Why I'm Furious with Silicon Valley (2011)
aarongreenspan.com
aarongreenspan.com
Rather than hiring a brilliant, hard working, and frankly outstanding engineer such as myself, technology companies have focused their time and billions of dollars of their money on engineers that have demonstrated, in a consistent fashion, lack of talent, skills, and integrity.
Tell me about social, mobile, or the like.
Yes, seemingly dumb start up ideas get funded, but at the same time a lot of dumb and smart ideas don't get any attention, and there are still a good number of smart ideas that do get funded.
If he couldn't get anyone to back his mobile payments idea, I think it says more about him and his character more than his idea. It's my belief that the reason someone funds/works for you can be attributed to less than half to how good your idea was, especially something that is really early stage.
Further, if he has put $1m in to the project, should he not have checked that laws and regulation first?
Perhaps the writer assumes a lot of knowledge on the part of the reader.
The regulations came into existence after his project did.
After the regulations went into effect, he was unable to get his project certified under the regulations.
imagine the following scenario.
CEO (not me) of self-funded startup hires prestigious silicon valley law firm to incorporate and represent his new company.
recruits 4 cofounders including big-name software company engineers and big-name b-school MBAs. however, nobody is 'connected' per se.
ostensibly law firm does its job, and helps coordinate meetings with the TOP valley and seattle VCs. like top 3 in each area. like 'holy shit' what am i doing in this board room right now. like 'wow i can't believe i actually delivered my pitch without tripping over my own tongue'.
during the fund raising process it's discovered the name of the company may be a copyright/trademark infringement on another company also represented by the law firm.
founders are assured by law firms and VCs it's no big deal. it happens all the time. this sort of thing is very common! law firm could stand to charge 10 thousand in fees for a name change, so it seems like an honest opinion.
during the fund raising process it's also discovered that the core business model of startup is in sort-of competition with another startup, already funded, represented by both the law firm, and a VC firm that lawfirm set startup up with to pitch. (of course no NDA's were signed). however, the business models are not identical, only similar. assurances all around, of course.
fast forward 2 months. startup is getting traction. 10,000 users, some high profile sites are using startup's technology.
fast forward another month. threats of lawsuit from represented company whose trademark claim is now becoming serious.
fast forward another month. sort-of competitor is now full-on competitor. exact same concept is now implemented and deployed.
no need to fast forward anymore. funding is never realized, company is under legal threat from multiple parties. other mistakes are made, but greatly exacerbated by a name change, which effectively kills the product. company implodes. kaput.
the conclusion of whether this was purely due to founder incompetence or naiveté (which there is certainly a component) or there was a large component of malicious VC/lawyer/funded collusion is left as an exercise for the reader.
however, i posit that the startup would have done FAR BETTER to not even get involved with the SV ecosystem IN THE FIRST PLACE. once you get involved, they will enforce their iron rule of SINK OR SWIM. and they WILL sink you.
my current startup is making $millions/year in revenue WITHOUT ANY OUTSIDE HELP. cofounders own 100% because we said FUCK IT over 2 glasses of scotch whisky and dumped $250k of our own money into it. we get multiple emails and calls per month from VC and PE firms inquiring. lollerskates. fuck off assholes. i would rather go bankrupt and steal loaves of stale bread from my local bagel shop than work for those people.
so that's just one data point for you. it's a jungle out there. keep your wits about you.
If you're going to get into the SV ecosystem, in order to stay away from the bad actors, I think you have to align yourselves with the forces for good. You think anyone will fuck with a YC company like that? Only if they want to be lambasted among most of the new / best / most promising startup founders in the valley.
In the private sector where "law" is the whim of powerful people, that's almost invariably true.
Whatever the good guys form (possibly centered around YC, and possibly something else) is going to be likened to the Mafia, a "don't fuck with us" collective that protects its own. After all, one of the Mafia's first (entirely just) social functions was to protect people against Pinkertons and other company police forces.
The thing is, those with capital and connections have been using their social power for extortion ("you'll never raise another dime") for decades. If talent starts to fight back, that's a good thing.
It's one thing to promote a culture where people help each other, another to promote one where people are cautioned about bad actors, and another still to seek to defame "bad actors".
