Comment by xracy
4 months ago
> why bring up any other industry when this is the vc playbook
Because my point is how messed up the VC incentive structure for tech is. This is proved by comparing it to every other industry.
> Yes, they do actually. I'm not sure why you think those links are talking about investments when they very clearly are about revenue.
They are using the word "revenue", but can you be certain that the word means "revenue from product sales"? Or does it just mean "revenue from investment".
A couple of the articles specifically mentioned the series A rounds as part of "revenue generation". And my whole point was that investors celebrating how much faster they're investing in AI startups is a classic "begging the question" type fallacy. They are measuring themselves on how much money they are investing in startups, and then saying that is proof that the startups are valuable.
True, the tech VC incentive structure is weird from a typical perspective -- it is very hit-driven... throw money at a thousand startups burning cash to capture a market, and hope one of them becomes a unicorn. However, it has been working very well for them, so at this point nobody questions it.
> They are using the word "revenue", but can you be certain that the word means "revenue from product sales"? Or does it just mean "revenue from investment".
Investment and revenue are accounted for very differently, and if there's any mingling between them that would be highly problematic, probably fraudulent. For instance, there are tax implications, investments are not taxed but income from revenue can be. There can be all kinds of shenanigans that happen with finances in startups for sure, but those are typically unethical and illegal.
In this case they all are talking about revenue. Some articles do mention that funding rounds are also being affected because these companies have been hitting revenue milestones so much faster yet with much fewer people, but that is a separate aspect from the revenue.