Wow, TIL a16z hired the NYC subway guy as a partner purely as a political stunt. This on top of the $115M in the midterms, them no longer legally being a VC firm, and recent discussion on dark patterns in their portfolio [1]. I'm inclined to agree with the thesis of the article especially with regards to this firm. Looking forward to the other articles in the series.
a16z has always struck me as the shadiest vc - i associate them with NFT's, crypto and god knows what. They personify the amorality of chasing money over anything (Maybe indicative of SV culture these days in general).
As someone reading much of what Molly White publishes, there is no short supply of people in crypto that give of the same aura and are f̵i̵n̵a̵n̵c̵i̵n̵g̵ donating to someone that will push their crypto regulation agenda https://hachyderm.io/@molly0xfff/117191164732599820
I don't think anything that could even be mentioned as VC despises its own clients as much as a16z. Trying to sell investors on NFTs in 2026 should be criminal.
I’m a VC and agree with much of this. The mega firms have totally warped VC and the desire for massive cash appreciation has led to a host of bad characters getting involved. I still love working with early stage companies but it is hard to cut your own lane when these mega groups control so many aspects of the stack and have such outsized capital and political influence. There are so many issues destroying early stage VC right now. We need major policy change / guardrails but that won’t happen.
I think “regular” VCs are one of the cohorts of people I feel worst for! I have a lot of friends who got into the business wanting to help entrepreneurs, and now they’re stuck on a cap table with folks who they’d never want to do business with. It’s not any different than the founders or employees who don’t want to be saddled with these guys, either.
The hard part is figuring out how to change these structures so that people can actually extract themselves and still build stuff that isn’t toxic and destructive.
I think the root problem is it takes a lot more money and resources to compete now than it did before. Before, due to broadband being new, everyone not already having high performance computing devices, and the quickly decreasing costs of hardware, it was possible to use a skeleton crew and barebones resources to do something impactful. Or you have to be a very, very exceptional performer.
I know milenimals who know how everything works but only check messages every 2 weeks and dont answer if anyone calls. Might play a game once per month, might watch one movie per week.
One guy boots up his pc, looks at one website, closes the tab, closes the browser, shuts down the pc and switches the monitor off. I have to admit the technology looks terrible if used like that.
I find it very useful to be able to look up information at a moment's notice, whether or not a store has something in stock and where it is in the store before I go, doing group chats and video calls with family and friends almost anywhere I am, being able to get a taxi at a known price and see it arrive on a map, etc.
I just had a medical emergency in a foreign country and was able to navigate it with relative ease and almost no cost using translation features. I was able to scan and OCR documents with my phone camera which let me easily submit insurance claims, yada yada, a lot of things are much easier and cheaper in this day and age.
I stay away from the "news" websites (ironic given this site is called Hacker News, but it's not as monetized, so I guess it still works) and instagram/tiktok/youtube shorts/x style stuff.
I wouldn't lump up all inventions into this. The incentives are warped and we're too focused on adtech and filling human lives with screentime. It should be entirely possible to live a fulfilling life without having to carry a phone everywhere you go.
That's like waiting for domesticated animals to walk of the farm by themselves. Mess resolves itself the same way throughout history when different camps within the elite start saying enough. But there is a process just like abolishing slavery or getting kings to hand over money printing to the central bank. Wasn't driven by the plebs. It takes time because the different camps have to align. The parasites get reigned in eventually because they are in the minority camp.
Hate to sound like a Marxist but... this is what happens when capital has this much power concentrated in so few people. Eventually the system eats itself.
If you're in the right elite at the right time though, you can make a lot of money while everything falls apart underneath
Based on my experience on the fundraising side, I'm inclined to agree with your perspective. One small nit to pick: I think policy changes can happen. However, it's hard for me to imagine meaningful change occurring before a catastrophic event. How big would the blast radius be? Obviously no one knows, but I hope it's closer in scope to "The Collapse of Silicon Valley Bank" as opposed to "The Collapse of Lehman Brothers".
At the Federal level, absolutely. I could imagine that California and New York could work together to affect meaningful change. It would still be tough because specialty finance regulation is unlikely to generate the type of constituent response usually required for government action, but it's not impossible.
That said, reform would be a Herculean task under the best conditions. Effective change would never be a "one and done" operation. It would be great to have a non-profit like the Electronic Frontier Foundation to carry the mantle.
I'm in a startup, and we are (somewhat lazily) trying to do Series A fundraising. We _are_ a company that has AI as a part of our app, but not an LLM company.
The advice from our early investors was to basically overhype ourselves, telling that we can transform the world overnight. And also to remove any mentions of our _actual_ product that has real paying users because it can muddy the grand vision.
Another hot thing in the startup world is what I'm calling the "vibe income". It's potential income from a signed MOU or contingent on the success of some trial. So we have to compete with companies saying that they're already having $500k in "income" after just a few months. We naïvely thought that our GAAP income is more important.
I have really bad feelings about this whole situation.
Most of the industry is running on bullshit. The concept of running a productive service that meets genuine user needs in a clever, delightful, and satisfying way has been replaced by grifting, scamming, hyping, manipulating, and outright lying - a headless chicken voodoo dance to attract moar moneyz and worship the blind, idiot god Number Go Up.
I have so many thoughts about this, I'm not sure where to start.
Doing a raise has always been weird, there are lots of things that impact it, and different players in PE have totally different theses and motivations.
