<story><title>Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition</title><url>http://www.bloomberg.com/news/articles/2016-03-09/more-venture-investors-are-sitting-on-the-sidelines</url></story><parent_chain><item><author>freyr</author><text>&amp;gt; &lt;i&gt;unless it&amp;#x27;s a &amp;quot;network effect&amp;quot; situation like a social network, you probably don&amp;#x27;t need to grow fast.&lt;/i&gt;&lt;p&gt;Uber seems like a weird example of this. It was said (and remains said) that they&amp;#x27;re operating in a winner-take-all space, and they expanded as if they were a social network.&lt;p&gt;Despite the aggressive expansion and marketing, a majority of people I know in the Bay Area now use Lyft exculsively. The last few times I&amp;#x27;ve said &amp;quot;I&amp;#x27;ll get an Uber,&amp;quot; somebody&amp;#x27;s actually paused and said &amp;quot;Wait, why don&amp;#x27;t we take Lyft?&amp;quot; I&amp;#x27;m not even sure why. When asked, they just reply that they don&amp;#x27;t like Uber for some non-specific reason.&lt;p&gt;They&amp;#x27;re expanding around the world and into new products and concepts, but haven&amp;#x27;t even seemed to nail down a loyal customer base on their home turf. Anecdotally speaking.</text></item><item><author>mindcrime</author><text>Here&amp;#x27;s the somewhat ironic &amp;quot;catch 22&amp;quot; to the whole thing:&lt;p&gt;If you&amp;#x27;re a startup and you &lt;i&gt;don&amp;#x27;t&lt;/i&gt; take VC funding, then you have the luxury of simply enjoying organic growth and funding expansion by re-investing profits into the company.  Well, as long as you can do that in the face of competitive pressure.   Strictly speaking, unless it&amp;#x27;s a &amp;quot;network effect&amp;quot; situation like a social network, you probably don&amp;#x27;t &lt;i&gt;need&lt;/i&gt; to grow fast.&lt;p&gt;Unless you take VC money.  Then, the simple act of taking their money now means there &lt;i&gt;is&lt;/i&gt; pressure to grow fast, but it comes from the investors and not from the market per-se.   And this is because VC funds are time-boxed and, by definition, have to generate whatever return they&amp;#x27;re going to generate by a fixed point in time.   And the older a fund is (eg, the nearer it is to the end of it&amp;#x27;s life) the greater the pressure.&lt;p&gt;This is something I think more entrepreneurs should think long and hard about.  Don&amp;#x27;t raise VC money just for the sake of doing it.  Even if you can.  Do it IF and only if it&amp;#x27;s the only (or at least surest) way to reach your goals.  And always remember that the VC&amp;#x27;s interests do &lt;i&gt;not&lt;/i&gt; necessarily align with the founders (at least not 100% so).</text></item><item><author>delecti</author><text>It&amp;#x27;s really weird how this article tries to frame the situation. It&amp;#x27;s almost like the startups feel entitled to the funding.&lt;p&gt;The point of funding should really be to enable faster growth than they might otherwise have been able to achieve, but if a business can&amp;#x27;t at least survive without huge influxes of investments then is it really a business that they should be investing in in the first place?</text></item></parent_chain><comment><author>mindcrime</author><text>I am a perfect example of somebody who &lt;i&gt;was&lt;/i&gt; a &amp;quot;loyal Uber user.&amp;quot; They were here (Raleigh&amp;#x2F;Durham&amp;#x2F;Chapel Hill) before Lyft, and I was already familiar with them and had an account and all from having used the service while I was in San Francisco visiting.   And so when my car broke down and I decided to go car-less for a while, I started using Uber all the time (along with walking and bicycle riding).&lt;p&gt;And then...  Uber lowered their rates.  Good for me, right? Rides are cheaper now.  BUT...  it appears that as a result, a LOT of local Uber drivers have quit doing Uber and over the past month, it&amp;#x27;s become increasingly difficult to even get an Uber here.  More and more often, I fire up the app and get &amp;quot;No UberX available&amp;quot; (and usually no UberXL or UberSelect either).    So I installed the Lyft app, and I consistently find that Lyft can get me a ride when Uber can&amp;#x27;t.&lt;p&gt;I still usually at least try Uber first just out of habit, but they&amp;#x27;re definitely ceding ground to Lyft in this area, just due to availability if nothing else.&lt;p&gt;OTOH, Uber does do some neat stuff... like I noticed that in Portland, they have &amp;quot;UberPedal&amp;quot; where you can get a car with a bike rack.  I find myself hoping they expand that to our area, as it would be nice to be able to bike to work, knowing that if it&amp;#x27;s raining or cold or something later, I can call up an UberPedal bike-rack equipped car for the trip home.</text></comment>
