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Comment by mysterypie | Hacker News Reader

Wow, these VCs blew $65 million dollars on an online clothing store.

Wozniak and Jobs funded their Apple I by selling an old car and an electronic calculator; probably a few thousand dollars at most. The Apple II was launched for $250K, or $996K in today's dollars. These are actual computers they designed, built, and sold. That's ICs, circuit boards, firmware, device drivers, cases, real engineering, programming, manufacturing, and selling -- all for less than a 1/65 of the money that an online retailer blew through selling clothes.

To put it another way, instead of one clothing retailer, these VCs could have funded 65 (sixty five!) hardware tech companies at $1 million each (at the Apple II level of funding).

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>The Apple II was launched for $250K, or $996K in today's dollars

Delusionally reductive to use rate of inflation to estimate the capital and labor costs associated with bringing the product to today's market.

Plus Apple had the Woz.

...on top of "virgin markets" vs "so saturated it is almost a blackhole market".

Except that's not what happened.

Go read the article and read up on them: they only took on VC funding later when they had a solid business that had been built from scratch and was beyond the Apple II era of its existence.

This wasn't a case of somebody just having the idea to sell clothes online and then heading to VCs: it was a business that started out well, took on VC funding, and then started to tank.

Your comparison is unfair to both Apple and Nasty Gal.

The easiest way to build a big business is to solve the hardest and most important technical problems. The market position would be defensible due to hardness, and the market size would be big enough due to importance.

There's many other approaches to build a big business though. While Apple's workers and investors believed in Apple's approach, Nasty Gal's workers and investors believed in Nasty Gal's approach. Capitalism is the judge and redistributes capital to the approach that works.

Apple's workers and investors now have more capital, so they can start more hardware tech companies, while Nasty Gal's workers and investors have less capital, so they can start fewer online clothing store companies. It's inefficient, but it works out in the end.

> easiest way

> solve the hardest

> defensible due to hardness

That wouldn't work today, though. People have a much higher expectation of what a piece of hardware can do and looks like.

Not necessarily, look at all the projects on Kickstarter. There are still a lot of products that can be designed and build for less than $1 million.

Don't you need to look at the products that hit the mass market?

A successful experiment on Kickstarter isn't really a fair comparison to the Apple I and Apple II, you need the Apple II of the Kickstarter project to make for an interesting comparison.

Yeah, but those projects stand on the shoulders of giants. They are building on top of already existing open source hardware and software.

That's true of everything, though?

I mean a shitty $2 shirt wouldn't exist but for the power looms of the 19th century...

Apple built their first computers out of commercially available standard electronic components.

It's more that people have a higher expectation of what a device can to, and that generally means what the software can do.

I mean right now there are computers you can get that are orders of magnitude better in every dimension than the first Apple computer, that you can buy for less than $100 (I'm talking about the Pi and its ilk). But to make it do something useful there has to be a lot more effort expended to add peripherals and write proper software to match people's expectations.

At that time there weren't much companies doing what Apple was doing, it was an almost new market but now you have thousands of online stores and you need the money to get seen and noticed more than for the shop itself.

You're making these two points:

(#1) Apple was doing something distinctive.

(#2) Nasty Gal is not doing something distinctive and needs millions of dollars just to be noticed.

On that basis alone, something like #1 is a much better investment than something like #2.

Agree. But how many distinctive things are going down or not even being noticed. It's too difficult to find one that can work and probably investors are more reluctant to put the money in something new , cause now you need quite a lot of money for anything. I understand your point but most money doesn't go to innovation but to proven markets. They're afraid of what they don't know. Look how hard is the hardware market.

You're right that they're 2 very different investments, but I don't think you can say unequivocally that #1 is better than #2. It all depends on desired returns, risk, etc. Let's face it, if you had given money to Apple in 1976 there was a good chance you were never seeing that money again.

When Apple was founded there were many other companies selling microcomputers. Today, there are thousands of online stores yet some still manage to get seen and noticed through word-of-mouth and viral marketing which costs very little.

Woz and Jobs happened to be supremely talented, executed well, and were very lucky. How many other Silicon Valley garage startups of that era flamed out or fizzled with barely a whimper?

Yeah, in a world where the microcomputer is something you assemble from blueprints in a magazine, then programme to print "Hello, World", or maybe talk to Eliza on if you got the tape machine to work.

And given the competition for the market back then, you can probably presume that 60 of those 65 investments would have failed.

Great comparison. Clothing store funded with $65 million vs tech giant funded with selling a car and a calculator.

they could've funded 65 clothing stores as well, no?

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