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- <!DOCTYPE html><html><head><title>Brandon Smietana Answers - Quora</title><script>_w2replay=(function(){var b=[],a=[],d,g=/^a$/i;function c(j,i,h){var k;if(j.addEventListener){j.addEventListener(i,k=function(l){if(h.call(this,l)===false){l.preventDefault()}},false)}else{if(j.attachEvent){j.attachEvent("on"+i,k=function(){return h.call(this,window.event)})}else{return}}b.push([j,i,k])}function f(j,i,h){if(j.removeEventListener){j.removeEventListener(i,h,false)}else{if(j.detachEvent){j.detachEvent("on"+i,h)}}}function e(h){c(document,h,function(j){var i=j.target||j.srcElement;a.push({type:h,elem:i,cursor:i.style.cursor});i.style.cursor="wait";if(g.test(i.nodeName)&&i.getAttribute("href")==="#"){return false}})}e("mousedown");e("mouseup");e("click");return function(k){if(d){return}d=true;while(b.length){f.apply(null,b.pop())}for(var h=0,j,l;j=a[h];++h){if((l=j.elem).style.cursor=="wait"){l.style.cursor=j.cursor}if(k.inDom(l)){k(l).trigger(j.type)}}}})();</script><meta http-equiv="X-UA-Compatible" content="IE=EmulateIE7" /><link rel="search" type="application/opensearchdescription+xml" href="/opensearch/description.xml" title="Quora" /><!--[if IE]><link rel="stylesheet" type="text/css" href="/static/ie.css" /><![endif]--><meta property="og:site_name" content="Quora" /><meta property="og:description" content="&quot;There is no such thing as perfect. There is only growth.&quot;" /><meta property="og:title" content="Brandon Smietana on Quora" /><meta property="og:url" content="http://www.quora.com/Brandon-Smietana" /><meta property="og:image" content="http://d2o7bfz2il9cb7.cloudfront.net/main-thumb-6673-50-iQY07uHy4EIxliIOKB2oVtdnn7FsdmZc.jpeg" /><meta property="og:type" content="article" /><meta name="robots" content="noarchive"/><link href="http://d1vgw4v7ja2ido.cloudfront.net/-c78da7565ff11063.css" rel="stylesheet" type="text/css" /><link href="http://d1vgw4v7ja2ido.cloudfront.net/-d56349121307e6c8.css" rel="stylesheet" type="text/css" /></head><body><div><div id="ld_GprgIi_1499"><div style="display:none;" id="live_mutation_pending"></div><div class="header wrapper" id="layout_header"><div class="contents"><div class="logo"><a class="w1" href="/">Quora</a></div><ul class="nav_list"><li class="about"><a href="/about">About</a></li><li class="login sub"><a href="#" id="__w2_DEZKV2w_login_link">Login</a></li><li class="signup"><a href="/signup/index">Sign Up</a></li></ul><div class="search w3_5"><div class="search_contents navigator"><form class="search_form" action="#" onsubmit="return false;" method="get" name="search_form"><div class="search_input"><div class="input_wrapper"><span class="context" id="__w2_IAvTtPV_context"></span><input class="question_box" group="__w2_JIvTDkh_interaction" autocomplete="off" type="text" placeholder="Find Questions, Topics and People" value="" maxlength="150" w2cid="JIvTDkh" id="__w2_JIvTDkh_input" /><a class="clear_navigator hidden" href="#" id="__w2_JIvTDkh_clear">&nbsp;</a></div></div></form><div id="__w2_JIvTDkh_results_shell"><div class="results_frame" id="__w2_VHV2VVd_results_frame"><ul id="__w2_VHV2VVd_results_list"><li class="instruction" id="__w2_VHV2VVd_list_item_0">Find Questions, Topics and People</li></ul></div></div></div></div><div class="add_question e_col w1"><span class="add_new_question"><a href="#" id="__w2_JIvTDkh_add_new_question">Add Question</a><span class="hidden"><a href="#" id="__w2_rf4mdCF_link">Add Question</a></span></span></div></div></div><div id="ld_GprgIi_1500"></div></div><div class="pmsg_container main wrapper hidden" id="__w2_QiuKk74_pmsg_container"></div><div class="main wrapper"><div class="user_profile contents content main_content"><div id="ld_GprgIi_1501"></div><div class="page_header row main_col"><div class="e_col w2_5 side_col"><span id="ld_GprgIi_1502"></span><span id="ld_GprgIi_1503"></span></div><div class="w5_5 e_col"><div id="ld_GprgIi_1504"><h1><div class="profile_icons"><a class="sn_icon" href="http://twitter.com/RKHilbertSpace" target="_blank" rel="me"><img src="http://d1vgw4v7ja2ido.cloudfront.net/-f2e98b581d7a2736.ico" /></a></div><span class="name_span">Brandon Smietana</span></h1></div><div class="w4_5"><div id="ld_GprgIi_1505"><div class="user_topic_sig">Founder of Symbolic Analytics</div></div></div></div><div id="ld_GprgIi_1506"><div class="tabs w8" style="margin-left:-10px;"><a class="link" href="/Brandon-Smietana">Profile</a><a class="link" href="/Brandon-Smietana/about">About <span class="light normal">(</span>4<span class="light normal">)</span></a><a class="link" href="/Brandon-Smietana/questions">Questions <span class="light normal">(</span>949<span class="light normal">)</span></a><a class="link selected" href="/Brandon-Smietana/answers">Answers <span class="light normal">(</span>430<span class="light normal">)</span></a><a class="link" href="/Brandon-Smietana/log">Edits <span class="light normal">(</span>7303<span class="light normal">)</span></a></div></div></div><div class="col w4_5 main_col"><div id="ld_GprgIi_1507"><div id="ld_GprgIi_1514"><div class="pagedlist_item" id="ld_GprgIi_1530"><div class="feed_item stream_feed_item p1" id="__w2_BmrH2FO_item"><div class="e_col w4_5"><div id="ld_GprgIi_1551"><div class="feed_item_question"><h2><span id="ld_GprgIi_1591"><span id="ld_GprgIi_1751"></span><a class="question_link" href="/Is-Zynga-a-sociopathic-company" id="__w2_uSrW5I7_link"><span id="ld_GprgIi_1752"></span>Is Zynga a sociopathic company?</a></span></h2></div></div><div id="ld_GprgIi_1552"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_tDUJGsD_answer_voting"><div id="ld_GprgIi_1611"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_F416BlQ_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_F416BlQ_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_tDUJGsD_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_luAXB5w_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_luAXB5w_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_luAXB5w_menu_contents"> </div></div></span><div id="__w2_tDUJGsD_answer_voters"><div id="ld_GprgIi_1612"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">1</strong> vote</span> by <a class="user" href="/Anthony-Foster">Anthony Foster</a></span></div></div></div>Zynga executives have a fiduciary obligation to be sociopathic.<div class="action_bar" id="__w2_tDUJGsD_answer_actions"><span id="ld_GprgIi_1613"><a class="view_comments supp " href="#" id="__w2_X0SpWmz_view_comment_link">1 Comment</a></span><span class="bullet"> &bull; </span><span id="ld_GprgIi_1614"><a class="answer_permalink" href="/Is-Zynga-a-sociopathic-company/answer/Brandon-Smietana"><span class="datetime" id="__w2_DCOy0qR_datespan">Insert a dynamic date here</span></a><span id="ld_GprgIi_1711"></span></span></div><div id="ld_GprgIi_1615"><div class="comments answer_comments hidden" id="__w2_jRFvWbG_answer_comments"><div id="ld_GprgIi_1712"><div id="ld_GprgIi_1791"><a name="comment_93324"></a><div class="comment p0_5" id="__w2_IIQOJSF_comment"><p class="comment_text">This may be the best comment on Quora.</p><p class="action_bar"><a class="user" href="/TJ-Murphy">TJ Murphy</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_QovMn4h_datespan">Insert a dynamic date here</span></p></div></div></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_GprgIi_1531"><div class="feed_item stream_feed_item p1" id="__w2_dn3tkwt_item"><div class="e_col w4_5"><div id="ld_GprgIi_1553"><div class="feed_item_question"><h2><span id="ld_GprgIi_1592"><span id="ld_GprgIi_1753"></span><a class="question_link" href="/Startup-Advice/As-a-first-time-entrepreneur-what-part-of-the-process-were-you-completely-blind-to" id="__w2_RzuaN31_link"><span id="ld_GprgIi_1754"></span>As a first time entrepreneur, what part of the process were you completely blind to?</a></span></h2></div></div><div id="ld_GprgIi_1554"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_TtO7qZK_answer_voting"><div id="ld_GprgIi_1616"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_LQq1PG7_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_LQq1PG7_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_TtO7qZK_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_M4AueyR_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_M4AueyR_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_M4AueyR_menu_contents"> </div></div></span><div id="__w2_TtO7qZK_answer_voters"><div id="ld_GprgIi_1617"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">5</strong> votes</span> by <span id="__w2_Lf3ahpY_view_all"><a class="user" href="/Max-Ischenko">Max Ischenko</a>, <a class="user" href="/Daniel-Shi">Daniel Shi</a>, <a class="user" href="/Antone-Johnson">Antone Johnson</a>, </span> <a class="more_link" href="#" id="__w2_Lf3ahpY_view_all_link">(more)</a><span class="hidden" id="__w2_Lf3ahpY_all_phrases"><a class="user" href="/Max-Ischenko">Max Ischenko</a>, <a class="user" href="/Daniel-Shi">Daniel Shi</a>, <a class="user" href="/Antone-Johnson">Antone Johnson</a>, <a class="user" href="/Charles-Krohn">Charles Krohn</a> and <a class="user" href="/Anthony-Foster">Anthony Foster</a></span></span></div></div></div>Innovation is extremely expensive and is often a moonshot.<br /><br />Copying, improving on and burying competitors in a small market is easy and fun.<div class="action_bar" id="__w2_TtO7qZK_answer_actions"><span id="ld_GprgIi_1618"><a class="view_comments supp " href="#" id="__w2_DiFimuD_view_comment_link">1 Comment</a></span><span class="bullet"> &bull; </span><span id="ld_GprgIi_1619"><a class="answer_permalink" href="/Startup-Advice/As-a-first-time-entrepreneur-what-part-of-the-process-were-you-completely-blind-to/answer/Brandon-Smietana"><span class="datetime" id="__w2_SRYdz8D_datespan">Insert a dynamic date here</span></a><span id="ld_GprgIi_1713"></span></span></div><div id="ld_GprgIi_1620"><div class="comments answer_comments hidden" id="__w2_sV6b6Cc_answer_comments"><div id="ld_GprgIi_1714"><div id="ld_GprgIi_1792"><a name="comment_93075"></a><div class="comment p0_5" id="__w2_CCm2nz8_comment"><p class="comment_text">If this was posted as anon i would have assumed its Marc Pincus for sure</p><p class="action_bar"><a class="user" href="/Aditya-Raman-D">Aditya Raman D</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_IhfXYTQ_datespan">Insert a dynamic date here</span></p></div></div></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_GprgIi_1532"><div class="feed_item stream_feed_item p1" id="__w2_gFuciS9_item"><div class="e_col w4_5"><div id="ld_GprgIi_1555"><div class="feed_item_question"><h2><span id="ld_GprgIi_1593"><span id="ld_GprgIi_1755"></span><a class="question_link" href="/Would-a-Chinese-government-sponsored-cyber-attack-against-the-US-be-enough-to-trigger-a-war-between-the-two-countries" id="__w2_vdnOReT_link"><span id="ld_GprgIi_1756"></span>Would a Chinese government sponsored cyber attack against the US be enough to trigger a war between the two countries?</a></span></h2></div></div><div id="ld_GprgIi_1556"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_dYKAQWN_answer_voting"><div id="ld_GprgIi_1621"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_omJ5rqt_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_omJ5rqt_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_dYKAQWN_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_GSU2v7v_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_GSU2v7v_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_GSU2v7v_menu_contents"> </div></div></span><div id="__w2_dYKAQWN_answer_voters"><div id="ld_GprgIi_1622"></div></div></div>It would be very difficult to determine if a cyber attack was in-fact state sponsored.  It would be very difficult to determine its source.<br /><br />Also, it would be unlikely to target infrastructure in a destructive manner and more likely involve collection of intelligence data or corporate espionage.  For example, consider operation Aurora.<br /><br />It is very unlikely that China would be immediately identified as the aggressor.  In fact, a cyber attack may not even be identified until years after it has already been in effect.  Consider operation Aurora.<div class="action_bar" id="__w2_dYKAQWN_answer_actions"><span id="ld_GprgIi_1623"><a class="view_comments supp " href="#" id="__w2_ekDsimJ_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_GprgIi_1624"><a class="answer_permalink" href="/Would-a-Chinese-government-sponsored-cyber-attack-against-the-US-be-enough-to-trigger-a-war-between-the-two-countries/answer/Brandon-Smietana"><span class="datetime" id="__w2_wymuzen_datespan">Insert a dynamic date here</span></a><span id="ld_GprgIi_1715"></span></span></div><div id="ld_GprgIi_1625"><div class="comments answer_comments hidden" id="__w2_CtME5MW_answer_comments"><div id="ld_GprgIi_1716"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_GprgIi_1533"><div class="feed_item stream_feed_item p1" id="__w2_FFhknUU_item"><div class="e_col w4_5"><div id="ld_GprgIi_1557"><div class="feed_item_question"><h2><span id="ld_GprgIi_1594"><span id="ld_GprgIi_1757"></span><a class="question_link" href="/Larry-Ellison/Why-does-Larry-Ellison-have-no-eyebrows" id="__w2_oKkA6X8_link"><span id="ld_GprgIi_1758"></span>Why does Larry Ellison have no eyebrows?</a></span></h2></div></div><div id="ld_GprgIi_1558"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_TV8XZYo_answer_voting"><div id="ld_GprgIi_1626"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_v8Xec8Q_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_v8Xec8Q_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_TV8XZYo_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_Jf7ymJm_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_Jf7ymJm_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_Jf7ymJm_menu_contents"> </div></div></span><div id="__w2_TV8XZYo_answer_voters"><div id="ld_GprgIi_1627"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">6</strong> votes</span> by <span id="__w2_EnfGhOX_view_all"><span class="name_span">Anon User</span>, <a class="user" href="/David-Haddad">David Haddad</a>, <a class="user" href="/John-Marsland">John Marsland</a>, </span> <a class="more_link" href="#" id="__w2_EnfGhOX_view_all_link">(more)</a><span class="hidden" id="__w2_EnfGhOX_all_phrases"><span class="name_span">Anon User</span>, <a class="user" href="/David-Haddad">David Haddad</a>, <a class="user" href="/John-Marsland">John Marsland</a>, <a class="user" href="/Catalin-Braescu">Catalin Braescu</a>, <a class="user" href="/Gene-Linetsky">Gene Linetsky</a> and <a class="user" href="/Erbil-Karaman">Erbil Karaman</a></span></span></div></div></div>Larry Ellison lost his eyebrows in the nuclear accident that gave him his superpowers.<div class="action_bar" id="__w2_TV8XZYo_answer_actions"><span id="ld_GprgIi_1628"><a class="view_comments supp " href="#" id="__w2_bz9qyVD_view_comment_link">1 Comment</a></span><span class="bullet"> &bull; </span><span id="ld_GprgIi_1629"><a class="answer_permalink" href="/Larry-Ellison/Why-does-Larry-Ellison-have-no-eyebrows/answer/Brandon-Smietana"><span class="datetime" id="__w2_f8Ahonj_datespan">Insert a dynamic date here</span></a><span id="ld_GprgIi_1717"></span></span></div><div id="ld_GprgIi_1630"><div class="comments answer_comments hidden" id="__w2_i9SwUOp_answer_comments"><div id="ld_GprgIi_1718"><div id="ld_GprgIi_1793"><a name="comment_90049"></a><div class="comment p0_5" id="__w2_J2q5WbY_comment"><p class="comment_text">I thought he lost them in a divorce settlement.</p><p class="action_bar"><a class="user" href="/Ryan-Lackey">Ryan Lackey</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_anp2VRr_datespan">Insert a dynamic date here</span></p></div></div></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_GprgIi_1534"><div class="feed_item stream_feed_item p1" id="__w2_NkrUJvp_item"><div class="e_col w4_5"><div id="ld_GprgIi_1559"><div class="feed_item_question"><h2><span id="ld_GprgIi_1595"><span id="ld_GprgIi_1759"></span><a class="question_link" href="/What-is-the-stupidest-technology-related-quote-in-retrospect" id="__w2_IXP8OUs_link"><span id="ld_GprgIi_1760"></span>What is the stupidest technology related quote in retrospect?</a></span></h2></div></div><div id="ld_GprgIi_1560"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_GNNLQGN_answer_voting"><div id="ld_GprgIi_1631"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_tAlIvCW_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_tAlIvCW_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_GNNLQGN_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_LEoYwDe_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_LEoYwDe_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_LEoYwDe_menu_contents"> </div></div></span><div id="__w2_GNNLQGN_answer_voters"><div id="ld_GprgIi_1632"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">1</strong> vote</span> by <a class="user" href="/Aditya-Raman-D">Aditya Raman D</a></span></div></div></div>  <br />“Windows is the past. In the future, AOL is the next Microsoft.” — Steve Case (1999)<div class="action_bar" id="__w2_GNNLQGN_answer_actions"><span id="ld_GprgIi_1633"><a class="view_comments supp " href="#" id="__w2_j4gIWam_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_GprgIi_1634"><a class="answer_permalink" href="/What-is-the-stupidest-technology-related-quote-in-retrospect/answer/Brandon-Smietana"><span class="datetime" id="__w2_dSjxgGX_datespan">Insert a dynamic date here</span></a><span id="ld_GprgIi_1719"></span></span></div><div id="ld_GprgIi_1635"><div class="comments answer_comments hidden" id="__w2_ZUwuPhq_answer_comments"><div id="ld_GprgIi_1720"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_GprgIi_1535"><div class="feed_item stream_feed_item p1" id="__w2_XbZN451_item"><div class="e_col w4_5"><div id="ld_GprgIi_1561"><div class="feed_item_question"><h2><span id="ld_GprgIi_1596"><span id="ld_GprgIi_1761"></span><a class="question_link" href="/Why-do-some-web-companies-take-venture-capital-while-others-do-not-and-grow-organically-even-though-they-may-address-similar-problems" id="__w2_TRk2iYm_link"><span id="ld_GprgIi_1762"></span>Why do some web companies take venture capital, while others do not and grow organically, even though they may address similar problems?</a></span></h2></div></div><div id="ld_GprgIi_1562"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_zAtQ19j_answer_voting"><div id="ld_GprgIi_1636"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_I87sZBc_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_I87sZBc_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_zAtQ19j_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_NCWeZkH_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_NCWeZkH_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_NCWeZkH_menu_contents"> </div></div></span><div id="__w2_zAtQ19j_answer_voters"><div id="ld_GprgIi_1637"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">4</strong> votes</span> by <a class="user" href="/Jascha-Wanger">Jascha Wanger</a>, <a class="user" href="/Seb-Paquet">Seb Paquet</a>, <a class="user" href="/David-de-Weerdt">David de Weerdt</a> and <a class="user" href="/Helder-Ribeiro">Helder Ribeiro</a></span></div></div></div>Silicon Valley has an &quot;equity culture&quot;.<br /><br />Bootstrapped companies do not receive media coverage.  Evony had more revenues than Zynga for years and almost no one know about them.  There are a number of other examples.<br /><br />Most VC investments occur in a few geographic regions and expecially in the SF area.  There are however thousands of web companies taking in millions a year in revenue that are not located in silicon valley.  The vast majority of companies do not take venture capital.  In fact almost half of the companies who IPO do not take any venture capital at all (even &quot;growth equity&quot;).<br /><br />In general, companies that have higher capital costs tend to take on venture capital.  Companies that have lower margins and require larger scale for profitability require venture capital.  Companies that will not be profitable but which have a large number of users (twitter) require venture capital.<br /><br />However, what is concerning is when you see a profitable company which is awash in cash taking on venture capital.  That has to do more with the Silicon Valley &quot;equity culture&quot; than anything else.<br /><br />The reality is that most companies are not venture backed and never will be. You are either profitable in the first three years or bankrupt.  Also, if you are in a 100% margin industry like software, then when you succeed your income grows disproportionately <wbr />quickly compared to your costs (&quot;increasing returns&quot;).  This is completely different than a low margin industry such as retailing.<div class="action_bar" id="__w2_zAtQ19j_answer_actions"><span id="ld_GprgIi_1638"><a class="view_comments supp " href="#" id="__w2_eH5FbTP_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_GprgIi_1639"><a class="answer_permalink" href="/Why-do-some-web-companies-take-venture-capital-while-others-do-not-and-grow-organically-even-though-they-may-address-similar-problems/answer/Brandon-Smietana"><span class="datetime" id="__w2_hWgFteQ_datespan">Insert a dynamic date here</span></a><span id="ld_GprgIi_1721"></span></span></div><div id="ld_GprgIi_1640"><div class="comments answer_comments hidden" id="__w2_sKOVJEY_answer_comments"><div id="ld_GprgIi_1722"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_GprgIi_1536"><div class="feed_item stream_feed_item p1" id="__w2_jrbiJKU_item"><div class="e_col w4_5"><div id="ld_GprgIi_1563"><div class="feed_item_question"><h2><span id="ld_GprgIi_1597"><span id="ld_GprgIi_1763"></span><a class="question_link" href="/What-tools-do-you-use-to-test-a-trading-strategy" id="__w2_LGmM0W0_link"><span id="ld_GprgIi_1764"></span>What tools do you use to test a trading strategy?</a></span></h2></div></div><div id="ld_GprgIi_1564"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_EKHgGoa_answer_voting"><div id="ld_GprgIi_1641"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_psvW1dm_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_psvW1dm_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_EKHgGoa_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_ctKqdB2_link"><span class="rep">They call me &quot;Flash Crash&quot;</span></span><div class="hover_menu hidden" style="display: none" id="__w2_ctKqdB2_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_ctKqdB2_menu_contents"> </div></div></span><div id="__w2_EKHgGoa_answer_voters"><div id="ld_GprgIi_1642"></div></div></div>I have an sql database of quote information and I just run the strategies through by feeding data into the strategies with a python script and recording the output.<div class="action_bar" id="__w2_EKHgGoa_answer_actions"><span id="ld_GprgIi_1643"><a class="view_comments supp " href="#" id="__w2_U8ySAis_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_GprgIi_1644"><a class="answer_permalink" href="/What-tools-do-you-use-to-test-a-trading-strategy/answer/Brandon-Smietana"><span class="datetime" id="__w2_PiBmRSh_datespan">Insert a dynamic date here</span></a><span id="ld_GprgIi_1723"></span></span></div><div id="ld_GprgIi_1645"><div class="comments answer_comments hidden" id="__w2_e4fFJ6Q_answer_comments"><div id="ld_GprgIi_1724"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_GprgIi_1537"><div class="feed_item stream_feed_item p1" id="__w2_yM5Dt4c_item"><div class="e_col w4_5"><div id="ld_GprgIi_1565"><div class="feed_item_question"><h2><span id="ld_GprgIi_1598"><span id="ld_GprgIi_1765"></span><a class="question_link" href="/What-is-Zyngas-core-competency" id="__w2_YOdUeVK_link"><span id="ld_GprgIi_1766"></span>What is Zynga&#039;s core competency?</a></span></h2></div></div><div id="ld_GprgIi_1566"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_rFFFM0G_answer_voting"><div id="ld_GprgIi_1646"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_shgclzU_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_shgclzU_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_rFFFM0G_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_gXn850J_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_gXn850J_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_gXn850J_menu_contents"> </div></div></span><div id="__w2_rFFFM0G_answer_voters"><div id="ld_GprgIi_1647"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">18</strong> votes</span> by <span id="__w2_ShmuC8u_view_all"><a class="user" href="/Lucas-Meadows">Lucas Meadows</a>, <a class="user" href="/Cameron-A.-Ellis">Cameron A. Ellis</a>, <a class="user" href="/David-Kaye">David Kaye</a>, </span> <a class="more_link" href="#" id="__w2_ShmuC8u_view_all_link">(more)</a><span class="hidden" id="__w2_ShmuC8u_all_phrases"><a class="user" href="/Lucas-Meadows">Lucas Meadows</a>, <a class="user" href="/Cameron-A.-Ellis">Cameron A. Ellis</a>, <a class="user" href="/David-Kaye">David Kaye</a>, <span class="name_span">Anon User</span>, <a class="user" href="/Prakash-Swaminathan">Prakash Swaminathan</a>, <a class="user" href="/Charlie">Charlie Cheever</a>, <a class="user" href="/Sajid-Umerji">Sajid Umerji</a>, <a class="user" href="/Samuel-Green">Samuel Green</a>, <span class="name_span">Anon User</span>, <a class="user" href="/Xiaofeng-Jin">Xiaofeng Jin</a>, <a class="user" href="/TJ-Murphy">TJ Murphy</a>, <a class="user" href="/Siqi-Chen">Siqi Chen</a>, <a class="user" href="/Byrne-Hobart">Byrne Hobart</a>, <a class="user" href="/AbdulKarriem-Ali-Khan">AbdulKarriem Ali Khan</a>, <a class="user" href="/Benjamin-Juang">Benjamin Juang</a>, <a class="user" href="/Amit-Chaudhary">Amit Chaudhary</a>, <a class="user" href="/Maya-Zehavi">Maya Zehavi</a> and <a class="user" href="/Ron-Yang">Ron Yang</a></span></span></div></div></div>Strengths:<br /><ul><li>a large installed user base for cross promotion</li><li>massive amounts of capital for advertising</li><li>unfair relationship with Facebook (through the Old Boy&#039;s club, Zynga&#039;s IP portfolio and its position as Facebook&#039;s largest advertiser).  For instance, its likely that Zynga receives free advertising on Facebook&#039;s ad network to offset the loss of revenue from Zynga adopting Facebook credits.  Or equivalently, Zynga pays a lower cut to Facebook than other developers, due to Zynga&#039;s bargaining position.</li><li>An extremely large staff of people whose full time job is buying display advertising</li></ul><br />Weaknesses:<br /><ul><li>Technical debt; is using 12+ layers of memcached just to keep Farmville online.  Horribly designed architecture.  Will have to be completely redone if Zynga wants to build more complicated social games.  Is adding hundreds of servers per day to compensate for its software architecture<wbr />.  However, Zynga has the money and developers to address this problem.</li><li>Grew organization too fast and is strained under the growing pains of expanding to 700+ employees in under 3 years and then restructuring.  Few companies survive this type of rapid growth without falling apart or becoming inefficient.  It is extremely difficult to scale this large extremely rapidly and the management team did well in handling this phase.</li><li>Zynga is currently reliant on the Facebook platform.  Facebook often changes the rules of the platform to harm developers (reducing viral channels, eliminating non-advertising channels for user acquisition, decreasing developer margins by 30% through Facebook credits).  Zynga&#039;s margin were decreased significantly by the transition to Facebook credits and Zynga is at the mercy of Facebook.  Zynga is mitigating its platform risk by developing its own gaming network and through joint initiatives with Yahoo and Google.</li><li>Zynga has lower margins and lower ARPU than other studies whose user acquisition is not as advertising driven.  Games targeting specific niches have lower MAUs, but higher ARPU than Farmville type games.  Zynga has low ARPU (compared to RPG game studios) and but offsets this with high MAU numbers.  Zynga&#039;s per employee revenue is smaller than many studios for these reasons.</li></ul><br />Zynga&#039;s core competencies do not include engineering or producing creative or in-depth games.<br /><br />To summarize  Zynga&#039;s core competencies are<br /><ul><li>Advertising / User Acquisition</li><li>Leveraging its cross promotion network and installed base</li><li>Knowledge about targeting the &quot;casual gamer&quot; demographic</li><li>Knowledge about monetizing social games (&quot;add in game coins&quot;)</li><li>Knowledge about the application of specific social game mechanics (especially the &#039;harvest mechanism&#039;)</li><li>Extensive use of A/B testing.  Zynga has an A/B testing centered culture.</li></ul><br />The biggest threat to Zynga is the proliferation of a large number of games with higher ARPU than Farmville type games.  When user acquisition is advertising driven, companies with higher ARPU bid up advertising costs to the point that lower ARPU games cannot acquire users profitably.  Market segmentation may be a threat to Zynga&#039;s continued growth in the US market.<br /><br />It will be interesting to see how the social gaming market evolves over the next decade.<div class="action_bar" id="__w2_rFFFM0G_answer_actions"><span id="ld_GprgIi_1648"><a class="view_comments supp " href="#" id="__w2_QBn8gYf_view_comment_link">18 Comments</a></span><span class="bullet"> &bull; </span><span id="ld_GprgIi_1649"><a class="answer_permalink" href="/What-is-Zyngas-core-competency/answer/Brandon-Smietana"><span class="datetime" id="__w2_RoDDBMX_datespan">Insert a dynamic date here</span></a><span id="ld_GprgIi_1725"></span></span></div><div id="ld_GprgIi_1650"><div class="comments answer_comments hidden" id="__w2_VlzIKgx_answer_comments"><div id="ld_GprgIi_1726"><div id="ld_GprgIi_1794"><a name="comment_88386"></a><div class="comment p0_5" id="__w2_boSS28I_comment"><p class="comment_text">Great answer. Hope I don&#039;t get fired for upvoting :)<br /><br />I would agree that engineering is not a core competency (insofar as the average engineer at Z is not necessarily world class). There are some really great devs at Zynga, but due to churn it&#039;s difficult to have a consistently-high hiring bar. Though you could argue that making exceptions in hiring only causes more problems (and eventually churn in the good devs), but that&#039;s a separate issue.</p><p class="action_bar"><a class="user" href="/Lucas-Meadows">Lucas Meadows</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_bz518Yh_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1795"><a name="comment_88391"></a><div class="comment p0_5" id="__w2_TsSkfeA_comment"><p class="comment_text">&quot;Great answer. Hope I don&#039;t get fired for upvoting :)&quot;<br /><br />Haha.  I had no idea you worked at Zynga.<br /><br />I was not as brutally negative in this answer as I usually am (out of respect for Pincus).  It is also difficult to be too negative when the company is profitable.</p><p class="action_bar"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_aLjbOmO_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1796"><a name="comment_88392"></a><div class="comment p0_5" id="__w2_mgZE8PS_comment"><p class="comment_text">Remember this?<br /><a href="/Why-wont-Zynga-let-me-have-two-or-more-wives-in-FrontierVille/answer/Lucas-Meadows">Lucas Meadows&#039;s answer to Why won&#039;t Zynga let me have two or more wives in FrontierVille?</a></p><p class="action_bar"><a class="user" href="/Lucas-Meadows">Lucas Meadows</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_mwsMYS6_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1797"><div class="comment comment_dotdotdot p0_5"><a class="supp" href="#" onclick="$(&#039;.hidden_comments_112714&#039;).toggleClass(&#039;hidden&#039;);
