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An investor can get a meaningful return the same way you always could while investing in a company: by sharing the profits that the company makes over the life

by turtle4 17y ago

An investor can get a meaningful return the same way you always could while investing in a company: by sharing the profits that the company makes over the life of the company. This means the investors are motivated to provide advice/connections/decisions that benefit the corporation over the long term, rather than concentrating on short-term solutions. I think it is a much more positive way of growing a business, but it seems like no one is interested in that anymore, either because they have no actual faith that what they do is valuable/viable long term, or because they are impatient. I don't see what is offensive about the article. It just points out what the trend currently is.

pxlpshr 17y ago
There is a balance that can be found if you want to commit to a 10-20 year business, but I'm not huge a fan of profit share plans in an early-stage company because they take away the most critical resource which is reserved for growth and/or survivability (like when the market retracted and VCs were on the sidelines). Also, most entrepreneurs I talk with have a ton of ideas... after about 4-5 years I think it's in a lot of peoples blood to start something new and let the expects take over growing the company from 70mph to 90mph.
- turtle4 17y ago
  But I think that is the point of this article. What you state is a valid way to handle things. 4-5 years in, you have a profitable company that needs grown out from 70mph to 90mph. But the trend is currently to start thinking about handing the company over when it still has training wheels on, way before it has hit 70mph. The point that resonates with me is that people are so fixated on the hand-off that they fail to really make a (sustainable) company. People ought to go into a venture thinking: I'm going to make a great company, and if at some point I decide to sell it/hand over management, I'll have that option. Instead, from day 1 they are obsessed with getting out. I think the article is too strong in saying 'everyone' does this, and I don't think it is the case that 'no one' should do that, but I think that businesses would be better off in general if that plan were the exception rather than the rule that it is becoming.

by turtle4 17y ago

pxlpshr 17y ago

There is a balance that can be found if you want to commit to a 10-20 year business, but I'm not huge a fan of profit share plans in an early-stage company because they take away the most critical resource which is reserved for growth and/or survivability (like when the market retracted and VCs were on the sidelines). Also, most entrepreneurs I talk with have a ton of ideas... after about 4-5 years I think it's in a lot of peoples blood to start something new and let the expects take over growing the company from 70mph to 90mph.

turtle4 17y ago
But I think that is the point of this article. What you state is a valid way to handle things. 4-5 years in, you have a profitable company that needs grown out from 70mph to 90mph. But the trend is currently to start thinking about handing the company over when it still has training wheels on, way before it has hit 70mph. The point that resonates with me is that people are so fixated on the hand-off that they fail to really make a (sustainable) company. People ought to go into a venture thinking: I'm going to make a great company, and if at some point I decide to sell it/hand over management, I'll have that option. Instead, from day 1 they are obsessed with getting out. I think the article is too strong in saying 'everyone' does this, and I don't think it is the case that 'no one' should do that, but I think that businesses would be better off in general if that plan were the exception rather than the rule that it is becoming.