12 ms·

Vinod Khosla: I believe 70% of VCs reduce the potential of a company

123 points by cft 11y ago

puppetmaster3 11y ago
agree
tim333 11y ago
The Greenspun article on his experience with VCs back in 2001 is interesting if you're in to that stuff and have not read it http://waxy.org/random/arsdigita/ http://waxy.org/random/arsdigita/
wjnc 11y ago
VCs have some sort of superstar economics going. The highest potentials hit the superstars VCs first, and get picked up. Second tier goes to second tier VCs and so on. The market sorts itself out. So when a first tier VC disses lower tiers for 'not adding value', he is probably stating the truth, but sadly there is no alternative. The superstars can't scale up without lowering the bars somewhere, so they don't. The companies looking for VC can't be too picky since no capital is no chance of traction. So in the end, you'll settle for the capital you can get and take the reduced value as a given. Remember that the outside option (no VC) gives no value, and the negative value is relative.
- curiouscats 11y ago
  His criticism isn't that 2nd tier VCs have lower returns. It seems to me your point would make sense if his criticism was of 2nd tier VCs for lower returns. Since that isn't a fair comparison if they don't get a shot at the best deals. I think his criticism is pretty obviously that VC often don't add value (no matter what tier they are at). The things mentioned in the article seem be criticisms of business as usually (not of some performers getting lower rates of return). It strikes me he realizes some VCs provide great help. And sure the cash is often helpful in growing though the growing quickly may well not really be good for the business when it distorts the companies focus to making huge financial bets to get huge returns. @dhh provides lots of good criticism of VC funding, in my opinion. Watching his activity or going through his history would provide more details on the problems created by accepting VC funding. Of course, lots of people with lots of money don't see things the same way he does.
- gjm11 11y ago
  This dynamic will tend to make "superstar" VCs look as if they're better (relative to other VCs) than they actually are. (Because every startup will want to be funded by them, so they get to pick the most promising ones, and if VCs have any ability to distinguish good prospects from bad then the superstars will tend to get better results than their rivals who funded the startups rejected by the superstars.)
- mpdehaan2 11y ago
  I liked the part about making sure those that joined the company left to get startup experience for a while.
- s73v3r 11y ago
  Wait, why is VC the only option? What happened to the old fashioned way of getting money, taking a business loan?
  - pge 11y ago
    It depends on your business model. For companies that require capital to build product before being able to sell, and thus don't have near term positive cash flow to pay off loans, debt is usually impossible to find. Only equity capital (i.e. VC or angel money) is willing to take that risk.
taphangum 11y ago
Probably closer to 99.99%.
bitL 11y ago
I run an exponentially growing fully automated business that is limited by my available operating capital. If VCs are useless (or finding a good one is a lottery), what are the other reasonable ways to raise capital (that don't eat all the profits nor want to control everything)? I would prefer Vinod's brutal honesty to fake politeness any time.
- danieltillett 11y ago
  Talk to a non-VC person with money to invest and who has shown that they are willing to take a risk. If what you have is real I am happy to talk to you about your business and if things stack up put my money where my mouth is.
- bmh100 11y ago
  Assuming that your question is not rhetorical, there are multiple ways to address this cash flow problem. You can focus on collecting revenue faster, offering new customers less generous payment terms, demanding payment up front or in advance, taking out loans against your receivables, asking vendors to finance your spending, converting a portion of employee compensation to a profit share that is payed out on a later date, finding strategic partners to provide financing or resources, etc. I hope this is helpful. There are many possibilities, but none are necessarily better than selling equity.
  - copsarebastards 11y ago
    > You can focus on collecting revenue faster, offering new customers less generous payment terms, demanding payment up front or in advance, It's worth adding that these in particular are good business practices with or without VCs, because: 1. It demonstrates that people will pay for your product. Nothing is worse than spending money making something only to discover nobody will pay for it. 2. It's aware of the 80/20 rule. Up-front payment does a good job of limiting you to the 20% of your client base who will make you 80% of your money. The clients who want things most on their terms, who will nickel-and-dime you, make unreasonable demands, and review you poorly to other clients, are going to balk at an up-front payment and go elsewhere, and that's a good thing. You don't need them. They'll weigh down your competitors and leave you more efficient.
danieltillett 11y ago
What amazes me about VCs is how passive they are about the whole process. Why sit and wait for talent to come to you? Why not go out and hire the best people and then put them to work with adequate funding and see what they come up with? If every start-up ends up pivoting as soon as they get funding why not bypass the whole process and just put a great group of people together and let them come up with something fantastic.
- ido 11y ago
  They call those "entrepreneurs". I worked in several companies bootstrapped by very wealthy founders.
  - danieltillett 11y ago
