
VCs Are Just Tired - tempsy
https://techcrunch.com/2020/01/16/vcs-are-just-tired/
======
fludlight
Everyone is tired because they are overworked: engineers, doctors, lawyers,
accountants, bankers, police, cooks, janitors. Long shifts, split shifts, long
commutes, homework, constant interruptions, questionable management practices,
weak labor laws, weak enforcement thereof, asymmetric legal costs, self-
training on your own time, expectations of faster and faster turnaround times,
less and less support staff...

~~~
agumonkey
Who's investigating the reasons behind all the burnout and erosion everywhere
?

~~~
dilap
I think it's just a consequence of a free market/capitalism. Everyone is
competing w/ everyone, so working as hard as possible, to beat the
competition.

Remedies? Either cultural (it just becomes unthinkable to work beyond X,
because that's taboo) or legal (limits on how much you're allowed to work).

~~~
arvinsim
It's also because the productivity gains that we have is captured by
businesses rather than the employees.

Being productive doesn't give you more free time. It just means that you get
more work.

~~~
munificent
_> is captured by businesses rather than the employees._

"Businesses" don't really do much of anything. What you really mean is the
billionaire executives at the top of them.

~~~
seem_2211
Well yes, but the majority of it is captured by the middle class, in the form
of public pensions, 401k's, the stock market etc.

~~~
TuringNYC
How much of the market is actually owned by the middle class? I would say not
much in the US.

See page 44 of the paper below.

You can look at Income, Wealth (net worth) or financial resources. Net Worth
is probably the best estimate. You'll notice the top 1% has ~40% of the
wealth. The next 4% have ~30% of the wealth.

So it would be very inaccurate to suggest that the "majority" of wealth and
upside is accrued to the middle class, at least in the US.

"Household Wealth Trends in the United States, 1962 to 2016: Has Middle Class
Wealth Recovered?" Edward N. Wolff

NBER Working Paper No. 24085 Issued in November 2017
[https://www.nber.org/papers/w24085](https://www.nber.org/papers/w24085)

------
zenincognito
"Lack of bandwidth, hyper-velocity, a pittance of sleep"

If we are just going to put together words to describe concepts that make no
sense then you are probably meeting people that have never made a dollar on
their investment.

Some of the best VCs are original thinkers and will take their time making
investments. The thing about them is that they will be the first to making an
investment in a company even before it has become the hot new thing.

~~~
andrepd
Venture capitalist success is indistinguishable from randomness. It's pure,
unadulterated luck. "The best VCs are thinkers and visionaries" is post-hoc
bullshit justifications to make their wealth seem the result of wits and hard
work, and not just the product of luck + the pre-existing capital to invest.

~~~
barry-cotter
Ron Conway alone disproves your thesis. Some people are just very good. Some
prescriptions are also very good, like Sequoia or Kleiner Perkins. And the
success of the good is not purely Matthew Effect, rich gets richer stuff, as
Andreesen Horowitz shows. If you’re good enough you can go from not a VC firm
to top 5 VC firm in under five years.

~~~
MiroF
In no way do these people disprove the argument or other EMH-like arguments
(efficient market hypothesis).

In many random distributions, if you sample enough you're going to get
outcomes at the tails.

~~~
barry-cotter
That would imply mean reversion. Investors who have been successful in the
past should be no more likely than average to be successful in the future.
That is not what we observe in VC.

------
auston
Can’t help but feel like they could literally just take a trip outside SV and
get:

1\. Easier access to deal flow

2\. Lower valuations

3\. Less competition

If any VCs are interested, HMU I can show you strong deals your peers saw way
before you because they looked @ Miami + deals your peers haven’t seen because
I live here & I am plugged in.

~~~
lazzlazzlazz
I'm a fan of Miami, and I don't mean this as a dig: could you point at some
venture-sized exits from Miami, especially ones that SV VCs seem to have
missed/been late to?

~~~
TuringNYC
That seems like an unfair question -- how can any city be expected to generate
venture sized exits _before the money even rolls in_? SF/SV have generated the
exits they have after decades of continued investment.

~~~
lazzlazzlazz
Maybe you missed my disclaimer. The question wasn't intended as a dig, just a
request for information.

------
pbiggar
This is a great article, especially because the solution is right there in the
text:

> forcing everyone to chase the same set of SaaS companies

> everyone can read the gridiron of SaaS metrics

There was a perfect storm: huge seed rounds leading traditional firms to move
upmarket, VCs raising larger funds and so needing to hit the winners hard,
which caused Series A metrics to swell, and so VCs are all chasing the same
deals.

Of course those deals don't need them: those companies are already winning and
don't need their expertise, just their money, which is commoditized by the
swelling of funds.

The answer is simple: chase less successful. Stop just trying to get into the
big SaaS deals, and target smaller companies, lower metrics, earlier stage
companies.

Of course, if the firm staffed up and raised a larger fund as the article
says, then it may be structurally impossible to survive. Innovator's dilemma
in action.

