ryandamm

Open source doesn't mean royalty free (though I have no idea if this format would be royalty-bearing).

There are open source implementations of various MPEG and JPEG codecs, but they still carry a licensing fee to use them. Most people who don't use Linux don't realize this (installing Linux and trying to deal with av codecs is a quick education in the difference).

I'm not sure the pause in unicorn IPOs is directly related to a slowdown in seed funding -- perhaps indirectly by minting fewer angel investors.

A lot of the popular press -- even the popular tech press -- conflates startup funding. But late stage investing, which is mostly where unicorns play, is a totally different game from seed investing.

Also, there are two stories here... one is about the shift in average check size and fewer deals. This is really just investment grade inflation, where larger deals are being called 'seed.' Not sure why but it's how it works. So much of the former seed rounds are probably underreported angel / micro fund rounds now.

[Source: my startup's funding isn't publicly disclosed for that precise reason.]

I think posting the "We don't give a f--k" video is a pretty direct attack.

And even if that specific incident hadn't happened: a climate of gendered or sexually explicit comments is hostile. I'm sorry if you work somewhere that this isn't obvious or explicit. At my company, we're working to maintain a good culture, and none of the behavior described in the article -- none -- would be acceptable.

Thankfully we haven't had to deal with that yet. But I'm formulating some new interview questions reading this HN thread....

"Lead" implies taking the largest position in the round, often but not always around 50% of it. VCs typically have a strict profile for the size of check they write -- though I think this is more prevalent at the seed stage, where funds top out pretty quickly at fairly small check sizes. I think the dynamics are probably very different from this at later stages, but then again the article (and all this discussion) is about seed funding, as far as I can tell.

This sounds a little too cynical, and possibly autobiographical.

I have counterexamples. So, who's right?

The article this is responding to is extremely misleading and is pure clickbait.

Safes are great. They're easy to understand, and any semi quantitative founders should be able to build dilution spreadsheets without the help of a lawyer.

The title misrepresents the universality of the author's perspective.

More plainly: this is HN clickbait. Ignore, please, read on at your peril.

I pitched Niko (he passed for now, too early) -- and this interview does capture his style pretty well. My cofounder and I found him very smart, but also personable and genuinely interested in what the startup is doing. He asked good questions.

As for the '2 Underrated Success Factors' -- I think when Niko calls it 'timing,' you wouldn't be wrong to call it 'luck' (he hedges a bit in the interview). Any mental model for startup success that doesn't incorporate a huge dollop of luck is probably overfitting. But that's my two cents, not the article or Bonatsos's.

Unfortunately for the US, proposed revisions to immigration policy may be sending more of that brain drain back.

Also, in general, more public funding for education does pay for itself in the long run, though I'm not sure how that's adjusted for net emigration.

(Edit: corrected fat fingered typo.)

That's not a separate point from "lack of a killer app" -- most motion sickness is a result of bad content, that violates rules of good perceptual design.

The nice thing about California is employers' concerns about the market, competition, and trade secrecy cannot take priority over an individual's right to work (with narrow exceptions for owners selling a business).

To the extent it puts pressure on the companies -- perhaps. But it shouldn't hurt the employees themselves; on the contrary, perhaps it encourages the companies to keep engineers around by granting enticing equity packages with long-ish vesting schedules.

Or you're right, and they'll just collude. Guess it could go either way...!

Are you sure about (1)? I believe you can steal trade secrets even if you don't take them in an embodied form.

It is true that you can't prevent someone from practicing their profession under the terms of California employment law (other states vary) -- but if you take reasonable steps to protect your trade secrets, the employees can be bound to honor that secrecy by not disclosing them to future employers.

Source: I've been involved in a trade secret dispute (it was nonsense but annoying), and I am definitely not a lawyer.

This is really similar to the concept of 'first sale' in copyright law, which similarly prevents the copyright holder from using copyright to restrict what a buyer does with the object.

Glad to see it extended to patent law as well.

Sure, I'll elaborate, but it may not be terribly illuminating.

As for why it's "hilarious" (okay, overstatemetn) -- it's not really a critique of how comments work -- more just that this is sort of an off-topic subject matter for the audience, and spangry is trying to reply to a comment.

