VCs Are Just Tired
techcrunch.com
techcrunch.com
The managerial class notion of overwork/busyness is completely voluntary.
Just because it's 'voluntary' doesn't mean it's not work or it's not stress or it doesn't affect you.
5-10 years in a managerial class role nets many that much.
Certainly there is an argument to be made for working less and living with less, but for most people $1M invested doesn't check out. If you're relying solely on returns from that investment, then conservatively you can only safely withdraw 3-4%, which works out to 30-40k a year. That's close to full time on minimum wage in some states. While that's enough to survive, not sure if that'd be a fulfilling life for most, even while single. What happens if you have a family later?
EDIT: Also not sure how many can actually save that much in 5-10 years. That's 100k - 200k of savings after tax. Even with compound interest, that's pretty tough for most I would think.
It’s also less about “never making another dime working” and more that you don’t need a traditional 9-5. You can and should figure out other sources of income.
Regardless, none of this negates that they can still feel valid pressures no matter what their success is. Typically having such success invites even more pressure as one is expected to keep it up, either by others or themselves. Few make it to such largess without overworking themselves.
[1] https://www.bloomberg.com/opinion/articles/2019-06-04/the-40...
$1M in a high quality REIT can generate 12% dividends, which is $120K. A single person could easily live off half that.
Are these 12% dividends normal or sustainable? Have they continued over the years? Could you name a couple of sample names/tickers?
>> A single person could easily live off half that.
True -- perhaps not half but you are forgetting taxes!
Taxes are not that high at that level of income.
If your health insurance coverage denies any procedure you consider necessary (which they do not), you're looking at 6 figure bills. These balloon with age. I'd agree on the $1M figure, but only without the monkey wrench of US healthcare.
I began typing this intending it to be sarcastic, but at its conclusion, I am no longer certain about that.
Remedies? Either cultural (it just becomes unthinkable to work beyond X, because that's taboo) or legal (limits on how much you're allowed to work).
Being productive doesn't give you more free time. It just means that you get more work.
"Businesses" don't really do much of anything. What you really mean is the billionaire executives at the top of them.
See page 44 of the paper below.
You can look at Income, Wealth (net worth) or financial resources. Net Worth is probably the best estimate. You'll notice the top 1% has ~40% of the wealth. The next 4% have ~30% of the wealth.
So it would be very inaccurate to suggest that the "majority" of wealth and upside is accrued to the middle class, at least in the US.
"Household Wealth Trends in the United States, 1962 to 2016: Has Middle Class Wealth Recovered?" Edward N. Wolff
NBER Working Paper No. 24085 Issued in November 2017 https://www.nber.org/papers/w24085
I'm convinced that a lot of people would be ready to work 'harder' when the work is well organized and done.
Because so many are on cruise control, anyone who wants to make something happen has to work to make up for the lethargy all around him/her.
I don't think it has ever not been this way except for short stints where entire tribes felt a sense of urgency. Most people's idea of an ideal life is sipping cocktails by the beach and gossiping about who said what. There is some wisdom in that :)
If you level-set your expectations you can live a very laid back life.
Particularly in the software industry where you can get paid twice as much for working half as hard compared to most other fields.
If we are just going to put together words to describe concepts that make no sense then you are probably meeting people that have never made a dollar on their investment.
Some of the best VCs are original thinkers and will take their time making investments. The thing about them is that they will be the first to making an investment in a company even before it has become the hot new thing.
Now what their investment strategy is versus what pays off, well that I'd love to see empirical data to shed some light.
I'll also say that building up their networks to get those deals is not just a matter of luck, especially for those that repeatedly do well.
In many random distributions, if you sample enough you're going to get outcomes at the tails.
I think it may look a lot like luck because they make so many speculative 'bets' and so many don't pan out, but that's more a function of the vast sums the successful ones end up being given to invest combined with poor deal flow. But they still aren't random odds.
Simple example: the VC that invested into WhatsApp and got a massive payout when Facebook bought them. Nobody in the Valley VC community knew about WhatsApp because it had no penetration in the USA. But the firm had hired a developer intern to write a script that downloaded the app store listings for every country in the world individually and calculate fast risers. So this VC was the first to realise that WhatsApp was getting huge everywhere except where they actually lived. But then he visited the WhatsApp website and discovered there was no address or contact information anywhere. He did some research and discovered they were based in Mountain View, but literally couldn't find an actual address anywhere.
So he did the obvious thing - he walked the streets of Mountain View systematically looking at every single office building until he found them, tailgated his way in and then sweet talked the receptionist into giving him a meeting with the CEO.
Well the CEO didn't want to take VC investment. So then the guy started on the final stage: convincing him it was a good idea. Eventually the WhatsApp founders concurred and took the money.
Those sorts of actions aren't the actions of gamblers. The guy had a thesis, he worked to put it into action, he even did a lot of physical work and ended up getting a distinctly non-random reward.
