Comment by vipshek | Hacker News Reader

Comment by vipshek | Hacker News Reader

This discussion and the points being made are totally valid and reasonable. But I think there's one thing they completely miss, which is the cultural impact of VC.

Given the massive success of software companies over the past decade or two, hordes of driven, talented, and smart young people have joined VC-backed companies or aspire to do so. It's become culturally accepted that if you're an ambitious person, you should be working at - or better yet, founding - a venture-backed company.

The societal opportunity costs of this phenomenon are significant. I know dozens of young, talented people who are founding companies for no particular reason, simply because it's become the default path for what they're supposed to aspire to.

Is this the "fault" of venture capital? Not really - VCs are just trying to attract talented founders and make their portfolio companies successful.

But by doing so, they've created a negative externality, which is that VC has become the gatekeeper of perceived "success." That means fewer talented, high-energy people working in government institutions or critical industries - precisely where those talented people could have the greatest impact on society at large.

I understand what you're getting at, but are high-energy people not working in government or other critical industries because of VC lore, or is there a significant contribution from these industries being slow and bureaucratic? If I'm a high energy person who wants my work to have impact, I probably want to work in an industry where people move fast and innovate and don't get caught up in a bunch of red tape (regardless of whether this red tape is actually reasonable).

From talking to friends and younger people entering the workforce, this is almost always the bigger consideration. Most feel like starting a company is still a total shot in the dark from a success standpoint, and I feel like there is more skepticism than ever of the startup lottery.

What I totally agree with is that VCs need to be doing a much better job telling people that starting a VC-backed company is an extraordinarily bad way to make a lot of money. The odds are just insanely stacked against you. That said, most people gravitate to inspirational stories even if you're told it's at odds with what you can expect for your own journey, so, the more of these success stories there are (even if the ratio of them relative to total "tries" stays consistent), the more people will take the startup path.

Completely agree there are many other reasons people don't join large, established bureaucratic organizations. My career has involved building software within well-established industries, but not necessarily within the large bureaucracies themselves. There is plenty of room for nimble software companies in those industries, but little of it fits the venture-backed model because it'll likely never achieve a 100x return. That's the sort of thing that gets suffocated by an overemphasis on VC.

I think your point about "inspirational stories" hits at the heart of something important. I believe there are plenty of successful software companies working in niche industries and having great impact, but their stories don't get amplified nearly as much as venture-backed companies do, partially because raising VC is viewed as a stamp of success that makes it easier to get press coverage, hire talented people, etc.

If there's one thing that I think needs to change, it's that we need to tell more inspiring stories about people who've achieved success without needing to raise VC. That'll also reduce pressure on VC to be the one-stop-shop for everyone's business ideas.

(Also, hi Vinay! Not sure you remember me, but I used to hang out on the "codechill" Slack a couple years ago. Hope all's well.)

Totally agree. And hello! Small world :)

Maybe asian and immigrant cultures where there is more social stigma attached to not making it big.

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