

Never Hate. Only Ever Destroy. - baha_man
http://gilesbowkett.blogspot.com/2008/05/never-hate-only-ever-destroy.html

======
maxklein
This is how I see it: The startup scene is like a big mall where one quarter
have shops selling stuff that people are looking for, and the other 3/4 are
borrowing money to buy lottery tickets. Every now and then, one of them will
win the lottery, driving the others into an even greater frenzy.

And people like Arrington and Graham are on the sidelines with megaphones
cheering on the lottery ticket buyers because, it turns out, they are earning
a 6% cut on ticket sales.

~~~
pg
YC only benefits from a small percentage of startups. The rest on average
_decrease_ our returns, because some compete with the ones we fund.

~~~
brlewis
It seems like a lot of YC startups have more partners than competitors, but
maybe those are just the ones most visible to me, e.g. disqus, clickpass,
tipjoy. Snipshot, one with a lot of competition, still has more than twice as
many partners as competitors. The only YC company I know of that was stopped
by competition was Kiko, and its competition was not a small startup.

~~~
pg
Nearly all have competitors. Plus any startup trying to raise money has to
compete with pretty much every other startup currently trying to.

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goodgoblin
I like the post - loved the presentation as well - the longest presentation
that I have ever sat through on the web.

I realize his arguments are sort of drummed up for effect, but I thought the
analogy between VC and patronage was weak. Its true they were both systems
whereby rich people would pay talented poorer people to make things for them,
but the further connection - the reason for the payments and the building,
doesn't hold up. Do VC's really want to build companies to feel good about
themselves, or to show off, or to look better? Only if those companies make
money. Pets.com was a stupid idea and if anything the VCs that invested in it
have probably never lived it down. Not too successful as a vanity project.
Also, the VCs aren't investing their own money, so they are responsible to do
more than look good, while those whose actual cash is invested (angel's aside)
aren't well known - nor do they appear to seek out reknown.

Anyway - I figure this wasn't a legal case he was pleading, just my .02

~~~
raganwald
"Do VC's really want to build companies to feel good about themselves, or to
show off, or to look better? Only if those companies make money."

I think you misunderstand the VC business. They charge a fee for managing
money. Therefore, their business is attracting investment. This is exactly how
mutual funds operate as well.

Now, they stand to make money when their funds make money through various
incentives and so forth. But by far the biggest incentive is that if they have
a home run, they get more money invested, which means more management fees.

So aren't they incented to make money for their investors?

Not really: if they have a string of modest investments, averaging out to
making money, they will not attract a lot of capital: the money will flow to
the VCs that have name brand hits.

Whereas if they have a ton of total and otherwise embarrassing failures but
hit one out of the park, they will get a ton of new money when they start
another fund.

Or if their portfolio companies are the darlings of the press, they will get a
ton of new money when they start another fund

So...

Their strongest incentives are to own companies that get a lot of press and
hopefully get a few really press-worthy hits.

That is a lot like patronage to me.

~~~
jcl
I have to agree with goodgoblin: VC is not quite like patronage.

Patronage is gift culture; its message is: "Look how much I can afford to give
away!" A patron patronizes something not merely with a risk of losing money --
losing money is the expectation and practically the goal. VCs, on the other
hand, invest in something with the hope that they will eventually have more
money than they started with.

You point out that ambitious VCs will invest in riskier propositions to
increase their chances of a big hit. But their motivation for doing this is so
that the big hit draws more money for the next round. This feedback loop
(money -> fame -> more money -> more fame) is not present in patronage,
because a patron's fame is not expected to lead to significantly more money.

~~~
raganwald
There is room for both of the expressions "a lot like patronage" and "not
quite like patronage" to be true.

The big question about using patronage as a metaphor is whether discussing the
ways in which Venture Capitalism 'is' and 'is not' like Patronage leads to
greater insight.

What do you think?

~~~
jcl
You are correct -- the insight is what matters. But in this case, I do not
think the patronage analogy is helping.

Giles brings up patronage as an explanation for why VCs -- who are otherwise
interested in money -- are not interested in hearing about a profitable
microloan business. From the patronage analogy he gathers that they are more
interested in power than money, hence their class hierarchy and why microloans
are beneath them.

I feel the patronage analogy misses the point because it implies that VCs are
somehow not interested in profit. If you follow this logic through, you'd
conclude that startups are profit-losing ventures kept alive only for the
power trips of VCs. While this may be true in a few cases, I think it is an
incorrect conclusion, since VCs _are_ interested in profit (or, at least,
their investors are), and there is apparently enough return in startups that
investors do not go elsewhere.

There is a simpler explanation for why VCs are not interested in microloans:
it is far enough out of their geographic and technical areas that they don't
think they could do very well at it.

------
davidmathers
When he brought up Grameen Bank as the kind of thing that TechCrunch wouldn't
bother reporting on I became incredulous and thought "um, Kiva?" So I went to
techcrunch.com to find their post on Kiva. Which doesn't exist. Not only have
they never written directly about Kiva but when they mention it they
characterize it as a p2p-lending site rather than as a microfinance
organization.

