[nrser]

I don't really understand your question... this is the favored approach of many Silicon Valley VC firms, and they are widely considered some the smartest tech start-up investors in the world.

If it really is a bad idea, and those firms have been so successful for so long not because of it but in spite of it, then it seems like a huge opportunity for others to come along and displace them with a better model. There's a lot of money in many of these tech markets. But we don't see that happening.

I guess the answer is that it's unintuitive... it seems like an obviously bad idea to many people, but the people that have the most experience think it's a great idea and continue to succeed with it.

There are other approaches: in China, for example, investors generally considered profitability much more important and expect it very rapidly, like in the first 6-18 months (though this has eased quite a bit towards a more SV-style model in recent years).

The gripe then is that companies can't have any long term vision or go big because they have to be making profit immediately and constantly.

Something about green grass...

[watwut]

I remember reading that they are loosing money on the aggregate. While there are some successful investors, majority is not long term successful.

[nrser]

Yeah, I when I thought about it I realized when I say "SV VC" I mean probably only the top 10-20 firms or so - the "top tier" or whatever, Sequoia, Accel, KPCB, Benchmark, etc. (highly subjective but you get the idea) - and I think those guys tend to do OK, and it has been mostly the same ones my whole time in tech (~10 years), and I know many go back considerably before that.

I meant that a lot of those people are down with the land-grab now / rent later model.