fricking awesome this stuff is?" But then I have to acknowledge that I'm (very) biased, and that our focus should be on identifying, connecting with, and having conversations with, our future customers. Getting press mentions, getting invited to events, accepted into accelerators / incubators, etc., all those things ultimately play second fiddle to customers. IF the day comes when we have paying customers and are growing, then the accolades and attention will come. Or not. In the end, it doesn't really matter. If we build a profitable, growing, successful business, it doesn't really matter if we get any accolades or not. Although it does pain my "inner Tony Stark" to say that, as I really want to have a big "Fogbeam Expo" one day. :-) Net-net, I just try to remember "we haven't proven anything yet".
olefoo 13y ago
I'm always amused by 'entrepreneurs' whose focus is on getting funded rather than building a business.

DoubleMalt 13y ago

As Cory Doctorow aptly stated: every good eco system has parasites. I'm sure these types exist, but they are an inevitable side effect of the properties that make the eco system successful.

jacques_chester 13y ago
There's a good case to be made that parasites make ecosystems, not the other way around (the "Red Queen" hypothesis).

rayiner 13y ago

The cognitive dissonance in Silicon Valley is amusing. You think VC-istan was ever not political? Where do you think VC's come from? They don't grow on trees. They grow in McKinsey and Morgan Stanley, where they learn to deftly navigate corporate politics at the highest levels. Thats not the only thing they learn, of course, but it is a fundamental pillar of the training. Silicon Valley is owned by Wall Street (what do you think it means for VC's to "raise funds?") and favors those who can play that game. Not that I think this is a bad thing mind you. It just is. It's like dating-it's futile to complain about the rules. They're just the rules. You're trying to convert capital into a successful business, so you gotta play by the rules of the people who have the capital. Which is true for pretty much everyone. Being in Silicon Valley doesn't insulate you from the reality that exists everywhere else.

pg 13y ago
Actually the trend among VCs lately is to hire people with operating experience as partners: Alfred Lin, Chris Dixon, Keith Rabois.
- atdrummond 13y ago
  This has been replicated in traditional private equity as well, especially when the IPO market softened significantly during the financial crisis.
crapshoot101 13y ago
Wait, are you serious? Have you looked at the average VC today? Overwhelmingly, they are made up of former entrepreneurs. The analysts may come from Morgan Stanley and McKinsey, but the partner's don't. This is one of those conjectures that people state without backing up.
- rayiner 13y ago
  Is that the average or high profile recent hires?
  - 13y ago

michaelochurch 13y ago

I feel like the douche-pocalypse described by OP has already happened. It's not a future threat. It's how most people have to live. The Apple founders would be unable to get funding these days. They wouldn't even get a meeting. VCs have set themselves up as executives (maybe more like record industry shot-callers than steel-company management) of the first postmodern corporation. If you don't take their terms, they can't exactly fire you, so they fund your competition. Tech press is a weird sort of HR organization, and so-called "startup CEOs" are merely product managers within this weird meta-corporation that is just as badly stacked against software talent as a 1970s steel company. It's having pernicious effects on the software industry, which is now a hotbed of mediocrity utterly opposed to what it used to be. I think what killed software entrepreneurialism for good was the rise in housing prices, coupled with the student debt epidemic and the cost of health insurance. Unless independently wealthy, no one can actually afford to "bootstrap" in these locations, so true entrepreneurial activity has been replaced by VC-istan careerism. I don't know where the future is, but it's not in Silicon Valley now-- no place where middle-class houses cost $1.2 million is anywhere near the future-- and it's not in New York, and it may not be in the U.S. at all. On a side note, I wish people would stop calling the VC ecosystem in the Bay Area, "Silicon Valley". That's why I use VC-istan. They're different things. Silicon Valley has a 70-year history and it hasn't always been VC-istan. VC-istan is just how it died.