I'm not sure, especially in an industry whose demographics tend to the young and aggressive, that we want to be encouraging this sort of gang mentality.
We've got shit to build and code to ship--who has time to beat their chest?
YC is a force for good in that without doing anything, bad actors are weeded out because nobody wants to be mean / do bad things to a YC company.
Just to play devil's advocate a little bit... shouldn't the founders of this startup have known about a possible name conflict earlier? It's not that hard to use Google and/or the USPTO database to do a basic search that will turn up potential name collisions.
That said, the law firm should certainly have disclosed any possible conflict of interest immediately and probably should have sent you to a different firm.
And the moral of this story, as far as I can tell, is "If you're working with any law firm or VC and even a hint of conflict of interest shows up, run, do not walk, away as fast as you can".
second of all, law firm client lists and VC client lists are not complete. you think they put all that shit on their website???
I agree, they wouldn't put that on their website. And, if they are an ethical firm, they would both disclose the conflict AND send you somewhere else as soon as any hint of a conflict appears.
That the firm in question didn't do that says something very sad about the state of business ethics among some people in this world. :-(
For everyone else, if you're more motivated by a potential 15 seconds of fame and lottery-like odds of becoming a billionaire if lightning strikes and enough is left after every non-producer takes his cut ahead of you, by all means, play the VC game and keep them distracted.
Do your homework. Choose deliberately the VCs you pitch, review their portfolio. Check if a name is already trademarked.
VCs are likely to share information learned, although they usually "anonymize" the facts. They're more likely to share market insights than product features. And when they do it, they _feel_ like they are sharing their general learnings, not sharing your secrets. Factor that into your planning.
But, startups are usually too busy to use suggestions that come in from VCs. I've never heard of a startup taking a new business strategy from a law firm. Nor have I ever had a law firm share sensitive information about another client with me, and I've spent thousands of hours working with different Silicon Valley lawyers over the last 20 years.
uh, their advice was to NOT change the name, which could be interpreted as
a) they wanted us to not lose momentum or
b) they wanted to set a trap for us in the future
probably all of the above.
you probably skipped more than just a couple lines of my story if you didn't even catch that little detail. read it again, the style is casual but it's fairly fact-dense.
i wasn't the CEO, i was just a kid. i probably would have changed the name.
and it might shock you to learn VCs/lawyers deal with different people differently. you look like an oldconnectedwhiteguy from your linkedin profile.
> founders are assured by law firms and VCs it's no big deal.
The problem is exactly that they took the advice. Without supposed experts telling them it wasn't a problem, they would probably have changed the name.
Consider all the co-funding and note-sharing that goes on among supposedly competing investors. That's clearly anti-competitive activity, but it's never enforced because of the power of the people who do it.
It sounds like his particular lawsuit is without legal ground and will fail, but he deserves major props for bringing public attention to VC-istan's collusion problem.
As I wrote, he's already morally entitled to an EIR position (at the very least, if not a real VC job) from VC-istan for his courage, intellect, and ethical above-board-ness, which are well into the top 5% by VC-istan standards (although that's not saying much).
I really wonder sometimes if it is actually possible to fail in some of these situations. If you don't have to follow the same laws as everyone else and know there won't be consequences, you're going to crush your competition of not rich people who actually applied for permits and stuff. Because your competition knew if they didn't get them, they would pretty much be shut down, while these other companies basically said "lol laws" and like most companies who do, reaped massive rewards.
Then there are other people who see unethical behavior and, for whatever reason, can't "just get over it" like normal people. They end up taking some immensely energy-consuming moral stands that often aren't in their individual interests.
Such people are immensely beneficial to society, but it's not fun to be one.
Mahatma Gandhi, Martin Luther King, Jr., and Nelson Mandela fall in that category to name a few. It is no coincidence all three suffered similar injustices to the extent they did including subjugation by the Government (Powers that be)not limited to incarceration, but when most would give up their spirit prevailed and they never waivered in their sense of justice.
When you live in a world where the highest levels of society are literally "above the law", torture as policy is considered acceptable, might makes right, and democracy has been for sale for so long that it's newsworthy when a politician refuses sponsorship; it is very hard to make an argument that anyone who pays attention to the news does not have a very clear idea of the moral status of our ruling elites.
