
On the Fetishism of Capital and Prestige - seanlinehan
http://sorryhumans.com/capital.html?
======
rayiner
> The Valley is not a world run by 20-somethings bringing about the future, it
> is a world run by the same people who run the real world - the financiers.

It's surprising to me that anyone would think otherwise. Weighted for risk,
the winning play in Silicon Valley is not to take a Thiel fellowship and go
found a startup. It's to do what Thiel did--take a pair of prestigious
Stanford degrees into the finance sector. It's the VC's that are the ones
reliably cashing their paychecks.

(This is not a moral judgment about whether this status quo is right or wrong.
I'm long past the point where I see the status quo as anything more than
something that "is.")

~~~
larrys
"It's surprising to me that anyone would think otherwise."

Not really if you think about it. Many experiences from the outside seem like
one thing until you go through them yourselves.

You might think Starbucks is all about coffee "why would anyone pay $4.00 for
a ..." but if you are a frequent Starbucks customer you then realize it's
about a sugar fix, community (if you spend time there and get to know the
regulars), habit and a host of other things you might not realize at the
outset.

New people are introduced to new things all the time with a fresh slate.

I would find it quite surprising for any 17 year old or even a 50 year old who
hasn't paid attention closely to know what the real game is (in anything).

I remember as a young child the shock I had finding out that there were
dishonest policemen or other authority figures who committed crimes.

People get a good chuckle at newbies for sure (laughing nervously because they
were all newbies at one point).

------
birken
As somebody who has gone through a startup that was pre-VC and post-VC, I
assure you we didn't take investment to get written about or be cool. We took
investment because to grow your company beyond the first few people you need
to pay people money. Sometimes certain ideas or opportunities you might want
to invest in cost money. And that is what the VCs provide you, money. Sure, we
could bootstrap and generate the money ourselves, but a) it requires short-
term trade offs and b) its much slower. And slower is a problem because time
is a really limited resource. Opportunity cost for all your employees, time
for competitors to spring up and try to beat you, etc.

VCs are a tool. They allow people like me to have upside while at the same
time make a salary. They allow me to instill confidence in potential
candidates that our business is safe and if they take the job here, the
company will still exist in 5 years. Look, Techcrunch is not an accurate
picture of the valley, I'm not going to dispute that with you. But VCs are not
evil people or a scam. They are a tool that for the right startup, at the
right timing, can be hugely beneficial. It is pretty stupid that the best way
to get written about is to raise funding, but then again getting written about
is so inconsequential to success you can just ignore it. However having
resources to grow and accelerate can be very consequential to success, and you
need to make sure not to confuse the two.

~~~
rayiner
I don't think his argument is that VC's are evil. I think he's just realizing
that VC's run the show in Silicon Valley, in the same way those who hold the
capital run the show in every industry. VC's decide what the industry looks
like, because VC-funded startups have a major competitive advantage over
bootstraped ones. This is true in nearly every industry, by the way. F500
CEO's spend enormous amounts of time obsessing over Wall Street analyst
reports. There is a reason it takes a CEO like Jobs and a company like Apple
to ignore them.

This isn't good or bad, it is just the nature of the world.

~~~
michaelochurch
I actually think Jobs's main accomplishment was to prevent Apple from
developing an Effort Thermocline (the line at which jobs get easier, rather
than harder, with increasing rank). What I've heard about him is that he was
actually a very nice guy to low-level employees, but brutal with executives
(the opposite of the normal company where shit rolls downhill).

VC-istan has managed to put the Effort Thermocline between companies, which is
rather ingenious. Crossing the Thermocline also involves a total change of job
description (from "entrepreneur", by which I mean glorified Product Manager
who serves as middle-management within the VC-istan ecosystem, to
investor/executive).

------
reinhardt
> It was 2010. I was 17 years old (...) and I had found the next Billion
> Dollar Idea.

> It was 2011. I was 18 years old (...) and I had found the next World
> Changing Idea.

> It is 2013. I am 20 years old (...) and I have found the Right Thing for Me.

IOW "this time it's different". Color me skeptical. Looking forward to the
2023 edition or whenever he gets over the Dunning–Kruger effect.

