A Critique of VC, Founders, and Tech

This talk by Maciej Ceglowski (the founder of Pinboard among other things) is mostly a discussion of ad:tech and privacy issues. It raises a number of interesting points and echoes a view of ad blockers that my partner Albert has convinced me is correct (that they are a logical extension of the user agent concept embedded in web browsers).

But the most biting critique is saved for the end of the talk and aimed at the VC and founder communities and the tech sector more broadly.

Our venture capitalists have an easy answer: let the markets do the work. We’ll try crazy ideas, most of them will fail, but those few that succeed will eventually change the world.

But there’s something very fishy about California capitalism.

Investing has become the genteel occupation of our gentry, like having a country estate used to be in England. It’s a class marker and a socially acceptable way for rich techies to pass their time. Gentlemen investors decide what ideas are worth pursuing, and the people pitching to them tailor their proposals accordingly.

The companies that come out of this are no longer pursuing profit, or even revenue. Instead, the measure of their success is valuation—how much money they’ve convinced people to tell them they’re worth.

There’s an element of fantasy to the whole enterprise that even the tech elite is starting to find unsettling.

We had people like this back in Poland, except instead of venture capitalists we called them central planners. They too were in charge of allocating vast amounts of money that didn’t belong to them.

They too honestly believed they were changing the world, and offered the same kinds of excuses about why our day-to-day life bore no relation to the shiny, beautiful world that was supposed to lie just around the corner.

Even those crusty, old-fashioned companies that still believe in profit are not really behaving like capitalists. Microsoft, Cisco and Apple are making a fortune that just sits offshore. Apple alone has nearly $200 billion in cash that is doing nothing .

We’d be better off if Apple bought every employee a fur coat and Bentley, or even just burned the money in a bonfire. At least that would create some jobs for money shovelers and security guards.

Everywhere I look there is this failure to capture the benefits of technological change.

So what kinds of ideas do California central planners think are going to change the world?

Well, right now, they want to build space rockets and make themselves immortal. I wish I was kidding.

I don’t agree with all of Maciej’s critiques, but he is directionally correct, particularly the bit about profits, revenues, and valuations. He nailed that. There is more truth to his critique than many would like to admit. That’s why I am copying and pasting it here. It’s important to look at yourself sometimes and think you could use some work.

#VC & Technology

Comments (Archived):

  1. Hu Man

    Bravo for you for posting this and giving it thought. Do you think you’ll be changing your business model and/or practices as a result?

    1. fredwilson

      I like to think we’ve been doing that for almost a decade now. See the Kickstarter post ewrkur this week for an example

      1. Hu Man

        Agreed, and why I’m a regular reader of your blog.

  2. Twain Twain

    So the other day I read how Apple, Google and Microsoft are all solving the same problem and the emergence of tech innovation uniformity:* http://www.theverge.com/201…Then in my LinkedIn stream I saw a post by the Economist’s Globalisation Editor on “Seven reasons Silicon Valley’s dominance is over’:* https://www.linkedin.com/pu…There’s been a period of stagnation in SV for the last 3-4 years where it’s arguable there hasn’t been the type of innovation it’s experienced in times past. “App featurization” isn’t the same as going from mainframes to PCs to mobiles, for example.My view is that the next seismic shift in innovation can only happen in the way it’s happened before, with male and female brilliance working in synch:1830s: world’s first computer = Ada Lovelace + Charles Babbage1941: Wi-fi, Bluetooth + CDMA = Hedy Lamarr + George Antheil1944: Harvard Mark I computer = Admiral Grace Murray Hopper + Howard Aiken1959: COBOL language = Admiral Grace Murray Hopper + UNIVAC team1969: Apollo 11 moon landing = Margaret Hamilton + NASA team1971: Computer telephony switching = Dr Erna Schneider Hoover + Bell Labs team1972: Smalltalk language (later Squeak) = Adele Goldberg + Alan Kay + Xerox PARC team1974: CLU language = Barbara Liskov + MIT team1985: Spanning Tree Protocol (STP) for the Internet = Radia Perlman + Digital Equipment Corp team1990s: ATMs & distributed transaction processing = Dr. Mandy Chessell + IBM team1995: Affective Computing = Rosalind Picard + MIT team2015: Virtual Reality = Mary Lou Jepsen + Facebook/Oculus team* https://www.startupgrind.co

  3. jason wright

    too much money in the hands of too few people, which is the same as saying too much power in the hands of too few people. capitalism, over time, has concentrated the decision making prerogative. hopefully the blockchain will enable a dilution.the blockchain, more significant than the invention of the printing press?

    1. Matt A. Myers

      There is some overlap of two separate issues I feel.Too much money in the hands of too few is only a problem when the baseline quality of life for people isn’t high enough – otherwise pooled resources if they’re being efficiently and well-distributed in a sustainable, environmentally healthy way – then there’s nothing inherently wrong.The core value IMHO that comes from massive pooled resources is that you don’t have indecisiveness or lack of final decision making – and you need larger amounts of capital the larger the holistic plans exist. Pooled resources can also have a downfall when some people decide to go to war, even if that first means using those same resources and tricking their population into supporting said war.Another value that a capitalistic structure has enabled is that (hopefully) enough people get enough resources to try various ways of doing something, with differentiations, so then there are more options – this happens in ‘hot’ sectors via VC models, however it’s more rare with capital intensive markets – until at least one person has started the movement and proven the market, e.g. Tesla and the probable Apple “iCar.”Blockchain enable dilution? I don’t buy it. Blockchain just allocates the increased value (due to demand) to the early adopters – making people who did practically nothing millionaires and eventually billionaires.

      1. jason wright

        “Too much money in the hands of too few is only a problem when the baseline quality of life for people isn’t high enough”what tethers the few to the quality of life index of the many?

        1. Matt A. Myers

          I’m not necessarily sure it needs to be tethered – that would take quite a lot of thought before coming up with an answer I’m content with. If it was to be tethered it would be through policy and I can imagine there’d need to be some degree of transparency.

          1. jason wright

            history shows that there needs to be a tether.

    2. Kirsten Lambertsen

      That’s some serious optimism about Blockchain. It will be fun to see if you’re right.

  4. Twain Twain

    Self-examination by Silicon Valley and the wider tech community across the world at this time is really important. Mostly because we’re entering the Machine Intelligence age which is as transformative as the Industrial Revolution and set the frameworks (in economics, in social relationships and structures, in value creation) for 200+ years.Change in VC mindsets, including at storied ones like Kleiner Perkins, and in female engineers making systems more intelligent for everyone is on the horizon and happening…* http://techcrunch.com/2015/…* http://readwrite.com/2015/0…There’s also the greater visibility of female innovators like Elizabeth Holmes of Theranos. I’m a HUGE fan of hers. She’s up there with Elon Musk on my list of favorite founders.* http://www.makers.com/eliza

  5. Matt A. Myers

    I guarantee Apple has plans for where their $200B is going – and I can only imagine it will be very efficiently allocated. They are a hybrid VC-startup model where we just can’t see the underworkings of everything – how much effort or work and resources/money goes into projects before they’re agreed internally to be publishable or scrapped. They could throw $1B into R&D into 1000 separate projects, allocating $1m each over two years, and projects that gain some value or traction then could have more allocated.Of course Apple has the bigger projects and can move resources into new or growing markets – Apple Music once Spotify proved the market, the Apple “iCar” since Tesla has started the movement, etc. And I don’t think most people understand what Apple is really trying to do.Apple really is trying to change the world and they manage their ecosystem well.I’d love to run Apple.

    1. Twain Twain

      I’d bet there are about a good billion people who’re in the queue of “I’d love to run Apple.”Haha.

      1. Matt A. Myers

        I don’t mean run it into the ground though. 😉

    2. andyswan

      Matt Myers and I agree on something of substance– that’s good enough for me today.

    3. Steve_Dodd

      Do they? Or do they just manage it to capitalize on their emerging dominance? Once Safari totally absorbs most mobile browser traffic, we’ll see. The industry is scattered with “We will never” claims to attract dominant market share and then all of a sudden the next announcement is “Opps, Sorry, sucks to be you!” and they laugh all the way to the bank. I think this is the heart of what Fred is calling out here.

  6. JimHirshfield

    “It’s important to look at yourself sometimes and think you could use some work.”Nip n tuck? Naw, we love you just the way you are.

    1. fredwilson

      I don’t mean physically. I mean spiritually

      1. JimHirshfield

        Yesterday was Yom Kippur. I hope it spiritually cleansed you by association. 😉

  7. kirklove

    Just needs a /fin at the end to make it perfect. 😉

    1. fredwilson


  8. Tom Labus

    It’s good to see people take a whack at tech.But maybe that’s his route to valuation.

  9. andyswan

    I feel sorry for people who think this way. They will always be the victims of something.As they type this envy-induced drivel on one of the most powerful machines ever created…which just so happens to be sitting in their lap as they fly smoothly in the air at 35k feet to a destination previously 5 weeks away by wagon, they’ll turn their laser-corrected eyes to the sky and realize the truth…”I will never be happy. I want others to be unhappy. My flowery words, my compassionate policy positions, and ultimately my outsourced physical actions are all pointed to the same end–destruction of that which is better than me.”Proper response…

    1. Matt A. Myers

      You think lowly of that kind of person eh? Not sure where you pulled “I want others to be unhappy” in the quoted text – care to share?And aren’t you always playing the victim of having to spend money/resources taking care of other people?

      1. andyswan

        It’s as obvious as can be that this miserable person wants others miserable. He doesn’t want them pursuing that which interests them…he even suggests burning money in a fire so that those with no skill can clean up the destruction.As for my feelings about spending to help others…you’re right…I definitely prefer doing so voluntarily on merit and self interest to having it forcefully taken from me by the greedy, compassionate mob.