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+ <!DOCTYPE html><html><head><title>Brandon Smietana Answers - Quora</title><script>_w2replay=(function(){var b=[],a=[],d,g=/^a$/i;function c(j,i,h){var k;if(j.addEventListener){j.addEventListener(i,k=function(l){if(h.call(this,l)===false){l.preventDefault()}},false)}else{if(j.attachEvent){j.attachEvent("on"+i,k=function(){return h.call(this,window.event)})}else{return}}b.push([j,i,k])}function f(j,i,h){if(j.removeEventListener){j.removeEventListener(i,h,false)}else{if(j.detachEvent){j.detachEvent("on"+i,h)}}}function e(h){c(document,h,function(j){var i=j.target||j.srcElement;a.push({type:h,elem:i,cursor:i.style.cursor});i.style.cursor="wait";if(g.test(i.nodeName)&&i.getAttribute("href")==="#"){return false}})}e("mousedown");e("mouseup");e("click");return function(k){if(d){return}d=true;while(b.length){f.apply(null,b.pop())}for(var h=0,j,l;j=a[h];++h){if((l=j.elem).style.cursor=="wait"){l.style.cursor=j.cursor}if(k.inDom(l)){k(l).trigger(j.type)}}}})();</script><meta http-equiv="X-UA-Compatible" content="IE=EmulateIE7" /><link rel="search" type="application/opensearchdescription+xml" href="/opensearch/description.xml" title="Quora" /><!--[if IE]><link rel="stylesheet" type="text/css" href="/static/ie.css" /><![endif]--><meta property="og:site_name" content="Quora" /><meta property="og:description" content="&quot;There is no such thing as perfect. 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class="add_new_question"><a href="#" id="__w2_IbFBdkT_add_new_question">Add Question</a><span class="hidden"><a href="#" id="__w2_sf92wPj_link">Add Question</a></span></span></div></div></div><div id="ld_RGxTHo_431"></div></div><div class="pmsg_container main wrapper hidden" id="__w2_O0zqfXf_pmsg_container"></div><div class="main wrapper"><div class="user_profile contents content main_content"><div id="ld_RGxTHo_432"></div><div class="page_header row main_col"><div class="e_col w2_5 side_col"><span id="ld_RGxTHo_433"></span><span id="ld_RGxTHo_434"></span></div><div class="w5_5 e_col"><div id="ld_RGxTHo_435"><h1><div class="profile_icons"><a class="sn_icon" href="http://twitter.com/RKHilbertSpace" target="_blank" rel="me"><img src="http://d1vgw4v7ja2ido.cloudfront.net/-f2e98b581d7a2736.ico" /></a></div><span class="name_span">Brandon Smietana</span></h1></div><div class="w4_5"><div id="ld_RGxTHo_436"><div class="user_topic_sig">Founder of Symbolic Analytics</div></div></div></div><div id="ld_RGxTHo_437"><div class="tabs w8" style="margin-left:-10px;"><a class="link" href="/Brandon-Smietana">Profile</a><a class="link" href="/Brandon-Smietana/about">About <span class="light normal">(</span>6<span class="light normal">)</span></a><a class="link" href="/Brandon-Smietana/questions">Questions <span class="light normal">(</span>984<span class="light normal">)</span></a><a class="link selected" href="/Brandon-Smietana/answers">Answers <span class="light normal">(</span>446<span class="light normal">)</span></a><a class="link" href="/Brandon-Smietana/log">Edits <span class="light normal">(</span>7588<span class="light normal">)</span></a></div></div></div><div class="col w4_5 main_col"><div id="ld_RGxTHo_438"><div id="ld_RGxTHo_445"><div class="pagedlist_item" id="ld_RGxTHo_461"><div class="feed_item stream_feed_item p1" id="__w2_SVafeCS_item"><div class="e_col w4_5"><div id="ld_RGxTHo_482"><div class="feed_item_question"><h2><span id="ld_RGxTHo_522"><span id="ld_RGxTHo_682"></span><a class="question_link" href="/What-are-the-implications-of-a-global-banking-system-that-is-completely-anonymous" id="__w2_fVwNCHs_link"><span id="ld_RGxTHo_683"></span>What are the implications of a global banking system that is completely anonymous?</a></span></h2></div></div><div id="ld_RGxTHo_483"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_U6SDl9A_answer_voting"><div id="ld_RGxTHo_542"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_yXOaQuG_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_yXOaQuG_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_U6SDl9A_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_FKTQJIL_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_FKTQJIL_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_FKTQJIL_menu_contents"> </div></div></span><div id="__w2_U6SDl9A_answer_voters"><div id="ld_RGxTHo_543"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">2</strong> votes</span> by <a class="user" href="/Russell-Stadler">Russell Stadler</a> and <a class="user" href="/Seb-Paquet">Seb Paquet</a></span></div></div></div>Nothing.<br /><br />There is already 800 in billion laundered money in banks.  Completely anonymous money is unlikely to change criminal transactions very much.<br /><br />Terrorists and others are using money transfer network such as the hawala or funneling money through non-profits.  The only thing that would change is the government&#039;s ability to monitor the transactions.  Anonymous payment methods may not even affect the government&#039;s ability to effectively monitor these transactions as the government is primarily using network analysis techniques anyways.  The identity of the people do not matter so much as their network of relationships.<br /><br />Government control and can tax the point of sale.  A Walmart could reduce its taxes to the government by not reporting sales and taking money out of the cashdrawer and righting off the sold inventory, but that does not work at scale.  Only small cash businesses such as pizzerias and laundromats are able to do this without suffering fines and retribution by federal government.<br /><br />Bribery would be as easy with anonymous digital currency as it is with cash.  However we would only see kickbacks transition from being informal to formal relationships.  The government&#039;s ability to regulate &#039;political economy&#039; would be decreased.  You could argue whether this is good or bad for the economy.  You could argue that our current system privileges those with political connection<wbr />s and backrub relationships and excludes the masses from participating in the political economy.  Legalized or deniable bribery may increase scrutiny on public offices and subject them to greater monitoring and oversight, which may be a net improvement over the current system of implicit bribes and no transparency or oversight.<br /><br />We are actually better at enforcing payroll tax compliance at large cash businesses like Walmart (where many consumer do not have credit cards and bank accounts) than we are about using oversight to detect and regulate unlawful &#039;political economy&#039; transactions such as bribery.<br /><br />The government also has systems in place for collecting payroll taxes.  These systems are effective, despite the incentive of the employer and employee to lower reported wages (circumventing payroll taxes) and pay the employee directly (&#039;under the table&#039;), circumventing government imposed transaction fees (taxes).  This type of circumvention only happens in small cash businesses, but not at places such as Walmart.<br /><br />As the government controls the point of sale and is able to collect payroll taxes and sales taxes, its likely the the government&#039;s revenue would not be impacted by anonymous currency to a greater extent than it is by the usage of cash.  In fact, the anonymous digital cash transactions may be easier to monitor for the government.  It can mandate businesses use reporting devices and that businesses receive revenue and pay employees from government controlled or approved accounts.  The switch to digital currency and elimination of cash would improve government revenue for these activities, compared to transactions where cash is used.<br /><br />Where the government would lose tax revenue to evasion, is in the provision of online services, digital goods and investment instruments.  Online service providers (PHP programmers from India/China, iPhone application developers, web-designers) can receive revenue anonymously and c<wbr />ircumvent IRS reporting requirements, with the person controlling the account in a position to deny control of the account and avoid recognition of the revenue.  This is however no different than having an online businesses today owned by a bearer bond IBC which has puppet directors in another foreign country and which provides full deniability for the controller of the back accounts of the corporation.  Anonymous banking would only make these transactions easier, although it is harder to imagine that it could possibly be easier to do than it already is, when you consider the existing system.<br /><br />If you are very rich, there are better ways of creating intergenerational wealth and avoiding taxation, which are extremely effective.  For instance, most equity in Israel and many European countries is controlled by a small number of families.  They do not own the companies directly, but have controlling interests in companies which control these companies.   Less than 20 family control about over 30% of the equity in Israel&#039;s public traded companies, through controlling interests.<br /><br />What use is 30 billion dollars if you cannot spend it?  It is much better to have a dual class share structure, where one class of shares has 20 votes to the common share.  A class of shareholders controlling 5% of market-cap controls the company.  Also, no capital gains are paid until shares are sold off.  When they are sold, the seller pays 15% capital gains tax (compared to +45% capital gains tax from wage income).<br /><br />It therefore seems unlikely to me that the very wealthy would find much advantage in an anonymous currency system for the purpose of avoiding taxation (as they are already able to do that very effectively).  For instance, why would you want to realize $1 in revenue untaxed?  You would want that revenue going to your publicly traded company trading at a 20x P/E multiple.  The 1 dollar in revenue creates $20 in market cap, if you owned 10% of the company, then $1 in revenue to the company is $2 to your share-value at a 20x P/E multiple.  If you own 50%, that $1 is $10 in market cap.<br /><br />You take that $10 in market-cap increase and take a loan against your shares and invest them in 8% corporate bonds...  The advantages to the financial and corporate elite of the existing system, far out weigh the advantages of anonymity (as long as the government and system are stable).<br /><br />Smaller business owners who do not have access to the public market would however find a tax advantage resulting from the unique capacities of digital currency systems.<br /><br />Effectively anonymous monetary systems are developing in Africa (cell phone mediated payment networks).  I think there are reasons that such systems would develop and that we are about 20 years away from some cryptography based monetary systems (there is a strong financial incentiv<wbr />e for smaller countries to provide these services).<br /><br />They really will not change anything however.  Drugs will still come in from Mexico into America.  However, instead of drugs coming from Mexico to America and cash going from America back to Mexico, drugs will go from Mexico to America and cell phone text messages will go from America to Mexico.<br /><br />However, with these monetary systems, even if anonymous; a balance of payments will need to be maintained between entities.  If goods and services are provided in America (drugs) and payment is made to Mexico, the Mexicans will need to be able to purchase goods and services with their payment (presumably to be delivered or consumed in Mexico).  Currently, A provides goods to B and B provides cash to A.  The only difference under unregulated digital currency is that A provides goods/services to B and and B transfers currency to C to be held for A and A transfer currency to D in payment to E for services consumed by A.  Its basically exactly the same as the current cash transactions.<br /><br />In fact, there are few limitations that drug cartels face when using the existing banking system.  Mexican drug cartels have front companies with revenue from drug sales and have been known to purchase capital assets, (such as boats) which are used in the drug business.  For instance, the same boat will end up on a California shore (empty/abandoned, but was full of marijuana or crack-cocaine) and then end up on auctioned by the state, purchased by the same companies and end up back on the shore again.  This can happen 5-8 times for a single boat; it will be seized, determined to have been used for drug transport and then repurchased and seized again several times.<br /><br />The governments have this information and record these transactions, but they do not use the information effectively.  Not much would fundamentally change if governments and law enforcement did not have access to information.  In fact, stronger enforcement or usage of the information which is available would only have the effect of greater concealment by criminal organizations (which has exactly the same effect as adoption of anonymous systems for settling balance of payments from a law enforcement perspective!).  The fundamental issue is border control and the inability of nation states to police their borders against the import of drugs, weapons, immigrants and sex slaves.  If a nation state cannot prevent kidnapping or crime within its borders, it is easy to say &quot;digital currency will make this problem worse&quot;, but the problem is with the nation state losing its monopoly on the use of force within its borders, or the nation state losing the ability to enforce its regulations upon its population or to secure its borders against the import of drugs or weapons.<br /><br />Also, it is likely that the advantages of anonymous digital currency would not be sufficient enough for criminal organizations to abandon the convenience of the existing financial, corporate and legal structures.  For instance, criminals will say &quot;I can get a bank against the income of my front company to finance the purchase of capital assets; but how do I get a bank loan against my anonymous digital currency income?&quot;<br /><br />Without a fully developed modern financial systems around the anonymous digital, it is of limited utility for anything but evading taxes.  It would be almost useless for the purpose of capital flight, unless it was possible to buy bonds or securities while skirting reporting requirements.  You would need a broker dealer willing to do this (hence the system is only feasible if state sponsored by at least one sovereign nation).<br /><br />It is not clear to me that you can security assets or enforce property rights without enforcement by a sovereign nation state.  So maybe you could buy equity in an online digital goods business which receives all payments through anonymous digital currency.  However, how would you audit the books of that business?  Who would enforce the voting rights that your equity ownership entails?<br /><br />You need a system of digital contracts and some advances in secure multi-party computing and<wbr /> cryptographic protocols before you can start developing a shadow finance system on top of the digital currency, which would be independent of right enforced by nation states.  That is still a long ways off.<br /><br />The ownership and transaction structures which would emerge would have to reflect what is enforceable through pr<wbr />otocols and would likely end up being much different than the investment instruments we have in our current system.  Therefore we will likely be seeing a hybrid system, for at-least the next 80 years.<br /><br />For an example of a &#039;hybrid system&#039; that governments are trying to regulate out of existence, look up &quot;hawala&quot;.  The hawala networks rely more on trust and social relationships than cryptography.<div class="action_bar" id="__w2_U6SDl9A_answer_actions"><span id="ld_RGxTHo_544"><a class="view_comments supp " href="#" id="__w2_eK3yC5F_view_comment_link">2 Comments</a></span><span class="bullet"> &bull; </span><span id="ld_RGxTHo_545"><a class="answer_permalink" href="/What-are-the-implications-of-a-global-banking-system-that-is-completely-anonymous/answer/Brandon-Smietana"><span class="datetime" id="__w2_h4CvQL8_datespan">Insert a dynamic date here</span></a><span id="ld_RGxTHo_642"></span></span></div><div id="ld_RGxTHo_546"><div class="comments answer_comments hidden" id="__w2_TOt1FhY_answer_comments"><div id="ld_RGxTHo_643"><div id="ld_RGxTHo_722"><a name="comment_98946"></a><div class="comment p0_5" id="__w2_L6llDZo_comment"><p class="comment_text">Brandon, oh let me count the ways :-), if the drug cartels don&#039;t have any problems useing the current financial system why do they still fly and ship by smugglers highspeed boats bails and bails of 100 dollar bills.<br /><br />The Isreali government understood that about organized crime in there country and in the 1980&#039;s I think date may be wrong but not what I describe. They redesigned there cash and made exchanging old cash for new cash a higly regulated process and did not pre announce what would happen. Thus it was estimated in the press that they were able to confiscate a very large percentage of organized crimes assets. Your system if controlled by a government might make a move like that easier but I think it would do just the opposite. If the US government would simply do that every ten years organized crime would not be anywhere near as profitable.<br /><br />Now as to your proposed system not effecting tax collection you do understand that sales tax and payroll tax are not the only or even majority forms of taxes collected in the US. Income Tax, Property Tax, Corporate Income Tax collect the lion share of taxes paid in the US. Income tax paid by small buisness is a huge percentage of that tax revenue and is precisely were your system would most assuredly make tax avoidance easier. The idea you seem to have that only elites are active in capital markets is also not as black and white as your presentation makes it sound.<br /><br />I stand by my answer that an anonymous e-currency system would; Money laundering, blackmail, extortion, human trafficking, drug sales, tax evasion, fraud, and the complete disruption of markets that depend on transparency, would all be made much easier by a truly anonymous banking system.</p><p class="action_bar"><a class="user" href="/Gary-Stein">Gary Stein</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_gTGMnOG_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_RGxTHo_723"><a name="comment_99016"></a><div class="comment p0_5" id="__w2_oC5dZj5_comment"><p class="comment_text">&quot;The idea you seem to have that only elites are active in capital markets is also not as black and white as your presentation makes it sound.&quot;<br /><br />70% of Americans live paycheck to pay check.  Bill Gates has more assets than the bottle 50% of the rabble.  I do not see Wallmart workers starting public companies or earning hundreds of thousands a year arbitraging complex <wbr />financial products.<br /><br />If you have a jet an a publicly traded company or use advanced financial produc<wbr />ts to achieve leverage, then you would probably be considered an &quot;elite&quot; or an &quot;insider&quot; by most reasonable definitions.<br /><br />&quot;if the drug cartels don&#039;t have any problems useing the current financial system why do they still fly and ship by smugglers highspeed boats bails and bails of 100 dollar bills.&quot;<br /><br />They are using the banks loans against their drug profits to buy the boats and planes.  All the enforcement efforts only increase the cost of capital for criminal organizations by ~30%.  Its just the cost of doing business for these organizations.<br /><br />Over half of the problems you suggest  anonymous digital currency will cause are &quot;border control problems&quot; that have nothing to do with currency exchange.  These criminal organisations al<wbr />ready have anonymous currency systems.  They are bulk shipping &quot;stored valued cards&quot; across the boarder and selling them at a 5% discount on markets, to settle balance of payments.  The system is already effectively anonymous for them.<br /><br />Large criminal organizations already have systems in place that accomplish this objective.  The only thing that is change is that the public is gaining access to anonymous banking and it is no longer reserved for governments and organized crime.</p><p class="action_bar"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_X6lxf6F_datespan">Insert a dynamic date here</span></p></div></div></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_RGxTHo_462"><div class="feed_item stream_feed_item p1" id="__w2_RCn7goH_item"><div class="e_col w4_5"><div id="ld_RGxTHo_484"><div class="feed_item_question"><h2><span id="ld_RGxTHo_523"><span id="ld_RGxTHo_684"></span><a class="question_link" href="/How-focused-should-a-start-up-be-on-being-acquired" id="__w2_tvpPRWT_link"><span id="ld_RGxTHo_685"></span>How focused should a start-up be on being acquired?</a></span></h2></div></div><div id="ld_RGxTHo_485"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_jcZdXje_answer_voting"><div id="ld_RGxTHo_547"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_gCL2yiO_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_gCL2yiO_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_jcZdXje_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_ox5fWTd_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_ox5fWTd_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_ox5fWTd_menu_contents"> </div></div></span><div id="__w2_jcZdXje_answer_voters"><div id="ld_RGxTHo_548"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">16</strong> votes</span> by <span id="__w2_ameMMUA_view_all"><a class="user" href="/Anthony-Foster">Anthony Foster</a>, <a class="user" href="/George-Godula">George Godula</a>, <a class="user" href="/Ian-Mercer">Ian Mercer</a>, </span> <a class="more_link" href="#" id="__w2_ameMMUA_view_all_link">(more)</a><span class="hidden" id="__w2_ameMMUA_all_phrases"><a class="user" href="/Anthony-Foster">Anthony Foster</a>, <a class="user" href="/George-Godula">George Godula</a>, <a class="user" href="/Ian-Mercer">Ian Mercer</a>, <a class="user" href="/John-Marsland">John Marsland</a>, <a class="user" href="/Ralph-Barbagallo">Ralph Barbagallo</a>, <a class="user" href="/Rishi-Natarajan">Rishi Natarajan</a>, <a class="user" href="/Gerard-Mills">Gerard Mills</a>, <a class="user" href="/Amund-Tveit">Amund Tveit</a>, <a class="user" href="/Joseph-N.-Liss">Joseph N. Liss</a>, <a class="user" href="/Cyril-Ebersweiler">Cyril Ebersweiler</a>, <a class="user" href="/Aaron-Weyenberg">Aaron Weyenberg</a>, <a class="user" href="/Lucas-Dailey">Lucas Dailey</a>, <a class="user" href="/Warrick-Taylor">Warrick Taylor</a>, <a class="user" href="/Douglas-Drouillard">Douglas Drouillard</a>, <a class="user" href="/Abhishek-Amit">Abhishek Amit</a> and <a class="user" href="/Keith-Pinson">Keith Pinson</a></span></span></div></div></div>You need an exit plan from day one.  Read this book;<br /><br />Early Exits: Exit Strategies for Entrepreneurs and Angel Investors (But Maybe Not Venture Capitalists) <a href="http://amzn.to/bLyS75" rel="nofollow" target="_blank" class="external_link">http://amzn.<wbr />to/bLyS75</a><br /><br />When you start your first eight companies, you will do it wrong.  There will be dozen of things you wish you knew that you were unaware of.  Planning for exits is one of them.<br /><br />Your objectives for your company and its exit are going to affect many of the decisions you are making and you should make these choices earlier rather than later.  Why do I say that?<br /><br />Here is a graph of time of VC financing to exit<br /><img class="qtext_image" src="http://d2o7bfz2il9cb7.cloudfront.net/main-qimg-1d4fe0f3434be165c4975bfb1d4d35ef" /> <br />If you take VC, your company is a 12 year commitment before an exit.  You should sit down with your founding team and make sure that everyone is aligned.  Are you building a company that you will be working at in 20 years or are you trying to build a company and flip it for a couple million in 4 years?<br /><br />You will find that different members of your company have different time horizons and objectives.<br /><br />You may also find that by taking the VC route, you increase your exit time and risk, but do not increase your rate of return.  A small 30 million dollar exit in 4 years is often better than a 12 year exit at 120 million with 3 rounds of VC and dilution.<br /><br />You also have to ask &quot;Can I exit at 1-2x after taking VC&quot; and that should influence your choice to take VC.  If you take VC, the VC has 3 separate ways of blocking an M&amp;A event.  You might like the exit at that valuation and may want to do the M&amp;A and move on, but you cannot; your investors will not approve the deal below 3x return.<br /><br />You may also find yourself with an M&amp;A offer and it seems like the last chance before you run out of money and its a good deal for you, but the VC vetos it and then puts a down-round in the company and wipes out your equity.<br /><br />So you have to ask &quot;What happens to my shares if there is a recession or unforeseen event and the company takes a down-round?  What is the probability of that happening in my market?&quot;  If your market is software and 100% margin, you can probably cut back to profitability.  However if you are a manufacturing company with inventory and debt to finance machinery/invento<wbr />ry purchases and your margins are 8%, then a recession could impact your sales enough to put you in a cash crunch.<br /><br />The reality is that your choices about the financing of your company affect your strategic options.  Selling for 10-30 million is easy, there are hundreds of buyers.  Selling for 120 million is more difficult, there will be fewer potential acquires and the company will need to get board approval for the process.  Between 30 million and 300 million valuation is a no-man&#039;s land.  You are too large for an easy M&amp;A but too small to go public.<br /><br />It is even worse to be a technology company with a 300 million valuation (lots of users) and no revenues (Slide, Digg, Ning, link shorteners, etc...).  You cannot IPO because you have no revenues, but your valuation is too high for anyone except Microsoft, Yahoo or Google to buy you.  You only option is taking on more and more VC and hoping that someone big decides to buy you someday.  For these companies, a 30 million dollar &quot;Flickr&quot; type exit early on may be better for the founders and empoyees than growing extremely large without any path to revenue (Foursquare).<br /><br />You want to make the decision whether you will &quot;Go for the Gold&quot; and build the company to IPO or to flip the company early.  You need to make this decision when you start the company, because you will find that different members of the management team will have completely different ideas about the timespan and objectives of company.<br /><br />&quot;<b>the decision to accept VC investment increases the time to exit by approximately 12 years, not the median time of 7 years.&quot;</b><br /><b><br />&quot;</b>When VC investment was added, the <b>time to exit increased to somewhere around sixteen years after the entrepreneurs started and twelve years after the angels invested.&quot;</b><br /><b><br /></b>You need to look at the data and determine what the objectives for your company are and need to make decisions in light of those objectives.  This requires having an early idea of your exit strategy.<br /><br />There are several things you can do to structure your company so that it is more desirable as a target for M&amp;A and those are things you need to do from day one.  They are covered pretty well in that book.<br /><br />One thing to keep in mind is that if you are small company, companies that are interested in acquiring you are not going to magically find you (there are actual companies outside of Silicon Valley that may be interested in your IP, but do not know you exist).  You will have to do some work to get acquired and to find the companies with complementary products.  Getting acquired is not necessary a passive process and there are actions you can take to increase the desirability of your company as an M&amp;A target and to advertise your company to a wider range of potential buyers.<br /><br />Soliciting M&amp;A offers is also necessary to setting up a competitive M&amp;A process. You will also learn that (like fund raising) M&amp;A deals are a full time job.  If you let the CEO manage the M&amp;A process, the company may suffer.  You should have someone who is able to handle the M&amp;A process full-time without affecting the performance of the company during the process.<div class="action_bar" id="__w2_jcZdXje_answer_actions"><span id="ld_RGxTHo_549"><a class="view_comments supp " href="#" id="__w2_cuV9RMq_view_comment_link">1 Comment</a></span><span class="bullet"> &bull; </span><span id="ld_RGxTHo_550"><a class="answer_permalink" href="/How-focused-should-a-start-up-be-on-being-acquired/answer/Brandon-Smietana"><span class="datetime" id="__w2_Dw5lqyJ_datespan">Insert a dynamic date here</span></a><span id="ld_RGxTHo_644"></span></span></div><div id="ld_RGxTHo_551"><div class="comments answer_comments hidden" id="__w2_KPLUyXB_answer_comments"><div id="ld_RGxTHo_645"><div id="ld_RGxTHo_724"><a name="comment_98830"></a><div class="comment p0_5" id="__w2_k29xPDf_comment"><p class="comment_text">Wow. that is an awesome response. Suprised the book doesn&#039;t have more reviews on amazon though. What you say makes a bucketful of sense.