~~~
seanlinehan
Your skepticism is understandable, yet I feel as if you are missing the core
message here. The message here is not about my own journey - my narrative is a
trope for the culture of Silicon Valley. Whether or not I succeed in my
venture is irrelevant to the main point - entrepreneurship is not about
raising money or acquiring fame; it is about building a business.

As much as I appreciate constructive criticism, your implication that I am
suffering from the Dunning-Kruger effect is unwelcome. You know nothing of my
talents nor my mind-state and to infer that the small glimpse of my life I
have provided is representative of my being is naive.

~~~
npc
I'm going to try to be nice and give you some advice: don't write like that.
Constructing these overwrought sentences with the dashes and the semicolons
and the vocabulary and whatnot just makes you look like an insecure sophomore
trying to cover up inexperience with excessive verbiage. Which is probably
accurate, but oh well. The purpose of writing isn't to make you look smart,
it's to communicate your thoughts clearly and convincingly, and writing to
show off all your fancy college-boy book lernin' is just going to antagonize
your audience. You're still in school, my advice is to take a writing course
and listen to what they say.

~~~
seanlinehan
Thanks. I switch between being overly concise and overly verbose. Today is an
overly verbose day. I'm working on finding a cool median.

~~~
LowKarmaAccount
'Over' is already an adverb. If you want to modify a word with 'over', combine
the two words or use a hyphen, as in 'over-concise'. Although 'overly' is now
common usage, it is still looked down upon by the literati.

There is nothing wrong with using dashes, but if you do, use the correct dash.
The em dash is U+2014. If you cannot type an em dash, the custom is to use two
en dashes.

------
bdcravens
So the "businesses" you looked at when you were 17 and 18, did you actually do
any development on them? Or by "not going anywhere", do you mean you never
crossed the first hurdles (financing, media exposure, etc)? I'm fascinated by
the idea that you can build million dollar ideas while dealing with the
demands of school and (presumably) a social life.

I wonder if having a third business by age 20 leads to ADD-driven
Entrepreneurship. Not to knock your age, but you can't ignore the truth that
your longest "project" has probably lasted a semester. The full experience of
high school, which surely feels like an eternity (I know it did to me at that
age, as it represented 20% of my life span!), is less time than it took for
some of the most successful businesses to attain profitability.

So what's your timespan for success? I guess I question the ability to even
have the perspective to drive not only product development, but the business
development it takes to bring a company to profitability at your level of life
experience.

~~~
seanlinehan
I did some development work on the first idea but didn't get funding or media
attention before a founder breakup. For the second idea I was even worse - I
decided not to even attempt to build the project unless I got YC. This sounds
ridiculous, but this story is so incredibly common. I talk to my peers and I
read posts about people who completely abandon their projects the moment they
fail to get into YC or [name incubator]. As if these fellas are legitimate
gate holders.

I am admittedly fickle when it comes to startup ideas, but I must make it
clear that these were not my only projects - they were the projects that I
modeled my understanding of entrepreneurship on. I was the Director of
Technology at Modify Watches [1] for two years and helped grow that business
with the team to a pretty healthy size. I also created a coupon site that was
generating about a thousands bucks a month semi-automatically which I ran for
two years. These just weren't Silicon Valley opportunities... I wasn't at the
helm.

My timespan for success is completely dependent on which level of success I'm
looking at. With my current business, I consider the fact that I wrote
software which generated revenue within an hour of turning it on to be a
pretty huge success. In terms of how long I expect it to take to make the Big
Bucks, I am completely realistic that this doesn't happen overnight. I plan to
be in this company for the long haul.

Although I do not have the life experience of an older gentlemen, I would
posit that my experience is light-years ahead of people who are my age. [1]
I've literally been running companies or been deeply involved in them almost
non-stop since I was 13 years old. I have real, executional experience and
textbook knowledge from my Berkeley education. Not to mention, this company is
not a company of one... Anywhere my team and I need help, I'm exciting to
bring on somebody who does have the life experience.

I really appreciate your perspective. I love a bit a constructive criticism /
interrogation... It helps with introspection!