As a founder, finding the right investment partner has always been one of the most important and difficult things.
As a rule of thumb, I recommend to founders that only about 50% of the value of the investor is their cash investment. In many cases, less than that.
The things that are at least as important are their advisors (who open doors for you), their portfolio companies that can partner with you, and the alignment of their thesis and worldview.
I don't see any of that as having really changed much recently, other than a tightnening of capital for non-AI companies, but I suspect we're going to see a big shift there over the next 18-24 months, as the pressure from the LPs to deploy stays the same, but fingers get burnt from this bubble.
Also, don't forget family offices and industry VCs (Optum Ventures, etc...) that have a lot of these features built in to their structure, not just the fund.
It's not our first fundraise, and not our first startup. But something _is_ distinctly different this time. People are no longer willing to wait for years and are betting on nebulous claims in hopes of a huge payout.
And I feel that this goes far beyond the usual VC risk-taking.
I agree. Ethics is at the forefront of everything I do both personally and professionally. I used to serve on an ethics in business council. All the investments we make are grounded in genuinely improving the world. It’s unfortunate that so much money flows to certain VC firms when people like me exist since I reckon I’m much more aligned with what the general population wants.
I'm someone in the startup space that's sworn off raising capital and talks to a lot of founders. I can say that if you're willing to take an anti-Zionist position, you will get incredible deal flow from frustrated founders and definitely make your own lane. I know how difficult that is in this space though.
> It’s unfortunate that so much money flows to certain VC firms when people like me exist since I reckon I’m much more aligned with what the general population wants.
You sound like a pretty good dude
The study of Ethics is such a double edged sword. On one hand you have people who study ethics to think about how to treat people well, on the other hand you have people who study ethics in order to treat people as poorly as possible while still being "ethical"
I don't have a ton of firsthand exposure to the decision making process of huge corporations, but I imagine they mostly listen to the second group of ethicists
> but it is hard to cut your own lane when these mega groups control so many aspects of the stack and have such outsized capital and political influence
Are you able to shed some light on this? It would be interesting to hear what people like you come across.
There’s a lot so we would need to talk in person. But basically the power law is way too powerful right now. The impact that a small group of people can have is too much and it’s distorting things. This is not unique to VC, the concentration is insane right now across the board.
While Anil makes a lot of great comments about VC's shift towards institutional PE, the legal issues he harps on are insignificant.
Until 2012 or so there was no legal concept of "venture capital". Around that time, the SEC adopted some new rules in response to the GFC. In those rules came the "venture capital adviser" exemption. To be a "venture capital adviser", a firm needed to avoid doing a lot of things that looked like private equity investments or hedge fund management. The only consequence of falling awry of the new "venture capital adviser" definition was registration as an "investment adviser" with the SEC.
The important anti-fraud provisions of the Advisers Act still apply to "venture capital advisers" even though they aren't registered, and most big VC shops would have probably been pushed to register for other reasons anyway.
Let's keep praying for fewer and fewer regulations, it's going great!
I didn't know that VCs were ever "not cancer", I've always known them like that. Also my experience with startups is that it is a big scam for employees, but I understand it's not always the case (maybe it depends on where in the world?). I have been an early employee in multiple startups that got the founders rich, and what I got from the stocks didn't compensate for the low salary while working there.
Do I understand correctly that when VCs invest, they dilute the employees and somehow the founders can get away without being diluted? That's the only way I could explain the difference between what the employees get and what the founders get if the startup is successful.
And young people are super excited to work in startups because of old stories like "early employees at Google/Facebook became rich", I guess.
Everything which is not your salary is completely speculative, and should be valued at near-zero. That you wanted to gamble on that was your own decision and your own fault. You have nobody to blame but yourself. If you had gotten rich from the stocks you wouldn't have complained here.
Startups define different classes of stock. The class A shareholders are the founders and investors. Everyone else gets class B shares. The A class shares don't get diluted, and they are inherently worth more anyway.
Pref shares do get diluted, they are however senior to common stock so they get money FIRST if there’s not enough to go around. There is some cap on this and sometimes it’s pretty high. Huge pref overhangs are, indeed, a problem.
Pref shares with a 1x preference are still worth like 10x common stock in early stage companies and it’s common for employed to get fucked by this.
Founders don’t get preferred shares (I think it’s really, really rare). There is founder pref stock, which is somewhat different. It’s common for founders to cash out some shares along the way, though.
VCs get preferential shares, not common. Preferential shares have economic rights to protect the investors, but more importantly they usually have extra control rights like veto abilities, board seats, IPO control, or ability to sack the founder (which may even cut out the founder's voting rights by sunsetting their class A common into class B common shares).
Employees get a third tier of stock (e.g. options that convert to non-voting class B common shares).
After IPO the preferential sheets becomes common shares. The dual A class may be removed or have sunset clauses because large public investors prefer one plain common share class.
Not a VC - so take above as written by a student. Founders in zero sense have the same voting control as VCs.
This is not standard. Normally founders and employees get common stock and investors get preferred stock. Founders may get more stock issued in a round, and VCs/founders can pretty much rework the cap table to their liking if they really want to. The difference in return between founders and employees is down to percentages. Founders get 25-75% where employees get 0.01-1%, maybe a bit more if they're lucky.