~~~
davidmathers
omfg. This is from the CrunchBase description of Kiva:

"Kiva is alone in their business model of online p2p lending to entrepreneurs
in developing countries as a nonprofit entity. Other p2p lending sites, like
Prosper, Zopa and Lending Club, make lower-risk loans to people in the same
country as for-profit entities. Online p2p lending is new and it is hard to
maneuver around financial regulations to make higher-risk, international loans
as a for-profit entity, which is partly why Kiva formed as a non-profit."

Looks like these "new jounalists" could learn a bit from the New York Times:
[http://www.nytimes.com/2006/12/10/magazine/10section4.t-6.ht...](http://www.nytimes.com/2006/12/10/magazine/10section4.t-6.html)

------
deathbyzen
Dead insightful and well put. About the only thing I read TechCrunch for is to
get invites to beta start-ups. I don't care about MA's perspective on Silicon
Valley.

~~~
rudyfink
I agree. It could be a false perception, but it seems there used to be a far
greater amount of start-up reviews. What was a great way to discover new and
interesting products/services seems to have changed into editorial on the
valley, technology issues, and financials.

I liked this when it started, as it was a little bit of the "behind the
scenes" of the products/services I liked learning about. I think it has since
gotten a bit out of hand.

------
Lagged2Death
The fact that a person's name often makes a lousy search term is the very
reason we have brands and branding, it's one of the reasons internet semi-
anonymity or pseudonymhood can be so interesting and useful, and it's one
reason to question the future of businesses that assume we all wish to
consolidate the shards of our multifaceted online identities.

------
josefresco
"you ridiculous MBA-having suit-wearing dumber-than-a-monkey Friends-episode-
reject J-Crew-catalog muppetfuckers.... you scum-gobbling weasel-brained
magic-eight-ball-flipping clueless fucking nimrods."

Funniest thing I've read all week.

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GHFigs
Indeed. The primary metric by which bloggers are judged is popularity, which
we long ago dismissed as being a terrible measure of value. Popular books,
popular music, popular movies, popular television -- these are rarely our best
works.

It's as though we've forgotten this on the web though, and re-instituted a
hierarchy of who matters that is based on meticulously engineered stacks of
grade-A bullshit, which, surprise, surprise, favors peddlers of distraction
and get-rich-quick schemes of all sorts. We've replaced "Old Media" with
"Tomorrow's Old Media".

Technorati even equates machine-estimated popularity with "Authority", a
dangerously loaded word and wholly inaccurate besides. Certainly popularity
means _something_ , but it doesn't say much at all about whether any person,
even someone in the ostensible target audience, should pay any attention at
all.

~~~
blang
Although, don't we sometimes unfairly criticize entities that are popular only
because they are popular?
[http://stuffwhitepeoplelike.wordpress.com/2008/01/30/40-indi...](http://stuffwhitepeoplelike.wordpress.com/2008/01/30/40-indie-
music/)

------
tx
Did you watch the video of his presentation? (the link is at the bottom of the
article). Very entertaining.

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jrockway
Good article, but why does he take screenshots of his email and attach them to
the post instead of just cutting and pasting the text into the post?

I personally have no trouble reading it, but pictures of text are not very
easy to read for some people.

~~~
giles_bowkett
I like the pretty colors.

Also, Blogger is fucking evil, and it eats the > from quoting e-mails, which
sometimes is a very time-consuming bug.

By the way mad apologies but I'm actually banning my own blog from my view of
Hacker News, using a Greasemonkey script in Firefox. I would seriously kill
people to defend my right to post gifs instead of cutting and pasting text,
even though I realize it's ridiculous. Reasonable people can disagree, but for
the rest of us, there's Greasemonkey.

~~~
olefoo
Congratulations on pointing out the emperor's lack of clothing.

I have a question for you. If the VCs are the Medicis of the modern age what
would our Da Vinci look like? Or our Michelangelo?

How would we recognize greatness amongst us?

~~~
anamax
Were they recognized at the time?

Michelangelo did get one of the most prestigous jobs of his time, but what
about the rest of the now-recognized great artists - were they more popular
than the hacks of their day?

------
TrevorJ
From the outside, all the infighting makes the blogging scene feel like high
school again.

------
menloparkbum
I didn't understand what this was about. Cory Doctorow and TechCrunch are bad,
because TechCrunch doesn't like Rails and never wrote about Grameen Bank? plz
advise.