        1. Matt A. Myers

          I think he’s more likely just making a shallow comment where the only goal is job creation – and isn’t taking into account that large plans that Apple undoubtedly has take large sums of money and will more efficiently create jobs and create benefit for society once they determine the time is correct to spend it.And technically that greedy, compassionate mob are in part the people who elect the government and then its government agencies who are directing resources — and I do agree it’s not done efficiently or well, the incentive and reward systems aren’t in place like they are in the investment world, however I think we can get there with the correct streamlining and onboarding – and it can be a private company who helps prove this before governments would spend money to adopt the systems. The current system has it so you need to find and support those people running for election who would change the spending how you want – and that’s what everyone is having to do, the imbalance being massive lobbies moving policy in their favour.

        2. fredwilson

          I know Maciej. He’s far from miserable

          1. andyswan

            Hyperbolic declarations deserve hyperbolic retorts.

          2. LE

            Hmm. Quite possible that the way he is around you is not the way he is the rest of the time or around others.You know my Dad used to say about Andy Williams “such a nice guy he probably beats his wife” (and he did).You could be right of course and Maciej may be “far from miserable”. But his writing doesn’t convey that. At least the sample you have given.

      2. JamesHRH

        The comparison to central planning in Poland is so specious.The difference between a VC having $1B to invest versus controlling an entire economy, the army and all the assets of an entire country is gargantuan.Author is mad that system is not fair. My kids learned that lesson in elementary school.Suck it up sunshine.

        1. Matt A. Myers

          Is this response meant for me or Andy?

          1. JamesHRH

            you, Andy is right on the money about this person: unhappy and looking to spread the virus.People who change things are realistic & optimistic.People who don’t are idealist & pessimistic.

          2. Matt A. Myers

            You don’t think there’s a stage where people are in discovery and exploration mode – before they are realistic and optimistic?Doesn’t it take asking questions and thinking through things to understand things — allowing for realism? Isn’t that what this person is doing?Also I can understand how comforting it can be to have a firm “us vs. them” mentality, all-or-nothing, pessimistic or optimistic – but everything’s on a spectrum.Can’t he be somewhere on that scale and on the path of learning?Should we shame and name-call and put down someone in this exploration?If you don’t think the person “spreading the virus” is good then do you think simply calling them out as such is useful to anyone?Discussion and thoughtful and skilled responses to people is how they learn.

          3. JamesHRH

            Don’t see a single Why in this screed.He’s bitching.

          4. Matt A. Myers

            There’s a what question, and yes, maybe he needs to learn to rephrase his thinking which would lead to deeper thoughts of his own.

          5. andyswan

            Of course Matt. Of course Maciej could be on some path to self discovery or whatever— and of course he isn’t 100% this or that — but THIS post was 100% negative, whiny drivel…. so that’s what we’re reacting to. If he was “in the room”… it might be a very different conversation. I can state for certain that people enjoy me much more when I’m in the room than when I’m behind a keyboard– maybe it’s the same for him?But his rant was presented to us as having value, which many of us are rejecting.

          6. LE

            They enjoy you like I used to enjoy my Uncle vs. my Aunt. My aunt was always so nice she would ask boring questions like “how is school doing” or “so how is your mother” or “are your sisters dating anyone”. My Uncle was a loose canon and unpredictable. He would say anything and everything. Very entertaining. Lot’s of fun. Same reason people like Trump and liked Howard Stern back in the day. You are entertaining. So yes I am saying you are a funny guy…..https://www.youtube.com/wat

          7. andyswan

            Knew before I clicked. Phenomenal

        2. Sebastian Wain

          > Author is mad that system is not fair. My kids learned that lesson in elementary school.Elementary schools and VCs could change. One thing is complaining if you don’t study and another if you make something great and receive a C. Fighting for a better system is a natural gift.We can argue that crowdfunding, angel syndicates, etc are part of this fight.

          1. JamesHRH

            Couldn’t agree more but I see none of that in these comments.I am concerned about how much I agree with Andy ;-)Haters gonna hate. Complainers gonna complain.

          2. ShanaC

            they in fact, do change, all the time

    2. JamesHRH

      I am assuming that suit is in your closet and you rock that look every 4th of July.

    3. LE

      Exhibit “A” is the Pope who talks a good (sheltered life) game about the poor and the evils of money but flies here on a large jet plane and gets shuttled around in a Fiat with a thousand computers.By the way Pope. Thanks for caring so much and shutting down parts of the entire fucking East Coast of the US. You have created more disruption and anxiety than 9/11 for many people.

  10. JimHirshfield

    Sounds like a case of “know your audience” with unintended consequences. That is, entrepreneurs telling VCs what they want to hear, having been coached by the vast amount of advice that’s out there on how to pitch a VC. There’s also a lot of copycat behavior by entrepreneurs in terms of product ideas, which isn’t all bad – derivative works can succeed where past ideas didn’t. It’s the “me too” stuff we could do without.

    1. Matt A. Myers

      I think the better advisors/VCs/etc probably help guide an entrepreneur along, allowing them to discover the processes on their own – and so hopefully the entrepreneur’s nuances will reman within their decision making process – and so they can stay rigid on the leading metrics that they’ve followed leading up to wherever they have evolved. It’s the process of differentiation that if you can find and benefit from then should do, otherwise you’re just copying and not necessarily giving any new value than previously existed – and likely will be rewarded as such.

      1. JimHirshfield

        Well, you make a good point. But entrepreneurs will hear “no thanks” repeatedly and that causes them to alter their approach – likely not stick to their guns. They’ll alter it to avoid whatever it is they thought turned away the past VCs. It’s human nature.

        1. Matt A. Myers

          Fair point. I’ve just met with people until they work for me, with me, that their method or approach to helping me learn – while learning about what I am doing – and I just trust that while I am able to move other pieces forward, I can be patient (difficult still) for the other necessary pieces to fall into place. I can fully understand if feeling rushed would lead to someone trying to look the part – which is bad for everyone IMHO.

        2. JamesHRH

          As the Fonz would say, ‘Exactamundo’.Its human nature.

          1. JimHirshfield


        3. ShanaC

          it is very hard to stick to your guns in the face of continual rejection.

          1. JimHirshfield


    2. Anne Libby

      This pops to mind for me here, Venkatesh Rao’s posts on “Venture as the New Labor.”http://onforb.es/1HbUzD9

  11. pointsnfigures

    I disagree with his comparison to central planners. The difference is VC capital is private, and there are constraints on it. I don’t care what the “gentry” do with their own private capital. If they want to invest it in companies that don’t make money, or pie eyed ideas that have little chance that is their business-as long as their choice doesn’t impact mine.He is correct to point out that there is a herd mentality in VC. That’s natural for humans. There is a herd mentality in a lot of things that are risky. There is a herd mentality in trading. There is a herd mentality in being a limited partner in funds. There is a herd mentality when it comes to corporate VC. People falsely believe there is safety in numbers. There is a herd mentality when it comes to trends. Then, when the sickle comes in and cuts everyone down they get harvested.It is really hard to be singular and against the herd. Harder than you think. You will be isolated socially. You will be talked about. If you invest against the herd it is a lot more difficult because it’s very hard to find partners-so you better be able to go it alone. But, singular risks succeed spectacularly, or fail miserably. You have to be able to deal with that too.On Apple and other corporations he has a point. Capital in banks outside the US being sheltered from taxes is the result of the central planners. I saw Apple was doing a massive buyback of stock the other day. I’d much rather see buybacks of stock taxed, and dividends on stock not taxed at all. All the money that has been spent on buybacks would have filtered out into people’s pockets.

    1. Tom Labus

      Herd mentality exists in all markets public and private. Most investors don’t have strong convictions or do the work needed to have them

      1. pointsnfigures

        Totally agree, especially with the second part. The second part is hard.

        1. JamesHRH

          20 years ago, a division president of Nortel gave me this advice on investors:’ they are sheep. They do not like to be alone. The only thing worse than being the only investor in your deal is being the only investor not in your deal. ‘It accurately describes the belly of any financial market bell curve.

    2. Twain Twain

      Apple and Steve Jobs were singular and against the herd at a time when people couldn’t imagine owning a PC.It could be argued that Apple continues to be singular and against the herd — look at their position on privacy and user data and advertising which is different from the rest of SV herd.

      1. pointsnfigures

        Apple was out of business in the 90s. Saved by Bill Gates…Apple watches the herd, takes the best things it likes out of the herd and makes them better. iPod was the first example of that.

          1. pointsnfigures

            Apple feels a lot more “corporate” since Steve Jobs left us. Maybe it’s an illusion, maybe not.

          2. Twain Twain

            Yeah, that’s the feeling I get from Apple too.Love him or hate him, Steve Jobs’ presence made Apple seem edgy, creative, just enough “punk cool” whilst also being corporate.All credit to Tim Cook for Apple’s continuing financial success.However, that extra perceptual advantage they had because of Steve Jobs is no more.

        1. JamesHRH

          Bill is – in the general – the same personality type as Fred.I think he thought that Apple was good for the overall PC ecosystem. i doubt that he even regrets about saving the company.

    3. fredwilson

      I think you miss his point. It’s too much capital in too few hads. The “gentry” phraising is off and thats why he misses the mark with that

      1. JamesHRH

        Its a specious complaint.Capitalism actual keeps money in more hands, the central planning comparison is ludicrous.His complaint that CA central planners want to build rockets and be immortal is cherry picking.400 Seed firms were founded in 2014 alone. More money is in more hands in VC than ever before.Compare your industry to 1983.The fact that Maciej can’t get funding is about him, not the system.

        1. pointsnfigures

          Maybe, but some ideas are just unfundable unless there is a patron. Want to build a rocket? Takes billions of dollars and someone willing to spend it. Many of those projects also get money from the government in some fashion; grant, SBIR, customer

          1. JamesHRH

            Startups only have one job: attract people.Can’t code – attract co-founders.Can’t design – attract designer.Don;t know your market – attract people who do.Need money – attract investors.Can’t get users – change offering, keep trying.Each of those attractions has a recipe, of some sort.Follow the recipe and build.Or bitch for change.Easy choice,

          2. Twain Twain

            Also…Can’t find someone who can code it — LEARN HOW TO CODE.Can’t design — learn how to design.Don’t know your market — start by asking your friends. Then random strangers on the street plus put up a Google survey or some such to ask people.Need money — bake revenue into model from Day Dot.