</p><p class="action_bar"><a class="user" href="/Paul-Sweeney">Paul Sweeney</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_oQ6iHWC_datespan">Insert a dynamic date here</span></p></div></div></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_RGxTHo_463"><div class="feed_item stream_feed_item p1" id="__w2_cV8EoDx_item"><div class="e_col w4_5"><div id="ld_RGxTHo_486"><div class="feed_item_question"><h2><span id="ld_RGxTHo_524"><span id="ld_RGxTHo_686"></span><a class="question_link" href="/Is-taxation-by-definition-a-form-of-theft-Why-or-why-not" id="__w2_dlvMg4Y_link"><span id="ld_RGxTHo_687"></span>Is taxation by definition a form of theft? Why or why not?</a></span></h2></div></div><div id="ld_RGxTHo_487"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_itGMPKT_answer_voting"><div id="ld_RGxTHo_552"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_bsRacO7_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_bsRacO7_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_itGMPKT_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_LZXyIhk_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_LZXyIhk_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_LZXyIhk_menu_contents"> </div></div></span><div id="__w2_itGMPKT_answer_voters"><div id="ld_RGxTHo_553"></div></div></div>Taxation is not voluntary and is enforced directly through the government&#039;s monopoly on force.<br /><br />If wealth if property and the government is depriving you of your property through the threat of force, that might be called theft.<br /><br />Theft has several connotations attached to it however, such as illegitimacy.<div class="action_bar" id="__w2_itGMPKT_answer_actions"><span id="ld_RGxTHo_554"><a class="view_comments supp " href="#" id="__w2_BoCk6is_view_comment_link">1 Comment</a></span><span class="bullet"> &bull; </span><span id="ld_RGxTHo_555"><a class="answer_permalink" href="/Is-taxation-by-definition-a-form-of-theft-Why-or-why-not/answer/Brandon-Smietana"><span class="datetime" id="__w2_qNZ5Hzl_datespan">Insert a dynamic date here</span></a><span id="ld_RGxTHo_646"></span></span></div><div id="ld_RGxTHo_556"><div class="comments answer_comments hidden" id="__w2_rK4xYPG_answer_comments"><div id="ld_RGxTHo_647"><div id="ld_RGxTHo_725"><a name="comment_97444"></a><div class="comment p0_5" id="__w2_V4cFbiP_comment"><p class="comment_text">Of course taxation is voluntary is there a guard at the border stoping you from leaving?</p><p class="action_bar"><a class="user" href="/Gary-Stein">Gary Stein</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_wC7kyWF_datespan">Insert a dynamic date here</span></p></div></div></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_RGxTHo_464"><div class="feed_item stream_feed_item p1" id="__w2_epwvnVG_item"><div class="e_col w4_5"><div id="ld_RGxTHo_488"><div class="feed_item_question"><h2><span id="ld_RGxTHo_525"><span id="ld_RGxTHo_688"></span><a class="question_link" href="/For-web-startups-seeking-to-acquire-users-should-they-focus-initial-advertising-on-one-city-market-or-disperse-advertising-among-several-major-cities" id="__w2_t0MSO8j_link"><span id="ld_RGxTHo_689"></span>For web startups seeking to acquire users, should they focus initial advertising on one city/market, or disperse advertising among several major cities?</a></span></h2></div></div><div id="ld_RGxTHo_489"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_jBKkqtq_answer_voting"><div id="ld_RGxTHo_557"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_qZzSedh_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_qZzSedh_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_jBKkqtq_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_rkaNzLs_link"><span class="rep" id="__w2_rkaNzLs_sig">I write machine learning based s...</span></span><div class="hover_menu hidden" style="display: none" id="__w2_rkaNzLs_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_rkaNzLs_menu_contents"> </div></div></span><div id="__w2_jBKkqtq_answer_voters"><div id="ld_RGxTHo_558"></div></div></div>How are you acquiring users?<br /><br />Is your startup geographically focused?  Like Foursquare?<br /><br />Is your user acquisition advertis<wbr />ing driven?<br /><br />Is it driven by SEO?<br /><br />There are too many factors.  There is not a best answer. If you are doing a Facebook or FourSquare, then geography matters.  If you are doing Q&amp;A than SEO and content matters more than geography.<br /><br />Communication services and user communities need a critical mass of users.  Whether geography matters is completely dependent on the nature of your service.  Some services has geography components and others do not.  Some are completely geography focused and others not at all.<div class="action_bar" id="__w2_jBKkqtq_answer_actions"><span id="ld_RGxTHo_559"><a class="view_comments supp " href="#" id="__w2_fR8qWRS_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_RGxTHo_560"><a class="answer_permalink" href="/For-web-startups-seeking-to-acquire-users-should-they-focus-initial-advertising-on-one-city-market-or-disperse-advertising-among-several-major-cities/answer/Brandon-Smietana"><span class="datetime" id="__w2_Bu0QKJJ_datespan">Insert a dynamic date here</span></a><span id="ld_RGxTHo_648"></span></span></div><div id="ld_RGxTHo_561"><div class="comments answer_comments hidden" id="__w2_wdhiDzh_answer_comments"><div id="ld_RGxTHo_649"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_RGxTHo_465"><div class="feed_item stream_feed_item p1" id="__w2_zOVEppK_item"><div class="e_col w4_5"><div id="ld_RGxTHo_490"><div class="feed_item_question"><h2><span id="ld_RGxTHo_526"><span id="ld_RGxTHo_690"></span><a class="question_link" href="/What-is-a-reasonable-range-for-a-CEO-to-pay-him-herself-at-a-pre-launch-startup-that-raises-5m-in-Series-A-funding" id="__w2_tFe9p6z_link"><span id="ld_RGxTHo_691"></span>What is a reasonable range for a CEO to pay him/herself at a pre launch startup that raises $5m in Series A funding?</a></span></h2></div></div><div id="ld_RGxTHo_491"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_dMfDZPt_answer_voting"><div id="ld_RGxTHo_562"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_jDiAOn9_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_jDiAOn9_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_dMfDZPt_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_gvYrb2K_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_gvYrb2K_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_gvYrb2K_menu_contents"> </div></div></span><div id="__w2_dMfDZPt_answer_voters"><div id="ld_RGxTHo_563"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">2</strong> votes</span> by <a class="user" href="/Matthew-Simon-Cavalletto">Matthew Simon Cavalletto</a> and <a class="user" href="/Michael-Wolfe">Michael Wolfe</a></span></div></div></div>$225,000 a year is base salary for the CEO of a post-series A company.  Founder CEOs typically receive 25k less a year than non-founder CEOs.<br /><br />25th percentile salary for technology startup CEOs is $200k/year<br />50th percentile salary is $225k a year<br />75th percentile is $250k a year<br /><br />Startup CEO salary is constrained to a very narrow range.<br /><br />25th percentile salary for CEOs at the first financing round is 155k a year.<br />75th percentile salary for CEOs at the first finance round is 275k a year<br /><br />For more information see,<br /><a href="http://www.scribd.com/doc/7494620/2008-CompStudy-Report-in-Technology" rel="nofollow" target="_blank" class="external_link">http://www.scribd.com/doc<wbr />/749462...</a><br /><br />For people who would say &quot;OMFG! 250k a year, that is ridiculous!  OMFG11&quot;, you should keep in mine that a 2,500 sq-ft shack in Menlo Park costs 2 million dollars.  If CEOs paid no taxes and saved 100% of their $250k a year income, it would still taken them 8 years to save enough money to buy a 2 million dollar shack.<br /><br />After taxes and expenses, it would take 32 years for a CEO to afford a shack if they lived very frugally (no Ferrari).<br /><br />In real terms, 250k a year is nothing.<div class="action_bar" id="__w2_dMfDZPt_answer_actions"><span id="ld_RGxTHo_564"><a class="view_comments supp " href="#" id="__w2_svFn3Vz_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_RGxTHo_565"><a class="answer_permalink" href="/What-is-a-reasonable-range-for-a-CEO-to-pay-him-herself-at-a-pre-launch-startup-that-raises-5m-in-Series-A-funding/answer/Brandon-Smietana"><span class="datetime" id="__w2_MuOyE7B_datespan">Insert a dynamic date here</span></a><span id="ld_RGxTHo_650"></span></span></div><div id="ld_RGxTHo_566"><div class="comments answer_comments hidden" id="__w2_rQaadOa_answer_comments"><div id="ld_RGxTHo_651"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_RGxTHo_466"><div class="feed_item stream_feed_item p1" id="__w2_fWBUe1r_item"><div class="e_col w4_5"><div id="ld_RGxTHo_492"><div class="feed_item_question"><h2><span id="ld_RGxTHo_527"><span id="ld_RGxTHo_692"></span><a class="question_link" href="/Why-is-Silicon-Valley-so-equity-focused-Are-there-a-lot-of-cashflow-businesses-we-just-dont-know-about" id="__w2_unHomxb_link"><span id="ld_RGxTHo_693"></span>Why is Silicon Valley so equity focused? Are there a lot of cashflow businesses we just don&#039;t know about?</a></span></h2></div></div><div id="ld_RGxTHo_493"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_HMDuNGl_answer_voting"><div id="ld_RGxTHo_567"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_uoVdn5V_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_uoVdn5V_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_HMDuNGl_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_wr1f2kA_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_wr1f2kA_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_wr1f2kA_menu_contents"> </div></div></span><div id="__w2_HMDuNGl_answer_voters"><div id="ld_RGxTHo_568"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">3</strong> votes</span> by <a class="user" href="/Craig-Montuori">Craig Montuori</a>, <a class="user" href="/Ramit-Sethi">Ramit Sethi</a> and <a class="user" href="/Varun-Arora">Varun Arora</a></span></div></div></div>There are a ton of cash cows.  However the news channels and rumor mills in Silicon Valley are focused on &quot;valuations&quot; and VC financing events.<br /><br />If you have a profitable bootstrapped business and twenty times the market-share of your VC backed competitor, the VC backed competitor gets all the press coverage in TechCrunch.  They also get all the gossip about boardroom backstabbing and valuations.<br /><br />It is not difficult to make money on the internet, but being a profitable business or a cash cow is not news worthy.  The cashflow businesses tend to be closely held if they would otherwise sell for an earnings multiple less than 20, because the owner would have to find other assets to invest the proceeds of the sale in (such as equities or corporate bonds).  Ad networks and affiliate marketing companies tend to fall into this space.<br /><br />The cashflow businesses are distributed all over the US instead of just being concentrated in one place (like the private equity financed companies).  Cashflow businesses tend to take less VC or no VC.  Online poker or gaming startups and others fall into this category.<br /><br />The reality is that the vast majority of companies receive no private equity investment and companies are generally profitable or bankrupt within 2-3 years.  Only half of companies that IPO have taken early stage private equity investment (as compared to growth equity).<br /><br />You just do not hear about profitable companies, because they have much less drama than &quot;Dude, wheres my revenue model&quot; VC backed companies like Digg, Reddit and Twitter.<br /><br />VCs complain about ad-supported or subscription based companies not being profitable enough, but there is a selection bias, with VCs only ending up with the companies which could not become profitable on 100k daily user and $3/eCPM.  If you are a 3 person company, can build a website and get 500k a year in revenue; you probably do not need private equity investment and you wont be in TechCrunch.<br /><br />News and information flow in Silicon Valley has no relationship with revenue.  That is probably the greatest reason we do not hear about these companies.<br /><br />However, if you are profitable and you go blabbing about, like the creator of Mafia Wars did; people start thinking &quot;This is a good market&quot; and Zynga or someone else comes along and copies your product and buries you.  So if you are making 10k a day in revenues but started your company for the &#039;ePeen&#039; instead of the money, you will go around blabbing about your revenues and end up with 30 &quot;me-too&quot; competitors.  There are selection effects at work.<div class="action_bar" id="__w2_HMDuNGl_answer_actions"><span id="ld_RGxTHo_569"><a class="view_comments supp " href="#" id="__w2_A9s5TM0_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_RGxTHo_570"><a class="answer_permalink" href="/Why-is-Silicon-Valley-so-equity-focused-Are-there-a-lot-of-cashflow-businesses-we-just-dont-know-about/answer/Brandon-Smietana"><span class="datetime" id="__w2_aIfprDj_datespan">Insert a dynamic date here</span></a><span id="ld_RGxTHo_652"></span></span></div><div id="ld_RGxTHo_571"><div class="comments answer_comments hidden" id="__w2_hRvymAp_answer_comments"><div id="ld_RGxTHo_653"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_RGxTHo_467"><div class="feed_item stream_feed_item p1" id="__w2_QJYhpZp_item"><div class="e_col w4_5"><div id="ld_RGxTHo_494"><div class="feed_item_question"><h2><span id="ld_RGxTHo_528"><span id="ld_RGxTHo_694"></span><a class="question_link" href="/What-is-the-best-and-safest-way-from-Detroit-airport-to-Auburn-Hills-Michigan" id="__w2_j9z2Imu_link"><span id="ld_RGxTHo_695"></span>What is the best and safest way from Detroit airport to Auburn Hills, Michigan?</a></span></h2></div></div><div id="ld_RGxTHo_495"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_FuIBj6f_answer_voting"><div id="ld_RGxTHo_572"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_VoQsvj3_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_VoQsvj3_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_FuIBj6f_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_JZ8s2Z9_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_JZ8s2Z9_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_JZ8s2Z9_menu_contents"> </div></div></span><div id="__w2_FuIBj6f_answer_voters"><div id="ld_RGxTHo_573"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">2</strong> votes</span> by <a class="user" href="/Rishi-Natarajan">Rishi Natarajan</a> and <a class="user" href="/Anthony-Foster">Anthony Foster</a></span></div></div></div>Armored stretch hummer limo with the rims that keep spinning every time you stop.<div class="action_bar" id="__w2_FuIBj6f_answer_actions"><span id="ld_RGxTHo_574"><a class="view_comments supp " href="#" id="__w2_lfD9OA5_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_RGxTHo_575"><a class="answer_permalink" href="/What-is-the-best-and-safest-way-from-Detroit-airport-to-Auburn-Hills-Michigan/answer/Brandon-Smietana"><span class="datetime" id="__w2_hiXKOth_datespan">Insert a dynamic date here</span></a><span id="ld_RGxTHo_654"></span></span></div><div id="ld_RGxTHo_576"><div class="comments answer_comments hidden" id="__w2_OpE3i6Y_answer_comments"><div id="ld_RGxTHo_655"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_RGxTHo_468"><div class="feed_item stream_feed_item p1" id="__w2_ylhtwr4_item"><div class="e_col w4_5"><div id="ld_RGxTHo_496"><div class="feed_item_question"><h2><span id="ld_RGxTHo_529"><span id="ld_RGxTHo_696"></span><a class="question_link" href="/Brandon-Smietana/What-television-shows-do-you-currently-watch" id="__w2_EqRiaWG_link"><span id="ld_RGxTHo_697"></span>What television shows do you currently watch?</a></span></h2></div></div><div id="ld_RGxTHo_497"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_y28IOlg_answer_voting"><div id="ld_RGxTHo_577"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_bBepJOk_answer_vote_up_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_y28IOlg_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_l7YkUve_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_l7YkUve_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_l7YkUve_menu_contents"> </div></div></span><div id="__w2_y28IOlg_answer_voters"><div id="ld_RGxTHo_578"></div></div></div>I wont watch television; it is too proletarian.<br /><br />I prefer reading Foucault.<div class="action_bar" id="__w2_y28IOlg_answer_actions"><span id="ld_RGxTHo_579"><a class="view_comments supp " href="#" id="__w2_mAugbUh_view_comment_link">1 Comment</a></span><span class="bullet"> &bull; </span><span id="ld_RGxTHo_580"><a class="answer_permalink" href="/Brandon-Smietana/What-television-shows-do-you-currently-watch/answer/Brandon-Smietana"><span class="datetime" id="__w2_jKPeTci_datespan">Insert a dynamic date here</span></a><span id="ld_RGxTHo_656"></span></span></div><div id="ld_RGxTHo_581"><div class="comments answer_comments hidden" id="__w2_GiZ2Lq7_answer_comments"><div id="ld_RGxTHo_657"><div id="ld_RGxTHo_726"><a name="comment_96084"></a><div class="comment p0_5" id="__w2_F40bbIb_comment"><p class="comment_text">I don&#039;t think this question or answer makes Quora a useful general resource!  It should be deleted!!!</p><p class="action_bar"><a class="user" href="/Ryan-Lackey">Ryan Lackey</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_fCViRwo_datespan">Insert a dynamic date here</span></p></div></div></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_RGxTHo_469"><div class="feed_item stream_feed_item p1" id="__w2_pveXzPn_item"><div class="e_col w4_5"><div id="ld_RGxTHo_498"><div class="feed_item_question"><h2><span id="ld_RGxTHo_530"><span id="ld_RGxTHo_698"></span><a class="question_link" href="/Brandon-Smietana/What-would-you-do-with-an-extra-40M" id="__w2_d1kyrFp_link"><span id="ld_RGxTHo_699"></span>What would you do with an extra $40M?</a></span></h2></div></div><div id="ld_RGxTHo_499"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_Koa6T7W_answer_voting"><div id="ld_RGxTHo_582"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_U17514b_answer_vote_up_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_Koa6T7W_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_IrWsGm0_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_IrWsGm0_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_IrWsGm0_menu_contents"> </div></div></span><div id="__w2_Koa6T7W_answer_voters"><div id="ld_RGxTHo_583"></div></div></div>After I am finished with my current company I want to focus more on computational chemistry.  I feel that I went for the low hanging fruit in my past companies.  I did what was likely to succeed instead of pursing the greatest opportunity in front of me.<br /><br />After I am more financially secure, I want to take on more technical risk.  I want to hire more machine learning graduate students and spin out a full-time High Frequency Trading group.  Buy and hold is so 90s; I want to get in on the flash crash action.<br /><br /><blockquote>&quot;WSJ is reporting that bonuses on Wall Street this year are expected to be around $144 billion. How big is that relative to the overall economy? </blockquote><blockquote><br /></blockquote><blockquote>ZeroHedge cranked out the numbers and it is 8% of the total money supply (as measured by M1). Got that? Investment bankers will control 8% of the entire money supply once bonuses are paid.&quot;<br /></blockquote><br />I am very tempted to start a HFT outfit and live out my dream of becoming a banker overlord.<br /><br />Another 40 million would not be nearly enough for me to throw in the towel and retire to a decadent life of models, Farmville and alcohol.<br /><br />As a CEO, my career goal is &quot;Gulfstream IV or die trying&quot;.  I dont need a Boeing 767 party jet to be happy.  A Gulfstream IV is well good enough for me.<br /><br />After a Gulfstream, I am sure that I will realize that &quot;there are more important things in life than money&quot; and burn a couple hundred million running for governor in California (this is sarcasm).<div class="action_bar" id="__w2_Koa6T7W_answer_actions"><span id="ld_RGxTHo_584"><a class="view_comments supp " href="#" id="__w2_K7cjqD1_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_RGxTHo_585"><a class="answer_permalink" href="/Brandon-Smietana/What-would-you-do-with-an-extra-40M/answer/Brandon-Smietana"><span class="datetime" id="__w2_bJaXIqZ_datespan">Insert a dynamic date here</span></a><span id="ld_RGxTHo_658"></span></span></div><div id="ld_RGxTHo_586"><div class="comments answer_comments hidden" id="__w2_NX66lIV_answer_comments"><div id="ld_RGxTHo_659"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_RGxTHo_470"><div class="feed_item stream_feed_item p1" id="__w2_cLhomIq_item"><div class="e_col w4_5"><div id="ld_RGxTHo_500"><div class="feed_item_question"><h2><span id="ld_RGxTHo_531"><span id="ld_RGxTHo_700"></span><a class="question_link" href="/Zynga/What-problems-was-Zynga-trying-to-solve-for-its-customers-when-it-launched-its-first-games" id="__w2_Rdq2Osb_link"><span id="ld_RGxTHo_701"></span>What &quot;problems&quot; was Zynga trying to solve for its customers when it launched its first games?</a></span></h2></div></div><div id="ld_RGxTHo_501"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_AL9P776_answer_voting"><div id="ld_RGxTHo_587"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_Uq2EsTV_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_Uq2EsTV_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_AL9P776_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_AdcuKav_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_AdcuKav_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_AdcuKav_menu_contents"> </div></div></span><div id="__w2_AL9P776_answer_voters"><div id="ld_RGxTHo_588"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">1</strong> vote</span> by <span class="name_span">Anon User</span></span></div></div></div>People need poker, just like they &quot;need&quot; alcohol and sex.<br /><br />Zynga was bringing poker to the Facebook platform.  By integrating poker with Facebook&#039;s social network, Zynga made it easier for people to indulge in their sinful gambling impulses by showing them that &quot;all my friends are doing it&quot; with a never-ending stream of notifications spamming yo<wbr />u every time you log in to Facebook.<br /><br />Zynga poker and Farmville notifications are to Facebook what &quot;Herbal Viagra&quot; spam was to email in the early internet.  Zynga was a pioneer of &quot;viral marketing&quot; on the Facebook platform.<br /><br />Zynga was also one of the first companies to successfully package and monetize &quot;ePeen&quot;.  You suck at poker and your friends look down upon you because you only have 150k chips left.  But if you pay Zynga $20 they will sell you 1,000,000 poker chips worth of &quot;I am better than my friends&quot;.<br /><br />Zynga poker and Farmville make people feel like they are accomplishing somethi<wbr />ng with their lives.  That is why they have been successful.<div class="action_bar" id="__w2_AL9P776_answer_actions"><span id="ld_RGxTHo_589"><a class="view_comments supp " href="#" id="__w2_iP8jjj0_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_RGxTHo_590"><a class="answer_permalink" href="/Zynga/What-problems-was-Zynga-trying-to-solve-for-its-customers-when-it-launched-its-first-games/answer/Brandon-Smietana"><span class="datetime" id="__w2_h5uxA9z_datespan">Insert a dynamic date here</span></a><span id="ld_RGxTHo_660"></span></span></div><div id="ld_RGxTHo_591"><div class="comments answer_comments hidden" id="__w2_akpLtd8_answer_comments"><div id="ld_RGxTHo_661"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_RGxTHo_471"><div class="feed_item stream_feed_item p1" id="__w2_T4nMWZB_item"><div class="e_col w4_5"><div id="ld_RGxTHo_502"><div class="feed_item_question"><h2><span id="ld_RGxTHo_532"><span id="ld_RGxTHo_702"></span><a class="question_link" href="/Why-are-many-people-who-are-very-smart-not-also-rich" id="__w2_zWprTG6_link"><span id="ld_RGxTHo_703"></span>Why are many people who are very smart not also rich?</a></span></h2></div></div><div id="ld_RGxTHo_503"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_FNYSSgK_answer_voting"><div id="ld_RGxTHo_592"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_aMltRR1_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_aMltRR1_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_FNYSSgK_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_ZE7R9vG_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_ZE7R9vG_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_ZE7R9vG_menu_contents"> </div></div></span><div id="__w2_FNYSSgK_answer_voters"><div id="ld_RGxTHo_593"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">12</strong> votes</span> by <span id="__w2_qB4jZBe_view_all"><a class="user" href="/Jeffrey-Morris-Jr">Jeffrey Morris Jr.</a>, <a class="user" href="/Yishan-Wong">Yishan Wong</a>, <a class="user" href="/Ming-Yeow-Ng">Ming Yeow Ng</a>, </span> <a class="more_link" href="#" id="__w2_qB4jZBe_view_all_link">(more)</a><span class="hidden" id="__w2_qB4jZBe_all_phrases"><a class="user" href="/Jeffrey-Morris-Jr">Jeffrey Morris Jr.</a>, <a class="user" href="/Yishan-Wong">Yishan Wong</a>, <a class="user" href="/Ming-Yeow-Ng">Ming Yeow Ng</a>, <a class="user" href="/Sheldon-Chang">Sheldon Chang
2
+ </a>, <a class="user" href="/David-Ouyang">David Ouyang</a>, <a class="user" href="/Bogdan-Bocse">Bogdan Bocse</a>, <a class="user" href="/Cameron-A.-Ellis">Cameron A. Ellis</a>, <a class="user" href="/Sudarshan-Gaikaiwari">Sudarshan Gaikaiwari</a>, <a class="user" href="/Antone-Johnson">Antone Johnson</a>, <a class="user" href="/Prakash-Swaminathan">Prakash Swaminathan</a>, <a class="user" href="/Alex-Kosorukoff">Alex Kosorukoff</a> and <a class="user" href="/Timothy-Wee">Timothy Wee</a></span></span></div></div></div>&quot;Why are many people who are very smart not also rich?&quot;<br /><br />The simplest reason is that they are bad at creating wealth.  Even if they create value, they may not be able to capture any of it.<br /><b><br /></b>I have met many intelligent people who have a slave mentality.  They do what they are told.  They want out of life what people tell them they should want.  They believe that money cannot make them happy but also believe women or family can make them happy, or other absurdities you find in popular culture.  They believe socially transmitted notions that are not validated by data and they try to live their lives by them.<br /><br />Most people are also risk adverse.  They would prefer a 80k a year job shuffling paper clips to the chance of success.  I know at least a dozen people who have said &quot;I am going to get a job and then start a company eventually&quot;.  When you ask them &quot;When are you going to start a company?&quot;, they have no definite plans.<br /><br />When you ask them &quot;Why don&#039;t you start a company today?&quot;, they give you the exact reasons why they will not be starting a company in the future.<br /><br />When people do start companies, they usually fail because they give up and decide that it would be easier to go back to their cubical.  This is the number one cause of startup failure.<br /><br />It is much easier for people to do what they are told instead of setting goals for themselves.  Most people have not been in a P&amp;L position where they have to make decisions.  School prepares people for employee positions where the goals are set for you and you just have to do what you are told.<br /><br />Most people are simply unwilling to make sacrifices to become financially succes<wbr />sful or aggressively play politics to  achieve and maintain power within organizations.  The vast majority of people have no plans or meaningful goals in life and those that do are doing nothing to execute on them.<br /><br />You do not generate wealth by accident and people who do not commit to actions that are effective at wealth generation, do not succeed at wealth generation (with the exception of some very lucky early Google and Facebook employees).<br /><br />If you have a slave mentality, you do have little use for assets.  You will come home and watch television, sleep and then go back to work.  Another 40 million is not going to change the television shows you watch.<br /><br />In many ways, a desire for wealth is a desire for freedom.  The reason intelligent people are not wealthy is because they have other desires such as &quot;ePeen&quot;, social status, women or the &quot;desire to belong&quot; and be affirmed by a group.  Each person has a different set of driving motivations and some of these motivations conflict with wealth creation goals.<div class="action_bar" id="__w2_FNYSSgK_answer_actions"><span id="ld_RGxTHo_594"><a class="view_comments supp " href="#" id="__w2_OILAbdT_view_comment_link">11 Comments</a></span><span class="bullet"> &bull; </span><span id="ld_RGxTHo_595"><a class="answer_permalink" href="/Why-are-many-people-who-are-very-smart-not-also-rich/answer/Brandon-Smietana"><span class="datetime" id="__w2_AHV7dCT_datespan">Insert a dynamic date here</span></a><span id="ld_RGxTHo_662"></span></span></div><div id="ld_RGxTHo_596"><div class="comments answer_comments hidden" id="__w2_FxteHQW_answer_comments"><div id="ld_RGxTHo_663"><div id="ld_RGxTHo_727"><a name="comment_95939"></a><div class="comment p0_5" id="__w2_QUWfZe5_comment"><p class="comment_text">Yes, but it may change the screen size and resolution with which you watch them. However, much as with happiness, this effect is most pronounced up to $100k/year, and then it levels off.</p><p class="action_bar"><a class="user" href="/Yishan-Wong">Yishan Wong</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_M6p7Mnc_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_RGxTHo_728"><a name="comment_95969"></a><div class="comment p0_5" id="__w2_S0rRIx0_comment"><p class="comment_text">I have enough competition as it is! Leave intelligent people who have a slave mentality alone, please.</p><p class="action_bar"><a class="user" href="/Gene-Linetsky">Gene Linetsky</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_TlZiLfP_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_RGxTHo_729"><a name="comment_96046"></a><div class="comment p0_5" id="__w2_CBARxEI_comment"><p class="comment_text">&quot;Yes, but it may change the screen size and resolution with which you watch them. &quot;<br /><br />Best comment ever.</p><p class="action_bar"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_J8qXfk8_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_RGxTHo_730"><div class="comment comment_dotdotdot p0_5"><a class="supp" href="#" onclick="$(&#039;.hidden_comments_124063&#039;).toggleClass(&#039;hidden&#039;);