dasil003 13y ago
I respect you a lot Michael, but don't you think perhaps you are romanticizing the past a bit too much here? I mean there was a time when tech advancements were more fundamental simply because you couldn't do as much in software. What makes you think VCs have changed so much?
- michaelochurch 13y ago
  I don't know whether VCs have changed, so much as they've either pushed themselves or been pushed into an inappropriate role. A large part of it is that big companies have given up on trying to innovate (they just buy innovations, at a panic price) and the people from whom innovation typically came are now a pariah caste of almost-unemployable miserable geniuses. Even worse, those people can't raise funding anymore because they've been outcompeted (for attention, press, and funding) by people with superior social polish but shittier ideas. VCs are private equity guys. For deciding whether two $300-million biotech companies should merge, they're probably the best people out there. It's not that they're "good" at making those calls, but that the companies are so complex and unusual that almost no one is, and they're the most adept at figuring out what's going on amid the chaos. They might be able to tease out a +0.02 correlation in decision-making while the rest of us would get zero. For figuring out who has the competence to start a tech company? They're in the dark. Not a clue among them. It's not what they learned in business school or McKinsey. They'd do 100 times better to have a person like me do the talent scouting/vetting, but for a variety of reasons that will never happen. The real evil isn't VCs so much as it's the replacement of R&D by M&A, representing a wide-scale trend of engineer disempowerment. Being a software engineer used to be an R&D job because non-engineers understood that they didn't know how to do that job, so it got a lot of autonomy and trust. Now, it's being treated as commodity work, and the result is a catastrophic dilution of the industry. VCs aren't singularly to blame for this, but they certainly didn't stop it. It was actually a lot better, for engineers, to be in R&D labs of large companies than it is to be an engineer at a VC-istan startup. You had more career growth and more opportunities to learn stuff. Don't be fooled by the bullshit equity handed out now. Sure, these R&D engineers didn't get rich at 27-- they had to strike out on their own to do that, and many were happy being upper-middle-class technology researchers as a lifelong career, so most never did-- but most VC-istanis don't either. We need to bring back the R&D flavor of the software industry, or we'll have lost the industry for good.

tbrownaw 13y ago

I don't get it. Convincing people to give you large sums of money has always been based on gaining their confidence. And people being what they are, that confidence has always been based more on how you present yourself than on any objective logical measures.

bitanarch 13y ago
What if I tell you that, there're a bunch of people who do nothing but present themselves? And, when they're co-founding a company with you, they still do nothing but present themselves (not your company)?

basseq 13y ago

The sweeping generalizations and alleged industry-crossing trends in this article undermine a very basic truth: that a small minority of people are successful by kissing ass rather than kicking it. The author has set up an imaginary "nobility" (including himself, presumably) of people who's intentions are—by his definition—"pure". You're either an entrepreneur or a "corporate stooge". There is no middle ground. There is no one in a Fortune 500 company who is responsible for delivering results, apparently. (Unless we're defining "entrepreneurs" as "anyone who is not a corporate stooge," which seems like a stretch.) Moreover, there's apparently no one who can both play the "political game" and deliver results. As if the mere presence of the former taints the well, so to speak. I think the fact of the matter is the politics—relationships, perception, track record—do matter and should matter. If you think you can build a good product and people will beat a path to your door, you're horribly naive. As a VC faced with two equal products, would you rather back someone who's already built a product and had an exit, or someone who's doing this for the first time? The former is certainly lower risk...

