The Next Generation Bends Over

$170 million is "fuck you" money. Aaron and I'm guessing many of the top founders/executives made enough money to never ever have to work again. Fake revolutions are cute and all, but think of how awesome it would be to never ever have to work for the man again. They can do anything they want...for profit, not for profit, TBD (Y Combinator). This wasn't some BS talent acquisition; this was an absolute shitload of money to make in a very short period of time (3 years!).

Techcrunch and many others constantly harp on how people should be working on stuff that can help save the world. But the reality is, most of us have bills to pay and a table to put food on. With FU money you can do whatever you please without worrying about your family.

They rail against people who take VC money. At the same time they take money from an investment firm. They they say that their taking money was okay because they wanted the advice of the investor: http://37signals.com/svn/archives2/bezos_expeditions_invests... Other people taking money to get access to investor advice is bad and a disease.

They rant against startups that pursue the eyeballs business. But then they publish blogs that are frequently contentious and create drama in the startup community. Really, RoR aside, if DHH didn't swear at conferences, or if 37 Sigs didn't throw rocks at other people's business models, would have heard abou them as a company? They like being the "bad boys" of the startup world. Bad boys get eyeballs and 37 Signals upsells those eyeballs.

The only problem that I have with 37 Signals is that they constantly say that they aren't doing the things that they are actually doing.

It's a rare founder who has no offer he'd take. In fact, if you have shareholders or employees with options, and someone makes you an offer that's significantly above the expected value of your company, fiduciary responsibility requires you to take it.

You can bend this requirement to some extent by overestimating your expected value, but there is always some number you'd have to take.

I think this point is important. Mint was adding value to an existing set of services rather than creating from scratch. This made its offering relatively easier to replicate. IMHO this point is not given adequate importance when considering why Mint chose to sell.

The most common argument (by far!) that I've heard against VC funding is that VCs only care about home runs, so their interests aren't aligned with the founders', they don't care if 9/10 of their portfolio companies die, and so on. But here the criticism is just the opposite: the "VC-induced cancer that’s infecting our industry and killing off the next generation" is that VCs don't want home runs, they want early exits. Both criticisms can't be right. So, are there two distinct and incompatible schools of thought about why VCs suck? Or are there just a lot of people who are against VCs no matter what, for whatever reason is handy? My spidey sense is that there's a little of the latter at work. (FWIW, I don't have an opinion for or against VC funding in general.)

as a Mint investor, friend of Aaron's, and someone familiar with most of the other Mint investors, i can only summarize my feelings on this by saying that Jason Fried is 100% wrong and pretty much completely full of shit on this topic.

if he'd bothered to even lift a finger to check a few sources on this issue, he would quickly have realized how WILDLY INACCURATE his conspiracy theory was.

in my opinion, blogging at length about a subject which he fully admits he knows little about -- and had not attempted to research -- is incredibly ignorant & irresponsible.

please forgive my anger, but when someone attacks my friends with stupid lies, i tend to get a little pissed off.

If you want change, make your own change. It's no one else's responsibility. Even if it were, the founders are now better positioned to execute on any idea they have in the future with few limitations. How shortsighted.

But from the point of view of a consumer of financial software, this is terrible. Intuit's products have been terrible and getting worse. I do better with a spreadsheet than their money management software, and it isn't even money management software any more, it's just an advertising platform that also keeps track of your money. The only good thing I can say about them is that their chief competitor (Microsoft Money) is as bad or worse.

Mint.com was different. It was great. Maybe it will continue to be different and great. Maybe not. But if I were to guess, I would guess that it will change for the worse.

My only REAL hope now is that someone else decides to come along and build something great. And then maybe THEY will sell it for another $170 million. Intuit, Microsoft, the phone company oligopoly: they all seem to be a new form of monopoly where competitors cannot break in to the market because the incumbent is too rich.

There's nothing wrong with a decent exit. The old guard doesn't have to die, and right now we're relying on the old guard since they're almost the only way startups can get liquidity.

The Silicon Valley venture game isn't about making lifestyle businesses. It's about making good returns on investment. $170m was a respectable return for everyone involved.

That said, Mint seems like the exception out here. Facebook and Twitter seem to be doing a great job keeping the champagne at bay.

Even for a company like Mint (of which I am a long time user), at some point their business model has a maximum angle of growth, and unless they went to a freemium-based model to generate recurring revenue, the short of it is they're running out of room to make money on their userbase.

That being said, as a user I'm very distrusting of Intuit taking Mint and running with it in any direction but into the ground.

And there's nothing wrong with that --- I mean, I have kids to put through college, and my first loyalty is to them, etc --- but employees should know what they're getting in to.

I have never seen Mint and haven't used Quicken in ages. But isn't Mint the same thing only hosted? Where exactly did they innovate, I haven't heard of any exciting features. Anything here besides just "onlineness"?

If I make a magic box, then patent it, and then sell the patent, whomever I sell the patent will dominate the box making industry, since they are the only ones with a magic box. This is what the author thinks is happening, but it is not analogous.

If I open a factory for making boxes, and I sit in the front office and monitor my factory, and hire great staff and motivate them to make boxes, and figure out methods and practices that help workers stay alert, motivated and uninjured, and I keep costs way below industry norms, I will have a very profitable box factory. Now, BigBoxMaker wants to buy my factory, since it is so much more efficient than theirs. They pay me $$$$$. I move to ${sunny_place}. They run the factory, but they aren't me, and they shit the place up. All they did was drive me out of the market, and in a few years another industrious soul will come in and they will have to buy their factory too, otherwise, eventually, they will be out of business.