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  $(this).parent().addClass(&#039;hidden&#039;);
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- return false;">...show <span><span id="ld_GprgIi_1817">13</span></span> hidden comments...</a></div><div class="hidden_comments_112714 hidden"><div id="ld_GprgIi_1818"><div id="ld_GprgIi_1823"><a name="comment_88394"></a><div class="comment p0_5" id="__w2_XsEA4fE_comment"><p class="comment_text">Someone was so impressed by our debate in the comments that they tagged it with <a href="/Exceptional-Comment-Threads">Exceptional Comment Threads</a>.</p><p class="action_bar"><a class="user" href="/Lucas-Meadows">Lucas Meadows</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_caAjBHD_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1824"><a name="comment_88399"></a><div class="comment p0_5" id="__w2_wJdRu9Y_comment"><p class="comment_text"> Exceptional Comment Threads<br /><br />Haha!  That is amazing.<br /><br /><a href="/Sex/What-was-your-most-hilarious-sexual-experience">Sex: What was your most hilarious sexual experience?</a></p><p class="action_bar"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_tpR3r8i_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1825"><a name="comment_88401"></a><div class="comment p0_5" id="__w2_IyGHgoC_comment"><p class="comment_text">I don&#039;t understand the relevance of the sex question.<br /><br />Looking forward to seeing your game, though. Didn&#039;t realize you were so close to releasing it!</p><p class="action_bar"><a class="user" href="/Lucas-Meadows">Lucas Meadows</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_Fo9NEgL_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1826"><a name="comment_88403"></a><div class="comment p0_5" id="__w2_KobvET2_comment"><p class="comment_text">&quot;Great answer. Hope I don&#039;t get fired for upvoting :)&quot;<br /><br />I am also being nice to Zynga, because we are releasing a social game next week. *wink*wink*nudge*nudge*<br /><br />By social game, I mean &quot;MMO&quot;.</p><p class="action_bar"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_OAuYEvr_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1827"><a name="comment_88405"></a><div class="comment p0_5" id="__w2_W44KPky_comment"><p class="comment_text">Hahaha, ok. Well let me know when the MMO is out. I&#039;ll be interested in checking it out.</p><p class="action_bar"><a class="user" href="/Lucas-Meadows">Lucas Meadows</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_OxEjYE6_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1828"><a name="comment_88778"></a><div class="comment p0_5" id="__w2_FXV2b8V_comment"><p class="comment_text">Three comments on Zynga&#039;s strengths.<br /><br />I work on Zynga&#039;s User Acquisition team. Up until March this year, we had 1--at most &quot;3&quot; people--working on advertising. For the size of our organization, that&#039;s a very small team--in fact, smaller than our closest competitors. We now have 3.5 FTEs dedicated.<br /><br />As much as I&#039;d like to toot our my horn, I&#039;d argue that advertising is not a core competency. Advertising is a result of a successful product. When you build a game that performs from an engagement, retention, monetization, and viral standpoint--the game sells itself. Advertising follows if the numbers work. Makes our group look good ;) But really--it doesn&#039;t matter how much money you throw at a game if the core metrics aren&#039;t there. Other developers have tried and failed--I&#039;ve observed similar spend patterns. This is not a failure of their advertising ops, rather, it&#039;s a failure of the game itself.  I&#039;d argue more generally that user acquisition (which you mentioned above) across all channels--not advertising solely--is a core competency. <br /><br />On metrics--it&#039;s more than just A/B testing. Analytics, in general, is a key core competency at Zynga. Our head of Analytics Ken Rudin said that &quot;Sometimes I think we are an analytics company masquerading as a gaming company. Everything is run by the numbers&quot; <a href="http://tdwi.org/blogs/wayne-eckerson/2010/02/zynga.aspx?sc_lang=en" rel="nofollow" target="_blank" class="external_link">http://tdwi.org/<wbr />blogs/wayne-ecke...</a> Right on. Real-time reporting on practically anything that&#039;s timely and reliable, a robust experimentation platform, and metric-oriented goals all keep everyone moving at full speed. The analytics group has mastered the hardest part of Business Intelligence--getting the right information to the right people at the right time.  If core metrics change significantly, 10 people are on it within 10 minutes. Problems rarely fester. I believe we have the largest Vertica cluster--this is a data geek&#039;s paradise. Analytics at Zynga doesn&#039;t get the credit it really deserves simply because it&#039;s not as sexy as other components of the business. But it&#039;s a huge advantage unmatched by any other dev and a true core competency.</p><p class="action_bar"><a class="user" href="/John-Marsland">John Marsland</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_LUEsiky_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1829"><a name="comment_88791"></a><div class="comment p0_5" id="__w2_CXM6lEN_comment"><p class="comment_text">Excellent points, John. That comment deserves to be an answer.</p><p class="action_bar"><a class="user" href="/Lucas-Meadows">Lucas Meadows</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_tgVuDeX_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1830"><a name="comment_88797"></a><div class="comment p0_5" id="__w2_x3OGmpI_comment"><p class="comment_text">The only pro-Zynga answers are like &quot;we&#039;re good at games and stuff&quot; :)</p><p class="action_bar"><a class="user" href="/Lucas-Meadows">Lucas Meadows</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_zwa1hGS_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1831"><a name="comment_88853"></a><div class="comment p0_5" id="__w2_RCCOvdv_comment"><p class="comment_text">&quot;I work on Zynga&#039;s User Acquisition team. Up until March this year, we had 1--at most &quot;3&quot; people--working on advertising.&quot;<br /><br />How do you spend millions of dollars in advertising dollars a month with just 3 people managing the ad campaigns?  You are not targeting specific demographics or using any advanced techniques to reduce user acquisition costs?<br /><br />Zynga spends enough on display advertising that I thought they would have more people on it.</p><p class="action_bar"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_yoxATr8_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1832"><a name="comment_88890"></a><div class="comment p0_5" id="__w2_lG12GPC_comment"><p class="comment_text">free red bull for one ;) <br /><br />also, the team is relatively senior, we&#039;ve invested in tools to help with the creation and management of ads at scale, and we piggy-back off our analytics system, allowing us to evaluate the effectiveness of our efforts practically.</p><p class="action_bar"><a class="user" href="/John-Marsland">John Marsland</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_f7JAtVe_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1833"><a name="comment_88911"></a><div class="comment p0_5" id="__w2_jh2QII8_comment"><p class="comment_text"><i>For instance, its likely that Zynga receives free advertising on Facebook&#039;s ad network to offset the loss of revenue from Zynga adopting Facebook credits.  Or equivalently, Zynga pays a lower cut to Facebook than other developers, due to Zynga&#039;s bargaining position.</i><br /><i><br /></i>These are not quite equivalent. It&#039;s a lot smarter for Facebook to give them free ads in exchange for getting them to adopt credits, since that lowers Zynga&#039;s cost of acquiring the marginal FB user (compared to the cost of acquiring users elsewhere). If users are cheap to acquire, it&#039;s tempting for Zynga to use FB for more new game launches, especially experimental ones where they <i>need</i> to toy with new people.<br /><br />Giving Zynga a break on their credit costs doesn&#039;t have the same effect.</p><p class="action_bar"><a class="user" href="/Byrne-Hobart">Byrne Hobart</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_H4x208p_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1834"><a name="comment_89058"></a><div class="comment p0_5" id="__w2_GbXttcc_comment"><p class="comment_text">Byrne, yes.  However the difference to the metrics that matter is the same.  What you are looking at is the net revenue per customer acquisition; Zynga per user margin.<br /><br />It is mostly an accounting difference.<br /><br />I am not familiar with what the exact deal Zynga has with Facebook, because it has not leaked yet.  However my bet is that it is one of those two.</p><p class="action_bar"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_B4gP3v1_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1835"><a name="comment_89060"></a><div class="comment p0_5" id="__w2_YtU1zuo_comment"><p class="comment_text">That would be my personal guess as well, though I know nothing as a humble peon.</p><p class="action_bar"><a class="user" href="/Lucas-Meadows">Lucas Meadows</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_zsJ5Sej_datespan">Insert a dynamic date here</span></p></div></div></div></div></div><div id="ld_GprgIi_1798"><a name="comment_89308"></a><div class="comment p0_5" id="__w2_G6TDCOV_comment"><p class="comment_text"> <a href="/Brandon-Smietana">Brandon Smietana</a> , that&#039;s only true if they aren&#039;t improving their product based on feedback from users. If they <i>are</i>, there is a big difference between a) status quo, and b) doubling the number of users, but halving the revenue per user. If revenue per user is a function of number of users (which it apparently is), any tradeoff that keeps users * RPU constant, but raises users and lowers RPU, is long-term positive until they hit saturation.</p><p class="action_bar"><a class="user" href="/Byrne-Hobart">Byrne Hobart</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_IGmHk2w_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1799"><a name="comment_89661"></a><div class="comment p0_5" id="__w2_Hxht66m_comment"><p class="comment_text">The saturation is not binary.  Its sigmoidal.  There are diminishing returns on advertising and cost per customer acquisition goes up as the amount of money on advertising spent goes up.</p><p class="action_bar"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_kCsPMGw_datespan">Insert a dynamic date here</span></p></div></div></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_GprgIi_1538"><div class="feed_item stream_feed_item p1" id="__w2_RETnrvf_item"><div class="e_col w4_5"><div id="ld_GprgIi_1567"><div class="feed_item_question"><h2><span id="ld_GprgIi_1599"><span id="ld_GprgIi_1767"></span><a class="question_link" href="/Why-do-VCs-angels-super-angels-ask-stupid-questions" id="__w2_CZ6nMKm_link"><span id="ld_GprgIi_1768"></span>Why do VCs/angels/super angels ask stupid questions?</a></span></h2></div></div><div id="ld_GprgIi_1568"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_h7Iccjf_answer_voting"><div id="ld_GprgIi_1651"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_IaMCJ9D_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_IaMCJ9D_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_h7Iccjf_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_n2F4bY6_link"><span class="rep" id="__w2_n2F4bY6_sig">&quot;Nonparametric kernel-based sequ...</span></span><div class="hover_menu hidden" style="display: none" id="__w2_n2F4bY6_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_n2F4bY6_menu_contents"> </div></div></span><div id="__w2_h7Iccjf_answer_voters"><div id="ld_GprgIi_1652"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">1</strong> vote</span> by <a class="user" href="/Senad-Dizdar">Senad Dizdar</a></span></div></div></div>&quot;I have been talking to VCs and I find that they ask really stupid questions. I am not sure if they really mean to ask these questions or they are just trying to get rid of you.&quot;<br /><br />Imagine if you are a non-technical person.  Pretend you have a degree in art history from Harvard and then worked at Goldman Sachs and now your a venture capitalist or a CEO of a newly formed company.<br /><br />As a CEO, you know your website is going to be brought to the brink of annihilation by scalab<wbr />ility problems if you succeed at user acquisition.  You want to hire a CTO that can design a system that will scale.  How would you select that CTO?  How do you determine whether a particular person will be able to handle these challenges?<br /><br />In general, you cannot.  You need a minimum level of competence in every area of your company to be able to ask the right questions and be able to evaluate a persons competencies.  In particular you have to evaluate how a person thinks and how they justify their arguments.  The position the person takes does not matter as much as the process through which they arrive at that position and how they justify and communicate their position.<br /><br />It is a very difficult problem.  Most people will choose people that they like and who will support and enhance their position of power in the company, over the people that will achieve the highest performance.<br /><br />The reality is that even if you are the best CEO in the world from a management perspective, if you cannot play politics, you will not retain your position long enough to achieve results; while a well entrenched and likable CEO is unlikely to be removed even if his performance is horrendous.<br /><br />Engineers who cannot play politics are liable to make an even greater mistake than selecting people that support them; they are likely to choose people that are like themselves.  They live in a monoculture and its difficult for them to understand that there are many groups in society and most of them have a completely different premise underlying their reality.<br /><br />So back to the question,  &quot;Why do investors ask stupid questions&quot;?  Investor&#039;s questions may seem stupid to you, but they do not seem very stupid to the investor.<br /><br />Honestly, your investors probably do not understand your business.  They do not understand your technology.  They do not understand your customers.   Stupid question usually reveal that the investors are operating under a different premise than you and they are good points to dig into to help the investor understand your business.<br /><br />Some people may say &quot;Its ridiculous that my investor does not understand my business!&quot;  However, today most executives do not even fully understand their company&#039;s business and only understand how it makes money at a very abstract level.  When you talk to management consultants who meet with executives, the consultant will often receive a ridiculous or &quot;stupid&quot; question from an executive, that belays a complete misunderstand of their business.  Its the role of the management consultants to help the executive understand what he does not know, or what he is assuming which is not true.<br /><br />Modern businesses are very complicated and to just operate and make day to day decisions, you must use a large number of heuristics.  However, your model of reality is ultimately a simplification and as time goes on, you will find that the model is deeply flawed.  Your cognitive model of reality is a dim image in a mirror; the stupid questions are the cracks in the mirror.<br /><br />People make a large number of assumptions to simply reality and make decisions (heuristics).  These assumptions are often very abstract and there is little opportunity for feedback against reality and so the naive assumptions persist for a very long time.  I do not think you should say that the &quot;question is stupid&quot;, but rather try to understand the implicit premises that underly the question (which might seem quite absurd to you).<br /><br />If you do not understand a domain (like economics and finance), its a very rare skill for a person to understand what questions to ask an expert in order to debug their own misunderstandings and discover their areas of ignorance.  It is also rare for experts to be able to debug the misunderstandings of others and dig out the underlying premises that are creating these &quot;stupid questions&quot;.<br /><br />However rare, I think these are the two most important skills for an executive to have, because without them you cannot accurately evaluate people who are different from yourself.  It is easy for an engineer to evaluate another engineer and his domain knowledge, but it is much more difficult for an engineer to evaluate the competency of a CFO.<br /><br />To summarize, investors do not ask &quot;stupid&quot; questions because they are stupid, but rather because their cognitive model of the world is different from yours.  After spending a couple hundred hours in the internet technology area, it is very difficult for a person to put themselves in the shoes of someone who only has a surface level understanding of the field.<br /><br />So whenever someone asks a &quot;stupid question&quot;, you should try to debug their cognitive model and give them concepts to understand what you are doing, instead of looking down upon them and telling yourself &quot;this person is an idiot&quot;.<br /><br />If you educate investors and are helpful, you are more likely to build up an investor&#039;s confidence in your expertise and knowledge and the investor is more willing to give you leeway and defer to your expertise in making decisions.  Investors will not understand your arguments or decisions, but it reassures them when your arguments seem well reasoned and you are able to explain the methodologies underlying your decision process.<br /><br />The best investors are subject domain experts in an area related to your business.  The next best investors are investors who trust you and who know almost nothing about your company or industry.  The worse investors are people who know a little, but do not know enough to know what they do not know and who try to actively management your company from the board of directors.  This is often where the greatest management failures occur (example: Friendster).<div class="action_bar" id="__w2_h7Iccjf_answer_actions"><span id="ld_GprgIi_1653"><a class="view_comments supp " href="#" id="__w2_Trnhmv1_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_GprgIi_1654"><a class="answer_permalink" href="/Why-do-VCs-angels-super-angels-ask-stupid-questions/answer/Brandon-Smietana"><span class="datetime" id="__w2_QakZ9L0_datespan">Insert a dynamic date here</span></a><span id="ld_GprgIi_1727"></span></span></div><div id="ld_GprgIi_1655"><div class="comments answer_comments hidden" id="__w2_E9KSILW_answer_comments"><div id="ld_GprgIi_1728"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_GprgIi_1539"><div class="feed_item stream_feed_item p1" id="__w2_vFYfwwI_item"><div class="e_col w4_5"><div id="ld_GprgIi_1569"><div class="feed_item_question"><h2><span id="ld_GprgIi_1600"><span id="ld_GprgIi_1769"></span><a class="question_link" href="/Non-Disclosure-Agreements/Why-is-asking-a-potential-investor-to-sign-an-NDA-in-connection-with-a-pitch-meeting-commonly-viewed-as-a-faux-pas" id="__w2_HejvTuQ_link"><span id="ld_GprgIi_1770"></span>Why is asking a potential investor to sign an NDA in connection with a pitch meeting commonly viewed as a faux pas?</a></span></h2></div></div><div id="ld_GprgIi_1570"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_cQPSepz_answer_voting"><div id="ld_GprgIi_1656"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_ZBOorJx_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_ZBOorJx_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_cQPSepz_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_H0sgc2a_link"><span class="rep" id="__w2_H0sgc2a_sig">&quot;Nonparametric kernel-based sequ...</span></span><div class="hover_menu hidden" style="display: none" id="__w2_H0sgc2a_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_H0sgc2a_menu_contents"> </div></div></span><div id="__w2_cQPSepz_answer_voters"><div id="ld_GprgIi_1657"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">2</strong> votes</span> by <a class="user" href="/Craig-Montuori">Craig Montuori</a> and <a class="user" href="/Mike-Mimbo">Mike Mimbo</a></span></div></div></div>DO NOT tell your investors anything you do not want your competition knowing.<br /><br />Your investors do not have to understand everything about your business.  Word gets around.<br /><br />If you sued a VC for violating a NDA or attempted to exert your legal rights, even if you were successful in court you will be ostracized and cut off from any future funding.  Assume that you will be retaliated against.  It is extremely difficult to prove violation of NDA agreements and its expensive to pursue legal action.  NDAs in reality give you very little protection.<br /><br />Investors in general will not sign NDAs because they do not want to be encumbered in investing in a competitor.  They may like your business model or technology, but may prefer to fund a different team from executing on it.<br /><br />It is not uncommon for powerpoint slide decks to be passed around to competitors.  It is not uncommon for the person being sent to do due diligence on your company to be on the board of a competitor.  It is not uncommon for a partner at a corporate venture capital arm to &quot;like your idea so much&quot; that the company decided to &quot;develop it internally&quot; (with the help of the documents you have provided).<br /><br />Investors will also often be sitting on the board of a possible competitor and signing an NDA creates legal liabilities.<br /><br />Another reason investors will not sign NDAs is that it encumbers them from colluding with other investors in similar companies to set &quot;reasonable&quot; valuations (aka. colluding to suppress valuations and to avoid bidding wars which would reduce investor returns).  Investors want to exchange price information, revenue information and other information which helps them determine what others in the market are willing to pay and to come to a consensus on valuations.<br /><br />Most of the classical Silicon Valley gossip is about; valuations, revenue, products, user numbers.  Most of this information is private and gossip serves the important function of increasing transparency and permitting comparison<wbr />s between competitors.<br /><br />Investors who bid up valuations above their &quot;fair&quot; price are locked out of syndicating deals with other investors and accused of &quot;causing a bubble&quot; in startup valuations.<br /><br /><a href="/Matt-Cohler-1/Is-Matt-Cohler-responsible-for-a-bubble-in-startup-valuations">Matt Cohler: Is Matt Cohler responsible for a bubble in startup valuations?</a><br /><br />An investor who does not conform to community and social norms, will be cut off from other investors and from deal syndication (in addition to being demonized).  You only have to recognize the type of social dynamic that is occurring here to understand why no investor will sign an NDA.  An investor may even be ostracized by other investors for violating social norms if they started signing NDAs.<br /><br />There is also the practical consideration that an investor may want to pass on investing in your company, while retaining his right to invest in similar companies in the future.<div class="action_bar" id="__w2_cQPSepz_answer_actions"><span id="ld_GprgIi_1658"><a class="view_comments supp " href="#" id="__w2_HnRQT7j_view_comment_link">7 Comments</a></span><span class="bullet"> &bull; </span><span id="ld_GprgIi_1659"><a class="answer_permalink" href="/Non-Disclosure-Agreements/Why-is-asking-a-potential-investor-to-sign-an-NDA-in-connection-with-a-pitch-meeting-commonly-viewed-as-a-faux-pas/answer/Brandon-Smietana"><span class="datetime" id="__w2_VCPvvrA_datespan">Insert a dynamic date here</span></a><span id="ld_GprgIi_1729"></span></span></div><div id="ld_GprgIi_1660"><div class="comments answer_comments hidden" id="__w2_CNkcm0d_answer_comments"><div id="ld_GprgIi_1730"><div id="ld_GprgIi_1800"><a name="comment_87219"></a><div class="comment p0_5" id="__w2_yhcuPie_comment"><p class="comment_text">+1, especially for the Matt Cohler reference.  I had always wondered why that question was there.</p><p class="action_bar"><a class="user" href="/Mike-Mimbo">Mike Mimbo</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_xkV3KHO_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1801"><a name="comment_87222"></a><div class="comment p0_5" id="__w2_RZNdIac_comment"><p class="comment_text">-1 this is a very negative view, and with some exceptions, probably unwarranted. if an entrepreneur feels he can&#039;t trust whomever he&#039;s pitching, he should probably shouldn&#039;t pitch them in the first place.</p><p class="action_bar"><a class="user" href="/Bob-Pasker">Bob Pasker</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_mjIWQYv_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1802"><a name="comment_87228"></a><div class="comment p0_5" id="__w2_h6qUS1H_comment"><p class="comment_text">&quot;if an entrepreneur feels he can&#039;t trust whomever he&#039;s pitching, he should probably shouldn&#039;t pitch them in the first place.&quot;<br /><br />People who say &quot;Trust everyone&quot; or &quot;Dont do business with people you cannot trust&quot; are extremely naive.  People are not unconditionally trustworthy or unconditionally trustworthy.<br /><br />How do you determine if a person is trustworthy?  There is not a blood test for trustworthiness and most entrepreneurs do not have deep relationships with their investors.<br /><br />It is simply not possible to determine whether someone is &quot;trustworthy&quot; based upon meeting them for 10 minutes.  It is also not possible to build a successful company only dealing with people you have known for the past 20 years.</p><p class="action_bar"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_ryarGAw_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1803"><div class="comment comment_dotdotdot p0_5"><a class="supp" href="#" onclick="$(&#039;.hidden_comments_111365&#039;).toggleClass(&#039;hidden&#039;);
