[birken]

1) An investor isn't marking a 1x as a win. Locking up their LP's money for many years to return 1x isn't making anybody happy.

2) AngelList isn't giving PH investors/employees $28M cash, or $20M cash, or whatever the figure is reported as. They are very likely giving them mostly stock, stock in a private company with an unknown valuation. Probably only enough cash to cover the taxes (10-20%). The 20M figure is pulled out of thin air based on whatever AL thinks their valuation is. How much stock do you think they'd have to give out to hire 20 people? How much stock are they giving out to acquire a company with 20 employees?

3) People said Google had no hope of ever making money, they were just a search engine and those don't make any money. Sitting on the sidelines and saying every investment is stupid is really easy when 95% of them fail.

[pdeuchler]

1) Being pedantic real quick, it's a ~2x win. And yeah, it's not the 100x most VCs dream about, but it's still a heck of a lot better than an embarrassing 0x loss after your founder shouts his billion dollar aspirations from the rooftops. The important thing here isn't that VC's are making money, it's that they're using an elitist social circle to absolve losses. "Too connected to fail", if you will.

2) How does this make it any better? What you're essentially saying here is instead of investors paying themselves cash they're just shuffling shares of stock from one investment vehicle to another... if this is true then in some cases investors are actually increasing their share in AngelList simply by, in your own words ("1x isn't making anybody happy"), making a failed investment. That doesn't seem above board to me.

3) If you're honestly trying to compare late 90's era Google with ProductHunt then I think that proves my point more than anything I can say myself

[birken]

Do you think the behavior of these companies could possibly be explained by doing what they think is in their own selfish best interest instead of somehow using "elitist social circles" to "absolve losses"? And who is absolving the losses anyways? Wouldn't some of the people in the "elitist social circles" be investors in AL but not PH and be upset that these "losses" were being inflicted upon them? Why wouldn't they use their elite social clout to stop it?

Anecdote time: I've personally seen a few startups that were failing attempt to sell themselves to the startup I was somewhat senior in. I interviewed and chatted with founders of the startups that were trying to get acquired. My meetings were not interfered with by the VCs or the angels or anybody else. They are far far too busy to care about every minute detail of what goes on at their portfolio companies. Had we ever gone through with one of the acquisitions (which we never did when I was there), my guess is the board would have tried very hard to convince us not to do it, as an acquisition has a much higher chance of going wrong than going well and can be a huge distraction.

[pj_mukh]

It's only in hindsight that 90's era Google is an "obvious win". It was "just another Search engine with a bunch of Stanford buddies for investors" in the 90's and probably would've been called so on HN.

Its seems to me that convincing a bunch of people to part with their money for your idea and then relentlessly trying to execute on it (as PH's founder seems to have done) is very meritorious.

Some investments are clearly made to friends, but you aren't convincing any investor to NOT invest in their friends who they think are great, personally. Now if only there was a process to democratise this discovery more....

P.S: I was referring to AngelList in the end there.

[antiviral]

20-20 hindsight works both ways; it's easy to see both obvious failures and successes once we know the results with certainty.

For Google, I don't think it was certain at all that they would succeed and there was a real chance they could have failed. Their first business model was selling their search engine to enterprises via hardware boxes, which grew very haltingly.

In fact it wasn't until Google came across Overture's idea of selling advertising tied to web search results that they found the success they now have, and which they appropriated despite Overture's patent because they were so desperate to find a working business model.

Overture(later acquired by Yahoo) sued Google, and Google had to pay in stock worth hundreds of millions in 2004 (tens of billions now had Yahoo kept them).

So how does this relate to ProductHunt? Google had a real product, knew who their users were and put their experience first. ProductHunt has polluted their site with junk and allowed their voting process to be distorted, making it practically useless to anyone who came there to find great products.

See here: http://www.nytimes.com/2004/08/10/business/technology-google...

[skinnymuch]

Nice hindsight review of Google. Often overlooked.