Ethics and Morals

avc.com

8 points·nedwin··2 comments

"A few months later they saw a competitor emerge in the market with an identical business plan and a website that was eerily similar to their own."

Yeah, it sounds sleazy. But even if the competitor wouldn't have gotten the insider tip from that other VC, what would have prevented dozens of competitors from copying that business model after the original company had launched? If that business really takes only a few months to get it going, it probably has a very low cost of entry which is not a significant hurdle to competitors.

Yes, being the first to market gives you a slight advantage, but not so much that it can assure your success if your competitors manage to offer a better product a few months later. MySpace preceded Facebook, but look where they are now.

Good post. I feel like a lot of VCs like to have competing startups in their war chest. I am now constantly seeing well funded companies emerge within months of each other when there was no technical reason they couldn't exist years before. It's not like some 3rd party invented some game changing low level tech, a bunch of people independently had a critical insight on how to apply it, and also all decided to leverage it independently.

It is simply, "my competitor invested in X, I didn't get into the deal (or couldn't on my terms), I'm going to find something similar to X and invest in them or just launch it within my own network and fund it".

Reply on news.ycombinator.com