sector

A VCs risk profile does not look like yours, due to the fact that they're diversified and you're not. Imagine your company is doing well and there are two ways to proceed:

option 1: your company can be sold today for $75m.

option 2: you can try for $1,000m or zero, with an 85% chance that you'll fail.

The VC is likely to prefer option 2, whereas if you aren't already rich, you'd likely prefer option 1.

Many a VC funded company has died because the VCs needed you to make a ton of money very quickly, or die trying, in order for their model to work. When considering VC investment, one really needs to be certain that their business needs align closely with your own (and are likely to continue in alignment) if you want to avoid heartbreak.

VCs are (primarily) investing other people's money. The basic overview is this:

VC raises a $100m fund that is expected to last for 10 years. They charge a 2%/yr management fee, for their work as investors. Then, they also keep 20% of the gains from their investments.

So if the fund operates for 10 years and exits for $400m, my understanding is that they'd take $20m for managing the fund, plus $60m "carried interest", and return the rest to the limited parters (the investors whose money was actually at risk).

If the fund operates for 10 years and the companies sell for a combined total of $50m, they still charge the $20m management fee, and the investors have $30m returned to them.

Thus, VCs themselves have very limited downside.

I'm never a fan of advertorials, despite their occasional efficacy, because I think they devalue their surroundings. I'm particularly bothered by then when substantial effort is made to make it difficult for even keen-eyed observers to recognize their existence.

So it's postgres log shipping, with S3 as the target?

Startups are akin to an MBA.

Running a small but ambitious company forces a serious, motivated founder to think about every business function. I don't see any meaningful downside for the founders who choose to spend some time on this task, and I see a lot of upside.

Parker's complaints strike me as absurd. If he really believes they can have more impact at FaceBook, he should find a way to create special purpose vehicles within FB that allow founders to get equity in the work of a small team, rather than just getting .00005% of the sum of FaceBook.

It's not a class issue. A more accurate appraisal would be that one is paid highest for strategic work, next highest for tactical, and the least for operational work.

If you're great at operational work, but are no good with tactics or strategy, you won't ever get a huge salary, in the office or in sports.

After all, look at pro-sports salaries and you'll see that the highest paid players are the ones who are put in situations where they have the ability to make potentially critical decisions, and who have a history of being relatively good with those calls.

I agree that many retail banks wouldn't be missed by anybody if they disappeared tomorrow; and I applaud and support efforts to improve competition in the sector. I think that we share a vision of what should be in the retail banking sector.

That said, I can't help but think about the capital required to scale the business due to the high customer acquisition costs in the sector. This large capital requirement seems likely to reduce the ability of Simple to have meaningful control over their exit, as it won't all come from impact investors.

I hope the Simple team makes a mark on the market, but I still fear that success means that a large bank purchases them, increases the cross-sells, adds incremental fees, and "streamlines" customer service. I hope my concern is misplaced.

Either way, I'm excited to see what develops, and I think you made a great investment.

As a customer, I'd feel a lot more comfortable if you worked solely as a technology vendor to my bank.

This isn't a knock on the team you're putting together, or your ability to build a great company. It's caused by the realities associated with venture capital.

Now that you took VC money, there's countdown to an exit, and I have to think about likely buyers. If you're successful, one of the top possibilities is a strategic acquisition from a major bank. This basically means that if I buy into the vision and support it, I'm likely to end up right where I started.

I want to like this idea, because I want to see more great, customer-service oriented banks. But I just can't quite bring myself to like it, because of the guaranteed change in ownership that is pending and the lineup of probable buyers.

Okay, so let's take a real situation that happened to me: an ATM debited my account $600, but only dispensed $300. In that situation, I call you, and what happens from there?

Thank you for taking the time to answer some of our questions on what is surely a busy day.