Hacker News Reader

stupid shit like an app that sends two characters

It's always worth remembering that it's people who get investment, not companies and certainly not ideas. What we see is the public face, not what's really going on. Yo is a good example of why some people get investment - someone who can take that app and persuade large numbers of people to use it is clearly good at building and marketing things. If they get their idea (not Yo, their actual idea) in front of an investor having proven that they're capable of building a product and taking it to market, then the investor will listen and do the necessary sanity checks and due diligence, and then invest in the next product. The real one, the one that needs investment.

Building something that proves you're someone who can build an engaged community of people that you can market other things to is a very good thing for your investment prospects. The fact the thing you built is stupid is of absolutely no consequence.

Which is the fairy tale that investors tell themselves and it's also impeding innovation. We're not music, we're technology; there's more at stake. Our Mozarts are being left to die in pauper graves while Biebers are inundated in funding to compose their next masterpiece called 'Yo!'.

And what's worse is that people like Andreesen used to be innovators and now they are happy to make this all a circus if it makes them just a little more obscenely rich.

> Our Mozarts are being left to die in pauper graves while Biebers are inundated in funding to compose their next masterpiece called 'Yo!'.

I don't have anything to add to this, because I find it to be the most tragically accurate portrait of both Western and startup culture I've ever come across. I just wanted to thank you for providing the perfect response when someone next tries to convince me, non-sarcastically, that Color was "a phenomenal idea."

I'm not sure that's actually true. There are a few examples of investors putting money in to stupid ideas that eventually fail, but there's also plenty of examples of investments in brilliant, world-changing ideas as well. Take Uber as an example - last September they announced that they're creating 50,000 jobs a month[1]. That's incredible and it'll make a real difference in the world.

Using Yo as an example of investors impeding innovation just highlights the fact you need to look at a sample of more than one investment to see what's going on.

[1] http://www.quora.com/How-many-Uber-drivers-are-there-in-the-...

Everyone time i hear that "it's not just the idea, but the people behind it" I feel it more that I should have a con artist in my team to get funded. Most of this highly funded founders can't build things: they are super good at marketing though. That's why I think of them as very good con artists.

Pretty much number one lesson I've learned in startups is that you can have an amazing product that does brilliant things but if no one knows about it you will fail. You may see good marketing as a con (not sure why, there's no need to be deceptive in marketing), but even brilliant products need marketing or an exceptional amount of luck. Anyone investing in a startup that doesn't have someone who can take the product to market (e.g. market it) is trusting their money to luck - and that is stupid.

> no need to be deceptive in marketing

The thread we are in currently suggests otherwise – the marketing here is extremely deceptive and lead to a startup scamming 10 million US$ out of a VC.

> idiots (I'll just burn all this cash and look for new ones or I'll get the most unrealistic valuation possible so I get kicked out of my own company)

Doesn't sound idiotic to me. So far as anyone has been able to prove, humans live only once. And realistically speaking have about 20 years in which to make money that will determine the level of comfort and luxury they will enjoy for the duration of that single life. If at some point in that 20 years one finds oneself in an environment in which "naive investors" are willing to hand out $10m at a throw on the basis of a physically unworkable idea and a pitch deck, I would strongly advise coming up with physically unworkable ideas and pitch decks. Writing articles about how foolish people are to pursue these ideas does not put money in your wallet, even if it's true.

This naive view that if is someone is silly enough to throw money at your silly idea you should take it isn't just hurting the current industry by setting unrealistic expectations but will also be the driving force behind the collapse of the unhealthy capital market in the valley. Unrealistic salaries (that completely ignore any roi calculations), ideas that aren't grounded, and the need to get it all done super fast are what's going to cause a drought in capital for tech and then both good and bad ideas will suffer.

I urge you to rethink your statement with the future of the industry in mind, not just a single bank account.

Everything you've said is sensible, though I question whether in a cheap money environment investors will stay away if they've been burned. People fall all over themselves to lend money to sovereigns who have defaulted fairly recently, and that at very low interest rates. I would be surprised if people with access to unlimited cheap money will really stay away.

