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When I read this comment I thought, this is exactly the kind of comment that people will link to in 2021, as a "can you believe this guy" comment, just as crowd

When I read this comment I thought, this is exactly the kind of comment that people will link to in 2021, as a "can you believe this guy" comment, just as crowdfunding (and what it evolves into) begins to replace all other forms of investing. Everything seems like a bad idea when you first start. That's the very nature of the new idea; it's something nobody else ever thought was a good idea... or else it wouldn't be a new idea. But this doesn't matter. We, almost all of us, simply cannot break outside of a paradigm. It has to be broken for us. The few that can break their paradigm are the same folks we read about on Forbes and Fast Company.

ninkendo 11y ago
I dunno, crowdfunding a company's investment rounds sounds a lot like an IPO to me. But with less oversight. I can't really see how this is a good thing.
- notahacker 11y ago
  Exactly. There's nothing especially novel about the concept of raising funds as widely as possible, and the reason that regulators have historically made it as difficult as possible to solicit funding for immature ventures through slick [recorded] pitches to as many retail investors as possible has nothing to do with the absence of the internet as a delivery mechanism until recently, and everything to do with people losing their shirts. A few ideas that seem bad turn out to be good. Most turn out to be terrible, especially when the paradigm they're breaking was established precisely because most of the aspects of the idea have been tried, tested, and proven to be terrible.
thepastisback 11y ago
When I read this comment I thought, how does this guy not realize that crowdfunding whole companies from unsophisticated investors isn't new, it's very old. And in fact, the regulation we have around it is because the problems didn't disappear after starting, they grew, as fraud in such a market is incredibly easy to commit, incredibly hard to improve, and extraordinarily lucrative. Perhaps enough has changed with improved distribution of reputation to make it work this time, but... it's not new. It's old. It's widespread. And it's a common vehicle for fraud in every time and every place that it's existed. Thus, I find myself thinking that yours is the kind of comment that people will link to in 2021 as a "can you believe this guy" comment, about how naive it was for you to believe that this time was different.
tptacek 11y ago
You can say the same thing about radium tonics.
manigandham 11y ago
What is so new and special about crowdfunding? This is basically the stock market (which already gets its share of ruining amateur players who don't know enough) but taking away all the rules required to participate. There's no oversight, no required disclosures, no stock/ownership, no liquidity, no insurance, no fallback protection, no guarantee of product, etc. And this is supposed to replace all other forms of investing? I'm sorry but that just seems very naive.
- mangeletti 11y ago
  You answered your own question so eloquently that I'm affraid I cannot offer too much more. Airbnb removed all the expensive rules and oversight intrinsic of the hospitality industry and opened the market, leading to new gains in market efficiency that are tough to compete with. Uber did the same for personal transportation. Crowd funding does this for investing. The real gains will be seen when the intelligence and agility of emergent, fast-moving fund pools are able to out-pace and out-perform traditional funds, indexes, and VC. That will change a lot of things. FTR, I am talking about investing, not just preorders, but this may not mean that you get stock certificates in all cases.
  - manigandham 11y ago
    That's not the same thing. 1) Removing rules in any industry will almost always lead to increased "efficiency" in some manner. That's just a mathematical function of less layers in the way. 2) Airbnb, Uber and others did not "remove" the rules and oversight. They're just skirting the law and are not completely legal nor right in every market. We haven't seen anything final on how these companies will be regulated in the future nor what happens due to the various loopholes they create in consumer protection. 3) Airbnb, Uber and others deliver something in exchange for your purchase and fall under the basic commitment of all companies who provide products/service to not just take the money and run. They're also relatively small purchases with no lasting damages. 4) Finance is much more complicated and regulations are necessary for consumer protection, especially when dealing with something like cash that can have direct and lasting impact on people's lives with the amount invested and the reliance on future stability and returns. Like the other comments have said, it's been proven over and over again that deregulating actions can cause massive fraud and losses. This is the same reason we have regulations for medical practice and law and banking and countless other situations where safety is paramount, even at the cost of some inefficiency.

ninkendo 11y ago

I dunno, crowdfunding a company's investment rounds sounds a lot like an IPO to me. But with less oversight. I can't really see how this is a good thing.

notahacker 11y ago
Exactly. There's nothing especially novel about the concept of raising funds as widely as possible, and the reason that regulators have historically made it as difficult as possible to solicit funding for immature ventures through slick [recorded] pitches to as many retail investors as possible has nothing to do with the absence of the internet as a delivery mechanism until recently, and everything to do with people losing their shirts. A few ideas that seem bad turn out to be good. Most turn out to be terrible, especially when the paradigm they're breaking was established precisely because most of the aspects of the idea have been tried, tested, and proven to be terrible.

thepastisback 11y ago

When I read this comment I thought, how does this guy not realize that crowdfunding whole companies from unsophisticated investors isn't new, it's very old. And in fact, the regulation we have around it is because the problems didn't disappear after starting, they grew, as fraud in such a market is incredibly easy to commit, incredibly hard to improve, and extraordinarily lucrative. Perhaps enough has changed with improved distribution of reputation to make it work this time, but... it's not new. It's old. It's widespread. And it's a common vehicle for fraud in every time and every place that it's existed. Thus, I find myself thinking that yours is the kind of comment that people will link to in 2021 as a "can you believe this guy" comment, about how naive it was for you to believe that this time was different.

tptacek 11y ago

You can say the same thing about radium tonics.

manigandham 11y ago

What is so new and special about crowdfunding? This is basically the stock market (which already gets its share of ruining amateur players who don't know enough) but taking away all the rules required to participate. There's no oversight, no required disclosures, no stock/ownership, no liquidity, no insurance, no fallback protection, no guarantee of product, etc. And this is supposed to replace all other forms of investing? I'm sorry but that just seems very naive.

mangeletti 11y ago
You answered your own question so eloquently that I'm affraid I cannot offer too much more. Airbnb removed all the expensive rules and oversight intrinsic of the hospitality industry and opened the market, leading to new gains in market efficiency that are tough to compete with. Uber did the same for personal transportation. Crowd funding does this for investing. The real gains will be seen when the intelligence and agility of emergent, fast-moving fund pools are able to out-pace and out-perform traditional funds, indexes, and VC. That will change a lot of things. FTR, I am talking about investing, not just preorders, but this may not mean that you get stock certificates in all cases.
- manigandham 11y ago
  That's not the same thing. 1) Removing rules in any industry will almost always lead to increased "efficiency" in some manner. That's just a mathematical function of less layers in the way. 2) Airbnb, Uber and others did not "remove" the rules and oversight. They're just skirting the law and are not completely legal nor right in every market. We haven't seen anything final on how these companies will be regulated in the future nor what happens due to the various loopholes they create in consumer protection. 3) Airbnb, Uber and others deliver something in exchange for your purchase and fall under the basic commitment of all companies who provide products/service to not just take the money and run. They're also relatively small purchases with no lasting damages. 4) Finance is much more complicated and regulations are necessary for consumer protection, especially when dealing with something like cash that can have direct and lasting impact on people's lives with the amount invested and the reliance on future stability and returns. Like the other comments have said, it's been proven over and over again that deregulating actions can cause massive fraud and losses. This is the same reason we have regulations for medical practice and law and banking and countless other situations where safety is paramount, even at the cost of some inefficiency.