    If the founders are wealthy is the company really bootstrapped, or just privately financed? If VCs think the idea is worthless and execution is everything why waste time listening to pitches? Just hire the best people able to execute, give them the money and get out of the way.
    - AndrewKemendo 11y ago
      That's actual work though, and that would also tie them directly with any of their failures. Can't have that.
      - danieltillett 11y ago
        It is true that it would take more work, but surely the rewards would make it worth trying. I can understand following the current modelled you are one of the tier 1 VC firms, but if you are tier 2 or 3 you need to do something different to succeed.
  - deleted 11y ago
    [deleted]
- acabrahams 11y ago
SiVal 11y ago
So, he thinks it's best for entrepreneurs to ramp up the volatility, because a 90% chance of failure with a 10% chance of $100M is the way to go. Advice from a guy with his own risk spread over a portfolio of such companies to a guy whose whole net worth is invested in one company that has a 90% chance of wipeout. Hmm. Maybe there's something to that estimate he makes about how harmful VC advice tends to be.
- deleted 11y ago
  [deleted]
- danieltillett 11y ago
  Yes. Watch what VC do with their own money and ignore what they tell entrepreneurs to do. They offer a great role model of what you should do.
- notahacker 11y ago
  Ironically, VCs prioritising "10% chance of $100M" as the way to go was exactly what I thought of when I saw the headline suggesting they actually tend to reduce the potential of the company There's no shortage of perfectly viable $xx million businesses pushed into chasing an [ultimately optimistic] hypothesis there was a 10% chance of breakout success which, when the mass market turns out not to exist, leaves them with the potential to achieve nothing other than failure.
- jgalt212 11y ago
  If life were only so simple, now it seems VCs are pushing founders to make the following bet: .1% chance of $5B+ and 99.9% chance of failure. In short, lots of potential $100MM companies are being done in by VC greed. This is only one data point, but I know an entrepreneur who was turned down by a blue chip VC because the VC said he saw a clear path for the biz to $100MM, but the path above that level was much murkier.
coolandsmartrr 11y ago
Reminds me of my interview with a Japanese venture capitalist. He doesn't have experience startup, but managed to invest in a few. http://rickyreports.com/archives/kinoshitayoshihiko/ http://rickyreports.com/archives/kinoshitayoshihiko/
DodgyEggplant 11y ago
Sometimes you learn about a person implicitly more than his explicit intentional declarations. This is the same Vinod Koshla who seized a public beach, and a beautiful and rare one, to his own utility against the law. This says a lot about attitude to others, maybe in business too. http://www.huffingtonpost.com/2014/09/27/martins-beach-vinod-khosla_n_5885662.html http://www.huffingtonpost.com/2014/09/27/martins-beach-vinod...
- deleted 11y ago
  [deleted]
- quizotic 11y ago
  and sometimes you learn about a person by working with them. Long ago, Vinod was an investor and director of two of my early companies. He was helpful, supportive, polite and wonderful.
  - DodgyEggplant 11y ago
    People change
    - DodgyEggplant 11y ago
      yet again: not agree = downvote.
      - escape_goat 11y ago
        Low quality comments are consistently downvoted without remorse. Your response added nothing substantive or interesting for people to read on the comment page. You didn't even bother to use proper syntax. By contrast, you will note that your original comment, disagreeable as it may be to the other commentator and to the other friends of Mr. Khosa, has not been downvoted.
        simonebrunozzi 11y ago
bsbechtel 11y ago
Regardless of your attitudes towards VCs, purely from a statistical perspective this makes sense. If you consider only a small percentage of individuals are capable of running or leading a high-growth company to millions or billions of dollars of revenue, then for every VC you add to your board, you have a greater chance of adding someone who isn't capable of adding value. Say only 1 out of every 10 individuals are rockstars in the startup/investing world. Assuming you and your co-founder are those rock-stars, the other 3 people on your 5 person board are only going to drag you down ;-)
coleslawfail 11y ago
90% of the time Vinod Khosla pulls numbers out of his ass. It's amazing really how much this guy subs the press. He acts as the entrepreneur's friend when the truth in the Valley is the exact opposite. Beware.
- deleted 11y ago
  [deleted]
coleslawfail 11y ago
If only the Onion knew the Valley, this would be a great headline: Vinod Khosla: Be Wary of “Stupid Advice” that's like saying: Donald Trump: Be Wary of "Gold Diggers"
andyidsinga 11y ago
> "Why pay attention to an English major?" one of my best devs was an english major. So ....I don't discount ANYONE for being an english major. edit, another point: I wish there was more advice on how to separate good from bad advice based on more than what is described in the article text - english major, not having been a CEO etc.
- javajosh 11y ago
  I've noticed that some of the best devs come from the humanities, too. I think a lot of it has to do with a certain calm, centered approach to learning. If you watch a young CS major "learn" something, they approach it with a manic, wild-eyed approach where they try to do things as fast as possible because their time is so valuable, they don't read docs because they don't need them, and so on. Confession: I approached Docker like a maniac before humbly working my way through the official Docker user guide slowly and methodically, without distractions, doing all the exercises (and taking notes with questions). When I look back, I've done this with Maven and git, too. In every case my frantic scramble up the learning curve left me with broken, incomplete and unreliable knowledge that had to be repaired later. Lesson learned!
