

An Engineer's View of Venture Capitalists - jdale27
http://www.flownet.com/gat/eng-vc.html

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amohr
"If you are a qualified investor, participate in start-ups as an "angel"
investor."

Couldn't agree more!

 _holds out hands expectantly_

~~~
jgrahamc
What's your start-up and how much are you looking for?

~~~
amohr
It's a social media player and, as far as money goes, we're trying to pound
that out: basically food/shelter/bandwidth/coffee for 3 or so. Our current
calculations say around 20k maybe to get from where we're at to series A (that
is if we were to do that at the end of the summer) any questions,
brnlligtsmehi (at) gmail

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bayareaguy
Modified: 31 August 2001 - his recommendations at the end seem in tune with
some of the ideas behind YC. I wonder if he ever read pg's essays.

Nick is a great "rabble rouser". I remember when he got all the pro-RISC
professors at UC Berkeley mad at him by arguing RISC vs CISC was unimportant
because modern CISC chips translated CISC to RISC internally.

~~~
rams
"his recommendations at the end seem in tune with some of the ideas behind YC"

My thoughts exactly. Sure hope the YC guys become rich enough to fund people
beyond a couple of months. Right now their main value seems to be in the
connections they create for you.

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thorax
This is a great read.

Any VCs around who want to defend themselves? I think this just convinced me
to self-fund or engineer-fund every venture I plan. (Surely doesn't hurt VCs,
because someone else will be in line.)

~~~
NSX2
I can't begin to express how true this article is. I was once a naive, yet
optimistic 24 year old who spilled his guts to a reasonably prominent EIR at
what was then a top-flight VC firm in the area. I started suspecting something
was wrong when I would get invited to their super-fancy digs (receptionist had
3 20-inch IBM flatscreen back when a 20-inch flatscreen actually almost cost
$20k, the board room had 30 Aeron chairs, etc.), yet curiously enough never
while anybody else was there, and would always be grilled for my 2 years of
research findings, but after they "sucked out all my ideas" I couldn't seem to
get any call-backs.

Tried another startup a year later and got sued by the EIR who claimed at
first that our ideas were very similar ... then so similar that in fact he
thought I "stole" what he saw as "his" idea.

I couldn't believe the nerve, and yet there they were, grown men twice my age
who made million screwing me over without a second thought about all the crap
they pay lip service to on their websites (ie, "Our reputations mean
everything to us" and "Our honesty is the basis of our credibility") and all
sorts of other mumbo jumo.

IN CONCLUSION: By all means keep at it, but be very, very careful - if they
screw up they're still VC partners or EIRs, but you're done for at least that
idea.

~~~
daniel-cussen
Have you talked names on The Funded?

~~~
NSX2
This was way, way before the Funded came out. And while it would be nice to
add my two cents in, (a) the VCs themselves never actually did anything
unethical, they just used the EIR as a proxy, so they can always shrug it off
like, "It wasn't OUR fault - we had a "rogue" EIR who did things his own way
... and (b) I've had enough years of ruminating and one day decided to put the
past behind me lest I become a bitter old man in my late 20s/Early 30s.

This article just struck a nerve and I wanted to add my 2 cents ...

That's why I get miffed whenever I hear talk of "ideas are nothing, it's all
in the execution" because I couldn't help but think that those two EIRs
weren't executing jack-sh@# before I told them the idea and HOW to execute
better than anybody else could, what to do when you had duplicators, etc.

Never mind me, I'm just a rampbling, bitter old man in a young man's body ...

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Prrometheus
The problem is that the nerds have no interest in doing the work involved in
running a VC. Your Sergei’s, Larry’s, and Bill’s all seem to prefer
philanthropy to investing.

PG is an obvious exception, though by all accounts it seems as if his YC
commitments still allow him to do nerdy stuff.

~~~
greendestiny
Plenty of nerds are angel investors. Generally VC's are big funds of other
peoples money and their job, or the firms, is in large part selling their fund
to investors - I think geeks generally want make to their own companies if
they don't have money or invest in other companies if they do.

~~~
NSX2
Why does it have to be "nerds" ... why can't it be anybody that was a
succesful entrepreneur and either got screwed by financial types or found a
way to do it without financial types.

