Business Model Fueling Silicon Valley Tech Companies May Be Illegal:

The point isn’t that venture capitalists sometimes invest in companies that don’t make their money back. The point is that the entire model deployed by VCs is to profit by disrupting the marketplace with predatory pricing, and leave the losses to the suckers who buy into the IPO. A company that engages in predatory pricing and its late-stage investors might not recoup, but the venture investors do. 

“The single most important fact in this paper is that Benchmark put $12 million into Uber and got $5.8 billion back,” Wansley says. “That’s one of the best investments in history, and it was a predatory pricing.”

The focus on the venture capital here is really important, because that is the real problem underlying all of this stuff.

As long as there are these unimaginably enormous globs of money and people looking to put them somewhere that will generate even more money, we are going to keep having these kinds of problems. It’s like a flood, where the water just keeps sloshing around, trying to find a place to go and wrecking everything in its path.