VC isn't VC anymore
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Today, the AI boom is a perfect storm of opportunity to put $Ts to work in frontier model AI Cos.
"In recent years, as private markets inflated, the default behavior switched to remaining private and absorbing more capital (to justify more VC fee income). This has resulted in fewer IPOs, and worsening prospects post-IPO for venture-backed companies."
https://x.com/credistick/status/2092259921177804930
So, maybe more regulation is not the answer.
The issues raised in this article are very real but even aside from that, you end up enabling a class of zombie companies that have no pressure to succeed. Their founders raise and end up as advisors and LPs themselves eventually while employees at these companies receive equity that will never be liquid and will rarely be worth anything. At best the equity in these companies will be realized at steep discounts as the lack of liquid markets makes it very easy for private companies to claim that a company was valued at a certain amount at a certain time with scant certainty of what happens next. Companies stay unprofitable and private for decades, relying on private markets to stay solvent.
Pre-GFC plenty of undisciplined, unprofitable companies would IPO. While some did take public money then eventually go under, most just made their underwriters lose money. With pressure to trade publicly and put sunshine on company books, losers lost and winners won.
The result is a K-shaped economy. Private capital appreciates on paper and private capital holders take out loans on the inflated value of their equities. Meanwhile public markets are more discriminating and fiscally tight by necessity. A private company may eventually go under but cheap loans collateralized on private capital may be paid back before there's any financial reckoning.
Care to be more specific? "Regulations bad" is a pretty common platitude around here but you've stated your main thesis, here, without a hint of support to back it.
My observation is that the glut of available private credit has meant for at least 15 years you could just raise funds from those markets, and that's the ultimate reason IPOs have become less common.
This hasn't made it "impossible" for companies to go public. It just eliminated the need. If you can raise billions of dollars in a G round why go to the public markets at all?
The entire damn deal we make when a company goes public is that the company can raise money from a much broader, potentially less sophisticated investor base that don't have to be accredited, etc, and in exchange there are more stringent requirements around reporting and so forth.
So sure, we could just throw away that regulatory and social contract, but at that point the public market serves no purpose.
I thought GP was modest in calling it out as simply a contributing factor. Regulation is complicated and reaching for it should be something done with care.
(Also FWIW, I think you're being a bit cheap by appealing to culture war talking points.)
[1]: https://corpgov.law.harvard.edu/2009/09/21/the-effect-of-sox...
If you consider that part of a "culture war", then it seems that term has lost all meaning. Might as well just accuse me of being "woke" and get it over with.
There's still a strong libertarian streak in HN posters, in a variety of ways.
However, there are also (mostly) different posters who have more vocally shifted the site's Overton window to the left.
These days, I find it fairly common to, for instance, make a comment that points out the very obvious problems the Republican Party has created in recent years, get downvoted to -3, and then upvoted to +5 (or vice versa), all within a few hours. This would suggest that there are contingents of posters (or at least voters!) in both camps.
Sarbanes-Oxley passed in 2002 and the number if IPOs climbed between then, in the wake of the dot-com crash, and the GFC six year later, while the median age didn't change much:
https://site.warrington.ufl.edu/ritter/files/IPOs-Age-of-Com...
If your claim was true you'd either expect a decline in IPOs or the age of those companies going up and neither is true during that period.
Now to be clear I'm not saying changes in regulation had no impact. Rather my claim is that regulations plus monetary policy and other macro effects fundamentally changed the structure of the market itself, thereby deincentivizing going public, rather than somehow acting as a break or barrier to IPOs.
If that's a "100% dealbreaker" to you, nobody should ever invest in your company, because you are literally complaining about not being able to defraud them!
While Sarbanes-Oxley did make it substantially harder for small companies (market cap <$1B) to go public, there was a wave of very affordable and notable IPOs throughout the 2010s - Tesla at $2B, Shopify at $1B, Square at $3B, LinkedIN at $4B, etc. All of these have now grown substantially since their IPOs, with Square (absolute dog) being worth 10x their IPO. So yes, SOX killed micro-IPOs, but GFC/Dodd-Frank did not kill affordable IPOs.
