[matthewowen]

I think the bigger objections than "fairness" are:

1. These might not be good funding decisions. Maybe investing in Keith Rabois's new startup is a bad decision, but it is only happening because he's a partner at Khosla. If you're an LP in a VC fund, this is something you could reasonably be concerned about.

2. If you're an entrepreneur pitching to a investors, you expect that the pitch is being taken in good faith. If the investor is just taking your pitch so that they can access your proprietary information and use it to inform their own startup (funded by the firm you're pitching), that's pretty wack.

I have literally no information about these examples, so it wouldn't be meaningful for me to hold an opinion on whether or not impropriety is occurring. I also think that Keith Rabois probably has enough of a track record that he could easily raise funding for pretty much whatever he wants to do. I also suspect that most entrepreneurs aren't particularly worried about point 2.

Nonetheless, this is clearly right at the nexus of the objections that people raise about SV: that it's an old boy's network masquerading as a "meritocracy". It just smells fishy. Sometimes things smell fishy and are OK... but there's always a cost to doing things that smell fishy: the appearance of impropriety is often just as harmful as impropriety itself.

[jacquesm]

VCs are under no obligation to invest in outsiders at all.

Yes, it's an old boys network, old boys networks are not illegal nor are they bad. In fact they give the younger boys a fantastic opportunity to side-step the whole thing and start their own network, that's exactly what YC has done.

Whenever you see something like this there is an opportunity.

[matthewowen]

Yeah, sure. I don't think that contradicts my post: I'm just saying that people might be concerned about those things, and an LP might question whether a given VC firm is best managing the assets under its control. The author didn't say that VC firms were obliged to invest in outsiders, just that these rules might give LPs more confidence that firms were behaving properly and in their investors best interests.

That's not a wishy-washy "fairness" thing: it's a concern about whether the firm is fulfilling its obligations to its backers. You don't have to agree with the concern... but it isn't an unreasonable thing to be worried about.

[jacquesm]

The author is not an LP with a VC. He feels he's in competition with the VC partners for their money, different situation entirely.

As an LP he might take issue with this, but for that you have to be an LP first and LPs typically do not take issue with this but actually feel that their money is well spent (whether that's correct or not is another matter).

[coderzach]

1) If you're an LP and you think this type of thing is a really big deal, don't put your money in a fund that does it.

2) Even if they didn't invest in themselves, they could just as easily give your idea to a more competent entrepreneur and invest in her instead. If you're really worried about your proprietary idea being stolen, you shouldn't be in these meetings.

[matthewowen]

Sure. But I think the author's point was that he does find these concerning, and that other people (LPs and entrepreneurs) might also find them concerning if they were more aware of them, and that he thinks that VC firms should institute rules against them.

So yeah, you can totally have the perspective that those two points don't matter. I'm not saying that you should think that they matter. But some people do think they matter, and I don't think it is wholly unreasonable to feel that way.

My goal with my earlier comment wasn't to make you agree with the author. It was just to point out that the author's points aren't just about "fairness": they're also about whether VC firms are best delivering value to LPs.

On a nitpick point: I never said "idea". The idea that people are worried only about "ideas" is silly. There are other things to worry about: if you're raising a series B and are providing data about your business, that data potentially has concrete value beyond merely an "idea". I don't personally think it's at all unreasonable to be concerned about people misusing that data.