That said, even if I agreed with you 100% (and you're certainly right in principle), I would not change my view. That's why I noted that humans live only once and have a short time frame to accumulate money. In the fullness of time, yes, this behavior is harmful. But humans don't live in the fullness of time; they live when they're born. Secure your own future and to hell with the industry's.

> Secure your own future and the hell with the industry's

This is just not something I can agree with, regardless how it's twisted. Accumulating a sustainable amount of money isn't as easy as raising a few rounds on a weak idea. It takes a real idea, perseverance, and thinking really long term. The mindset quoted above isn't likely to support any of these requirements.

So, really what you'll end up with is a nice house, a pretty car, and a few fake friends while it's all running smoothly. The second you can no longer deliver it all goes away. I might be in the minority here, but I plan to leave my children an empire. Not a house of cards.

Assets don't just "go away" unless they're encumbered by debt. If you're paying yourself a bloated salary, living frugally, and taking advantage of opportunities to sell things that are ridiculously overvalued, you should not have any trouble building durable wealth in a short time.

It's fine to say that you don't like what I'm saying. It's fine to think it's unethical, or that it harms others. But don't suggest that it doesn't work; it very obviously does.

You're right in your approach. However, in the capital market founders don't usually get to dictate their salaries or suck in more of the loot than is absolutely necessary. That's why VCs keep a good portion of the control.

Now this may not be the case always, so yes, a short term plan could work. But I doubt it works reliably enough to be turned into a rule.

I'm inescapably drawn to the idea that selling goofy ideas to cash-heavy investors is a form of short-selling, and every "hot" market has a fair amount of short-selling activity going on. In fact it got me wondering why the typical startup founder isn't primarily engaged in shorting their own stock, given that the majority of startups fail. The answer has to be that the founder has enough of their own skin in the game, and limited access to pocket the cash themselves, that they can't profit from this ploy.

This would be illegal in a public company, for any executive to bet against the company, and in the private case would probably be breaking some part of the contract signed with the investors. They get to hedge your bets, if you want to hedge yours you'll need to find some other vehicle.

As a self funded founder I feel you that the stories about what we do are unheralded and we have different challenges than other businesses (good ones that force us to find the right answer quicker).

There are businesses that are not self fundable, though and will take massive amounts of investment to make happen. Uber is one since they need to get critical mass of drivers/riders in many cities to take over. uBeam is also one of those companies, as a whole lot of R&D has to be done to take it to market. They have a thesis and if correct will have a big impact and can only be done with some real investment (can you imagine self-funding this??). This seems like the perfect thing to invest in.

Its super easy to poke holes in other peoples business but we are also not working with all the information. Let her work!

Money that will be made in the distant unknown future seems to be more valuable than money made today

High political and economic stability has brought us to this point. The more uncertain the world is, the more people prefer money today to money tomorrow. But when people have accumulated more wealth than they could concievably spend, and feel safe enough to let it out of their sight, they want to invest. Hence the flood of cheap money. The capital flight from China helps too.

Investors are also still believing that they can win the Apple lottery: buy an underappreciated tech company at the right time then watch it take over the world, and stay there forever.

I don't think we're in for a 'correction' any time soon. Where else are investors going to put their money? Leave it in a bank earning 0%?

I agree. I think the issue isn't that money is being spent but that it's being spent on the wrong ideas. Split that 10m into 5 and help five different founders who have taken their time to really prove their concept and build a real revenue model...

HN does not need more substanceless, generic discussion.

Such comments invariably sprout up when there isn't enough actual information to discuss anything concrete. They're like fireweed, except fireweed is pretty.

You just described HN in A nutshell. Looks like I've angered the HN gods it's all the way at the bottom now. One step closer to censorship....

HN does have much of that, but it also has much that is better. Let's be the kind of people who pick up litter (or at least take care of our own) instead of thinking "this place is a dump anyway".

I don't think that at all. It's just you.

If there was no substance then why would people vote for it in the first place?

The original article was about how the investments in tech is fucked up and generic to begin with.