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One of Silicon Valley's Most Esteemed VCs Says Startups Are 'Mostly Crap' (vanityfair.com)
An anonymous reader cites an article on VanityFair: Former Facebook employee Chamath Palihapitiya won't pull punches when it comes to lame tech companies. Palihapitiya's firm, Social Capital, has backed numerous tech companies with valuations in the billions, such as Slack, Box, and SurveyMonkey. But that doesn't mean that he is bullish on unicorn culture. He says "Most of those businesses are fundamentally not good, they're poorly run, and they never should have been invested in in the first place. But the capital came in because the person who had control of the capital was able to justify it intellectually to themselves versus something else that could have become the next Facebook or Google. [...] The reality is, great companies can go public in any market. When we talk about the I.P.O. slowdowns what we're really saying is that there really just aren't that many good companies being built. We need to divorce ourselves from venture capital as an occupation and focus on using capital as a way to take really big bets on things that just seem totally audacious. Right now we haven't done enough of that, and the result is that most of the things we've funded are mostly crap and largely worthless."
Something's wrong here, but I can't quite put my finger on it.
Everything must seem like crap! My GOD what were her parents thinking?
duh.
It's a bubble, and now it's deflating because, like the mortgage-backed certificates, the underlying assets are crap.
"Transparent" is a shit show that trades on every stereotype going. A man in drag is NOT a transsexual.
Then he announced his plans for a revolutionary type of new instant messaging/social dating app?
Didn't Sturgeon already tell us this 75 years ago? Ninety percent of everything is crap, including VC's.
We hope your rules and wisdom choke you / Now we are one in everlasting peace
Most business ideas throughout all of history have been shit, news at 11.
Someone who made a ton of money from investing in something worthless is telling the rest of us we shouldn't invest in things that are worthless? Sure thing.
Damn_registrars has no butt-hole. Damn_registrars has no use for a butt-hole.
Look, the numbers for new businesses are always crap - that's why you get the high returns.
For every 10 businesses you start, seven go out of business in the first year. One more squeaks along till the 2nd year, another becomes a 'viable loss' (i.e. they make money, but less than their owner could earn if they got a job working for a major corporation), and only the last one makes any money. But that last one will make so much money that the owner becomes wealthy
That show VC works - they invest in 10 start ups, one of them gives them a return on their investment that is 20x, or 100x how much they gave it, and they go away happy. The other 9 they invested in are just the cost of doing business.
excitingthingstodo.blogspot.com
Most business ideas are worthless. The trick is to invest in as many as possible, because a small number will work out.
This is not rocket science, and this is why owning the S&P 500 is a great idea. The most successful 500 companies will have many bad ideas, and some business will have such bad ideas that they fail. But on average, you will make 10ish percent per year.
...But the capital came in because the person who had control of the capital was able to justify it intellectually to themselves versus something else that could have become the next Facebook or Google.
The problem is many of these companies only get big because of a fad and not for any concrete business reason. Social media companies have no real source of revenue except advertising and data-mining their users. But revenue from that is going to be highly dependent on how popular they (may) become.
We had that story about the "emoji" company a few days back. Sounds like a pretty stupid company, right? But they likely got funding from someone, and now they are being bought for $100 million. Would a person approving that capital have any justification that the business would ever become the next Facebook? Or was Facebook really just that 1 in a million that managed to somehow take off?
The reality is also that you don't know what actually is a great company until it has succeeded. After all, both Facebook and Google looked like pretty crappy bets when they started out. And that's why startups have high returns on investment: they are risky.
Perhaps as a pointy haired boss with a contempt for programmers and who got lucky at Facebook, Mr. Palihapitiya never needed to understand either technology or economics, which is probably why he keeps making a fool of himself.
Although to be fair, at least the ideas floated in the '90s were at least half-assed plausible (well, most of them).
I always marveled at the ability of VCs to dump metric tons of money into something that usually has no business plan (and no, "get bought by Google!!OMG!!11!!" is not really a practical business plan). I mean, I get that it's gambling in a way, and one out of 1,000 or so might actually turn a profit (or at least get enough hype to cash out the stock and profit from that), but it looks like one hell of a high risk.