  - andyidsinga 11y ago
    ha! the first paragraph in this article (letter to Isaac Asimov: http://chem.tufts.edu/answersinscience/relativityofwrong.htm http://chem.tufts.edu/answersinscience/relativityofwrong.htm) touches on the key issue: > In the first sentence, the writer told me he was majoring in English literature, but felt he needed to teach me science. (I sighed a bit, for I knew very few English Lit majors who are equipped to teach me science, but I am very aware of the vast state of my ignorance and I am prepared to learn as much as I can from anyone, so I read on.)
Enzolangellotti 11y ago
"Journalists? Why pay attention to an English major?" Tell that to Jack Ma.
ChuckMcM 11y ago
Wow, was surprised to find the beach comment on the top :-) Amongst people who know Vinod I have heard a common theme but he is included in the list of inhibiting potential for second guessing everything, and creating an unhealthy tension in the founding teams. But isn't that the way of things? VC's want their investment to thrive, and because they have money and you don't they will always assume they know how to make it thrive and you don't. The only difference is how much leeway they give you.
- dchichkov 11y ago
  Why are you surprised? This issue is still outstanding, Vinod layers are still trying to block access to this public beach. Also it looks like he is violating the judge decision by "only opening the road sporadically". http://martinsbeach.blogspot.com/search?updated-min=2015-01-01T00:00:00-08:00&updated-max=2016-01-01T00:00:00-08:00&max-results=3 http://martinsbeach.blogspot.com/search?updated-min=2015-01-... If you feel that this is not how it should be: http://martinsbeach.blogspot.com/p/get-involved.html http://martinsbeach.blogspot.com/p/get-involved.html
  - ChuckMcM 11y ago
    Because I felt it didn't really add anything to the more important question which is "Do VC's add value or subtract value to your company?" For me, I think about that question from time to time and try to find empirical evidence to back up one side of the argument or the other. I will admit however that "Good Character" does not seem to correlate at all with "Effectiveness" in VC circles, there are bastards and there are saints and it doesn't seem to really effect the success or lack thereof of the companies they fund.
tlrobinson 11y ago
624 days ago: Vinod Khosla: 70-80% Of VCs Add Negative Value To Startups: https://news.ycombinator.com/item?id=6369626 https://news.ycombinator.com/item?id=6369626
- melvinmt 11y ago
  I wonder what caused the 14% regression of negative value.
copsarebastards 11y ago
Say what you want about Vinod Khosla, but that doesn't make him wrong. Disproving what he said would make him wrong. I'm not a fan of the man personally, but I think he's right--and it's not surprising. When you bring in a VC, you get a team which is personally, emotionally, and temporally invested in the project, and you bring in an outside person for whom this is only a small part of his larger financial investments and give him a significant amount of control. Of course taking away control of a project from the people who are most invested in its success is going to decrease its chances of success. I'm not sure why this would be a topic of debate.
- mirashii 11y ago
  Because it doesn't matter how personally, emotionally vested you are in a company if you don't understand how to run one, how to monetize, to find new customers, hire good managers and leaders, or a whole slew of other things which your team at a startup hasn't done before but a good investor knows how to advise on, or has connections with advisors who do. Success of a company is determined by a lot more than how invested your team is in the project.
  - copsarebastards 11y ago
    What you're saying is correct, I'm just not sure why you think it's relevant. It's entirely possible to have both personal investment and competence.
    - mirashii 11y ago
      It is, but the point was more that bringing in an outside person who may be less invested but has some skill that falls outside of the team's existing range isn't necessarily going to decrease your chance of success. We have advisors and incubators for a reason.
api 11y ago
84.3% of all statistics are pulled from the nether regions.
ksk 11y ago
Most VCs could be safely ignored as toxic (if not useless) if they were restricted to investing their own money. The fact that they're allowed to gamble with retirement pension funds (which are sometimes insured by the state) is troublesome.
rdrock 11y ago
I sense a strong dislike for Vinod Khosla the person himself in almost all the responses irrespective of his actions. Are a few incidents like the martin's beach and some statistics which he pulls without references the only reason for it. The responses to beach discussion and statistics themselves are very hostile like "If he dosen't like shelling out $500k for maintainence of a public property he should not have bought it" which I think is unfair and "my best dev is an english major" when he clearly meant that for Business consultants and Journalists etc. And can't one pull a number based on a lifetime of personal experience without backing it up with statistical data? Don't we all do that in everyday lives? Even when someone mentions having a good personal experience with him, it gets discounted. I have never been to the valley. Genuinely interested in knowing what makes a person so universally hated on this fourm. Unless he is the Donald Trump of the Valley. In which case I understand.

