The field startups don't do well

Startups do everything from health care to semi-conductor to services, almost everything. Even though success rate is low, some startups eventually excel in their field and grow. The book The Startup Game: Inside the Partnership between Venture Capitalists and Entrepreneurs, cracks the relationship between VC and entrepreneurs, essentially is investor and founding partners. Yahoo, Google, Facebook, Intel, a long list of startups now are world wide brand names. One field, however, hasn't have widely had success so far. This field is investing.

There are many hedge funds that are startups such as one or two people shop. They do as much as they can from analysis, trading, and recruiting investors. Outsourcing the rest they can't like legal issues to other firms. Investors invest in these startups from many reasons. Barton Biggs' book tells numerous stories on this. Many can't survive at their early start. Biggs didn't explain why they failed. Of course, he did compare the hedging fund business to high tech startup either. A recently most successful startup hedge fund probably is John Paulson's in 2008 who captured the financial crisis. 

The reason may lie on the field where startups root. So far for the past fifty or sixty years, capitalism systems were based on three tenets. First, the economic growth, measured in GPD. Second, consumption of resources to satisfy end users was the most important outcome of all economical activities. Finally and more recently, wealth accumulation was realized through short-term changes in asset values rather than through products and services. In other words, it is through capital manipulation. High tech startups pick the first route as they try to make goods to the public. Input to these startups is capital and outcome is product. All of these results in a huge amount of disposable income that exceeds pure consumption needs. That is where the last way finds its market. The trend is apparently shifting to capital regeneration. However the unique feature of this approach is that it is singularity, i.e., money in and money out. There are no diversified products and services. This may be the most important nature of this business and also pre-defined as a hard business to run. People used to say that during California's Gold Rush age, the ones who eventually last to the end weren't those trying to buy tools to dig gold but the ones who sold tools. So intuitive and philosophical.