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Comment by Patrol8394 | Hacker News Reader

VC has unfortunately pushed forward a model that rarely helped building sustainable businesses, but rather grow fast, build hype, IPO, cash out move on model. It definitely benefitted few at the expense of many.

People have accepted to work tireless hours for peanuts and paper money with the promise they will become rich: this rarely happen. Don't buy the hype. It is more the exception than the rule.

Many multi billion dollar VC funded business are still not profitable and often don't have a path to profitability.

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Both of the companies cited as examples early on the the article, Microsoft and Apple were basically started by a couple of guys in a garage (or dorm room). VC wasn't involved until later stages. Probably most of their early funding came from parents. There are plenty of things that don't need VC funding to get going - they can either be self-funded or with loans from relatives in the early stages. At some point the decision can be made as to whether VC is needed to expand or if it's just fine to stay small.

In the 90s my wife worked at a software company that makes scientific imaging software. They have a nice niche and continue to sell their software into academic and research labs. They never had more than about 7 employees - now about 5. It's a decent business that never needed VC funding and has gone for about 30 years now.

> Probably most of their early funding came from parents.

Perhaps VC is an equalizer here. It makes it possible for founders (like me) to start the next Microsoft without having to rely on privilege.

I understand allocation of VC resources has its own privilege issues but I'll take that slightly more accessible world over a world where your family determines the outcome.

Rich parents helped in the Microsoft case, but I don't think that was the case for Apple where the parents of both Jobs and Wozniak were middle class.

Apple had Mark Markkula and Don Valentine, now-legendary VCs, investing at or near the company's incorporation (this is 8 months after Jobs and Woz started working together and after they had released the Apple I, funded by Jobs and Woz's personal funds).

Exactly. But then most of the Valley was founded this way. The historical precedent was set in 1957 by Fairchild Semiconductor, the engineer founders of which went on to found other companies (Intel) or VC firms (Kleiner Perkins).

https://en.wikipedia.org/wiki/Fairchild_Semiconductor

Edit: HP started earlier in 1939, but was bootstrapped and didn’t do silicon till much later.

In the 90s my wife also worked at a software company that makes scientific imaging software - with about that many people. Weird.

There's an opportunity for a joke here I just can't find it. Something something double lives. /s I give up.

Something something dark side

I deserve these downvotes.

I had to go look it up. It was OriginLab in Northampton, MA.

I used your wife's software in the early 2000s!

Just to add on, Microsoft never actually needed VC money if I remember correctly. Gates got VC funding more for the connections than needing the money.

I guess you never learn about most of those companies because they chug along quietly, allowing a few people a decent but not lavish life.

>but rather grow fast, build hype, IPO, cash out move on model

you missed the step where you completely destroy the established market, and then when you're the only game left in town, make for a more expensive and/or worse product/service than what existed before.

And when has that actually worked in the last decade to create a sustainable profitable business? I can think of one - AirBnb.

What existing market did Airbnb destroy?

I’m ignoring even “existing market destroying” and just looking for tech companies that are even consistently profitable that went public in the last decade.

Housing markets in many cities globally.

MindGeek (owner of Pornhub, Brazzers et al)

Breaking laws, stripping their lower echelons of their dignity, burning investor money and - if given the chance - destroying the planet.

I think this is the old way of thinking in the VC world. Yes, it still happens, but I think enough VCs have been burned by garbage deals that they are starting to look under the hood more carefully. No VC wants to be funding the next Theranos or WeWork. Bad economy doesn't mean going back to 2008 funding levels. I think a bad economy today means that the companies being created need to have a viable path for growth as well as profitability.

>No VC wants to be funding the next Theranos or WeWork

I wouldn't bet on it. Wait for $$$ to become cheap again and you will see all sorts of garbage with multi million $$$$ evaluation out of thin air.

It's a good point. It does seem like some VCs have short term memory.

> No VC wants to be funding the next Theranos or WeWork.

All things being equal, you’d rather not fund failures. But VCs care more about missing Facebook than getting conned by FTX. Most of their investments go to zero anyway.

No matter whatever else I accomplish I will still die. I won't get any more years. Better to fail quickly than slowly.

It's not about getting rich. It's about being able to give yourself a realistic shot at each of many things you care about. If I do the slow path, I get maybe one or two shots and if I'm not ready for that industry or if I fuck it up, I'm borked. Succeeding or failing fast lets me do this the way I have succeeded at everything else: trying many times.

But this is pointless. Those who get what I'm saying need no convincing. Those who don't can't be convinced by me.

What if the odds of the slow method are much higher?

Unicorns are rare. Businesses that pay 2-5x the local salaries and let their founders get 8 hours of sleep are more common, I'd argue.

> But this is pointless. Those who get what I'm saying need no convincing. Those who don't can't be convinced by me.

That's an odd way to join a conversation, since that's precisely why we have them.

I think, in that case, the slow and steady ones will outcompete us rushing few and all will stabilize soon. Until then, I'll be seeing you guys on the playing field.

> that rarely helped building sustainable businesses

I think this falls under the founders' shoulders. Some founders tried to "hack" their way to "fake out" large growth that they themselves know are not sustainable, just so they can fool the VCs they are raising money from.

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