123 points by cft 11y ago

agree

The Greenspun article on his experience with VCs back in 2001 is interesting if you're in to that stuff and have not read it http://waxy.org/random/arsdigita/ http://waxy.org/random/arsdigita/

wjnc 11y ago

VCs have some sort of superstar economics going. The highest potentials hit the superstars VCs first, and get picked up. Second tier goes to second tier VCs and so on. The market sorts itself out. So when a first tier VC disses lower tiers for 'not adding value', he is probably stating the truth, but sadly there is no alternative. The superstars can't scale up without lowering the bars somewhere, so they don't. The companies looking for VC can't be too picky since no capital is no chance of traction. So in the end, you'll settle for the capital you can get and take the reduced value as a given. Remember that the outside option (no VC) gives no value, and the negative value is relative.

curiouscats 11y ago
His criticism isn't that 2nd tier VCs have lower returns. It seems to me your point would make sense if his criticism was of 2nd tier VCs for lower returns. Since that isn't a fair comparison if they don't get a shot at the best deals. I think his criticism is pretty obviously that VC often don't add value (no matter what tier they are at). The things mentioned in the article seem be criticisms of business as usually (not of some performers getting lower rates of return). It strikes me he realizes some VCs provide great help. And sure the cash is often helpful in growing though the growing quickly may well not really be good for the business when it distorts the companies focus to making huge financial bets to get huge returns. @dhh provides lots of good criticism of VC funding, in my opinion. Watching his activity or going through his history would provide more details on the problems created by accepting VC funding. Of course, lots of people with lots of money don't see things the same way he does.
gjm11 11y ago
This dynamic will tend to make "superstar" VCs look as if they're better (relative to other VCs) than they actually are. (Because every startup will want to be funded by them, so they get to pick the most promising ones, and if VCs have any ability to distinguish good prospects from bad then the superstars will tend to get better results than their rivals who funded the startups rejected by the superstars.)
mpdehaan2 11y ago
I liked the part about making sure those that joined the company left to get startup experience for a while.
s73v3r 11y ago
Wait, why is VC the only option? What happened to the old fashioned way of getting money, taking a business loan?
- pge 11y ago
  It depends on your business model. For companies that require capital to build product before being able to sell, and thus don't have near term positive cash flow to pay off loans, debt is usually impossible to find. Only equity capital (i.e. VC or angel money) is willing to take that risk.

