You can question a business plan in Silicon Valley—but prepare for the wrath of your peers

Does a true venture capitalist always side with entrepreneurs, no matter the plan?

With markets eyeing highly valued private tech companies for signs of bubble trouble, an online spat between two prominent investors offers mixed messages for those wondering exactly how a skeptical venture capitalist is treated in Silicon Valley.

Chamath Palihapitiya, a former Facebook executive turned VC at his fund, Social Capital, recently announced that he plans to raise billions of dollars to purchase mobile spectrum at government auctions and build out a rival to incumbent carriers like AT&T and Verizon.

The firm will be called Rama. It has already bought spectrum abroad and will work with another Social Capital portfolio company, LotusFlare, which has supposedly developed unique software to manage mobile networks.

“The first country was Sri Lanka,” Palihapitiya said at a conference in November. “The second country was the Philippines, and now we’ve said, ‘Fuck it!’ Let’s come back to the US and try to fuck this country up.”

Benedict Evans, a former mobile analyst turned partner at prominent venture firm Andreessen Horowitz, tweeted his skepticism that Rama can break into the heavily regulated, incumbent-favoring, capital-intensive US mobile market. Palihapitiya wasn’t impressed with his analysis, calling Evans a “wannabe asshole.”

Now, maybe Evans and Palihapitiya have a personal history—is Evans secretly a Lakers fan, which would no doubt get under the skin of Golden State Warriors co-owner Palihapitiya? Certainly their firms compete to invest in similar startups, and have even co-invested in the past.

But when the most gentle skepticism of a startup’s chance of success is met with accusations that the skeptic is out of bounds just for raising the issue, it brings to mind prominent investor Bill Gurley’s warnings that due diligence is too often left behind in the scramble to find the next unicorn.

On the glass-half-full side, there clearly are investors who are still evaluating startups with some measure of pragmatism.

In any case, Palihapitiya shouldn’t feel so bad: Aren’t most start-ups destined to fail, and isn’t that what makes backing them so risky—and potentially rewarding?

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