Now, you're right that IPOs have grown a lot more expensive over time, but you're absolutely wrong to attribute it to increased regulations post GFC. The actual answer is much more closely related to what the article is talking about - VCs realized how much growth and returns they were leaving on the table and there has been substantial pressure on firms to stay private as long as possible, as well a huge increase in larger rounds and private credit. In fact, rather than increased regulations, there has been a loosening of regulations that allow investors to use SPVs (and SPVs of SPVs, and SPVs of SPVs of SPVs, a veritable matrioshka of SVPs) to get around the maximum number of shareholders a private company can have.
I have seen this first-hand - part of my investing strategy was to blindly buy cheap tech IPOs and that got me some great returns, but this strategy no longer works, because the VCs have effectively managed to hoover up any decent returns retail investors could get. Today you gotta be on AngelList or other platforms (only qualify investors, obviously, more exclusion) buying secondaries if you want decent returns.
I've never run a public company, but my bet is the mechanical filings, etc are way less of a burden than shareholder litigation.
VC eats up everything that's becoming bigger. And they will kill it. Their goal is not to run a healthy business that serves their customers. They try to take out as much money as possible and then trash it.
Traditionally big vendors were more trustworthy and stable, that's no longer the case.
Edit: I'm not talking about end users, most commercial software is licensed by companies.
VC used to push to public exits in order to maximize the founders and VCs stake which turned employees equity to a liquid asset. Truly aligning everyones interests, nowadays not so much.
If a company is worthless if it isn't public, then IKEA would be absolute garbage. Quite strange for a company making hundreds of millions in profit for its owners.
TSLA would be worth crap if it were a private company giving off dividends. It is really truly about the insane valuations driven by collective delusion.
These days, it can be sustainable for a tiny team, named Claude and Luna.
Why doesn't every engineer have a side project or three for small market things of this caliber in 2026?
Until 2012 or so there was no legal concept of "venture capital". Around that time, the SEC adopted some new rules in response to the GFC. In those rules came the "venture capital adviser" exemption. To be a "venture capital adviser", a firm needed to avoid doing a lot of things that looked like private equity investments or hedge fund management. The only consequence of falling awry of the new "venture capital adviser" definition was registration as an "investment adviser" with the SEC.
The important anti-fraud provisions of the Advisers Act still apply to "venture capital advisers" even though they aren't registered, and most big VC shops would have probably been pushed to register for other reasons anyway.
The legal stuff is nearly irrelevant here.
You sound like a pretty good dude
The study of Ethics is such a double edged sword. On one hand you have people who study ethics to think about how to treat people well, on the other hand you have people who study ethics in order to treat people as poorly as possible while still being "ethical"
I don't have a ton of firsthand exposure to the decision making process of huge corporations, but I imagine they mostly listen to the second group of ethicists
It’s inherent with true capitalism. You have to be willing to forego some profit to actually treat people right and for some that’s just too much.
I wish they taught this in business schools. I get the impression they really don't, based on my experiences with business grads
Judging from the many HBS students I’ve interacted with, the takeaway seems to be judiciously avoiding treating people fairly.
What if you've met both a Zionist and an anti-Zionist? What does that make you?
So I don't quite know what you're on about.
Would you work with someone who took a selfie with Hitler? This is the 21st century equivalent.
He said that being a Zionist is a brand risk. The implication is that the CEO of Vercel is a Zionist.
https://x.com/rauchg/status/1972669025525158031
Also your original comment was a non sequitur. I replied to a VC saying they could make their own lane by being ethical and being anti-Zionist and you replied asking about business fundamentals, which had nothing to do with what we were discussing.
It’s fair to question whether a VC should care about a founder’s position on Zionism (or vice versa). If you don’t like it, that’s on you.
> It’s fair to question whether a VC should care about a founder’s position on Zionism (or vice versa). If you don’t like it, that’s on you.
Re-read the thread. No one was talking about what VCs want, I was talking about what founders want. VC opinions on founders aren't part of this discussion.
I’m sure your customers would find this interesting. Do you disclose your position to them before they agree to do business with you? Are you also refusing to do business with them or unilaterally canceling existing contracts if you learn that they too believe that Israel should exist?
> No one was talking about what VCs want, I was talking about what founders want.
You do know what “or vice versa” means, right?
Yes.
> You do know what “or vice versa” means, right?