          3. JamesHRH

            Your personality dictates your answer. each approach has its risk (mine is that I attract people who are no good, yours that you never attract people at all).To each his own.

          4. Twain Twain

            Both our approaches are about solving the problem rather than complaining.Do we know it’s hard and challenging doing startups? Definitely.The thing about being a founder / inventor is we DO everything we can to solve the problem and break it down to manageable parts.If we don’t know how to code, ok go attract some devs and/or learn how to code.If we don’t know how to design, ok go attract some designers and/or learn how to design etc.The risk is the same: not sourcing the right co-founders.:*).

          5. Twain Twain

            Majiec doesn’t want investors or patrons?This is from his blog, July 2014.

          6. JamesHRH

            This is a Quixotic approach.That’s the writing style of a highly prejudiced, unbelievably arrogant martyr.

          7. Twain Twain

            I was giving him the benefit of doubt along the lines of, “Maybe his dry European sense of humor has been lost in translation.”It happens, some Europeans can be snarky about US capitalism just as vice versa and Americans being snarky about European socialism.But he makes his position on investors clear enough. No “lost in translation”.

          8. Cam MacRae

            Well spotted. His entire website is an obvious pisstake, first and foremost of himself. The set of North Americans capable of apprehending this must surely intersect the set of those who can pat their tummy and head at the same time!

          9. Twain Twain

            Exactly. There’s something vaguely Basil Fawlty about his position wrt investors.It’s tragi-comic. Like when Basil waxes lyrical about how he doesn’t need his staff or clients and did a brilliant job of scaring them all off.Oh and Maciej uses the word “flapdoodle” so if he’s reading AVC comments he’s probably laughing his head off about the “flapdoodle”.

          10. Cam MacRae

            And such earnest flapdoodle it is! Very droll.

          11. LE

            Part of the problem is lack of social proof of the unatainability of what they want.For example when purchasing housing most people are well aware of where they fall in the pecking order. You don’t find people without a pot to piss in getting to live in a 20 million dollar apartment in NYC. (Even if they won the lottery ..) You don’t find that they average kid (just like you) in your high school gets into Harvard or even Chicago Booth. The swimmer like you doesn’t go to the olympics. The golfer like you doesn’t end up playing with Tiger.The “startup lottery” has changed all of that. You find what appear to be average people, or people more like you than not like you, making a boatload of money and getting large amounts of fame and adulation in the media and on blogs. Lots of hero worship. Most are not Steve Jobs. Most are not Walt Disney.You for sure remember Howard Hughes when he was “thee billionaire”. And he did seem special. But the guy who wrote Mindcraft? Seems like anyone could do that, right? Seems like that could have been Falicon? Larry Page and Sergey Brin? How many Phd’s are equally as talented and could have been them? These are not Walt Disneys (who really was special and not a one trick pony).

        2. Ian

          Perhaps you need to take some time to find out more about Maciej instead of attributing erroneous motivations to him and making yourself look uninformed.

          1. JamesHRH

            Pattern matching is an amazingly accurate process.The phrase ‘they learned soon enough’ is used nearly exclusively by people with a prejudiced mindset and a superiority complex of some degree.He’s teaching, investors are learning, while he fails to succeed but finds internal fulfilment in his outcome (to the point that he brags about it).Martyrdom 101.Perhaps you should learn more about me and the foundations for my opinions before chastising me in public and making yourself look uninformed.

        3. LE

          He is not exactly in a target rich environment for fund raising, right? Or perhaps he can’t leave where he is and go to the right place (for family or other reasons). That is the way the world is no sense in blaming others..

      2. pointsnfigures

        Maybe. I understand the point about too much capital in too few hands. But I don’t see that as a fault of centralized planning. I see it as a fault of the LPs that give them the money. I see it as a fault of restrictions that don’t allow new funds to play. Being a rookie and trying to raise a new fund is practically impossible. Certainly, platforms like Angel List go against the premise of gentry-although the IRS defines who can play the game and who can’t.

        1. LE

          Being a rookie and trying to raise a new fund is practically impossible.Have you ever done a blog post on that? I’d be curious to know more about the difficulties in doing that.

      3. Jim Ortiz

        “too much capital in too few hands” implies a desire to rectify that situation- a deeply problematic suggestion.

  12. Anne Libby

    “Schools should produce kids with job skills!” “Public schools should be defunded.””My startup will mail you an artisan designed notebook each a month!” “Kill the USPS!””Our infrastructure is collapsing!” “Don’t tax us to death.”(heh heh, h/t to @pmarca)

    1. Jon Michael Miles

      I love those Andressonisms

    2. Kirsten Lambertsen


    3. andyswan

      Private schools are better than public.FedEx/UPS are better than USPS.Local governments are better at it than federal government.Dig the style though

      1. Matt A. Myers

        Could it simply be because the pay structure in private is different – what if the incentive system was different to attract top management talent into government roles?

        1. andyswan

          Wouldn’t matter— government uses coercion and the threat of force to implement its plans, where private industry uses voluntary participation and mutually beneficial transactions.Government is simply inferior to private enterprise in all but a handful of roles (3-4) which are pretty well, but not completely, defined in our Constitution.

          1. Matt A. Myers

            I start wondering if the structure like corrupt governments must exist along with the innovation and value private individuals or organizations can bring in a ying-yang balance/dance, and if so, then the more a private organization can take over the roles of governments, the better.

          2. Kirsten Lambertsen

            “…where private industry uses voluntary participation and mutually beneficial transactions.”Unless it can wrangle itself a monopoly and create its own private army. Then it will gladly lord over small nations of poor people and enslave them. Which it has done.There are too many examples of corporate awfulness to use statements like that as an argument. The problem right now is that government is simply an arm of the corporate elite.

          3. andyswan

            A lasting monopoly is impossible without government “assistance”

          4. Stephen Voris

            Coercion can happen at the private level as well – these are called “mafias”.But the more relevant issue is tragedy-of-the-commons situations, where the side effects of those voluntary, mutually beneficial transactions turn out negative instead of positive. The go-to property-rights solution there is “have someone own that commons, and levy a fee on people whose intended transactions deplete it”. Historically, that “someone” usually ends up being “the government”.This may or may not be the optimal resolution of the issue.

      2. Marcosardi

        Just checking: could you convince me that private schools are better than public schools? It seems to me the key difference are the students. Send the same population to both systems and you will likely get the same results. Look at the public schools in Palo Alto, Menlo Park, Los Altos: the attendance matches the demographics of private schools, results are excellent. Am I missing something?

        1. JamesHRH

          Most studies show that better schools are powered by parents who value education.Many private schools are social clubs. However, people demand more when they pay more.So, the graduates have more experiences even if they have fewer skills.

          1. Marcosardi

            I believe we are saying the same thing. The schools are not better in themselves, attendance is. At least in some meaning of better.

      3. JamesHRH

        These Black & White Swans powered by classic truths:- People who pay demand better.- All politics is local.

      4. Tyler

        I would disagree to a point on the schools point. The quality of teacher at a public school in TX is superior than the private school (and charter school for that matter). Simply put, starting salary for public teacher is roughly $45k vs about $35k for private or charter. If the rest of the economy is any judge, I’d be absolutely shocked if better teachers opted for lower the paying job.The biggest difference has always been about parents – having involved parents that make sure homework is done, read to their kids, etc. In many ways, private and charter school parents self select, therefore it’s not really apples to apples if you simply compare test scores, graduation rates, etc.Having said that, I’m a fan of charter schools, if for nothing more than creating competition for public schools. In the long run, competition and being able to evaluate the impact of a single teacher (and paying them accordingly) will benefit students in the long run.(An aside: For the life of me, I still don’t understand why this is not more of an issue in this presidential debate. Many of the major topics – the economy and jobs, healthcare and Obamacare, entitlements – those become A LOT easier problems to solve if we’re churning out young adults with better skills.Crazy thought I know.)

        1. LE

          I’d be absolutely shocked if better teachers opted for lower the paying job.There are many reasons why teachers might opt for lower pay. For one thing, at least in boarding schools, the cost of rent and meals is included. Another is many private school teachers are not lifers they are teaching for a short time and then moving on. Another reason is that the environment in a private school is, as a general rule and of course depending on the school, a lot nicer environment to work in. The one that I went to (many years ago) had tablecloths in the dining room and other students held the door open for you and were actually nice! A private school can kick out an unruly student and has actually vetted that student (and family) prior to acceptance. They have a great deal of control over the student body. There is no riff raff. There are really no trouble makers. The poor students attending come from nice families (they get scholarships). There are a host of reasons why it’s not only a better learning environment but better for someone teaching there. There are not thousands of students (I doubt there are private schools with 1000 students per class). When I say “private” I mean traditional private boarding or day schools by the way not catholic schools which cost very little and admit everyone (thereby being closer to a public school). However even those (from what I hear) have a great deal of control over the student body.

          1. Tyler

            I agree there is a certain portion of teachers that would opt for the private or charter school environment over the public. But I doubt that segment accounts for the majority of teachers. By and large, l believe the higher quality teacher will be attracted to the higher paying job (another reason pay structure for teachers needs to overhauled – no reason the best teacher at a school shouldn’t be making 6 figures if they’re worth it. The opportunity/chance to make that kind of $ should attract better quality applicants I’d suspect).In my wife’s experience (she’s taught at both public and charter), most teachers in a charter school are simply building their skills and experience in order to get a job at a public school. She, not coincidentally, hated her experience at the charter school precisely because the quality of teacher was poor in comparison.

