Item — HN Reader

I'm confused and saddened on why Oxide has to keep raising money (in substitute for growth) and keep entrenching their business with VCs and letting them control business and ownership.

> "So if we didn’t need to raise, why seek the capital? Well, we weren’t seeking it, really. But our investors, seeing the business take off, were eager to support it."

From this of course the VCs will back and support Oxide (they are mentally thinking that Oxide will move into supplying hardware for AI datacenters) eventually want their money back at many many multiples and the pressure is there to achieve this.

Can you even invest in Oxide?

I just wish Oxide wouldn't have to keep getting owned by VCs which would inevitably lead to enshittification to pay back the VCs.

If Oxide followed the model of Valve (100% founder and employee ownership, profitable, vast unlikelihood of enshittification or pressure to get acquired or IPO) then it would be a different situation.

3 comments

How could a massively capex business like Oxide scale in the same manner that Valve did based on the current market movement of the industry that Oxide is addressing? I personally cannot see how that is at all possible. The cash required to back downstream capital in a business like this as it scales without it falling flat is surly well in excess of $6/700MM, if they manage to get by with with only selling 300/400 million of equity, that will be a great outcome for the founders.

Unfortunately since they already took VC money they have to keep doing it and each time they do it they do it the VCs would own more and more and would control the business.

I predict in less than 10 years Oxide exits by way of being acquired or an IPO. The enshittification would have already begun by then.

> You seem very sure of yourself in how business works! I'm curious now, how did you create your $100MM++ revenue hardware business? I'd love to learn from you. [deleted]

You don't need to create a $100MM++ revenue hardware business to know how this ends when you get into bed too many times with VCs.

We already know it is a huge capex spend (which is why they keep going to VCs) the question is, how many times does Oxide need to go back to VCs to keep raising (even though they said they didn't need to raise?)

I hope they become immensely profitable enough to buy out the VCs stakes and get control back and become independent.

But I am doubtful that Oxide will do that if they keep raising and they will just be sold down the river in less than 10 years.

There's a lot of confusion here about the way VC operates (or companies, for that matter), but just to clarify one point: an IPO is not an "exit" -- it is a public offering. That is, an Oxide IPO, were we to be so lucky, would be a milestone towards being the generational company that we aspire to be.

> ...but just to clarify one point: an IPO is not an "exit" -- it is a public offering.

And what are you offering and why are you offering it?

Who do you think will own whatever you're offering after you go public?

Are you hoping your VCs (or you) won't sell whatever your offering when an IPO happens?

Valve is primarily a software company with zero marginal cost to a game sale.

There’s nothing confusing about it. Hardware businesses require a lot of capital to build the hardware.

I don't see Hetzner getting into bed with VCs and raising $100M or $200M?

How long until Oxide needs $2BN, $4BN or $8BN from VCs, further getting owned by them?

K, well I was on the first/founding team of digitalocean and owned strategy there from zero to just before IPO, we took a bunch of venture, heck if you'd seen our covenants in our lease lines, they made our venture debt look like kittens, yet we IPO'd, and I don't think very many in the digitalocean story are particularly unhappy? VCs do not try to "own companies" they try to exit businesses at a gain.

> VCs do not try to "own companies" they try to exit businesses at a gain.

They do both as they need many multiples to return the fund.

And it also sounds very predatory to me and not aligning with any startup's mission other than for the VCs to pressure Oxide to get acquired for over $20BN+ or go to the public markets.

Not even Hetzner did this. DigitalOcean could have followed Hetzner, but I guess VC money is very attractive and now DigitalOcean is now the slave of Wall St.

Going into deals with VCs and IPO'ing to Wall St. always leads to enshittification.