I’ve learned that glorifying money raising is a massive mistake
This, in my opinion, is what the metaphor of not reading TechCrunch stands in for. Each article celebrating a round of fundraising has a backstory about an entrepreneur who has less ownership of their company. Often that backstory is that they have less or even no control.
Jobs took outside funding. Gates did not. Both acted like jerks in the 80's. But nobody could fire Gates because nobody had the shares to bring in an outside CEO to Microsoft.
Fundraising is a two edged sword. It should often be accompanied by both congratulations and condolances.
Bill Gates was the son of wealthy parents, his father was a partner in the law firm Preston Gates & Ellis, his mother was on board of directors for First Interstate BancSystem and the United Way.
Bill got a sweetheart deal from IBM, in part due to his mother serving on the United Way board with Jon Opel, chair of IBM.
Steve Jobs was adopted by Paul Jobs, a mechanic and a carpenter, and Clara Jobs, who was a payroll clerk for Varian Associates. Neither of his adoptive parents had the opportunity to attend college.
Jobs sold his minivan and Wozniak sold his HP scientific calculator to initially fund development of the Apple I.
If you have the option of being born to parents with extreme wealth and connections, I highly recommend it over fundraising.
One may dismiss Gate's success as due to the resources of his parents. However, Microsoft was not his first foray into entrepreneurship. I suspect that bootstrapping was always the plan. Just as Apple always anticipated taking venture capital.
Jobs had the good fortune to be raised in Silicon Valley. Had he been in Topeka, there would not have been a viable market of hobbyists for Apple I kits. Then again, he wouldn't have known Wozniak who actually built the damn thing, either.
Luck played a factor in the fortunes of both men.
The funding of Gates and Jobs is a parable. The extended version includes the prodigal son's return.
I don't completely disagree with you, a good start in life and tons of money doesn't guarantee you future success, but luck alone doesn't pay the bills either, that takes money.
You can have a great viable market and if you don't have the money to build the widgets, you are stuck pounding sand.
BTW if Wozniak hadn't met Steve Jobs, he might have spent the rest of his days working at HP, being one of hundreds of brilliant engineers nobody has ever heard about.
Woz is many things, but he is not --and was never-- an ambitious corporate leader. Wozniak built the Apple I and Apple II but it was Steve Jobs that built Apple Inc.
Nobody is "dismissing Gates' success as due to the resources of his parents." People are pointing out that taking VC funding was unnecessary for Gates due to his family's wealth. Surely you can see this.
Also, Gates was building a software company and Jobs was building a hardware company. Jobs had a lot more need for funding in the first place since his capital expenditures were higher.
Finally, Mr. Jobs made almost half a billion off of Apple in the 1980s (yes... 1980s dollars.) I hardly think that Apple is some kind of parable about how VC funding is a bad idea. Quite the contrary.
I recently spoke to a group of aspiring founders (not that I'm anything to aspire to, but they needed speakers!) and one of my slides was, 'recognise distortion fields'.
Techcrunch was my main example. A great resource, but needs to be absorbed with the right amount of perspective.
The next Microsoft is very unlikely to be a YC company because YC purchases meaningful equity upfront and its template is built to serve the needs of venture capital, e.g. demo days and more recently, convertible notes.
There's nothing wrong with that. There's nothing wrong with removing the beer goggles and acknowledging it, either.
Besides their money, VCs bring little value to your company. They rarely understand the scope of your problem or why your plan on solving it that way, they don't know your customers, and it can sometimes be distracting to prepare for board meetings with your investors.
Its unfortunate that TC can only validate companies based on how much money they've raised..
Jobs took outside funding. Gates did not. Both acted like jerks in the 80's. But nobody could fire Gates because nobody had the shares to bring in an outside CEO to Microsoft.
Jobs got the best kind of getting fired possible, though. He walked away with half a billion dollars, which let him do whatever the fuck he wanted with the rest of his life. I've never had a job where I wouldn't resign on the spot a $500 million (or, fuck, even $5 million) severance check. I can't imagine that it being "my" company would change that. Once a company is large enough, it doesn't really belong to one person anymore.