Now, the key is eventually. They can afford to pay me what I would profit from running my awesome factory for 15 years, except it only took me 3 years. They require me to stay at BigBoxCompany for 2 years, but I just have to meet benchmarks, which is super easy since I already have the factory working at the level the benchmarks specify. So 2 years of dicking around at BigBoxCompany, doing whatever I feel like, plus a check for the amount I would make if I worked my heart out for the next 10 years, or 10 years sitting in a factory, looking at factory people, dealing with factory problems. Plus, my factory might not be successful in the long run, there is inherent risk of lawsuits, natural disaster, political shinanigans (BigBoxCompany gets your factory rezoned as an old folks home by bribing the governor, or you get EPA inspections every 10 minutes, or they bribe an employee to sabotage your equipment).

Finally, you don't have to sit around after you take the check. Perhaps you should open a bag factory (you probably agreed not to compete in Boxes), and you turn that around even faster, since you will of course take all your talented workers with you in 2 years once you are free of BigBoxCompany.

If the check is larger than (expected profit without selling out) * (risk factor) - (estimated value of your time doing other things) you MUST take it unless you don't care about maximizing profits, in which case why are you running such a great factory?

Obviously the loser is the consumer, but this is always the case. On their way up, companies are models of efficiency (that is why they are moving up, so this is a tautology). At some point they are able to use market position and branding to get customers, and so they can let efficiency slip a little, so of course it does slip. If you were guessing what an executive would do when presented with 2 options, and one option requires 60 hours a week of hard work for 6 months, and one requires a phone call and dicking around and playing golf, and both have the same outcome, which would you expect the executive to make? So of course established companies just advertise and give out free schwag and sponsor events instead of buckling down and making a better product and more cheaply, the executive only cares about profit for the period which effects his compensation, and both methods are identical if that is your only metric.

I have a long history of being a bleeding heart. I also come from an environment where "throwing money at the problem" is kind of the default mental model. So I've spent lots of time fantasizing about how I would improve the world/help people around me should I suddenly have money. Over the years, I have concluded that financial problems grow out of real problems, so in most cases just throwing money at the problem actually hurts a person's ability to solve the underlying real problem. If someone is convinced that "The Problem" is how much money they owe and you pay off their debts, it lets them off the hook for wondering if there is something about their lives they should change. (And in many cases, those debts will quickly pile up again because the cause of the debts was not resolved. My recollection is that about 2/3s of people who win the lottery are bankrupt 5 years later.)

For intractable personal problems, the odds are very good that the person with this intractable problem is very resistant to change and/or the problem itself is inherently difficult to overcome. In both cases, an easy way out of a portion of the consequences tends to undermine any hope they will buckle down and do the hard task of making the necessary changes. Also, paying off someone's debts inherently contains a judgement about how the money should be used. I have concluded that it would be better to just give someone money, no strings attached, no questions ask, no expectations, as a gift. And then not roll one's eyes and such when it isn't used the way one thought it ought to be. I have also concluded that if I want to help people address some serious personal problem, throwing money at the problem is not the way to do it. Some day, I might figure out how making money available could grease the wheels of progress towards a solution without causing all kinds of unintended negative side effects. Should I ever work that out in my mind, I might well found a charity. In the mean, I will share info and try to mind my own business.

In general, though, I would point to something that ought to strike anyone with an outside angle on the culture and worldview pervading the tech startup community and much of small business: there is a rather Messianic complex of exceptionalism, particularly with innovation.

While it is certainly true that large companies necessarily homogenize business processes and impart well-known characteristics of "mediocrity," that's exactly what they do best: optimise for profitability. Large organisations are very good at extracting value from existing things. They are also the only ones with the capital to bring many innovations from an incipient level to mass-market; that's a large-scale, and very capital-intensive endeavour.

I think startups often like to imagine themselves leaders in innovation due to hypothetically negligible distribution and replication cost structure introduced by the Internet, but that's a silly thing to extrapolate to a universal. It really depends on what the product is, and certainly on the nature of the innovation. There are a lot of modern conveniences, well-known products, appliances, brands, etc. that would have never seen the light of day - in a household name sort of sense - if they had been left in the stewardship of the original creators. It takes a lot of money - and, indeed, a lot of thankless, cheerless, rather bland and unremarkable process development and management - to get the escape velocity.

My point is that without knowing more about Intuit, I am not convinced, ipso facto, that Mint is going to die a mediocre, bromidic megacorporate death simply because it was acquired by a much, much larger company. That doesn't necessarily follow. That it will undergo considerable change and adaptation to the business imperatives of the acquirer is almost certain, but whether that will turn out to be utterly horrible or something quite pleasant depends on the quality of the acquirer, not the mere fact of the acquisition.

I don't hear anyone criticize pg for selling Viaweb, and that sale was obviously what opened the door to the Y-Combinator experiment (which is much more interesting than running an established company).

There's a reason founders leave when the company "makes it", and its not the money.

If this was an acquisition fueled completely by a VC or investor, I doubt the founder would be interested or willing to then commit to the Big Evil Company that his revolution is being sold to.

Therefore I think the main premise of Jason's blog post is wrong.

Will the lead people at Mint have real power in Inituit? Will one of them be the next CTO? Are terms like those ever specified in a buyout?

Get in, get out - that's a O.G.'s classic

Everyone on this thread is just screaming their own point of view so they can feel validated.

Quit arguing on HN, and go DO something.