So fundamentally, "everyone else" is scammed. Unless the class A scammers get so, so rich that everyone else gets rich as well. In which case it's still a scam, but the "everyone else" are happy anyway.
Why is that a scam? Nobody ever promises you any specific valuation or fraction of the company. When I joined a company relatively late but well before IPO, some funny number of shares at 12 cents or whatever each did not even enter my calculation any more than "oh and they also give me a free lottery ticket". In my case depending on when one sold after IPO they would have been in the range centered around about compensating for the salary differential I think, but nobody promises you they'd ever be worth more than Monopoly money
> Nobody ever promises you any specific valuation or fraction of the company
Would you mind asking before saying what I have been promised?
Also it feels like you have never been in a startup. The whole language of growth everywhere, the "billion-dollar startup", the "becoming a unicorn", this is all suggesting that "you're part of it and it matters to you if it becomes a unicorn". But it doesn't, really. Because you get diluted.
I was given a very large number of very low value shares. The company was about 60 people iirc and I think the hr guy said well we won't IPO soon but when we do, these shares might be worth a lot! Companies often aim for shares to be worth 10, 20, 50 dollars at IPO! Something like that. But it's obviously just vague pep talk. They also sometimes say everyone is there to make the world a better place...
It would be a scam if they promised you 0.2% of the company but then it was diluted to 0.1%. and nobody prevents you from asking i think. Otherwise it's no more a scam than a lottery ticket commercial showing the guy who won a Ferrari.
> But it doesn't, really. Because you get diluted.
At this day and age, if you don't understand dilution before you join, it's entirely on you.
This isn't a new concept - it was the case decades ago. Even when I left school over 15 years ago, the standard advice when trying to get a job with a startup was "Get a good salary and value the equity at zero."
And class A vs class B isn't even a rich vs everyone else thing. I have class A shares in an LLC, where even the (richer) founders are class B. The operating agreement is that we class A folks are "guaranteed" a fixed rate of return on our investment, and the class B folks don't get anything unless we get at least that rate of return. This is very normal in that industry.
We need something like an open source model or guild for VC, where successful people can put money into a pool that is generally accessible to anyone, with little friction. The idea would be to join the guild and gain access to funding, with a contract to contribute back some percentage of gross revenue and/or net profit, depending on how many people game the rules.
Honestly, wealth inequality has reached such epic proportions, that if someone came up with an alternative funding model, they could make VC lock-in obsolete. This is simultaneously extremely easy and extremely difficult to pull off. Money talks yes, but sometimes saying "your money's no good here" is more empowering.
I was thinking about this the other day in regard to Flock. There's simply no way this company will fail, despite the public outcry, because the rich people in charge will not _let_ it fail.
Of course it can fail, just like the AI circular investment moves can fail just like the Soviet Union failed. Too much decisive power in too few hands, disconnected from reality, disconnected from competition, disconnected from outside community criticism. It fails open loop. A lot of money can temporarily buffer the failure, but already we see world wide inflation and interest rate increases from the open loop decisions of the most powerful class.
Look at Silicon Valley Bank that was also "too big to fail" and when it did the taxpayer had to bail it out. If something is too big to fail, it's too big, the regulator should have stepped in earlier to chop it up.
Strong agree, spot on. There will always be wealthy folks behind the scenes who will arrange for the capital theatrics to land the way they want (Loopt was a failure and Sam Altman still ended up running YC because of vibes, Leopold Aschenbrenner blew up Situational Awareness and wealthy friends [Griffin and Citadel] bailed him out, for example). The best you can do is political recourse (note the wide social efforts to vote out folks who support data centers, and to have Flock contracts cancelled) and decouple from needing anything from any company who is controlled by these folks through cap tables, network, etc.
The game is rigged, operate accordingly. You are managing risk and threat exposure against threat actors who want to obtain and maintain control, influence, and power.
That's a fair point. I suppose the difference is if a rando is about to get blown out of the water, no one is coming to save them. If someone connected is going to get blown out of the water, calls are going to be made, people are going to meet, and it's going to "be taken care of" even if it's a good deal for whomever is Winston 'The Wolf' Wolf in the situation. Caveat being that sometimes, even if well connected, you're still toast (Archegos Capital Management and Bill Hwang).
I was living in SF Bay Area when a16z started. They had good marketing and a good reputation. Their analyst posts were insightful and well received here. My perception of a16z has changed drastically. I’m ashamed just how badly that marketing worked on me in the early years.
Indeed. I was once an Andreesen fan (many years ago). I've been trying to like him despite all the negatives for many years, but reading this I just can't any more.
VC General Partners (managers of the VC fund) are already fiduciaries with responsibility to the fund's Limited Partners (people and institutions which invest in VCs). Their fiduciary responsibility is to maximize return on investment.
> Since the Cancer Capital firms have become so powerful, the overall balance of power between founders and VCs has flipped; instead of founders having a company that VCs would try to fund, now VCs publish extremist political manifestos, and “founders” are just the people who are selected to carry out parts of those plans
> The rest of the world doesn’t know: New founders and workers entering the tech industry are unaware that Cancer Capital has taken over, so many are still trying to play by the old rules, and can’t figure out why their ideas are being pushed into serving the goals of the Cancer Capital firms
> These days, venture firms are increasingly getting their funds from pension funds and retail retirement accounts, meaning the public (you!) are increasingly holding the bag for the parts of their portfolios that actually have some risk, even if you never intentionally made that choice
> Part of why this has gotten so corrupt is the way the Cancer Capital firms have transformed themselves into their post-VC forms. Because they’re not legally VC firms anymore, they’re free to buy shares directly from founders, or hold unlimited amounts of publicly-traded stock — exactly what they couldn’t do as regular VCs. They can even sell their investment in a company as an asset to another one of their own funds, and then book the increase in value as a profit, all without the company ever having made a penny. Another racket: a company that’s raised a bunch of cash in a funding round can buy out its early investors if they’re one of these post-VCs, so they can get paid off even if their portfolio company has never made a penny in profits or revenues.
