The Silicon Valley VC Disease | Hacker News Reader

The Silicon Valley VC Disease

scobleizer.com

21 pointsparker15 comments

Scoble writes like Steve Gillmor with smaller words. I'm not sure what the point of this article is. The whole point of Venture Capital is to invest in small companies and grow them to a point where they can raise more money through other means - typically IPOs or acquisition. That they're failing badly is more about the US economy than some "VC disease."

So I guess what he wants is for investors to invest bucket loads of money for decades on promises and hot air. Or he wants someone to subsidize iphone usage...

My favorite part, though, is when he starts touting long dead products (Visicalc, Pagemaker) as examples of the kind of success that comes from a long term perspective.

What the hell is he talking about? VCs routinely fund companies that don't have a business model or any near-term path to making "buckets of money". Twitter being a great example.

He was specifically calling out Dave Hornik for his bit about not investing in iPhone apps because it's too small a market. There's too much VC investment in junk they think will be the next big thing rather than things that might be smaller hits, but actual hits. It's the difference between a $1 scratch-off paying $5 vs. buying $30 of Powerball tix in hopes you hit the jackpot.

What Hornik says seems 100% obvious. iPhone is still a tiny percentage of the market. That said, they're disproportionately likely to use the web and apps I would think.

But still, you have all of the negatives you do with Facebook Apps (capricious overlords in total control of your fate) but with something like 5% of the user base. And while iPhone users are clearly more engaged with that platform than, say, Win Mo users, they're nowhere close to Facebook users.

iPhone has the App Store, through iTunes, and is already demonstrating that people will pay money to install those apps on their phones. Facebook apps plan to make money how exactly?

Some Facebook apps are making a killing. There are a number of ways to monetize other than low paying cpc ads.

The "killing" that they are making is by running ads for OTHER Facebook apps. Isn't that just passing the VC around?

Blackmail? Haha...wait...that's not a bad idea.

Yeah, I'm not sure what the hell he's talking about either. The fact that specific funds exist for both iPhone and Facebook applications kind of obliterates his point.

"you gotta build apps for mainframes and DEC’s, because that’s where the market is, not in that Apple II toy."

faulty comparison

"He forgets that the small, seemingly unimportant platform today that gets early adopters excited will become the large, dominant platform of tomorrow. It might take 10 years, though, which is too long for VCs to care about."

lets get real, the only thing that makes iPhone somewhat better (in some cases) is the UI. Where is the difficulty others making similar UI?

I think Scoble has 20/20 hindsight disease:

... the small, seemingly unimportant platform today that gets early adopters excited will become the large, dominant platform of tomorrow ... How long did it take Visicalc to happen on the Apple II? Or Aldus Pagemaker to happen on the Mac?

Most of promising technologies doesn't become dominant. For one thing, there are many small, seemingly unimportant platforms, but only one can dominate.

But I like his 5 reasons for targeting a nascent platform. Even if its market stays small, for a DHHian business, that may be right-size. Assuming it endures...

Scoble doesn't know anything about VC. They are just the middlemen, they need to report back to their investor. Do you think they risk funding you and take the heat explaining to their investors?

I can criticize bill gates for not investing in my dog breeding business becuase it could get bigger, and keep on whinning, but what is the point?

The article seems to boil down to timeframe and the idea VCs want to make money now. (nothing new there)

If you really are passionate about and believe in what you are doing, you'll do it anyway even if the market/segment is "small".

Small markets can often be the most lucrative (loyal, willing to pay more, etc.), especially if people love the products you make.

There is nothing wrong in making apps just for the iPhone etc., people like Tapulous are doing well by it.

Apple, liking to preserve quality don't allow clones. With iPhone cloning, the VCs would see a market, and this is an issue: to clone or not to clone?

Curiously, Scobledober's blog is mostly unreadable without Javascript.

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