You know your comment about business fundamentals is a non sequitur right? The comment you were replying to had nothing to do with that or the point of view of venture capitalists with regard to entrepreneurs.
> but it is hard to cut your own lane when these mega groups control so many aspects of the stack and have such outsized capital and political influence
That said, reform would be a Herculean task under the best conditions. Effective change would never be a "one and done" operation. It would be great to have a non-profit like the Electronic Frontier Foundation to carry the mantle.
The Collapse of Lehman Brothers is also not enough for long term change, also apparently.
The hard part is figuring out how to change these structures so that people can actually extract themselves and still build stuff that isn’t toxic and destructive.
Agreed it’s so difficult. And every time I think we have things all figured out, someone flips the table!
I’ve seen some ruthless terms for angels too. My buddy took an uncapped SAFE to get in a deal while the deal runners gave themselves a cap.
I’m a small biz guy and not interested in VC. Very boring.
bix6 alludes to it another comment:
I do find myself enjoying my computer / phone less these days though.
I just had a medical emergency in a foreign country and was able to navigate it with relative ease and almost no cost using translation features. I was able to scan and OCR documents with my phone camera which let me easily submit insurance claims, yada yada, a lot of things are much easier and cheaper in this day and age.
I stay away from the "news" websites (ironic given this site is called Hacker News, but it's not as monetized, so I guess it still works) and instagram/tiktok/youtube shorts/x style stuff.
Some inventions are for the better, other mostly don't matter and yet others make the world actively worst. And the "for the better" things dont seem to come from our industry anymore. Nor for rich VCs, nor from private equity investments etc.
One guy boots up his pc, looks at one website, closes the tab, closes the browser, shuts down the pc and switches the monitor off. I have to admit the technology looks terrible if used like that.
The advice from our early investors was to basically overhype ourselves, telling that we can transform the world overnight. And also to remove any mentions of our _actual_ product that has real paying users because it can muddy the grand vision.
Another hot thing in the startup world is what I'm calling the "vibe income". It's potential income from a signed MOU or contingent on the success of some trial. So we have to compete with companies saying that they're already having $500k in "income" after just a few months. We naïvely thought that our GAAP income is more important.
I have really bad feelings about this whole situation.
Doing a raise has always been weird, there are lots of things that impact it, and different players in PE have totally different theses and motivations.
As a founder, finding the right investment partner has always been one of the most important and difficult things.
As a rule of thumb, I recommend to founders that only about 50% of the value of the investor is their cash investment. In many cases, less than that.
The things that are at least as important are their advisors (who open doors for you), their portfolio companies that can partner with you, and the alignment of their thesis and worldview.
I don't see any of that as having really changed much recently, other than a tightnening of capital for non-AI companies, but I suspect we're going to see a big shift there over the next 18-24 months, as the pressure from the LPs to deploy stays the same, but fingers get burnt from this bubble.
Also, don't forget family offices and industry VCs (Optum Ventures, etc...) that have a lot of these features built in to their structure, not just the fund.
And I feel that this goes far beyond the usual VC risk-taking.
Are you seeing a difference there?
It's as if the whole industry is suffering from a high fever. This is purely my personal vibe, perhaps others might chime in with their subjective opinions.
Mad FOMO, listening to, believing, and benchmarking against actual liars (both obvious and non-obvious).
I was part of a couple raises back then and I remember every founder was being forced to find some blockchain application, no matter how inappropriate, to get any attention from the fad-tech VCs
If you're in the right elite at the right time though, you can make a lot of money while everything falls apart underneath
Can it please finish itself before it eats the table, chairs, and dishes?
Academics and founders who might work on developing practical products using NN / ML / RL techniques to solve a realworld problem in engineering/logistics/medicine are not getting investment money. VCs and most people are blind to the fact there is AI outside of LLMs, despite the fact that we have seen AlphaGo and AlphaFold as evidence of non-LLM AI progress in hard domains.
This is perhaps a sub-problem of a larger issue - hyper-inequality means that capital is not allocated to talent [ capital is localized, talent is more widely spread throughout the population ].
We are not getting money to things that will grow our future such as :
- small innovative startups
- university science research
- people who are young enough to have kids, being able to afford them
- new garage bands / authors / musicians / photographers
- public works / infrastructure / libraries
- local retail : bookshop, artisanal bakery, cafe
AI could be a golden age of human flourishing - but thats not where we are heading, what we are seeing is a territory rush by the megacorps.
