
Ask HN: Rich ex-entrepreneurs turned VC's: "Bug" in society? - sendos
It seems that many if not most entrepreneurs who strike it rich end up becoming VC&#x27;s (or some variation thereof)<p>This seems to indicate that it&#x27;s easier&#x2F;more profitable to turn your millions into more millions by not producing, and just investing (essentially, betting on other companies).<p>I would categorize this as a &quot;defect&quot; or &quot;bug&quot; in the way society is structured. In an ideal scenario, if you are a successful entrepreneur, it would be inherently more profitable to spend your time and energy on your new company, which would go on to produce something useful for society.<p>Instead, I see lots of people who have created great things in the past just switch over to becoming investors.<p>Of course, one may argue about the benefits of smart, successful, people going into investing, and I can see some of that, but mostly, I just see it as a relatively easy avenue to make more money, without the commensurate benefit to anyone else. And I don&#x27;t blame anyone, it&#x27;s just that we would all benefit more if the more profitable strategy was creating something.<p>How do you guys see this?
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nairteashop
Serial entrepreneurship is not for everyone. Once you've put in nearly every
waking hour of 5-10 years of your life into building a company, it is easy to
see why doing that all over again may not be all that appealing. Especially
once you've got a family and other competing commitments.

However, many entrepreneurs still want to help create and bring new and
exciting things into the world. Becoming a VC is one relatively low-stress way
of doing this. It is also a way of "giving back to the community".

The few ex-entrepreneur VCs I know have been amazingly helpful, and frankly I
don't think any of them are in it for the money - they have quite enough
already.

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Mz
VC's do more than just "invest." You have to pitch them on the idea and new
companies need capital with which to work, so, no, I don't agree with your
view. It takes a lot of time and energy to launch a new venture. Like the
military, that tends to be a game for the young, who have that kind of energy.
But having some feedback from someone with experience helps improve the odds
of success so new people aren't flying quite so blind. It is not a bug or
defect. It's a feature.

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lauradhamilton
I don't really agree with your assessment. First of all, having a
knowledgeable person with operational experience deploy capital in viable
early stage companies is indeed useful for society. Companies need capital to
grow.

Also, it's harder than it sounds to invest in startups. It's not the case that
any rich idiot can multiply his money by being an angel investor. It's very,
very easy to lose your shirt that way.

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tormeh
Money breeds money. It's just a consequence of the right to private property
that this will be the most profitable strategy. It's bad, but changing it
would require a huge rethink of capitalism, and the powers that be wouldn't
like that because they are a product of the current system. Even the cool
ones, like Elon Musk, counts here.

I've often thought about this. Why do we have the right to own land? The
people who own the land rights to various parts of Manhattan, Bay area (and
other popular places) might pay some taxes and handle some paperwork but other
than that they just collect what's basically a tax on everyone who wants to be
where the opportunities are. Same with operative systems APIs (like win32) and
processor instruction sets. It's not really relevant how the specific
individual/company/family got into the position as a gatekeeper. It could have
happened hundreds of years ago. Now they're just a taxman you can't vote on.
Constrained gatekeeper resources like land or frequency spectrum should be
government property for all eternity and rented out to the highest bidder on,
say, a fifty year basis. Non-constrained gatekeeper resources should become
public domain.

Money isn't nearly as bad, though. You can take investments from the lowest
bidder after all, but you can hardly get around Manhattan/Windows/x86.
Basically, the issue here is that it's easier to let your money work for you
than working yourself. Maybe you could put into law that for each share sold
or dividend given (basically, whenever an investor gains cash from his/her
investment) a certain percentage also has to be equally distributed among
employees. That might work, but I can imagine that investment targets would be
vulnerable to investment competition from countries without such a law.

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anthony_franco
It isn't "just investing". Especially with regards to angel investing, the
entrepreneurs are able to use their knowledge and expertise to allow many
other startups to exist and flourish.

In my personal experience, I've worked with a pair of founders that have
become amazingly successful at creating viral growth in companies. So by
investing & advising, they've been able to multiply their impact on the world.

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carebuddy
I think many entrepreneurs just don't want to take that high risk of failing
anymore, as with startups the odds are against you. And even if they would
want to, I can imagine successful entrepreneurs have more money then they
would need for a new company, so why wouldn't they want to invest that money
into other startups, a world they understand well?

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deepsun
Because, starting a company, and running it for a long time requires very
different set of skills and mindset. And it's a very different experience, and
people are different.

Also, the most successful entrepreneurs actually continue to create companies,
often in very different areas: Elon Musk, Richard Branson, Martin Varsavsky,
Oleg Tinkov.

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timrosenblatt
Respectfully...

Investing seems like it is fun and easy to a lot of people who haven't done
it. I'm not saying it is or isn't, I'm only saying that there's a _perception_
that it's a fun and easy job. That perception might be right or wrong, and
might not be a simple binary yes/no.

Sure, there are big plusses, and yes you can make a lot of money doing it.
Starting a company is no cakewalk either, and investing is a nice way to get
paid while enjoying the ability to talk to lots of smart folks who educate you
about a broad array of subjects.

It's also not easy. A lot of investment funds fail. Not everyone is enjoyable
to deal with. There are many hard truths.

FWIW I know a VC who left investing to start another company b/c he hated
having to say "no" to so many folks, and to deal with some of the other
pressures in the environment. There are negatives that aren't always obvious.
[http://www.quora.com/Venture-Capital/What-is-the-worst-
part-...](http://www.quora.com/Venture-Capital/What-is-the-worst-part-of-
being-a-VC)

As to your bigger point about the moral and social value of investing -- I
think nearly everyone would agree that religious and community leaders are
more deserving of high praise than a VC. In some cases, people who sweep their
sidewalks might be adding more social value than some investors ;)

That being said, I think it's unfair to paint every investor with the same
brush.

A good VC adds value and helps companies grow and succeed. The jobs created
are good for society. A company like Tesla also serves a bigger good -- moving
us from fossil fuels to renewables is a good thing for society, and capitalism
is an effective tool for pushing that forward. The people who gave Elon Musk
money to make that happen are (indirectly) helping.

Not every company is quite so noble. There are certainly lots of terribly
useless investments -- [http://www.businessinsider.com/a-year-
later-41-million-start...](http://www.businessinsider.com/a-year-
later-41-million-startup-color-has-30000-daily-users-2012-3)

That being said, if we're going to point the finger at the investors, what
should we make of the business people and engineers who work on these
'useless' apps? Are they also profiting from socially useless activities? Is
there no room in human life for entertainment? Is there no value in an app
that makes it easy for families to share special moments with one another?

I think there's a certain amount of acceptance required that not everything in
a society will/can be focused on directly moving that society forward in the
most obvious way, and being ok with that.

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a3voices
The bug is called capitalism. It's an imperfect societal system, but a better
one has never been tested before.