[0] <http://www.modifywatches.com/>

[1] Not necessarily light-years ahead of other 20-year old entrepreneurs, but
of the 20-year old public at large.

~~~
derefr
> I talk to my peers and I read posts about people who completely abandon
> their projects the moment they fail to get into YC or [name incubator].

Yeesh. As someone who's currently bootstrapping a lifestyle business, this
point of view seems downright toxic to me. If you _really_ believe in your
company (and its product-market fit), then giving away equity (and control!)
should be an absolute last resort, not something to be sought out. Better to
work on your business as a side-project for months of alternating consulting
gigs and destitution.

~~~
larrys
"then giving away equity (and control!) should be an absolute last resort"

You are focusing on the down side and not the upside of taking money.

As well as the upside to having to not give up any control or equity vs. the
downside to trying to do it without that money. And totally underestimating
what you can do with a shit load of money vs. what you can't do.

~~~
derefr
Note that I said "lifestyle business", not "startup." I can't think of
anything outweighing the downside of losing the ability to have my business as
an extension of my own life, perfectly meshing into my own desires. If I had
fuck-you money[1], all I'd do with it is... start this business.

I hope to still be running it in 40 years--and imagining someone having the
power to _force me to do something I don't want to do with my own company_ ,
even after I've put in 40 years of effort into it... well. This is why I would
recommend just taking on loans/debt first: when your company grows, you'll pay
off debts (and when your company fails bankruptcy/liquidation will still make
them go away), but equity is a loan that gets harder and harder to pay out the
bigger your company gets.

Of course, this is all assuming you're taking investment from someone whose
utility function doesn't match your own (usually in that you care more about
the business, and they care more about the money.) I would gladly put in with
some people--but those are _cofounders_ , not investors.

\---

[1] But really, I don't think I need fuck-you money--I've planned the business
in stages (pre-set pivots), where each stage targets a market of appropriate
size and entrenchment to fund the next stage (tackle B2B when small, B2C when
huge, basically.) In effect, I'm just planning to be my _own_ investor. :)

~~~
larrys
That's fine. Please keep in mind though that investors are only one of a group
of many people that you have to bogu for ("bend over, grease up"). There are
also customers (major and minor), employees, partners (if any) landlords,
spouses, kids etc. Agree that not having investors is certainly one less to
deal with though.

Even on the issues of "customers" that can be granular. Do you have a bunch of
small customers who don't know about each other? Or a bunch of small customers
that do know about each other (and can create a problem for you if you don't
beat to their drum?). Do you have the type of business (not you but anyone
reading this) that has a concentration of business with 3 large customers and
if any of them left you'd have a big problem? Do you have someone who owes you
money, won't pay (a big sum of money) and you have sleepless nights?

"and when your company fails bankruptcy/liquidation will still make them go
away"

I come from a time and place where failure like that was viewed differently.
It would not be as easy for me to do that and not have it bother me. That said
it's not a bad mindset if it doesn't have the same impact on you (you're lucky
it's really hard to un-ring that bell).

------
pmarca
Man, now I feel really bad for exploiting all those 20 year old Stanford and
Berkeley kids by handing them millions of dollars to see if they can get their
ideas to work.

From now on, y'all are on your own -- good luck!

~~~
ucee054
You're not _handing_ them money jackass, you're _loaning_ it to them, and
you're being very well paid for it - ROI waaay above market rate, if you
realize that market rate means the junk bond rate.

"Handing" it to them would be if you didn't get equity or anything else in
return.

~~~
staunch
In no way is VC a loan. It's an investment. A bet.