          2. LE

            A charter school is a private school but not the private school that I am referring to. I am referring to an elite private school with high tuition not a charter school in a community.

          3. andyswan

            A lot of my friends’ wives started in public school, then went to private after a few years. The pay was less, but so was the drama. Less “teaching to the test”. Less shit-head kids, less shit-head parents. Plus their kids got into private school for free…which they saw as very valuable (and should tell you a lot)

          4. LE

            Ah yes forgot about that bene so that’s in addition to the other things I mentioned. Teach at private school, your kids get free tuition. The tuition at the school I went to is now 37k for day students, 55k for boarding students. Not when I went there of course. (Was 17k as a day student in today’s dollars..)At the time I remember teachers living on campus some had kids some were still single.Here is one of my teachers from back in the day:http://www.bostonpublicscho…His father (at the time) was secretary of transportation William T. Coleman.Here is another one of my teachers from back in the day:http://www.swarthmore.edu/S…Her father was some rich guy.One of my classmates father’s was a friend of MLK and a famous civil rights leader.

      5. Anne Libby

        Thanks, Andy.

      6. ShanaC

        USPS delivers every day for me?I like USPS

  13. Guy Lepage

    I have no idea if Masiej was pressed for time or if this was an excerpt from the talk but I rarely subscribe to those who critique without providing solutions. At least one solution would have been a nice way to exit stage left.

    1. fredwilson

      He has six suggestions on privacy in his talk

      1. Guy Lepage

        Ahh.. Was confused. Thought the link to the talk was an error. When I viewed Masiej’s talk page on my desktop the copy was so broken up I didn’t realize that the images were being pegged to the copy and thought they were all separate links to other talks.

  14. JamesHRH

    He has the theme right but the logic way wrong.Tech startups are a garage mentality, even now.You hit on something that is big, money flocks to you.He is describing the day to day dullness of tail chasing that occurs in SV.These people exist everywhere, regardless of the system.Magic still happens and VC still fuels its distribution.its just that magic is scarce.

  15. Salt Shaker

    Maciej sounds like he was schooled at the house of Trump. A pile on of negativity delivered via a stream of consciousnes rant devoid of any better/constructive solutions.

  16. greyenlightenment

    We’d be better off if Apple bought every employee a fur coat and Bentley, or even just burned the money in a bonfire. At least that would create some jobs for money shovelers and security guards.—————————-Yaaawnn here we go again..the left ignores that tech companies indirectly create jobs in the broader silicon valley economy

  17. greyenlightenment

    Apple has $200 billion but not a peep by the left about trillions of wasteful spending by the govt. I would say Apple is much better at managing its money than Obama.

    1. pointsnfigures

      Not the same. Apple is private and responds to economic incentives. Governments don’t. I am no fan of Obama, but when the Republicans ran the show the last time they weren’t exactly thrifty.

  18. creative group

    At first glance the evaluation of the critique would have applied if part of what was accessed wasn’t factual. A person being able to accept constructive criticism without finding a need to attack to justify and substain their pecking order in the chain only reflects upon their thinking they are perfect. It requires a canoe of humility to counteract the ship load of a false sense of self worth and arrogance that is created in ones mind. A good human being can embrace what is lacking and self correct and a worthless human being always justifies everything wrong about himself. Just read the responses.

  19. Brandon Burns

    Everything Maciej said is embodied right here in the AVC comments.His critique on VC is more a critique on the nature of humans when they believe to be in a position of power. It is a “end justifies the means” mentality. How you hunt makes no difference as long as you’ve snagged your kill.But here’s the thing. The single most important discovery in the history of humans is this: when we band together, we prosper. When hunter-gatherers figured out that if we not only fend for ourselves, but also for those around us, we can build community and protect each other and have more power in numbers. It is the antithesis of human nature, but the very thing that allows us to grow and prosper.Is this top of mind for most VCs? No.Is this top of mind in the AVC community? No.I’m saddened by the dismissive attitudes I’m reading in this comment thread. Even if everyone really is that blind that they cannot see Maciej’s point, there should be an effort to see what you cannot see. There should be an effort to find common ground. There should be an effort to build community. Instead there’s vitriol thrown from one side to another.Andy Swan said this is all “envy-induced drivel on one of the most powerful machines ever created.”I hope we start using the most powerful machine ever created to continue to push humans forward — which history shows means bringing them together — instead of giving into greed which will only tear us apart. Bringing people together makes money. Lots of it.USV, an outlier with it’s network-based model, having invested exclusively in platforms that bring people together, from Kickstarter to Indeed to even Farmville via Zenga, is the clearest signal there ever could be that making a choice to focus on the tools that bring people together isn’t just for the greater good, but it’s also massively profitable.I expect more from the AVC community. You all know better.

    1. JamesHRH

      Too much time in Portland BB!This person is criticizing the system that you just lauded. The belly of the bell curve sucks everywhere. Get over it.The idea that you would chastise this audience for ‘being blind to what it cannot see’ is the single most misinformed statement you have ever made here (and you have a track record of insight).Those network models that bring people together……the biggest one is FB. Nothing has been aped more in recent VC memory. Fawning, sycophantic copycats exist everywhere – from Beibers hangers on to the Valley to anywhere that people are successful and politics exist.Drink 3 espressos and ditch the bad attitude.”Envy induced drivel” is colourful but accurate.Fred is to be lauded for his willingness to accept criticism from all quarters, but, at a certain point in your life, you should be able to tell the difference between valid critique and a person with no clue.Pinboard is a social bookmarking site for introverts with an $11 annual subscription. The plane is landing at Fantasy Island, Maciej had better throw on the white suit and get down to the dock.

      1. Brandon Burns

        I am also criticizing the system. I’m lauding USV as an outlier within the system to show how VC can be done in a way that is culturally and financially positive.Even Facebook largely does good. I will not throw stones at Facebook.From Maciej: “[VCs] want to build space rockets and make themselves immortal. I wish I was kidding.” — This is the kind of activity that I disagree with. And it’s running rampant.Yes, the belly of the curve sucks everywhere. But I will not get over it. I don’t have it within me to get over it. I will continue to attempt to play some sort of role in correcting it, even if it’s futile.

        1. JamesHRH

          I am sorry to hear that.You have the entire history of humanity against you.Good luck and Godspeed.

          1. Kent Karlsen

            “You have the entire history of humanity against you.”I try to understand. Do you mean history of capitalism? People like what they really believe in and will protect their Research and investments. Maybe most People sometimes are wrong on a subject, because the critics hurts? Like dotcom and now maybe ad:tech Challenge/pricing?

          2. JamesHRH

            You can change human behaviour but you cannot change human nature.Every system has people who work the system to success. Likely this has been true since people gathered in groups larger than 3.

          3. Brandon Burns

            You’re 100% right.That’s also why I think its worth it to be an example for “good success” that others can emulate. Or at least try; as you’ve pointed out, correctly, it’s an uphill battle that, odds are, I’m likely lose.But as much as we can’t fight human nature as a whole, we also can’t find our individual natures, either.

          4. JamesHRH

            That’s what I am talking about!The Freakonomics cats have it right – nudging is the answer.What is FB but a nudge that works on billions of people?

        2. LE

          The reason (other than vanity) for that space ship shit is so that investors can fantasize about a future once the cash cow ends.A good example of this is Apple and cars. Apple is able to show that they are working on various plan b’s as a result of investing in something for the future that bears no relationship at all to the business that they are in currently. Which means they are obviously acknowledging that the money they are making now won’t last forever. It’s actually a smart strategic move that will buy them some time and prevent the stock price from falling to much. And it’s close enough that people can see the light at the end of the tunnel. Notice how they said “2019”. They didn’t say “2025”. When 2019 rolls around they can then say “2021”. That will only be 2 years down the road. Then they can push it a bit more even then. Then once they ship the profitability on cars can be further down the road.

          1. Brandon Burns

            Apple is in the business of making computational hardware. Starting with computers, then putting computers in music players, then in phones, then in TVs and watches — they merely see cars as the next frontier in this space. I see it as a 100% logical and expected move for Apple.And with each and every product they’ve released, Apple has done it with the message of, “Just imagine all the wonderful things we can do as humans with this device!”Is Apple a dogooder company? I wouldn’t go that far. But unlike Maciej, I respect Apple; the ethos of making things that help people better themselves is deeply ingrained in that company, and has been from the very beginning, thanks to the “sanctimony” of Steve Jobs. And now Apple is the most profitable company in the world. Fancy that.

          2. LE

            For the record in the model of business nobody has done what Apple is doing now. Ok maybe Google started this trend but that assumes that Apple didn’t have this on the board before they did and we will never know (as if it matters, it doesn’t).Business simply don’t do things like this. They diversify but they don’t bet the ranch and gamble in this way (Boeing with 747 a different type of gamble, IBM and computers a different type of gamble). This kind of stuff is really unprecedented. Shows how scared the are and how lucky they realize they are.

          3. JamesHRH

            I think their message is: that other stuff is crap, our is better.The Apple design philosophy didn’t work on PCs, because design lost to effectiveness (both cost and tool availability).It works in handhelds, due to the space constraints.Environment or timing tends to drive success more than internal adaptability.

        3. Drew Meyers

          “Even Facebook largely does good. I will not throw stones at Facebook.”If I wasn’t an entrepreneur with a business to build/grow/promote, I would likely delete FB from my life entirely and be better off.

          1. Brandon Burns

            Individual experience aside, Facebook helps 1.5 billion people (and counting) stay connected to friends and family each and every day.#perspective

          2. Drew Meyers

            I certainly agree there is value to being more easily connected to friends/family. I’m not discounting that. But too much of anything is not good. There’s really no need to know what all my friends/family are doing, all the time. Once a month, or once every 3-4 months even…sure. But daily? I honestly struggle to figure out why people care…at some point, it’s just eggs on pointless gossip about people you really know nothing about. Wouldn’t we be far better off spending all that time with real people, in the real physical world? I think so.

