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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
by 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wealthy, no one can actually afford to "bootstrap" in these locations, so true entrepreneurial activity has been replaced by VC-istan careerism.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 agoI 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 agoI 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.
- dasil003 13y agoI tend to view the tech R&D golden age as a product of post-war prosperity and the unique advantages the US had during the latter half of the 20th century. Trust between corporations and employees, and indeed the longevity of corporations themselves has now been so eroded that no one is willing to continue playing the long game of R&D. Take into account the insanity of how the patent system protects all the wrong people and has on balance the exact opposite of its intended effect, and I see the current situation as a bit of a Darwinian inevitability. Being a software engineer is still a kick-ass job compared to almost anything else out there today.
- michaelochurch 13y agoBeing a software engineer is still a kick-ass job compared to almost anything else out there today. No, I really don't think so. If I were to do it over again, I would rather be an Alaskan fishing boat operator than a software engineer doing 99% of the stuff that paid programmers have to do. My body is mediocre. It works, there's nothing wrong with it, and I'm probably in the top 33% for physique, but I'm not Olympic material, so using my body for mediocre physical work does not offend me. It seems about right. I think I would be happier in medieval times when there was no expectation that a smart person would do high-quality work. You did harsh physical work for 45 years and then died. Seems more fulfilling than this corporate bullshit where a bunch of well-connected high priests don't merely do less work and make more money, but the fuckers think they earned it! My mind, on the other hand, is Olympic material and any time someone tries to coerce me into using it for the grunt work they don't want to do, it just makes me homicidal.
- dasil003 13y agoI have go call bullshit on this. You are probably younger than every Alaskan fishing boat operator today and you could go do that tomorrow if you really wanted. Also, why would it be better to pay 80% of your labor directly to a king who would let you starve after a bad harvest or two than it would be to deal with some douchey suits? I mean you can't really be serious with this, it's just a diatribe against the existing corporate hegemony, am I wrong?
- apike 13y agoThe Apple founders would be unable to get funding these days. They wouldn't even get a meeting. This was true in the 70s as well. The Apple founders had to rely on revolving credit from the parts suppliers to get the parts they needed to get off the ground.
- hga 13y agoEh, that's more like angel level stuff. Wikipedia's history is lacking in details, but says "Jobs eventually met Mike Markkula who co-signed a bank loan for US$250,000, and the three formed Apple Computer on April 1, 1976." That's a million in 2013 dollars. But I know they got VC funding later (and I seem to remember they weren't given the third degree in getting it) and Wikipedia acknowledges that saying "On December 12, 1980, Apple launched the Initial Public Offering of its stock to the investing public. When Apple went public, it generated more capital than any IPO since Ford Motor Company in 1956 and instantly created more millionaires (about 300) than any company in history. Several venture capitalists cashed out, reaping billions in long-term capital gains." (http://en.wikipedia.org/wiki/History_of_Apple_Inc. http://en.wikipedia.org/wiki/History_of_Apple_Inc.)
- nostrademons 13y agoThey had traction well before they met Mike Markkula - the Apple I sold out, even though it was nothing but a kit. If can show traction today similar to what Apple had, you'll have a bidding war of investors on your hands. This is how YouTube and Instagram got bought for $1B+, it's how Google got two separate VCs to co-lead their series A, and it's how any number of other small startups attract investor attention. The thing that's new is that you can sometimes get VC funding based only on an idea, without traction and without a prior business relationship. That never used to happen before YC. When I quit my job in 2007 to pursue a startup (2 years work experience), I told our VP of BizDev (a former investment banker) "Realistically, we have about zero chance of getting VC funding without traction, but this is our chance to try to build traction and see if it's fundable ourselves" and he was like "Well, at least you're being realistic about your odds."
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- mindcrime 13y agoThat'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. To be completely honest, I never knew you intended to imply a geographic location when you use the term "VC-istan". I always thought you were applying that to refer to, basically, all VCs, anywhere. Not sure if that changes to the extent to which I agree/disagree, but it is a detail that wasn't apparent (at least to me).
- michaelochurch 13y agoSorry for the confusion. No, I don't intend VC-istan to be pinned on a specific location. There's definitely a New York VC-istan, and probably a VC-istan for every city that has a serious VC scene. However, people use "Silicon Valley" to mean VC-istan, but Silicon Valley is something much bigger (at least in time, because it goes back about 70 years).
- mindcrime 13y agoAh, OK. Gotcha.
- jimbokun 13y ago"The Apple founders would be unable to get funding these days." If it's a political game today, I would take Steve Jobs over any entrepreneur today to win.