Aka the classic dynamic of wealth concentration resulting in power concentration. Great article. One thing it does not mention is how much this small circle of people have gotten zero-sum leverage over the whole country, because when the surveillance economy collapses, America collapses. This wouldn't be the first time the oligarchy triggers a crisis with reckless financial games.
My paranoid brain thinks the new "Every baby gets a $1000 investment account" is a lame effort on their part to keep it going. For an extremely low price tag they can give every child & parent skin in the game. For someone struggling seeing their kids account go up a $100 might compel them to support the bloated financial/banking industry now that they get a few drops from it.
The Gilded Age didn’t just “pass”. It was ended by strong unions and antitrust legislation (and enforcement). Passivity will kill us if we let the oligarchs have their way. Hope is not a plan. Appeasement will have no more success than it did in WWII.
The first one passed with a lot of regular people losing their homes, their jobs, and even their lives. I wish just for once we could have the wealthy elites get their comeuppance without it also screwing over everyone else.
there were substantial crashes and booms during the gilded age as well, it wasn't uncommon to go bust and lose a house before the great depression. The panic of `73 is pretty comparable with the great depression, for example
There is an explicit claim in the essay that says they aren't all the same.
Third bullet point says "a handful of venture capital firms have become 'do everything' funds that combine private equity with their existing VC businesses".
The root of the problem I think was caused by allowing institutional funds to invest money in VC firms. You combine that with the majority of the value being generated before they go public and you have a stock market which no longer works as a way to raise money for the company but as a way for VC´s to exit their positions and offloading companies on the public and funds.
I've been in an interesting spot the last few months. I've pitched probably two dozen or so VCs and, and while almost every case showed interest, it was quickly followed by "rules" and "desires" that were antithetical to the product.
The product I am building is a decentralized trust system. The word "trust" is literally in the name. It requires very specific decisions and a very specific organizational and legal structure to be successful. Why? Because anything else doesn't breed trust.
But that's actually the problem. The VCs don't like those things, because in almost every case it relinquishes their control/power. Or, they ask us to do something either questionably or blatantly unethical in order to sweeten the pot. I was one of those founders "unaware of the Cancer Capital situation." After six months of pitching, it's become extremely obvious to me that the current VC system is incapable of funding anything ethical or long-term.
I don't know what the right answer is from here. Our current attempt is founding a syndicate of like-minded individuals to bootstrap a pre-seed. It seems like the only possibility where you might be able to maintain an ethical vision without fighting a cancerous overlord. We'll see how it goes.
I think the problem is that decentralization is almost by definition antithetical to the ability to capitalize on something. As you indicated, decentralization means diffusion of control and power, which are essential to capitalize on that thing. Why would a VC or any capitalist invest money if they cannot see a way to earn back multiples?
Sure you could make some money, but nowhere near the monopoly profits everyone is seeking. A decentralized Google would never be as profitable as a centralized one, so where would a capitalist prefer putting their money?
IMO this is also why decentralized systems or peer-to-peer applications never really caught on. Some point to technical challenges or usability issues or a lack of use-cases, but I believe all of those could have been overcome with enough investment. There just wasn't enough money in them compared to centralization. (It didn't help that the only really popular systems were almost entirely used for illegal or unproductive purposes.)
And these dynamics over time are what have led to the asymmetric Internet today. The Internet was supposed to be equal, with each node capable of being a client and a server and, heck, even a router. But that's clearly not what we have today: networks hostile to P2P connectivity, increasingly powerful centralized services, and decreasingly capable end-user devices.
Well said. To be fair, there is a proposed healthy income stream to the company proper, and the investors are buying equity in the company (at relatively low scale, >$20M ARR). But that's sort of an "old school" play and it seems most VCs want more than just equity. Or if they do take equity, it comes with some insane pump and dump plan that would destroy the very thing we're building.
But I think the broader point I'm making is that what _is_ making all of the money nowadays is increasingly unethical and counter-productive to society. For example, see Kalshi and co. That, in our experience, is what the VCs are in all of the rage for right now, and as I said it's completely antithetical to our vision.
"Why would a VC or any capitalist invest money if they cannot see a way to earn back multiples?"
Why did Andrew Carnegie invest in building public libraries? Surely it wasn't because he was expecting a capital return.
The oligarchs (at least some of them) used to feel some responsibility to the betterment of man. It really seems like today's billionaires really only care about money and power and nothing else.
In case of Andrew Carnegie, it was probably desire at end of his life to been rembered as not only a ruthless businessmen and monopolist.
"Carnegie spent his last years as a philanthropist. From 1901 forward, public attention was turned from the shrewd business acumen which had enabled Carnegie to accumulate such a fortune, to the public-spirited way in which he devoted himself to using it on philanthropic projects."
