1/ Thread: "A Silicon Valley Ponzi Scheme"
Thanks to @chamath for laying this out in Social Capital's 2018 annual letter.
I've always appreciated his outspokenness.
This is creating a big bill that will soon come due...
But it's not who you think (that does), and the dynamics we’ve entered is in many ways creating a dangerous, high stakes Ponzi scheme.
Someone has to pay for the outrageous costs of this style of growth. Will it be VCs?
Eg: VCs habitually invest in one another’s companies during later rounds, bidding up rounds to valuations that allow for generous markups on their funds' performance.
if you’re a VC with a $200 million dollar fund, you’re able to draw $4million each year in fees.
Most funds never return enough profit for managers to see a dime of carried interest.
If u can show marked up paper returns & then parlay those returns into a newer, larger fund—say $500 million—you now have a fresh $10 million a year to use as you see fit.
There’s some deep misalignment here...
Partly why American healthcare is so expensive is bcos insurers, who play a key middleman role in setting prices for medical care, have a 2-sided biz model:
High costs allow them to charge higher premiums, allowing them to pull steadily more and more money out of patients’ and payers’ pockets.
In the end, both, patients and payers are the ones who end up as bag holders footing the bill.
The same thing is happening in today’s venture world.
Just as insurers’ biz model translates to higher costs of patient care,
So if its not VCs, who ends up holding the bag?
It’s still not who you’d expect.
In some cases, high prices may even work to their advantage.
Unlike the other pass-the-buck schemes
The real bill ends up getting shuffled outta sight to 2 other groups.
The 1st as u may guess are early stage funds’ limited partners, particularly future limited partners investing into the next fund.
Marking up Fund IV to raise money for more mgmt fees out of Fund V is so effective bcos fundraising can happen much faster than the long & difficult job of building businesses & creating real enterprise value
The second group of people left holding the bag is far more tragic: the employees at startups.
Although originally helpful as a way to incentivize and reward employees for working hard for an uncertain outcome,
Overall, you can understand how this arrangement endures:
Those companies then go spend the money on more user growth, often in zero-sum competition w/ one another.
What is the antidote here? Its 2-fold.
The 2nd is to break away from the MLM scheme that the VC-LP-user growth game has become.
It’s time to wait patiently, as the air is slowly let out of this bizarre Ponzi balloon created by the venture capital industry.
More from Tech
When I was sexually harassed by the director of the area I was working in, I was afraid to report it because I was worried that "getting him in trouble" would result in the subtle retaliation of missed leadership opportunities.
I wanted to continue working on the team I was on, because I'd gained a lot of very deep knowledge and expertise in that area, as well as reputation and camaraderie with the other folks working in that area. I didn't want to make the situation more "difficult."
To get promoted at Google, several need to happen: 1. you need opportunities for ownership and leadership above your current level (basically, opportunities to show you're working at the next level you're trying to get promoted to). The work you're "assigned" has a big impact.
2. You need glowing reviews from peers, *at or particularly above the level you're hoping to get promoted to.* Basically, you need people a lot more senior than you to say you're doing awesome work.
For technical founders it is irrationally, obscenely hard to reverse years of programming (ba dum bum) that sales is a value-destroying activity. Sales is CLEARLY a value-creating activity, contingent on you have a value-creating product.
The world will not drop what they are doing to adopt your work. This is particularly true in B2B, where simply building a better mousetrap won't overcome the activation energy required to get people with additional non-mice problems to prioritize changing mousetraps today.
This is very non-obvious for founders because founders are not often people who *want* to be sold to. We often come from a background where trying out tools is a bit of a fun hobby. We like looking at all the options, making charts, and ripping out partially complete tests.
"This week I unsuccessfully trialed four software options for automating that thing that has been killing us. Our actual production process remains the same as last week. Don't worry; this was a great use of time." is not a thing you want to write in a progress report to manager.
In the spring, Katsuki gets accepted into the bioengineering program at the Tokyo Institute of Technology. His friends insisted they opened the admissions letter, just in case he got waitlisted—then they all screamed, because
he’d been accepted.
Just like he knew he would be.
Personalized letter from the dean of students. Excess financial aid. Honors.
He smiled, even if it hurt a little, knowing he’d be leaving them soon. Hanta had applied there as well, and although his standardized test scores
weren’t great, he still had a shot since he scores really well in STEM courses. Other than him, everyone else planned to stick around Musutafu.
