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Venture Capital didn't actually exist when Fairchild was founded. The company was named Fairchild Semiconductor because the main funder was Sherman Fairchild of
by grinich 13y ago
Venture Capital didn't actually exist when Fairchild was founded. The company was named Fairchild Semiconductor because the main funder was Sherman Fairchild of Fairchild Camera and Instrument. They were connected by a twentysomething named Arthur Rock who'd recently ditched corporate finance in NY. Rock also later invested in Intel.
Much of VC actually grew out of Fairchild. Eugene Kleiner of KPCB was one of the Fairchild founders, and Don Valentine was a Fairchild sales+marketing exec before starting Sequoia. Those two firms essentially invented modern day VC investing, and you could say Fairchild was the first experiment that worked.
It's also worth noting how much VC has grown since then. Intel only raised 2.5MM before going public. Technology is now much more broad, and there's more money to fund diverse companies. Back then, tech was a niche industry.
Hard science is certainly still getting funded out here -- see Counsyl, LightSail Energy, etc. -- but I think lots of investors are now looking at existing industries that can be flipped via software (cue pmarca's "software is eating the world" neo-adage). The "Stanford startup" that Amir describes is moreso a tech-enabled company, rather than a hard tech company. They're both valuable, but should be seen as apples and oranges.
Maybe it's because I went to MIT and am perhaps foolishly ambitious, but I personally get frustrated when I see super talented people go after easy industries. The one that comes to mind is house cleaning services. It's possible I just don't get the potential, but it's disheartening to see ultra-educated young people trying to figure out how to disrupt a low-margin industry dominated by mostly illegal immigrant workers. Not something I'd want in my epitaph I guess.
The sweet spot is probably somewhere in the middle. Work with wicked smart people, have audacious goals, and focus on shipping and being relevant today.
As an aside, I don't know why everyone is hating on Snapchat. They are riding a massive wave -- the social behavioral shift in how people share online -- which is really not to be underestimated. It's strategic for them to fly under the radar and be disregarded as a stupid toy right now. But if you look at the team they've gathered, see their metrics, or actually talk to Evan, you immediately know that it's something special on the order of YouTube or Twitter.
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- thaumasiotes 13y ago> As an aside, I don't know why everyone is hating on Snapchat. It's the same reason people hate on claims of perpetual motion machines. Their entire selling point is known to be impossible.
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- Mvandenbergh 13y agoA hard guarantee of privacy that prevents any snapchat message being copied is obviously impossible, but for a lot of people messages which are resistant to casual forwarding by ordinary users is valuable. The analogy which is usually made with DRM for media is flawed because of the mass audiences for ripped films and music. If one person of the hundreds of thousands who pays for a DRM protected music track cracks the protection off and posts the raw file, the protection is substantially devalued. A snapchat sent to a few people will not be forwarded unless one of the recipients has put forethought into doing so.
- fragmede 13y agoAll it takes is for one enterprising programmer to write and sell) a snapchat recorder, which would automatically saves all the snapchat photos, while bypassing whatever mechanism snapchat uses to detect picture saving.
- grinich 13y agoIn practice, this is actually pretty difficult to do. They can send you cease and desist, block you via the ToS, threaten legal action, add stronger crypto, etc. It's different than DRM because Snapchat owns the entire system. Also, once your friends realize you're using the "Snapchat recorder" they'll stop sending you snaps entirely.
- fragmede 13y ago> It's different than DRM because Snapchat owns the entire system. That's strange, I'm pretty sure I own my own phone.
- felipe 13y agoAlthough you are correct in your assertion that Fairchild was basically the "mother" of VC, that does not invalidates the OP's point. Take this example: Do you know any VC firm today that would invest in a company like Apple, ran by a smelly barefoot hippie followed by two other nerds holding some weird circuitry machines? Mike Markkula did, and that's the classic story of VC as in Venture Capital: He provided critical funding in a very risky business attached to also very specific conditions (part of the funding was a loan, for example), and in exchange he asked for a high return. What we have today is NOT venture funding: We have funding without risk. And that's the OP's point.
- dakrisht 13y agoSome great comments from everyone here. Glad to see an intellectual and factual discussion on HN vs. the usual flaming someone or something! We need more VC's like Mike Markkula today, no doubt.
- grinich 13y agoThere's still a bit of civil discourse left in HN. :P Both Founders Fund and DFJ seem to take larger bets. I wouldn't count on AngelList to fund the next Fairchild.
- jpadkins 13y ago> I don't know why everyone is hating on Snapchat. What is the possible business models? Just because something is popular doesn't mean it is a good business. No one has figured out how to effectively monetize chat going all the way back to the IRC / ICQ days (or even farther back to BBS systems). Chat has always been very popular, but no one has figured out how to make a business out of chat. If snapchat was working on that problem, it might be more respected in the startup world.
- grinich 13y agoHave you heard of Line? They have nearly $100MM per quarter in revenue. (Not sure why the original TC link is broken. Weird.) http://webcache.googleusercontent.com/search?q=cache:2EqnneaZEOcJ:techcrunch.com/2013/11/10/messaging-app-line/+&cd=1&hl=en&ct=clnk&gl=us http://webcache.googleusercontent.com/search?q=cache:2Eqnnea... That market just hasn't been cracked in non-Asian markets.
- jpadkins 13y agoBut now, the key part of Line’s massive revenue growth now is in gaming. The games part of Line’s business now makes up 60 percent of their revenue, followed by stickers, which make up another 20 percent of their sales. Then there are sponsored accounts and merchandising, which is pretty minimal.