399 karma · joined March 19, 2010
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I'm sorry but shutting the company down because the round you could raise wasn't as big as you hoped feels like wimping out. Alive beats true to your vision and dead. In "The Hard Thing About Hard Things", Ben Horowitz coins the term WFIO (pronounced wiff-e-o) for that "We're Fucked, It's Over" feeling that entrepreneurs get on a regular basis. Lawsuits spooking investors is certainly bad but hardly even qualifies.
Given how big an issue the worker classification issue is for the whole economy, I could see the regulatory issues getting sorted out over the next few years. Quitting seems like a premature move to me. How do the investors who put $40m into the company feel? Who's going to invest in this team again? Who's going to go work there?
The truth is, it is hard to make any system as flawless as we're going to want these systems to be.
[1] http://www.businessinsider.com/elon-musk-patents-2012-11
You have to understand the way capital inside venture funds is usually allocated - it's not just one big checking account. A common way to describe the economics of a venture fund is "2 and 20" which means that the fund takes 2% management fees per year (across a 10 year fund lifetime) and takes 20% of the returns or upside.
So, in a hypothetical $300m fund with this arrangement, 80% of the money is reserved for making investments that provide returns. Every time an investment is made, a capital call takes place where the LPs are asked for the money.
The other 20% of the fund goes to management fees - 2% per year although it's not uncommon that these fees be non-linearly distributed, IE 3% in the early years and 1% in the out years when (presumably) new funds are also throwing off management fees.
So your $300m fund really generates $500k / month in management fees. (Probably paid annually or quarterly.) Enough for some very comfortable salaries, ample support staff, great office space and a travel budget but not enough to really start throwing dollars around millions at a time.
Now of course Andreessen has a reported ~$4B under management but I'd be surprised if they're really generating north of $6M in management fees per month. As fund size grows, management fees may come down (since it doesn't take 10x the effort to write checks 10x as large) or a fund as confident as Andreessen (and in as strong a position) might make a "1.5 and 30" deal where they take fewer dollars as management fees up front but get a larger percentage of the upside.
Note, I know absolutely nothing about what's really happening inside Andreessen, this is a purely hypothetical story against what is considered "typical" in the industry. (In the US.)
I ported my Google Voice number out to my cell phone which is a huge pain but it did work eventually.
[1] https://www.schneier.com/blog/archives/2012/05/backdoor_foun...
* References to his "Pole dancer girlfriend" will be used to suggest poor moral character. [1] [2]
* It will be suggested that he's gay. [3] (Interesting contrast to the previous point)
* His "inability" to finish high school will be cited as a character flaw. [4][5]
I'm sure there will be many others along the same lines.
[1] http://www.huffingtonpost.com/2013/06/11/lindsay-mills-edwar...
[2] http://www.dailymail.co.uk/news/article-2339980/Jonathan-Mil...
[3] http://www.washingtonpost.com/opinions/richard-cohen-nsa-is-...
[4] http://www.nytimes.com/2013/06/11/opinion/brooks-the-solitar...
[5] http://www.politico.com/story/2013/06/10-things-to-know-abou...
[1] http://www.adweek.com/news/technology/meet-most-suspect-publ... [2] http://imgur.com/WHxmmHo
You could use the same logic to convince yourself never to convince anyone to quit their job and come work with you. Or to move their family across the country. Or to convince their boss that using your startup as a vendor rather than SAP is the right thing to do.
Making something work is going to require convincing others to bet on you - with money, with time and with credibility. Betting involves risk. It's unavoidable. But doing it "on your own" is largely a fiction.
Extensions like this one have neither of these characteristics and instead are seen as a "tax" by the merchants - they drive up costs without any benefit. This is of course not welcomed by the merchants and as a result, VigLink does not permit this type of use of our service.
The account this extension references was terminated quote some time ago, not long after we discovered it. Although the extension continues to insert our code (we cannot prevent it) we do not affiliate any clicks on the account and the extension owner is making no money through VigLink.
Oliver Roup Founder / CEO, VigLink oroup@viglink.com
The interstate commerce clause of the constitution and subsequent case law establishes that one state may not tax the businesses of another unless it has a physical presence ("a nexus") in it's state.
California and a number of other states are attempting to redefine nexus more broadly in an attempt to be able to force eg Amazon to collect sales tax from it's residents. Amazon has established that they would rather stop doing business with CA affiliates than (effectively) raise prices.
This should matter to you because affiliates are just the tip of the iceberg. One of the California proposals already contemplates that having subsidiaries, servers or _vendors_ in CA would establish a nexus. So let's say you're the entrepreneurs behind CloudKick (to use an already exited example from Y Combinator.) If these proposals had been law when they were looking for customers, they would have found many customers concerned that using CloudKick would obligate them to collect sales tax from their customers in California. Collecting the taxes would of course only be part of the issue - computing when and how much to collect in accordance with the latest version of the law in every state would be a significant burden.
The states of course are perfectly entitled to seek new revenue, especially in times of economic distress. However we believe lawmakers should stick to strategies that work. Historically these laws have resulted in _reduced_ tax revenue and job flight. (the merchants cut ties with affiliates in those states and the affiliates either move or cease operation.) They also make investment in these kinds of business models more challenging. For a state as dependent as California on innovation, we think this is just bad public policy. (Also the Performance Marketing Association has filed suit against the state of Illinois arguing that it's affiliate tax law is unconstitutional.) The correct place for this to be taken up is at the federal level since the federal government actually does have the right to impose taxes on interstate commerce. Senator Durbin of Illinois has announced he intends to introduce legislation to address this federally in the fall.
If you're still reading and you're motivated to do something, check out http://25000businessesatrisk.com/ for California or http://performancemarketingassociation.com/nexus-tax for the rest of the country.
Oliver Roup Founder / CEO, VigLink
VigLink is a content monetization company, assisting publishers to make more money from their site by capturing the value of outbound traffic from their site.
We use technologies like Hadoop, Cassandra, Nutch and Lucene. We're looking for full-stack developers ready to jump in on a high-volume low-latency bidding engine. Experience with real-time auctions, NLP and data mining are all pluses.
Work is in SF, looking for both interns and full time.
More info: http://www.viglink.com
Job descriptions:
http://www.viglink.com/jobs#/product-manager http://www.viglink.com/jobs#/senior-java-dev
Email me directly (oroup@) and please put "HN Job Post" in the title.