~~~
ryanSrich
Yeah I generally agree. There’s a lot of risk averse investors it seems. I
don’t have the data so I can’t say for certain, but it feels like VC is just
betting on companies that already have product, revenue, a solid customer
base, and almost zero chance of completely failing.

a16z, benchmark, SV angles (when they were around), etc. only got where they
are by taking massive risk - on founders with no track record and often just a
prototype of demo.

Now, just to get a seed round, you need a fully featured product, with
distribution and revenue.

It just feels like the wonder and risk of creating world changing tech without
worrying about financial outcome is dead. Which, honestly makes sense from an
investment thesis standpoint. You minimize risk by following the leader or
investing later stage. It’s growth equity, not true or traditional VC that
requires a 10x return. Most VCs are happy with 1.5-3x now (relatively happy).

------
brenden2
This is just one person's anecdotal experience.

------
riskneutral
Alarming indicators of an asset class bubble.

------
cityzen
Sure feel sorry for these VCs... hope they get some rest on their piles of
money.

------
throwGuardian
Aren't these the same VCs espousing China style 9:9:6 work hours [1],
promoting myths of 10x-ers who only sleep once a week, and demand from their
portfolio every last breath of effort, or esle ...

Please, apply some of that 9:9:6 to your VC workflow, don't sleep and
definitely try to be a 10-X investor. And definitely turn up the paranoia on
FOMO - not because it yields dividends, but because every VC peaches it, so
practice what you ...

Those Billions won't earn themselves

[1]:
[https://en.m.wikipedia.org/wiki/996_working_hour_system](https://en.m.wikipedia.org/wiki/996_working_hour_system)

------
frostyj
money never sleeps

------
agumonkey
those poor VCs, how can they live on 52M

~~~
brink
You can be rich and miserable.

~~~
agumonkey
True. But I'd rather but sad and wealthy.

------
redis_mlc
Oh my! Collecting that 2/20 while I sleep is sooooo exhausting! /s

~~~
tempsy
if you have a small fund the 2% barely keeps the light on

I see some articles congratulating people who’ve raise $5M funds. If the fee
is 2% you only have $100K to pay yourself and run the business. Not exactly
rolling in dough.

------
save_ferris
I have a really hard empathizing here, VCs in many ways represent the robber
barons of the 21st century.

In WeWork, the world saw a blatant attempt by VCs to dump a severely
overvalued and overhyped company into the public markets so they could cash
out.

In Facebook, we saw VCs fund one of the world’s largest and most successful
surveillance capitalist enterprises, one that still seems to be going strong,
despite the ridiculous number of scandals plaguing Zuckerberg. VCs made him
invincible.

We’re seeing gig economy companies find new and creatively unsavory ways to
screw over their “not workers” (looking at you, GrubHub).

But yeah, screwing over the middle class has to be draining work.

~~~
dang
Please don't post in the flamewar style to Hacker News—not even about VCs.
We're looking for curious conversation here.

[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)

~~~
kev009
Assume for a moment the guy is right by whatever circumstances. There are
three supporting pieces of evidence and perhaps the last sentence is "charged"
but I don't see how it is offensive even if wholly incorrect. How would he
present the very ideas as "curious conversation"?

~~~
tomhoward
“Curious conversation” means working towards understanding, as distinct from
heaping blame.

In all the examples cited, there are many actors and circumstances that have
brought these things about; investors, sure, but also customer demand and
behavior, technological evolution, social and economic factors at micro and
macro scales, and countless millennia of evolution.

Angry scapegoating might be briefly cathartic but doesn’t effect actual
change.

A healthy, curious conversation explores all factors and yields ideas for new
solutions to present day problems.

~~~
kev009
This is like a pharmaceutical company that dumped opioids on the public
through legislature, perverting the medical community, advertising and
reputation saying "well there are many factors and your brain has countless
millennia of evolution to seek out these compounds".

Sorry, I just don't buy it.

People can be wrong, and in fact it is necessary for people to be able to be
wrong and state their case and sometimes emotion without tonal arguments to
dismiss the hardest of questions.

The root of the comment, the curious part, is: are VCs somehow causing
undesirable pathology that leads to their "tiredness"? The moderator happens
to work for a VC. I don't think the parent of this thread makes a compelling
case, but the sentiment is rooted in reality and can be used to start a useful
if uncomfortable discussion.

Perhaps this is not a true intellectual community and I should just leave.