    2. andyswan

      I see no call to band together in the original post. It is ENTIRELY a diatribe attacking others. Why? Because they won’t band together in HIS direction. They are crusty. They are greedy. Failure is “everywhere”Their money would be put to better use in a fire.This is not the language of someone trying to bring people together. There is no rallying cry here. It’s greed and envy wrapped in colorful commentary. It deserves a similar response.

      1. Brandon Burns

        I agree that Maciej could have chosen better language; but for me, the larger point still stands that the tech community at large is focused on the wrong things.I also think that we, as people who live in today’s warped media culture, should resist the urge to give into punditry; to take something someone has said, and ignore the larger point while we grab onto a word or phrase that’s easy to attack, and repeat the negligent talking head cycle over and over again isn’t helpful. There is too much intelligence on AVC for that to exist here. Leave that kind of discourse to CNN and Fox News.

        1. andyswan

          I’m not attacking a single line unfairly. I think the “larger point” is nonsense and it is expanded upon with colorful, enticing language that obscures that point.VCs are nothing like central planners.Technology innovations have been and continue to be incredible and are creating wealth across the globe at unprecedented levels.Valuations are driven by the probability of the expected value of future cash flow, not by fantasy unicorns.The larger point is that he doesn’t agree with what other people are doing with their money.I don’t know him or his situation, but I’m guessing it is at least partially rooted in the fact that what they are doing with their wealth doesn’t benefit him.

          1. JamesHRH

            I think he cannot make current system of money work for him, so he has decided to hate it and all the people who make the system work for themselves.Goofy valuations are a side affect of a massive opportunity being realized.It explains herds of unicorns and Carly Fiorina’s business career.

          2. nocomment

            “Valuations are driven by the probability of the expected value of future cash flow, not by fantasy unicorns.”How can you look at someone with a straight face and say that Snapchat being valued at ~$16bn is based on realistic future cash flow.Instagram at $35bn?Give me a break.

          3. andyswan

            Snapchat isn’t valued at $16b. You’re being naive. It’s latest round of preferred shares (those that get the first dollars out) are buying a % of the company, which, if applied to all classes of less preferred shares, would equal $16b.Facebook is worth 15 times that amount. Snapchat is growing at an astronomical rate with phenomenal engagement metrics and impressive advertiser adoption and spend.They’re getting in at “$16 billion” because they believe that the company will one day be worth more than that based on its future cash flows. It’s really not up for debate.

          4. rick gregory

            Then let’s see some of these companies actually produce those anticipated cash flows. What has happened for the most part lately is that they sell to a larger company without ever demonstrating that they can, in fact, translate their network growth into revenue.

          5. andyswan

            They either will or they won’t.Investors think they will. You apparently think they won’t.What’s the difference to you if you aren’t invested?  Hell you can go short-sell FB or TWTR and profit if you’re right. Who cares if someone else is overpaying?

          6. rick gregory

            Investors mostly think they’ll get acquired. Any investor who looks at most of these companies as long term independent plays is, by and large, fooling themselves.

          7. andyswan

            I assume you are heavily short Facebook and Twitter and have been for some time? Facebook seems like that is especially painful.The acquirer would be buying based on anticipated future value.Again— who cares? If you’re not involved, why does it bother you?!!?

          8. ShanaC

            Instagram has no valuation anymore….

          9. Twain Twain

            Just to bring some levity since none of us knew of Maciej before Fred posted about him (and really no one should be judged so vociferously based on a single talk), at least now…We know his name!* https://www.youtube.com/wat

          10. SubstrateUndertow

            Your globle introspection skills are on fire today !The active reinvestment of accumulated capital and the forces that steer/focus that investment capital are pivotal to all individual/collective human economic success, always have been always will be. Rational collaborative planning and synchronizing are what puts man at the top of the food chain.Any time that accumulated capital/grubstake/slack starts to stagnate on the sidelines you can be sure that investment/capital control has become too narrowly concentrated/myopic to effectively sustain cyclical economic stasis. Look around and smell the coffee!Economic-history elucidates our extreme flair for inventing endless flavors of overly centralized/myopic planning/investment control.But I take your point :It can’t happen here because we have clearly perfected capitalism.Its not as if some techo-magic network-effect culture-shift has somehow suddenly accelerated/amplified all of our social/economic interdependencies thus shifting the very substrate upon which capitalism operates.There clearly is no need to continue evolving our now perfected right-vs-left economic tipping-point-balance thesis/anti-thesis ?Are you really declaring SUBLATION dead on this issue ?SUBLATION – from the german word AufhebenA term used by Hegel to explain what happens when a thesis and antithesis interact in a productive mental thrashing so as to generate a new integrated perspective for the modelling of a process. This new thesis, on how to visualize the process, is a synthesis of the best elements distilled via constructive arm wrestling between thesis and antithesis. Key terms and concepts in both the thesis and antithesis are both preserved and changed through their dialectical interplay. Key terms and concepts is both the thesis and antithesis are SUBLATED, subjugated and subsumed into a newly evolved integrative thesis. This newly evolved thesis generates a new antithesis and the process of thesis-antithesis SUBLATION spirals off into the endless ether of historical evolution.Mr. Sublation is far more productive than his evil twin brother Mr. Polemic who often masquerades as his more open minded brother!

        2. LE

          What do you mean the tech community is focused on the wrong things? I simply don’t get it. They are focused on what they need to do in order to survive in a field populated by a certain group of people that have a collective group of values that they compete with. Nobody gets together to decide how other market participants should operate and can enforce that even if they did. If you are concerned about things like to much attention on billion dollar valuations (and that word that begins with a “u” that many of us, including Fred, do not like) focus your anger on the fucking media. Oh that’s right they are a business also and will print what gets them page views and advertising dollars so they can continue to be a business. They aren’t trying to do good they are jut trying to get by. Back when they had a monopoly they still did this but certainly to a lesser extent. See the way it is? Every man for himself. Summary: It’s the way the world works, get used to it and focus on yourself.

          1. Donald E. Foss

            Adam Smith posited that capitalism is fundamentally based on greed. He verbosely expounded on the principle that rational self-interest and competition can lead to economic prosperity. Every man for himself and damn the rest isn’t rational. Banding together for mutual benefit is a higher level of self-interest.Paul Graham semi-famously does not allow sole founders into Y-combinator. It takes a team, even if only 2, to survive. One can’t do everything themselves, and focusing on yourself is just vanity.LE, I won’t dispute your description of how some of the world is. I do posit that we, and the world, can do better.

          2. bmathes

            False. *And* a false dichotomy. One of the superpowers of homo sapiens is the *combination* of individual actors that *organize into large groups*.

        3. Donald E. Foss

          Thanks Brandon for posting my thoughts on this before I got to your reply. The media is looking for soundbites, taking a few phrases or sentences out of context and tries to explain them. In this case it isn’t needed. Sure, the language could have been softer, but then we wouldn’t have understood the depths of his frustration. I remember one asking someone why they were using profanity when we have a rich enough language to describe exactly the same thing without resorting to their mode of language. The reply was simple. “Sure,” they replied, “I could, but the emotional color I’m conveying wouldn’t come across.” I don’t entirely agree, however I got her point.With a Polish background, an Eastern Bloc country, he has seen and rejected the highly centralized authority that tells the population that the authorities know best. Applying the same here is poignant yet thought provoking–or should be.Lastly, about Apple’s cash hoard–reminds me of Warcraft III when the orc says “My life for the hoard!” It made sense a while ago to store cash against an uncertain market and recession. That’s long over. Apple and others should be exercising that capital, or returning it to their shareholders. I’ve been in that situation before, although about 3 orders of magnitude less, and we returned over half of the cash to the shareholders and market.

      2. ShanaC

        I actually don’t see it as a diatribe – it is becoming plainly obvious we don’t create tools easily that create a middle class.We’ve gone in two directions – algorithmic machines that replace a lot of core activity humans do (hell, read up on some of the state of the art predictive work, and be scared), or create high end services (massages on demand) that aren’t really tech. Both are heavily valuation driven. Neither are pure drivers of new industries per say. I’m not totally sure how we moved away from core technology changes. What happened?And that makes for interesting problems of what the future holds

        1. CJ

          Not sure we moved away from core tech changes, but rather those changes now support the tech industry’s drive for disruption more than invigorating older industry. Though there are exceptions to that as well.I totally agree with your comment on creating the middle class. If you think about the tech industry recently, most of the profits lie in removing the middle men…

    3. Twain Twain

      Few people would disagree with you on this: The single most important discovery in the history of humans is this: when we band together, we prosper.I also agree with you Maciej could have presented his position more deftly.Personally, if he’d provided a list of things SV could be building and investing in that “capture the benefits of technological change” and how we can go about doing that which is great for global society and value creation, his words would have inspired me a lot more.As it is…I wanted to understand his position better and found this on his blog from July 2014.@fredwilson:disqus says he knows Majiec. The other day we were all out in admiration for Chris Poole who dealt gracefully with what was likely to have been 12 years of hardship (Fred noted: “And yet Chris did it dutifully for over twelve years. Contrary to the beliefs of many in the 4chan community, Chris didn’t take a real salary from 4chan. It was truly a labor of love.”). It’s clear from his own blog, Majiec is a different type of founder.He doesn’t seem to want investment anyway?

    4. fredwilson

      I think “exclusively” is too generous. We’ve invested in some cringeworthy things unfortunately

      1. Brandon Burns

        Just take the compliment. 🙂

        1. Donald E. Foss

          The more successful one is, the harder to (honestly) accept compliments.

      2. ShanaC


      3. Donna Brewington White

        VCs talk about the ones that got away — like Bessemer’s anti-portfolio and your story of airbnb — the missed opportunities. But what about the ones you wish you had missed? Harder to talk about, I understand, because these are stories about real people who are either in your portfolio or were. Yet, it would be helpful to understand the anatomy of a “cringeworthy” investment. What had to happen for you to come to this realization? Is this largely based on financial performance or other factor(s)?

