Thorin and Guests Discuss Player Salaries: Esports Salon Episode 1, with guests Bryce Blum, Noah Whinston and Lazerchickn

One thing you guys skirted around but did not actually address is the following:

I run a lemonade stand. I'm just a dumb kid with no financial backing so I basically can only operate "at cost." But my lemonade is really good and people like it, but the consumer base isn't so large that expanding the operation will actually generate more profits short of upgrading to having a full-fledged restaurant. That is to say, having two tiny lemonade stands doesn't produce any more profit, but naturally, if my lemonade stand it became a restaurant (i.e. after a huge investment is made) then it could become profitable.

Now Donald Trump comes in, sees that there are a constant stream of customers and says, "oh, look. I want in." With just pocket change he can buy all the lemons and workers he wants and sell his lemonade for a fraction of the price I sell mine at (basically operating at a loss). Naturally, I can't compete so I go out of business after two weeks or in the best case I just sell my stand to Trump. (Or I can take out a loan and try to compete with Trump, but obviously I can't possibly borrow as much as Trump has on hand.) Trump then decides, "you know what, there isn't really all that much money to be made here after all. Oh well, no harm done. It was only pocket change anyway. 9 out of 10 VCs fail anyway. Time to shut down all my lemonade stands."

Now, I'm out of business working in some other industry. Trump shrugged off the failed business like it was nothing and is now running for president. And all the customers that were once enjoying lemonade now don't have any lemonade.

Basically, it comes down the financial resources of the involved parties? The way a VC group is able they are able to throw money around, they force the existing guys to take the same financial risk to keep up. Except, it's not really the same risk. $1M of a $100M portfolio is a 1% risk. $1M of a company with $1.5M in assets is 67%. As you guys collectively argued, if everything works out, then great everyone wins. But if it doesn't? What if it takes an extra two years for that sponsor money to come in? What if Coke doesn't buy in until 2019 instead of the projected 2017? For the VC guys it's an "oh well, no biggie" at worst and a "it's ok we continue to 'invest' in company growth for another year" but for the longer standing guys without large financial backing, it's basically a death sentence.

/r/leagueoflegends Thread Parent Link - youtube.com