[FoRK] More on "Capitalism's Fatal Flaw" / hopefully-amusing jabs at VCs
jbone at place.org
Sun Nov 8 07:58:33 PST 2009
I may have inadvertently set the impression that my main complaint w/
VCs is that they aren't investing in the right deals. That's true to
some degree, but it's less than half the story.
First, before a VC invests in your deal they can only do two things:
say "no" or *fail to say no* (and in doing the latter, waste
potentially unbounded amounts of your time, which is its own HUGE
problem. It would be better if more VCs could be more decisive, and
be more forthright about their issues that lead them to no. In my
experience, very few are capable of actually *making* a decision in
the first place; they eventually "arrive" at a decision through some
rather random-walk-like process that's totally opaque, subjective, and
generally useless --- and, clearly, looking at their win rates, highly
The *bigger* problem comes when the VC actually *does* invest in your
deal. At that point, no matter what their stake or level of control
or size of investment, they have effectively *infinite* ways that they
can (and usually will) screw up your deal. And there's barely
anything you can do to thread the needle; it's mostly a matter of luck.
Hardly surprising that technological innovators are increasingly
choosing to pursue courses of action that mitigate the ability of
others to screw up their outcomes.
Just for amusement, here's a small sampling of the very many stupid
things I've heard VCs say *with utter conviction* over the years that,
in part, led to my flight from "value-creating" entrepreneurial
pursuits to where I am now. This is only an approximate timeline,
it's all paraphrasing, and I won't name names. (Well, maybe one; but
if I did name them all, many of you would recognize many or most of
1993: "Internet? Who cares about that? Just geeks. AOL and
Compuserve are going to own the whole thing."
1994: "Mobile e-mail? That sounds like a complete *nightmare!* I
don't *want* to be that reachable!"
1995: "Browse the web on a mobile device? Nobody will ever want to
1996: "Web? Forget that, it's not going anywhere, Lotus Notes has
already won that game."
1996: "There will never be a mass market for "computers" that fit in
1997: "Java? That's not a real language. Why hitch your wagon to a
horse that's going nowhere?"
1997: "Peer-to-peer? Who cares about that? The trend is
centralization, my friend."
1998: "Instant messaging? That's just e-mail for kids, nobody cares
1998: "Virtual environments? You mean games, right? Tiny industry,
kids only, no practical application, a dead end."
1998: "Virtual currency, virtual economies in virtual worlds? So,
I'm guessing you smoke a lot of dope."
1998: "This whole paying to advertise online thing is just a flash in
the pan. It's a Ponzi scheme."
1998: "The software application is dead. It's all going to be
services, online." (Nb., cf. Apple's App Store now, motard...)
1999: "E-payments? Who wants to do that?"
1999: "Kids shopping online? Parents will never go for that."
2000: "Scripting language? Get serious. Why aren't you using a real
programming language, like Java?"
2000: "But there's just no way to make money giving consumers a free
service! Hello, dot-bomb?!?"
2000: "Automatically categorizing news? Even the NSA can't do that..."
2000: "Social bookmark service? I can already bookmark things --- in
2000: "Blogs? RSS feeds? How's this different from mailing lists?
Push failed, remember Pointcast?"
2001: "Filesystems are dead. Everything is just going to live in the
2002: "Synchronizing folders across machines? Why bother, I can just
e-mail files to myself."
2002: "Cloud storage and versioned files? I've already got backups,
nobody will want that."
2002: "Why do I care about how hard it is to manage network shares?
I have IT folks for that..."
2003: "Rules and policies on files? But we already have everything
we need to do this, obviously."
2003: "Appliance? Why don't you just sell your application on a CD
2003: "Nobody's going to buy hardware gear from anybody but Cisco or
2004: (French accent) "Classify files? That is AI. It is snake
oil. C'est impossible, it does not work. You lie."
(This latter is the one instance in which I will name names: Jean
Louis Gassee told me this.)
At that point, despite having had some success over the period
monetizing several of these "crazy" and "impossible" ideas... I said
"screw it" and left for greener pastures. And so far, *absolutely* no
PS - in the interest of fairness I should mention one of my own big
misses on such judgments; though I'm no VC, that doesn't immunize me
from failing to recognize the occasional *great* opportunity. This
recollection is tainted by the distance of 13 years of time, so caveat
folklore; it's at least mostly true, though. ;-) One night (really,
early morning) in 1996 (I think) I was taking a break during a lengthy
compile and playing a game of pool at General Magic with the developer
who had been assigned to work with my company (Active Paper) to
integrate our mail and browser apps into their OS. He was describing
how his girlfriend, like many Apple employees, didn't really "get" the
Internet and talking about what he was doing about that. He was
working on a website to help her conduct her hobby online: trading
collectable Pez dispensers. He was working on "this kind of auction
site thing" and thinking that he might quit to really try to turn it
into a business. Had it running on a surplus Sun desktop box running
out of his spare bedroom at the time, or some such. I told Pierre I
thought that was the dumbest idea I'd ever heard. ;-)
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