dangrover 13y ago

I've gotten hung up on this before, but after two years away from the Valley, I realized a lot of this stuff is small potatoes. We've all seen companies that have been involved in multi-million dollar transactions on pure hot air and politics alone. These can seem discouraging to people who want to build actual businesses, and deals like Tumblr and Instagram are in another league entirely. But, for most of them, you really have to look at the actual magnitude of these things (on a financial level) before you decide to be indignant about them. As a thought experiment, if you take the amounts of money involved in typical fundings and even a lot of exits, and compare it to amounts of money involved in things outside the startup ecosystem, it can be thought-provoking, even if you're comparing apples to oranges. For instance: - The project budgets of large consultancies. (e.g. I worked on a routine project at a consultancy once where the budget was $12M.) - Smaller government agencies and civil engineering works (e.g. new Central Subway on 4th St is around $900M [how much politics do you think is involved in that?]) - Real estate listings - The amounts invested in even smaller hedge funds/mutual funds. (I think Zed Shaw had a piece on this) - The profits of bigger SV companies that actually are profitable (Google, Apple, etc). Or, the budget of some given department in such a company. - Real acquisitions outside of tech (see the WSJ on an average day for figures that can make your head spin). I know these things are obvious, but it really needs to be stated sometimes. It's hard to rationalize big numbers unless you really think about it. And you can get tunnel vision living in the Valley. $5M here and there is chump change in the grand scheme of things in the world that venture capitalists and large enterprises inhabit. There is bound to be a certain amount of noise you see observing these transactions, and definitely politics. Fun to watch and comment about, but not really important. While these aren't grave injustices, I guess I would concede that when taken wrong, it does have some chilling effects for people like the OP and myself. The current business climate does create some awkward and unnecessary dilemmas for people in the uncanny valley between being an entrepreneur and an employee. There are plenty of smart people who, in a perfect world, might go for starting a fairly medium-risk/medium-return sort of business. But with all the "smart money" on crazy startups impacting everyone's salaries, the rents, and the news cycles, it changes things. If you do go ahead with it, you might be tempted optimize your business at least partially for a potential acquisition and spend more on generating hype than on the fundamentals. Or you might get such a compelling offer from one crazy, poorly-proven but well-funded and well-connected startup that you forgo your perfectly viable plan entirely. So, the odd politically-motivated acquisition or funding shouldn't make you feel bad, but the cumulative effects can be suffocating for sure!

orangethirty 13y ago

The rise? Has anyone not paid attention to history? Entrepreneurs have always directly influenced policy.

venomsnake 13y ago

Well ... I think it is much simpler than that - startups are in a buyer's market. We have oversupply of startups concentrated in few relatively narrow classes of problems. So the most connected people win. Which is paradoxical because the uncharted areas today are bigger than ever - but there are not much ships sailing there. Maybe the "solve problems that you have" mantra is becoming too influential. So we have two tracks - one of people with common problems and the tech skills to solve them and the other - much bigger - people that have real problems but lack the skills to solve the problems. But we got success stories like Raspberry Pi - when people tried to solve a problem they didn't have but created something awesome in the process. And just today Google bought a flying wind turbine startup - and it does not look like aqui-hire.

pg 13y ago

This would be accurate if time were going backwards. The world it describes is how things were in the 90s. For the last two decades, at least, the power of hackers/makers relative to MBAs/smooth talkers has consistently increased, and that trend shows no sign of slowing down.

amarghose 13y ago
> hackers/makers relative to MBAs/smooth talkers I think the article is more referring to Hackers/Makers that are also smooth talkers. Obviously an MBA/Business guy with no technical experience/knowledge is not going to be able to pull off any sort of political entrepreneurship in VC-istan.
- nostrademons 13y ago
  A hacker/maker who is also a smooth talker is always going to do better than one who isn't a smooth talker, though. That's like saying "A person who builds useful stuff but also has an Ivy-League degree will be hired over someone who builds useful stuff but doesn't." Duh, but it doesn't mean that building useful stuff is less useful than having the Ivy-League degree (or being a smooth talker).
- tptacek 13y ago
  I stopped trying to parse this comment just before it gave me an aneurysm as I tried to resolve what "VC-istan" might refer to and how non-tech MBAs had no influence there. VC's fund tons of companies headed by operators with no technical experience (look at some 2012 portfolios to see this). It is eas-ier to get external funding if you're a tech with no company operating experience, but it still not eas-y to do that. So it's probably not "obvious" that MBA/business types have no influence wherever "VC-istan" is. Which is I think a good reason not to start calling it "VC-istan".
  - MisterWebz 13y ago
    The word "VC-istan" has been used a lot in this thread and even elsewhere, I don't understand why you put so much emphasis on not understanding what it means.