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- return false;">...show <span><span id="ld_GprgIi_1819">2</span></span> hidden comments...</a></div><div class="hidden_comments_111365 hidden"><div id="ld_GprgIi_1820"><div id="ld_GprgIi_1836"><a name="comment_87229"></a><div class="comment p0_5" id="__w2_AQxeP7U_comment"><p class="comment_text">no, there&#039;s no blood test. but there are ways to build trust, and that&#039;s how successful personal and business relationships are formed. </p><p class="action_bar"><a class="user" href="/Bob-Pasker">Bob Pasker</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_mxnSQFw_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1837"><a name="comment_87232"></a><div class="comment p0_5" id="__w2_cOGUC8l_comment"><p class="comment_text">Trust is also not binary.  There are degrees of trust. A person who you are pitching who can decide to later not investor and fund a competitor, has no obligations to you; legal, social or ethical.<br /><br />You can ask &quot;Would this person fuck me over for $20? Would this person fuck me over for $20,000?  Would this person fuck me over for $2,000,000&quot;.  What you will find is that most people are willing to fuck you over for 2 million.  It does not matter if you have been friends with them for 15 years.<br /><br />Businesses often destroy friendships and people you thought you could trust on the basis of decades of experience, turn out to not be &quot;trustworthy&quot;.  This happens betweens friends.<br /><br />Now imagine you are dealing with an investor who has no social, legal or ethical obligations to you and stands to benefit a couple million dollars personally. You would be naive to &quot;trust&quot; that person unconditionally.<br /><br />In general, you should try to minimize your exposure to risks.  That does not mean you should be suspicious of your investors, but you should not put them in a situation where a conflict of interest arises and their loyalty comes under test.</p><p class="action_bar"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_xaatQUA_datespan">Insert a dynamic date here</span></p></div></div></div></div></div><div id="ld_GprgIi_1804"><a name="comment_87233"></a><div class="comment p0_5" id="__w2_WUlDRc8_comment"><p class="comment_text">Bob, all people want trust in their business relationship, but the simple reality is this is a *business* relationship, not a *love* relationship.  Based purely on the number of horror stories I have heard in this space, I believe Brandon&#039;s advice is completely justified.</p><p class="action_bar"><a class="user" href="/Mike-Mimbo">Mike Mimbo</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_utUBVFX_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1805"><a name="comment_87240"></a><div class="comment p0_5" id="__w2_BFlX2LL_comment"><p class="comment_text">I will also add that there are indeed reasonably trustworthy VCs in the startup ecosystem, and certain individuals that are honest brokers.  (I&#039;ve noted that your answer to this question is relatively well-reasoned.) However, there are more than a few rotten apples in the VC industry, and it is simply impossible to evaluate trust in such a short period of time.  Trust is the stuff that is developed over time, and in the absence of that time, using due caution is in the best interest of every entrepreneurs out there. </p><p class="action_bar"><a class="user" href="/Mike-Mimbo">Mike Mimbo</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_hjH7Vcj_datespan">Insert a dynamic date here</span></p></div></div></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_GprgIi_1540"><div class="feed_item stream_feed_item p1" id="__w2_wtPUD0x_item"><div class="e_col w4_5"><div id="ld_GprgIi_1571"><div class="feed_item_question"><h2><span id="ld_GprgIi_1601"><span id="ld_GprgIi_1771"></span><a class="question_link" href="/Brandon-Smietana/What-do-you-think-of-this-paper-http-arxiv-org-pdf-1009-3753" id="__w2_OiCNiHI_link"><span id="ld_GprgIi_1772"></span>What do you think of this paper http://arxiv.org/pdf/1009<wbr />.3753</a></span></h2></div></div><div id="ld_GprgIi_1572"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_niJlAfQ_answer_voting"><div id="ld_GprgIi_1661"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_lvGhl4r_answer_vote_up_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_niJlAfQ_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_SMps8ib_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_SMps8ib_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_SMps8ib_menu_contents"> </div></div></span><div id="__w2_niJlAfQ_answer_voters"><div id="ld_GprgIi_1662"></div></div></div>There is an optimal way of doing re-balancing in the face of transaction costs.  It has something to do with &quot;polytropes&quot; and heavy linear algebra.<br /><br />I am trying to find some way of doing continuous time rebalancing.  In general, I am a bit nervous about the frameworks that are being applied to portfolio construction and the assumptions behind these frameworks.<br /><br />1&gt; Tracking the market fund is not the same as optimizing the rate of return of your portfolio over a fixed period<br /><br />2&gt; Many of the investment results for fixed periods do not generalize well to continuous trading models.  For instance, fixed period investment models like APT and CAPM allow you to show that the return a stock should be a linear function of its beta.<br /><br />However, in the continuous time models, rate of return is a quadratic function of beta! (look towards the end of <a href="http://amzn.to/bxjQcg" rel="nofollow" target="_blank" class="external_link">http://amzn.to/bxjQcg</a> )<br /><br />Two different results.  Which is true?<br /><br />On the topic of the paper<br /><br />&quot;We showed for various settings that when the transaction fee coefficient α is sufficiently high, for the investor it may be more profitable to adjust the portfolio less frequently and an optimal rebalancing period T ∗ arises.&quot;<br /><br />Is he implying that if transaction costs are low enough, that it becomes optimal to continuously rebalance<wbr />?<br /><br />&quot;When P1 &lt; 0 (the asset is not profitable), f ∗ &lt; 0 which corresponds to the so-called short selling. For simplicity we assume that both borrowing and short selling are forbidden and hence f ∈ [0; 1].&quot;<br /><br />I am not sure I like this assumption. <br /><br />&quot;Firstly, while transaction fees are maximized by f = 1/2 when investing in one asset, the situation gets more complicated when investment is distributed among several assets.&quot;<br /><br />I am not sure what the papers main result is (people should rebalance less if there are higher transaction fees) but it need to be generalized to the case of multiple correlated assets.<div class="action_bar" id="__w2_niJlAfQ_answer_actions"><span id="ld_GprgIi_1663"><a class="view_comments supp " href="#" id="__w2_iZ7KfRA_view_comment_link">1 Comment</a></span><span class="bullet"> &bull; </span><span id="ld_GprgIi_1664"><a class="answer_permalink" href="/Brandon-Smietana/What-do-you-think-of-this-paper-http-arxiv-org-pdf-1009-3753/answer/Brandon-Smietana"><span class="datetime" id="__w2_CxSDKXq_datespan">Insert a dynamic date here</span></a><span id="ld_GprgIi_1731"></span></span></div><div id="ld_GprgIi_1665"><div class="comments answer_comments hidden" id="__w2_EY5Hkt7_answer_comments"><div id="ld_GprgIi_1732"><div id="ld_GprgIi_1806"><a name="comment_87153"></a><div class="comment p0_5" id="__w2_KuTjcQ5_comment"><p class="comment_text">Frankly it confused the heck out of me that is why I asked. Thanks for looking at it.</p><p class="action_bar"><a class="user" href="/Gary-Stein">Gary Stein</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_zH0NLH4_datespan">Insert a dynamic date here</span></p></div></div></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_GprgIi_1541"><div class="feed_item stream_feed_item p1" id="__w2_SvhXlBf_item"><div class="e_col w4_5"><div id="ld_GprgIi_1573"><div class="feed_item_question"><h2><span id="ld_GprgIi_1602"><span id="ld_GprgIi_1773"></span><a class="question_link" href="/With-interest-rates-at-historic-lows-why-are-college-loans-from-Fed-and-private-industry-still-at-8-5" id="__w2_SPe9gpU_link"><span id="ld_GprgIi_1774"></span>With interest rates at historic lows why are college loans from Fed and private industry still at 8.5%?</a></span></h2></div></div><div id="ld_GprgIi_1574"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_JDCqJJh_answer_voting"><div id="ld_GprgIi_1666"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_Y0G7Srd_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_Y0G7Srd_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_JDCqJJh_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_xMMTKxY_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_xMMTKxY_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_xMMTKxY_menu_contents"> </div></div></span><div id="__w2_JDCqJJh_answer_voters"><div id="ld_GprgIi_1667"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">1</strong> vote</span> by <a class="user" href="/Erik-Fair">Erik Fair</a></span></div></div></div><blockquote>Under current law, taxpayers provide as much as $9 billion each year to subsidize guaranteed student loans issued by banks. The banks earn profits on the interest; if students default, taxpayers take the loss, not the banks. In other words, working Americans pay while bankers get rich [...]<br /></blockquote><br />Student loans are privatized and guaranteed against default by the federal government.<br /><br />The interest rates are so high because someone is making a profit.<br /><br />&quot;Education Secretary Arne Duncan stepped up the campaign today to end the privatization of the student loan market and save the federal government $87 billion dollars that can be plowed into Pell Grants to make higher education affordable to students.&quot;<br /><br /><a href="http://news.firedoglake.com/2010/02/26/ed-sec-duncan-bankers-have-gotten-a-free-ride/" rel="nofollow" target="_blank" class="external_link">http://news.firedoglake.c<wbr />om/2010...</a><br /><br />Basically, its price fixing of federally insured student loans through regulatory capture of the student loan industry.<div class="action_bar" id="__w2_JDCqJJh_answer_actions"><span id="ld_GprgIi_1668"><a class="view_comments supp " href="#" id="__w2_Sgr3IgP_view_comment_link">2 Comments</a></span><span class="bullet"> &bull; </span><span id="ld_GprgIi_1669"><a class="answer_permalink" href="/With-interest-rates-at-historic-lows-why-are-college-loans-from-Fed-and-private-industry-still-at-8-5/answer/Brandon-Smietana"><span class="datetime" id="__w2_hznT66p_datespan">Insert a dynamic date here</span></a><span id="ld_GprgIi_1733"></span></span></div><div id="ld_GprgIi_1670"><div class="comments answer_comments hidden" id="__w2_wBIOrdp_answer_comments"><div id="ld_GprgIi_1734"><div id="ld_GprgIi_1807"><a name="comment_87164"></a><div class="comment p0_5" id="__w2_doFUO0I_comment"><p class="comment_text">This structure is also likely contributing to the escalation (inflation) of college tuition (prices).</p><p class="action_bar"><a class="user" href="/Erik-Fair">Erik Fair</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_hzGC7PQ_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1808"><a name="comment_87834"></a><div class="comment p0_5" id="__w2_EEo6rp0_comment"><p class="comment_text">Yep,<br /><br />Colleges are also excluding poorer students because they have high student loan default rates and the colleges must maintain requirements to be eligible for receipt of federal aid.</p><p class="action_bar"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_cchatUY_datespan">Insert a dynamic date here</span></p></div></div></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_GprgIi_1542"><div class="feed_item stream_feed_item p1" id="__w2_eCyM1Q2_item"><div class="e_col w4_5"><div id="ld_GprgIi_1575"><div class="feed_item_question"><h2><span id="ld_GprgIi_1603"><span id="ld_GprgIi_1775"></span><a class="question_link" href="/What-is-the-future-of-money" id="__w2_PifX5Ry_link"><span id="ld_GprgIi_1776"></span>What is the future of money?</a></span></h2></div></div><div id="ld_GprgIi_1576"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_c1GdCtS_answer_voting"><div id="ld_GprgIi_1671"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_dDyuvFQ_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_dDyuvFQ_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_c1GdCtS_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_FqGPAJn_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_FqGPAJn_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_FqGPAJn_menu_contents"> </div></div></span><div id="__w2_c1GdCtS_answer_voters"><div id="ld_GprgIi_1672"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">3</strong> votes</span> by <a class="user" href="/J.C.-Hewitt">J.C. Hewitt</a>, <a class="user" href="/Mark-Bruns">Mark Bruns</a> and <a class="user" href="/Russell-Jurney">Russell Jurney</a></span></div></div></div>There is a massive demand for anonymous banking.  One fifth of the world&#039;s financial wealth was held in the Cayman Islands alone at one point in history.<br /><br />Existing asset protection schemes have relied upon privacy protection granted by sovereign nation states, but these protections have been eroded under increasing international pressure on tax havens.  Countries want to prevent capital flight, maximize tax revenues and track money lauding and the financing of terrorism.<br /><br />Previous security and privacy guarantees were protections extended by nation states; the next generation of such guarantees are likely to be enforced by mathematics instead.<br /><br />There have been steady advances in financial cryptographi<wbr />c protocols for currency exchange.  I think we will see heavily adoption of these technologies over the next fifty years.  The trend is towards decentralization and anonymity.<br /><br />There are several groups that are doing everything they can to prevent this.  It is not clear whether the financial status quo can be maintained or whether the transition is inevitable.<br /><br />&quot;Semantic Web&quot; type systems will lead to the first widespread usage of digital contracts (this eliminates the need for courts to enforce asset control and ownership for many applications) and many of the barriers and protocol limitations <wbr />that have prevented adoption of a digital currency and cryptography based banking system will be severely eroded.  There will also be a strong incentive for smaller island nation states and traditional tax havens to adopt these technologies.<div class="action_bar" id="__w2_c1GdCtS_answer_actions"><span id="ld_GprgIi_1673"><a class="view_comments supp " href="#" id="__w2_RUSfBdJ_view_comment_link">2 Comments</a></span><span class="bullet"> &bull; </span><span id="ld_GprgIi_1674"><a class="answer_permalink" href="/What-is-the-future-of-money/answer/Brandon-Smietana"><span class="datetime" id="__w2_MSILy00_datespan">Insert a dynamic date here</span></a><span id="ld_GprgIi_1735"></span></span></div><div id="ld_GprgIi_1675"><div class="comments answer_comments hidden" id="__w2_e9SMSIf_answer_comments"><div id="ld_GprgIi_1736"><div id="ld_GprgIi_1809"><a name="comment_86131"></a><div class="comment p0_5" id="__w2_mhEpuaY_comment"><p class="comment_text">The &quot;anonymity of money&quot; is fascinating topic!!!  It touches on world history, economics, politics, game theory, mechanism design, startups ... FASCINATING!  <br /><br />In any transaction there are three parties ... buyer, seller and the entity who prints the bank notes or otherwise provides the monetary infrastructure to makes sure that the money&#039;s liquid and everybody stay happy and just keeps busy buying, selling, producing, consuming, getting taxed ... AND not fighting a civil war over the control of an inept government that can&#039;t at least make sure the money&#039;s good.  <br /><br />Smarter governments have always recognized that the underground cash economy is not really worth aggressively tracki<wbr />ng.  Gold also doesn&#039;t really matter that much -- there&#039;s a finite amount and serious global economic activity simply cannot be run on transactions based in gold ... or piles of marbles ... or stacks of art.  <br /><br />Governments are interested when BIG MONEY starts moving, they want to follow the transaction participants, get to know them, maybe tax them as much as those folks will endure, see if they can get the participants to like them...  </p><p class="action_bar"><a class="user" href="/Mark-Bruns">Mark Bruns</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_EXj7nED_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1810"><a name="comment_87002"></a><div class="comment p0_5" id="__w2_pYJl7iG_comment"><p class="comment_text">With mathematical anonymity of money and no back doors for big bro, a decades old vision comes back into view. Pay taxes on your income by postcard, 5% if you like. Support your government, as much as you think they earned it. Finally big bro only can grow if everyone else prospers.</p><p class="action_bar"><a class="user" href="/Bernd-Nurnberger">Bernd Nurnberger</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_ysISI68_datespan">Insert a dynamic date here</span></p></div></div></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_GprgIi_1543"><div class="feed_item stream_feed_item p1" id="__w2_Jx6fx2k_item"><div class="e_col w4_5"><div id="ld_GprgIi_1577"><div class="feed_item_question"><h2><span id="ld_GprgIi_1604"><span id="ld_GprgIi_1777"></span><a class="question_link" href="/Is-it-ethical-for-a-VC-to-pull-people-together-to-start-a-company-to-directly-compete-with-a-company-they-decided-not-to-fund" id="__w2_ULdeJSD_link"><span id="ld_GprgIi_1778"></span>Is it ethical for a VC to pull people together to start a company to directly compete with a company they decided not to fund?</a></span></h2></div></div><div id="ld_GprgIi_1578"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_vQ3i26g_answer_voting"><div id="ld_GprgIi_1676"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_wGo1237_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_wGo1237_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_vQ3i26g_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_uaX5o85_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_uaX5o85_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_uaX5o85_menu_contents"> </div></div></span><div id="__w2_vQ3i26g_answer_voters"><div id="ld_GprgIi_1677"></div></div></div>It does not matter if its ethical.  The fiduciary obligation of the venture capitalist is to his limited partners, not to the entrepreneur. <br /><br />As long as it makes money for the VC&#039;s LPs, the VC has a financial incentive and fiduciary obligation to their LPs to do whatever is necessary to maximize the rate of return on their capital.<br /><br />Even it was unethical AND illegal, they would still do it if the net present value was positive after the cost of the lawsuit and settlement.<br /><br />You could argue that it would be unethical for the VC not to pull together an entrepreneur and founding team to compete with a company he chose not to fund, but which had an interesting product and business model.  The fiduciary obligation of the venture capitalist is to his limited partners, not to the entrepreneur. <div class="action_bar" id="__w2_vQ3i26g_answer_actions"><span id="ld_GprgIi_1678"><a class="view_comments supp " href="#" id="__w2_B6Ji7cZ_view_comment_link">7 Comments</a></span><span class="bullet"> &bull; </span><span id="ld_GprgIi_1679"><a class="answer_permalink" href="/Is-it-ethical-for-a-VC-to-pull-people-together-to-start-a-company-to-directly-compete-with-a-company-they-decided-not-to-fund/answer/Brandon-Smietana"><span class="datetime" id="__w2_dBK2INl_datespan">Insert a dynamic date here</span></a><span id="ld_GprgIi_1737"></span></span></div><div id="ld_GprgIi_1680"><div class="comments answer_comments hidden" id="__w2_YyUAU06_answer_comments"><div id="ld_GprgIi_1738"><div id="ld_GprgIi_1811"><a name="comment_85949"></a><div class="comment p0_5" id="__w2_Od77USO_comment"><p class="comment_text">Interesting perspective. However, I would argue that the VC would need to look at the long-term impact on the fund&#039;s returns in addition to the one-time cost-benefit. If the VC develops a bad reputation, it may limit the number of deals they are exposed to in the future as well as business development opportunities for their existing portfolio companies.</p><p class="action_bar"><a class="user" href="/Andrew-DSouza">Andrew D&#039;Souza</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_VZVp2iD_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1812"><a name="comment_85951"></a><div class="comment p0_5" id="__w2_xK2RNYu_comment"><p class="comment_text">&quot;If the VC develops a bad reputation&quot;<br /><br />The only reputation that matters is the reputation of the VC to his LPs.<br /><br />Most firms do not have a reputation to protect.  Entrepreneurs also cannot spread the word about bad VCs, because they will be retaliated against.<br /><br />You should read some of the stuff that Private Equity Week has written about VC retaliation against en<wbr />trepreneurs (and other VCs) for shareholder lawsuits and other matters.<br /><br />&quot;If the VC develops a bad reputation, it may limit the number of deals they are exposed to in the future as well as business development opportunities for their existing portfolio companies.&quot;<br /><br />In general, this is not true at all.  VCs only fund one out of every couple thousand deals and a typical VC makes 2 investments a year.  The vast majority of companies are not venture backed and never receive funding.<br /><br />Also, the Yahoos, Ciscos and Googles are all funded by the top tier firms such as Sequoia.  These firms are known for funding successful companies, not for being entrepreneur friend<wbr />ly.  There is a difference.</p><p class="action_bar"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_sgmouhL_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1813"><a name="comment_85964"></a><div class="comment p0_5" id="__w2_xC2RQJO_comment"><p class="comment_text">What about the 90%+ funds who aren&#039;t Sequoia, but are aspiring to become top tier firms?<br /><br />Do they not risk their long-term success by alienating entrepreneurs?</p><p class="action_bar"><a class="user" href="/Andrew-DSouza">Andrew D&#039;Souza</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_ewgVl8R_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1814"><div class="comment comment_dotdotdot p0_5"><a class="supp" href="#" onclick="$(&#039;.hidden_comments_109542&#039;).toggleClass(&#039;hidden&#039;);
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- return false;">...show <span><span id="ld_GprgIi_1821">2</span></span> hidden comments...</a></div><div class="hidden_comments_109542 hidden"><div id="ld_GprgIi_1822"><div id="ld_GprgIi_1838"><a name="comment_85972"></a><div class="comment p0_5" id="__w2_nyYgFDt_comment"><p class="comment_text">&quot;What about the 90%+ funds who aren&#039;t Sequoia, but are aspiring to become top tier firms?&quot;<br /><br />Their long term success is measured by returns for LPs, not be satisfaction of entrepreneurs.  Try to find the companies the VC did not fund.  Its impossible.<br /><br />An entrepreneur is going to goto dozens of VCs and what is the chance that one of them does not fund a direct competitor at some time in the future?<br /><br />The allegations are completely impossible to assert and they are not that incriminating for the VC.<br /><br />A VC personally receives 20-30% of the profits of his portfolio companies.  A VC is not going to risk losing 50 million in returns for his LPs and 20 million dollars personally by not funding a competitor.<br /><br />If your business plan looks good, but he does not like your team, they will find a competitor and fund them.  They might even throw together a team (an entrepreneur in residence and some executives) and fund them to execute on your business model.<br /><br />VCs do not sign non-compete agreements.  They do not sign NDAs.  They have no legal, ethical, moral or financial obligation to do anything but maximize returns.<br /><br />Conflict of interest and ethics is secondary to profits.<br /><br />There is a severe reputational risk to any entrepreneur who tries to call out a VC on conflict of interest or unethical behavior.  The entrepreneur loses a lot (all future chance of being funded by other VCs; who all know each other and sometimes act as a cartel) with very little benefit to the entrepreneur.<br /><br />Your powerpoint slides and business plan are going to be passed around and you will not even know about it.  If another VC funding a competitor see it, why wouldnt he pass those plans along to a competitor portfolio company?<br /><br />This happens all the time.</p><p class="action_bar"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_XCgh4hR_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1839"><a name="comment_85975"></a><div class="comment p0_5" id="__w2_HFZAaV7_comment"><p class="comment_text">&quot;<b>VCs don&#039;t sign nondisclosure agreements.</b><br />That affords them protection if they like your ideas, but they want to fund someone else to do them. At least two of my friends have had their ideas stolen and funded separately. One case was blatant theft--sections of the original business plan were crudely copied and taped into the VC-sponsored plan. My friend sued and won a moral victory and a little money. The start-up based on the stolen idea went public and made lots of money for that start-up&#039;s VCs. Most entrepreneurs don&#039;t have the time, the means, or the proof to sue. In the second case, venture firm D sent its expert several times for additional &quot;due diligence&quot; regarding the possible investment. My friend got funding elsewhere, but D funded its expert with the same ideas.&quot;<br /><br /><a href="http://ycombinator.com/tredennick.html" rel="nofollow" target="_blank" class="external_link">http://ycombinator.com/tr<wbr />edennic...</a></p><p class="action_bar"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_XLuXmMQ_datespan">Insert a dynamic date here</span></p></div></div></div></div></div><div id="ld_GprgIi_1815"><a name="comment_85983"></a><div class="comment p0_5" id="__w2_ffTVKab_comment"><p class="comment_text">I suppose the last sentence of that article highlights what you mentioned earlier... the reputational risk of publicly calling out a VC is heavily skewed toward the entrepreneur<br /><br />&quot;I wanted to publicly thank more than a dozen people for help on this essay, but they all said &quot;NO!&quot; None can afford to have the VCs find out that they contributed. &quot;</p><p class="action_bar"><a class="user" href="/Andrew-DSouza">Andrew D&#039;Souza</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_V30STfQ_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_GprgIi_1816"><a name="comment_86053"></a><div class="comment p0_5" id="__w2_NXGzl3J_comment"><p class="comment_text">&#039;I wanted to publicly thank more than a dozen people for help on this essay, but they all said &quot;NO!&quot; None can afford to have the VCs find out that they contributed.&#039;<br /><br />Ya.  They are sort of a cartel.<br />You will not hear anyone speak out about them except on TheFunded or people who have so much money that they do not mind offending anyone (Larry Ellison).</p><p class="action_bar"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_rnDMTti_datespan">Insert a dynamic date here</span></p></div></div></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_GprgIi_1544"><div class="feed_item stream_feed_item p1" id="__w2_O4kHuYc_item"><div class="e_col w4_5"><div id="ld_GprgIi_1579"><div class="feed_item_question"><h2><span id="ld_GprgIi_1605"><span id="ld_GprgIi_1779"></span><a class="question_link" href="/Computer-Science-Research/Is-the-entropy-of-the-web-only-22-bits" id="__w2_g13wO9j_link"><span id="ld_GprgIi_1780"></span>Is the entropy of the web only ~22 bits?</a></span></h2></div></div><div id="ld_GprgIi_1580"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_X6AZkL9_answer_voting"><div id="ld_GprgIi_1681"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_ebWsTYo_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_ebWsTYo_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_X6AZkL9_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_hw5DCu8_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_hw5DCu8_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_hw5DCu8_menu_contents"> </div></div></span><div id="__w2_X6AZkL9_answer_voters"><div id="ld_GprgIi_1682"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">2</strong> votes</span> by <a class="user" href="/Borislav-Agapiev">Borislav Agapiev</a> and <a class="user" href="/Devabhaktuni-Srikrishna">Devabhaktuni Srikrishna</a></span></div></div></div>The paper uses a fairly naive approach and achieves good results.  He is clustering users by IP address instead of by demographic variables.<br /><br />The reality is that only a very small number of websites have relevant information on them and the vast majority of the internet is spam.  Think of how many page views you generate a day and how many sites those page views occur on.  NYT, Twitter, Quora, Facebook... in reality people use only a very small number of websites and resources.<br /><br />23 bits of entropy is high for predicting the next URL the user clicks on.  The reason the paper&#039;s entropy figure was so high is that the author was clustering users only by IP address, instead of by other more informative demographic variables.<br /><br />Notice his graph in section 3 shows that the entropy estimates are robust and very similar when calculated with 1 month of data or 1.5 years of data.<br /><br />The result is not unreasonable.<div class="action_bar" id="__w2_X6AZkL9_answer_actions"><span id="ld_GprgIi_1683"><a class="view_comments supp " href="#" id="__w2_vhmMiZj_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_GprgIi_1684"><a class="answer_permalink" href="/Computer-Science-Research/Is-the-entropy-of-the-web-only-22-bits/answer/Brandon-Smietana"><span class="datetime" id="__w2_XBtEN65_datespan">Insert a dynamic date here</span></a><span id="ld_GprgIi_1739"></span></span></div><div id="ld_GprgIi_1685"><div class="comments answer_comments hidden" id="__w2_ksqnkGu_answer_comments"><div id="ld_GprgIi_1740"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_GprgIi_1545"><div class="feed_item stream_feed_item p1" id="__w2_wcTxVSZ_item"><div class="e_col w4_5"><div id="ld_GprgIi_1581"><div class="feed_item_question"><h2><span id="ld_GprgIi_1606"><span id="ld_GprgIi_1781"></span><a class="question_link" href="/Should-you-give-an-employee-a-raise-when-they-ask-for-one" id="__w2_ZkrWA7H_link"><span id="ld_GprgIi_1782"></span>Should you give an employee a raise when they ask for one?</a></span></h2></div></div><div id="ld_GprgIi_1582"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_GX0QvDo_answer_voting"><div id="ld_GprgIi_1686"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_KQEk0aU_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_KQEk0aU_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_GX0QvDo_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_oVdUXaf_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_oVdUXaf_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_oVdUXaf_menu_contents"> </div></div></span><div id="__w2_GX0QvDo_answer_voters"><div id="ld_GprgIi_1687"></div></div></div>There are several factors<br />1&gt; Do you need the employee?<br />2&gt; How important is money to employee?<br />3&gt; Is your company a cash-cow that has money lying around or you just getting along?<br /><br />There is not a yes/no answer to this question.<br /><br />In general, you should try to compensate your star employees enough that they are happy and unlikely to entertain other job offers.  Everyone else should be at market rate or below.<br /><br />A token 5-15 raise can forestall several tens of thousands of dollars in recruiting, interviewing, hiring and training costs. <br /><br />Other factors however affect job satisfaction more than money.  However some people are motivated by money and you should use this to your advantage.<div class="action_bar" id="__w2_GX0QvDo_answer_actions"><span id="ld_GprgIi_1688"><a class="view_comments supp " href="#" id="__w2_EELoK7j_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_GprgIi_1689"><a class="answer_permalink" href="/Should-you-give-an-employee-a-raise-when-they-ask-for-one/answer/Brandon-Smietana"><span class="datetime" id="__w2_vx9en1n_datespan">Insert a dynamic date here</span></a><span id="ld_GprgIi_1741"></span></span></div><div id="ld_GprgIi_1690"><div class="comments answer_comments hidden" id="__w2_afNv9zC_answer_comments"><div id="ld_GprgIi_1742"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_GprgIi_1546"><div class="feed_item stream_feed_item p1" id="__w2_r2LVkzO_item"><div class="e_col w4_5"><div id="ld_GprgIi_1583"><div class="feed_item_question"><h2><span id="ld_GprgIi_1607"><span id="ld_GprgIi_1783"></span><a class="question_link" href="/How-could-the-technical-barriers-of-building-a-national-public-wireless-network-be-overcome" id="__w2_b9NOKnK_link"><span id="ld_GprgIi_1784"></span>How could the technical barriers of building a national public wireless network be overcome?</a></span></h2></div></div><div id="ld_GprgIi_1584"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_Xof7fQ1_answer_voting"><div id="ld_GprgIi_1691"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_S3lUPSn_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_S3lUPSn_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_Xof7fQ1_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_RTnc6aw_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_RTnc6aw_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_RTnc6aw_menu_contents"> </div></div></span><div id="__w2_Xof7fQ1_answer_voters"><div id="ld_GprgIi_1692"></div></div></div>There are no unsolved technical issues.  There are only regulatory issues.<div class="action_bar" id="__w2_Xof7fQ1_answer_actions"><span id="ld_GprgIi_1693"><a class="view_comments supp " href="#" id="__w2_eewnmH9_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_GprgIi_1694"><a class="answer_permalink" href="/How-could-the-technical-barriers-of-building-a-national-public-wireless-network-be-overcome/answer/Brandon-Smietana"><span class="datetime" id="__w2_lQfdos8_datespan">Insert a dynamic date here</span></a><span id="ld_GprgIi_1743"></span></span></div><div id="ld_GprgIi_1695"><div class="comments answer_comments hidden" id="__w2_w8da0n8_answer_comments"><div id="ld_GprgIi_1744"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_GprgIi_1547"><div class="feed_item stream_feed_item p1" id="__w2_k2Zn0w4_item"><div class="e_col w4_5"><div id="ld_GprgIi_1585"><div class="feed_item_question"><h2><span id="ld_GprgIi_1608"><span id="ld_GprgIi_1785"></span><a class="question_link" href="/What-is-the-key-to-success" id="__w2_KZFIIQk_link"><span id="ld_GprgIi_1786"></span>What is the key to success?