~~~
tomhoward
> _This is like a pharmaceutical company_...

If there was anybody who would be motivated to scapegoat a single actor or
cause for dysfunction in the medical industry it's me.

I've endured debilitating health challenges, including severe pain, for almost
half my life. I've had plenty of time and motivation to research and
contemplate everything that's wrong with the medical system, including corrupt
dealings between pharmaceutical companies, regulators, research institutions
and medical practitioners.

And, much like apportioning blame to VCs, there is some truth to this point of
view.

But it's not the whole story.

At least as significant a factor is that there is a real, legitimate need for
pharmaceutical opioids, and a widespread epidemic of "pain" that is little-
understood by mainstream medical researchers and practitioners, which is
mostly to do with the fact that physiology is extremely complex and still only
partially understood.

Fortunately, I've never had to turn to opioids or other pharmaceuticals to
treat my pain conditions, and after many years of research and
experimentation, have been able to become pain-free via natural - though
unconventional - approaches.

I think it would be great if other people had the access and motivation I've
had to achieve good health, rather than ending up dependent on opioids or
languishing in other ways.

But 10+ years of thinking about it, including plenty of, yes, _curious
conversation_ , has taught me that problems in the medical system can't all be
simplistically blamed on corrupt pharmaceutical companies.

> _tonal arguments to dismiss the hardest of questions_

What "hard questions" was the root commenter raising?

Real "hard questions" involve honestly considering all facets of a topic, and
taking on the responsibility of contributing to the formulation solutions that
are practical and effective.

> _Perhaps this is not a true intellectual community_

In what way was the root comment more "intellectual" than what I'm advocating?

~~~
kev009
Sorry dude I'm not really tracking with you at all. The OP posited some plain
issues that can be dissected and dismissed but was muted by a mod that works
for an organization that benefits from just burying said issues. I lean
conservative and can't really see how anyone in tech says with a straight face
the "gig economy" is good for anybody except the 10^5 or so technical staff
and their management and financiers. A modest understanding of history (i.e.
what technology meant in the 60s and 70s) just leaves me bewildered with what
constitutes tech now, and the flow of money from monetary policy down to banks
and VCs is they main cause of overall stalling out of fundamental, worthwhile,
and simply interesting progress. The cashout culture of things like WeWork is
a totally different dimension of the bizarre and unsavory. VCs should be tired
enabling and propping this farce up.

A desire for intellectualism comes from allowing airtime for ideas that you
disagree with, that might even confront yourself, and maybe even elucidating
and moving the tonal argument you disagree with to the very roots of the
things that need to be discussed and providing ample discourse for the
thoughts to be explored. Whether you are doing this or not I can't really tell
right now, but you are not the target of my comments, the mod mute is. I'm
happy to just go away at this point, this site and surrounding culture has
changed for the worse in the 12 years I've seen.

~~~
tomhoward
This comment is starting to wrestle with the complexities of the topic, which
is great!

Dang's job is to prevent flamewars on this site, and to cultivate intellectual
curiosity.

All he was objecting to in the original comment was that it was of the style
that can spark flamewars.

Ultimately, I think we want the same things.

------
nicoburns
It's almost as if capital is too concentrated, to the point that the people
with who control it don't know what to do with it. Oh wait.

The basis of capitalism is markets, and the wisdom of the crowd (the
"invisible hand") controlling them and making them efficient. VC's (and wealth
concentration in general) are the opposite of that. They are the very-much-
visible hand.

We'd solve this problem with progressive taxation and a basic income (a
healthy side-helping of better funding for public services wouldn't go amiss
either).

IMO, if you believe in free markets, then your position is inconsistent if you
also believe if you also believe in unconstrained wealth collection. Because
once that wealth is concentrated, the market is automatically distorted.

~~~
AnimalMuppet
> IMO, if you believe in free markets, then your position is inconsistent if
> you also believe if you also believe in unconstrained wealth collection.

But if you believe in free markets, then your position is _also_ inconsistent
if you _don 't_ believe in unconstrained wealth collection. Because that's one
of the things that the market sometimes does when it's free.

And I'm sure that someone will say "That means that the idea of a free market
is self-inconsistent, and therefore we should abandon the idea." I think it is
more likely that the logic in the parent's last paragraph is incorrect.
Instead, one has laws to prevent wealth from distorting the market. (Tax the
wealth to extinction is not the only possible form that such laws could take.)

~~~
MiroF
More likely is that there is no objective "free" market. Is it more "free" to
include pricing information from externalities (say with a carbon tax)? Or is
it more "free" when those participating in the market are able to harm me
without my consent through those externalities?

There's no ground standard for non-interference in the affairs of others.

