I’ve mentioned this before, but the firearms industry has a similar issue, caused by the same clauses. Local gun stores often pay very high fees for credit card processing relative to other retail stores - and unlike gambling and pornography, this doesn’t seem to be supported by a higher chargeback rate as best I can tell. They’ve just been “lumped in” because of the regulated nature of some of their products.
I say “some of”, because things like magazines and accessories are usually included in the “prohibited goods and services” clauses, even though they are typical subject to no specific regulation at either the state or federal level. It’s honestly kind of weird to me.
Such denials of service are due in part to the politics of the financial bigwigs, but are also due in large point to government programs [1] specifically designed to suppress "undesirable" business.
The article explains that this program was terminated in 2017:
> This operation, disclosed in an August 2013 Wall Street Journal story,[2] was officially ended in August 2017,[3] and the FDIC settled multiple lawsuits by promising to Congress additional training for its examiners and to cease issuing "informal" and "unwritten suggestions" to banks.
This program actually seems pretty sketchy. Government officials were having banks to identify customers in certain industries and subsequently "informally suggesting" that banks terminate these customers' accounts. Congress also criticized this program:
> Forceful prosecution of those who defraud American consumers is both responsible and admirable. However, Department of Justice initiatives to combat mass-market consumer fraud must be legitimate exercises of the Department's legal authorities, and must be executed in a manner that does not unfairly harm legitimate merchants and individuals.
> Operation Choke Point fails both these requirements. The Department's radical reinterpretation of what constitutes an actionable violation under § 951 of FIRREA fundamentally distorts Congress' intent in enacting the law, and inappropriately demands that bankers act as the moral arbiters and policemen of the commercial world. In light of the Department's obligation to act within the bounds of the law, and its avowed commitment not to "discourage or inhibit" the lawful conduct of honest merchants, it is necessary to disavow and dismantle Operation Choke Point.
Should the government be able to strip people of their ability to use banking services, even when they have committed no crimes? Sure, we may not like gun stores or fireworks or porn but the kicking people off of banking services without justification is quite authoritarian.
(And before anyone gets triggered about me talking about politics, please notice that the examples below are referring to both parties in the same light)
1. Selling marijuana is still illegal federally but there are hundreds of companies selling it out in the open in states where it is legal. Neither Republican or Democratic Presidents seem to have much interest in prosecuting them. Yes I know The former attorney general under Trump wanted to start prosecutions but the Republican Congress at the time basically said he couldn’t use funds for it and it went against what even Trump wanted.
2. How many companies were paying illegal immigrants for farm labor and factory work while both Republican and Democratic lawmakers looked the other way until Trump? I am not making a value judgement either way here.
Your first example is a contradiction between state law and federal law. Large public companies seemed to stay out of this business for that reason.
Your second example was also not something large public companies were doing consistently and I don't think that has changed with a different administration.
"Uber" is not any sort of statement or reasoning in support of what you are saying.
So Uber wasn’t breaking local taxi laws for years?
Everyone knows that farmers and companies employing low skill labor have been employing illegal immigrants for decades. Other presidents both Republican and Democrats have looked the other way because both sets of employers would not be able to find enough cheap labor otherwise. No one wants to harm the farm belt because of their outsized electoral college influence.
Well seeing that your question doesn’t have anything to do with the thread...
My post:
“ It’s not about the regulations, it’s about whether the executive branch chooses to enforce them and how much.”
And the response to:
“ That's really not true, you can't run a giant public company and start breaking laws because you think 'the current executive branch won't care'.”
What does it have to do with “changing” the executive branch?
The “executive branch” is not just at the federal level. It’s also at the state and the local level where the president/governor/mayor has a lot of influence on what gets enforced.
No, but certain politicians would with a goal of gun elimination might. We have already seen pointless laws passed to ban cosmetic features on guns that has zero purpose other than punish monetarily and criminalize otherwise law abiding citizens. At the very least it makes them buy federal tax stamps or pay for Federal Firearms Licenses which is a paywall for ownership and will ultimately reduce ownership rates.
I think most of the firearms industry serves police and military and I don't think that part has trouble getting finance of whatever sort it might need. Retail gun sales are a somewhat exceptional little piece of the overall arms industry. Many nations that control access to arms for their citizens still maintain and support an arms industry, including small firearms.
Small startups doing expensive manufacturing in the face of existing industrial-grade competition will always have a hard time finding funding, because the risk/reward ratio sucks.
True, and the general consensus is if you want to make a start-up in this industry just don't. It's more likely you'll end up on a future episode of Forgotten Weapons.
I can definitely understand not wanting to invest in these sorts of start-ups purely from an ROI perspective.