        1. Twain Twain

          THIS because startups are self-reporting on where they think things went wrong:* http://autopsy.ioIt'd be great to have investors also self-reporting on what made them pull the plug on investments.=> virtuous cycle of learning for both sidesI know that when I was an investor, my big thing was: cash burn.

    5. Richard

      The single most important discovery is that we are all unique (thanks to combinatorial math), and possess unique skills. Our success is not due to the approach of the the ant or the wolf.

    6. LE

      The single most important discovery in the history of humans is this: when we band together, we prosper. When hunter-gatherers figured out that if we not only fend for ourselves, but also for those around us, we can build community and protect each other and have more power in numbers. It is the antithesis of human nature, but the very thing that allows us to grow and prosper.Sanctimonious and a great sound bite for a political speech by someone like Bernie Sanders (as only one example) but the truth is there are many examples of keeping things close to the vest and prospering. And all of this is “to a degree” and easy to say without getting into specifics. Business is competitive and about making money. You are not going to find McDonalds sharing their secrets and formulas with Church’s Friend Chicken and vice versa.Here’s an idea if you want prosperity for yourself and your family. Concentrate on what is good for yourself and your family and stop worrying about the rest of the world. And don’t feel obligated at any point (even after success) if that is not what floats your boat or private jet.

      1. Brandon Burns

        I won’t debate McDonald’s wisdom in keeping its secret sauce secret. But, to continue with your analogy, I will point to Subway as an example of how to be in the same business, do some good by focusing on healthy options, and become even bigger than McDonald’s.My point is that often times what is good for the world at large is also good for you as an individual, which makes the effort to better the world worth it; to some degree, it’s the most selfish thing you can do.#feelthebern

        1. LE

          Bad example with Subway. Sucky franchise (from what I’ve read) it’s kind of more like a paid job than a true business. Also when you say “bigger” et tu, brute? What metric? Bigger in terms of number of franchises? Or profitability and wealth for the franchisee?See there you have it in a nutshell. You think Subway is great because Subway has the most restaurants. Without regards to sales or profits with without checking are certainly less per store by a great deal and possibly (no time to check) even less for the entire system. Not to mention that McDonalds owns a great deal of the real estate (don’t know about Subway but this is actually the key to McDonalds success and stability..)

          1. Brandon Burns

            Semantics.The point (my point) is that money can be made by doing good and looking out for others. Full stop.

          2. LE

            Actually more good has come out of greedy narcissitic selfish business people than has come out of “doing good”. Most advances are driven by people’s self interest. I am sure if I had a history or business Phd I could gather enough info to prove that point. Look for example how Donald Trump changed NYC real estate. I am sure he played no small role in getting the ball rolling in the direction of high end luxury residential development in NYC by his Trump Tower of the early 80’s. (As did other narcissistic NYC cut your throat real estate guys who used mafia concrete..)

          3. PhilipSugar

            I would never own a franchise, and I find Subway’s good absolutely horrible. The only time I got sick on a trip around the world was when a host in Singapore bought those subs.However, I hear they actually are a really good franchise, because you need so few employees, and equipment. Think about the number of employees and equipment between them and McDonalds.

          4. LE

            Note the difference in the answers to this question on Quora for the 1st reply vs. the others:https://www.quora.com/How-m…One guy says “boatloads and only takes 10 hours per week” (right off the bat that’s a red flag).The other says “work 40 hours, make 60k”. So that’s a job basically.Of course you can get non-taxable income from a subway and other benefits (call it that) but bottom line is it’s a job. You can’t move the needle (you either have a good location or you don’t) and you are following a formula.Plus you are running a cash business and a business with shit employees. I’d rather be a home improvement contractor or roofer (haha).I am reminded of my cousin who opened a Benneton in the 80’s. He owned supermarkets. So he bought a Benneton for his wife thinking he would just “hire a manger” and she would have a place to stop by and pickup the profits. Guess what? Shit that you get for a strip center retail store isn’t even the level of guy you get to run your meat department. He lost his shirt. Nobody good wants to work for your shit small business. If you get good people you lucked out.Now at scale owning a great deal of Subways it’s probably decent. Plus then you can insulate yourself from the shit assuming you have good cash controls and other controls.These types of businesses are always for sale. There is a reason for that.

          5. PhilipSugar

            Don’t disagree one bit. The one thing you have to do if you have low level employees is to be big enough to not have deal with the day to day. The problem with that is you are never really getting out of it and there are no moats.

          6. LE

            Will add to your most excellent agreement with my thoughts the following other thing that you get if you are big (other than insulation and separation from the day to day).What is that? You get to give potential employees the illusion of an upward mobility path. (Which of course actually does exist for some new hires.) So if you are Wawa you get people who feel that they could possibly travel up the chain and do other jobs if they prove themselves. They have a future. Doesn’t matter if they ever do and doesn’t matter if they even want to. At your shit small company that path doesn’t exist.One of the reasons that 711 sucks compared to Wawa is because of the people that work there. There are many reasons of course why Wawa gets better people. One of those reasons is that it is a great place to work (because of the company). The other is that 711 is primarily a franchise (if not solely a franchise). So where do you go (forget the shit stores) if you work at a 711? Nowhere in the chain.Have you ever gotten gas at a Wawa? It’s an awesome experience. They rush out they monitor the pumps they say thank you and so on. Can’t say I ever got gas at a gas station that had better people than Wawa (in this state they pump for you as you know..)

          7. PhilipSugar

            Consistently amazed at the quality of their employees. Howard Shultz of Starbucks said it best. Franchising is just a cheap source of capital until it catches up with you

          8. LE

            Back in the day I was lucky to have some of the same type of “salt of the earth” women working for me. They lived in South Philly and took the subway to work. Type of girls that if they got pregnant they had their mom all lined up to take care of the kid (because she lived down the block) so they would rarely if ever phone in with some whiny excuse. Many were single moms as well. Never missed a beat. If you needed them on saturday for “the big job” they were there. Ah the old days. In this case the attraction wasn’t a big company and upward path but simply a “mr boss man” who was able to relate to them and make them feel special and appreciated.

          9. JamesHRH

            ON the Subway front, they frequently did this move, during their go-go days in the 90’s:- first franchisee pays X%- if goes broke, bring in a new franchisee, cut fees- if he goes broke, …..

          10. ShanaC

            I’ve never had that experience

    7. sigmaalgebra

      The power of teamwork?Okay.But so far a VC deal is a business transaction, with a contract, maybe two inches thick, from a lot of lawyers, with a Delaware C corporation, and a BOD, with also a lot of law and lawyers, and a handshake across a wide table.@JLM: “You don’t get what you deserve. You get what you negotiate.”.Very few VCs will negotiate like Obama did with Iran — sit on the wrong side of the table and then congratulate themselves on how well the negotiations went. Uh, go very long on tell-all books in 2017 where as a country we say “Never again”.Or look at the basics (can prove the basic theorem as a simple corollary of the non-trivial theorems of linear programming) of von Neumann/Morgenstern two person game theory — that is, look for a saddle-point where if either side changes their strategy they do worse. The Nash result is much the same but a little more general. For working together, such a saddle-point is about the best can hope for.And those tribes that got advantages by hunting together typically had a leader who was an alpha male and possibly a tyrant.VC has another problem: On average low ROI as in, say,http://www.avc.com/a_vc/201http://www.kauffman.org/new…In my post herehttp://avc.com/2015/09/a-cr…I don’t see the solution as a tribal hunting party with a tyrannical leader or everyone singing Kumbayah or Why Can’t We Be Friends but with better technology and, likely, with a leader selected not from being a tyrant or having a thick checkbook but from being uniquely qualified in the crucial, core, advantageous, barrier to entry technology. Ah, seditious thought!But, for this, the VC partners need to learn how to work effectively with things that are new; parts of US society are really good at that; but, as I essentially explained in my post, the VC partners are poorly qualified at that.So, right, there’s a big opportunity waiting.

    8. Dave Pinsen

      The irony I see with Maciej’s comment on central planners is that the status quo he laments (companies hoarding cash, not creating many jobs, etc.) is the result of too little central planning here. And that’s not the fault of Silicon Valley, but of government.Of course, communist central planning doesn’t work well, but that’s not true of more limited forms of central planning. America used to have a central plan to be a manufacturing power, and it pursued policies, such as protective tariffs, to help make that happen. America used to have a central plan of higher wages for working people, so it restricted immigration for forty years, to reduce the supply of labor. For the last several decades, we’ve embraced free trade and open borders, and, unsurprisingly, wages for average Americans have been in decline, and a smaller percentage of us are in the workforce now than in 1979.That’s the backstory of why Donald Trump and, to a lesser extent, Bernie Sanders, are doing so well in the polls now. Trump’s main argument is that, on trade and immigration in particular, our government has been getting lousy deals for the American people. And the facts suggest he’s right.Silicon Valley, and other industries, weigh in on these issues, but in countries that work better for their citizens, the government does a bit more to steer industrial policy. Decades ago, for example, South Korea’s government decided that it’s country should have a steel industry, even though it didn’t have the raw materials for one. That (along with tariffs, other policies, and the innate talent of the Korean people) helped build the foundation for the 1st world economy it has today.

      1. Simone

        Hi Dave, if I understand your argument correctly, you are saying – to be even more specific – that central planning is too concentrated, not necessary too little. Or potentially under a perfectible monopole. But not too little.

        1. Dave Pinsen

          You’re right that “too little” may not have been the best choice of words on my part, but “too concentrated” isn’t right either. The problem isn’t a lack of government involvement in the economy here, but the lack of an attempt to guide it in a direction that would benefit most Americans. That’s the fault of government though, not Silicon Valley.

