Zappos Deal Shows VCs Hate Entrepreneurs

This is actually pretty stupid. There's a literal 0% chance that Tony Hsieh got a bad deal here. The guy's a successful repeat entrepreneur who had been through the whole thing before and was dealing with a top-notch VC firm. He knew the game way too well to be getting burned by participating preferred or some absurd liquidation preference. Hell, I knew the game well enough to have avoided that before I even got in it, just from Googling around. (Thanks PG!)<p>He may have been forced to sell perhaps, but he gave up that right when he took the money and he knew it was a very real possibility. He also knew that if it happened, he'd be making a bundle off of it. If he feels screwed right now, which seems highly unlikely, it's his own fault.<p>VCs don't hate entrepreneurs, most of them love them. They just have a business to run and look out for themselves. The good ones, like Sequoia, do it by aligning their interests with the founders as much as possible.

Their interests may differ, but VCs don't hate Tony Hsieh. Indeed, if he ever starts another company, I bet they'll be falling all over themselves wanting to fund him.<p>Also, while the founder/CEO of Zappos may not have wanted to sell, were I an early employee with a lot of vested stock, I might be happy that my stock was finally liquid. Zappos has been in existence for 10 years, and I just might be interested in cashing out enough stock to buy a nice house.<p>Tony already had enough money, and made a big enough salary, that the independence of Zappos was worth more than having Zappos stock liquid, but I doubt this was true for all of the early employees.

Hate is just the wrong word to use. Do you think Sequoia had a personal dislike for Tony? Or do you think they just wanted to cash out earlier? Even the latter is speculation based on un-named sources, but assuming it's true - where does hate figure into any of this?

Yes, Sequioa capital hates entrepreneurs. Somehow they hate them soooooo much they were able to attract founders who made successes such as Apple, PayPal, EA, Google, Yahoo, Youtube, and over 10% of the Nasdaq.<p>Please leave linkbait and uninformed articles like this to other places. Maybe they didn't want to sell, but it was not a homerun exit, and there are rules of engagement when taking on VC.

I agree with ajju, hate is totally the wrong word to use. Both parties simply have different interests. In this case, Sequoia wanted liquidity on their investment (the economy is in a downturn after all), while from what I understand Tony wanted to stay independent so that he could continue to run his company. I don't think that this in any way shows that Sequoia hates Tony though.<p>If the articles are true, it definitely casts a bit of a shadow on Sequoia. Having a reputation for wanting to cash out at any moment certainly isn't good when trying to court entrepreneurs.

Isn't it the role of a VC to give a company funding so they can get a big return on their investment later one when the company sells, or something along those lines? I mean, isn't that something everyone expects when they get involved with a VC? Isn't that what they're for? Am I misunderstanding something here?

Venture Capitalists are capitalists. They believe that all wealth flows from capital.<p>Entrepreneurs believe in free enterprise, that wealth flows from one's efforts.<p>There will always be tension between the two camps.

"...but that liquidation preference (3 or 3.5X!!) is meant to ensure that no matter what, Sequoia actually gets a guaranteed return."<p>Since when does liquidation preference confer a guaranteed return?

If they don't put DRM in the shoes, then break into my house and steal them back in the middle of the night, I might consider buying something from Zappos again.

there has to be another side to this story.