This is an important trend, and I think it's permanent, because it's not, like valuations, driven simply by this being a hot market. The smarter investors, like Sequoia and Accel, have realized that it actually works better to have founders in control. Or more precisely, that the biggest outcomes (which financially are the only ones that matter in the VC business) tend to come from founders remaining in control.
(The reference in the 2004 essay to 26 year olds who are ready to rule the world if they can find someone to handle the paperwork for them sounds like a reference to Zuckerberg, but it isn't. I don't think I'd heard of him then.)
This is very good to know! As a founder dealing with VCs I feel like a puppy that fell in a shark tank.
It would be enormously relieving to know before a meeting that they are a) not trying figure out how to boot me out of my own company, b) not going to force me to make decisions that might make a quick buck in the short run but hurt the company in the long run (if I'm in it for the long haul), and c) not going to structure the deal in a way that they get unfairly larger returns on their investment and leave me broke (reminds me of a line from the Kanye West song Gold Digger - "Win the Super bowl and drive off in a Hyundai". ;)
It depends on the VCs. So far only the top VCs have realized it's best to leave founders in control. Below the top 15 or so, their thinking is 5 years behind. Plus lower ranking VCs tend to be less scrupulous generally.
That’s a great start! I have faith in the concept rolling downwards from the top VCs into the minds of the rest. As founders we’re already a paranoid bunch, having one less (huge) thing to worry about is a breath of fresh air, allowing us to focus on the company.
Say what you will about Broadcast.com or Myspace, but their founders did quite well, giving up any delusion of building on online legacy through said domains.
Take the cash and move on.
Particularly with Groupon, I really don't understand how a global company can compete at a local level if a local 'Mom & Pop' groupon clone takes Groupon on. Are the economies of scale there? (Please note I am talking about smaller towns, not major cities like Manhattan, Chicago, etc.)
The daily deal space is technically simple and has low barriers to entry - get a WordPress account and MailChimp, and you're more than halfway there. However, driving traffic and sourcing deals is ridiculously capital intensive.
Local Groupon clones around the world have been doing more or less well depending on their country's access to capital -- if there's sufficient VC available, they can hold their own, but if not, they've been getting steamrolled when a Groupon or Living Social enters their country.
See number 4 here for more about this idea:
http://paulgraham.com/bubble.html
and this for the present state of things:
http://paulgraham.com/control.html
(The reference in the 2004 essay to 26 year olds who are ready to rule the world if they can find someone to handle the paperwork for them sounds like a reference to Zuckerberg, but it isn't. I don't think I'd heard of him then.)