These teenagers are sometimes handed “pre-idea funding”—hundreds of thousands of dollars, or in rare cases, even millions—before they have the glimmer of an actual company in mind.

The products will need to get worse, more expensive, or both if VCs are to get their money back.

I would put venture capitalist in finite demand & open loop. There's only a certain amount of venture capital dollars entering the ecosystem in a year

I would put venture capitalist in finite demand & open loop. There's only a certain amount of venture capital dollars entering the ecosystem in a year, & investment selection remains an open problem.

The initialterms of the limited partnership stated that the first round of investorswould have their returns capped at 100x of what they put in.

Ryan Randall @ryanrandall@hcommons.socialEarnest but still solidifying #pkm take:The ever-rising popularity of personal knowledge management tools indexes the need for liberal arts approaches. Particularly, but not exclusively, in STEM education.When people widely reinvent the concept/practice of commonplace books without building on centuries of prior knowledge (currently institutionalized in fields like library & information studies, English, rhetoric & composition, or media & communication studies), that's not "innovation."Instead, we're seeing some unfortunate combination of lost knowledge, missed opportunities, and capitalism selectively forgetting in order to manufacture a market.

Business ModelWill I get charged at some point? How do you make money to run this product?TBD

It was as if Silicon Valley had made a secret pact to subsidize the lifestyles of urban Millennials. As I pointed out three years ago, if you woke up on a Casper mattress, worked out with a Peloton, Ubered to a WeWork, ordered on DoorDash for lunch, took a Lyft home, and ordered dinner through Postmates only to realize your partner had already started on a Blue Apron meal, your household had, in one day, interacted with eight unprofitable companies that collectively lost about $15 billion in one year.

We've had three things happen simultaneously: we've moved from an open web where people start lots of small projects to one where it really feels like if you're not on a Facebook or a YouTube, you're not going to reach a billion users, and at that point, why is it worth doing this? Second, we've developed a financial model of surveillance capitalism, where the default model for all of these tools is we're going to collect as much information as we can about you and monetize your attention. Then we've developed a model for financing these, which is venture capital, where we basically say it is your job to grow as quickly as possible, to get to the point where you have a near monopoly on a space and you can charge monopoly rents. Get rid of two aspects of that equation and things are quite different.

Surveillance technologies, especially those backed by significant amounts of venture capital, areoften underpinned by the same precarious labour and outsourcing practices that are critiqued fromwithin the academy

Jean Clarke, a professor of entrepreneurship and organization at EmlyonBusiness School in France, has spent years watching entrepreneurs like GabrielHercule make their case at demo days, incubators, and investment forums acrossEurope. In a study published in 2019, she and her colleagues reported thatcompany founders who deployed “the skilled use of gesture” in their pitcheswere 12 percent more likely to attract funding for their new ventures.

No one is going to be able to imagine a text online without annotations anymore.” They also foresaw a day when the site’s algorithmic evaluation of your Genius annotations — their “Genius IQ” — would be so widely accepted that it “could impact your grades in primary school and your ability to get a job in a certain field.” (“We’re going to have annotations on other sites, so every other site in the world like the Wall Street Journal and the New York Times are going be Genius-powered and they’re going to have our annotations on them. And then the Genius platform will take over the internet; everyone’s most important statistic that they have in life is their Genius IQ.”)

Thus, the creative freedom of creators is limited.

It’s the usual Silicon Valley sleight-of-hand move, very similar to Uber reps claiming drivers aren’t “core” to their business. I’m sure Substack is paying a writer right now to come up with a catchy way of saying that Substack doesn’t pay writers.

So Substack has an editorial policy, but no accountability. And they have terms of service, but no enforcement.

one thing I’m dead certain of is that startups shouldn’t be fixing this for us.

When Casper filed its S-1 in January, analysts, investors, and business nerds descended on the document like vultures. Not only was it a precarious moment to take a startup public, it was the first time anyone could actually access the raw numbers under the hood of a DTC. “The economics work better if Casper sent you a mattress for free, stuffed with $300,” jabbed NYU Stern marketing professor and tech doomsayer Scott Galloway. “This appears to be Casper’s business,” tweeted number-crunching Atlantic columnist Derek Thompson. “Buy mattress at $400. Sell at $1,000. Refund/return 20% of them. Keep $400, on avg. Then spend $290 of that on ads/marketing and $270 on admin (finance, HR, IT). Lose $160. Repeat.”

Months after achieving unicorn status by raising $100 million in funding at a $1.4 billion valuation, The Verge detailed allegations against the Instagrammy startup that its CEO Steph Korey had created a sweatshop culture within the company.

Perhaps the original mistake of the DTCs wasn’t in their vision, but in their decision to take the venture capital in the first place. Now under pressure to grow even faster and at greater scale than they otherwise would have had to naturally, they are being confronted with what happens when growth slows down, the cash starts running out, and investors are expecting their returns.

the past few months have exposed major cracks in the DTC business model, as several high-profile, venture-backed DTC startups have struggled and others have completely closed their doors. The investors bankrolling these companies are discovering one thing in common — that most of their money is going to expensive and ever-rising customer acquisition costs (CAC) via Google, Facebook, and Instagram. As one DTC investor has put it starkly before: “CAC is the new rent.”

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