VCs don't care if you're nice, they want founders who take risks

VCs want founders who are willing to play the game and can do it well: lying to (potential) customers, making insane promises, presenting fake demos as if they were real products and using fancy accounting tricks to make the business look profitable, when in fact it is bleeding their money, all so that they can easily find _other_ investors to bail them out. VCs have perfected legal Ponzi schemes.

> In August 2022, Andreessen Horowitz (A16z) announced its newest investment: It would put $350 million into a company called Flow, which "aims to create a superior living environment that enhances the lives of our residents and communities" — in other words, rental real estate. The company was founded by a charismatic Israeli-American named Adam Neumann. If the name sounds familiar, it's because Neumann was also the founder of WeWork — a company that was once worth an estimated $47 billion before imploding spectacularly amid accusations that Neumann had, among other things, taken a "sizable chunk" of weed across international borders on a private jet, fired a pregnant employee, and — most importantly — expanded far too quickly, leading to enormous annual losses.

Was this ever addressed by anyone at YC directly? I've heard Andreeson talk about it but never answer the simple question: this guy was extremely irresponsible and unethical, why would you trust him again?

I can't help but feel it worsened their reputation, at least to the normie. Just makes it look like VC is just a big game where if you're in, it doesn't matter much what you do.

> It can also help to have something else: a chip on your shoulder. Josh Wolfe, of Lux Capital, is fond of the phrase "chips on shoulders put chips in pockets." Feeling left out, excluded, or estranged can make you extremely competitive. VCs want founders who are willing to commit to low-probability ideas — ideas they think the rest of the world is wrong about — for a decade or more. What motivates a person to do something like that? Wolfe, who grew up in a single-parent home in New York's gritty Coney Island neighborhood, told me he thinks there's a common answer: revenge.

At this time, I'd like to ask all the VCs to form an orderly line in front of my desk, and to have their checkbooks ready.

It's interesting, I'm building a startup accelerator type thinger in Canada, very specifically for Canada (long story) - after about 6 months I noticed a really interesting early stage phenomena where: Canadians are primarily being funded by Americans and Canadian Funds are primarily backing Americans. In closed doors, over lunches and dinners, over time, it finally came out, Canadian vc's don't believe Canadians are ambitious enough, they "don't even imagine moonshots".

I wondered originally if it was a small thing, but as I've dug in over month and months, I've noticed it's both a very real thing and a very wide spread thing.

The article is phrased as VCs wanting founders who take risks, but actually it's just another framing of the fact that VCs are looking to reduce their risks as much as possible.

No matter which new market the founders are working on proving, if and once the founders find PMF, first mover advantage provides a very narrow window of opportunity before second-mover advantage competitors enter the market, many of them either incumbent players with large GTM operations or simply foreigners (e.g. Chinese) willing to steal IP and undercut on cost. Exploiting the new market sufficiently quickly to develop into a major player that is capable of providing VC-acceptable returns requires the founders to have, shall we say, a certain kind of cut-throat character.

It has never been more feasible to avoid VC funding. Initial server costs are cheap. Social media makes it free (even profitable) to develop a following to sell to. Why waste your time chasing VC funds?

This article is deeper than most of the offhand comments so far are giving it credit for. It's a fair crack at some psychological folklore about formative experience and motivation, and how that relates to risk-taking. Oddly I noticed the words "ethics" and "morals" don't appear in the text. I think they're important to complete the discussion around drive and its relation to adversity, opportunity, sense of being an 'outsider', disagreeableness and all that. I think there are many more similarities between "founders" and "revolutionaries" than is comfortable to discuss.

> Of the billionaires on the 2023 Forbes 400 list — the 400 richest people in the United States — 70% are basically self-made. And 59% came from an upper-middle-class background or below.

I have a very strong feeling the words "basically" and "upper-middle-class" are doing a ton of work in this sentence.

I don’t know if most of the founders listed in the article are abnormally high risk takers in terms of downside risk (other than Adam perhaps). They all seem to have secured a decent backup plan if things started going south.

To see this, just look at what each founder was doing immediately prior to going all-in on their startup. It was typically something that set them up to fail gracefully if necessary. Bezos had plenty of connections at D.E. Shaw by the time he decided to drive to Washington and could have easily returned to the finance industry at any point. If Facebook had failed, Zuckerberg would have at least been able to secure a high-level role at an existing tech company. And it may only be a rumor, but I believe Elon Musk had a certain window of time to resume pursuing his PhD at Stanford if he desired.

This isn’t a criticism of these founders not being “risk takers”, but rather just an observation to serve as a counterpoint to the article. The decisions I have made in my own career so far are based on laying the groundwork for the same strategy—set things up so I can attempt a startup at some point, and if it fails, my previous work history plus a decent amount of savings should minimize downside risk. And the additional experience of leading a failing startup isn’t worthless; I once worked at one where many employees jumped ship to better jobs than the ones they were at prior to joining the startup.

This is a long winded way to say that Black-Scholes applies to startup investments too. Greater volatility has a higher expected value.

>And 59% came from an upper-middle-class background or below.

what a useless categorization to rely on

In my experience with many VCs, they are pretty risk averse people (if they were risk taking, they'd be either in hedge funds or starting companies themselves).

So the best way to raise VC funding is to leverage FOMO or sell traction.

Show me the VC's who care about innovation and want risk takers please. I only see them interested in proven money producing product lately.

I don't care if VCs take risks, I want to be nice.

They want founders who win.

It’s much simpler than a lot of people think. Venture capitalists want the largest returns possible, they do not care about anything else, people, environment, social, nothing. They will pretend to in order to get the returns. Just as they expect you to say anything to win they will also say anything to get the best deal. More risk = more reward

This isn’t just VCs, it’s capitalism. It shouldn’t be a shock

Just so everyone understands how VC works, when a company announces a round of VC funding what they are really saying is they just sold a percentage of their company for the number in the announcement. You know the capital funding number, you don’t always (often?) know the valuation or the percentage.

If you are any sort of entrepreneur, you’ll understand how difficult this is , it can feel like a deal with the devil for a percentage of your soul.

But again, more risk = more reward

Remember , it’s an old game, startups predated modern VCs, tech, Silicon Valley, all of it. Think outside your current bubble, well written business books back to the 1920s exist. Sometimes simpler examples help, never engage with what you don’t understand.

Is this about making the VCs rich or the founders rich? What's the point about self-made billionaires ?