stacksatsio on Nostr: Required is not the right word Pablo. The Silicon Valley VC model is about ploughing ...
Required is not the right word Pablo.
The Silicon Valley VC model is about ploughing capital in to emergent spaces in the hope that you back one of the 1/2/3 companies that will dominate the space rather than get eaten.
These startups are given exorbitant amounts of money with no expectation of profits, just growth metrics. Grow the userbase now, work out monetisation later.
So long as they hit the growth metrics, the previous round of investors help you go milk the next round - after all, it’s increasing the book value of their investment… Sounds like a Ponzi scheme, right?
And what the hell do you do with that money? You pay for ridiculous offices, provide insane perks to attract talent away from MS/Google etc and sooner rather than later you need a middle management bureaucracy to oversee the early productive team members. That’s the beginning of the end.
“The bureaucracy is expanding to meet the needs of the expanding bureaucracy.” - Oscar Wilde
A tale as old as time. Productivity in aggregate decreases with every marginal labour unit added, it’s not “required” rather its just what happens at a certain size but the investors don’t care because their goals are completely untethered from reality.
They’re not in it for a marginal return on a solid business, they’re in it for moonshots that go 100-1000X and literally gamble on entire industries like fucking degenerates.
Nostr is going to be the end of this model!
The Silicon Valley VC model is about ploughing capital in to emergent spaces in the hope that you back one of the 1/2/3 companies that will dominate the space rather than get eaten.
These startups are given exorbitant amounts of money with no expectation of profits, just growth metrics. Grow the userbase now, work out monetisation later.
So long as they hit the growth metrics, the previous round of investors help you go milk the next round - after all, it’s increasing the book value of their investment… Sounds like a Ponzi scheme, right?
And what the hell do you do with that money? You pay for ridiculous offices, provide insane perks to attract talent away from MS/Google etc and sooner rather than later you need a middle management bureaucracy to oversee the early productive team members. That’s the beginning of the end.
“The bureaucracy is expanding to meet the needs of the expanding bureaucracy.” - Oscar Wilde
A tale as old as time. Productivity in aggregate decreases with every marginal labour unit added, it’s not “required” rather its just what happens at a certain size but the investors don’t care because their goals are completely untethered from reality.
They’re not in it for a marginal return on a solid business, they’re in it for moonshots that go 100-1000X and literally gamble on entire industries like fucking degenerates.
Nostr is going to be the end of this model!