</a></span></h2></div></div><div id="ld_GprgIi_1586"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_mfi0Nu7_answer_voting"><div id="ld_GprgIi_1696"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_BUrtZ5G_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_BUrtZ5G_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_mfi0Nu7_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_oZhA0WM_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_oZhA0WM_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_oZhA0WM_menu_contents"> </div></div></span><div id="__w2_mfi0Nu7_answer_voters"><div id="ld_GprgIi_1697"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">6</strong> votes</span> by <span id="__w2_hg2V0Tt_view_all"><a class="user" href="/Gary-Stein">Gary Stein</a>, <a class="user" href="/Lucas-Meadows">Lucas Meadows</a>, <a class="user" href="/Prakash-Swaminathan">Prakash Swaminathan</a>, </span> <a class="more_link" href="#" id="__w2_hg2V0Tt_view_all_link">(more)</a><span class="hidden" id="__w2_hg2V0Tt_all_phrases"><a class="user" href="/Gary-Stein">Gary Stein</a>, <a class="user" href="/Lucas-Meadows">Lucas Meadows</a>, <a class="user" href="/Prakash-Swaminathan">Prakash Swaminathan</a>, <a class="user" href="/Rajan-Chandi">Rajan Chandi</a>, <a class="user" href="/Steve-Leonard-1">Steve Leonard</a> and <a class="user" href="/Inigo-Sarmiento">Inigo Sarmiento</a></span></span></div></div></div>1&gt; Hustle and Bustle<br />2&gt; Having lots of money<br />3&gt; Having lots of rich white friends<br />4&gt; Having rich parents<br />5&gt; Being prepared to make severe sacrifices to be successful (quiting your job, living on ramen, working 80 hours a week, losing all your friends, backstabbing your loved ones and only making choices that have a probability of resulting in success.)<br /><br />Success is not easy.  However, people can make success easier if they redefine their measure of success to be something they already have<br /><br /><ul><li>&quot;I am successful if I can live comfortable and have a stable job and family&quot;</li><li>&quot;I am successful if I can sleep with lots of women&quot;</li><li>&quot;I am successful if my startup gives me more e-peen than my friends&quot; &lt;-- &quot;Seasoned SV Entrepreneur success&quot;</li><li>&quot;I am successful if my house is larger and my wife more attractive than those of the people I went to school with&quot;</li><li>&quot;I am successful if I have enough money that I am financially independen<wbr />t and can live modestly without being forced to work jobs I do not like&quot;</li><li>&quot;I am successful if people acknowledge me&quot;</li><li>&quot;I am successful if I have a Gulfstream&quot; &lt;-- VC goal</li><li>&quot;I am successful if my house has a better golf course than my neighbor&quot; &lt;-- VC with Gulfstream</li><li>&quot;I am successful if I spend hundreds of millions of dollars to be elected governor of California&quot; &lt;-- Meg Whitman</li><li>&quot;I am successful if I surpass Bill Gates&quot; &lt;-- Larry Ellison Goal</li></ul><br />People define what success means to them.  If being successful requires growing as a person or accomplishing somethin<wbr />g; you will have to make sacrifices to be successful and most people will fail for lack of commitment.  It is much easier and more common to define success as something you already have.  This is called complacency.<br /><br />One thing you will notice is that &quot;successful&quot; people often do not consider themselves successful.  There is no contentment in success.  You never feel successful.  You are either complacent (and bored) or are looking at the people above you.<br /><br />The joy of success is in the process of success (the sacrifice, misery and eternal toil), not the destination.<div class="action_bar" id="__w2_mfi0Nu7_answer_actions"><span id="ld_GprgIi_1698"><a class="view_comments supp " href="#" id="__w2_GIIjzKQ_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_GprgIi_1699"><a class="answer_permalink" href="/What-is-the-key-to-success/answer/Brandon-Smietana"><span class="datetime" id="__w2_Jutg2m1_datespan">Insert a dynamic date here</span></a><span id="ld_GprgIi_1745"></span></span></div><div id="ld_GprgIi_1700"><div class="comments answer_comments hidden" id="__w2_qIB8KAl_answer_comments"><div id="ld_GprgIi_1746"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_GprgIi_1548"><div class="feed_item stream_feed_item p1" id="__w2_zorofpu_item"><div class="e_col w4_5"><div id="ld_GprgIi_1587"><div class="feed_item_question"><h2><span id="ld_GprgIi_1609"><span id="ld_GprgIi_1787"></span><a class="question_link" href="/Why-are-Quora-answers-so-long" id="__w2_bjJZ4Cq_link"><span id="ld_GprgIi_1788"></span>Why are Quora answers so long?</a></span></h2></div></div><div id="ld_GprgIi_1588"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_suArggU_answer_voting"><div id="ld_GprgIi_1701"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_KoY7S5d_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_KoY7S5d_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_suArggU_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_grGRjdP_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_grGRjdP_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_grGRjdP_menu_contents"> </div></div></span><div id="__w2_suArggU_answer_voters"><div id="ld_GprgIi_1702"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">1</strong> vote</span> by <a class="user" href="/Justin-Meltzer">Justin Meltzer</a></span></div></div></div>Long answers scare away the people from Yahoo answers.<div class="action_bar" id="__w2_suArggU_answer_actions"><span id="ld_GprgIi_1703"><a class="view_comments supp " href="#" id="__w2_qHRIjZl_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_GprgIi_1704"><a class="answer_permalink" href="/Why-are-Quora-answers-so-long/answer/Brandon-Smietana"><span class="datetime" id="__w2_MWYYH1W_datespan">Insert a dynamic date here</span></a><span id="ld_GprgIi_1747"></span></span></div><div id="ld_GprgIi_1705"><div class="comments answer_comments hidden" id="__w2_J2gwPtW_answer_comments"><div id="ld_GprgIi_1748"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_GprgIi_1549"><div class="feed_item stream_feed_item p1" id="__w2_H89ThmL_item"><div class="e_col w4_5"><div id="ld_GprgIi_1589"><div class="feed_item_question"><h2><span id="ld_GprgIi_1610"><span id="ld_GprgIi_1789"></span><a class="question_link" href="/Startup-Failure/Why-do-startups-fail" id="__w2_cEWSiR8_link"><span id="ld_GprgIi_1790"><span class="best_source_icon" id="__w2_puKt84j_icon"></span></span>Why do startups fail?</a></span></h2></div></div><div id="ld_GprgIi_1590"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_Pf4HZhV_answer_voting"><div id="ld_GprgIi_1706"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_UApTfwp_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_UApTfwp_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_Pf4HZhV_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_HcstyKK_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_HcstyKK_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_HcstyKK_menu_contents"> </div></div></span><div id="__w2_Pf4HZhV_answer_voters"><div id="ld_GprgIi_1707"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">1</strong> vote</span> by <a class="user" href="/Tyler-Willis">Tyler Willis</a></span></div></div></div>A company fails when it runs out of money.<br /><br />Startups fail because most people start a companies for the e-peen or to &quot;change the world&quot;, instead of for the money.<div class="action_bar" id="__w2_Pf4HZhV_answer_actions"><span id="ld_GprgIi_1708"><a class="view_comments supp " href="#" id="__w2_gluLJmb_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_GprgIi_1709"><a class="answer_permalink" href="/Startup-Failure/Why-do-startups-fail/answer/Brandon-Smietana"><span class="datetime" id="__w2_moT86JG_datespan">Insert a dynamic date here</span></a><span id="ld_GprgIi_1749"></span></span></div><div id="ld_GprgIi_1710"><div class="comments answer_comments hidden" id="__w2_qv9Aj9P_answer_comments"><div id="ld_GprgIi_1750"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div id="ld_GprgIi_1550"><div class="hidden" id="__w2_iSjuXpd_loading"><span class="__wn2_loading"><span class="__wn2_loading_spinner"></span><span class="__wn2_loading_text">Loading...</span></span></div><div class="pager_next action_button" id="__w2_iSjuXpd_more">More</div></div></div></div></div><div class="e_col w2_5 side_col"><div class="row"><div class="e_col w1 p1"><div id="ld_GprgIi_1510"><div class="profile_photo"><div id="ld_GprgIi_1513"><a href="/Brandon-Smietana"><img class="profile_photo_img" src="http://d2o7bfz2il9cb7.cloudfront.net/main-thumb-6673-100-iQY07uHy4EIxliIOKB2oVtdnn7FsdmZc.jpeg" width="100" alt="Brandon Smietana" height="100" /></a></div></div></div></div><div class="e_col w1_5 side_col p1"><div class="light page_opts row"><div id="ld_GprgIi_1511"><ul class="action_list"></ul></div></div></div><div id="ld_GprgIi_1512"><div class="row p1"><div class="col mini_count first"><a href="/Brandon-Smietana/followers"><strong>353</strong><br />Followers</a></div><div class="col mini_count "><a href="/Brandon-Smietana/following"><strong>212</strong><br />Following</a></div><div class="col mini_count "><a href="/Brandon-Smietana/mentions"><strong>16</strong><br />@Mentions</a></div></div></div></div><div id="ld_GprgIi_1508"><div class="row section p1" id="answers"><strong>Recent Top Answers</strong><div id="ld_GprgIi_1515"><div class="feed_item stream_feed_item p1 row"><div class="w0_5 e_col"><div class="big_number_stat"><div class="number">16</div><div class="text">Votes</div></div></div><div class="e_col side_col w2"><div class="feed_item_question"><h2><a href="/What-is-Zyngas-core-competency/answer/Brandon-Smietana">What is Zynga&#039;s core competency?</a></h2></div><div class="inline" id="__w2_Su8PoSw_truncated"><div id="ld_GprgIi_1520"><div class="truncated_thumbnail_holder"></div>Strengths:<br /><ul><li>a large installed user base for cross promotion...</li></ul> <a class="more_link" href="#" id="__w2_HHUsCqj_more_link">(more)</a> </div></div><div class="hidden expanded_q_text" id="__w2_Su8PoSw_expanded"><div id="ld_GprgIi_1521">Strengths:<br /><ul><li>a large installed user base for cross promotion</li><li>massive amounts of capital for advertising</li><li>unfair relationship with Facebook (through the Old Boy&#039;s club, Zynga&#039;s IP portfolio and its position as Facebook&#039;s largest advertiser).  For instance, its likely that Zynga receives free advertising on Facebook&#039;s ad network to offset the loss of revenue from Zynga adopting Facebook credits.  Or equivalently, Zynga pays a lower cut to Facebook than other developers, due to Zynga&#039;s bargaining position.</li><li>An extremely large staff of people whose full time job is buying display advertising</li></ul><br />Weaknesses:<br /><ul><li>Technical debt; is using 12+ layers of memcached just to keep Farmville online.  Horribly designed architecture.  Will have to be completely redone if Zynga wants to build more complicated social games.  Is adding hundreds of servers per day to compensate for its software architecture<wbr />.  However, Zynga has the money and developers to address this problem.</li><li>Grew organization too fast and is strained under the growing pains of expanding to 700+ employees in under 3 years and then restructuring.  Few companies survive this type of rapid growth without falling apart or becoming inefficient.  It is extremely difficult to scale this large extremely rapidly and the management team did well in handling this phase.</li><li>Zynga is currently reliant on the Facebook platform.  Facebook often changes the rules of the platform to harm developers (reducing viral channels, eliminating non-advertising channels for user acquisition, decreasing developer margins by 30% through Facebook credits).  Zynga&#039;s margin were decreased significantly by the transition to Facebook credits and Zynga is at the mercy of Facebook.  Zynga is mitigating its platform risk by developing its own gaming network and through joint initiatives with Yahoo and Google.</li><li>Zynga has lower margins and lower ARPU than other studies whose user acquisition is not as advertising driven.  Games targeting specific niches have lower MAUs, but higher ARPU than Farmville type games.  Zynga has low ARPU (compared to RPG game studios) and but offsets this with high MAU numbers.  Zynga&#039;s per employee revenue is smaller than many studios for these reasons.</li></ul><br />Zynga&#039;s core competencies do not include engineering or producing creative or in-depth games.<br /><br />To summarize  Zynga&#039;s core competencies are<br /><ul><li>Advertising / User Acquisition</li><li>Leveraging its cross promotion network and installed base</li><li>Knowledge about targeting the &quot;casual gamer&quot; demographic</li><li>Knowledge about monetizing social games (&quot;add in game coins&quot;)</li><li>Knowledge about the application of specific social game mechanics (especially the &#039;harvest mechanism&#039;)</li><li>Extensive use of A/B testing.  Zynga has an A/B testing centered culture.</li></ul><br />The biggest threat to Zynga is the proliferation of a large number of games with higher ARPU than Farmville type games.  When user acquisition is advertising driven, companies with higher ARPU bid up advertising costs to the point that lower ARPU games cannot acquire users profitably.  Market segmentation may be a threat to Zynga&#039;s continued growth in the US market.<br /><br />It will be interesting to see how the social gaming market evolves over the next decade.</div></div></div></div></div><div id="ld_GprgIi_1516"><div class="feed_item stream_feed_item p1 row"><div class="w0_5 e_col"><div class="big_number_stat"><div class="number">6</div><div class="text">Votes</div></div></div><div class="e_col side_col w2"><div class="feed_item_question"><h2><a href="/Startup-Advice/As-a-first-time-entrepreneur-what-part-of-the-process-were-you-completely-blind-to/answer/Brandon-Smietana">As a first time entrepreneur, what part of the process were you completely blind to?</a></h2></div><div class="inline" id="__w2_KLtdUkV_truncated"><div id="ld_GprgIi_1522"><div class="truncated_thumbnail_holder"></div>Innovation is extremely expensive and is often a moonshot.<br />... <a class="more_link" href="#" id="__w2_QNJkaiA_more_link">(more)</a> </div></div><div class="hidden expanded_q_text" id="__w2_KLtdUkV_expanded"><div id="ld_GprgIi_1523">Innovation is extremely expensive and is often a moonshot.<br /><br />Copying, improving on and burying competitors in a small market is easy and fun.</div></div></div></div></div><div id="ld_GprgIi_1517"><div class="feed_item stream_feed_item p1 row"><div class="w0_5 e_col"><div class="big_number_stat"><div class="number">5</div><div class="text">Votes</div></div></div><div class="e_col side_col w2"><div class="feed_item_question"><h2><a href="/Why-do-some-web-companies-take-venture-capital-while-others-do-not-and-grow-organically-even-though-they-may-address-similar-problems/answer/Brandon-Smietana">Why do some web companies take venture capital, while others do not and grow organically, even though they may address similar problems?</a></h2></div><div class="inline" id="__w2_qkc0TNv_truncated"><div id="ld_GprgIi_1524"><div class="truncated_thumbnail_holder"></div>Silicon Valley has an &quot;equity culture&quot;. <a class="more_link" href="#" id="__w2_wl4mrfP_more_link">(more)</a> </div></div><div class="hidden expanded_q_text" id="__w2_qkc0TNv_expanded"><div id="ld_GprgIi_1525">Silicon Valley has an &quot;equity culture&quot;.<br /><br />Bootstrapped companies do not receive media coverage.  Evony had more revenues than Zynga for years and almost no one know about them.  There are a number of other examples.<br /><br />Most VC investments occur in a few geographic regions and expecially in the SF area.  There are however thousands of web companies taking in millions a year in revenue that are not located in silicon valley.  The vast majority of companies do not take venture capital.  In fact almost half of the companies who IPO do not take any venture capital at all (even &quot;growth equity&quot;).<br /><br />In general, companies that have higher capital costs tend to take on venture capital.  Companies that have lower margins and require larger scale for profitability require venture capital.  Companies that will not be profitable but which have a large number of users (twitter) require venture capital.<br /><br />However, what is concerning is when you see a profitable company which is awash in cash taking on venture capital.  That has to do more with the Silicon Valley &quot;equity culture&quot; than anything else.<br /><br />The reality is that most companies are not venture backed and never will be. You are either profitable in the first three years or bankrupt.  Also, if you are in a 100% margin industry like software, then when you succeed your income grows disproportionately <wbr />quickly compared to your costs (&quot;increasing returns&quot;).  This is completely different than a low margin industry such as retailing.</div></div></div></div></div><div id="ld_GprgIi_1518"><div class="feed_item stream_feed_item p1 row"><div class="w0_5 e_col"><div class="big_number_stat"><div class="number">3</div><div class="text">Votes</div></div></div><div class="e_col side_col w2"><div class="feed_item_question"><h2><a href="/Non-Disclosure-Agreements/Why-is-asking-a-potential-investor-to-sign-an-NDA-in-connection-with-a-pitch-meeting-commonly-viewed-as-a-faux-pas/answer/Brandon-Smietana">Why is asking a potential investor to sign an NDA in connection with a pitch meeting commonly viewed as a faux pas?</a></h2></div><div class="inline" id="__w2_w3whHAt_truncated"><div id="ld_GprgIi_1526"><div class="truncated_thumbnail_holder"></div>DO NOT tell your investors anything you do not want your competition knowing. <a class="more_link" href="#" id="__w2_rLmsv1C_more_link">(more)</a> </div></div><div class="hidden expanded_q_text" id="__w2_w3whHAt_expanded"><div id="ld_GprgIi_1527">DO NOT tell your investors anything you do not want your competition knowing.<br /><br />Your investors do not have to understand everything about your business.  Word gets around.<br /><br />If you sued a VC for violating a NDA or attempted to exert your legal rights, even if you were successful in court you will be ostracized and cut off from any future funding.  Assume that you will be retaliated against.  It is extremely difficult to prove violation of NDA agreements and its expensive to pursue legal action.  NDAs in reality give you very little protection.<br /><br />Investors in general will not sign NDAs because they do not want to be encumbered in investing in a competitor.  They may like your business model or technology, but may prefer to fund a different team from executing on it.<br /><br />It is not uncommon for powerpoint slide decks to be passed around to competitors.  It is not uncommon for the person being sent to do due diligence on your company to be on the board of a competitor.  It is not uncommon for a partner at a corporate venture capital arm to &quot;like your idea so much&quot; that the company decided to &quot;develop it internally&quot; (with the help of the documents you have provided).<br /><br />Investors will also often be sitting on the board of a possible competitor and signing an NDA creates legal liabilities.<br /><br />Another reason investors will not sign NDAs is that it encumbers them from colluding with other investors in similar companies to set &quot;reasonable&quot; valuations (aka. colluding to suppress valuations and to avoid bidding wars which would reduce investor returns).  Investors want to exchange price information, revenue information and other information which helps them determine what others in the market are willing to pay and to come to a consensus on valuations.<br /><br />Most of the classical Silicon Valley gossip is about; valuations, revenue, products, user numbers.  Most of this information is private and gossip serves the important function of increasing transparency and permitting comparison<wbr />s between competitors.<br /><br />Investors who bid up valuations above their &quot;fair&quot; price are locked out of syndicating deals with other investors and accused of &quot;causing a bubble&quot; in startup valuations.<br /><br /><a href="/Matt-Cohler-1/Is-Matt-Cohler-responsible-for-a-bubble-in-startup-valuations">Matt Cohler: Is Matt Cohler responsible for a bubble in startup valuations?</a><br /><br />An investor who does not conform to community and social norms, will be cut off from other investors and from deal syndication (in addition to being demonized).  You only have to recognize the type of social dynamic that is occurring here to understand why no investor will sign an NDA.  An investor may even be ostracized by other investors for violating social norms if they started signing NDAs.<br /><br />There is also the practical consideration that an investor may want to pass on investing in your company, while retaining his right to invest in similar companies in the future.</div></div></div></div></div><div id="ld_GprgIi_1519"><div class="feed_item stream_feed_item p1 row"><div class="w0_5 e_col"><div class="big_number_stat"><div class="number">3</div><div class="text">Votes</div></div></div><div class="e_col side_col w2"><div class="feed_item_question"><h2><a href="/What-is-the-future-of-money/answer/Brandon-Smietana">What is the future of money?</a></h2></div><div class="inline" id="__w2_yMt4Je0_truncated"><div id="ld_GprgIi_1528"><div class="truncated_thumbnail_holder"></div>There is a massive demand for anonymous banking.  One fifth of the world&#039;s financial wealth was held in the Cayman Islands alone at one point in hi... <a class="more_link" href="#" id="__w2_JYKVXl7_more_link">(more)</a> </div></div><div class="hidden expanded_q_text" id="__w2_yMt4Je0_expanded"><div id="ld_GprgIi_1529">There is a massive demand for anonymous banking.  One fifth of the world&#039;s financial wealth was held in the Cayman Islands alone at one point in history.<br /><br />Existing asset protection schemes have relied upon privacy protection granted by sovereign nation states, but these protections have been eroded under increasing international pressure on tax havens.  Countries want to prevent capital flight, maximize tax revenues and track money lauding and the financing of terrorism.<br /><br />Previous security and privacy guarantees were protections extended by nation states; the next generation of such guarantees are likely to be enforced by mathematics instead.<br /><br />There have been steady advances in financial cryptographi<wbr />c protocols for currency exchange.  I think we will see heavily adoption of these technologies over the next fifty years.  The trend is towards decentralization and anonymity.<br /><br />There are several groups that are doing everything they can to prevent this.  It is not clear whether the financial status quo can be maintained or whether the transition is inevitable.<br /><br />&quot;Semantic Web&quot; type systems will lead to the first widespread usage of digital contracts (this eliminates the need for courts to enforce asset control and ownership for many applications) and many of the barriers and protocol limitations <wbr />that have prevented adoption of a digital currency and cryptography based banking system will be severely eroded.  There will also be a strong incentive for smaller island nation states and traditional tax havens to adopt these technologies.</div></div></div></div></div></div></div></div></div></div><div class="footer wrapper"><div class="contents"><div class="footer_nav row"><div class="e_col footer_links w8"><div id="ld_GprgIi_1509"><ul class="nav_list"><li class="about"><a href="/about">About</a></li><li class="jobs"><a href="/jobs">Jobs</a></li><li class="privacy"><a href="/about/privacy">Privacy</a></li><li class="tos"><a href="/about/tos">Terms</a></li><li class="press"><a href="/press">Press</a></li><li><span class="bullet"> &bull; 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+ return false;">...show <span><span id="ld_RGxTHo_739">6</span></span> hidden comments...</a></div><div class="hidden_comments_124063 hidden"><div id="ld_RGxTHo_740"><div id="ld_RGxTHo_741"><a name="comment_96061"></a><div class="comment p0_5" id="__w2_HbtwbBO_comment"><p class="comment_text">&quot;The vast majority of people have no plans or meaningful goals in life and those that do are doing nothing to execute on them.&quot; - I have to disagree with this. A lot of people have goals that may not require wealth (though I would say sometimes, some people do fail to see that wealth can help make whatever they want to do a lot faster and easier).</p><p class="action_bar"><a class="user" href="/Edwin-Khoo">Edwin Khoo</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_PVGPyoG_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_RGxTHo_742"><a name="comment_96094"></a><div class="comment p0_5" id="__w2_G8gVQ2c_comment"><p class="comment_text">&quot;The vast majority of people have no plans or meaningful goals in life and those that do are doing nothing to execute on them.&quot;<br /><br />I am going by the data, which shows that few people have goals.</p><p class="action_bar"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_gHSpCq7_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_RGxTHo_743"><a name="comment_96096"></a><div class="comment p0_5" id="__w2_YSQOIpF_comment"><p class="comment_text">Could you please quote the sources? Thanks.</p><p class="action_bar"><a class="user" href="/Edwin-Khoo">Edwin Khoo</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_wJYhDXY_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_RGxTHo_744"><a name="comment_96098"></a><div class="comment p0_5" id="__w2_iM7mUXx_comment"><p class="comment_text">It was some study by the Ford foundation.  I have to dig it up.</p><p class="action_bar"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_hG2R4Iw_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_RGxTHo_745"><a name="comment_96627"></a><div class="comment p0_5" id="__w2_CjpqeXU_comment"><p class="comment_text">&quot;have a slave mentality.  They do what they are told.  They want out of life what people tell them they should want.  They believe that money cannot make them happy but also believe women or family can make them happy, or other absurdities you find in popular culture.  They believe socially transmitted notions that are not validated by data and they try to live their lives by them.&quot;<br /><br /><br />How do you still call them intelligent?</p><p class="action_bar"><a class="user" href="/Sai-Kumar">Sai Kumar</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_lomJZ5B_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_RGxTHo_746"><a name="comment_96959"></a><div class="comment p0_5" id="__w2_JlaGvCz_comment"><p class="comment_text">&quot;How do you still call them intelligent?&quot;<br /><br />They can solve partial differential equations, or write ten thousand line python programs or design a high performance key-value store.  They are not stupid.<br /><br />They have just spent their whole life being shuffled from institution to institution, with their work assignments being handed to them.  They are happy within the institutional framewo<wbr />rk.<br /><br />However, you will capture very little of the wealth you create within that framework (outside of finance).  For instance, Kerry Mullis invented the PCR process and his company patented it.  His company generated hundreds of millions of dollars a year from the patent, but Kerry Mullis only received a $10,000 bonus for the invention.<br /><br />Value produced and value captured diverge sharply in the modern corporation.<br /><br />By &quot;slave mentality&quot; I mean, that people are socialized for certain roles within institutions and for occupying certain places within a network of workflows.  They tend to acquire a workflow orientation rather an outcome or performance orientation.</p><p class="action_bar"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_km6inXb_datespan">Insert a dynamic date here</span></p></div></div></div></div></div><div id="ld_RGxTHo_731"><a name="comment_97083"></a><div class="comment p0_5" id="__w2_inY6MEP_comment"><p class="comment_text">Brandon, we all grow up in a framework where someone is &quot;in charge.&quot;  First it is our parents, then it is our teachers, then it is our boss.  We are socialized for the first 25+ years of our life to have someone to please, someone who has power over us, and someone we can defer to.<br /><br />I think the hardest mindset for people who start companies to get out of is that &quot;no one&quot; is in charge now!  *They* are in charge!  There is no one else.  To many it is thilling and liberating.  To others it is scary, isolating, and disorienting.<br /><br />I think that some of the phenomenon that I&#039;ve heard you describe on Quora, where entrepreneurs find VCs, turn over control to them, and act like they &quot;work for&quot; them, is to a large degree an effort to get back to a place of comfort where they don&#039;t ultimately have control, nor complete responsibility.<br /><br />That is also why questions like &quot;what do investors want to see?&quot; and &quot;what will look good on my resume to a future employer&quot; absolutely drive me bonkers.    They are all an effort to return to a comfortable place in the hierarchy where asking what the higher-ups want to see and doing that is way more comfortable than just hanging out there doing what you think is right.</p><p class="action_bar"><a class="user" href="/Michael-Wolfe">Michael Wolfe</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_CPcTbX1_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_RGxTHo_732"><a name="comment_97112"></a><div class="comment p0_5" id="__w2_j2RZDrh_comment"><p class="comment_text">Michael, that is a very interesting observation.<br /><br />&gt;&quot;what do investors want to see?&quot;, &quot;what will look good on my resume to a future employer&quot; absolutely drive me bonkers.<br /><br />Me too; I get a headache when I see questions like that.  People are more concerned about the perceptions than they are about the reality.</p><p class="action_bar"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_ysFKcPz_datespan">Insert a dynamic date here</span></p></div></div></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_RGxTHo_472"><div class="feed_item stream_feed_item p1" id="__w2_n34Cfss_item"><div class="e_col w4_5"><div id="ld_RGxTHo_504"><div class="feed_item_question"><h2><span id="ld_RGxTHo_533"><span id="ld_RGxTHo_704"></span><a class="question_link" href="/What-are-the-main-arguments-that-super-angels-have-against-VCs" id="__w2_z6vsFAT_link"><span id="ld_RGxTHo_705"></span>What are the main arguments that super angels have against VCs?