taphangum 11y ago

Probably closer to 99.99%.

bitL 11y ago

I run an exponentially growing fully automated business that is limited by my available operating capital. If VCs are useless (or finding a good one is a lottery), what are the other reasonable ways to raise capital (that don't eat all the profits nor want to control everything)? I would prefer Vinod's brutal honesty to fake politeness any time.

danieltillett 11y ago
Talk to a non-VC person with money to invest and who has shown that they are willing to take a risk. If what you have is real I am happy to talk to you about your business and if things stack up put my money where my mouth is.
bmh100 11y ago
Assuming that your question is not rhetorical, there are multiple ways to address this cash flow problem. You can focus on collecting revenue faster, offering new customers less generous payment terms, demanding payment up front or in advance, taking out loans against your receivables, asking vendors to finance your spending, converting a portion of employee compensation to a profit share that is payed out on a later date, finding strategic partners to provide financing or resources, etc. I hope this is helpful. There are many possibilities, but none are necessarily better than selling equity.
- copsarebastards 11y ago
  > You can focus on collecting revenue faster, offering new customers less generous payment terms, demanding payment up front or in advance, It's worth adding that these in particular are good business practices with or without VCs, because: 1. It demonstrates that people will pay for your product. Nothing is worse than spending money making something only to discover nobody will pay for it. 2. It's aware of the 80/20 rule. Up-front payment does a good job of limiting you to the 20% of your client base who will make you 80% of your money. The clients who want things most on their terms, who will nickel-and-dime you, make unreasonable demands, and review you poorly to other clients, are going to balk at an up-front payment and go elsewhere, and that's a good thing. You don't need them. They'll weigh down your competitors and leave you more efficient.

danieltillett 11y ago

What amazes me about VCs is how passive they are about the whole process. Why sit and wait for talent to come to you? Why not go out and hire the best people and then put them to work with adequate funding and see what they come up with? If every start-up ends up pivoting as soon as they get funding why not bypass the whole process and just put a great group of people together and let them come up with something fantastic.

ido 11y ago
They call those "entrepreneurs". I worked in several companies bootstrapped by very wealthy founders.
- danieltillett 11y ago
  If the founders are wealthy is the company really bootstrapped, or just privately financed? If VCs think the idea is worthless and execution is everything why waste time listening to pitches? Just hire the best people able to execute, give them the money and get out of the way.
  - AndrewKemendo 11y ago
    That's actual work though, and that would also tie them directly with any of their failures. Can't have that.
    - danieltillett 11y ago
      It is true that it would take more work, but surely the rewards would make it worth trying. I can understand following the current modelled you are one of the tier 1 VC firms, but if you are tier 2 or 3 you need to do something different to succeed.
- deleted 11y ago
  [deleted]
acabrahams 11y ago

SiVal 11y ago

So, he thinks it's best for entrepreneurs to ramp up the volatility, because a 90% chance of failure with a 10% chance of $100M is the way to go. Advice from a guy with his own risk spread over a portfolio of such companies to a guy whose whole net worth is invested in one company that has a 90% chance of wipeout. Hmm. Maybe there's something to that estimate he makes about how harmful VC advice tends to be.

deleted 11y ago
[deleted]
danieltillett 11y ago
Yes. Watch what VC do with their own money and ignore what they tell entrepreneurs to do. They offer a great role model of what you should do.
notahacker 11y ago
Ironically, VCs prioritising "10% chance of $100M" as the way to go was exactly what I thought of when I saw the headline suggesting they actually tend to reduce the potential of the company There's no shortage of perfectly viable $xx million businesses pushed into chasing an [ultimately optimistic] hypothesis there was a 10% chance of breakout success which, when the mass market turns out not to exist, leaves them with the potential to achieve nothing other than failure.
jgalt212 11y ago
If life were only so simple, now it seems VCs are pushing founders to make the following bet: .1% chance of $5B+ and 99.9% chance of failure. In short, lots of potential $100MM companies are being done in by VC greed. This is only one data point, but I know an entrepreneur who was turned down by a blue chip VC because the VC said he saw a clear path for the biz to $100MM, but the path above that level was much murkier.