If I were spangry, I would've replied to the post itself. I think HN commenters are pretty thoughtful, and his detailed post probably would've risen to the top, and enhanced the overall conversation.

So the right way to read my snark is more as a commentary on the fact that economics is a technical subject, but most technical readers at this site are technical in different ways. I would assume the top comment (and attendant conversation) would be spot-on for the latest framework or software technology, though.

Everything exponential is ultimately unsustainable.

The value of these analyses is they try to plumb the limits of the model; there was a substantial sea change in how China's economy operates ~2008-9, with a shift towards massive debt growth. That's inherently less sustainable, particularly because the rate of debt growth is climbing.

But this is actually why the euro isn't an optimal currency area. Germany's low levels of debt:GDP are a result of explicit suppression of the household sector -- a deal struck by Merkels government with labor unions to restrain wage growth.

This kept German industry competitive, and enhanced exports. This overall made the euro stronger, but not as strong as the deutschmark would have been. Greece suffered from the other end: they became less competitive by being tethered to Germany's economy.

To the extent people are trying to trade on this model, they look for liquid marketplaces that are exposed to China's economy. Australian metals and mining stocks, for instance, or currency fluctuations in closely-pegged economies (forex being pretty darned liquid with a very deep futures market).

Chinese equities are something else entirely, closer to a derivative class. And hard to trade in directly (not that I have tried or would ever try -- I'm in index funds).

And the truth is, the banking system is less liquid, and the equities market much smaller, than developed economies. Oh, also, short-selling is illegal, I believe.

So no, there aren't any natural, market-driven checks on this stuff.

To piggyback on your point, Pettis lays out explicitly how China should shift to consumer-driven GDP growth... then also points out how politically difficult it will be (because it likely entails assigning losses to the wealthy and politically connected, via breakup of SOEs, transfer of wealth to households from the government, etc).

So yes, grandparent's point is correct, that there's room for consumer-led GDP growth. But the mechanism for how to get there is not easy. (And it's something Pettis has written about extensively.)

The average disguises a few things. One, I assume that's in absolute terms and not, say, purchasing power parity (which accounts for lower consumer prices in China).

Two, the 'average' in China includes huge numbers of the rural poor. They are living in the third world; an office worker in Shanghai is not, but her income's contribution to the average is diluted by rural subsistence farmers.

This does suggest that there is room for growth via urbanization and modernization: if subsistence farmers switched to commercial farming, and the excess labor moved to productive cities, in theory you've got a productivity boom. But China's productivity is predicated on the world's ability to absorb their excess production, which is not actually unlimited. That said, the central government is taking deliberate steps to encourage urbanization (while simultaneously not undertaking some reforms that would help, like overhauling the hukou system).

Great, detailed response -- I learned a lot from this, so thank you. Also, I think it's hilarious/curious that the actual economist's response is buried in a thread.

Internet message boards (yes, even HN's) are not kind to actual expertise.

No, the reason he suggests the government move assets into private hands is because his main thesis for how China can get out of the jam is to improve household consumption vis-a-vis growth in household wealth.

Not covered in the article I linked in particular, but his main idea is that China has had investment-fueled growth that's no longer sustainable; the foundation for all advanced, post-industrial economies is a robust consumer sector. China's is stunted at best. That's the motivation for transfers, not a productivity argument.

No, I was making a general point about what's productive investment and what isn't.

In the US, we're doing a bad job of making our deficits count. That will be bad in the medium and long term. In the short term, any spending is mildly stimulative. (Though spending that doesn't create future growth is essentially what creates the situation China is in: you're creating future debt-servicing obligation without creating debt-servicing capacity -- so you're making yourself poorer.)

I was just making a point about economics. I'll spare you my political opinions about the utility of US deficits, or the direction we're going, but based on your tone I imagine we might agree quite a bit more than you think.

We also have immigration into the US. I read somewhere that growth in the population vis-a-vis immigration (and the higher birth rate of recent immigrants) propped up US growth, and explains both why the US didn't suffer as badly as Europe post-recession, and also why our demographics will look better down the road (better ratio of workers to dependents).

Japan has very little immigration. Europe and America are obviously grappling with these issues politically, but it's pretty clear from the economic numbers that immigration is important for growth if you don't have stable population growth. (Japan and parts of Europe are in decline, as would the US be if not for immigration, I believe.)

