Monday, April 9, 2012

Startups on Steroids*

* Check Back in 5 Years

Juicing an orange
 ~ The JOBS Act will juice startups, but it will come from squeezing investors, many of whom will be little more than pulp by the time it is over. Matt Taibbi:
There's just no benefit that the JOBS Act brings to an honest startup company. In fact, it puts an honest company at a severe disadvantage, because now it has to compete against other, less scrupulous companies that can simply make their projections up on the backs of envelopes.

This is like formally eliminating steroid testing for the first five years of a baseball player's career. Yes, you can pretty much bet that you'll see a lot of home runs in the first few years after you institute a rule like that. But you'd better be ready to stick a lot of asterisks in the record books ten or fifteen years down the line.

In the same way, get ready for an avalanche of shareholder suits ten years from now, since post-factum civil litigation will be the only real regulation of the startup market.

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