coolandsmartrr 11y ago

Reminds me of my interview with a Japanese venture capitalist. He doesn't have experience startup, but managed to invest in a few. http://rickyreports.com/archives/kinoshitayoshihiko/ http://rickyreports.com/archives/kinoshitayoshihiko/

DodgyEggplant 11y ago

Sometimes you learn about a person implicitly more than his explicit intentional declarations. This is the same Vinod Koshla who seized a public beach, and a beautiful and rare one, to his own utility against the law. This says a lot about attitude to others, maybe in business too. http://www.huffingtonpost.com/2014/09/27/martins-beach-vinod-khosla_n_5885662.html http://www.huffingtonpost.com/2014/09/27/martins-beach-vinod...

deleted 11y ago
[deleted]
quizotic 11y ago
and sometimes you learn about a person by working with them. Long ago, Vinod was an investor and director of two of my early companies. He was helpful, supportive, polite and wonderful.
- DodgyEggplant 11y ago
  People change
  - DodgyEggplant 11y ago
    yet again: not agree = downvote.
    - escape_goat 11y ago
      Low quality comments are consistently downvoted without remorse. Your response added nothing substantive or interesting for people to read on the comment page. You didn't even bother to use proper syntax. By contrast, you will note that your original comment, disagreeable as it may be to the other commentator and to the other friends of Mr. Khosa, has not been downvoted.
      - simonebrunozzi 11y ago

bsbechtel 11y ago

Regardless of your attitudes towards VCs, purely from a statistical perspective this makes sense. If you consider only a small percentage of individuals are capable of running or leading a high-growth company to millions or billions of dollars of revenue, then for every VC you add to your board, you have a greater chance of adding someone who isn't capable of adding value. Say only 1 out of every 10 individuals are rockstars in the startup/investing world. Assuming you and your co-founder are those rock-stars, the other 3 people on your 5 person board are only going to drag you down ;-)

coleslawfail 11y ago

90% of the time Vinod Khosla pulls numbers out of his ass. It's amazing really how much this guy subs the press. He acts as the entrepreneur's friend when the truth in the Valley is the exact opposite. Beware.

deleted 11y ago
[deleted]

coleslawfail 11y ago

If only the Onion knew the Valley, this would be a great headline: Vinod Khosla: Be Wary of “Stupid Advice” that's like saying: Donald Trump: Be Wary of "Gold Diggers"

andyidsinga 11y ago

> "Why pay attention to an English major?" one of my best devs was an english major. So ....I don't discount ANYONE for being an english major. edit, another point: I wish there was more advice on how to separate good from bad advice based on more than what is described in the article text - english major, not having been a CEO etc.

javajosh 11y ago
I've noticed that some of the best devs come from the humanities, too. I think a lot of it has to do with a certain calm, centered approach to learning. If you watch a young CS major "learn" something, they approach it with a manic, wild-eyed approach where they try to do things as fast as possible because their time is so valuable, they don't read docs because they don't need them, and so on. Confession: I approached Docker like a maniac before humbly working my way through the official Docker user guide slowly and methodically, without distractions, doing all the exercises (and taking notes with questions). When I look back, I've done this with Maven and git, too. In every case my frantic scramble up the learning curve left me with broken, incomplete and unreliable knowledge that had to be repaired later. Lesson learned!
- andyidsinga 11y ago
  ha! the first paragraph in this article (letter to Isaac Asimov: http://chem.tufts.edu/answersinscience/relativityofwrong.htm http://chem.tufts.edu/answersinscience/relativityofwrong.htm) touches on the key issue: > In the first sentence, the writer told me he was majoring in English literature, but felt he needed to teach me science. (I sighed a bit, for I knew very few English Lit majors who are equipped to teach me science, but I am very aware of the vast state of my ignorance and I am prepared to learn as much as I can from anyone, so I read on.)

