What Nikola Tesla vs. VCs video says about the state of Silicon Valley | Hacker News Reader

What Nikola Tesla vs. VCs video says about the state of Silicon Valley

gigaom.com

108 pointsmkuhn29 comments

If you want to hear how Tesla, Edison, etc. actually went about funding / building their companies - check out: "American Genesis"

It's a history of the human / social part of this period of technology. So interesting to hear about J.P. Morgan essentially angel investing in Edison / Tesla + all the other unknowns like Elmer Sperry, etc.

[1] http://www.amazon.com/American-Genesis-Invention-Technologic...

Noblesse Oblige is dead. The ultra-rich hoard their wealth. They won't even invest in their own country by paying their taxes without tax shelters. What makes you think they would invest in something that might benefit others?

JPM wasn't doing this out of obligation - he wanted to make money too!

Noblesse Oblige is alive and well - it's called crowdfunding now! ;-)

Bill Gates? Warren Buffett? Laurene Jobs? Zuckerberg? Ron Conway?

I don't know what qualified as ultra-rich, but "investments" the wealthy/rich bracket in SV (including new-comers) also fails to back up your assertion.

The problem is, we let them choose where to spend their money, so everyone in need depends on their mercy. They're like the Kings and Queens of our time.

They’re all looking for the next Facebook or the next Twitter, but no one wants to look for the next Juniper or the next Intel or even the next ARM.

The author didn't substantiate this claim. The only actual example he came with was the Tesla hypothetical. I'm sure it is true that there is a lot of money chasing easy short term ideas right now, but his only real world example of clean tech shows there is money out there for big ideas. Even bad big ideas. I'd like this article if it were actually about some companies with big ideas who needed money and couldn't get it.

The internet and mobile have created opportunities to make large amounts of money faster than ever. You can't blame the VCs for choosing a quick billion vs a slow billion. Along the same lines, the referenced VC deals of the past (Khosla + Juniper) were not comparing those opportunities with the hyper growth startups that we see today.

You change tack not tact although maybe some companies should change both

This begs the question, how did Tesla actually do it? Ultimately he was driven by the inventions themselves, not the business models. This was his genius and his failure.

Licensing the patents worked but it's also worth looking at Tesla's relationship with George Westinghouse who became a patron more than an investor.

What's the avenue for a Nikola Tesla today?

>> What's the avenue for a Nikola Tesla today?

Not sure you want to end up like Tesla. He died broke and alone. I wouldn't try to emulate his avenue, only his genius... If such a thing is possible.

Maybe (eventually) crowdfunding, assuming it ever gets through the rulemaking process of the SEC. And it's not just the $1M from unaccredited investors, you can raise unlimited amounts of money from accredited investors, so the amount of capital you need wouldn't be a limiting factor. Given the numbers of investors who are looking for large returns, plus those that have an affinity for a particular technology, idea, or solution to a social problem, this could be big competition for VC's and maybe the only route to funding for some ideas/industries/technologies.

Are you serious? Tesla essentially gave away much of his works (or voluntarily chose to not enforce his copyright) because his work and the advancement of technology was more important to him than money. He chose to remain chaste (a virgin) also in order to further his work. There were many beautiful women desperately in love with him. If he wanted money or women he could have had them instantly at any time. Instead he chose to dedicate his life to his work, yes at times he was bitter but I would say he would be an excellent role model for a myriad of reasons.

Are you suggesting he would look a lot like a patent troll today? Could be heretical talking there.

Generally fundamental infrastructure improvements are very very hard for the individual contributor to capitalize on. Part of that is because there are usually alternatives for everything so its pre-commoditized and thus hard to extract value from, and partly because the legacy of 20th century was rent seeking businesses which polluted the waters for everyone.

Troll! That's preposterous. He INVENTED those things; he didn't buy up batches of vague patents and file frivolous suit.

And his patents were detailed, precise, and often accompanied by a model.

That video was a cariacature of bad VCs. A real Tesla of today should approach VCs like Thiel or Andreesen, if they're not already at DARPA or some other well-funded government blue sky R&D lab (or, say, inventing memristors at a corporate research division).

The Elon Musk model, perhaps? Bootstrap by delivering to the people, repeat until Mars.

http://begthequestion.info/

If you're wondering, here is the kickstarter to the video. http://www.kickstarter.com/projects/dorrian/a-statue-of-niko...

62% unrelated: Nikola Tesla vs Thomas Edison (Epic Rap Battes of History):

http://www.youtube.com/watch?v=gJ1Mz7kGVf0

Venture capitalists these days go on social proof largely because of their career incentives. You don't "make it" as a VC unless you get into a black albatross deal early, and there's one of those per decade. That's why all the horrible note-sharing and co-funding goes on. All the VC resources are chasing the career needs of the agents, not maximizing return on investment (which is impossible to predict anyway).

Someone is going to win big by working with the mid-risk/mid-growth "lifestyle" businesses (that currently make most of their money consulting) but it's not going to happen in VC-istan, nor will it be in Silicon Valley or New York. Boston has a shot; I'd also say Austin, Seattle and Chicago are in the running.

Weren't you taking a one month break from hacker news?

http://michaelochurch.wordpress.com/2013/05/18/one-month-bre...

Isn't the entire premise of venture capital that you only make money off the big winners? Assuming lifestyle businesses fail at similar rates as venture-backed companies, the way to maximize returns is to invest in the companies with the biggest potential upside.

In other words, how many $10/month SaaS companies would it take getting acquired to match the return of your average $300M VC-backed exit?

Don't say 37signals. 37signals is an outlier in the same way Instagram is an outlier. The existence of either of these proves nothing.

By definition a mid-growth business will NEVER generate the returns needed to sustain a venture fund.

I don't think it's fair or the most beneficial to society that VCs only invest in high-risk, high-potential businesses. But that's the only way the math could work. You can't argue with math. The only exception would be funds like YC that can invest very small amounts at very low valuations and make money from acqui-hires.

Assuming lifestyle businesses fail at similar rates as venture-backed companies

Why would you make such an assumption?

You can't argue with math.

I can when you get the math so wrong, like above.

Most businesses fail because they run out of money. Do you think getting an infusion of millions of dollars makes a business more likely to fail?

Lifestyle businesses are usually about a modest initial investment by the founder and then reinvesting modest profits into raising the hot air balloon a bit. VC backed companies usually start out losing tons of money and hope they achieve flight by the time they reach the end of the runway.

I think that's "black swan", but I like the idea of a black albatross :)

> Someone is going to win big by working with the mid-risk/mid-growth "lifestyle" businesses

I don't think that's what this Tesla video was about though. Quite the opposite, it explicitly laid out the need for large capital outlays, etc.

I had a meeting with Accel last year and pretty much went exactly like this video.

There are angel investors in Silicon Valley (and elsewhere) who focus on smaller but less risky wins. It's not a horrible strategy, I think, if you make only a few investments and do it for reasons other than getting rich.

(If I were in a position to invest, I'd be happy investing in businesses which were sustainable/profitable but not the next $500mm exit IFF I wanted the beneficial side effects of those businesses. Even down to the scale of a single individual, sort of the "patronage" model. I think it's entirely reasonable that a single person could accomplish great solutions to small to midsize problems, like say a good zerocoin implementation. Sadly, I'm not right now, and probably won't be for several years.)

Plenty of angels seem happy with longer term or potentially ongoing revenue streams -- the kind of people who invest in restaurants, dry cleaners, consultancies, etc. Seems like it only makes sense if you really like the industry/product or the team, though.

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