As an olive branch, I came in connection with a group (mostly out of Asia) that seems to be more connected by the day (meaning I keep making more mutual connections). They have a very specific vision for capital aimed at funding generational companies whose vision aligns with bettering humanity rather than exploiting it.
They are out there, but unfortunately very much on the fringe because it's difficult to raise money with that ethos.
Yeah, you need to look away from private equity investment. Mutuals, co-ops, LLPs, there's lots of other models, but VC and PE money is not where you want to be.
> But a cancer grows from a cell that a body needs in small, healthy amounts, and that turns deadly when it grows without limit until it harms, or even kills, its host
I thought a cancer grew from a defective cell that is able to divide and grow to over take the healthy ones.
I would not focus on individual cells but the ability to grow super fast, which itself is not a defect since it's important during development, but the checks on this ability can be removed by later mutations/metabolic issues
The problem is using cancer as a singular noun in this context.
>a cancer grows from a cell that a body needs in small, healthy amounts
"A" cancer does not grow from a cell, a cell is a cancer cell if it keeps dividing when it should not. The cancer cells as a collective are the disease referred to as "cancer".
If they had written
"cancer grows from cells that a body needs in small, healthy amounts, and that turns deadly when it grows without limit until it harms, or even kills, its host"
Speaking of accountability, if you look around and see the tech enshitified you have no one else to blame but the biggest investors in the vicinity. Like it or not they are building your future and more often than not it's just a byproduct of whatever the hell they think they're doing, not a deliberate milestone, which makes it even worse.
yea but part of this is the consolidation of funding too. Standards to raise seed capital are soooo lofty now compared to 3 years ago. If you are in your in, if not good luck.
Likewise, stock market IPOs are a parody now - not means of getting financing, but dumping the paper on the retail after for the insiders and VCs to realize their gains.
Yes, it's downright stupid to buy into any tech IPO these days. The fundraising and all the growth were done by the A-M rounds, while the IPO is the bag-dump for the last few rounds of investors. Stay far away.
The lockup period is still in effect (for now) but reductions to index inclusion rules expose the stock to passive vehicles like ETFs that are obligated to have a specific allocation on the stock. So now there is an essentially guaranteed demand established by the time the lockup period expires. NASDAQ allows mega-cap companies into the NASDAQ-100 after 15 days which is much shorter than the lockup period for 80% of the SpaceX shares.
15 days - Pump: get into indexes -> ETFs obligated to buy shares
After - Dump: insiders cash out benefiting from the price premium of demand for shares from ETFs
They're solving that problem. Look at Spacex. They not only got the rules changed for fast-tracked inclusion in Nasdaq and Russell indexes to pump the price on their garbage asset, they changed the rules so insiders could bail early. It was a one-two punch in service of making insiders richer at the expense of retail investors. Transparent corruption, where a few billionaires write the rules that allow them to reach into regular folks pockets.
In my ~20 year career half of which were well funded startups I made it to one IPO (multiple sole proprietor sales) with a bigcorp and my prize was having 3 years to buy my stock options at the IPO day strike-price, which was higher than the stock ever was in my last 2-3 years there.
In the end I made my million(th) sitting behind a cubicle collecting 401k which none of those startups gave me.
Can you name a recent IPO that didn't put funds in the corporate coffers?
If the complaint is that people are investing in companies that are a Bad Bet, the solution is simple. Don't buy stocks that are you think are losers. That's the definition of insanity.
If someone wants to blindly invest money with zero diligence, then they have to be willing to accept the returns of a zero diligence bet.
VC is basically just plowing capital into people that went to prestigious schools or maybe were at a top company. They collect fees and every once in a while a company hits.
Any analysis on the asset class is moot.
Most of the VC media is aimed at hiding the fact that its a lottery machine for a pre selected group
I think the letter V should be removed from VC to better reflect your point that these are barely ventures - they're more like a rigged casino spin for those that don't have the talent to do the building themselves.
That's what the letter V was historically understood to mean. As the article says, venture capital used to be a small segment of the capital markets for the uncommon set of companies who can't prove their idea is any good until they get more capital than their friends and family have to offer. The idea that venture funding is supposed to be anything more than a rigged casino spin is upstream of quite a lot of the problems people have with modern VC.
I don't think they are that squeamish about hiding it. VC's talk all the time about investing in people and understanding that their ideas May shift over time.
Tyler Cowen is a big proponent of pre-selecting talented people and not even requiring an idea. I think this is the model of Emergent Ventures (EV), launched in 2018, and is getting replicated in many places.
i can't believe the whole blog post was just the tldr. this is going to be a legendary series of blog posts! j/k i WOULD like to read the long version of this but i probably won't remember to go back to this blog.
All the same to me. All of these entities have ruined previous workplaces in one way or another. Effectively stealing years of my life that I put my labor into.
These rich cunts are the reason everything is shittier and the term "enshittification" exists in our modern vernacular
VC was good when a guy with no technical skills raised 10s of millions of dollars. That was when VC was good, right?
This guy has been grifting his entire career but it's those other people who are the problem, guys!
He's not wrong about VC but he's another Chamath - a guy who grifts a thing to death, moves on to the next grift and goes 'look, that grift I'm no longer doing - it's bad, very bad!'
When you get caught stealing candy, saying 'look, he stole more than me!' doesn't work. Were you raised in a human society? I thought people learned these things when they were 7.
