Tuesday, February 16, 2010

Venture Capital

Joel Spolsky on venture capital and perverse incentives:
[A]s a founder of a company, I can't help but think that there's something wrong with the VC model as it exists today. Almost every page of these books makes me say, "yep, that's why Fog Creek doesn't want venture capital." There are certain fundamental assumptions about doing business in the VC world that make venture capital a bad fit with entrepreneurship. And since it's the entrepreneurs who create the businesses that the VCs fund, this is a major problem.
Spolsky's complaints concern mostly the mutual benefit of the capitalist class. It's an important element of the communist argument, however, that the internal structure of capitalism is strongly (and perhaps necessarily) resistant to capitalists cooperating for even their own mutual benefit, much less the mutual benefit of the people.

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