- tptacek 13y agoI've been doing startups since the mid 1990s†. There is no reasonable argument that says that it is harder for tech people to get funding now than it was in the 1990s. It is much, much easier to get funding in 2013 than it was in 1999 (which was the last time I got funding): * There are more investors doing deals now than there were then * The deal size needed to start any given company is lower and investors are playing along with that instead of holding out for deals they can shove 8MM into * More technical people with no previous operational experience are getting funded than got funded in 1999 --- you can just look around to see this; bubble companies still needed grey hair and/or Ivy MBAs to get off the ground * Companies have better pre-A-round options (particularly, syndicated convertible note funding) than they did in the 1999s, when "angel investor" meant "best friend's rich uncle gives you $200,000" * There are more people with operational experience in software companies staffing VC firms In 1999, if you were a software developer with a good idea, a working prototype, and just a little bit of traction, but no experienced operators and no inside track, you had no realistic chance of getting off the ground with external funding of any sort. Your whole argument stems from a flawed observation and so, I think, falls apart when the observation is shown to be incorrect. I do not like venture fund financing either, but the hyperbole you bring to these arguments does my own dissatisfaction with the model a disservice by presenting an easily dismissible caricature instead of an argument. † From 1995: 1. Bootstrapped ISP with mid-double digits FTEs, 2. Angel-funded product company that exited successfully, 3. Venture funded product company that failed, 4. Venture funded product company that eventually exited successfully, 5. Matasano; I had key/sr/mteam roles at all of them and founded 2.
- lifeisstillgood 13y agoI would suggest the two of you are describing different parts of the elephant. I was deeply struck by Venkatesh Rao's arguments [#] that entrpreneurlism now is simply a new form of hiring than genuine disruption. Michaels comment that VCs are the execs in some new corporate format has the ring of truth. However, it certainly seems there is more capital, more widely available, and more fairly accessible both in the US and elsewhere. This means that a vastly increased number of entrpreneurs will be able to take flight and not all of them will be lacking the leverage of insight into tidal forces that Michael is alluding to. Anyway I need sleep, but it seems to me that there is an elephant in the dark, it is the shape of Western workforce in the future - and we are all trying to describe its shape. [#] http://www.forbes.com/sites/venkateshrao/2012/09/03/entrepreneurs-are-the-new-labor-part-i/ http://www.forbes.com/sites/venkateshrao/2012/09/03/entrepre...
- mahyarm 13y agoMe and my friend recently talked about housing prices here in SV. His father moved to SV about ~25 years ago and was a tech worker in Cupertino. About a third of his income went to housing, and we calculated it would be around that price now too for current tech workers. It's above the US average, but it's still stayed somewhat consistent. You have adjust for the very recent complete cash sale, foreign investor, unoccupied house boom here driving up the price. Remember, you have the option to drive 30m to Hayward from Palo Alto and buy a 3bed2bath for $330k. You don't have that option in lets say Vancouver, BC where a 3bed2bath costs $850k, and 30 minutes away in New Westminster, BC a similar house still costs $850k. Student debt and health insurance is something epidemic to the entire USA, and you can still cost reduce it somewhat by being young and going to state universities.
- waterlesscloud 13y ago"Remember, you have the option to drive 30m to Hayward from Palo Alto and buy a 3bed2bath for $330k. You don't have that option in lets say Vancouver, BC where a 3bed2bath costs $850k, and 30 minutes away in New Westminster, BC a similar house still costs $850k." These prices and this dynamic are not even close to representative of most of the US.
- crapshoot101 13y agoI've decided that if I had a dollar for every occasion that you refer to VC-istan, I could retire. The idea that people a) don't bootstrap here or b) can't afford to live here is some sort of VC agenda is just ridiculous. This is the pinnacle of the software developer's era of leverage, and yet you seem to insist that it isn't. Where's the proof?
- michaelochurch 13y agoThis is the pinnacle of the software developer's era of leverage, and yet you seem to insist that it isn't. Really? This must explain why every software company runs open allocation, instead of people being stuck on projects that often hurt their career. It must also explain why software engineers get to pick their tools and never get stuck maintaining legacy garbage that really doesn't add any value, but that risk-averse empty-suits are afraid to throw away. It must also explain how software engineers get paid enough money to raise a family and weather the instability of this industry, with its disposable companies and all that. It probably also describes the absence of age discrimination as a threat that begins in the mid-30s. Oh wait, I just described an alternate reality that doesn't exist. And the real one is pretty horrible. Maybe the world is dramatically different where you live and, if so, I'd love to hear about it. What I've seen is pretty dismal. Low respect for people who actually write the code, lots of legacy, low autonomy, ageism starting around 30-35. ("If you're so smart, why don't you have my job?") Even Google is closed-allocation. Now, if you know where to find something different from what seems to be the prevailing software industry experience, I'd love to hear about it.
- LekkoscPiwa 13y agohot cheap money does it. Wait for the FED to raise interest rates. I.e. why to invest in a startup when just keeping cash in a bank deposit gives you 7-10% return? I read somewhere that the average return of VC companies hasn't been higher than traditional investments for the past decade. Wow! VC is high risk, should be high return. It is high risk with blue chip stock return. This type of anomaly still functioning is possible only because of the low interest rates environment we have had for the past 15 years. Cheap credit enables this. People being forced to invest as they can't just keep money on 1% "savings" bank accounts helps that too. Once the hot air is out, it'll all go back to normal.
- deleted 13y ago[deleted]