The fact that RAM and GPU prices have risen so fast, is evidence of supply and demand effect where inequality steals resources from the commons [ middle of the economy ].
Can a talented garage inventor / math or arts student afford a Ryzen AI dev platform, let alone a DGX spark on which to create the next important technology innovation ?
I didn't know that VCs were ever "not cancer", I've always known them like that. Also my experience with startups is that it is a big scam for employees, but I understand it's not always the case (maybe it depends on where in the world?). I have been an early employee in multiple startups that got the founders rich, and what I got from the stocks didn't compensate for the low salary while working there.
Do I understand correctly that when VCs invest, they dilute the employees and somehow the founders can get away without being diluted? That's the only way I could explain the difference between what the employees get and what the founders get if the startup is successful.
And young people are super excited to work in startups because of old stories like "early employees at Google/Facebook became rich", I guess.
Would you mind asking before saying what I have been promised?
Also it feels like you have never been in a startup. The whole language of growth everywhere, the "billion-dollar startup", the "becoming a unicorn", this is all suggesting that "you're part of it and it matters to you if it becomes a unicorn". But it doesn't, really. Because you get diluted.
At this day and age, if you don't understand dilution before you join, it's entirely on you.
This isn't a new concept - it was the case decades ago. Even when I left school over 15 years ago, the standard advice when trying to get a job with a startup was "Get a good salary and value the equity at zero."
And class A vs class B isn't even a rich vs everyone else thing. I have class A shares in an LLC, where even the (richer) founders are class B. The operating agreement is that we class A folks are "guaranteed" a fixed rate of return on our investment, and the class B folks don't get anything unless we get at least that rate of return. This is very normal in that industry.
I don't know what to tell you. Young graduates get an offer to work at a startup, nobody tells them how it works. They are just excited, as I was. And they don't think about "what happens if the startup is successful" because they do know it probably won't be.
And when the startup is successful (happened to me) is when they realise that they got scammed. But all they can do is see their founders become rich and tell everyone why THEY deserve it because it was THEIR idea and THEY are the best.
> the standard advice when trying to get a job with a startup was "Get a good salary and value the equity at zero."
That does not say AT ALL that the founder gets rich when you get nothing. It says "be careful, most startups fail, so make sure you get a salary". Usually that salary is subpar.
That one is covered under the standard advice of "comparison is the thief of joy".
>Usually that salary is subpar.
If it was subpar, then the salary would not have been accepted.
Turns out it was. Young graduate excited with the mission, and all that bullshit.
It would be a scam if they promised you 0.2% of the company but then it was diluted to 0.1%. and nobody prevents you from asking i think. Otherwise it's no more a scam than a lottery ticket commercial showing the guy who won a Ferrari.
I guess being honest brings about too many opportunities for people who don’t understand the finances to make (or be perceived to make ) promises they can’t keep. So you might as well just get into a race to present the most ridiculous stuff possible.
So that's a scam by the founders to the employees, in my book. It's fine, it's just that I am not sure young professionals joining a startup know that.
Said differently, if you join a startup, you should not work too much without compensation, and you should not care about making it super valuable, because you don't benefit from it. If you have a super good idea or realise you have expertise that would make the startup valuable, you should leave and become a founder yourself.
VCs get preferential shares, not common. Preferential shares have economic rights to protect the investors, but more importantly they usually have extra control rights like veto abilities, board seats, IPO control, or ability to sack the founder (which may even cut out the founder's voting rights by sunsetting their class A common into class B common shares).
Employees get a third tier of stock (e.g. options that convert to non-voting class B common shares).
After IPO the preferential sheets becomes common shares. The dual A class may be removed or have sunset clauses because large public investors prefer one plain common share class.
Not a VC - so take above as written by a student. Founders in zero sense have the same voting control as VCs.
Edit: VCs play the same game over and over again, against different innocent founders. VCs know how to stack everything in their favour - especially using social cues and "norms" that benefit them. My favourite article on this is: https://siliconhillslawyer.com/2019/02/18/relationships-and-...
Pref shares with a 1x preference are still worth like 10x common stock in early stage companies and it’s common for employed to get fucked by this.