This is an excellent link, thanks for that! Pettis goes over similar identities, but this is much pithier, and all in one place.

(Probably: Pettis assumes his readership already knows these things; I'm definitely not as savvy as his intended reader I think.)

Pettis quantifies it (elsewhere in his articles). He's gone on record that there's going to be an explicit or implicit write down, and China's average GDP growth is going to be well below 5% (averaging more like 2-3%) by 2020. I think those numbers are roughly correct.

What appeals to me about Pettis's analysis is it's rooted in a simple quantitative model that rests on accounting identities. When you've got a model that fundamental, it's easier to make strong predictions.

Also, "markets being irrational" is a claim about asset bubbles. What we're discussing here is much larger, and subject to its own laws of dynamics. It's not a bubble, per se -- it's more like a bad loan that keeps getting rolled over and bigger, and no one acknowledges the loan won't be repaid. Someone is going to lose out, but the day you can't cover the interest payments is the day you have to acknowledge the loss.

In the case of China in 2017, the debt is held by banks, who are functionally insolvent if the bad loans (usually to property developers and commercial entities) were called in. Many of these commercial entities (large, state-owned enterprises, or state-adjacent conglomerates) simply have no possible way to service the actual loans, short of rolling over more debt.

This isn't about asset prices, or a bigger fool bidding up the price of, say, housing stock: it's about the ratio of debt to productive capital. And the reason debt ballooned post 2008 is because the regular investment engine (mostly infrastructure and housing) had started to lose steam. The growth in debt in the economy was a rational response to the need to keep growth numbers high.

But deferring the reckoning doesn't make it better. Though it's held in the corporate sector, much of China's debt behaves almost like revolving consumer credit in the US.

(Also: one form of reckoning is flat growth for an extended period of time; Japan's lost decade is entering its third decade now, and systemic debt is still really bad. Pettis holds up Japan as one example of how not to correct the imbalances.)

He elaborates on technology improvement in other articles, but it boils down to: technological improvements have a range of returns, but even the most optimistic of historical returns to technological progress can't paper over the debt-fueled boom China is currently undergoing.

Basically, qualitatively, you're right. Technological improvements can generate growth from scratch. But when you look at the historical data to try to quantify it, you see it's quite modest. Big gains have come from: women entering the workforce, electrification, containerization. The rest is incremental enough it doesn't matter in the same way.

(Part of this is how it's measured; the fact that consumers get much more value for their dollar isn't well captured, but the point remains because it's about debt-servicing, not consumer value.)

I think the best model to understand this is Michael Pettis's balance sheet analysis. He covers it extensively, but here's his latest digest of the model:

http://carnegieendowment.org/chinafinancialmarkets/66221

It really makes clear how stark the choices are for China. The debt binge of the last ~10 years has masked the flattening out of productive investment, and there will need to be a reckoning. Hopefully it's a soft landing, but that will depend on politics as much as anything.

Sustainability is a function of total annual deficit relative to growth in ability to service the debt. Deficits that lead to productivity-enhancing investments will pay for themselves: education, infrastructure, etc. Deficits that result from cutting taxes will not: the idea that we're on the virtuous part of the Laffer curve has been thoroughly debunked in economic, if not political, circles.

Furthermore, debt in the US is a result of exogenous capital flows, not the other way around. If the US government tightened belts and cut heavily, leading to a fiscal surplus (or even just balanced gov't budget), we would see a growth in private sector debt.

It's one of my favorite hobby-horses, this idea -- because it's counterintuitive until you dive into the balance sheet analysis, then it makes perfect sense. All credit due to Michael Pettis:

http://carnegieendowment.org/chinafinancialmarkets/70042

A little late, but Pettis obliged with his latest post. It's more directly answering your question, I think:

https://news.ycombinator.com/item?id=14408165

Worthwhile subhead: "In a recent much-remarked-upon and very short op-ed, George P. Shultz and Martin Feldstein argue that the only way, or at least the best way, to cut the U.S. trade deficit is for Washington to cut the U.S. fiscal deficit. It is at least as likely, however, that cutting the fiscal deficit will simply increase debt or increase unemployment."