<story><title>Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition</title><url>http://www.bloomberg.com/news/articles/2016-03-09/more-venture-investors-are-sitting-on-the-sidelines</url></story><parent_chain><item><author>freyr</author><text>&amp;gt; &lt;i&gt;unless it&amp;#x27;s a &amp;quot;network effect&amp;quot; situation like a social network, you probably don&amp;#x27;t need to grow fast.&lt;/i&gt;&lt;p&gt;Uber seems like a weird example of this. It was said (and remains said) that they&amp;#x27;re operating in a winner-take-all space, and they expanded as if they were a social network.&lt;p&gt;Despite the aggressive expansion and marketing, a majority of people I know in the Bay Area now use Lyft exculsively. The last few times I&amp;#x27;ve said &amp;quot;I&amp;#x27;ll get an Uber,&amp;quot; somebody&amp;#x27;s actually paused and said &amp;quot;Wait, why don&amp;#x27;t we take Lyft?&amp;quot; I&amp;#x27;m not even sure why. When asked, they just reply that they don&amp;#x27;t like Uber for some non-specific reason.&lt;p&gt;They&amp;#x27;re expanding around the world and into new products and concepts, but haven&amp;#x27;t even seemed to nail down a loyal customer base on their home turf. Anecdotally speaking.</text></item><item><author>mindcrime</author><text>Here&amp;#x27;s the somewhat ironic &amp;quot;catch 22&amp;quot; to the whole thing:&lt;p&gt;If you&amp;#x27;re a startup and you &lt;i&gt;don&amp;#x27;t&lt;/i&gt; take VC funding, then you have the luxury of simply enjoying organic growth and funding expansion by re-investing profits into the company.  Well, as long as you can do that in the face of competitive pressure.   Strictly speaking, unless it&amp;#x27;s a &amp;quot;network effect&amp;quot; situation like a social network, you probably don&amp;#x27;t &lt;i&gt;need&lt;/i&gt; to grow fast.&lt;p&gt;Unless you take VC money.  Then, the simple act of taking their money now means there &lt;i&gt;is&lt;/i&gt; pressure to grow fast, but it comes from the investors and not from the market per-se.   And this is because VC funds are time-boxed and, by definition, have to generate whatever return they&amp;#x27;re going to generate by a fixed point in time.   And the older a fund is (eg, the nearer it is to the end of it&amp;#x27;s life) the greater the pressure.&lt;p&gt;This is something I think more entrepreneurs should think long and hard about.  Don&amp;#x27;t raise VC money just for the sake of doing it.  Even if you can.  Do it IF and only if it&amp;#x27;s the only (or at least surest) way to reach your goals.  And always remember that the VC&amp;#x27;s interests do &lt;i&gt;not&lt;/i&gt; necessarily align with the founders (at least not 100% so).</text></item><item><author>delecti</author><text>It&amp;#x27;s really weird how this article tries to frame the situation. It&amp;#x27;s almost like the startups feel entitled to the funding.&lt;p&gt;The point of funding should really be to enable faster growth than they might otherwise have been able to achieve, but if a business can&amp;#x27;t at least survive without huge influxes of investments then is it really a business that they should be investing in in the first place?</text></item></parent_chain><comment><author>TheAceOfHearts</author><text>This is really interesting to me, because I&amp;#x27;ve noticed the same thing in the Bay Area.&lt;p&gt;I would conjecture that Uber constantly being under attack (i.e. having lots of negative articles about them) has played a significant role in this. So when people have to pick between Lyft and Uber, they go for the one that seems &amp;quot;less evil&amp;quot;. Perhaps the reason Lyft doesn&amp;#x27;t come under fire as much is because they haven&amp;#x27;t grown enough to divert attention from Uber?&lt;p&gt;If we consider the long-term outcome, is this actually a problem for Uber? If you move between places where both Lyft and Uber are available, and places that only have Uber, it doesn&amp;#x27;t seem unreasonable that you&amp;#x27;d just stick to using Uber. But anyway, once you have an account with one of the two services, what incentive do you have to create an account with the other one?</text></comment>