We have replaced “venture” capital with “product-market fit” capital.

October 6, 2015 10:50 AM

Bros Funding Bros: What's Wrong with Venture Capital. "What really matters is that we are in the midst of a technological renaissance that will be much farther reaching than any of us can predict if we invest correctly. Our generation has an opportunity, in our lifetime, to put a massive dent in human suffering and make trillions of dollars in return. ... We need a wake up call on Sand Hill Road. We need to recapture our potential and open the doors."

Demographic breakdown of 546 senior investors at 71 firms. (Requires email address to view.)

posted by annekate (22 comments total)

For the last link, you can use the email of their editor-in-chief: [e-mail]
posted by ryanrs at 11:00 AM on October 6, 2015 [7 favorites]

Here's a blog post I've been working my way though on similar lines, though geekier and less edited.
posted by miyabo at 11:01 AM on October 6, 2015 [1 favorite]

I love love love this.
posted by Annika Cicada at 11:06 AM on October 6, 2015 [1 favorite]

I like this a lot, but the purpose of VC as it currently exists isn't to move technology or society along. It's to further concentrate capital and therefore power into the hands of those who already hold it. If there is to be progress it will have to be through new firms. The current power structure cannot be expected to willingly change to accommodate new demographic realities; they are very much reflective of the "elite" campuses, fraternities, and social classes from which they spring.

Jewish lawyers didn't break the anti-Semitic stranglehold white shoe firms in New York had on the legal profession by begging their way in. They started new firms and outcompeted the snot out of the old guard.
posted by 1adam12 at 11:19 AM on October 6, 2015 [30 favorites]

The Information is a great publication. I couldn't get work to pay for it so had to let the subscription lapse, but it was well worth the time to read.
posted by michaelh at 11:29 AM on October 6, 2015 [1 favorite]

The current power structure cannot be expected to willingly change to accommodate new demographic realities; they are very much reflective of the "elite" campuses, fraternities, and social classes from which they spring.


Yeah. I guess reading the article I was thinking "maybe it's great that they buy their own BS, but I thought everyone understood that the 'startup' 'dotcom' 'angel-investor' 'incubator' culture was just marketing to refresh the appeal of the same old money changing hands in the same old circles".
posted by selfnoise at 11:33 AM on October 6, 2015 [1 favorite]

Our generation has an opportunity, in our lifetime, to put a massive dent in human suffering and make trillions of dollars in return.

The second part of that sentence, for me, totally negates the first part of it. If you're concentrating on ending human suffering (or making a dent in it), then you can't also be focused on making trillions of dollars in return. Most of what's causing human suffering right now is the fact that those trillions of dollars are not being used for everyone, but instead are being hoarded by a scant few (getting more and more scant by the year), who deign to dole out a few of those dollars to the almost-super-rich in order to fluff up their accounts even further.
posted by xingcat at 11:41 AM on October 6, 2015 [22 favorites]

The real answer is that VCs and their wealthy individual investors don't pay their fair share of taxes. The federal government can handle funding expensive projects that pay off only in the long term. Worked pretty well with the national highway system and the Apollo program. This was back when the investor class in the U.S. was taxed at a rate that made sense -- when not coincidentally we could also afford a real safety net. (edit: couple of grammar fixes)
posted by Lyme Drop at 12:05 PM on October 6, 2015 [13 favorites]

Yes, this seems like the same old SV prosperity theology to me. Believe in the market hard enough, and the world will be reborn along with your bank account. Meh.
posted by Steely-eyed Missile Man at 12:14 PM on October 6, 2015 [4 favorites]

Our generation has an opportunity, in our lifetime, to put a massive dent in human suffering and make trillions of dollars in return.

In the immortal words of the immortal Tom Lehrer -

Every evening you will find him
Around our neighborhood
It's the old dope peddler
Doing well by doing good
posted by Devonian at 12:16 PM on October 6, 2015 [2 favorites]

Hey, remember when people used to start "small businesses" with "loans" from "banks"?