NoPiece 13y ago

Now, I’ve decided to refrain from naming names, since any specific mentions would almost certainly induce a wave of denials and distract from identifying and, hopefully, ending the underlying trend. You've identified a "terrifying" trend, but you don't want share any names or substantiation because it would distract from the important discussion you think we need to have. That's really shoddy journalism.

lettergram 13y ago

If anyone read the Fountainhead you can call those groups Keating's and Toohey's

tudorconstantin 13y ago

The OP is presenting this as if the objective of every startup is to get fundings or to get acquired. It's not. The objective should be to help a big number of users with something and make profit. Funding should be just a tool to help you achieve that if you can't bootstrap your business. If there are VCs who fall for tricky presentations, they'll soon realize that it is not that fun to lose money investing in startups with no future.

pshin45 13y ago

It's both surprising and alarming to me how many VCs cite "emotion" (rather than logic) as a main if not primary factor in their decision to fund a startup or not. I'd venture (no pun intended) to say that this is the root cause of much of the "politics" and cronyism described by the OP, and I don't think YC is immune to this either. Sure, we can talk all day about "human nature" and how "those are the rules of the game", but there's gotta be a better way for investors to make funding decisions than "trusting your gut" or "I have a good feeling about this team." Yes, VC has changed and evolved over the years thanks in part to new institutions like YC, but the overall VC landscape still reminds me way too much of that scene from the based-on-the-book film "Moneyball" where a bunch of old baseball scouts are sitting around a table discussing who to recruit for next season, and they keep recommending players based on fluff and BS like how good a guy looks swinging the bat (vs. actual hitting stats), how confident he looks, how good he he looks with his shirt off, etc. This all leads me to believe that, while things are getting better, there's still a long ways to go before Silicon Valley and michaelochurch's so-called "VC-istan" can be considered anything close to a true meritocracy.

hga 13y ago
The problem I see with your complaint is that any early venture funding is a bet on people ("I have a good feeling about this team") and there's no escaping that. The real Moneyball was based on using better metrics to choose players ... in a rigorously constrained game. Starting a business of the sort we're talking about is entirely different, and I see little in the way of opportunities to apply logic to the choosing people question.
- pshin45 13y ago
  I agree that baseball is easily the most "rigorously constrained game" there is, but I don't think that's reason to dismiss the use of more/better metrics in assessing startup founders and teams. The same argument you make was once used to dismiss the value of metrics in other more free-flowing and less-constrained sports like basketball, but analytics has become a staple of the sport ever since. [1] And since then, advanced metrics have even found their way into Mixed Martial Arts (MMA), of all things. [2] Sure, starting a company is obviously very different from sports and building a sports team, but I don't think it's THAT different. Sports is essentially a simulation of real life, and I think the move to using advanced metrics in startups is inevitable. If you think about it, even startups are a highly constrained and simplified (i.e. smaller-scale, less people, more uniform "path", etc.) version of running a big business. I see no real reason, besides general skepticism, why metrics cannot be used to improve the startup fundraising process. [1] http://en.wikipedia.org/wiki/APBRmetrics http://en.wikipedia.org/wiki/APBRmetrics [2] http://www.sloansportsconference.com/?p=8966 http://www.sloansportsconference.com/?p=8966

Aqueous 13y ago

Everything is political, because everyone else is political, except for me - I'm not political. The winners of the political game are the same individuals who reinforce the political game, and the people who complain about the politics are inevitably the ones who can't muster the energy for fake affection, enthusiasm, flattery, obsequiousness and therefore lose the political game. As soon as something has become a culture in itself it is already too late - it is and will forever be political, til the very beginning of the next big culture shift, which will also inevitably become political. It's self-selecting, and it's been going on since the beginning of history. The only answer is to not give a shit. To not complain about politics, or if you happen to be a winner of politics, to be self aware enough not to then turn around and reinforce the game that you just won at.

jezclaremurugan 13y ago

Its not as scary as it first appears as VCs have a huge incentive to correct this while in the corporate world, the incentive to correct it is quite less.

skreech 13y ago

If there are two camps, these would rather be 'those who want to build a business' (sending invoices, paying customers, etc) and 'those who want to make a big flip' (with major financial rewards) Since VCs (and indirectly LPs) are in the business of growing money, they will follow the money.