(Ignoring the use of convertible debt, which is really just a hack to benefit
everyone).

~~~
ucee054
Don't work in finance. You'll lose a ton of money if you try.

------
nnethercote
Don't read TechCrunch. It's a cesspit of hype and sensationalism. Any plan
which involves "get on the front page of TechCrunch" is a horrible plan, IMO.

I still occasionally look at TechCrunch, mostly because it's a good test site
for browsers (because it's really memory-hungry). And every time I get sucked
into reading an article, I inevitably end up feeling dirty. It's similar to
how I feel after reading the covers of the gossip magazines when I'm waiting
in line at the supermarket.

------
dgreensp
Yes, taking VC money is a double-edged sword; that's basically the long and
the short of it. However, it's a great thing that investors will line up to
throw millions at a nascent tech start-up, especially if you want to spend
your life building big companies.

VCs obviously have a lot of power and influence in the Valley because many
businesses need a big chunk of start-up capital and they have it, and they own
fractions of many companies and sit on boards. The fact that they are
influential isn't a reason _not_ to associate with them.

Bootstrapping your business and paying your engineers' salaries out of your
revenue rather than investment is admirable. I'd like to try it sometime.

The main thing to recognize is that when you take money from investors, _you_
are claiming the business is a good business. Successful fund-raising is not
derisking, it is you explaining the risk and why you will succeed.

------
gnosis
_I have found some of the best reasons I ever had for remaining at the bottom
simply by looking at the men at the top._

\- Frank Moore Colby

------
hkmurakami
It goes without saying on HN that not playing the VC-driven-startup game is
the tougher road of the two options. That being said I have the utmost
admiration and respect for those who are working hard to give us a more role
models to follow in this mold.

\----

Btw completely off topic, but the red square on white background design
immediately evoked images of Campbell soup in me, at which point I realized
the magnitude and importance of their branding and visual identity.

~~~
saraid216
> It goes without saying on HN that not playing the VC-driven-startup game is
> the tougher road of the two options.

Tougher how? There's no way I could start a company if I was resigned to the
fact that I'd have to be selling myself to financiers constantly. To me,
running off my own cash is easier and saner.

------
damonpace
A VC fundable startup is one in which you KNOW you can turn $1 into $20. Once
you figure out how to do this, you will want as much money as possible to make
that happen as many times as you can. That's when VC's are needed. You take VC
money for growth, not for ideation or market validation. Before you find your
business model you should stick to bootstrapping, angel investing and just
keep iterating until you figure it all out.

------
Connaissance
As a 20 year old, maybe you should avoid writing such pompous and definitive
posts and write with more humility, or indeed not at all (for now).

------
scottporad
Smart kid. It took me 20 years to figure this out.

------
rohunati
Some of the comments here a bit disconcerting. This is just a critique of the
mentality that many aspiring entrepreneurs unknowingly engage in. It's not
really an indictment of venture cap.

Also, discussing what nobody wants to hear and pointing out our deeply rooted
assumptions is definitely a good thing. Sad that some people seem to get so
defensive about such things.

------
aadamov
High on emotions. Low on facts and ideas.

~~~
seanlinehan
I don't write much. If you have concrete feedback, I'd appreciate the
commentary!

------
javajosh
Make things people want to buy, and you will be wildly successful.

------
zacharyvoase
Note to the author: your Twitter account doesn't seem to exist?

~~~
seanlinehan
Thanks! Fixed.

------
michaelochurch
I'm not going to join the douche-pile of people attacking the OP because of
his age. I admire his courage.

OP is literally sophomoric. He's beginning to realize that "tech" (meaning VC-
istan) isn't a meritocracy, and this is a really hard realization. This is
that stage where you hate something but don't know _why_ you hate it, and
every time you speak out against something, people tear you down because you
haven't figured out exactly what is wrong with it (much less how to fix it).
You might complain about "politics" without having new insight into what makes
various environments political.

I hate VC-istan and I have good reasons for it. I don't hate VCs-- not
individually, and not conceptually. I don't hate every VC-funded company, of
course; there are good ones, I'd probably raise VC (as horrible as it is) if I
were in that space. I just hate the ecosystem and its _anti_ -technical, 17th-
century reputation economy that is ripe for extortion. (The reason multiple
liquidation preferences, participating preferred, and entrepreneur payment of
VC legal fees exist is professional extortion via social proof; the VC knows
he can pick up a phone and rape your shit for breakfast.) I hate that it
encourages people to build horrible companies that destroy young peoples'
careers. It's ridiculous how a bad implementation of something very old
(patronage) can be dressed up as innovative and new.

OP isn't there yet on his knowledge of the _why_ , so his knowledge seems
superficial. He'll get there, and he probably understands more than he can
articulate right now.

