This is exactly the reason Technorati is finding it hard to sell, whereas MyBlogLog got sold within no time and Newroo even before they could launch the product.
I don't think I've read a funnier paragraph about venture investing. Brilliant observation.
This is actually why I left reddit. As the site grew, I became increasingly frustrated that anything I said contrary to popular opinion was mercilessly downvoted & derided, regardless of the actual quality of the comment.
Reddit now cultivates one set of values & opinions. Anyone who disagrees is hounded & ridiculed until they leave.
I hadn't noticed this. In fact, I noticed the opposite -- that well-articulated comments taking controversial views still got upvoted. It was just a stricter quality filter. And anyway, it's easy to take advantage of reddit's predilections. A while ago, I read a great George Will column, and thought it deserved to be reddited. My headline was something like "Notorious Neocon George Will actually believes that..."
I left because it was getting boring and homogeneous.
That's why a possibility of being downvoted never stopped me from commenting, be it reddit, slashdot, or YCnews.
One lesson that I learned from reddit in particular, is that if you are interested in the topic, you should read all comments, all the way down the page, because there might be something there, in the negative karma area.
This is already how it works in open source even if there isn't an explicit karma value. If good developpers and contributors are detected they may get an offer for a payed mission on the project or even better a permanent job.
PG said for instance that a good karma could catch their attention. Some sort of benefit to getting a good karma.
It is preferable that karma benefit are not made public and taken for granted otherwise the system could be perverted.
That's why I think there are two types of winners in this game: those with good implicit ranking mechanisms (Google, Flickr) and those with good human moderation (Slashdot). Those based on explicit voting are taking the risk of being taken down by broad and unfocused masses.
Two, you could have interesting comments, based on people voting them up or down, and their replies.
Also you could do some kind of geomtric progression instead of linear, or combine that with the voter's own karma.
 And a user's incentive to join correlates with the average desirability of other users, in terms of whatever the network focuses on. Link-finding ability for reddit, popularity for Facebook/Myspace, sexual attractiveness for dating sites, disposable income for business networking sites, etc.
What you said (and what you usually says) is right from the point of view of a person non really interested in the quality of other people's life.
Is quite obvious to see that the world is producing a lot more than before and that the difference between poor and rich is becoming wider (in USA, your country, more than in Europe, but we are copying you in this too...): the question is not if they were paid more than they were entitled for, and now their price is "the right one".
The question is: which kind of society are we building? Which kind of countries are we shaping? Which world we want to live in? A world made of people who can stand, one beside the other, without slave (official or unofficial...).
You want a society where the stronger eats the weaker. It's not the world I want.
I don't want to earn so much, it's not there happiness. Is not buying things that brings happiness: I'd rather prefer a society where the state take part of the resources to take care of people that are lessa ble or lucky or whatever...
I want a better Atene not a better Sparta. And if you have studied philosophy (that you wrong said not teaching nothing to people...very unlucky words) you would had known that no society can resists in such a disparity. You know history better than me: our time, in the west, is not so full of revolutions, but just few years ago we were killing each others...remember that if you push someone's shoulders against a wall, you force him to fight or die.
The solution is to drain the company. The VCs install executives they owe favors to, at massively inflated salaries. They make the company hand over millions to "market research" and outsourced marketing companies. They make the company sign big service and equipment contracts. Each of these deals means a kickback or a favor owed. Best of all is if the money goes to one of the properties not being drained, or somebody the VC owes, or personally owns stock in.
It's no accident so many companies folded after buying unnecessary enterprise-grade Oracle and Vignette licenses.
I mean, other than the fact you'd have to talk someone into giving you that loan at a reasonable interest rate. Talking investors into giving you the money as a bet for an astronomical interest rate would be easier for companies with no collateral. Still, if you have a revenue stream and can show how a capital expenditure would increase it, it would at least be worth considering.
I will think more on your points..
and a very cool article. great points.
"Let you run the company" ? Surely a single round of funding doesn't take majority ownership from the founders?
In some cases this will flat out be a condition of investment, so it is agreed on in advance. If you are really anxious to close the deal it is easy to see why you might agree.
In other cases the composition of the board might be such that a majority might vote for a CEO change. This can be the case when, in addition to the founders and the VCs on the board, there are "independent" directors who might vote with the VCs. If the independents+VCs is greater than 50% of the board, they can usually make a change of CEO.
If the VC does not have 50%, but no individual founder does either, it is possible for the VCs to convince some of the non-CEO founders that it would make sense to bring on "professional" management to increase the possibility of success. Particularly if the founders have some disagreements, this can be tempting.
One other thing that can happen is that as a company goes out to pursue additional rounds of financing, the existing VCs can use that process as leverage to force a change. For example, if they say that they won't invest their pro-rata share in a new round, that can often be a warning sign to other investors. So, the VC might threaten to withhold that investment to convince the CEO to step down.
Majority ownership means a lot, but it is not everything.
I am reading all articles one by one for last 6 hours.
And I will continue doing so. Because everything I find here so right and complete.
thanks a lot...
note: i'm one of a small group of ex-geek angel investors out here in silicon valley, altho admittedly i'm small fry compared to most others. i've done 5-6 deals averaging ~$25-50K, and only because i'm crazy and my wife isn't watching too closely ;) i was fortunate to be at PayPal from 2001-2004, but not so early that i'm rich enough to retire just yet... maybe someday.
enjoyed the article; keep up the great writing!
- dave mcclure
however in Silicon Valley or New York, probably more like $10-20M.
(note: in some beach towns in thailand or se asia, FU money can be had for under $1M... maybe even a few hundred thou).
still working on mine, btw ;)
- dave mc