      2. Brandon Burns

        I think Maciej’s analogy of central planners was off, and has clouded his message that SV perpetuates a fantasy, where businesses that make profits and do worthwhile things for real people aren’t the priority.I also agree with everything you’ve said about planning in the U.S. Specifically on Trade, Bernie and Trump are saying the same thing and both of them are right — we need to make stuff that matters in our own country, paying our own people real wages to do it.And with that in mind, is that SV’s point of view? Nope. If it were feasible / cheaper for Uber to hire Mexicans to be the drivers, and send them back to Mexico after their shifts to live and eat and sleep and spend all the money they earned in the U.S. back at home, you better believe Uber and it’s investors would have gotten the ball rolling on that yesterday.SV doesn’t care how its money is made, as long as its made. If we fuck up this planet, we can all move with Elon Musk to Mars!

        1. Dave Pinsen

          You allude here to the reason his analogy was off: central planners ostensibly had a responsibility to do what was in the best interest of their country, but Silicon Valley (like any other industry) doesn’t. Their goal is to make money, within the legal and regulatory framework set up by government. Government’s responsibility is to set up that framework so its citizens benefit.

  20. Terry Cook

    Interesting comment on vc’s as central planners. If true, the meaningful tech of the future will not come from the SV. Disrupting the disruptors.

  21. markslater

    This is a fascinating viewpoint.For me the far darker and way more concerning problem is the consolidation of wealth that resides with the modern day robber barons from the former eastern block and the arab states. These hundreds of billions of dollars of plundered sovereign dollars are going to football teams, obscene floating whore palaces and far darker objectives that prey on our species. It feels like some megalomaniacal mad max movie walking around london sometimes.So yes we can critique the california hippie billionaire venture investor who might seek out his or her own authenticity with a jolly to a desert festival occasionally, but it could be said about all of us that we could “do more” with what we have.As someone who runs a venture backed company, i’ve met with and spent some time with a whole bunch of these VCs over the last 5 years and i can truly say that if i were to stereotype, i have experienced a collective “good” in this crowd, a sort of undefinable “well meaning” – pretty honest, and sometimes truly daring. of course every apple tree has the odd bad apple.But as a group, our venture investors are positively angelic when compared to the death star housing the oligarchs and arabs. Last i checked, i don’t think fred or marc A were rolling deep in a tank proof escalade with menacing bald roided and armed WWE characters riding shot gun….could be wrong…..fred?Could more be done with the dollars these folks and these “california capitalist companies” have accumulated – of course!!But take a moment and be grateful it’s in these people’s hands. Or go to the Hotel Du cap on a summer day at the pool on the cliff and witness the alternative.

    1. pointsnfigures

      Have you seen a photo of Fred’s jeep? : )

  22. Ana Milicevic

    Directionally correct is right and he raises an important point – if you’re working on a company that doesn’t fit into the current groupthink (e.g. ‘Uber for ______’) you’ll have a harder time getting attention. Same goes if you’re not ‘stock’ issue tech bro. But the point that’s missing is that now, unlike 10 or even 5 years ago, there are many other avenues: bootstrapping (I hear it’s coming back!), crowdfunding, investing time to find the right growth partners, acquihire for financial independence down the road, etc.

    1. ShanaC

      it is more socially acceptable, but…. – it doesn’t break you into the right circles necessary for breakout growth.Gentry is as agentry does?

      1. Ana Milicevic

        Fair point but that’s just the thing: the right circles make things easier, but there are now more options outside of those circles too (which would have been nonexistent or extremely difficult to find a few years ago).People w/ more resources at the start of the game tend to have an advantage but doesn’t mean they’re guaranteed to win.

    2. Drew Meyers

      18 months of bootstrapping…actually, more like 3 years if you include our first attempt: https://www.linkedin.com/pu

      1. Ana Milicevic

        Nice write up – as you point out, there’s a big difference b/w ‘this product should exist and I’d like to use it myself’ and ‘I’ll invest in this’.Would love to chat w/ you about your Startup Chile experience.

        1. Drew Meyers

          Hey AnaI wrote some thoughts here: http://www.horizonapp.co/bl…Feel free to email me at drew at horizonapp co and I can answer follow up questions, or hop on skype/phone 🙂

          1. Ana Milicevic


  23. Rick_Robinson

    what is “directionally correct”

    1. andyswan

      It means wrong, but with “good intentions”.

  24. William Mougayar

    There is some truth there, and I’m in the Valley this week, spotting it here and there. But that criticism shouldn’t be just directed to the entrepreneurs who pursue crazy valuations, it is also directed to those who give it to them when it’s not warranted.I was warning an entrepreneur who is raising yesterday not to succumb to the lure of early high valuations, and he’s not going to. He told me: “Smart money doesn’t overpay.” Amen.That said, you need to have high ambitions in order to achieve great things in life and work. At the end of the day, it is Goals that drive outcome.

    1. Matt A. Myers

      It’s the nature of competition – and it certainly makes it tougher for more reasonable VCs to hit the unicorns when others are offering much more money; yes, I understand the value of quality relationships.How was that entrepreneur raising? A properly/fairly structured convertible note/debt? A smart entrepreneur and VC will try to make things fair with a baseline expectation of success.Goals and deadlines you care about drive outcome – whether that’s because you’re riding the edge of your burn rate or another motivation; I don’t like the idea of a VC keeping an entrepreneur on a short leash money wise as a tactic, being disciplined with money is the better option – especially if you can have legitimate reasons to have access to a larger amount of money than you may need to reach baseline/adequate success – however that looks.

    2. Twain Twain

      Will you blog your observations about what’s happening in SV this week? Thanks.

      1. William Mougayar

        10 meetings in 1 day. 9am-8:30pm. I might blog on it.

        1. Twain Twain

          Looking forward to it. Have you seen this?* http://www.businessinsider….”That was because bitcoin wasn’t catching on in the way that evangelists had hoped.”

          1. William Mougayar

            That line can’t be further from the truth. Bitpay’s issues have nothing to do with the state of the industry. Clearly the writers haven’t done their homework.

          2. Twain Twain

            As expected from the banks:* http://www.technologyreview…What are the implications for those Bitcoin startups that focused more on Bitcoin and a lot less than on Blockchain?

          3. William Mougayar

            Nothing wrong with that. Both are good.

  25. harris497

    First a proponent of a novel idea must get attention. Then when people are paying attention, they must be convinced… This is the tact that Maciej is using here and he’s not wrong. We can sing cumbaya around a fire when the problem has been fixed, but first the problem must be exposed and addressed. This begins with a shot across somebody’s bow.My2centsworth

  26. Steve_Dodd

    Hi Fred, interesting observation. But, I’d suggest that people read the entire interview to gain a better understanding of the points raised. Maciej is really just identifying the broken nature of our beloved internet and all of its contributors (VCs included). He sums it up eloquently:The only thing I don’t want to do is to raise the white flag. I refuse to believe that this cramped, stifling, stalkerish vision of the commercial Internet is the best we can do.I agree that markets will ultimately “do the work” . His point about “AdBlockers” is a perfect example of this. They exist because of market backlash and those investing in an advertising driven internet are upset. You can’t have your cake and eat it too! Perhaps they should have paid more attention to the downside consequences and risks to the unknowing recipients of their money driven, top line thinking.My biggest concern is that it is “all about the money” with little regard to impact. Yes, the free market will ultimately correct stupidity but the cost to those impacted (other than themselves) during the process is ignored. And unfortunately, those who created the “mess” usually get their money out (with huge gains) long before the “house of cards” collapses.What appears to be missing is the concept of “Having Ruth” (the opposite of Ruthlessness) and I totally agree with your final comment. Thanks for sharing.

  27. Kirsten Lambertsen

    Coincidentally, I read this yesterday, too. A colleague shared it.I had a mostly negative reaction to it. It did, indeed, strike me as hyperbolic. I almost felt like I was reading Alex Jones. Seriously. (@andyswan:disqus Crack the seal; we agree!)His points about privacy and advertising get lost. And frankly, anyone who’s been around awhile knows that advertising is a perpetual race to the bottom and battle for people’s private info. Big money cooperating with government spies is nothing new.He makes some interesting and valid points. But they’re lost in the “sky is falling!” tone. His take on VC and the tech elite just echoes the kinds of criticisms that have been made of the ultra rich and powerful since forever.His criticisms of people like Thiel and Musk seem taken out of context. That kind of thing makes me question the entire piece (and I am not a Thiel fan).His critique of San Francisco / Silicon Valley is quite fair. But it also looked like that long before the tech explosion. That city has long suffered from some of the most corrupt government you could care to meet.My years in activism taught me to be skeptical of anything that’s just too too. And this piece is too too. (In fact, he reminds me of myself when I first got into activism, running around “enlightening” everyone on shit they already knew all too well.)At the end of the day all of us should be checking ourselves for ego, hubris, and ignorance. We’d like those who have a disproportionate share of the wealth to do so even more. But that’s nothing new.I like USV’s approach: set an example, present ideas and solutions.

    1. Twain Twain

      +1 and add this to USV’s approach: be open to criticism and different views, and change for the better.

      1. Kirsten Lambertsen

        Yes. Perfect addition 🙂

  28. James Ferguson @kWIQly

    If simpler to raise money because of “who you know”, or “how well you put lipstick on a pig” than create a business that generates money, solves a real problem and can scale an implication arises…Those that seek and get funding through the former are rationally less attractive than the latter.Where “playing the game” features as more important that helping develop viable businesses our attendees are at a “drama school for con-artists”, not in an incubator.An industry (VC) caught up in this solicits prostitution of talent to the detriment of entrepreneurial activity – rather than driving forward an economy.The solution – look to where value is being created andwhere pigs wear lipstick run hog-roasts

    1. JamesHRH

      SV biggest issue is its phenomenal success. It is the largest market for startup capital in the history of mankind.It is no longer a maker community, it is a financial community.Financial communities are highly political and often suffer from Emperor Has No Clothes Syndrome.Putting lipstick on a pig happens everywhere – I worked for an ad agency that ran a major auto account….we keep a lot of lipstick around.Playing the relationship game is part of raising anywhere, its just worse in SV.