1. Easier access to deal flow
2. Lower valuations
3. Less competition
If any VCs are interested, HMU I can show you strong deals your peers saw way before you because they looked @ Miami + deals your peers haven’t seen because I live here & I am plugged in.
eBuilder | raised $8.4m -> sold $500m
Chewy.com | raised $450m -> IPO $8.7b
BelugaCDN | undisclosed acquired by SSL provider Comodo
Willing.com | raised $7.1m -> acquired by Life Insurance provider MetLife
Octopi | undisclosed acquired by CargoTec (logistics company)
LiveNinja | raised $3m -> acquired by Net2Phone
If we go by funding round/private valuation:
Magic Leap (I saw the founder pre ML @ local meetups)
REEF technologies (saw them as a competitor for years on a side project before SoftBank dumped $100m in)
Papa (met the founder a few times pre YC)
OnSwipe (saw it before Yuri Milner invested after the company moved to NY)
There’s not a lot of them BUT they are super easy to get to & write checks into if you’re here. Email is in my profile if you want access to a few that are still easy access / low valuation.
> forcing everyone to chase the same set of SaaS companies
> everyone can read the gridiron of SaaS metrics
There was a perfect storm: huge seed rounds leading traditional firms to move upmarket, VCs raising larger funds and so needing to hit the winners hard, which caused Series A metrics to swell, and so VCs are all chasing the same deals.
Of course those deals don't need them: those companies are already winning and don't need their expertise, just their money, which is commoditized by the swelling of funds.
The answer is simple: chase less successful. Stop just trying to get into the big SaaS deals, and target smaller companies, lower metrics, earlier stage companies.
Of course, if the firm staffed up and raised a larger fund as the article says, then it may be structurally impossible to survive. Innovator's dilemma in action.
a16z, benchmark, SV angles (when they were around), etc. only got where they are by taking massive risk - on founders with no track record and often just a prototype of demo.
Now, just to get a seed round, you need a fully featured product, with distribution and revenue.
It just feels like the wonder and risk of creating world changing tech without worrying about financial outcome is dead. Which, honestly makes sense from an investment thesis standpoint. You minimize risk by following the leader or investing later stage. It’s growth equity, not true or traditional VC that requires a 10x return. Most VCs are happy with 1.5-3x now (relatively happy).
Please, apply some of that 9:9:6 to your VC workflow, don't sleep and definitely try to be a 10-X investor. And definitely turn up the paranoia on FOMO - not because it yields dividends, but because every VC peaches it, so practice what you ...
Those Billions won't earn themselves
[1]: https://en.m.wikipedia.org/wiki/996_working_hour_system
I see some articles congratulating people who’ve raise $5M funds. If the fee is 2% you only have $100K to pay yourself and run the business. Not exactly rolling in dough.
In WeWork, the world saw a blatant attempt by VCs to dump a severely overvalued and overhyped company into the public markets so they could cash out.
In Facebook, we saw VCs fund one of the world’s largest and most successful surveillance capitalist enterprises, one that still seems to be going strong, despite the ridiculous number of scandals plaguing Zuckerberg. VCs made him invincible.
We’re seeing gig economy companies find new and creatively unsavory ways to screw over their “not workers” (looking at you, GrubHub).
But yeah, screwing over the middle class has to be draining work.
In all the examples cited, there are many actors and circumstances that have brought these things about; investors, sure, but also customer demand and behavior, technological evolution, social and economic factors at micro and macro scales, and countless millennia of evolution.
Angry scapegoating might be briefly cathartic but doesn’t effect actual change.
A healthy, curious conversation explores all factors and yields ideas for new solutions to present day problems.
Sorry, I just don't buy it.
People can be wrong, and in fact it is necessary for people to be able to be wrong and state their case and sometimes emotion without tonal arguments to dismiss the hardest of questions.
The root of the comment, the curious part, is: are VCs somehow causing undesirable pathology that leads to their "tiredness"? The moderator happens to work for a VC. I don't think the parent of this thread makes a compelling case, but the sentiment is rooted in reality and can be used to start a useful if uncomfortable discussion.
Perhaps this is not a true intellectual community and I should just leave.
If there was anybody who would be motivated to scapegoat a single actor or cause for dysfunction in the medical industry it's me.
I've endured debilitating health challenges, including severe pain, for almost half my life. I've had plenty of time and motivation to research and contemplate everything that's wrong with the medical system, including corrupt dealings between pharmaceutical companies, regulators, research institutions and medical practitioners.
And, much like apportioning blame to VCs, there is some truth to this point of view.
But it's not the whole story.
At least as significant a factor is that there is a real, legitimate need for pharmaceutical opioids, and a widespread epidemic of "pain" that is little-understood by mainstream medical researchers and practitioners, which is mostly to do with the fact that physiology is extremely complex and still only partially understood.
Fortunately, I've never had to turn to opioids or other pharmaceuticals to treat my pain conditions, and after many years of research and experimentation, have been able to become pain-free via natural - though unconventional - approaches.
I think it would be great if other people had the access and motivation I've had to achieve good health, rather than ending up dependent on opioids or languishing in other ways.
But 10+ years of thinking about it, including plenty of, yes, curious conversation, has taught me that problems in the medical system can't all be simplistically blamed on corrupt pharmaceutical companies.