The reality of business is that, as the thing grows, the Iron Law of Oligarchy kicks in and it becomes less "yours". That happens regardless of capitalization structure. Complex entitles are just not, under normal circumstances, controllable by one person.
The bad deal is when you take money for the business (i.e. not personally) and lose control.
"That happens regardless of capitalization structure."
Analysts, pudits, and others with a keyboard and an IP address have been calling for Ballmer's head for years. In vain, because Ballmer is the second largest shareholder after Gates. Capital structure matters a great deal.
Most of the data are generated automatically from SEC forms regarding the trades of insiders over the previous 24 months.
Ballmer's last transaction was 11/23/10. Hence, his name will not show up in data generated that way. In 2010, he sold 12% of his stake for about $1.3 billion. He's probably not hurting for cash.
He's still a small minority shareholder. So is Gates, and have been for many years. Last I checked, unless I'm severely mistaken, I believe Gates held something like 6%-7% of MS, and Ballmer substantially less.
The size of their holdings might make it somewhat harder to mount an "attack", in that there are no small group of large shareholders that would be able to vote a majority on their own and so any attack would require gaining the support of a large number of smaller shareholders, but he's certainly not immune from being ousted if he's actually so disliked by shareholders.
It does, because having a small percentage of the equity accelerates the pace at which the thing becomes "not yours". My only point is that it's almost impossible to grow a complex entity to the point of "bigness" and retain total control. The Iron Law of Oligarchy sets in.
Even if you are a CEO with total control, there are information problems that limit your true power. Sure, you have lieutenants who will furnish you with the answer to any question you desire-- biased and dishonest information. I heard someone once say that the hardest thing about being a CEO is that "everyone is fucking lying to you" and that sounds about right. I would add "... and wants your job" to that.
People talk about "giving up control" as if it were a loss. Even if I built the business from the ground up, I'd rather have control of my life than the business. $10 million would mean that I own my life instead of renting it from a boss. Selling control of a corporate entity and code for someone else's use is easily worth that, from my perspective. I now own my life, you now own (partially) a couple years of my work... seems like a fair trade to me.
Mentioning the Iron Law of Oligarchy in a comments thread about Techcrunch and fundraising gets you a vote up from me.
For those who didn't study sociology or political science at some point, the Iron Law of Oligarchy describes the apparently inevitable tendency of organizations to centralize power towards leaders by a process of increasing bureaucratization, decentralization and specialization. It was developed primarily to study political parties, but it is believed to apply to all organizations.
I can't help but think that Michels missed one strategy which can defeat "power corrupts". The solution is to structure the organization such that each agent has identical power. And better yet, organize the agents into small groups (and those groups into groups of the same size) which require consensus among the members. Perhaps even consensus at each subsequent level of groupings.
In other words, a fractal (self-repeating) organization.
What's most interesting to me about it is that the convergence occurs from both sides. Both autocracies and democracies converge toward an oligarchy. Democracies devolve because there are a lot of people who don't care enough about most issues, which means there are "cheap votes" that are extremely easy to sway. Access to cheap votes (control of the press, political party leadership) is not democratically distributed, but the opposite. On the other hand, even the most vicious autocrats need lieutenants who eventually learn how to take advantage of them. Either way, you get to something that looks like the "square root of N".
TechCrunch is powerful because it has a nut-hold on the cheap votes. The same goes with the prominent VCs who lead the herd.
The best you can do, often, is to create genuine competition among the oligarchs. Then there is a real market for talent, which often comes from the common people (the demos) and this means that the oligarchs can't treat them too badly, because pissing on the people is a sure way not to be able to recruit talent when you go to war against other oligarchs.
That's one thing I dislike about VC-istan. Rather than competing with each other, the VCs talk to each other about who's hot, who's not, and what kind of terms to offer. So you get vertical competition (class warfare) instead of the horizontal kind.
This, in my opinion, is what the metaphor of not reading TechCrunch stands in for. Each article celebrating a round of fundraising has a backstory about an entrepreneur who has less ownership of their company. Often that backstory is that they have less or even no control.
Jobs took outside funding. Gates did not. Both acted like jerks in the 80's. But nobody could fire Gates because nobody had the shares to bring in an outside CEO to Microsoft.
Fundraising is a two edged sword. It should often be accompanied by both congratulations and condolances.