Yeah, me neither!
posted by overeducated_alligator at 12:22 PM on October 6, 2015 [1 favorite]

Something must be done about these Venture Bros. I, for one, am hoping that either the Monarch or Dr. Mrs. The Monarch will figure something out.
posted by the phlegmatic king at 12:33 PM on October 6, 2015 [14 favorites]

Sounds like someone didn't get their seed money!
posted by Nanukthedog at 12:37 PM on October 6, 2015 [3 favorites]

There is this great new approach to subsidizing early stage startups so that they can focus on developing their product before facing the venture capital world. It's called welfare. I hear some Scandinavian countries have begun experimenting with it.
posted by jeffburdges at 12:54 PM on October 6, 2015 [1 favorite]

Articles like this are ignorant of the fact that over time VC is a pretty crap return investment.

It's almost behaviorally primed to be bad.
posted by JPD at 2:06 PM on October 6, 2015

From the foundations and NGOs that are eradicating poverty and taking care of the world’s worst off, to companies like Facebook, Google and Apple that are inventing the future...

so... the future is pervasive and inescapable advertising and luxury electronic fetish objects?

fuck.

Anyway I thought it was globalized corporations like Apple who were eradicating poverty by letting Chinese villagers assemble our fetish objects...
posted by ennui.bz at 2:29 PM on October 6, 2015 [1 favorite]

>Hey, remember when people used to start "small businesses" with "loans" from "banks"?

Yeah, me neither!

Well, people still do. It's just that banks are risk-adverse and also don't understand technology companies.

VC's are not always the best choice for funding a startup anyway. Or what VC's are attempting to do is very different than "funding a startup." It could be an attempt to acquire a technology, the investment could be a way to hedge a VC's portfolio.

Most businesses, and this includes technology businesses, financed initially through "sweat equity" and then "friends and family."

And, after that, the company is funded by its own revenue.

And that might be it.

Of course, these sorts of slow growth, organically-grown companies are often sneered at as being "lifestyle" companies. There is no "technology play" or "exit strategy", but that's fine.

My point is that the kinds of companies that VC's fund are outliers, and there are still plenty of companies out there that are self-funding. They employ lots of people and pay good wages, but from the perspective of Sandhill Road and the Sandhill Road groupies, they're just not sexy.
posted by Nevin at 2:39 PM on October 6, 2015

over time VC is a pretty crap return investment

Only because you can't fully monetize the Economic Power VCers have over what innovations come to market. They are seriously pushing 'slow growth, organically-grown companies' out of the marketplace with their money to burn. How much they are shaping (or misshaping) our society is far beyond their pure profit. But then, Power is still as enticing as Riches (especially after you've acquired the latter).
posted by oneswellfoop at 2:50 PM on October 6, 2015 [1 favorite]

Just look at the attempts to airbrush out what makes twitter twitter meh

and on this whole thread, all i can say is o the irony

the rest is under nda
posted by infini at 3:11 PM on October 6, 2015 [1 favorite]

I'm with xingcat. The biggest lie the devil ever told is you can save the world, and get rich doing it.
posted by Andrhia at 8:19 PM on October 6, 2015 [1 favorite]

Sorry, I can't hear you over the sound of VCs stampeding to invest in Wypr, the hot new BWAAS (Butt Wiping As a Service) startup in which an independent contractor will, when summoned by iPhone App(*), come to any toilet and wipe the butts of techies too busy launching their own startups to do it themselves. Sure, you could use iGroom, but those guys don't have any traction and are probably going to pivot anyway.

(*) Coming soon to Android once we close the next round and contract out development because who wants to get their hands dirty developing for that POS?
posted by LastOfHisKind at 8:26 PM on October 6, 2015 [2 favorites]

Something must be done about these Venture Bros. I, for one, am hoping that either the Monarch or Dr. Mrs. The Monarch will figure something out.

IGNORE ME.
posted by DigDoug at 5:55 AM on October 7, 2015