This is all silly and as best as I can read it due to very vocal large VC managers having politics the author doesn't agree with.
Take a look at the bullet points. It's just scattered random conflicting complaints.
VC is small and is now big (okay...)
They're not even VC anymore, they're doing all sorts of other investments (okay and?) Oh and they don't really care about their returns, but they grow fast (what? I'm pretty sure VCs care about returns). You know what else grows fast? Cancer!
Now that they're large, they have power over founders (why? there's other sources of capital). And they use companies to push their politics (seems much more complicated than just paying lobbyists).
And did you know pension funds invest in this stuff?(which is bad?)
There's an argument against large VC, but this ain't it. Talk about misaligned incentives, how they push aggressive tactics without regard to the founders, who may not be indifferent between a 50% chance of building a company to $10m to a 1% chance of building a company to $1b
Or just say "I don't like the politics of [VC related person]" and save everyone time.
> And did you know pension funds invest in this stuff?(which is bad?)
Not if this were something healthy. This wouldn't be the first time joe average is holding the bag when the rich set the house on fire again. The USA economy is particularly brittle (as in: not diversified) in that regard.
I can understand how the article might conflict with personally held notions and thus might look odd, especially as the weird dealings of the tech accelerationists do not find much press coverage. The only thing I can do is recommending to keep your mind open for new info, the article mentions he will follow up on the bullet points. The author has another previous article [1] that references Paul Krugman's article "The rich are crazier than you and me"[2], that might be an interesting read alongside the other pointers. As an aside, I also recommend to watch the video at the end that goes into Andreessen hiring murderer Daniel Penny.
"politics the author doesn't agree with" = racism, hatred, calls for ethnic cleansing, dismantling of the democratic government, open support for fascism... all being coordinated and advanced by a cabal of extremely wealthy VCs. Yeah those politics.
Do you think people who suspect tolerated opposition would not also criticize A16Z? How about investigating controlled opposition financed by A16Z or others?
[1]: https://news.ycombinator.com/item?id=49416055
The hard part is figuring out how to change these structures so that people can actually extract themselves and still build stuff that isn’t toxic and destructive.
Agreed it’s so difficult. And every time I think we have things all figured out, someone flips the table!
I’ve seen some ruthless terms for angels too. My buddy took an uncapped SAFE to get in a deal while the deal runners gave themselves a cap.
bix6 alludes to it another comment:
https://news.ycombinator.com/item?id=49554814
One guy boots up his pc, looks at one website, closes the tab, closes the browser, shuts down the pc and switches the monitor off. I have to admit the technology looks terrible if used like that.
I do find myself enjoying my computer / phone less these days though.
I just had a medical emergency in a foreign country and was able to navigate it with relative ease and almost no cost using translation features. I was able to scan and OCR documents with my phone camera which let me easily submit insurance claims, yada yada, a lot of things are much easier and cheaper in this day and age.
I stay away from the "news" websites (ironic given this site is called Hacker News, but it's not as monetized, so I guess it still works) and instagram/tiktok/youtube shorts/x style stuff.
If you're in the right elite at the right time though, you can make a lot of money while everything falls apart underneath
That said, reform would be a Herculean task under the best conditions. Effective change would never be a "one and done" operation. It would be great to have a non-profit like the Electronic Frontier Foundation to carry the mantle.
The Collapse of Lehman Brothers is also not enough for long term change, also apparently.
The advice from our early investors was to basically overhype ourselves, telling that we can transform the world overnight. And also to remove any mentions of our _actual_ product that has real paying users because it can muddy the grand vision.
Another hot thing in the startup world is what I'm calling the "vibe income". It's potential income from a signed MOU or contingent on the success of some trial. So we have to compete with companies saying that they're already having $500k in "income" after just a few months. We naïvely thought that our GAAP income is more important.
I have really bad feelings about this whole situation.
Doing a raise has always been weird, there are lots of things that impact it, and different players in PE have totally different theses and motivations.
As a founder, finding the right investment partner has always been one of the most important and difficult things.
As a rule of thumb, I recommend to founders that only about 50% of the value of the investor is their cash investment. In many cases, less than that.
The things that are at least as important are their advisors (who open doors for you), their portfolio companies that can partner with you, and the alignment of their thesis and worldview.
I don't see any of that as having really changed much recently, other than a tightnening of capital for non-AI companies, but I suspect we're going to see a big shift there over the next 18-24 months, as the pressure from the LPs to deploy stays the same, but fingers get burnt from this bubble.
Also, don't forget family offices and industry VCs (Optum Ventures, etc...) that have a lot of these features built in to their structure, not just the fund.
And I feel that this goes far beyond the usual VC risk-taking.
You sound like a pretty good dude
The study of Ethics is such a double edged sword. On one hand you have people who study ethics to think about how to treat people well, on the other hand you have people who study ethics in order to treat people as poorly as possible while still being "ethical"
I don't have a ton of firsthand exposure to the decision making process of huge corporations, but I imagine they mostly listen to the second group of ethicists
It’s inherent with true capitalism. You have to be willing to forego some profit to actually treat people right and for some that’s just too much.