</a></span></h2></div></div><div id="ld_RGxTHo_505"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_jm92Dnu_answer_voting"><div id="ld_RGxTHo_597"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_VenC2RV_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_VenC2RV_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_jm92Dnu_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_GTQfwxh_link"><span class="rep" id="__w2_GTQfwxh_sig">I write machine learning based s...</span></span><div class="hover_menu hidden" style="display: none" id="__w2_GTQfwxh_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_GTQfwxh_menu_contents"> </div></div></span><div id="__w2_jm92Dnu_answer_voters"><div id="ld_RGxTHo_598"></div></div></div>Many angels do not like their portfolio companies to take VC, because companies taking VC have longer exit times and lower rates of return for angels than companies that can do an M&amp;A for 10-30 million without taking VC.<br /><br />I think the mean time to exit for a VC portfolio company is almost ~12-16 years today.  Compare that with your average angel portfolio company.<br /><br />I think it comes down to the fact that angels have higher returns than VCs, shorter exits and have a lower cost of capital for the entrepreneur compared to VC (when you factor in the board control you are giving up and other factors).<br /><br />Ultimately, most of the attacks against traditional VC come down to the fact that VC as an asset class has been performing horribly.<div class="action_bar" id="__w2_jm92Dnu_answer_actions"><span id="ld_RGxTHo_599"><a class="view_comments supp " href="#" id="__w2_MLRk2k3_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_RGxTHo_600"><a class="answer_permalink" href="/What-are-the-main-arguments-that-super-angels-have-against-VCs/answer/Brandon-Smietana"><span class="datetime" id="__w2_a9q2zUR_datespan">Insert a dynamic date here</span></a><span id="ld_RGxTHo_664"></span></span></div><div id="ld_RGxTHo_601"><div class="comments answer_comments hidden" id="__w2_HRDKEGo_answer_comments"><div id="ld_RGxTHo_665"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_RGxTHo_473"><div class="feed_item stream_feed_item p1" id="__w2_JCzoJCm_item"><div class="e_col w4_5"><div id="ld_RGxTHo_506"><div class="feed_item_question"><h2><span id="ld_RGxTHo_534"><span id="ld_RGxTHo_706"></span><a class="question_link" href="/Are-Peter-Thiel-and-Vinod-Khosla-right-that-its-the-end-of-Web-2-0-and-the-beginning-of-the-golden-age-of-greentech-and-biotech" id="__w2_IRYCRHa_link"><span id="ld_RGxTHo_707"><span class="best_source_icon" id="__w2_wFTRJrm_icon"></span></span>Are Peter Thiel and Vinod Khosla right that it&#039;s the end of &quot;Web 2.0&quot; and the beginning of the golden age of greentech and biotech?</a></span></h2></div></div><div id="ld_RGxTHo_507"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_EYR6R6C_answer_voting"><div id="ld_RGxTHo_602"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_X8AUfbQ_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_X8AUfbQ_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_EYR6R6C_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_OMfcDSJ_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_OMfcDSJ_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_OMfcDSJ_menu_contents"> </div></div></span><div id="__w2_EYR6R6C_answer_voters"><div id="ld_RGxTHo_603"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">2</strong> votes</span> by <a class="user" href="/Anthony-Foster">Anthony Foster</a> and <a class="user" href="/Fahd-Butt">Fahd Butt</a></span></div></div></div>Mobile<br />Social <br />Social Games<br />Semantic Web<br />Databases<br />Enterprise<br />&quot;Clean Tech&quot;<br />UAVs<br />Call center automation / Agent systems<br />NLP<br /><br />Its not either/or.  The reality is that everything is exploding and there are several areas that are experiencing massive growth or will be very important in the future.<br /><br />If you were a VC, you are going to see better returns in at least moderately capital intensive industries than in Web 2.0.  The capital costs for these companies are too low and most of the money is being made from 10-30 million M&amp;A events.  We are seeing hundreds of social networks, but they only have 2-10 millions of users each.<br /><br />There will be fewer Amazons and Facebooks and more market segmentation and lower barriers to entry.<br /><br />When you look at the trend-lines, there are a large number of areas which are becoming increasingly important, but as an investor these areas vary significantly in their returns.  We mights see 400 solar startups and 2-3 of them will survive after industry consolidation an<wbr />d price competition.  They might have massive sales, but low margins because of price competition.  There is a similar situation with algae biofuels.<br /><br />It will be difficult to achieve high margins in competition with state subsidized companie<wbr />s in China and a global market.  Especially in solar and biofuel production.<br /><br />This is good for the economy, but bad for the investor.  On the other hand, healthcare technologies have software like margins and high capital costs and could produce substantial retur<wbr />ns; but face regulatory challenges.<br /><br />Many of these technologies are just displacing existing technologies; cheaper solar power cannibalizing coal and natural gas power plants; algae biofuels substituting for corn ethanol and oil.  They are merely substitutes for existing commodities.<br /><br />Other areas are completely new markets, such as social gaming.  Roughly I would ask &quot;Is this technology substituting or creating a new market or is a complement of something existing?&quot;.  For instance, algae biofuel substitutes for gasoline (a commodity) where as call center automation technology substitutes hu<wbr />man labor for capital costs.<br /><br />Overall, its a golden age for everything.  Its not just clean-tech or Web 2.0; one does not start where the other ends.  The question about where to put your money to achieve a high rate of return, is more difficult question.  In general, lumping companies by market is not a good way to look at return data.  When someone says &quot;enterprise software is hot&quot;, what they mean is that there are 400 VC backed enterprise software companies and 10 of them are going to produce a great return and 300 of them will go no where.<br /><br />The individual company and where it fits in its market&#039;s value chain is probably more important.<br /><br />It is however interesting that VCs in SV are looking at biotech and clean tech companies.  It would be interesting if SV branched out beyond software and started developing expertise in the physical sciences again (such as occurred when IC production was a hot area).<div class="action_bar" id="__w2_EYR6R6C_answer_actions"><span id="ld_RGxTHo_604"><a class="view_comments supp " href="#" id="__w2_aTN9yAr_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_RGxTHo_605"><a class="answer_permalink" href="/Are-Peter-Thiel-and-Vinod-Khosla-right-that-its-the-end-of-Web-2-0-and-the-beginning-of-the-golden-age-of-greentech-and-biotech/answer/Brandon-Smietana"><span class="datetime" id="__w2_JTAAOfw_datespan">Insert a dynamic date here</span></a><span id="ld_RGxTHo_666"></span></span></div><div id="ld_RGxTHo_606"><div class="comments answer_comments hidden" id="__w2_ksgDTcF_answer_comments"><div id="ld_RGxTHo_667"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_RGxTHo_474"><div class="feed_item stream_feed_item p1" id="__w2_gSLabUx_item"><div class="e_col w4_5"><div id="ld_RGxTHo_508"><div class="feed_item_question"><h2><span id="ld_RGxTHo_535"><span id="ld_RGxTHo_708"></span><a class="question_link" href="/The-Social-Network-movie/What-is-the-truth-of-the-Facebook-story" id="__w2_y6BcJYJ_link"><span id="ld_RGxTHo_709"></span>What is the truth of the Facebook story?</a></span></h2></div></div><div id="ld_RGxTHo_509"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_XMV9oci_answer_voting"><div id="ld_RGxTHo_607"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_BKLZR6y_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_BKLZR6y_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_XMV9oci_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_tTWd6ym_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_tTWd6ym_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_tTWd6ym_menu_contents"> </div></div></span><div id="__w2_XMV9oci_answer_voters"><div id="ld_RGxTHo_608"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">4</strong> votes</span> by <a class="user" href="/Giorgi-Lekveishvili">Giorgi Lekveishvili</a>, <a class="user" href="/Amrish-Kapoor">Amrish Kapoor</a>, <a class="user" href="/David-Haddad">David Haddad</a> and <a class="user" href="/Gene-Linetsky">Gene Linetsky</a></span></div></div></div>The winner writes history.<br /><br />The literature on the founding of Facebook is mostly whitewashed, because of Facebook&#039;s market position it does no one any good to say negative things about the company.<br /><br />You would not even receive access to the executives unless they were assured the coverage would be positive and that dissenting opinions were censored.  Companies restrict access to media outlets which do not provide positive press coverage.  In the case of Apple, companies may even be retaliated against if they do not fire journalists and bloggers that are critical of the company.<br /><br />Companies like Zynga will not even grant interviews with executives unless they are assured in advance that the article will be noting but praise, in advance of the interview.<br /><br />On the other side, are the people that were manipulated, had their &quot;idea stolen&quot; or were kicked out of the company.<br /><br />The truth is somewhere in-between.<div class="action_bar" id="__w2_XMV9oci_answer_actions"><span id="ld_RGxTHo_609"><a class="view_comments supp " href="#" id="__w2_N8N5Soh_view_comment_link">3 Comments</a></span><span class="bullet"> &bull; </span><span id="ld_RGxTHo_610"><a class="answer_permalink" href="/The-Social-Network-movie/What-is-the-truth-of-the-Facebook-story/answer/Brandon-Smietana"><span class="datetime" id="__w2_nr5IVPm_datespan">Insert a dynamic date here</span></a><span id="ld_RGxTHo_668"></span></span></div><div id="ld_RGxTHo_611"><div class="comments answer_comments hidden" id="__w2_SlkoTbX_answer_comments"><div id="ld_RGxTHo_669"><div id="ld_RGxTHo_733"><a name="comment_95042"></a><div class="comment p0_5" id="__w2_nNeI1yn_comment"><p class="comment_text">Yes. Your non sequitur is value-less, thanks for playing.</p><p class="action_bar"><a class="user" href="/Andrew-Badera">Andrew Badera</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_J0Vfhag_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_RGxTHo_734"><a name="comment_95050"></a><div class="comment p0_5" id="__w2_kiZdQnz_comment"><p class="comment_text">I am censoring you.</p><p class="action_bar"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_gSbj6mT_datespan">Insert a dynamic date here</span></p></div></div><div id="ld_RGxTHo_735"><a name="comment_95059"></a><div class="comment p0_5" id="__w2_XEl8thT_comment"><p class="comment_text">Oops, I censored you again.</p><p class="action_bar"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_MQdVIJY_datespan">Insert a dynamic date here</span></p></div></div></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_RGxTHo_475"><div class="feed_item stream_feed_item p1" id="__w2_Fm3SRKW_item"><div class="e_col w4_5"><div id="ld_RGxTHo_510"><div class="feed_item_question"><h2><span id="ld_RGxTHo_536"><span id="ld_RGxTHo_710"></span><a class="question_link" href="/What-are-the-arguments-against-index-investing" id="__w2_IOzqMQF_link"><span id="ld_RGxTHo_711"></span>What are the arguments against index investing?</a></span></h2></div></div><div id="ld_RGxTHo_511"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_eujLZAC_answer_voting"><div id="ld_RGxTHo_612"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_ZvL7nSq_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_ZvL7nSq_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_eujLZAC_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_t2e12LP_link"><span class="rep" id="__w2_t2e12LP_sig">I write machine learning based s...</span></span><div class="hover_menu hidden" style="display: none" id="__w2_t2e12LP_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_t2e12LP_menu_contents"> </div></div></span><div id="__w2_eujLZAC_answer_voters"><div id="ld_RGxTHo_613"></div></div></div>The index is observable but the market portfolio is unobservable.<br /><br />Beta can only be estimated from historical data, its not observable.<br /><br />The index also changes based upon the time horizon of your investment, if you are using a mean-variance portfolio theory; which are implicitly single period investment theories.<br /><br />In a mean-variance portfolio theory with factor weightings, the index depends on the factors.  The CAPM assumes the index weightings can be inferred from market-cap, however this breaks down when you have factors as the market portfolio from the data and from the market-cap data are two different things.<br /><br />The market does not actually obey the CAPM and the market-portfolio and the index-portfolio are actually different portfolios.<br /><br />There are other questions which are interesting, such as &quot;Are you computing beta against the index portfolio or against the unobservable market portfolio&quot;.<br /><br />I think that in general, you can construct a portfolio that has better risk/return characteristi<wbr />cs than the index through mean-variance portfolio construction methodologies.  I am however biased towards the use of mathematics in portfolio construction.<div class="action_bar" id="__w2_eujLZAC_answer_actions"><span id="ld_RGxTHo_614"><a class="view_comments supp " href="#" id="__w2_Oe8mLjg_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_RGxTHo_615"><a class="answer_permalink" href="/What-are-the-arguments-against-index-investing/answer/Brandon-Smietana"><span class="datetime" id="__w2_cDmHf2V_datespan">Insert a dynamic date here</span></a><span id="ld_RGxTHo_670"></span></span></div><div id="ld_RGxTHo_616"><div class="comments answer_comments hidden" id="__w2_JNQExcB_answer_comments"><div id="ld_RGxTHo_671"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_RGxTHo_476"><div class="feed_item stream_feed_item p1" id="__w2_TJu6JNK_item"><div class="e_col w4_5"><div id="ld_RGxTHo_512"><div class="feed_item_question"><h2><span id="ld_RGxTHo_537"><span id="ld_RGxTHo_712"></span><a class="question_link" href="/What-were-the-4-or-5-key-decisions-that-Mark-Zuckerberg-made-in-the-early-days-of-Facebook" id="__w2_Bnx9U4B_link"><span id="ld_RGxTHo_713"></span>What were the 4 or 5 key decisions that Mark Zuckerberg made in the early days of Facebook?</a></span></h2></div></div><div id="ld_RGxTHo_513"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_Ml5u7aQ_answer_voting"><div id="ld_RGxTHo_617"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_maflrPb_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_maflrPb_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_Ml5u7aQ_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_wPz24eJ_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_wPz24eJ_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_wPz24eJ_menu_contents"> </div></div></span><div id="__w2_Ml5u7aQ_answer_voters"><div id="ld_RGxTHo_618"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">4</strong> votes</span> by <a class="user" href="/Catalin-Braescu">Catalin Braescu</a>, <a class="user" href="/Ruchit-Shah">Ruchit Shah</a>, <a class="user" href="/Carlos-Leiva-Burotto">Carlos Leiva Burotto</a> and <a class="user" href="/David-Haddad">David Haddad</a></span></div></div></div>1.  He got lucky<br />2.  He met Sean Parker<br />3.  He decided to build the thing<br />4.  He met Web 2.0 people and leveraged his relations to get advice and people.<br />5.  He made the choice to retain control of his company<br /><br />I think there is nothing spectacular about Zuckerburg.  He tried to make some very stupid decisions, however the people around him were experienced and talked him out of it.<br /><br />For instance, Zuckerberg tried going back to college instead of working on Facebook full time (Seak Parker talked him out of it).  Zuckerburg almost gave up board control to investors (Sean Parker talked him out of it; Parker was kicked out of three previous companies by his investors and learned this lesson the hard way).<br /><br />Zuckerberg&#039;s success has as much to do with the people around him as it does with any grand choice Zuckerberg made.<br /><br />The one key decision that I think was extremely important and attributed to Zuckerberg alone, is that he chose not to sell to Yahoo for just under a billion dollars.  That decision led Facebook to where it is today.<br /><br />Facebook&#039;s strategy of going from college to college and its brilliant use of network externalities seemed to have been the result of a very small number of intelligent people (ex. Sean Parker, Peter Thiel and Marc Anderson) around Zuckenburg.  Many of facebook&#039;s core strategies (social graph) leverage network externalities (classic Shapiro and Varian) and its not clear to me that Zuckenburg would have even been aware of these strategies, except for the very interesting group of people around him.<br /><br />I think that its very difficult to explain Facebook&#039;s success in terms of a &quot;Great Man&quot; theory, where one person was the critical factor in the critical success of the company.<div class="action_bar" id="__w2_Ml5u7aQ_answer_actions"><span id="ld_RGxTHo_619"><a class="view_comments supp " href="#" id="__w2_otsb9B7_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_RGxTHo_620"><a class="answer_permalink" href="/What-were-the-4-or-5-key-decisions-that-Mark-Zuckerberg-made-in-the-early-days-of-Facebook/answer/Brandon-Smietana"><span class="datetime" id="__w2_SJ9Ywa5_datespan">Insert a dynamic date here</span></a><span id="ld_RGxTHo_672"></span></span></div><div id="ld_RGxTHo_621"><div class="comments answer_comments hidden" id="__w2_nsA90cq_answer_comments"><div id="ld_RGxTHo_673"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_RGxTHo_477"><div class="feed_item stream_feed_item p1" id="__w2_aSbr94N_item"><div class="e_col w4_5"><div id="ld_RGxTHo_514"><div class="feed_item_question"><h2><span id="ld_RGxTHo_538"><span id="ld_RGxTHo_714"></span><a class="question_link" href="/Is-Zynga-a-sociopathic-company" id="__w2_RJBN2BM_link"><span id="ld_RGxTHo_715"></span>Is Zynga a sociopathic company?</a></span></h2></div></div><div id="ld_RGxTHo_515"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_fGGlrPP_answer_voting"><div id="ld_RGxTHo_622"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_TjUDS0Q_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_TjUDS0Q_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_fGGlrPP_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_e3cuUN8_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_e3cuUN8_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_e3cuUN8_menu_contents"> </div></div></span><div id="__w2_fGGlrPP_answer_voters"><div id="ld_RGxTHo_623"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">2</strong> votes</span> by <a class="user" href="/Anthony-Foster">Anthony Foster</a> and <a class="user" href="/Adam-Rifkin">Adam Rifkin</a></span></div></div></div>Zynga executives have a fiduciary obligation to be sociopathic.<div class="action_bar" id="__w2_fGGlrPP_answer_actions"><span id="ld_RGxTHo_624"><a class="view_comments supp " href="#" id="__w2_lV0F0pS_view_comment_link">1 Comment</a></span><span class="bullet"> &bull; </span><span id="ld_RGxTHo_625"><a class="answer_permalink" href="/Is-Zynga-a-sociopathic-company/answer/Brandon-Smietana"><span class="datetime" id="__w2_wlmsYeb_datespan">Insert a dynamic date here</span></a><span id="ld_RGxTHo_674"></span></span></div><div id="ld_RGxTHo_626"><div class="comments answer_comments hidden" id="__w2_YqLgIs2_answer_comments"><div id="ld_RGxTHo_675"><div id="ld_RGxTHo_736"><a name="comment_93324"></a><div class="comment p0_5" id="__w2_lfmXnZ8_comment"><p class="comment_text">This may be the best comment on Quora.</p><p class="action_bar"><a class="user" href="/TJ-Murphy">TJ Murphy</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_a8riD13_datespan">Insert a dynamic date here</span></p></div></div></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_RGxTHo_478"><div class="feed_item stream_feed_item p1" id="__w2_gCMr21y_item"><div class="e_col w4_5"><div id="ld_RGxTHo_516"><div class="feed_item_question"><h2><span id="ld_RGxTHo_539"><span id="ld_RGxTHo_716"></span><a class="question_link" href="/Startup-Advice-Strategy/As-a-first-time-entrepreneur-what-part-of-the-process-were-you-completely-blind-to" id="__w2_g5B3nbC_link"><span id="ld_RGxTHo_717"></span>As a first time entrepreneur, what part of the process were you completely blind to?</a></span></h2></div></div><div id="ld_RGxTHo_517"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_pvBZ4AM_answer_voting"><div id="ld_RGxTHo_627"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_oZXt4Dg_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_oZXt4Dg_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_pvBZ4AM_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_iw1BnE0_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_iw1BnE0_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_iw1BnE0_menu_contents"> </div></div></span><div id="__w2_pvBZ4AM_answer_voters"><div id="ld_RGxTHo_628"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">6</strong> votes</span> by <span id="__w2_qsVwzU6_view_all"><a class="user" href="/Max-Ischenko">Max Ischenko</a>, <a class="user" href="/Daniel-Shi">Daniel Shi</a>, <a class="user" href="/Antone-Johnson">Antone Johnson</a>, </span> <a class="more_link" href="#" id="__w2_qsVwzU6_view_all_link">(more)</a><span class="hidden" id="__w2_qsVwzU6_all_phrases"><a class="user" href="/Max-Ischenko">Max Ischenko</a>, <a class="user" href="/Daniel-Shi">Daniel Shi</a>, <a class="user" href="/Antone-Johnson">Antone Johnson</a>, <a class="user" href="/Charles-Krohn">Charles Krohn</a>, <a class="user" href="/Anthony-Foster">Anthony Foster</a> and <a class="user" href="/Shanky-Surana">Shanky Surana</a></span></span></div></div></div>Innovation is extremely expensive and is often a moonshot.<br /><br />Copying, improving on and burying competitors in a small market is easy and fun.<div class="action_bar" id="__w2_pvBZ4AM_answer_actions"><span id="ld_RGxTHo_629"><a class="view_comments supp " href="#" id="__w2_w4NzDNP_view_comment_link">1 Comment</a></span><span class="bullet"> &bull; </span><span id="ld_RGxTHo_630"><a class="answer_permalink" href="/Startup-Advice-Strategy/As-a-first-time-entrepreneur-what-part-of-the-process-were-you-completely-blind-to/answer/Brandon-Smietana"><span class="datetime" id="__w2_dSq3uJG_datespan">Insert a dynamic date here</span></a><span id="ld_RGxTHo_676"></span></span></div><div id="ld_RGxTHo_631"><div class="comments answer_comments hidden" id="__w2_wIBoRbK_answer_comments"><div id="ld_RGxTHo_677"><div id="ld_RGxTHo_737"><a name="comment_93075"></a><div class="comment p0_5" id="__w2_G0zSmlF_comment"><p class="comment_text">If this was posted as anon i would have assumed its Marc Pincus for sure</p><p class="action_bar"><a class="user" href="/Aditya-Raman-D">Aditya Raman D</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_JClmvz5_datespan">Insert a dynamic date here</span></p></div></div></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_RGxTHo_479"><div class="feed_item stream_feed_item p1" id="__w2_JddsrLR_item"><div class="e_col w4_5"><div id="ld_RGxTHo_518"><div class="feed_item_question"><h2><span id="ld_RGxTHo_540"><span id="ld_RGxTHo_718"></span><a class="question_link" href="/Would-a-Chinese-government-sponsored-cyber-attack-against-the-US-be-enough-to-trigger-a-war-between-the-two-countries" id="__w2_KxwI6rC_link"><span id="ld_RGxTHo_719"></span>Would a Chinese government sponsored cyber attack against the US be enough to trigger a war between the two countries?</a></span></h2></div></div><div id="ld_RGxTHo_519"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_LkGc1mj_answer_voting"><div id="ld_RGxTHo_632"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_khwg7oM_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_khwg7oM_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_LkGc1mj_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_jlNXHUD_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_jlNXHUD_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_jlNXHUD_menu_contents"> </div></div></span><div id="__w2_LkGc1mj_answer_voters"><div id="ld_RGxTHo_633"></div></div></div>It would be very difficult to determine if a cyber attack was in-fact state sponsored.  It would be very difficult to determine its source.<br /><br />Also, it would be unlikely to target infrastructure in a destructive manner and more likely involve collection of intelligence data or corporate espionage.  For example, consider operation Aurora.<br /><br />It is very unlikely that China would be immediately identified as the aggressor.  In fact, a cyber attack may not even be identified until years after it has already been in effect.  Consider operation Aurora.<div class="action_bar" id="__w2_LkGc1mj_answer_actions"><span id="ld_RGxTHo_634"><a class="view_comments supp " href="#" id="__w2_w7vWbbP_view_comment_link">Add Comment</a></span><span class="bullet"> &bull; </span><span id="ld_RGxTHo_635"><a class="answer_permalink" href="/Would-a-Chinese-government-sponsored-cyber-attack-against-the-US-be-enough-to-trigger-a-war-between-the-two-countries/answer/Brandon-Smietana"><span class="datetime" id="__w2_jpHIcw5_datespan">Insert a dynamic date here</span></a><span id="ld_RGxTHo_678"></span></span></div><div id="ld_RGxTHo_636"><div class="comments answer_comments hidden" id="__w2_sAPNML8_answer_comments"><div id="ld_RGxTHo_679"></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div class="pagedlist_item" id="ld_RGxTHo_480"><div class="feed_item stream_feed_item p1" id="__w2_x5czoYZ_item"><div class="e_col w4_5"><div id="ld_RGxTHo_520"><div class="feed_item_question"><h2><span id="ld_RGxTHo_541"><span id="ld_RGxTHo_720"></span><a class="question_link" href="/Larry-Ellison/Why-does-Larry-Ellison-have-no-eyebrows" id="__w2_AKICmpC_link"><span id="ld_RGxTHo_721"></span>Why does Larry Ellison have no eyebrows?</a></span></h2></div></div><div id="ld_RGxTHo_521"><div class="feed_item_answer answer_text"><div class="rating_buttons"><div id="__w2_wuMyALo_answer_voting"><div id="ld_RGxTHo_637"><div class="rating_buttons "><div class="rating_options"><a class="lil_button rate_up" href="#" id="__w2_MKK31nv_answer_vote_up_link">&nbsp;</a><a class="lil_button rate_down" href="#" id="__w2_MKK31nv_answer_vote_down_link">&nbsp;</a></div></div></div></div></div><div class="feed_item_answer_content answer_content"><div class="answer_user"><span class="feed_item_answer_user" id="__w2_wuMyALo_answer_user_sig"><a class="user" href="/Brandon-Smietana">Brandon Smietana</a><span class="rep">, </span><span id="__w2_cs9p2Zp_link"><span class="rep">Founder of Symbolic Analytics</span></span><div class="hover_menu hidden" style="display: none" id="__w2_cs9p2Zp_menu"><div class="hover_menu_nub"></div><div class="menu_contents growl_notification" id="__w2_cs9p2Zp_menu_contents"> </div></div></span><div id="__w2_wuMyALo_answer_voters"><div id="ld_RGxTHo_638"><span class="answer_voters"><span class="answer_voter_callout"><strong class="voter_count">6</strong> votes</span> by <span id="__w2_osiOtAx_view_all"><span class="name_span">Anon User</span>, <a class="user" href="/David-Haddad">David Haddad</a>, <a class="user" href="/John-Marsland">John Marsland</a>, </span> <a class="more_link" href="#" id="__w2_osiOtAx_view_all_link">(more)</a><span class="hidden" id="__w2_osiOtAx_all_phrases"><span class="name_span">Anon User</span>, <a class="user" href="/David-Haddad">David Haddad</a>, <a class="user" href="/John-Marsland">John Marsland</a>, <a class="user" href="/Catalin-Braescu">Catalin Braescu</a>, <a class="user" href="/Gene-Linetsky">Gene Linetsky</a> and <a class="user" href="/Erbil-Karaman">Erbil Karaman</a></span></span></div></div></div>Larry Ellison lost his eyebrows in the nuclear accident that gave him his superpowers.<div class="action_bar" id="__w2_wuMyALo_answer_actions"><span id="ld_RGxTHo_639"><a class="view_comments supp " href="#" id="__w2_vZUP8bk_view_comment_link">1 Comment</a></span><span class="bullet"> &bull; </span><span id="ld_RGxTHo_640"><a class="answer_permalink" href="/Larry-Ellison/Why-does-Larry-Ellison-have-no-eyebrows/answer/Brandon-Smietana"><span class="datetime" id="__w2_p8ibHCd_datespan">Insert a dynamic date here</span></a><span id="ld_RGxTHo_680"></span></span></div><div id="ld_RGxTHo_641"><div class="comments answer_comments hidden" id="__w2_mNbqXlY_answer_comments"><div id="ld_RGxTHo_681"><div id="ld_RGxTHo_738"><a name="comment_90049"></a><div class="comment p0_5" id="__w2_nWZ1J2D_comment"><p class="comment_text">I thought he lost them in a divorce settlement.</p><p class="action_bar"><a class="user" href="/Ryan-Lackey">Ryan Lackey</a><span class="bullet"> &bull; </span><span class="datetime" id="__w2_w8ZOKVu_datespan">Insert a dynamic date here</span></p></div></div></div><div class="comment light p0_5">Cannot add comment at this time.</div></div></div></div></div></div></div></div></div><div id="ld_RGxTHo_481"><div class="hidden" id="__w2_SoET9yM_loading"><span class="__wn2_loading"><span class="__wn2_loading_spinner"></span><span class="__wn2_loading_text">Loading...</span></span></div><div class="pager_next action_button" id="__w2_SoET9yM_more">More</div></div></div></div></div><div class="e_col w2_5 side_col"><div class="row"><div class="e_col w1 p1"><div id="ld_RGxTHo_441"><div class="profile_photo"><div id="ld_RGxTHo_444"><a href="/Brandon-Smietana"><img class="profile_photo_img" src="http://d2o7bfz2il9cb7.cloudfront.net/main-thumb-6673-100-iQY07uHy4EIxliIOKB2oVtdnn7FsdmZc.jpeg" width="100" alt="Brandon Smietana" height="100" /></a></div></div></div></div><div class="e_col w1_5 side_col p1"><div class="light page_opts row"><div id="ld_RGxTHo_442"><ul class="action_list"></ul></div></div></div><div id="ld_RGxTHo_443"><div class="row p1"><div class="col mini_count first"><a href="/Brandon-Smietana/followers"><strong>370</strong><br />Followers</a></div><div class="col mini_count "><a href="/Brandon-Smietana/following"><strong>226</strong><br />Following</a></div><div class="col mini_count "><a href="/Brandon-Smietana/mentions"><strong>17</strong><br />@Mentions</a></div></div></div></div><div id="ld_RGxTHo_439"><div class="row section p1" id="answers"><strong>Recent Top Answers</strong><div id="ld_RGxTHo_446"><div class="feed_item stream_feed_item p1 row"><div class="w0_5 e_col"><div class="big_number_stat"><div class="number">17</div><div class="text">Votes</div></div></div><div class="e_col side_col w2"><div class="feed_item_question"><h2><a href="/How-focused-should-a-start-up-be-on-being-acquired/answer/Brandon-Smietana">How focused should a start-up be on being acquired?