The "firearms industry" is a subset of the "arms industry." "Firearms" are rifles, pistols, and shotguns. "Arms" include those, plus tanks, fighter jets, artillery, nuclear weapons, etc.
there is crossover but you might as well lump together stealth bombers and SUVs. the vast, vast majority of firearms produced by US companies are for civilians.
Completely agree, that was my point. The parent comment lumped them together, including a Wikipedia link to an article on "the arms industry." But the arms industry is so vast that high-level conclusions about government purchasing have almost nothing to do with the grandparent comment about credit card fees at local gun stores.
Yeah, its not that they have no moral compass, its just that it points in a different direction to many people. I don't have a problem with sex tech or esports but want nothing to do with addiction.
I wonder if they would also fund email spammers if there was money in it.
"Esports" typically refers to professional competitive gaming, not to video games in general -- the focus is on viewership, not participation. There are some related side industries which might fit that description (like esports betting sites), but the industry itself isn't particularly "addictive", at least no more than traditional sports.
The classification of sex and pornography as "addictive" has been controversial, and all I'll say about that is that there is no scientific consensus that they should be considered as such.
Porn, you can call it anecdotal, but over a decade in that industry taught me, its certainly addictive for some, and is are some very manipulative marketing going on by the smarter companies. But i do see the opposing argument, people get addicted to all kinds of strange things and nothing about porn per se is addicting. it's that ending they are addicted to, not the content.
I used the work in the gaming[0] industry and did my best to read up on addiction, both in general terms and related to gambling. One of the main takeaways I found was that the addiction rates are surprisingly similar across different vices. It doesn't matter if the vice is gambling, porn, alcohol, shopping, or whatever -- some low single digit percent of the population is likely to get dangerously addicted, a somewhat larger group will spend way too much money but not otherwise disrupt their life, and the vast majority of people will treat it like just another type of recreation.
I really wish our society could take all of the energy that goes into criminalizing and stigmatizing vice industries and instead use it to offer help to people who are dangerously addicted. Just think of how much free therapy, rehab, and drug research could be funded by the tens of billions of dollars that the drug war has cost.
Science says that there is a distinction between the colloquial definition of "addicted" and the technical definition of a physiological / psychological addiction.
Many people will also say that a delicious food, an entertaining game, or an enjoyable TV show is "addictive", but these do not actually constitute addictions either.
Sure, but science doesn’t say that, per se, because science is about quantitative measurement. We have no machine that can measure addiction.
People with scientific backgrounds hypothesize all the time, and they have machines that can make brain scan images, but we aren’t very close to being able to measure addiction on a numerical scale.
The best we have is listening to people, maybe analogous to how we listen to people when they believe they are a different gender, etc. since there is no quantitative measure for ‘feelings’ (see Olympic male/female athlete controversies, et al.)
Hard sciences may be, but there are quite a soft science domains such as psychology. We do not yet know exact nature of addiction, but psychological, environmental impacts have not been ruled out, by most scientists.
I actually just happened to be hanging out downtown and found myself at a convention for people devoted to answering just that question!
DeltaFOSB is a gene transcription factor and is the precursor for the development of all forms of what is clinically called "addiction". However what the other commentators suggested [food is not addictive] is not actually true, it has a measurable affect here. In fact, Delta-FOSB can be and often is used as a biomarker of addiction in patients who are already deceased (and can have their brains broken open).
Now, as to the question of addictiveness, nobody mentioned anything about pornography there, but I did hear an interesting anecdote about the raw power that certain addictions have that clearly isn't present in pornography; Delta FOS-B accumulates in the ventral tagamental area and nucleus accumbens, two central regions of the brain, and many drugs have the action of creating floods of FOS-B precursors there, for example, this effect is so strong in heroin addicts, that they nearly always throw up upon recent re-exposure (sometimes newer Methamphetamine addicts as well) where the mechanism here is the flood of FOSB, which an outer region (she had mentioned but I have already forgotten which) interprets as "poisoning". So while it may be true that pornography is "addicting" - when is the last time you saw someone throw up when they looked at pornography (modulo ordinary "disgust").
What was doubly interesting was that she said the change in dopamine regulation (meaning the introduction of new dopamine-like substances + the change in the rate that your body "reuptakes" dopamine) in the most powerful addictions -- benzodiazapines and opiates, aren't actually that high, and compared with drugs like methamphetamine and cocaine aren't much different from marijuana.
It's this secondary affect that creates these changes in reasoning and reward structure with these drugs (she also mentioned that both have "withdrawal", which while technically unrelated to addiction is extremely painful and sometimes life-threatening).
However, to be fair, it was repeatedly stressed that the "secondary" affect was more than just Delta-FOSB. There were changes in signaling, new kinds of peptides that unaddicted people can't produce (???), something about phosphoration of camp ("new notes on camp") and bunch of change to "Dendritic Spiny Structures".
