4 ms·

I could go to vegas and drop $40k in cash on the casinos, gambling it all away. There's nothing to stop me from dong that. But even with 20 years experience i

by MCRed 12y ago

I could go to vegas and drop $40k in cash on the casinos, gambling it all away. There's nothing to stop me from dong that. But even with 20 years experience in startups, I can't put $40k into a startup's round? Slate would say I need to be "protected" from that? Sorry, in this case, the regulations that only allow the well connected and wealthy to invest in startups also serve to keep those with domain expertise out of the market. All too often regulations are used to exclude competition. This is one example.

sillysaurus3 12y ago
The difference between a casino and a startup is that you're legally guaranteed to know all the rules of the casino. "Here is the game; here's how it's played; here are your odds." With a startup, information asymmetry virtually guarantees that crowds are least qualified to judge whether it will succeed. It's easy to trick people, and that's what the legislation is protecting against.
- dnautics 12y ago
  The difference between a casino and a startup is that you're legally guaranteed to know all the rules of the casino. "Here is the game; here's how it's played; here are your odds." Not quite. That's certainly true for roulette, and maybe craps, but only marginally true for poker, blackjack, pai gow, etc (although those odds are researchable). For machine gambling, the odds are dynamic, and the casino is allowed to non-transparently manipulate them.
  - sillysaurus3 12y ago
    I'm not an expert, but I'm pretty sure when you set foot at a blackjack table at a US casino, there is almost 100% likelihood that you're going to be playing blackjack. This outcome was engineered by the legal system. It's no accident that there's no chance of you losing your money at a casino for reasons you couldn't have researched ahead of time. In other words, the rules of the game are public knowledge. With a startup, you could lose your money because the founders got into a squabble. Casino vs startup investing is therefore an invalid comparison.
    - ericd 12y ago
      There are lots of people who play blackjack in casinos who don't know the odds, or who at least fool themselves into thinking that the odds are in their favor. It's harder to estimate with startup investing in the case where you do your homework on both, but I think that if startup investing is heavily advertised as being a complete crapshoot with potentially huge returns, but most likely a complete loss, then people should be allowed to experiment with it. The proposed rules have spending limits to enforce that it's just dipping in, and not people dumping their life savings into things.
    - dnautics 12y ago
      the rules of the game are public knowledge For machine gambling, the odds are dynamic, and the casino is allowed to non-transparently manipulate them.
SoftwareMaven 12y ago
Very few people would go to a casino with their life savings with the expectation of retiring off the winnings. Most people understand the risks involved (even if they are very poor at understanding the real odds, they still know they aren't good). Further, casinos would never be allowed to sell their games that way; gambling is a massively regulated industry. Now consider a company selling itself. With no rules, they are able to say anything they want about themselves. The stock market is seen by many (most?) as an investment, and therefore fairly safe (possibly even safe). How well dispersed is the knowledge that, while investing most of your money in the market is relatively safe, investing it in one dstock is horribly risky? How easy is it for a semi-reputable (much less disreputable) company to paint an overly rosey picture, appealing to somebody's hopes and dreams? I completely agree you should be able to invest. There is a real problem with how qualified investor is defined today, but I'm not convinced removing that concept is a good idea at all.
- derefr 12y ago
  > The stock market is seen by many (most?) as an investment, and therefore fairly safe (possibly even safe). Well, now, that seems to be what needs to change. Institutional investors rightfully treat non-AAA investment products with all the respect of used toilet-paper (with the mortgage crisis imparting the further wisdom that a AAA rating is a necessary, but not sufficient condition for a product to be a safe backing investment for consumer savings.) How can we get consumer investors to see things the same way? Put big black bars across the tops of stock certificates like they have on packs of cigarettes?
- ioncereadknuth 12y ago
  Free markets will reward crowd funding sites that perform good due diligence.
- Htsthbjig 12y ago
  "Now consider a company selling itself. With no rules, they are able to say anything they want about themselves. The stock market is seen by many (most?) as an investment, and therefore fairly safe (possibly even safe). How well dispersed is the knowledge that, while investing most of your money in the market is relatively safe, investing it in one dstock is horribly risky? How easy is it for a semi-reputable (much less disreputable) company to paint an overly rosey picture, appealing to somebody's hopes and dreams?" I don't know where you extract that there are "no rules" in crownfunding stock. The stock market is crownfunding by nature. At first NY Stock market was a tree under which interested people traded part of their companies. With more than one hundred kickstarter projects backed on my belt, I have been duped in... ZERO. They are free to say whatever they want but it is very easy to catch a liar. Part of my family comes from socialist East Europe economies. In those places even very smart people like nuclear scientists or very bright philosophers were protected "for their own good" against taking risks(or doing anything on their own by the way, good competent people were dangerous if they did good things because it made the very incompetent look bad). The only problem is that "protectors" were very Mediocre people, people that spent their time banging pretty girls and drinking Vodka. Bureaucrats whose only merit were kissing asses of someone higher in the monopolistic hierarchy of power. Let me be a grown up, an adult who takes his own decisions.
abalone 12y ago
You didn't read the article, did you. It's about how regulations around crowdfunding are too burdensome, with ill effects.

