Venture Capital - Silicon Valley Ponzi Scheme - Chamath Palihapitiya
Why Hacker News recommends it
Cited in threads about startups, VC and private equity as an insider's description of how VC economics work, though commenters note he is self-serving.
What it is
A 13-minute clip from This Week in Startups in which Chamath Palihapitiya describes venture capital as a Ponzi-like scheme driven by fees and inflated valuations among VCs.
Recommended by 1 HN commenters across 1 different months, 2020 to 2023.
What Hacker News said
Recommends nowherebeen · 2020-12 · on “How to Start a Startup (2014)”
> all this money and all this failure, its going to end badly, these investors are gonna get burnt No, I think all these startups employees with families to feed are going to be out of a job. VCs fund startups that shouldn’t have been funded in the first place. They create a market that artificially props up unsustainable businesses. This video is a good explanation of how the VC world actually works. [this video]
Cites Reedx · 2020-01 · on “Lime shuts in 12 markets, lays off around 100”
It seems that a lot of VC is a multivariate ponzi scheme of sorts, which might explain some of it. If they're making fees regardless, then they just need to show/push fast initial growth to attract more layers of investment and it doesn't necessarily need to make long term sense. Chamath Palihapitiya describes this here: [this video]
Cites ibeckermayer · 2020-01 · on “Lime shuts in 12 markets, lays off around 100”
VCs also get paid by getting other VCs to evaluate their companies as more valuable in a sort of Ponzi scheme: [this video]
Cites cryptica · 2020-09 · on “Fuck You Startup World (2016)”
Let's not ignore the 'minor' detail that the entire space is a ponzi scheme to begin with (coming from Chamath Palihapitiya; a billionaire who was one of the first Facebook employees): [this video] And let's not ignore that the entire financial system within which this ponzi scheme operates is also a giant ponzi scheme: [LINK] So the startup world is literally a ponzi scheme within a ponzi scheme.
Cites jiveturkey · 2022-06 · on “Amundi warns that parts of private equity market resemble ‘Ponzi schemes’”
Not a new understanding. Chamath Palihapitiya talked about this in 2019, and others before then although I don't have references. [this video] Warning, video is self-serving but simplistically, this is part of it. To be clear, the VCs understand what they are doing. They aren't fleecing themselves.
Cites stillwithit · 2023-11 · on “More on Sam Altman's Ouster from OpenAI”
Yeh he was setting up another funding funnel MS -> OpenAI -> his AI chips [this video] Make it appear on paper like there’s proper separation of concerns but really building a web to form monopoly with MS’s backing because they can’t get in trouble if some startup is doing it. Just more shell company games to play the system, screw everyone else by using their churches to claim dominion over all of tech. These guys are too obvious now. The elders who don’t know better are dying off leaving behind a more technically literate voter base.