The subtitle starts like this: "Even the worst-run startup can beat competitors if investors prop it up."<p>This is clearly written by someone that has little to no startup experience. As someone that has spent 15 years as a founder I can tell you that the opposite is true: I have seen startups racking in seemingly endless funding only to be beaten by much smaller / less well funded competitors that happened to have better strategy or execution. The examples are endless, more recently we heard about Quibi ($2B funding!) failing, Yik Yak, WeWork etc<p>There are markets that are capital intensive, and others that are really commodity spaces where winner takes all (Uber comes to mind) but for the most part, the smartest VCs in the industry will tell you that you should worry about strategy and execution, not raising a ton of cash which creates a bunch of problems on its own.
Isn't this the sort of meta-hack that should(or is?) be illegal? I thought selling your services at a loss to specifically drive competitors out of markets was illegal? If it's not, should it be? Once capital has accumulated, there is really no effective way to compete if these practices are allowed.
This thing is extremely divisive on VC twitter: <a href="https://twitter.com/benedictevans/status/1330889261479043075?s=20" rel="nofollow">https://twitter.com/benedictevans/status/1330889261479043075...</a>
That's kind of the nature of wealth that you can make projects keep going regardless of how good or bad they are. There's no meritocracy, just power.
This article hits the nail on the head. The financial system is not working. Also there are VC-funded zombie companies everywhere. Just look at Snapchat or Uber. Never made a profit in a decade but they have ridiculously high market cap.<p>What kind of investor puts their money into a business which has a decade long track record of losing money and no profits in sight? In a system which is notorious for incentivizing short term gains... It doesn't add up.
There is some truth to what the author writes, but it's not absolute.<p>Softbank's Vision Fund basically exists to invest with that thesis. That an extremely well-funded and basically competent team will outlast all competitors and eventually own the market. Then they will have monopoly pricing power and become extremely profitable.<p>It hasn't worked out that way for them.<p>The article is no so much wrong as it is an oversimplification.
That scene in Silicon Valley where Hendricks gets chewed out for trying to make a profit is extremely accurate.<p>The current system that we have is a miscarriage of Capitalism, where the HOPE of future profits is more valuable than the skill and competence to make a profit out of the gate, the way, you know, a grocery store has to before it goes under in two months.<p>Basically it's a giant pyramid scheme. A bunch of VCs throwing companies around like hot potatoes until the biggest idiot ends up with an overvalued load of crap.
This article gets a lot wrong. For one, it calls Rupert Murdoch and Betsy DeVos VC and I think that's a real stretch of the term VC. Everyone likes to point out Theranos as an example of Silicon Valley Hubris when in reality no respected SV institutions put money into it.
One of the long running problems in capitalism or indeed economics in general is the so called agency problem where in this case you entrust Benchmark as an agent to invest your money wisely but it can be in their interests to throw it around wildly as long as they can collect 2% on assets invested or similar. Not sure exactly what the solution is.
Another read in a similar vein today: <a href="https://www.theverge.com/21571690/oomba-startup-work-environment-sex-lies-video-games-gameworks-exworks" rel="nofollow">https://www.theverge.com/21571690/oomba-startup-work-environ...</a><p>I think (and hope) this era of unfettered partying and bro-culture capitalism is finally coming to an end (with the WeWork debacle and even a bit of Theranos finally permeating the public view). And of course, Rona forcing everyone from line engineers to hedge fund managers to take stock of their lives (and finances).
It's just capitalism.
Like read ONE(1) book please for the love of god.<p>Concentrating a lot of wealth in the hands of few people who then have complete power over what human endeavor gets funded, and potentially given insane financial advantages over more virtuous competition, to obtain monopolistic positions.<p>It turns out : this is bad, empirically.
Of course any analysis a priori would have also netted this result.
In some sectors of the economy, we haven't had capitalism for decades. The economy is highly artificial. It turned into a giant ponzi scheme and it constantly needs to use media to brainwash its participants in order to give legitimacy to fickleness. Fickleness and fragility is what you get when you have a system founded on an infinite debt bubble which keeps spreading itself thinner over time.<p>People literally have to go insane to get by in this insane system. The industries which are closest to the money printers are incoherent and have nothing to do with capitalism.
Gee,where have I seen this strategy of using private capital to subsidize a deliberately unprofitable business just long enough to drive all of its competitors out of business so they can form their own duo/monopoly before? VC yielded like this it isn’t creating innovation or anything of value, it’s perverting the spirit of capitalism.