We do have, though, concrete empirical evidence of the eventual consequences of casually thinking of and referring to others, any others at all, as 'human garbage'.
The moral status of that line of thought is much more clear - it's noxious and if there's some sort of moral thing we ought to agree on is that it's to be rejected and opposed, wherever it pops up.
[Edit: and to completely Godwin up this thread - if there's a day to take 30 seconds to think about the implications of such rhetoric, today, V-E day, is a good one].
Calling VC 'human garbage' is, at the end of the day, just nerd message-board hyperventilating. And it's still completely repugnant and talking about other repugnant things doesn't make it any less so.
My direct experience (which is not with VCs) is that the VC-darling startups are mostly run by human garbage, which raises questions about who funds them. Does this mean there are probably some horrible VCs? Yes, absolutely. Does it mean that all VCs are that way? Of course not. There are plenty of good ones out there, too.
My feelings about this suit are complicated. Look, Al Capone was nabbed on tax fraud, rather than the harder-to-prove but more vicious shit he did. If the Greenspan suit starts a process that puts an end to VC note-sharing and co-funding and social-proof calls-- against the spirit of the law, but hard to prove on an individual basis-- then I'm all for it.
It is when you win.
Do you have a shred of evidence to support any of these accusations? Not that I think the VC industry is devoid of problems, but in my experience it is neither rigged nor corrupt, and the people with the most power actually tend to be the most morally conscious people I've ever met.
What? A banker? Morally conscious? You believe that I got a bridge to sell you.
This is also anecdotal too. The people you've met.
I greatly appreciate the fact that someone is trying to innovate in this space and I wish him success. I don't know or care if he self identifies as a victim like you describe. I just appreciate him for his actions and tenacity.
Not sure if this potshot was called for.
Rebels eventually wish to be kings. Some actually get there. Then the cycle repeats.
My worry here is that individuals are paying more attention to specific actors who as powerful as they appear to be are not as formidable as systems they represent.
Its almost rare to see such wounded attitudes from an equally matched adversary.
The other direction is full scale martyr which was also displayed recently .. I'd rather not take the name to avoid pain for those close to the kid.
https://www.facecash.com/legal/brown.html
If you read through the history, it's pretty clear that Think Computer Corporation got screwed by California. California classified him as a money transmitter, but refused to clearly define the bar needed for him to become one. It's obviously a case of favoring the big guy for now reason. Facebook and BoA can be money transmitters, because they're big. You're not big, you're a scrub, now go to get job at Facebook like the other scrubs. Obviously, this latest lawsuit makes him look like an obnoxious dickhead. I can nevertheless sympathize with his action here, which is to lash out at an obviously unfair system.
In my brief reading the documents at the link referenced above, it appears that the author originally contacted the state of California, believing that he may be subject to the Money Transmission Act (MTA) based on his reading of the law. In his initial correspondence, he asks for clarification: is he actually engaged in operating a money transmission service, or is he an exempt payment processor?
That seems like a simple question but the bureaucrats he's dealing with don't provide an answer. Instead, they appear to latch on to his correspondence and treat it as a representation that he is engaged in money transmission and therefore subject to the MTA. That's not exactly surprising: if he is subject to the MTA, there's a license involved, which generates revenue for the state.
This leaves an interesting unanswered question: was the author ever subject to the law in the first place? Perhaps the competitors who you suggest are flouting the law brought the matter to their legal counsel, who concluded that they were exempt. That doesn't mean that they aren't, but the lack of prosecutions hints that this isn't an unreasonable possibility.
One final comment about breaking the law: financial services are highly regulated and given the number of laws and regulations at the federal and state levels, I don't think any company in this space can ever be certain that it is not breaking some law. One thing is for sure however: if you're running a financial services company and have questions about a law, allowing legal counsel to research the matter and handle any correspondence with regulators is the best approach.
You can read the law and decide for yourself. The text is actually fairly clear: if you receive money from one party for the purpose of transmitting it to another party then you need a license.
Limit the scope of government very narrowly, to about what Bastiat argued for[1] and a lot of this problem would go away.
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It's "bad" code by today's web standards, but was once considered normal so I'm going to have to side with the developer here since the site functions well and displays beautifully.