Eij wanted to join the armed services. Denki wanted to be a dental hygienist. Mina would go to the community college, and figure shit
out when she got there.
Ochako planned to leave the country, take a gap year and travel around a bit. Tsu—who is now dating Mina—was also on a full-ride to the University of Tokyo, on a pre-med track.
And then there was Deku.
The dumbass couldn’t pick a direction if you handed him a map and a compass.
Hizashi wants him to join the military; and as much as Katsuki hates the bastard of a man, he can’t deny that it may be Deku’s best option. If he doesn’t pick a school or come up with a plan,
With 100% free & useful videos showing each step.
A thread 👇
1) Align your topic with the exact keyword your audience is searching.
You can write about whatever you want... But if you don't use your audience's language patterns... They'll never find you!
High search volume and low difficulty phrases are the
2) Double-check the intent behind the keyword.
You found your keyword, but you need to check and see if Google & your audience think that phrase means what YOU think it means.
Do a quick Google search of the phrase. Do the results match your topic
3) Write your Title/Description at this point.
You've got Google open from the intent research, browse the titles ranking... Are they listicles? "How to" articles?
Your title is the promise of your post. Make it bigger, bolder and more compelling than what you see on pg1!
4-A) Outline the post based on the additional topics/questions/suggestions Google is showing you.
This outline will help you in 2 ways....
A) You will write MUCH faster
B) Your end product will be SEO
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Some random interesting tidbits:
1) Zuck approves shutting down platform API access for Twitter's when Vine is released #competition
2) Facebook engineered ways to access user's call history w/o alerting users:
Team considered access to call history considered 'high PR risk' but 'growth team will charge ahead'. @Facebook created upgrade path to access data w/o subjecting users to Android permissions dialogue.
3) The above also confirms @kashhill and other's suspicion that call history was used to improve PYMK (People You May Know) suggestions and newsfeed rankings.
4) Docs also shed more light into @dseetharaman's story on @Facebook monitoring users' @Onavo VPN activity to determine what competitors to mimic or acquire in 2013.
This spring at SxSW, @SusanWojcicki promised "Wikipedia snippets" on debated videos. But they didn't put them on flat earth videos, and instead @YouTube is promoting merchandising such as "NASA lies - Never Trust a Snake". 2/
A few example of flat earth videos that were promoted by YouTube #today:
If everyone was holding bitcoin on the old x86 in their parents basement, we would be finding a price bottom. The problem is the risk is all pooled at a few brokerages and a network of rotten exchanges with counter party risk that makes AIG circa 2008 look like a good credit.— Greg Wester (@gwestr) November 25, 2018
The benign product is sovereign programmable money, which is historically a niche interest of folks with a relatively clustered set of beliefs about the state, the literary merit of Snow Crash, and the utility of gold to the modern economy.
This product has narrow appeal and, accordingly, is worth about as much as everything else on a 486 sitting in someone's basement is worth.
The other product is investment scams, which have approximately the best product market fit of anything produced by humans. In no age, in no country, in no city, at no level of sophistication do people consistently say "Actually I would prefer not to get money for nothing."
This product needs the exchanges like they need oxygen, because the value of it is directly tied to having payment rails to move real currency into the ecosystem and some jurisdictional and regulatory legerdemain to stay one step ahead of the banhammer.
1. IQ is one of the most heritable psychological traits – that is, individual differences in IQ are strongly associated with individual differences in genes (at least in fairly typical modern environments). https://t.co/3XxzW9bxLE
2. The heritability of IQ *increases* from childhood to adulthood. Meanwhile, the effect of the shared environment largely fades away. In other words, when it comes to IQ, nature becomes more important as we get older, nurture less. https://t.co/UqtS1lpw3n
3. IQ scores have been increasing for the last century or so, a phenomenon known as the Flynn effect. https://t.co/sCZvCst3hw (N ≈ 4 million)
(Note that the Flynn effect shows that IQ isn't 100% genetic; it doesn't show that it's 100% environmental.)
4. IQ predicts many important real world outcomes.
For example, though far from perfect, IQ is the single-best predictor of job performance we have – much better than Emotional Intelligence, the Big Five, Grit, etc. https://t.co/rKUgKDAAVx https://t.co/DWbVI8QSU3
5. Higher IQ is associated with a lower risk of death from most causes, including cardiovascular disease, respiratory disease, most forms of cancer, homicide, suicide, and accident. https://t.co/PJjGNyeQRA (N = 728,160)