Let's not alienate anybody. For all you know there might be some guy who made
a fortune in something mundane and may want to invest in promising young
people and he's reading this and thinking, "Oh, I see, they only want money
from "nerds" with engineering degrees ... guess my money's not good enough for
them."

Personally I'd take money from anybody who made it any way other than as a
result of hurting someone in the process and could care less about their
"pedigree" or "nerd-factor" ... the fact that they may have made it without
the advantages of a masters from MIT just tells me they have THAT MUCH MORE
streetsmarts to compensate ...

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comatose_kid
I remember reading this article a while ago. It's a good one. Nick invented
the 68000 architecture IIRC.

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rams
It's probably one of the best posts about VCs. Very few people understand the
Ivy leaguish, closed nature of the VC old boys network.

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qaexl
I found this at Joel's Reddit:
[http://angryaussie.wordpress.com/2008/01/31/dealing-with-
the...](http://angryaussie.wordpress.com/2008/01/31/dealing-with-the-office-
psycho/)

It lead me to this FastCompany Article:
[http://www.fastcompany.com/magazine/96/open_boss.html?page=0...](http://www.fastcompany.com/magazine/96/open_boss.html?page=0%2C1)

There's a particular part mentioned on the second page of that article: "And
this summer, together with New York industrial psychologist Paul Babiak, Hare
begins marketing the B-Scan, a personality test that companies can use to spot
job candidates who may have an MBA but lack a conscience."

... This is going off-tangent, but what do you think? Higher percentage of VCs
who would be rated as moderately psychopathic or antisocial?
<http://news.ycombinator.com/item?id=114422>

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jmtulloss
I can see a certain appeal to a VC over an angel. There are a lot of pieces
that a company that is growing quickly needs to take care of, and most
engineers don't have the expertise to do so. If a business explodes and
suddenly finds itself in need of legal, accounting, marketing, and HR
departments, how is one of the guys still hacking on the project going to put
all that together? I suppose if he's motivated a smart guy could make it
happen, but I think most engineers would want somebody to handle all that so
they could keep hacking.

At the same time, I don't want to deal with anything described in that essay.
If I can find it, I'll take the angel funding until I absolutely cannot
continue without professional help and my angel can't provide it.

~~~
NSX2
Don't fall for this trick! Just because you have no idea how to do those
things, don't fall into the trap of assuming that a V.C. does know how to do
them / is willing to roll up his sleeves and do the hard work. Most VCs,
despite constant blogging of how many hours they work, are actually quite lazy
and allergic to work.

Actually, though they'll never tell you, and often say the opposite on their
websites, VCs view big time involvement in your day to day business as a sign
of trouble - ideally they want to sit on their rear ends, visit you once a
month and tell you to "optimize the radical paradigm shift" then go home and
write a blog about their value added and entrepreneurs should be grateful they
have VCs telling them how to do such things.

When they actually do have to get involved, they'll do so as the article
suggests and "punish you" by shoving "their team" in your startup with a "see
what you made me do? See what happens when you make me break a sweat?"
attitude.

IN CONCLUSION: Just because you don't know it, doesn't mean you should assume
that some smug, confident-looking guy sitting across the table from you (the
VC) DOES know how to do it. For all you know he might be as clueless as you.

There was an awesome article on this subject from about 10 years ago called
something like, "The pussification of silicon valley"

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asdflkj
This was written in year 2000, it seems. Haven't some things changed since
then? This

 _The VC's CEO gets 10 percent of the company. VC-placed board members get 1
percent each. Your entire technical team gets as much as 15 percent. Venture
firms get the rest._

is no longer true, is it?

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skmurphy
This is actually available here <http://ycombinator.com/tredennick.html>

It's a great article that came out in the Sep 2001 Spectrum (on-line edition).

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motoko
So if being a Venture Capitalist means being rich, and the goal of a startup
is to get rich, how does one skip the hard startup part and become a Venture
Capitalist?

~~~
NSX2
Actually most VCs are nowhere near what you would think of as "rich" ... they
just have use of fancy offices paid for by the fund, lease a fancy car paid
for by their 2-300k saleries, etc. - it's designed to give anybody talking to
them the impression that "they don't need you" and you're lucky to be
breathing the same air they are.

On the other hand I've formed some friendships with a few high placed people
in a large company here and there, and they assure me that pretensions aside,
VCs usually spend most of their time calling contacts in the corporate world
begging for deal flow.

Most VC is just bluff.

