Fuck the VCs (or not fuck the VCs)

http://furrier.org/2008/08/28/venture-capital-and-the-modern-startup-building-a-company-is-a-team-sport/

by dennykmiu • 18 years ago

17 12 18 years ago

I disagree with the premise that anger towards VCs isn't warranted. The author paints a picture of the VC as an innocent victim of changing times:

"VC doesn’t have a greater share of bad actors than the ecommerce or gaming sectors. Large-scale, software VC is simply a formerly great business in decline, and there are a lot of good, smart people who haven’t made in VC yet who are worried about their (and their families’) economic futures. It’s not evil — it’s their job and they may not feel they can switch."

Those poor VCs who have no other career options available to them, and must therefore resort to squeezing every last drop of blood from entrepreneurs who don't know any better.

I absolutely believe that there are some fantastic VCs out there, but anger against the industry is only natural when you've been screwed over like some of these companies have.

dennykmiu2• 18 years ago

Being angry with VC's is like being angry with mother-in-law. They will always be a pain if you insist on sleeping with their daughters. So make your choice, stop taking their money and they will cease to be your problem. Be angry ... but move on.

tonystubblebine• 18 years ago

I love this analogy.

ahold• 18 years ago

fuck'em

Hexstream• 18 years ago

I've always wondered, do you really have as much decision power with 51% of the company as 100%?

_b8r0• 18 years ago

In theory, yes. Having said that, leverage can be achieved through means beyond shareholdings and it's worth remembering that if you're heavily dependent on your VC for assistance.

gaius• 18 years ago

Nope: http://waxy.org/random/arsdigita/

Having said that, it's not at all clear what Greenspun really wanted VC money for in his cash-generative services company. Perhaps he shouldn't have bitten off more than he could swallow.

mechanical_fish• 18 years ago

it's not at all clear what Greenspun really wanted VC money for in his cash-generative services company

Read his new, improved, more nuanced explanation in Founders at Work.

If I were to summarize his answer: It requires intestinal fortitude to embrace slow, organic growth at the cost of turning down lots and lots of business from a market that is begging for your services. But it is also hard to recruit people to grow your company -- especially businesspeople -- in a bubble economy where every company with a domain name is going public with billion-dollar valuations. So ArsDigita tried to come up with a plan to go public, and that inevitably involved VCs, because back then investment banks didn't bother talking to privately funded companies, because the fix was in: Why bother working with actual, profitable companies when you can make more money by scratching a VC's back? It's not like the market was paying attention to fundamentals at the time.

The moral of this story is that bubbles suck. They're completely disorienting: The market value of everything is screwed up, and you're surrounded by irrational people. I do not miss those days at all.

peanutcruncher• 18 years ago

The first thing anyone looking for venture capital needs to understand is that the primary objective of a VC company is to turn every dollar they invest into your idea into $10 over a 2 to 5 year time frame.

Once this fact is understood and understood well, then many of the emotional issues just sort of go away.

shimon• 18 years ago

There are some good things in this post, but did anyone else get the impression that the author ran parts of it through a Markov Chain text generator to bulk it up?

dhouston• 18 years ago

http://www.joelonsoftware.com/articles/fog0000000056.html

dennykmiu2• 18 years ago

This is the best article ever for explaining the two possible startup models, bootstrapping and venture-funding. I have done both, one that was funded by VC's and failed and one that was bootstrapped and succeeded. I would be the first one to admit that I have limited data points. Thanks for sharing.

Fuck the VCs (or not fuck the VCs)

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