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Comment by jongjong | Hacker News Reader

It's so weird. I started to think that maybe this is intentional. It looks as though investors want to invest only in over-optimistic people who believe that we're living in some kind of utopian paradise; at the same time they avoid investing in anyone who has had so much of a faint whiff of how the sausage gets made.

It's like the entire system is desperate to keep optimists optimistic and pessimists pessimistic.

Why is it that investors actively seek out starry-eyed individuals?

It sounds like an economic bubble factory. If every new person who joins elite circles is optimistic to a delusional level, then that level of optimism may be contagious and propagate delusional beliefs among the elite.

There are people in the tech sector who were very successful decades ago and are now in their 40s and still haven't come out of their highs. They have the same worldview as I had when I was 15.

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I think it's because you need a figure-head that truly has zero doubt that what they are doing is the best and most correct thing. Because it has to sell, and it can't sound like a car-salesman pitch.

It might not be in the best interest of the company, it just needs to be a hype train long enough for the VC to get theirs. The Greater Fool meets real life. The VC doesn't care one way or another if the founder benefits in the end, as long as it doesn't affect their ability to make their next play.

Using smart children who have degrees from reputable institutions like Stanford is a value signal that VC uses to get more people involved with their plays. It's borrowing legitimacy and adding to the Jobsian mythology of the company, while also getting someone who has no idea what they're doing into a position where they will listen to a board who will tell them what to do.

I think it's just that privileged 20-year olds are the best material with which elites can build the next generation to replace themselves and thus the system in which they are embedded. Young Ivy Leaguers are also the basic building material of traditional business' executive corps, the CIA, the FBI, the military officer Corp, McKensie, and so on. In past centuries, these kids would be sent to manage imperial affairs in the Raj or something.

There are good reasons for this: their parents were last season's elites and want to pass it on, their classmates will likely be good contacts in other elite institutions, and they've already been trained to please establishment figures enthusiastically (or they wouldn't be Stanford wiz kids).

Not to sound like a crank, but information technology is now (and, really, has been since it's inception) an important theater in the class war, and elites are recruiting for it the same way they always have.

Not investors: venture capital investors in tech. It's a particular kind of investment in a particular industry.

Tech VC's are in the business of selling business futures, not building mature businesses. The buyer they sell to can install a practical CEO and worry about actual operations when that time comes.

In the meantime, enthusiastic kids provide a relatively cheap, manipulable, supply of powerpoints and pizazz -- whereas sober, mature professionals often need more personal income and tend to focus more on executing the business that they have experience in (mostly irrelevant to the VC's own business) instead of matching the investment pitch for upcoming rounds (all that matters).

The VC investors don't need a startup that accurately predicts its odds, because most startups fail. So what they need are starry-eyed kids who have a distorted view of their chances of success, and in the small chance that they actually succeed beyond anyone else's wildest dreams (but within expectation of the distorted perspective -- which is the only way you can continue executing without being overwhelmed), the VC reaps the profits.

> they avoid investing in anyone who has had so much of a faint whiff of how the sausage gets made.

Not actually the case. The average Silicon Valley founder is in their 40s. It’s just the young ones that get all the press (because they need it).

Why is it that investors actively seek out starry-eyed individuals?

> Apart from the fact that pessimists are not founding companies, the answer is: narrative. There’s a ready-made place in our society for the hero’s story - the lone individual who (like ourselves) is special and has a unique vision. We have multiple millennia-old religions based off this same narrative. It works. It gets press, it gets followers. Humans naturally take any boring story and fashion it into this shape if they can. It takes the large, confusing, abstract or confusing and makes it personal.

It's because the emperor has no clothes. Most of the VCs I've met have been complete airheads.

All it really takes to be "an investor" is to have money or be able to get money. There is no prerequisite of intelligence, business sense, product taste, operations wisdom, or sound judgment. Although they all seem to act as if they magically have these, as if the Investor title suddenly imbued them with these traits.

The only thing stopping me from being an angel investor is that I don't have $1M burning a hole in my pocket. But if I did, suddenly I could sit down in a conference room, put a polo shirt on, dangle the money from a fishhook, and people would take what I said about their business idea seriously. It's such a joke.

I mean, VC exists because they need to diversify their investments and literally can't find anywhere to put their money? I got the impression from the outside that VC money is just gambling on March Madness for the elite.

Deploy $5m to 20 companies and only one of them has to hit for it all to be worth it.

Because those investors (rarely) ever lose if the company goes belly up.

Is the company slowly declining into unprofitability? Sell it off and cash that big payout.

Can't sell it off? Scrap it for parts and scavage the remains, cash that big payout.

Did it implode in on itself in a spectacular fashion? Sue leadership to recoup your losses.

As the saying goes, the house always wins.

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