Comment by BobWarfield | Hacker News Reader

Comment by BobWarfield | Hacker News Reader

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"VC-istan innovation is over"

Maybe. Much as I'd like to believe it, there are some things that can't be bootstrapped. Actually there are many things. We just don't do them because the VC's aren't funding them either. Perhaps they'll go back to it.

OTOH, VC access is one big reason innovation gets centralized to places like Silicon Valley. Reduce that friction and it can spread out more. Still doesn't fix the issue of networking for talent which is another network effect that clumps innovation.

I did my first startup in Houston, Texas. It was great. Extremely cheap. Built a product and got to profitability on about $600K of capital. Moved the company to Silicon Valley before ultimately selling it to Borland (it became Quattro Pro).

Houston worked for development because I could get talent out of Rice University and Univ. of Houston. Infrastructure was cheap because they were having a real estate crunch at the time. You could get free rent for 2 years in exchange for signing a 5 year lease.

What was hard was the marketing and networking. After riding planes to go to the East and West Coasts to get the product reviewed, I decided we had to move the company.

In the Internet age, that may be a lot less true. No particular advantage to doing my current bootstrap (CNCCookbook) in Silicon Valley other than that's where I live. Houston would be a lot cheaper.

Much as I'd like to believe it, there are some things that can't be bootstrapped. Actually there are many things. We just don't do them because the VC's aren't funding them either. Perhaps they'll go back to it.

Funding is the art of boss-picking. Who gets to be a boss, and who has to implement someone else's idea and have a boss? Funding goes to a (Person, Idea) pair-- a 2-tuple, in other words.

Now, the problem. Person-picking is fairly useless. It's not that good management isn't important, but there's no correlation between being fundable (i.e. attractive to VCs, probably because one went to the same boarding school) and being a good executive. Idea-picking is important, but very hard to do.

Now, there are obvious Ideas that deserve funding. Cancer research, clean energy. The issue is that most of us who are intellectually honest know that we don't make a credible (Person, Idea) pair with the meatiest Ideas (because others know a lot more than we do). The higher the quality of Idea, the fewer Persons there are for whom there's a credible pair. (This social-media nonsense is mostly low-quality ideas that a 5-year-old could execute.)

So, what do you have in VC-istan? You have narcissists who say, "I don't care what the Idea is, but I deserve to be the Person because, goddamn it, I have an MBA." They continually pivot until they find something a VC will fund. Typically, they land on Ideas for which it's easy to have a (Person, Idea) match, which tend to be those that involve no vision or real technical meat except for "scaling", which isn't that hard if you're half-decent at hiring technical people.

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