Among the living, questions like "drug-use reinstatement likelihood", "place conditioning preference" (the more addictive the drug, the more you want to use it in a safe, known place), increase in use over time, etc. are how this stuff is generally measured with reasonable economics.
I don't know how professionals define it, but it seems to me logical to define an addiction as something which people cannot stop even when it leads to financial, health, or other difficulty that affects normal functioning and/or relationships. That is, the short-term need for a fix overrides universal parts of living a healthy life.
This is not precise, but it seems like an appropriate metric. It's basically the same as defining mental illness in general vs. harmless eccentricity.
Sex is not similar to alcohol, tobacco, or pharmaceutical addictions.
You can have orgasms alone without purchasing anything. There's also debate about whether you can be addicted to sex. 1) It's a normal part of our lifecycles, 2) there's no withdrawal effect after you get off of it, and 3) it's a convenient way to pathologize bad behavior.
E-sports are game competitions, not video games in and of themselves. You can be no more addicted to them than you can be to the NBA.
>If it's sex or drugs or any sort of addiction, the user is victim. With weapons, other people are the victim.
At least in the US, a majority of deaths by firearm are suicides. And as for potentially addictive drugs (e.g., alcohol), the user can cause great harm to other people, as in drunk driving.
Fivethirtyeight says about 2/3 of gun deaths are suicides. Around 1/3 are homicides. A surprisingly small percentage (to me) are classified as accidents.[0]
Im not entirely surprised accidents are low, the places with the most guns have strong gun culture who have learned and put into practice gun safety from a young age. Many of the older folks have taken shooting classes or done shooting sport while in school, many of the younger generation have taken hunter safety courses, and of course military service people throughout the entire time, and all would teach basic gun safety. You will be kicked off any range for not being safe and most anyone who owns guns will very quickly correct anybody not being safe.
The amount of people who know nothing about guns and never shot one under proper supervision and then go out and purchase a firearm without researching anything are extremely low, so accidents remain pretty low.
Basic firearm safety instruction is part of it, and the other part is the general mechanical reliability of firearms. Modern firearms, as a general rule, will not fire themselves unless somebody or something interacts with them. Basic firearm safety instruction is often a short dogmatic set of rules[0] primarily focused on making sure people don't interact with the gun in a way that makes it likely to go off unintended. These two factors work together to keep people relatively safe from accidents around firearms most of the time.
There are some guns for which the basic dogmatic instruction is probably insufficient. Notably glocks; in some circles "glock" has become a verb, wherein to "glock yourself" means to accidentally shoot yourself in the leg with your glock while holstering or upholstering it. More specialized training can reduce the chances of this happening, but for this specific scenario and some others like it, the standard basic safety instructions fall a bit short in my opinion.
Self-defense doesn't exist according to HN. The SFPD should be good enough for anybody, which means all private guns are just murder waiting to happen.
I think you’ll find that the political diversity here is quite wide. There’s people here against guns and people here who believe people have a right to own them.
Their mission statement is investing in industries "facing funding and/or regulatory challenges because of social disapproval", but the unstated (or perhaps implied) political angle is they are focusing on industries that society doesn't approve of, but they do. Otherwise weapons, fossil fuels and surveillance tech would be on their list too. The obvious response to that is that those industries face disapproval because of a perceived harm to society, but all of the industries they list face disapproval for the exact same reason.
I suspect that weapons producers don't have a shortage of investment opportunities. Their customers include militaries and police departments. And if it's "just politics," the finance industry skews right and the NRA is one of the most powerful lobbies in the US. If ivestors are distancing themselves from the gun industry, I'd assume that it's good ol' fiscal conservatism: mass shootings are on the rise and they don't want to touch that liability with a 10' pole.
Big, established arms companies have decent financial prospects. Firearms/accessories businesses in the startup space (or just small, local businesses) are frequently cold-shouldered out of opportunities.
What we think of as startup-style capital, the kind that goes into software, is a hard sell for firearms manufacturers, because it's very difficult to get an edge, compared to software. Manufacturing is expensive, with a lot of up-front costs, and can't easily be scaled without a lot more up-front costs. Meanwhile, established deep-pockets competitors can just duplicate a successful product.
This is really about boutique/niche product manufacturing. There's usually not a reasonable path to becoming a billion-dollar company, at any degree of risk. That's what "startup capital" wants... to get in on the ground floor of a billion dollar company. They want that 100x return. You're not going to get a 100x return manufacturing a better rifle scope or a boutique handgun.
This is what banks are for. Start business on scraped capital, show real customers and real profit, then go to a traditional bank with a traditional business plan for scaling capital.
Industries dominated by a small number of very large players are typically what you'd call 'ripe for disruption'. Banking has never had a shortage of funding either, but banking and financial startups have only recently started to influence the industry. I didn't hear about anybody turning down Stripe because "finance sector is overfunded".
