Comments URL: https://news.ycombinator.com/item?id=46276578

Points: 2

# Comments: 1

(I'm not disagreeing with the author, just sharing an article that is interesting/relevant.)

For these types of businesses, paying less for labor is a secondary goal and just having enough labor (human or machine) is the primary goal.

Comments URL: https://news.ycombinator.com/item?id=44447219

Points: 1

# Comments: 0

Comments URL: https://news.ycombinator.com/item?id=44263554

Points: 2

# Comments: 0

Comments URL: https://news.ycombinator.com/item?id=43897636

Points: 2

# Comments: 0

Comments URL: https://news.ycombinator.com/item?id=43874710

Points: 1

# Comments: 0

This reminds me of some early stage startup pitches. During a pitch, I might ask: "what do you think about competitor XYZ?" And sometimes the answer is "we don't think highly of them, we have never even seen them in a single deal we've competed for!" But that's almost a statistical tautology: if you both have .001% market share and you're doubling or tripling annually, the chance that you're going to compete for the same customers is tiny. That doesn't mean you can just dismiss that competitor. Same thing with the article above dismissing AI as a threat to jobs so quickly.

To give a concrete example of a job disappearing: I run a small deep tech VC fund. When I raised the fund in early '24, my plan was to hire one investor and one researcher. I hired a great investor, but given all of the AI progress I'm now 80% sure I won't hire a researcher. ChatGPT is good enough for research. I might end up adding a different role in the near future, but this is a research job that likely disappeared because of AI.

Comments URL: https://news.ycombinator.com/item?id=43214612

Points: 2

# Comments: 2

It's like a prisoner's dilemma where property owners as a class may not want more housing so that they are wealthier on paper, but any individual property owner will want to build housing because that'll grow their wealth faster.

Comments URL: https://news.ycombinator.com/item?id=42514043

Points: 2

# Comments: 1

From the linked article (from Jan 2023):

  But sesame does differ in one distinct way from eggs, peanuts, shellfish, milk, and soy: The seeds are teeny tiny and hard to keep track of. This means they’re prone to “cross-contamination,” in food-allergy terms. If you operate a bakery that makes sesame bagels, the odds are decent that rogue seeds will end up in your other products, too. Bad news for people with severe sesame allergies. But it’s also expensive and frustrating for food manufacturers to ensure the seeds are kept away from other foods, if they’re on the FDA’s major allergens list.
  
  Advocates have therefore been warning since December that the FASTER Act is poised to have a counter effect. Rather than minimize cross-contamination, as they argue the law requires, many big food brands have opted to add sesame to their bread products, then simply declare it as an ingredient. They are intentionally adding sesame flour to “avoid complying with the spirit and intent of the FASTER Act,” FARE tells Fast Company. That is cheaper than certifying that their facilities are 100% sesame-free.

Given that the methodology was to compare wages for the 75th percentile vs. the 25th percentile, this just seems like a political potshot/non sequitur rather than an explanation for the wage gap. Billionaires are ~.01% of SF's population, and that won't meaningfully impact the wage gap between the 25th and 75th percentiles.

Comments URL: https://news.ycombinator.com/item?id=40006032

Points: 2

# Comments: 0

1) I think 1x is very fair and meant to protect investors from bad company behavior. If you didn't have 1x preference, this would be an easy way for an unscrupulous founder to cash out: raise $X for 20% of the company, no liquidation preference. The next day, sell the company and its assets ($X in cash) for, say, 0.9x. If there's no liquidation preference, the VC gets back 0.18x and the founder gets 0.72x, even though all that the founder did was sell the VC's cash at a discount the day after getting it.

2) >1x liquidation preferences are sometimes the founder's fault and sometimes the VC's fault. Sometimes it's an investor exploiting a position of leverage just to be more extractive. That sucks. But other times it's a founder intentionally exchanging worse terms for a higher/vanity valuation.

For example, let's say a founder raised a round at $500m, then the company didn't do as well as hoped, and now realistically the company is worth $250m. The founder wants to raise more to try to regain momentum.

A VC comes and says "ok, company is worth $250m, how about I put in $50m at a $250m valuation?"

Founder says "you know, I really don't want a down round. I think it would hurt morale, upset previous investors, be bad press, etc. What would it take for you to invest at a $500m+ valuation like last time?"

VC thinks and says "ok, how about $500m valuation, 3x liquidation preference?"

The founder can now pick between a $250m and a 1x pref, or $500m and a 3x pref. Many will pick #1, but many others will pick #2.

It's a rational VC offer -- if the company is worth $250m but wants to raise at $500m, then a liquidation preference can bridge that gap. The solution is kind of elegant, IMHO. But it can also lead to situations like the one described in the article above where a company has a good exit that gets swallowed up by the liquidation preference.

3) generally both sides have good lawyers (esp. at later stages of funding), so the liquidation preference decision is likely made knowingly.

Related to #3, if you're fundraising, please work with a good lawyer. There are a few firms that handle most tech startup financings, and they will have a much better understanding of terms and term benchmarks than everyone else. Gunderson, Goodwin, Cooley, Wilson Sonsini, and Latham Watkins are the firms I tend to see over and over.

https://podcasts.apple.com/dk/podcast/palmer-luckey-inventin... (Palmer Luckey)

https://podcasts.apple.com/us/podcast/a-conversation-with-ch... (Charlie Munger)

https://www.youtube.com/watch?v=DcWqzZ3I2cY (Jeff Bezos)

(The thing that made me suspicious here is that the graph shows the number of investors grew from 5,000 to 7,500 a few years ago, but there's no way we got 2,500 new VC funds in a single year in 2021.)