I'd say the much bigger change is that randos have a real shot at getting funded today, due to YC and the syndicated convertible debt round. It's hard to overstate how much more open the funding market is now than it was even 15 years ago.

Yep. I worked with a startup that, after a few months, obviously had this as its primary motive. They made an app similar to another big-name (at the time) app, with the intent of having that bigger app buy them out.

When the big fish didn't swallow their little fish they blew all of their remaining cash on a big party in New York and flew in all kinds of bold-faced names to bring attention to themselves. And it worked. A few months later they were eaten by another company, everyone lost their jobs, and the founders retired at 31.

The irony is that a few months after that, its only competitor "pivoted" and abandoned the space it was competing in. If the small fish had held on, it would have owned that market.

I gave them data from my company, and they gave me things in return. Through a bunch of sales that database ended up being the core of a large mobile app that's a household name, but you'd never know it from the outside.

When we got bought the founders complained about how it wasn't enough to retire on. Aww, poor babies. We were too early (Apple introduced a similar product 6+ years after we started ours), so the payoff was only enough for them to live comfortably for the rest of their lives. Except they immediately got condos downtown with unobstructed water views so I doubt that lasted very long.

I think you had the same problem we did. Potential investors take competition in a space as validation. Legitimate competition just solidifies that validation. The moment you folded, the screws got tightened on the other company. Either they didn't get any offers at all, or with terms that were terrible. Founders don't want to be treated the same way they treat their employees.

(This thing where companies get bought out and discontinue their flagship product is, in my mind, a failure mode. That's not success if you make things for a living. Somebody, not us, got rich, while we have a project on our resume that was a failure by our standards, but makes us more attractive to the next guy who wants to pump and dump a company. An attractive little cog for their big wheel. And maybe, just maybe, enough from shares or bonuses to get a loan on a new car)

Exactly the same mentality 20 years ago, except back then it was mostly about the IPO.

I think part of the difference between the late 90s and now (besides scale) is that small IPOs don't exist anymore. VCs need exits and once founders own n% of a $100m company, they need a way to realize those, unless they're willing to totally ignore their own financial interests.

The 1990s IPOs didn't work out well though. These companies were still longshots, and public markets lend better to lower risk-reward companies.

The second part of the problem is tech "monopolies," in the thiel sense. Google and FB's business models, for example, needs massive scale. A social network or search engine with 10% of the user's is not worth anywhere near 10% of what FB or google are worth.

So... the "highest value use" of a smaller startup is to help maintain a larger company's monopoly.

Finally, the tech space (especially consumer web stuff) just changes too fast to "build something lasting."

.. I'm not sure everything needs to be lasting. Do we even want dating apps or online loyalty programs that last a century? Maybe we just need classier ways of doing shorter horizon stuff.

This.

I was recently the first full-time hire at a seed funded company that was in the right place and the right time. They grew to 10 people over a few months, and I loved the people I was working with.

Knowing that the founders had a 10-40x equity stake larger than mine made it nearly impossible to feel invested in the company.

Knowing that you don't have an equal stake in the company makes it almost impossible for the founders to view you as a peer. This is bad for everyone involved.

Until you become a founder yourself and know how hard it has been might change your mind. Otherwise we're all just employees. One big difference is that founders take bold moves and risks. I also consider this is capitalism at work.

But how do you know how much time will it take to reach that $50 million? If it was a VC backed company sure it might have taken couple of years ie short term. But for a bootstrap company focusing on a smaller pie or niche markets this could take years to happen.

Edit:

For further context: It used to be that a technology company could go public and provide an exit to investors. After the dot com crash, Sarbanes-Oxley regulations made it much more difficult to IPO. It has many administrative requirements, greatly increases run rate to support and raises the finanical bar significantly to which companies can go IPO. The VC model however remains the same, they need 10X returns. Thus you see them pushing entrepreneurs to go IPO which post-SO means a longer runway to exit fraught with a lot of risk mostly placed on the entrepreneurs (compared to pre-SO). It became a rational choice for the founders to take smaller, faster exits since "the big one" (IPO) now looks less certain for all but the most successful startups.

Yeah, SO raised the bar to get into (and stay in) the public markets. Maybe regulation minded Congress had a point there. In any case, this correction didn't prevent private MA. Moreover, VCs still get their funds funded. So SO hasn't killed any golden gooses.

Maybe we should have corrected something in 2008. We certainly un-corrected Glass-Steagall in 1999.

Let's say as a VC you invested $3m and are holding 20% of the company at exit, that means you'll make $10m. A 3x return is nice but not going to be fund-maker.

If you're a $50m fund then you're expected to return >$150m, 10m will nudge you along to that target, but isn't going to be significant. Because a majority of your investments will go to zero or be small returners (1x-3x), it essentially means the good exits have to be >10x in order to be able to achieve reasonable returns for the fund.

$50M is short term or long term depends totally on the growth rate and while bootstrapping, that target could be a formidable challenge.