I think the author is on to something with the small bets, investors being wimps, etc. And I'd add to that: The pressure with these small bets is for a startup to produce something fast. The whole culture is designed around "What can you do in a weekend, prove a market exists, and then scale manually until your dev team can catch up?" Hence why every 3rd startup out of YC seems to be "Uber for [laundry, house cleaning, menial tasks, etc.]" It's an easy model to prove and scale.
A lot of ideas take longer than a few months and a few hundred thousand dollars to prove, but investors don't want to take the risk and founders see it as easier to build a laundry service and get paying customers in a week than to come up with a really big idea and potentially waste millions getting it to the point where it would be a failure or a success.
I don't think it's Instagram we need to worry about--I think it's the myriad of startups that are getting funded to the tune of a few million in a seed or a Series A that really aren't doing much of anything past scaling an "old-school" business, and the investor/accelerator culture that forces these startups to build a business in a week or two. (I say this as someone who's running a funded startup and currently going through a top accelerator, so at least I have a first-hand perspective.)
It's not simply that investors don't want to take certain risks. It's that some kinds of risks are outside their parameters. VCs are built up in our minds as towering financial authorities, but really they're just small teams of MBAs who are themselves raising money from foundations and pension funds, and the fraction of that capital that they get to work with is very small; a large pension fund wants some exposure to the market dynamics of "venture capital", but no pension fund wants to bet the farm on a Hyperloop.
When you grok how venture capital actually works, it gets easier to see how much less important they are to the economy than they seem. Startups like Instagram emerge from the parameters of VC, not from the whims or me-tooiness of the VC partners.
Again, this is a standard trope at HN,but is wrong - they are not primarily financial it goes like hedge fund or PE guys. Most top tier firms are made up of former entrepreneur types. And the idea that they all don't invest in groundbreaking technology is because quite frankly a perception issue here - is the average YC company a groundbreaking tech or closer to an Instagram? A lot of the clean tech investing was disastrous, but that is an example where a lot of interesting tech was backed, some of which has hit the market. Jut because it doesn't reach the front page here does not mean it doesn't happen.
My point was that it doesn't much matter what the VC partners think, because they're simply not in a position to fund massive civil infrastructure projects. Even the former- entrepreneur- types; they're getting their money from the same places.
It is not wrong. To make matters worse you'd need to look at the history books to better appreciate what indeed actually is "groundbreaking tech" and how it evolves. Science and technology is nudged along with micro breakthroughs. The history books are full of what appear to be big breakthroughs but when you look past the surface you'll discover how they really happen. Your experience of VC firms appears to be very limited, I'm guessing though you were top in your class (probably two years ago), and now think when you say something, it automatically becomes "the word".
If your points are strong, they don't need to be covered in barbs. Barbs are a "tell"; they indicate bluster, which is what people deploy when they don't know that they're talking about. You're making it harder to take you seriously and should change your tactics.
I think the seed bubble is certainly annoying, but that's largely angel investors. It's largely folks who made a few million dollars having success in someone else's startup (Google, Facebook, whatever) and thinking they're business geniuses with lots to offer the next generation of entrepreneurs. Many of them are little more than dumb money but think they're adding a ton of value, and entrepreneurs humor them and take the checks. As a result a lot of crap gets funded early.
But VCs still play at the bigger level for more money and most of these me-too startups that get their million dollars go nowhere and get no follow on funding and die. The bubble of seed will eventually go away as these angels realize that investing is hard and they have better things to spend their money on.
As someone who has been involved in a billion dollar project that required up front investment of around $250million I can tell you that finding very large sums of investment for capital intensive businesses with good return metrics is not hard - there's a lot of money that at that scale only has limited options for putting it in play. Sovereign wealth funds alone are desperately seeking out deals at this scale.
A lot of ideas take longer than a few months and a few hundred thousand dollars to prove, but investors don't want to take the risk and founders see it as easier to build a laundry service and get paying customers in a week than to come up with a really big idea and potentially waste millions getting it to the point where it would be a failure or a success.
I don't think it's Instagram we need to worry about--I think it's the myriad of startups that are getting funded to the tune of a few million in a seed or a Series A that really aren't doing much of anything past scaling an "old-school" business, and the investor/accelerator culture that forces these startups to build a business in a week or two. (I say this as someone who's running a funded startup and currently going through a top accelerator, so at least I have a first-hand perspective.)