Founders don’t get preferred shares (I think it’s really, really rare). There is founder pref stock, which is somewhat different. It’s common for founders to cash out some shares along the way, though.
If they were in job where they were saving $50k a year, then after becoming a founder they should be getting $50k worth of preferential shares per year because they are investing that much in the business.
Not that I've actually ever heard of founders getting preferential shares to match their dollars invested.
Duh.
> That you wanted to gamble on that
What makes you think I gambled at all?
You could have worked somewhere else instead for a higher salary if you weren't gambling.
Or if nobody would have hired you for a higher salary somewhere else, then maybe your salary at the startups wasn't so low after all?
I did not say that I felt scam because of my low salary. I said that I felt scam because the founders got rich and what I got didn't compensate the low salary.
Said differently, the founders got rich and I didn't get much at all. When I say "not much", it means "not nothing, but not a lot".
I told you that there is no such guarantee, the only thing guaranteed is the salary you agree on. Everything else is speculative = gambling. Which is your decision, but don't cry later that you got scammed and that VC are cancer and so on.
But there's no reason for me to teach you, because you already learned it the hard way.
I did not. I joined a startup as a young graduate without thinking about what stocks meant at all.
> Which is your decision, but don't cry later
My decision was "let's join an exciting startup, probably those stocks won't ever have any value". I don't even care about the fact that I did not get more than I did: I never counted or even hoped for it.
But what wasn't clear to me back then was that I was being abused by the founders.
> Since the Cancer Capital firms have become so powerful, the overall balance of power between founders and VCs has flipped; instead of founders having a company that VCs would try to fund, now VCs publish extremist political manifestos, and “founders” are just the people who are selected to carry out parts of those plans
> The rest of the world doesn’t know: New founders and workers entering the tech industry are unaware that Cancer Capital has taken over, so many are still trying to play by the old rules, and can’t figure out why their ideas are being pushed into serving the goals of the Cancer Capital firms
> These days, venture firms are increasingly getting their funds from pension funds and retail retirement accounts, meaning the public (you!) are increasingly holding the bag for the parts of their portfolios that actually have some risk, even if you never intentionally made that choice
> Part of why this has gotten so corrupt is the way the Cancer Capital firms have transformed themselves into their post-VC forms. Because they’re not legally VC firms anymore, they’re free to buy shares directly from founders, or hold unlimited amounts of publicly-traded stock — exactly what they couldn’t do as regular VCs. They can even sell their investment in a company as an asset to another one of their own funds, and then book the increase in value as a profit, all without the company ever having made a penny. Another racket: a company that’s raised a bunch of cash in a funding round can buy out its early investors if they’re one of these post-VCs, so they can get paid off even if their portfolio company has never made a penny in profits or revenues.
Hopefully this one will pass, just as the first did
Firefights with guns, hand-to-hand violence, and real deaths were needed to give unions the leverage they had.
For some reason this history isn't taught in schools.
Honestly, wealth inequality has reached such epic proportions, that if someone came up with an alternative funding model, they could make VC lock-in obsolete. This is simultaneously extremely easy and extremely difficult to pull off. Money talks yes, but sometimes saying "your money's no good here" is more empowering.
not too long ago we were amazed at Apple hitting $1 trillion mkt cap and elon reaching $100 bil
now we're waiting for the first trillionaires to show up
Pretty insane from 100 billion in 2020 to 1 trillion in 2026.
Not a sign of a supremely broken system at all
and I'm not an Elon hater, I just don't see how this system can be sustained
We need an equivalent of the "Fiduciary" word for financial advisors ... but applied to VCs.
"Are you an Artisanal, Free-Range, Fair-Trade™ VC?"
The game is rigged, operate accordingly. You are managing risk and threat exposure against threat actors who want to obtain and maintain control, influence, and power.
It's worth noting North Korea probably is not a failure for Kim Jong Un an his ilk, it's just a failure for most other North Koreans.
That's probably a happy end-state for these "Cancer Capitalists."
We frequently forget “the system” that protects these actors consist of our respect for rule of law and compliance and the enforcement of the laws.
If the cops stop enforcing, and we stop complying, what would protect them?
- Waste my time filling out forms to participate in incubators they would always reject me for.
- Fund my competitors so much as to drive up CPC for any given keyword as to make make ROI on ads impossible.
