Steve Blank: Venture Capital Is “Liquidity Ponzi Scheme”

The ability to shut out what is important for good mental survival is an unhealthy, dissonance creating behavior. By ignoring what is crucial to one's mental stability and focusing on an arbitrary goal (which is to make someone else not doing the work more money) is an INSANE behavior to practice. It might make sense if it were life and death, but rationalizing the technology improvements that come from these types of efforts, and the money that comes with those improvements, is just a sign of massive societal dissonance.

Technology will continue to increase in sophistication regardless of how idiotic we are with our own mental health and sanity.

These people, mostly billionaires I will point out, only stand to profit from others throwing themselves into something so completely that the chances are that the founders will either succeed widely or end up being broken as a result. Justifying "brokenness" as a needed trait for CEOs using biased blaming statements is a sign of a self centered rationalization. And for what?

That jackass on the right was even laughing about people paying $10 more to sit closer to him. Fuck those guys. Build your own company on your own terms. Live your life fully TODAY, for tomorrow may not be at all.

1) the loose definition of Ponzi Scheme he's applying here seems so broad as to be meaningless. Multiple banks offering you lines of credit you can't pay back would be Ponzi Schemes too with his characterization.

2) the stuff about what makes great founders reads like post-hoc projection of his own life experience onto rationalizations for his success. In other words, bias. Given almost half of Silicon Valley founders apparently don't come from "dysfunctional" upbringings. A veritable coin toss doesn't make a compelling case.

VC's want to make money, pure and simple. The only thing that matters is the liquidity event that allows them to recoup their investment. It can be argued that in the end all these people actually create is personal wealth for themselves since the product and it's long term success (and the success of the founder and company) really don't matter. I think that's a pretty bleak outlook considering they could be making money doing a lot of other things and there is great value in what they do.

VC is a game, and to play it right, they need to distill their decision making into core principles. This whole thing about dysfunctional families that the article discusses, well, I do think you need a certain temperament to be successful in the VC game and maybe the dysfunction helps to build that kind of mindset (non-sentimentalism and drive).

Completely incorrect use of the term "Ponzi scheme".

> "Their only goal is to make you liquid or go public. They will support you to do that, but that's about it."

I've never met a founder that didn't know that taking a VC money means liquidity is your overarching goal.

For example, it would be extremely unfair to describe Y Combinator's business as a "liquidity Ponzi scheme."

Maybe a moderator can fix the original link.