Hacker News Reader

Comment by alehul | Hacker News Reader

> East Coast VCs are much more conservative, which is ultimately bad because it results in less moonshots succeeding.

This is really accurate, at least from my experience as someone of a similar age working on my first startup at the time.

With cold outreach to VCs in NYC I had zero responses, and only two meetings with BigCos curious about us; they seemed easier to get the attention of.

When I reached out to investors on the west coast it was entirely different. I still remember getting my first reply. It was a rejection, but a super-detailed one from Topher Conway of SV Angel that stuck with me. Despite it being a cold email, he offered up a lot of points that helped me adapt my strategy and address what investors may be concerned about.

I was a kid with anxiety and never replied back to that rejection email (pains me to this day), but I have so much appreciation for people like that, who are aplenty in the Bay Area.

View on HN

I can see a parallel with the "why Europe doesn't have as many big tech companies as the US" discussions. Now change the question to "How many companies does the East Coast have in comparison with the West Coast." Or even SV. (Even if most companies are actually established in Delaware)

Ease of finance and management vision (which kinda related to the first point) seems to be the main drivers.

The caveat I'd make about that comparison is that the question a lot of people end up asking is "How many SV flavor of tech companies are on the East Coast vs. SV?" Ignoring, for example, biotech, defense contractors, finance, etc. The comparison isn't invalid but it's certainly biased towards tech=web-scale.

If you Wikipedia List of largest companies by revenue, most seem to be headquartered in the East Coast and Midwest

Reply to his email now?

I lost the domain of the email address a while back so I can’t even see it anymore... Will try to guess his email address to send a thank-you later today; better late than never even if very late?

One of those funny situations of “ah, yes, now with my own domain Gmail can never take my email away from me!” but then my payment failing and my domain going to auction before I notice.

Yuk! Domains suck in that regard.

A little old fashioned, but you could try a snail mail thank you card. I'm definitely showing my age a bit here, but it's something that I've started doing with my clients.

Regardless, it's definitely never to late to say thank you whether it's via email or some other medium.

In support - do it! It means a lot to be told a genuine thank you.

He is on LinkedIn and Twitter.

I wonder how close or far the strategy for getting investment is to the strategy for growth/profit.

> East Coast VCs are much more conservative, which is ultimately bad because it results in less moonshots succeeding.

"East Coast VCs are much more conservative, which is actually better in a longer term because it results in more stable return rates (less failure)"

I should’ve only quoted the first part of the sentence as relevant to me, but:

Better for whom?

I agree it could result in better average returns for the firm, but it likely isn’t better for moving society forward as a whole.

What makes you think moving society forward is on anyone's agenda?

The best we can do is align incentives.

Given recent events, incentives seem to be far from aligned, even in the most basic & important aspects of our society (policing, pandemic handling).

Firms that do not make a solid profit margin are a really bad sign - it means that there is little value add by the firm.

If I buy $10 worth of paints (and equipment) then use that to create and sell you a painting for $10, that is society signalling that I really should find something better to do with my time. The raw materials are about as hard to produce as the care anyone has for my work. The value created by me doing the work was $0.

On the other hand, an artist who turns $10 worth of paint into a $100 painting has created enormous value - that artist should be the one who gets all the paint, and that is what the market will sort out. That artist is not wasting time, their art is high value add over the raw materials. The time they spent on art added $90 in value.

If firms tend to have solid profit margins, almost by magic society at large will get more actual value out of the same amount of resources. Nothing is good in excess, and there is plenty of intellectual room to quibble about where the threshold and preconditions need to be for the outcome to be 'good', but investors making a solid return is very healthy. It can move society as a whole forward.

By that logic, take all the paint away from Van Gogh and give it all to Jeff Koons.

Van Gogh tried to sell his art for more than the price of parts. He was unsuccessful in his life due to being ahead of the curve. Much like Betamax, he died before being appreciated.

It's true, If everything of value has a price tag. That, my friend, is an opinion, not a fact.

While not everything of value has a price tag, everything where the price tag is paid has value.

If people make a habit of matching the two it will not end well. We need outputs to, on average, be greater than inputs or the whole show falls apart.

moving society foward is a strong statement

which startups in your opinion did that? you know, an actual innovation not another competitive service as a service

Intel? Apple? Google? Nvidia? Tesla? SpaceX?

Hum... Better for investors and better for the founders.

Yep, it's maybe better for random strangers if both commit to a lot of work that may not pay out. (Or maybe not, isn't there something better for them to do?) But that's a really entitled point of view, isn't it? It's better for everybody that is actually on the line.

How did you get the notion that moonshots move forward the society? Heck large parts the US is 3rd world level I'm infrastructure and education. But US is really good with VC and such.

Sorry, this assumption is just a pipe dream.

Re-usable rockets? Affordable & enjoyable electric cars?

Or, perhaps an oldie, but goodie, “A computer on every desk, and in every home, running Microsoft software.” And believe it or not, there was a time when Bill G. was well on his way to realizing that vision.

How reusable rockets or silly fast 0-60 electric cars help the millions who get crappy education, savagely policed, or working 3 jobs to not starve?

> East Coast VCs are much more conservative, which is actually better in a longer term because it results in more stable return rates (less failure).

Returns are power law distributed, not normally. You want to increase your variance, not minimize the chance of the fund not returning anything. VC’s investment thesis is not based on making solid returns that aren’t that risky. It’s a bunch of minimally correlated bets, most of which will return nothing, some of which return 100x their investment or more.

Stripe and AirBnB are the majority of the value of YC’s investment portfolio.

VC as a category is not meant for stable returns — the goal is to find breakout successes with power law returns that return the entire fund. VC LPs (like the Yale college endowment) allocate only a small portion of their AUM into VCs knowing this.

Reply on news.ycombinator.com