- Monopolize all tech markets through a variety of ways including contributing to the culture of making it taboo for companies to purchase solutions from small vendors who aren't funded by them. My friend who did get into the club described the ecosystem as 'incestuous'. The circular deals we saw going on with AI companies and hardware companies recently are not new; just the same thing they always did, on a bigger scale.
I entered the industry in 2012 so for me it has always been like this.
That said, it's really a deeper system issue which allows this.
Third bullet point says "a handful of venture capital firms have become 'do everything' funds that combine private equity with their existing VC businesses".
In the end I made my million(th) sitting behind a cubicle collecting 401k which none of those startups gave me.
https://www.cnbc.com/2026/05/21/spacex-insiders-will-get-to-...
15 days - Pump: get into indexes -> ETFs obligated to buy shares
After - Dump: insiders cash out benefiting from the price premium of demand for shares from ETFs
If the complaint is that people are investing in companies that are a Bad Bet, the solution is simple. Don't buy stocks that are you think are losers. That's the definition of insanity.
If someone wants to blindly invest money with zero diligence, then they have to be willing to accept the returns of a zero diligence bet.
The product I am building is a decentralized trust system. The word "trust" is literally in the name. It requires very specific decisions and a very specific organizational and legal structure to be successful. Why? Because anything else doesn't breed trust.
But that's actually the problem. The VCs don't like those things, because in almost every case it relinquishes their control/power. Or, they ask us to do something either questionably or blatantly unethical in order to sweeten the pot. I was one of those founders "unaware of the Cancer Capital situation." After six months of pitching, it's become extremely obvious to me that the current VC system is incapable of funding anything ethical or long-term.
I don't know what the right answer is from here. Our current attempt is founding a syndicate of like-minded individuals to bootstrap a pre-seed. It seems like the only possibility where you might be able to maintain an ethical vision without fighting a cancerous overlord. We'll see how it goes.
Sure you could make some money, but nowhere near the monopoly profits everyone is seeking. A decentralized Google would never be as profitable as a centralized one, so where would a capitalist prefer putting their money?
IMO this is also why decentralized systems or peer-to-peer applications never really caught on. Some point to technical challenges or usability issues or a lack of use-cases, but I believe all of those could have been overcome with enough investment. There just wasn't enough money in them compared to centralization. (It didn't help that the only really popular systems were almost entirely used for illegal or unproductive purposes.)
And these dynamics over time are what have led to the asymmetric Internet today. The Internet was supposed to be equal, with each node capable of being a client and a server and, heck, even a router. But that's clearly not what we have today: networks hostile to P2P connectivity, increasingly powerful centralized services, and decreasingly capable end-user devices.
But I think the broader point I'm making is that what _is_ making all of the money nowadays is increasingly unethical and counter-productive to society. For example, see Kalshi and co. That, in our experience, is what the VCs are in all of the rage for right now, and as I said it's completely antithetical to our vision.
Why did Andrew Carnegie invest in building public libraries? Surely it wasn't because he was expecting a capital return.
The oligarchs (at least some of them) used to feel some responsibility to the betterment of man. It really seems like today's billionaires really only care about money and power and nothing else.
They are out there, but unfortunately very much on the fringe because it's difficult to raise money with that ethos.
"Carnegie spent his last years as a philanthropist. From 1901 forward, public attention was turned from the shrewd business acumen which had enabled Carnegie to accumulate such a fortune, to the public-spirited way in which he devoted himself to using it on philanthropic projects."
https://en.wikipedia.org/wiki/Andrew_Carnegie
Bill Gates is in similar phase of life.
You don't have any God given right to other people's money for high risk ventures. Neither does anybody else. But it's easy to blame "the system" when things don't go our way.
What is it that Anil Dash thought the purpose of these firms was?
Its at least heartening to see a broad recognition across many circles and communities of how insane wealth/power concentration, corruption and insane laws like Citizens United are dismantling democracy today. But a16z and others are still pushing their own techno-utopia anti-doomer message that a lot of useful idiots buy into, even though it serves to detract from the political and social root causes of our problems today and instead says even more technology will fix it all.
- stop using claude
- stop using open AI
- guess what happens?