by MCRed 12y ago

sillysaurus3 12y ago

The difference between a casino and a startup is that you're legally guaranteed to know all the rules of the casino. "Here is the game; here's how it's played; here are your odds." With a startup, information asymmetry virtually guarantees that crowds are least qualified to judge whether it will succeed. It's easy to trick people, and that's what the legislation is protecting against.

dnautics 12y ago
The difference between a casino and a startup is that you're legally guaranteed to know all the rules of the casino. "Here is the game; here's how it's played; here are your odds." Not quite. That's certainly true for roulette, and maybe craps, but only marginally true for poker, blackjack, pai gow, etc (although those odds are researchable). For machine gambling, the odds are dynamic, and the casino is allowed to non-transparently manipulate them.
- sillysaurus3 12y ago
  I'm not an expert, but I'm pretty sure when you set foot at a blackjack table at a US casino, there is almost 100% likelihood that you're going to be playing blackjack. This outcome was engineered by the legal system. It's no accident that there's no chance of you losing your money at a casino for reasons you couldn't have researched ahead of time. In other words, the rules of the game are public knowledge. With a startup, you could lose your money because the founders got into a squabble. Casino vs startup investing is therefore an invalid comparison.
  - ericd 12y ago
    There are lots of people who play blackjack in casinos who don't know the odds, or who at least fool themselves into thinking that the odds are in their favor. It's harder to estimate with startup investing in the case where you do your homework on both, but I think that if startup investing is heavily advertised as being a complete crapshoot with potentially huge returns, but most likely a complete loss, then people should be allowed to experiment with it. The proposed rules have spending limits to enforce that it's just dipping in, and not people dumping their life savings into things.
  - dnautics 12y ago
    the rules of the game are public knowledge For machine gambling, the odds are dynamic, and the casino is allowed to non-transparently manipulate them.

SoftwareMaven 12y ago

Very few people would go to a casino with their life savings with the expectation of retiring off the winnings. Most people understand the risks involved (even if they are very poor at understanding the real odds, they still know they aren't good). Further, casinos would never be allowed to sell their games that way; gambling is a massively regulated industry. Now consider a company selling itself. With no rules, they are able to say anything they want about themselves. The stock market is seen by many (most?) as an investment, and therefore fairly safe (possibly even safe). How well dispersed is the knowledge that, while investing most of your money in the market is relatively safe, investing it in one dstock is horribly risky? How easy is it for a semi-reputable (much less disreputable) company to paint an overly rosey picture, appealing to somebody's hopes and dreams? I completely agree you should be able to invest. There is a real problem with how qualified investor is defined today, but I'm not convinced removing that concept is a good idea at all.

derefr 12y ago
> The stock market is seen by many (most?) as an investment, and therefore fairly safe (possibly even safe). Well, now, that seems to be what needs to change. Institutional investors rightfully treat non-AAA investment products with all the respect of used toilet-paper (with the mortgage crisis imparting the further wisdom that a AAA rating is a necessary, but not sufficient condition for a product to be a safe backing investment for consumer savings.) How can we get consumer investors to see things the same way? Put big black bars across the tops of stock certificates like they have on packs of cigarettes?
ioncereadknuth 12y ago
Free markets will reward crowd funding sites that perform good due diligence.
Htsthbjig 12y ago
"Now consider a company selling itself. With no rules, they are able to say anything they want about themselves. The stock market is seen by many (most?) as an investment, and therefore fairly safe (possibly even safe). How well dispersed is the knowledge that, while investing most of your money in the market is relatively safe, investing it in one dstock is horribly risky? How easy is it for a semi-reputable (much less disreputable) company to paint an overly rosey picture, appealing to somebody's hopes and dreams?" I don't know where you extract that there are "no rules" in crownfunding stock. The stock market is crownfunding by nature. At first NY Stock market was a tree under which interested people traded part of their companies. With more than one hundred kickstarter projects backed on my belt, I have been duped in... ZERO. They are free to say whatever they want but it is very easy to catch a liar. Part of my family comes from socialist East Europe economies. In those places even very smart people like nuclear scientists or very bright philosophers were protected "for their own good" against taking risks(or doing anything on their own by the way, good competent people were dangerous if they did good things because it made the very incompetent look bad). The only problem is that "protectors" were very Mediocre people, people that spent their time banging pretty girls and drinking Vodka. Bureaucrats whose only merit were kissing asses of someone higher in the monopolistic hierarchy of power. Let me be a grown up, an adult who takes his own decisions.

abalone 12y ago

You didn't read the article, did you. It's about how regulations around crowdfunding are too burdensome, with ill effects.