I wish they taught this in business schools. I get the impression they really don't, based on my experiences with business grads
Until 2012 or so there was no legal concept of "venture capital". Around that time, the SEC adopted some new rules in response to the GFC. In those rules came the "venture capital adviser" exemption. To be a "venture capital adviser", a firm needed to avoid doing a lot of things that looked like private equity investments or hedge fund management. The only consequence of falling awry of the new "venture capital adviser" definition was registration as an "investment adviser" with the SEC.
The important anti-fraud provisions of the Advisers Act still apply to "venture capital advisers" even though they aren't registered, and most big VC shops would have probably been pushed to register for other reasons anyway.
The legal stuff is nearly irrelevant here.
I didn't know that VCs were ever "not cancer", I've always known them like that. Also my experience with startups is that it is a big scam for employees, but I understand it's not always the case (maybe it depends on where in the world?). I have been an early employee in multiple startups that got the founders rich, and what I got from the stocks didn't compensate for the low salary while working there.
Do I understand correctly that when VCs invest, they dilute the employees and somehow the founders can get away without being diluted? That's the only way I could explain the difference between what the employees get and what the founders get if the startup is successful.
And young people are super excited to work in startups because of old stories like "early employees at Google/Facebook became rich", I guess.
Pref shares with a 1x preference are still worth like 10x common stock in early stage companies and it’s common for employed to get fucked by this.
Founders don’t get preferred shares (I think it’s really, really rare). There is founder pref stock, which is somewhat different. It’s common for founders to cash out some shares along the way, though.
VCs get preferential shares, not common. Preferential shares have economic rights to protect the investors, but more importantly they usually have extra control rights like veto abilities, board seats, IPO control, or ability to sack the founder (which may even cut out the founder's voting rights by sunsetting their class A common into class B common shares).
Employees get a third tier of stock (e.g. options that convert to non-voting class B common shares).
After IPO the preferential sheets becomes common shares. The dual A class may be removed or have sunset clauses because large public investors prefer one plain common share class.
Not a VC - so take above as written by a student. Founders in zero sense have the same voting control as VCs.
Would you mind asking before saying what I have been promised?
Also it feels like you have never been in a startup. The whole language of growth everywhere, the "billion-dollar startup", the "becoming a unicorn", this is all suggesting that "you're part of it and it matters to you if it becomes a unicorn". But it doesn't, really. Because you get diluted.
It would be a scam if they promised you 0.2% of the company but then it was diluted to 0.1%. and nobody prevents you from asking i think. Otherwise it's no more a scam than a lottery ticket commercial showing the guy who won a Ferrari.
At this day and age, if you don't understand dilution before you join, it's entirely on you.
This isn't a new concept - it was the case decades ago. Even when I left school over 15 years ago, the standard advice when trying to get a job with a startup was "Get a good salary and value the equity at zero."
And class A vs class B isn't even a rich vs everyone else thing. I have class A shares in an LLC, where even the (richer) founders are class B. The operating agreement is that we class A folks are "guaranteed" a fixed rate of return on our investment, and the class B folks don't get anything unless we get at least that rate of return. This is very normal in that industry.
Honestly, wealth inequality has reached such epic proportions, that if someone came up with an alternative funding model, they could make VC lock-in obsolete. This is simultaneously extremely easy and extremely difficult to pull off. Money talks yes, but sometimes saying "your money's no good here" is more empowering.
It's worth noting North Korea probably is not a failure for Kim Jong Un an his ilk, it's just a failure for most other North Koreans.
That's probably a happy end-state for these "Cancer Capitalists."
The game is rigged, operate accordingly. You are managing risk and threat exposure against threat actors who want to obtain and maintain control, influence, and power.
not too long ago we were amazed at Apple hitting $1 trillion mkt cap and elon reaching $100 bil
now we're waiting for the first trillionaires to show up
Pretty insane from 100 billion in 2020 to 1 trillion in 2026.
Not a sign of a supremely broken system at all
and I'm not an Elon hater, I just don't see how this system can be sustained
We need an equivalent of the "Fiduciary" word for financial advisors ... but applied to VCs.
"Are you an Artisanal, Free-Range, Fair-Trade™ VC?"
Hopefully this one will pass, just as the first did
Firefights with guns, hand-to-hand violence, and real deaths were needed to give unions the leverage they had.
For some reason this history isn't taught in schools.
Why spend the money to build the bigger house when you don’t really enjoy it anyway - when your only motivation is that nobody else’s house is as big.
Third bullet point says "a handful of venture capital firms have become 'do everything' funds that combine private equity with their existing VC businesses".
The product I am building is a decentralized trust system. The word "trust" is literally in the name. It requires very specific decisions and a very specific organizational and legal structure to be successful. Why? Because anything else doesn't breed trust.
But that's actually the problem. The VCs don't like those things, because in almost every case it relinquishes their control/power. Or, they ask us to do something either questionably or blatantly unethical in order to sweeten the pot. I was one of those founders "unaware of the Cancer Capital situation." After six months of pitching, it's become extremely obvious to me that the current VC system is incapable of funding anything ethical or long-term.
I don't know what the right answer is from here. Our current attempt is founding a syndicate of like-minded individuals to bootstrap a pre-seed. It seems like the only possibility where you might be able to maintain an ethical vision without fighting a cancerous overlord. We'll see how it goes.
Sure you could make some money, but nowhere near the monopoly profits everyone is seeking. A decentralized Google would never be as profitable as a centralized one, so where would a capitalist prefer putting their money?