- user base drops to 0
- demand drops to 0
- both companies go bankrupt
- no need for data centers anymore? see its that simple
- in the first step, convince all the HN guys to cancel their subscriptions
User base and demand are irrelevant when it comes to a bubble. People invest because Line Goes Up, which in turn makes Line Goes Up, convincing people to invest. As the saying goes: markets can remain irrational a lot longer than you and I can remain solvent.
If, say, Google publishes a claim that "95% of Google Search users have adopted AI", that does not mean that 95% of Google Search users think AI is a core feature of Search they would potentially pay extra for - which is what the massive valuations are based on. The AI Mode is auto-enabled, so the only thing it tells you is that 5% of users are annoyed enough by it that they take the time to disable it.
Some people of course genuinely like it and would indeed pay extra for AI-enhanced search, but a huge chunk of users simply does not care either way. They wouldn't pay a dime for AI, just like they wouldn't pay a dime for the ability to re-arrange the letters in the Google logo into "Oggoel". If AI were default-off, they would not bother enabling it. That is fake demand.
It was already great when I first read it ~10 years ago. And his linked post about VCs writing extremist manifestos from 2023 is arguably better than this one. But this post is amazing as well.
I wonder how many iterations it takes to remove all the extra words and reach this 0% fat state.
Both articles also brought me to a peak / cliff hanger type of place. The post from 2023 doesn’t even have a follow up!
Though I didn’t like the repetition of the phrase (“cancer capital”) he clearly wants to coin. It’s Trump-like. More importantly, it’s the kind of thing simpletons do. Or people who think of their audience as simpletons.
We should insist on public policy forcing public money into only public assets. It's the obvious sensible rule.
And company safes need to start including a clause where all classes of vested equity are offered buyouts in equal proportions. So VCs can't keep paying founders/each other on the way up while zeroing out common stock and eventually selling company IP for around the liquidity preference to some "totally unrelated" entity. Realistically this will only happen if YC gets onboard but I doubt Garry tan is the guy who can show this kind of spine.
I graduated into a tech workforce that was a celebrated part of society (i.e. "high status") to one that is decidedly not (and I'd say it's grown to deserve this disrepute).
The first main wave of the vibe going negative (at least at the heart of the 'imperial core' in the SF Bay Area) was around ~2013/14 (the 'tech co bus protests'), then again around ~2018 ("don't call SF General 'Zuck General'"), and now it's kicked into a much higher gear during this current AI wave. It spans big tech co's to startups to everything in between. Anil's post speaks to this too, when he says:
> Politicians and media still look at VC as if it works like it did 10 or 20 years ago, and cheer them on ... when their primary goal is concentrating power and wealth
It's not just VC per se, but the 'managerial class' within tech rotted into mostly career-climbing types that were a far cry from impassioned creative technologists aiming to 'do good' with tech. It became the same status-bound competition you'd find on Wall Street and elsewhere (which the Dempsey post describes well).
I have a mentality and overall life orientation that is aligned with Anil and celebrates the open web, public interest technology, and so forth, and many of my peers in tech (often from elite universities and backgrounds) look at me as a strange creature. I'll bring up the need to increase awareness about Public AI and boosting AI literacy among citizens, and I hear, "Wow, you like, really care about like, people. That's so interesting." It's unbelievable, I wish I was kidding.
Thanks for writing this Anil. I wish for better days.
[0] https://mhdempsey.substack.com/p/vc-backed-startups-are-low-...
All the same to me. All of these entities have ruined previous workplaces in one way or another. Effectively stealing years of my life that I put my labor into.
These rich cunts are the reason everything is shittier and the term "enshittification" exists in our modern vernacular
You got a paycheck, no?
Any analysis on the asset class is moot.
Most of the VC media is aimed at hiding the fact that its a lottery machine for a pre selected group
Those folks are in these comments. They'll get their pitchforks and torches eventually.
Tyler Cowen is a big proponent of pre-selecting talented people and not even requiring an idea. I think this is the model of Emergent Ventures (EV), launched in 2018, and is getting replicated in many places.
I think it is regarded as highly successful
The principle is simple. VCs are soccer stars, but founders play basketball.
Basketball and soccer share much in common. For instance, both involve teams dribbling, passing, and shooting a round ball. But successful abilities and traits in one may not translate to the other.