Has anyone done any studies as to what percentage of VC-funded startups actually eke out enough money (somehow) to provide a decent ROI to anyone investing in them?
Quo usque tandem abutere, Nimbus, patientia nostra?
unless you can 3ork It transforms into Baby...don't fear Fact: *BSD IS A
Most multi-billion dollar mega-corps are crap too. Facebook, Google, Amazon, etc. They don't actually provide anything of value, they make money off of deceptive and dishonest bullshit. And they are poorly run at that.
Worked with two startups. One was all crap, other was half crap.
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Since when do you put periods in IPO?
The stories of abject failure, malfeasance, and mismanagement alone would be worth the price of 10 of those startups.
Wheel of Time: Book by Book and Sumview (summary review) Bigdady92 style: http://bigdady92.blogspot.com/
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That's why 8 of 10 new businesses fail.
I have a startup that I have been trying to get funding for in order to finish the product. It is highly technical but all the features I have finished work great. I think it will be 10x better than anything else on the market that it will compete against (it does data management). Yet I can't seem to get any attention from investors. If they can't understand it in a 20 second elevator pitch, they have no interest.
and some rock, gets sold as pet rock, netting someone millions for pennies in cost
ELOI, ELOI, LAMA SABACHTHANI!?
Any VC who didn't already know this is crap. A Slashdot editor who wasted our time with story is also crap. I'm arguably crappy, too, for pointing this out, since most of our readers also already know this.
A sign we've had enough of delivery drones, robotic dogs, obscure social networking, black mock turtlenecks, and charismatic 20 something CEOs.
Well no shit, Sherlock!
Most linux users don't know this, but the man pages were named after Chuck Norris. Chuck Norris fsck'ing hates noobs!
The rich pay the communists (government) to pass laws making it too expensive for the poor to raise capital to compete with the rich. The rich even pass on the cost they pay to raise capital to the poor in the pricing of their products. The poor pay for this and vote for the communists, proving that they aren't poor, they're stupid. Then the fraudsters can raise capital for their stupid startups because there is no competition.
Most successful startups are going to look like crap early on. If the ideas behind them were clearly good, there'd be established businesses in the market segment, and it would look dumb to try to break in and make it big.
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
TV might be 99% worthless, but that one time it lets you know a tornado is coming your way makes it worth it. Someone could lose $100 million on ten crappy companies to find that one company that will make them billions.
Google books and google scholar are amazing resources for me as a graduate student. Google maps makes a significant contribution to my lifestyle. Youtube has it moments...
Pets.com anyone? How is this news?
Time makes more converts than reason
Improving VC means they would be able to assess project quality, instead of being misled by nice talks. Is it possible?
Fuck you
you take it for what it is if your out side looking in just a bunch of segwayers, the dreams broken pieces make a fun puzzel game (linux things and servers and) and damaged disk arrays from auctions and ebay, peck at it enough and you begin to understand how phone fraudsters work with a copy of asterisk in the comfort of your own home amps portal etc.....
>versus something else that could have become the next Facebook or Google.
Facebook and Google have always had the backing of US Government and their surveillance programs. Many startups were actually really good companies with incredibly talented employees - but those companies were not 'tapped' by the establishment and ultimately folded.
And then there's the "jewish connection" (of course). Facebook and Google were created and run by Jews - just like the banks and the media, and just about every other 'influential' organisation.
But that's all just a coincidence... And pointing out the obvious is just anti-semetic dribble, right? Right.
Those silly wind up jumping toy animals are total crap. Yet you find them for sale everywhere. People will purchase them as silly gifts and folks put them on their desks.
But it makes money. Were they the Google of the toy industry? no. Did anybody learn and have an ah-ha moment after seeing one? probably not.
Bobble heads too.
I think its safe to say, most level headed people know that a lot of these tech startups are a fucking joke. Money going down the drain.