Enzolangellotti 11y ago

"Journalists? Why pay attention to an English major?" Tell that to Jack Ma.

ChuckMcM 11y ago

Wow, was surprised to find the beach comment on the top :-) Amongst people who know Vinod I have heard a common theme but he is included in the list of inhibiting potential for second guessing everything, and creating an unhealthy tension in the founding teams. But isn't that the way of things? VC's want their investment to thrive, and because they have money and you don't they will always assume they know how to make it thrive and you don't. The only difference is how much leeway they give you.

dchichkov 11y ago
Why are you surprised? This issue is still outstanding, Vinod layers are still trying to block access to this public beach. Also it looks like he is violating the judge decision by "only opening the road sporadically". http://martinsbeach.blogspot.com/search?updated-min=2015-01-01T00:00:00-08:00&updated-max=2016-01-01T00:00:00-08:00&max-results=3 http://martinsbeach.blogspot.com/search?updated-min=2015-01-... If you feel that this is not how it should be: http://martinsbeach.blogspot.com/p/get-involved.html http://martinsbeach.blogspot.com/p/get-involved.html
- ChuckMcM 11y ago
  Because I felt it didn't really add anything to the more important question which is "Do VC's add value or subtract value to your company?" For me, I think about that question from time to time and try to find empirical evidence to back up one side of the argument or the other. I will admit however that "Good Character" does not seem to correlate at all with "Effectiveness" in VC circles, there are bastards and there are saints and it doesn't seem to really effect the success or lack thereof of the companies they fund.

tlrobinson 11y ago

624 days ago: Vinod Khosla: 70-80% Of VCs Add Negative Value To Startups: https://news.ycombinator.com/item?id=6369626 https://news.ycombinator.com/item?id=6369626

melvinmt 11y ago
I wonder what caused the 14% regression of negative value.

copsarebastards 11y ago

Say what you want about Vinod Khosla, but that doesn't make him wrong. Disproving what he said would make him wrong. I'm not a fan of the man personally, but I think he's right--and it's not surprising. When you bring in a VC, you get a team which is personally, emotionally, and temporally invested in the project, and you bring in an outside person for whom this is only a small part of his larger financial investments and give him a significant amount of control. Of course taking away control of a project from the people who are most invested in its success is going to decrease its chances of success. I'm not sure why this would be a topic of debate.

mirashii 11y ago
Because it doesn't matter how personally, emotionally vested you are in a company if you don't understand how to run one, how to monetize, to find new customers, hire good managers and leaders, or a whole slew of other things which your team at a startup hasn't done before but a good investor knows how to advise on, or has connections with advisors who do. Success of a company is determined by a lot more than how invested your team is in the project.
- copsarebastards 11y ago
  What you're saying is correct, I'm just not sure why you think it's relevant. It's entirely possible to have both personal investment and competence.
  - mirashii 11y ago
    It is, but the point was more that bringing in an outside person who may be less invested but has some skill that falls outside of the team's existing range isn't necessarily going to decrease your chance of success. We have advisors and incubators for a reason.

api 11y ago

84.3% of all statistics are pulled from the nether regions.

ksk 11y ago

Most VCs could be safely ignored as toxic (if not useless) if they were restricted to investing their own money. The fact that they're allowed to gamble with retirement pension funds (which are sometimes insured by the state) is troublesome.

rdrock 11y ago

I sense a strong dislike for Vinod Khosla the person himself in almost all the responses irrespective of his actions. Are a few incidents like the martin's beach and some statistics which he pulls without references the only reason for it. The responses to beach discussion and statistics themselves are very hostile like "If he dosen't like shelling out $500k for maintainence of a public property he should not have bought it" which I think is unfair and "my best dev is an english major" when he clearly meant that for Business consultants and Journalists etc. And can't one pull a number based on a lifetime of personal experience without backing it up with statistical data? Don't we all do that in everyday lives? Even when someone mentions having a good personal experience with him, it gets discounted. I have never been to the valley. Genuinely interested in knowing what makes a person so universally hated on this fourm. Unless he is the Donald Trump of the Valley. In which case I understand.