> tonal arguments to dismiss the hardest of questions
What "hard questions" was the root commenter raising?
Real "hard questions" involve honestly considering all facets of a topic, and taking on the responsibility of contributing to the formulation solutions that are practical and effective.
> Perhaps this is not a true intellectual community
In what way was the root comment more "intellectual" than what I'm advocating?
A desire for intellectualism comes from allowing airtime for ideas that you disagree with, that might even confront yourself, and maybe even elucidating and moving the tonal argument you disagree with to the very roots of the things that need to be discussed and providing ample discourse for the thoughts to be explored. Whether you are doing this or not I can't really tell right now, but you are not the target of my comments, the mod mute is. I'm happy to just go away at this point, this site and surrounding culture has changed for the worse in the 12 years I've seen.
Dang's job is to prevent flamewars on this site, and to cultivate intellectual curiosity.
All he was objecting to in the original comment was that it was of the style that can spark flamewars.
Ultimately, I think we want the same things.
We can't have both the flamewar game and the curious conversation game. That's not a moral observation, it's an empirical one: those roads lead to very different places. Since HN exists for one and not the other, it's a moderation issue.
The basis of capitalism is markets, and the wisdom of the crowd (the "invisible hand") controlling them and making them efficient. VC's (and wealth concentration in general) are the opposite of that. They are the very-much-visible hand.
We'd solve this problem with progressive taxation and a basic income (a healthy side-helping of better funding for public services wouldn't go amiss either).
IMO, if you believe in free markets, then your position is inconsistent if you also believe if you also believe in unconstrained wealth collection. Because once that wealth is concentrated, the market is automatically distorted.
Interested in how you definitely know for a fact and with 100% certainty that what you suggested would solve the problem.
Doesn't mean your opinion is right or wrong or invalid, since I personally happen to agree with this line of reasoning, but I don't see how it fits within what the author is talking about.
* desktops, laptops, phones, tablets, etc aren't free
* wireless data plans aren't free
* wired Internet connections aren't free
* streaming services aren't freeBut can be obtained for free. People literally throw out perfectly functional machines daily. But anyway, "effectively" was meant to cover the marginal costs of getting onto the internet.
> streaming services aren't free
Okay. While I don't quite see the appeal when there is already an infinite depth of content that is not a paid streaming service, let's talk about streaming services.
The assertion was that if you make more money, you will buy more things. While there is some variation from service to service, streaming services have carved out a price point of around $10 per month. Does that mean for every $10 you make over and above the cost of necessities that you will buy another streaming service? If you are given a $10,000 raise above an income that already provides necessities will you buy 1,000 streaming services? Probably not.
Let's narrow our focus to music streaming services. I like to listen to music at work. Other places too, but work gives us a tidy eight hour window. 173 hours per month, on average. The average song is around three minutes, so nearly 3,500 songs a month. Using the Spotify free music service there are ads and time to queue up songs, so let's say 3,000 songs a month. For argument's sake, let's assume they are all performed by different artists.
When I was younger a CD sold for around $20. Not having much money, I might buy one or two a month, but that's it. If I had more money would I conceivably buy more CDs to access those 3,000 songs I listen to now? I think the answer is yes. I would have bought more CDs if I had more money.
But now I get that for what is effectively free. Even if I did pay the marginal cost to access a non-free tier on a music steaming service, that payment buys me all the music, so to speak. What would have cost $60,000 per month 30 years ago would now cost somewhere around $10 a month, with, most importantly, no linear increase in price with consumption.
So, sure, you need to buy a few things, like a computer and internet access. But the point is that, even given unlimited money, one quickly runs out of things to buy in this day of age.
To elaborate on the great comment above -- this is not working well because it creates asset bubbles. It also makes one of the most important things people need -- homes -- inflate in value beyond reach for many.
But if you believe in free markets, then your position is also inconsistent if you don't believe in unconstrained wealth collection. Because that's one of the things that the market sometimes does when it's free.
And I'm sure that someone will say "That means that the idea of a free market is self-inconsistent, and therefore we should abandon the idea." I think it is more likely that the logic in the parent's last paragraph is incorrect. Instead, one has laws to prevent wealth from distorting the market. (Tax the wealth to extinction is not the only possible form that such laws could take.)
Correct -- a truly unconstrained market tends to devolve to a highly unfree market. This is why even Adam Smith commented that proper regulation is essential to ensure markets remain free.
There's no ground standard for non-interference in the affairs of others.
The original point the poster made still stands. The point of the invisible hand is to parallelize capital expenditure decisions. Once everything consolidates in a few hands, the market is no longer operating in that mode. You have few people making increasingly large and underinformed decisions about capital movement, which coincidentally, further constrains the ability for money to move throughout the world unless your people sitting on top of capital are spending each and every day doing nothing but trying to unload capital to facilitate the rest of the world's business.
The idea of a Free Market does not discount the possibility of Market participants organizing to redistribute and reprime the Market optimizer in the name of shifting away from destabilizing economic circumstances. After all,a market that can no longer function due to civil unrest makes no one but the engines of violence any money.
The sooner people start to to take that to heart, the better we'll all end up.