Comment by kibwen
6 hours ago
> Can anyone explain why on earth VC's are making actual investment decisions based on imaginary internet points?
The answer is right there in front of your face. Say it with me: VCs are morons. VCs are morons. VCs are morons. Just because someone is rich, you think that means they have any clue what they're doing?
Listening to All In is a real eye opening experience. Especially when they have guests on and they're exactly like the regulars.
I have zero respect for All In. It’s a shame people pay those guys any mind.
I actually think this take is wrong... but the moment Travis Kalanick was a guest and claimed that he was on the verge of discovering new physics with the aid of ChatGPT was an eye opening moment.
"new-to-me" physics
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this is compounded by young, newly rich tech workers (no kids, no mortgage, maybe not even a car) experimenting with being a VC because they've recently reached accredited investor status.
and it's not just ZIRP. every recent IPO or liquidity event creates literally 500 more of these guys.
> maybe not even a car
Hold up — one can be mature without any of those things, but cars are especially optional.
maturity has nothing to do with it. these are recurring expense liabilities with very very distant return horizon.
Depending on which city you live, my feeling is owning a car is a lot less optional once you have kids, at least in their earlier years.
They say Silicon Valley was more of a documentary than a comedy, and now we have one more way life imitates art: A growing army of Erlich Bachmann's.
Jian-Yang's
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Those would be angels, not VCs. VCs manage outside money.
That's a really good distinction. I realize this is a little snide, but I imagine when they look in the mirror they still see themselves as Marc Andreessen.
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true, but the way I would frame it is we are all morons in someone else's eyes. No one is as smart as they think they are. The mistake Americans make is thinking that rich people are so smart that everything they do is smart.
I don't think this is always true, but it's true a lot. I think there are better descriptions than moronic as well. People use moronic when people are just as smart but have a different (and possibly better) direction. It's just the case that it defies the will of the other person.
These people go to the extreme and feel they have to outdo each other in an arms race to win whatever category it is today.
You can have extreme ambitions without being a moron. It's possible for someone to be empathetic, but also really driven. The problem is that they are locked in a downward spiral and they can't possibly be vulnerable. It's only when they run out of money, or some other extreme event occurs that they change tack. That's moronic, especially when the outcomes are predictable.
There is a lot to be said about SV culture and the people that surround these VCs. A lot of people love these environments and more than tolerate the environment these VC folks create. It's hardly a new phenomenon.
Yes, but while we're all born stupid, rich people are subject to forces that actually make them dumber than the average person. Normally people learn from failure because they experience tangible negative consequences as a result of failure. But money is a better insulator than a vacuum, and once you're sufficiently wealthy, failure no longer has any tangible negative effect on your quality of life. Lose ten billion dollars? Lose 90% of your net worth? You and your kin will still be living lives of ease and luxury for generations to come. They're destined to be morons because there's no pressure forcing them to learn from their mistakes.
I don't really see any evidence that the poor are smarter than the rich. You can say that a wealthy person is more insulated from their mistakes, but I think poor and rich react very similarly to major financial setbacks. Yeah, a wealthy person can do something dumb all the time and not feel it, but then a poor person may be doing as proportionately badly with things like credit card fees or sports gambling. If you think you are smarter because you are a "normal person" then I think you need to consider that everyone is dumber then they realize.
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We're all morons outside of some very narrow areas of expertise. By most criteria James Mattis would be considered a smart guy: he earned a Master's degree, commanded troops effectively in combat, and served as Secretary of Defense. And yet he fell for the Theranos fraud. You have to know your limitations, and too many people think that because they're good at one thing they must be geniuses who are good at everything. Engineers are especially prone to this delusion.
What does a soldier / pollitical appointment know about finance?
Exactly. That's the point.
The answer isn't that they're morons. It's that they aren't people who "invest" in "good businesses" to make money, but instead on the whole a class of individuals classed with gambling on high risk ventures that will have absolutely massive returns and they don't care if 90% of them fail and 9% flounder because the 1% that succeed bring in absolutely apeshit amounts of $$ when they are acquired by someone else.
Using things like github stars is clearly stupid, but not in the way you're suggesting. They're using the GH stars as a proxy metric for "someone else will come along and give money bags to this person later, so I should get in early so I can take that money eventually."
They're operating on metric of success which is about influence and charisma and connectedness, not revenue or technical excellence.
Again, VCs don't care if you'll make a profitable business some day. They're just interested in if someone else will come along and pay out giant bags of cash for it later in a liquidity event. If they get even one of those successes, all the stupid GH star watching pays off.
Here's another way of framing it: any harms from the false positives around "He has a lot of GH stars" or "He went to Stanford" or "I know his father at the country club" are more than mitigated by the one exit in 1000 that makes a bunch of people filthy rich.
We shouldn't expect VCs to be something they're not. But we are missing something inbetween VCs and "self financing" and "bootstrapping"
> Again, VCs don't care if you'll make a profitable business some day. They're just interested in if someone else will come along and pay out giant bags of cash for it later in a liquidity event. If they get even one of those successes, all the stupid GH star watching pays off.
And if that's true, they should be slapped, hard. They're no longer performing a socially useful function, and and have degraded towards pure financialization. Some middleman between fools and their money.
As much as I don't like Altman, VC should be pumping money into startups like Helios--companies pursuing cutting-edge technology that could totally fail (yes, that's an organic em-dash).
You should start your own VC firm, solicit cash from LPs, and invest in companies like Helios. Go ahead, no one will stop you.
Helios? Altman? I think you mean Helion, the fusion company, not Helios (quantum computers). Either way, that’s a pretty hilarious example to use when you’re criticizing VC foolishness. Anyone doing due diligence wouldn’t go near those companies.
Spoiler alert: commercial fusion power may not be practical at all, but if it is, the timescales to delivery are measured in numbers closer to centuries than decades. Don’t fall for the hype generated to sucker those VCs you’re talking about.
I don't think there's ever been an argument that anybody in a free market capitalist economy has to perform a "socially useful function"?
I do think that ZiRP distorted things extremely badly. There's an entire generation in this software industry that lives around the business-culture expectations set during that time which as far as I could see basically amounted to "I build Uber but for X" (where X is some new business domain).
Perhaps after a bit of a painful interregnum things will be a bit different now that rates are higher and risk along with it.
Also anybody can throw a SaaS together in a few days now. Separating the wheat from the chaff in the next few years will be... interesting.
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“no longer”… lol
I know this isn’t quite your point. But for the portfolio approach to be plausible you have to play as if all of them will succeed, and only later sort out the failures.
If you mentally say “well 90% fail so I’ll just throw in this dog shit to see what happens” then you increase the failure rate.
Yeah I can see that.
Another thing I was thinking as I was re-reading this thread is that for some VCs the fact that you can game your GH star count might in fact read as a positive signal. It shows you're willing able to play a kind of vicious PR game to get popularity.
Again, VCs not interested in pure technical excellence or geek "cred". They likely want you if you're the kind of person who can stand in front of a room and puff yourself up and make yourself look more important than you are, and frankly "acquiring" GH stars might just be part of that.
I think it's awful, and I could never do that and my values wouldn't let me buy stars or lie about my projects.
Hence I've been working in this industry for 30 years this year, and I'm still a wage labourer.
VCs are, traditionally, people who made a lot of money in a lottery and think that makes them experts. It's virtually guaranteed they're idiots.
hey shhh the ycomb gods might hear us
I got downvoted on another post mentioning VCs. Confirmed everything I already knew about the sheeple