Thread by @patio11

Also seeing this, and (while not to be Mr. I Told You So) it's been pretty obvious it was eventually going to happen, for years.

https://twitter.com/Austen/status/1442708150449172484

One of many articulations of the thought, though I wouldn't use the word "bubble" these days; in core tech (ex-crypto) degree of investment seems extremely rationale to me.

Software takes money to build, and that money has historically been raised by professional money people.

Software makes software people money.

It is very not obvious that professional money people add value other than the money, and to the extent they don't, why have them.

VCs also provide connections, advice, gravitas, sure sure, but CEOs of public companies also have connections, advice, and gravitas, and if you notice some of those CEOs *still code for fun.*

Wouldn't you, an aspiring software entrepreneur, like tying yourself to them for years?

I mean there exist many options for folks who are very good at wining and dining capital allocators at pension funds if you think that you really, really want to spend a lot of time with someone who wines and dines capital allocators at pension funds. Golf's a great game!

I'm not evenly being acidly sarcastic, some people connect much harder with this archetype than they connect with the typical software person and if that is you, great, you have plenty of options.

But people who geek out about servers also have great options, and that's very new

(There are a few VC funds largely staffed by software people and it's become fashionable to say "Oh yeah I have operator experience." Some people who say that have built software companies, and some got an MBA and then did 2 years not building or selling at a big tech company.)

A related observation: one reason founders like raising from other founders is because founders generally don't insist on some provisions that VCs do and are broadly more pro-founder than VCs are, including re: e.g. valuations.

Fundraising Founder: I really want to get $X for 10% of the company.
VC: I mean wishes are fishes, but I have a fiduciary responsibility to my LPs to optimize for their interests, and I think you can get $Y.
Rich Founder: I'm here to fund cool shit with my own money. SOLD.

The way to phrase the reaction to this in polite VC is "I'm concerned about the level of capital discipline in the market these days.", which means "Damn it people we were supposed to allocate the excess return to capital not to the geeks."

See also "The game is changing. We're having to move faster and don't have the ability to build relationships over a month."

It has always been a curious thing that VCs think a large portion of their value prop is gazing into your eyes over many dates, looking for the spark.

If I were a cynical man, and I try not to be a cynical man, I would say that that increases founders' investment in "the relationship" and makes them less likely to push hard for the interests right around the term sheet.

But when founders fund founders, of course its faster.

New founder: "So here's what I'm building and less talk."
Successful founder: "This would be the point where I regale you with tales of how many successful things I've been a part of except presumably you've heard of my company so show me the demo instead."
New founder: "Yeah."