</a></h2></div><div class="inline" id="__w2_XZvLMbC_truncated"><div id="ld_RGxTHo_451"><div class="truncated_thumbnail_holder"><img class="qtext_image" src="http://d2o7bfz2il9cb7.cloudfront.net/main-qimg-1d4fe0f3434be165c4975bfb1d4d35ef" /></div>You need an exit plan from day one.  Read this book; <a class="more_link" href="#" id="__w2_W3pauv6_more_link">(more)</a> </div></div><div class="hidden expanded_q_text" id="__w2_XZvLMbC_expanded"><div id="ld_RGxTHo_452">You need an exit plan from day one.  Read this book;<br /><br />Early Exits: Exit Strategies for Entrepreneurs and Angel Investors (But Maybe Not Venture Capitalists) <a href="http://amzn.to/bLyS75" rel="nofollow" target="_blank" class="external_link">http://amzn.<wbr />to/bLyS75</a><br /><br />When you start your first eight companies, you will do it wrong.  There will be dozen of things you wish you knew that you were unaware of.  Planning for exits is one of them.<br /><br />Your objectives for your company and its exit are going to affect many of the decisions you are making and you should make these choices earlier rather than later.  Why do I say that?<br /><br />Here is a graph of time of VC financing to exit<br /><img class="qtext_image" src="http://d2o7bfz2il9cb7.cloudfront.net/main-qimg-1d4fe0f3434be165c4975bfb1d4d35ef" /> <br />If you take VC, your company is a 12 year commitment before an exit.  You should sit down with your founding team and make sure that everyone is aligned.  Are you building a company that you will be working at in 20 years or are you trying to build a company and flip it for a couple million in 4 years?<br /><br />You will find that different members of your company have different time horizons and objectives.<br /><br />You may also find that by taking the VC route, you increase your exit time and risk, but do not increase your rate of return.  A small 30 million dollar exit in 4 years is often better than a 12 year exit at 120 million with 3 rounds of VC and dilution.<br /><br />You also have to ask &quot;Can I exit at 1-2x after taking VC&quot; and that should influence your choice to take VC.  If you take VC, the VC has 3 separate ways of blocking an M&amp;A event.  You might like the exit at that valuation and may want to do the M&amp;A and move on, but you cannot; your investors will not approve the deal below 3x return.<br /><br />You may also find yourself with an M&amp;A offer and it seems like the last chance before you run out of money and its a good deal for you, but the VC vetos it and then puts a down-round in the company and wipes out your equity.<br /><br />So you have to ask &quot;What happens to my shares if there is a recession or unforeseen event and the company takes a down-round?  What is the probability of that happening in my market?&quot;  If your market is software and 100% margin, you can probably cut back to profitability.  However if you are a manufacturing company with inventory and debt to finance machinery/invento<wbr />ry purchases and your margins are 8%, then a recession could impact your sales enough to put you in a cash crunch.<br /><br />The reality is that your choices about the financing of your company affect your strategic options.  Selling for 10-30 million is easy, there are hundreds of buyers.  Selling for 120 million is more difficult, there will be fewer potential acquires and the company will need to get board approval for the process.  Between 30 million and 300 million valuation is a no-man&#039;s land.  You are too large for an easy M&amp;A but too small to go public.<br /><br />It is even worse to be a technology company with a 300 million valuation (lots of users) and no revenues (Slide, Digg, Ning, link shorteners, etc...).  You cannot IPO because you have no revenues, but your valuation is too high for anyone except Microsoft, Yahoo or Google to buy you.  You only option is taking on more and more VC and hoping that someone big decides to buy you someday.  For these companies, a 30 million dollar &quot;Flickr&quot; type exit early on may be better for the founders and empoyees than growing extremely large without any path to revenue (Foursquare).<br /><br />You want to make the decision whether you will &quot;Go for the Gold&quot; and build the company to IPO or to flip the company early.  You need to make this decision when you start the company, because you will find that different members of the management team will have completely different ideas about the timespan and objectives of company.<br /><br />&quot;<b>the decision to accept VC investment increases the time to exit by approximately 12 years, not the median time of 7 years.&quot;</b><br /><b><br />&quot;</b>When VC investment was added, the <b>time to exit increased to somewhere around sixteen years after the entrepreneurs started and twelve years after the angels invested.&quot;</b><br /><b><br /></b>You need to look at the data and determine what the objectives for your company are and need to make decisions in light of those objectives.  This requires having an early idea of your exit strategy.<br /><br />There are several things you can do to structure your company so that it is more desirable as a target for M&amp;A and those are things you need to do from day one.  They are covered pretty well in that book.<br /><br />One thing to keep in mind is that if you are small company, companies that are interested in acquiring you are not going to magically find you (there are actual companies outside of Silicon Valley that may be interested in your IP, but do not know you exist).  You will have to do some work to get acquired and to find the companies with complementary products.  Getting acquired is not necessary a passive process and there are actions you can take to increase the desirability of your company as an M&amp;A target and to advertise your company to a wider range of potential buyers.<br /><br />Soliciting M&amp;A offers is also necessary to setting up a competitive M&amp;A process. You will also learn that (like fund raising) M&amp;A deals are a full time job.  If you let the CEO manage the M&amp;A process, the company may suffer.  You should have someone who is able to handle the M&amp;A process full-time without affecting the performance of the company during the process.</div></div></div></div></div><div id="ld_RGxTHo_447"><div class="feed_item stream_feed_item p1 row"><div class="w0_5 e_col"><div class="big_number_stat"><div class="number">11</div><div class="text">Votes</div></div></div><div class="e_col side_col w2"><div class="feed_item_question"><h2><a href="/Why-are-many-people-who-are-very-smart-not-also-rich/answer/Brandon-Smietana">Why are many people who are very smart not also rich?</a></h2></div><div class="inline" id="__w2_TcRh5fW_truncated"><div id="ld_RGxTHo_453"><div class="truncated_thumbnail_holder"></div>&quot;Why are many people who are very smart not also rich?&quot; <a class="more_link" href="#" id="__w2_dz5ipVn_more_link">(more)</a> </div></div><div class="hidden expanded_q_text" id="__w2_TcRh5fW_expanded"><div id="ld_RGxTHo_454">&quot;Why are many people who are very smart not also rich?&quot;<br /><br />The simplest reason is that they are bad at creating wealth.  Even if they create value, they may not be able to capture any of it.<br /><b><br /></b>I have met many intelligent people who have a slave mentality.  They do what they are told.  They want out of life what people tell them they should want.  They believe that money cannot make them happy but also believe women or family can make them happy, or other absurdities you find in popular culture.  They believe socially transmitted notions that are not validated by data and they try to live their lives by them.<br /><br />Most people are also risk adverse.  They would prefer a 80k a year job shuffling paper clips to the chance of success.  I know at least a dozen people who have said &quot;I am going to get a job and then start a company eventually&quot;.  When you ask them &quot;When are you going to start a company?&quot;, they have no definite plans.<br /><br />When you ask them &quot;Why don&#039;t you start a company today?&quot;, they give you the exact reasons why they will not be starting a company in the future.<br /><br />When people do start companies, they usually fail because they give up and decide that it would be easier to go back to their cubical.  This is the number one cause of startup failure.<br /><br />It is much easier for people to do what they are told instead of setting goals for themselves.  Most people have not been in a P&amp;L position where they have to make decisions.  School prepares people for employee positions where the goals are set for you and you just have to do what you are told.<br /><br />Most people are simply unwilling to make sacrifices to become financially succes<wbr />sful or aggressively play politics to  achieve and maintain power within organizations.  The vast majority of people have no plans or meaningful goals in life and those that do are doing nothing to execute on them.<br /><br />You do not generate wealth by accident and people who do not commit to actions that are effective at wealth generation, do not succeed at wealth generation (with the exception of some very lucky early Google and Facebook employees).<br /><br />If you have a slave mentality, you do have little use for assets.  You will come home and watch television, sleep and then go back to work.  Another 40 million is not going to change the television shows you watch.<br /><br />In many ways, a desire for wealth is a desire for freedom.  The reason intelligent people are not wealthy is because they have other desires such as &quot;ePeen&quot;, social status, women or the &quot;desire to belong&quot; and be affirmed by a group.  Each person has a different set of driving motivations and some of these motivations conflict with wealth creation goals.</div></div></div></div></div><div id="ld_RGxTHo_448"><div class="feed_item stream_feed_item p1 row"><div class="w0_5 e_col"><div class="big_number_stat"><div class="number">4</div><div class="text">Votes</div></div></div><div class="e_col side_col w2"><div class="feed_item_question"><h2><a href="/Why-is-Silicon-Valley-so-equity-focused-Are-there-a-lot-of-cashflow-businesses-we-just-dont-know-about/answer/Brandon-Smietana">Why is Silicon Valley so equity focused? Are there a lot of cashflow businesses we just don&#039;t know about?</a></h2></div><div class="inline" id="__w2_cEIHQiA_truncated"><div id="ld_RGxTHo_455"><div class="truncated_thumbnail_holder"></div>There are a ton of cash cows.  However the news channels and rumor mills in Silicon Valley are focused on &quot;valuations&quot; and VC financing events. <a class="more_link" href="#" id="__w2_fDCU1PT_more_link">(more)</a> </div></div><div class="hidden expanded_q_text" id="__w2_cEIHQiA_expanded"><div id="ld_RGxTHo_456">There are a ton of cash cows.  However the news channels and rumor mills in Silicon Valley are focused on &quot;valuations&quot; and VC financing events.<br /><br />If you have a profitable bootstrapped business and twenty times the market-share of your VC backed competitor, the VC backed competitor gets all the press coverage in TechCrunch.  They also get all the gossip about boardroom backstabbing and valuations.<br /><br />It is not difficult to make money on the internet, but being a profitable business or a cash cow is not news worthy.  The cashflow businesses tend to be closely held if they would otherwise sell for an earnings multiple less than 20, because the owner would have to find other assets to invest the proceeds of the sale in (such as equities or corporate bonds).  Ad networks and affiliate marketing companies tend to fall into this space.<br /><br />The cashflow businesses are distributed all over the US instead of just being concentrated in one place (like the private equity financed companies).  Cashflow businesses tend to take less VC or no VC.  Online poker or gaming startups and others fall into this category.<br /><br />The reality is that the vast majority of companies receive no private equity investment and companies are generally profitable or bankrupt within 2-3 years.  Only half of companies that IPO have taken early stage private equity investment (as compared to growth equity).<br /><br />You just do not hear about profitable companies, because they have much less drama than &quot;Dude, wheres my revenue model&quot; VC backed companies like Digg, Reddit and Twitter.<br /><br />VCs complain about ad-supported or subscription based companies not being profitable enough, but there is a selection bias, with VCs only ending up with the companies which could not become profitable on 100k daily user and $3/eCPM.  If you are a 3 person company, can build a website and get 500k a year in revenue; you probably do not need private equity investment and you wont be in TechCrunch.<br /><br />News and information flow in Silicon Valley has no relationship with revenue.  That is probably the greatest reason we do not hear about these companies.<br /><br />However, if you are profitable and you go blabbing about, like the creator of Mafia Wars did; people start thinking &quot;This is a good market&quot; and Zynga or someone else comes along and copies your product and buries you.  So if you are making 10k a day in revenues but started your company for the &#039;ePeen&#039; instead of the money, you will go around blabbing about your revenues and end up with 30 &quot;me-too&quot; competitors.  There are selection effects at work.</div></div></div></div></div><div id="ld_RGxTHo_449"><div class="feed_item stream_feed_item p1 row"><div class="w0_5 e_col"><div class="big_number_stat"><div class="number">3</div><div class="text">Votes</div></div></div><div class="e_col side_col w2"><div class="feed_item_question"><h2><a href="/Are-Peter-Thiel-and-Vinod-Khosla-right-that-its-the-end-of-Web-2-0-and-the-beginning-of-the-golden-age-of-greentech-and-biotech/answer/Brandon-Smietana">Are Peter Thiel and Vinod Khosla right that it&#039;s the end of &quot;Web 2.0&quot; and the beginning of the golden age of greentech and biotech?</a></h2></div><div class="inline" id="__w2_mEZTXBh_truncated"><div id="ld_RGxTHo_457"><div class="truncated_thumbnail_holder"></div>Mobile <a class="more_link" href="#" id="__w2_ZQaS6a7_more_link">(more)</a> </div></div><div class="hidden expanded_q_text" id="__w2_mEZTXBh_expanded"><div id="ld_RGxTHo_458">Mobile<br />Social <br />Social Games<br />Semantic Web<br />Databases<br />Enterprise<br />&quot;Clean Tech&quot;<br />UAVs<br />Call center automation / Agent systems<br />NLP<br /><br />Its not either/or.  The reality is that everything is exploding and there are several areas that are experiencing massive growth or will be very important in the future.<br /><br />If you were a VC, you are going to see better returns in at least moderately capital intensive industries than in Web 2.0.  The capital costs for these companies are too low and most of the money is being made from 10-30 million M&amp;A events.  We are seeing hundreds of social networks, but they only have 2-10 millions of users each.<br /><br />There will be fewer Amazons and Facebooks and more market segmentation and lower barriers to entry.<br /><br />When you look at the trend-lines, there are a large number of areas which are becoming increasingly important, but as an investor these areas vary significantly in their returns.  We mights see 400 solar startups and 2-3 of them will survive after industry consolidation an<wbr />d price competition.  They might have massive sales, but low margins because of price competition.  There is a similar situation with algae biofuels.<br /><br />It will be difficult to achieve high margins in competition with state subsidized companie<wbr />s in China and a global market.  Especially in solar and biofuel production.<br /><br />This is good for the economy, but bad for the investor.  On the other hand, healthcare technologies have software like margins and high capital costs and could produce substantial retur<wbr />ns; but face regulatory challenges.<br /><br />Many of these technologies are just displacing existing technologies; cheaper solar power cannibalizing coal and natural gas power plants; algae biofuels substituting for corn ethanol and oil.  They are merely substitutes for existing commodities.<br /><br />Other areas are completely new markets, such as social gaming.  Roughly I would ask &quot;Is this technology substituting or creating a new market or is a complement of something existing?&quot;.  For instance, algae biofuel substitutes for gasoline (a commodity) where as call center automation technology substitutes hu<wbr />man labor for capital costs.<br /><br />Overall, its a golden age for everything.  Its not just clean-tech or Web 2.0; one does not start where the other ends.  The question about where to put your money to achieve a high rate of return, is more difficult question.  In general, lumping companies by market is not a good way to look at return data.  When someone says &quot;enterprise software is hot&quot;, what they mean is that there are 400 VC backed enterprise software companies and 10 of them are going to produce a great return and 300 of them will go no where.<br /><br />The individual company and where it fits in its market&#039;s value chain is probably more important.<br /><br />It is however interesting that VCs in SV are looking at biotech and clean tech companies.  It would be interesting if SV branched out beyond software and started developing expertise in the physical sciences again (such as occurred when IC production was a hot area).</div></div></div></div></div><div id="ld_RGxTHo_450"><div class="feed_item stream_feed_item p1 row"><div class="w0_5 e_col"><div class="big_number_stat"><div class="number">2</div><div class="text">Votes</div></div></div><div class="e_col side_col w2"><div class="feed_item_question"><h2><a href="/What-are-the-implications-of-a-global-banking-system-that-is-completely-anonymous/answer/Brandon-Smietana">What are the implications of a global banking system that is completely anonymous?</a></h2></div><div class="inline" id="__w2_jSTdBZW_truncated"><div id="ld_RGxTHo_459"><div class="truncated_thumbnail_holder"></div>Nothing. <a class="more_link" href="#" id="__w2_DZTFS0h_more_link">(more)</a> </div></div><div class="hidden expanded_q_text" id="__w2_jSTdBZW_expanded"><div id="ld_RGxTHo_460">Nothing.<br /><br />There is already 800 in billion laundered money in banks.  Completely anonymous money is unlikely to change criminal transactions very much.<br /><br />Terrorists and others are using money transfer network such as the hawala or funneling money through non-profits.  The only thing that would change is the government&#039;s ability to monitor the transactions.  Anonymous payment methods may not even affect the government&#039;s ability to effectively monitor these transactions as the government is primarily using network analysis techniques anyways.  The identity of the people do not matter so much as their network of relationships.<br /><br />Government control and can tax the point of sale.  A Walmart could reduce its taxes to the government by not reporting sales and taking money out of the cashdrawer and righting off the sold inventory, but that does not work at scale.  Only small cash businesses such as pizzerias and laundromats are able to do this without suffering fines and retribution by federal government.<br /><br />Bribery would be as easy with anonymous digital currency as it is with cash.  However we would only see kickbacks transition from being informal to formal relationships.  The government&#039;s ability to regulate &#039;political economy&#039; would be decreased.  You could argue whether this is good or bad for the economy.  You could argue that our current system privileges those with political connection<wbr />s and backrub relationships and excludes the masses from participating in the political economy.  Legalized or deniable bribery may increase scrutiny on public offices and subject them to greater monitoring and oversight, which may be a net improvement over the current system of implicit bribes and no transparency or oversight.<br /><br />We are actually better at enforcing payroll tax compliance at large cash businesses like Walmart (where many consumer do not have credit cards and bank accounts) than we are about using oversight to detect and regulate unlawful &#039;political economy&#039; transactions such as bribery.<br /><br />The government also has systems in place for collecting payroll taxes.  These systems are effective, despite the incentive of the employer and employee to lower reported wages (circumventing payroll taxes) and pay the employee directly (&#039;under the table&#039;), circumventing government imposed transaction fees (taxes).  This type of circumvention only happens in small cash businesses, but not at places such as Walmart.<br /><br />As the government controls the point of sale and is able to collect payroll taxes and sales taxes, its likely the the government&#039;s revenue would not be impacted by anonymous currency to a greater extent than it is by the usage of cash.  In fact, the anonymous digital cash transactions may be easier to monitor for the government.  It can mandate businesses use reporting devices and that businesses receive revenue and pay employees from government controlled or approved accounts.  The switch to digital currency and elimination of cash would improve government revenue for these activities, compared to transactions where cash is used.<br /><br />Where the government would lose tax revenue to evasion, is in the provision of online services, digital goods and investment instruments.  Online service providers (PHP programmers from India/China, iPhone application developers, web-designers) can receive revenue anonymously and c<wbr />ircumvent IRS reporting requirements, with the person controlling the account in a position to deny control of the account and avoid recognition of the revenue.  This is however no different than having an online businesses today owned by a bearer bond IBC which has puppet directors in another foreign country and which provides full deniability for the controller of the back accounts of the corporation.  Anonymous banking would only make these transactions easier, although it is harder to imagine that it could possibly be easier to do than it already is, when you consider the existing system.<br /><br />If you are very rich, there are better ways of creating intergenerational wealth and avoiding taxation, which are extremely effective.  For instance, most equity in Israel and many European countries is controlled by a small number of families.  They do not own the companies directly, but have controlling interests in companies which control these companies.   Less than 20 family control about over 30% of the equity in Israel&#039;s public traded companies, through controlling interests.<br /><br />What use is 30 billion dollars if you cannot spend it?  It is much better to have a dual class share structure, where one class of shares has 20 votes to the common share.  A class of shareholders controlling 5% of market-cap controls the company.  Also, no capital gains are paid until shares are sold off.  When they are sold, the seller pays 15% capital gains tax (compared to +45% capital gains tax from wage income).<br /><br />It therefore seems unlikely to me that the very wealthy would find much advantage in an anonymous currency system for the purpose of avoiding taxation (as they are already able to do that very effectively).  For instance, why would you want to realize $1 in revenue untaxed?  You would want that revenue going to your publicly traded company trading at a 20x P/E multiple.  The 1 dollar in revenue creates $20 in market cap, if you owned 10% of the company, then $1 in revenue to the company is $2 to your share-value at a 20x P/E multiple.  If you own 50%, that $1 is $10 in market cap.<br /><br />You take that $10 in market-cap increase and take a loan against your shares and invest them in 8% corporate bonds...  The advantages to the financial and corporate elite of the existing system, far out weigh the advantages of anonymity (as long as the government and system are stable).<br /><br />Smaller business owners who do not have access to the public market would however find a tax advantage resulting from the unique capacities of digital currency systems.<br /><br />Effectively anonymous monetary systems are developing in Africa (cell phone mediated payment networks).  I think there are reasons that such systems would develop and that we are about 20 years away from some cryptography based monetary systems (there is a strong financial incentiv<wbr />e for smaller countries to provide these services).<br /><br />They really will not change anything however.  Drugs will still come in from Mexico into America.  However, instead of drugs coming from Mexico to America and cash going from America back to Mexico, drugs will go from Mexico to America and cell phone text messages will go from America to Mexico.<br /><br />However, with these monetary systems, even if anonymous; a balance of payments will need to be maintained between entities.  If goods and services are provided in America (drugs) and payment is made to Mexico, the Mexicans will need to be able to purchase goods and services with their payment (presumably to be delivered or consumed in Mexico).  Currently, A provides goods to B and B provides cash to A.  The only difference under unregulated digital currency is that A provides goods/services to B and and B transfers currency to C to be held for A and A transfer currency to D in payment to E for services consumed by A.  Its basically exactly the same as the current cash transactions.<br /><br />In fact, there are few limitations that drug cartels face when using the existing banking system.  Mexican drug cartels have front companies with revenue from drug sales and have been known to purchase capital assets, (such as boats) which are used in the drug business.  For instance, the same boat will end up on a California shore (empty/abandoned, but was full of marijuana or crack-cocaine) and then end up on auctioned by the state, purchased by the same companies and end up back on the shore again.  This can happen 5-8 times for a single boat; it will be seized, determined to have been used for drug transport and then repurchased and seized again several times.<br /><br />The governments have this information and record these transactions, but they do not use the information effectively.  Not much would fundamentally change if governments and law enforcement did not have access to information.  In fact, stronger enforcement or usage of the information which is available would only have the effect of greater concealment by criminal organizations (which has exactly the same effect as adoption of anonymous systems for settling balance of payments from a law enforcement perspective!).  The fundamental issue is border control and the inability of nation states to police their borders against the import of drugs, weapons, immigrants and sex slaves.  If a nation state cannot prevent kidnapping or crime within its borders, it is easy to say &quot;digital currency will make this problem worse&quot;, but the problem is with the nation state losing its monopoly on the use of force within its borders, or the nation state losing the ability to enforce its regulations upon its population or to secure its borders against the import of drugs or weapons.<br /><br />Also, it is likely that the advantages of anonymous digital currency would not be sufficient enough for criminal organizations to abandon the convenience of the existing financial, corporate and legal structures.  For instance, criminals will say &quot;I can get a bank against the income of my front company to finance the purchase of capital assets; but how do I get a bank loan against my anonymous digital currency income?&quot;<br /><br />Without a fully developed modern financial systems around the anonymous digital, it is of limited utility for anything but evading taxes.  It would be almost useless for the purpose of capital flight, unless it was possible to buy bonds or securities while skirting reporting requirements.  You would need a broker dealer willing to do this (hence the system is only feasible if state sponsored by at least one sovereign nation).<br /><br />It is not clear to me that you can security assets or enforce property rights without enforcement by a sovereign nation state.  So maybe you could buy equity in an online digital goods business which receives all payments through anonymous digital currency.  However, how would you audit the books of that business?  Who would enforce the voting rights that your equity ownership entails?<br /><br />You need a system of digital contracts and some advances in secure multi-party computing and<wbr /> cryptographic protocols before you can start developing a shadow finance system on top of the digital currency, which would be independent of right enforced by nation states.  That is still a long ways off.<br /><br />The ownership and transaction structures which would emerge would have to reflect what is enforceable through pr<wbr />otocols and would likely end up being much different than the investment instruments we have in our current system.  Therefore we will likely be seeing a hybrid system, for at-least the next 80 years.<br /><br />For an example of a &#039;hybrid system&#039; that governments are trying to regulate out of existence, look up &quot;hawala&quot;.  The hawala networks rely more on trust and social relationships than cryptography.</div></div></div></div></div></div></div></div></div></div><div class="footer wrapper"><div class="contents"><div class="footer_nav row"><div class="e_col footer_links w8"><div id="ld_RGxTHo_440"><ul class="nav_list"><li class="about"><a href="/about">About</a></li><li class="jobs"><a href="/jobs">Jobs</a></li><li 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