Think of each profession as a different sport. Venture, growth, and value investing all differ, and all differ from founding.
VCs are all driven and highly intelligent, but so are lawyers, bankers, and consultants. Talent isn't the issue.
Capital confers authority, but not expertise.
Based on resume alone, 80% of VCs would not earn board seats at their portfolio companies. Their experience and skills, much like consultants and value investors, were honed on a field different from the basketball arena where founders compete.
Here's a quick heuristic: sans capital, would you still hire the VC to sit on the board? If yes, wonderful.
This is no slight and works in reverse: 80% of founders would not earn the right to direct VC investments.
To clarify, great VCs are absolutely worth the premium and can reshape a startup's trajectory as all great advisors can. If you find a great VC, do not haggle. Strike a deal, and return to building.
The greatest VCs exhibit the same pattern, understanding their role on the startup team as advisors, not alphas. They are often understated and work tirelessly on behalf of their clients.
The worst VCs exhibit the inverse pattern and imagine themselves as the alpha, not appreciating how a talented peer could have replaced them without changing the exit. They are loud on social media and assume accomplishments from finance or FAANG map to the startup arena. These VCs should run funds on Wall Street, not advise founders in Silicon Valley.
How do we highlight good VCs without attacking bad ones? Many good VCs, as with many good advisors, prefer subdued profiles and dislike self-promotion. This is the challenge.
The original idea was to flag bad VCs, but such a system grants founders too much power to levy unjust charges and settle feuds.
After all, many disputes are legitimate and reflect bad founders. Founders, like all professionals, sit on a spectrum. The surge of big money has spawned plenty of bad ones who, sadly enough, do not represent the best of tech and innovation but rather greed and self-aggrandizement.
The Pincus post sparked a cleaner iteration.
The proposal is a public page/spreadsheet where only founders can post, only after an outcome or a certain number of years, and only with affirmative assessments. Nothing negative, nothing anonymous. Posts must certify no quid pro quo or other VC prodding.
Topics could include responsiveness, support during dark days, absence of alpha syndrome, and other key considerations.
Over time, good VCs should reveal a clear pattern and attract new founders: founders trusting them again with repeat business and consistent high marks across the portfolio, not only unicorns. Arguably, the strongest signal will radiate from the worst outcomes.
Critically, this system won't incite mob justice or expose VCs to unfair accusations, but can still suggest who to diligence more deeply.
The purpose is to spotlight good VCs who advance innovation and startups over time, letting their body of work rise to the top and garner proper recognition.
Of course, it penalizes newer investors and is vulnerable to gaming like any system, but it plugs a small gap. Founders want to find good investors based on data, but good investors dislike boasting.
https://x.com/search?q=from:markpinc%20israel&src=typed_quer...
Lots of VCs out there still taking big gambles on the agendaless and unproven ideas.
This guy has been grifting his entire career but it's those other people who are the problem, guys!
He's not wrong about VC but he's another Chamath - a guy who grifts a thing to death, moves on to the next grift and goes 'look, that grift I'm no longer doing - it's bad, very bad!'
When you get caught stealing candy, saying 'look, he stole more than me!' doesn't work. Were you raised in a human society? I thought people learned these things when they were 7.
He also does this. That's... the entire point of the comparison.
Nice try. Shall we continue to where I start copy/pasting an LLM explaining it to you until you can't pretend to not understand any longer and move on to some other bad faith tactic? I want to see your most advanced bad faith attempt - deflection and playing dumb are for juniors. Show me something good.
I thought a cancer grew from a defective cell that is able to divide and grow to over take the healthy ones.
>a cancer grows from a cell that a body needs in small, healthy amounts
"A" cancer does not grow from a cell, a cell is a cancer cell if it keeps dividing when it should not. The cancer cells as a collective are the disease referred to as "cancer".
If they had written
"cancer grows from cells that a body needs in small, healthy amounts, and that turns deadly when it grows without limit until it harms, or even kills, its host"
that would have made more sense to me.
He writes against Big-AI, but supports AI (small?) and copyright theft at the EFF, where he is a board member.
I'm getting tolerated opposition vibes here.
https://techcrunch.com/2026/08/31/a-group-funded-by-andreess...
https://www.nytimes.com/2026/05/13/technology/andreessen-hor...