  29. iggyfanlo

    He’s SO spot on… we’ve gotten away from purpose and progress and follow the fantastical unicorn… I’ve read SO many comments in the past year or so that we are not in a bubble… it’s delusional…. any time you have ZIRP (zero interest rates) for 7 years, you will BY DEFINITION have a bubble

  30. LE

    Apple alone has nearly $200 billion in cash that is doing nothing .I mean seriously. Throwing out statements like that makes you lose all credibility. What is the right amount of cash to have sitting around (and not spend like a drunken sailor) if your success isn’t based on cash cows but a product that could easily see the pipeline of profits come to an end or be greatly be diminished? (Iphone). And this is forgetting that they are using the cash for things that we have heard of (cars) and almost certainly for things that we haven’t heard of.

  31. Semil Shah

    There’s a market for news, and the startup world has it’s own news market too. What drives eyeballs are unbalanced views — it’s either rampant techno-optimism without any consideration of on-the-ground realities, or it’s deep techno-skepticism (including around VC behavior) without coverage of people who are quietly doing super-human things. Usually when I read a overly gushy post or a more negative one like this one, it occurs to me it’s usually just a reflection of one’s sources of information and what they choose to pay attention to. In my day to day, I see both — I see the rampant behavior described above, but it only accounts for half of it — I also see people bringing robotics to warehouses, cloud systems to heavy industry, VR to commercial lines of business, computation to biology, machine learning to disaster science, and much more. The people working on those things and those investing in them often don’t have a big audience or pump efforts into PR, so we don’t hear about them.

    1. Cam MacRae

      Absolutely spot on.

  32. Richard

    We’d be better off if Apple bought every employee a fur coat and Bentley, or even just burned the money in a bonfire. At least that would create some jobs for money shovelers and security guardsWhat a lack of vision. And so incredibly ignorant. Is there a time limit for a company to hold earnings on its books? Apple is holding the money in trust for its shareholders. Savings have always played a pivotal role in capitalism and always will.

    1. Simone

      What a lack of vision for Apple indeed! I am sure this is what my teacher of management accounting would have said.

  33. sigmaalgebra

    After watching Silicon Valley information technology venture capital (VC) for too long, I had to conclude that it’s difficult to understand and for one really simple reason: It ignores essentially everything we have learned about applied mathematics, physical science, engineering, and technology for the past 150 years or so.Here I discuss just Silicon Valley information technology venture capital. Biomedical VC seems to be quite different.Or, we keep looking for how VC is a case of the astounding, huge, civilization changing lessons of those 150 years and just can’t see it. Sweat. Struggle. Strain. And don’t see it. Or we suspect we see it but, getting closer, conclude we saw just a mirage.If we look at all carefully, of course we don’t see it: It isn’t there.The fact that the VC Web sites commonly claim to be interested in innovation, disruption, going against the grain, originality, newness, brilliant entrepreneurs, etc. helps provide smoke to cover up the truth. It’s all misdirection much as in a magic show.We get a hint of the truth with:It’s a class marker and a socially acceptable way for rich techies to pass their time On “techies”, let’s check this out:What fraction of Silicon Valley VC partners have technical backgrounds? What fraction have college majors in math, physics, computer science, or engineering versus English literature, history, international relations? Their graduate degrees are technical or law or MBAs? What fraction of the VCs have written at least 10,000 lines of code in the past 20 years? Could discuss the main topics in a junior year college course in computer science, e.g., the Gleason bound and heap sort, P versus NP, how we can backup a relational database system while it is also doing transactions, the difference between TCP and IP, how minimum spanning tree algorithms work and where they get used, and a few dozen more such.What fraction of VC partners would be accepted as problem sponsors at NSF, DARPA, or Air Force Cambridge? What fraction are qualified for a tenure track appointment in a technical position at a leading US research university? What fraction could be hired as a researcher at a leading technical research lab, e.g., GE, Microsoft, IBM Watson? What fraction are qualified for a technical position in serious software development? For their careers, what fraction have been mostly in marketing, finance, business development, or stock analysis.The list goes on.The bottom line result: The number of Silicon Valley VC “techies” could hold a convention in an airplane lavatory.Net, rock solid conclusion, overwhelmingly, Silicon Valley information technology VCs are not technical. “Techies”? F’get about it.How can that be? Hint: Look at the backgrounds of the limited partners the VC partners get their money from.So, then, what the heck are the VC partners doing?They look for a business, usually exploiting some or all of Moore’s law, readily available infrastructure and open source software, the Internet, the cloud, and mobile, with traction significant and growing rapidly, in a big market, with so far minimal direct competition, and with a team eager to sign what is for them an onerous term sheet, e.g., a team of five young men each with a pregnant wife! The VC partners look for exit opportunities via acquihires, M&A, or IPO.An evaluation by the VC partners of a company has next to nothing to do with anything technical. Instead, the partners can get the information on traction from industry buzz, ComScore numbers, Google Analytics, talking to some users, trying the product/service themselves and, thus, estimating how popular it will be, etc. For the size of the potential market, just look broadly from 50,000 feet up using just common knowledge and also flip their lucky silver dollar. For the competition, again just use common knowledge.For a barrier to entry via intellectual property, patents, or unique technology difficult to duplicate or equal, just f’get about it. Really, prefer that all the core technology be just routine software. Generally, never really evaluate any core technology.So, really, there’s next to nothing technical about the work of a Silicon Valley information technology venture partner. And where there might be something technical about their work, they just ignore that, reject such projects, and make their money otherwise. They are not technical and won’t try to be technical; they avoid anything technical.By being so non-technical, the (Silicon Valley information technology) VC partners may be missing out on a lot of ROI — no joke.For the unicorn, billion dollar valuations, if you take that billion dollars seriously, then definitely you should look into the once in a lifetime, golden opportunity I have for you on a bridge over the East River. Instead, read the fine print on the deals.

  34. Joel Natividad

    What about Masiej’s larger point which is “directionally correct?” If you go over the entire presentation, he has some valid points as Fred pointed out.What exactly is it that could use some work about profits, revenues and valuations?PBCs and Effective Altruism are recent innovations that complement the rich starting Foundations – the goto mechanism that have long been the primary mechanism to fund impact-first firms.But it seems to me that these approaches are but a drop in the bucket in the greater scheme of things and do not address the root cause – that your externality is somebody else’s reality. That all the market power is increasingly getting concentrated into the hands of the few – at work, in politics, in capital.Are there market-based mechanisms that can be used? One can argue that the carbon tax and Romney/ObamaCare are (failed?) attempts at using the market to address larger societal issues.Is there a way to hack/disrupt “smart” regulations? Privatize it? Monetize it? Incentivize industry self-regulation rather than collusion? Computational whistle-blowing for a bounty with ombudsbots, perhaps?As there are still too many instances of companies putting profit above everything and getting away with it, and just looking at toothless regulatory fines as a cost of doing business – the recent Johnson & Johnson Risperdal revelation and VW “defeat” algorithms come to mind. In J&J, the main instigator actually gets promoted to CEO, despite the firms’ admission of guilt. With VW, the CEO retires with a golden parachute.To date – the typical regulatory cycle goes like this – a “bad apple” is caught doing something bad; everybody is “shocked”; some regulations are passed that penalizes not only the bad apple, but everybody else; the regulator is eventually “captured” and special provisions are inserted into the law to favor the incumbent regulated; rinse and repeat.

  35. Douglas Crets

    This is great, and from the outside, he is also right on about what I take as a critique of a culture of exclusion.

  36. disqustingUSA

    The flaw in human’s “end justifies the mean” mentality is that human’s often opt for the path of least resistance, or simply by nature, we take shortcuts and seek short-term gains over long-term sustainability. A capitalist or underwriter only needs to ensure a fat valuation today to gain near-term triple digit returns when they flip the company tomorrow. With that said, a true capitalist would never pay 10x+ for a company today if it had no control over increasing that return, however, the public equity markets will. It is not necessary for the company to ever reach that valuation or even have the capacity or intention to do so as long as the unknown growth variable exists to say “it could”.Definitely right on with this article. He sheds light to what most tech startup leaders discuss at conferences.

  37. PhilipSugar

    I really appreciate you posting this. The best part for me was the first part.

  38. JD Carluccio

    Interesting point of view, which I hear and see here in the Valley.My only thing to add is: remember where he comes from and who he is, because his words can’t be understand without this. Poland is a very different country than USA, and we change home but carry our bias. (know this from experience)

    1. Simone

      we all carry the bias of being ourselves before carrying the rest of our biases e.g. origin. So I am curious to understand in more detail your train of thought, because I can’t fault his logic

  39. Dave Pinsen

    The one day I forget to check this blog and it’s the most interesting post I’ve seen here in years.If VCs are akin to communist central planners, I wonder what Maciej would say about Carly Fiorina. Who in communist Poland does she remind him of?

    1. Simone

      same here :)! re checking AVC

  40. James Hare

    btw, when did human exploration and the preservation of life become something to sneer at…?

  41. Sean Hull

    Where are these bread lines today’s “central planners” are creating?

  42. george

    Nice catch phrase – CA capitalism. I think Adam Smith probably got this one right, self-interest and the competition are really the guiding forces here.Are all VC’s, Founders and Tech really concerned with the needs of society? Of course not but their interests do produce unintended benefits to society. Just look at how many new jobs and adjacent businesses have formed, that’s pretty meaningful value creation.BTW, Apple’s $200B in cash is used as collateral on bonds issued, which pay shareholders dividends, fund R&D and help acquire/support emerging new business and technologies. It’s pretty narrow to say it’s doing nothing.I’m not suggedting that all investor motives and pursuits are honorable or value creating, but rather stating – look around, technology is benefiting society although sometimes in unintended ways.