IMO this is also why decentralized systems or peer-to-peer applications never really caught on. Some point to technical challenges or usability issues or a lack of use-cases, but I believe all of those could have been overcome with enough investment. There just wasn't enough money in them compared to centralization. (It didn't help that the only really popular systems were almost entirely used for illegal or unproductive purposes.)
And these dynamics over time are what have led to the asymmetric Internet today. The Internet was supposed to be equal, with each node capable of being a client and a server and, heck, even a router. But that's clearly not what we have today: networks hostile to P2P connectivity, increasingly powerful centralized services, and decreasingly capable end-user devices.
But I think the broader point I'm making is that what _is_ making all of the money nowadays is increasingly unethical and counter-productive to society. For example, see Kalshi and co. That, in our experience, is what the VCs are in all of the rage for right now, and as I said it's completely antithetical to our vision.
Why did Andrew Carnegie invest in building public libraries? Surely it wasn't because he was expecting a capital return.
The oligarchs (at least some of them) used to feel some responsibility to the betterment of man. It really seems like today's billionaires really only care about money and power and nothing else.
"Carnegie spent his last years as a philanthropist. From 1901 forward, public attention was turned from the shrewd business acumen which had enabled Carnegie to accumulate such a fortune, to the public-spirited way in which he devoted himself to using it on philanthropic projects."
https://en.wikipedia.org/wiki/Andrew_Carnegie
Bill Gates is in similar phase of life.
They are out there, but unfortunately very much on the fringe because it's difficult to raise money with that ethos.
I thought a cancer grew from a defective cell that is able to divide and grow to over take the healthy ones.
>a cancer grows from a cell that a body needs in small, healthy amounts
"A" cancer does not grow from a cell, a cell is a cancer cell if it keeps dividing when it should not. The cancer cells as a collective are the disease referred to as "cancer".
If they had written
"cancer grows from cells that a body needs in small, healthy amounts, and that turns deadly when it grows without limit until it harms, or even kills, its host"
that would have made more sense to me.
15 days - Pump: get into indexes -> ETFs obligated to buy shares
After - Dump: insiders cash out benefiting from the price premium of demand for shares from ETFs
https://www.cnbc.com/2026/05/21/spacex-insiders-will-get-to-...
In the end I made my million(th) sitting behind a cubicle collecting 401k which none of those startups gave me.
If the complaint is that people are investing in companies that are a Bad Bet, the solution is simple. Don't buy stocks that are you think are losers. That's the definition of insanity.
If someone wants to blindly invest money with zero diligence, then they have to be willing to accept the returns of a zero diligence bet.
Any analysis on the asset class is moot.
Most of the VC media is aimed at hiding the fact that its a lottery machine for a pre selected group
Tyler Cowen is a big proponent of pre-selecting talented people and not even requiring an idea. I think this is the model of Emergent Ventures (EV), launched in 2018, and is getting replicated in many places.
I think it is regarded as highly successful
Those folks are in these comments. They'll get their pitchforks and torches eventually.
All the same to me. All of these entities have ruined previous workplaces in one way or another. Effectively stealing years of my life that I put my labor into.
These rich cunts are the reason everything is shittier and the term "enshittification" exists in our modern vernacular
You got a paycheck, no?
This guy has been grifting his entire career but it's those other people who are the problem, guys!
He's not wrong about VC but he's another Chamath - a guy who grifts a thing to death, moves on to the next grift and goes 'look, that grift I'm no longer doing - it's bad, very bad!'
When you get caught stealing candy, saying 'look, he stole more than me!' doesn't work. Were you raised in a human society? I thought people learned these things when they were 7.
Lots of VCs out there still taking big gambles on the agendaless and unproven ideas.
Take a look at the bullet points. It's just scattered random conflicting complaints.
VC is small and is now big (okay...)
They're not even VC anymore, they're doing all sorts of other investments (okay and?) Oh and they don't really care about their returns, but they grow fast (what? I'm pretty sure VCs care about returns). You know what else grows fast? Cancer!
Now that they're large, they have power over founders (why? there's other sources of capital). And they use companies to push their politics (seems much more complicated than just paying lobbyists).
And did you know pension funds invest in this stuff?(which is bad?)
There's an argument against large VC, but this ain't it. Talk about misaligned incentives, how they push aggressive tactics without regard to the founders, who may not be indifferent between a 50% chance of building a company to $10m to a 1% chance of building a company to $1b
Or just say "I don't like the politics of [VC related person]" and save everyone time.
I can understand how the article might conflict with personally held notions and thus might look odd, especially as the weird dealings of the tech accelerationists do not find much press coverage. The only thing I can do is recommending to keep your mind open for new info, the article mentions he will follow up on the bullet points. The author has another previous article [1] that references Paul Krugman's article "The rich are crazier than you and me"[2], that might be an interesting read alongside the other pointers. As an aside, I also recommend to watch the video at the end that goes into Andreessen hiring murderer Daniel Penny.
1. https://www.nytimes.com/2023/07/06/opinion/robert-kennedy-jr... 2. https://www.anildash.com/2023/07/07/vc-qanon/
He writes against Big-AI, but supports AI (small?) and copyright theft at the EFF, where he is a board member.
I'm getting tolerated opposition vibes here.
https://techcrunch.com/2026/08/31/a-group-funded-by-andreess...
https://www.nytimes.com/2026/05/13/technology/andreessen-hor...