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Comment by kylelibra | Hacker News Reader

This thing is extremely divisive on VC twitter: https://twitter.com/benedictevans/status/1330889261479043075...

The New Yorker author responded. I tend to agree with his response. Quoted below.

> Benedict - thanks for your tweet. I'm a fan of your newsletter. Although VC might have a specific and limited definition in your book - as a certain kind of professional - it has a pretty common use in the vernacular: People who invest in start-ups, at a variety of stages, in the hopes that company will prosper. You may not respect the people who invested in Theranos, and you might not consider them part of your industry, but they were VCs. They were acting like VCS. They were investing in a start up in the hopes the company - and their investment - might prosper. They were evaluating companies and making bets. And while I would never call you or anyone else 'lazy', I've always appreciated the intellectual rigor you've brought to your writing. If you'd like to engage, I'm absolutely willing to do so. Calling me an intern or lazy, however, seems beneath us all. (Besides! There are some great interns!)

Source https://twitter.com/cduhigg/status/1330894337090015232

I think its a decent argument and I partially buy it! But i worry it falls down partially due to generalization and maybe over-inclusion.

So I'll take the opposite side. Does "acting like VCs" by "evaluating companies and making bets" make you a VC? That kinda just seems like investing though right?

Is Bill Murray in "What About Bob?" really a sailor because he was duct-taped to the mast?? (https://www.youtube.com/watch?v=YrbY4hsNh64&ab_channel=jooki...)

it starts sounding like "no true scotsman" though. If one sails, one is a sailor. Being duct-taped to a mast might not count as sailing though. If one invests in early-stage startups that are believed to have growth potential... I guess you can try to promulgate a different definition of what makes a VC, but if it starts sounding too much like "Those who act WISELY are VC's, those who act unwisely are not", or even "those who hobnob with us at parties are VC's, those who go to other parties are not" (Oh, they were on the East Coast not the West!), I'm not sure how objective or useful that is, for other than propaganda purposes.

What is the VC industries understanding/definition of VC then? The tweet thread doesn't leave me clear on it.

Wikipedia says "Founded in 2003 by 19-year-old Elizabeth Holmes, Theranos raised more than US$700 million from venture capitalists and private investors." Google theranos venture capital you can find plenty more references. Evans suggests it's a "straight fuck-up by fact-checkers" to do so, which seems overly-defensive and just plain odd to me.

Tim Draper is a VC and invested in Theranos.

This seems like a really weak argument IMO. Isn't Rupert Murdoch a venture capitalist in this context? He cut a big check to a startup (Theranos) with high growth-potential in exchange for equity. How did Murdoch's investment in Theranos not qualify as VC? It seems like Benedict is trying to argue that Murdoch isn't a VC because he isn't known typically as a VC. Instead of explaining his argument, he simply compares this to "summer intern" work. It should be pretty easy to make the distinction between VC and whatever Benedict considers Murdoch without resorting to attacking the reporters.

He’s just being nice. In reality, what he’s really saying is that Rupert Murdoch is dumb money. Seeing the success of VC and trying to copy it, but only doing it at the most superficial of levels.

To be fair, in recent years, a lot of dumb money has entered into the VC scene. Again, mostly from traditional incumbents attempting to emulate without understanding the bigger picture.

If you exclude all the dumb VC investments after the fact then sure the industry looks awesome. The problem is making distinctions beforehand. Exclude non investment fund VC’s and you exclude most of the best investments and keep a lot of cruft. Net result professional VC’s under preform the market.

Include non professional investors and you get successes like George Forman and a ton of far less successful athletes etc. which on net also under preform the market.

The entire article is about how "dumb money" is distorting things. The distinction between dumb and smart money is irrelevant - VC money is distorting the economy in a way which benefits a handful of large investment firms and destroys many viable businesses.

> A fool and his money are soon parted.

In the time between a fool acquires money and becomes destitute they can topple governments, commit genocides, destroy ecosystems and generally terrorize billions of people. I don't care about a billionaire losing everything on craps. I care greatly about idiots usurping democracy in coups, force feeding propaganda through willfully oblivious social media companies, and other melt methods.

yeah, after reading that thread I have no idea what Benedict Evans thinks a VC is and isn't.

Does anyone understand this?

Evans is distinguishing between people who are full-time VCs, and anyone who has ever written a check to a business that doesn't have revenue yet.

A part time carpenter is still a carpenter. Evans claim wasn’t that Murdoch is an amateur. His claim was that Murdoch was categorically not involved with VC.

If you write an article titled "Electricians Are Turning Homes Into Firetraps" and then cite the fact that I improperly swapped out an outlet in my home as evidence that I'm an electrician, you should expect pushback.

But the article works equally well for Uber or Lyft or indeed We work, all of which were funded by professional VCs.

I really like Ben Evans, but he's ignoring the main thrust of the article and nitpicking about definitions.

That's rarely a sign of someone who has a strong argument against a piece.

If it works equally well for Uber or Lyft or WeWork, then trying to shoehorn Theranos in since it's a spectacular fraud that doesn't really fit the definition was a bad decision.

That's rarely a sign of a piece that makes a strong argument.

The article covered WeWork much, much more extensively than Theranos.

I know its against the guidelines, but did you read the article?

Trying to shoehorn in Theranos does not preclude covering WeWork, so I'm not sure how you read my comment to imply that it did.

Theranos is mentioned three times in the article, and always in the company of more cogent examples of VC-funded companies- Juicero, Uber, and WeWork. The quibbling over Theranos really does look like a distraction away from the main points of the article.

Divisive?

Yes...auto-correct failed me there.

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