Stripe, N26, SBV, Square, Brex, Monza... and many others all compete directly with banks.
That’s also very tangential to the fact that while some areas of banking, finance or weapons dealing may be dominated by large institutions, there’s plenty of other areas that are not. Stripe is a perfect example in how they started out by capturing a retail market that was outside the core business of the large players. Nobody would look at their value prop and say “finance is overfunded”, because that ignores what area they were actually trying to compete in.
If you wanted to make a startup that looked to innovate retail weapons trade, then no investor is going to tell you “you’ll never compete with Raytheon”, because no matter how big they are, they don’t compete in retail weapons trade. What they would more likely tell you is something like “we don’t invest in that vice industry”.
I think that's only true when the start up costs are relatively low, right? The airline industry also has a small number of very large players, but I don't know if we should also consider it ripe for disruption
The airline industry has already been massively disrupted by innovative startups and new investment. Startups have drastically changed the business of selling flights and travel services to consumers, the rise of budget airlines has completely changed the competitive landscape of that industry, and there’s countless ways that outside innovations have found their way into the supply chains of the big players.
I think your comment is interesting because it demonstrates how inadequate the left wing - right wing view of the world is. A lot of "left wing" energy is spent trying to kill the gambling and nicotine industry.
I think the biggest win here is the marketing for Vice after putting together this $25M fund. This is totally on-brand for them, regardless of how business-viable these investments are. Plus, it’s not Vice’s own money they are playing with (which is good for them given their profitability struggles as a parent company).
My inclination is that VCs don’t particularly not-invest in successful “vice-driven companies” due to their moral compass, but rather due to the financial friction and PR risk-reward involved in doing so.
I feel like the article understates the point that, given the nature of vices, if the business turns out to be doing substantial harm and a media shitstorm hits, the VCs will absolutely be dragged into the mix and publicly shamed for contributing to the problem. When Juul was going through it’s recent implosion all the cigarette giants who were investors got name-dropped. When WeWork was in the news, SoftBank’s name was being dragged right next to it. And the media was sure to tie Uber articles to Saudi money.
Sure, some investments are bound to not work out for VC firms, but nobody wants to trash their firm’s legacy and reputation over blowback from the fickle beast that is public opinion on the internet and word of mouth.
There is still value in these vice industries and proper federal regulations still need to be figured out for things like Cannabis companies to operate like ‘real’ businesses.
Not all “vice” companies are equal and I think it will still take time to figure out to what level different types are socially acceptable and what restrictions to put in place to keep the good/bad balance in check.
> VCs will absolutely be dragged into the mix and publicly shamed for contributing to the problem
In every example you gave, the investors whose names was "dragged" were already independently controversial.
Juul has plenty of investors who didn't famously exacerbate and suppress public awareness of what is still the leading cause of preventable death in the US [1]. WeWork and Uber have plenty of investors who didn't famously murder and dismember any journalists.
This undermines your claim that such "media shitstorms" can "trash [a] firm’s legacy and reputation". Cigarette companies and Saudi money already had trash reputations independent of Juul, WeWork, and Uber.
There are well-established benefits of CBD use in some patients covering a wide variety of symptoms, but pushing skin care pseudoscience is wrong. Isolated evidence like that of anti-inflammatory effects is not the same as an extensive clinical trial. This is why we need an actual healthcare system: to allow people to see doctors rather than falling victim to the junk CBD products that this person is excited to fund.
Recess's CBD sparkling water sounds kind of cool, but its $5 a can! Yikes, that's one hell of a markup. I'd try it at half the price, and might be a customer at 1/3 the price, but $30/6pk is pretty wild.
Each can contains 10mg of broad spectrum hemp extract: high quality broad spectrum CBD oils are $0.80 for 10mg CBD (10mg of broad spectrum oil means the CBD content probably 5mg+/-3). Price compare with TonicVibes's 1500mg CBD (from whole plant extract) for $120 - best quality CBD oils I've found so far.
Even if the other herbs are extremely high quality as well, the margins on this product are insane.
CBD products in general are quite expensive, for example CBD extracts are similarly priced to their THC counterparts. I assume this is in large part due to marijuana prohibition laws. Prices will hopefully come down as those laws are relaxed around the country and more players enter the market.
Walking around my neighborhood in NYC, I wonder how human life expectancy got beyond thirty-five years before the arrival of CBD based on the claims being made in shop windows and on sandwich boards obstructing sidewalk traffic.
the numbers tossed around in these articles always amuse me. I have worked extensively in the adult industry and can guarantee its no where near $97B. Print is dead, the internet and PPV in hotels and satellites bring in the bacon and it's not much.
Does the adult industry include things like strip clubs, physical stuff like condoms/vibrators, or dating sites/apps? I feel like a sufficiently broad definition probably encompasses a lot of money. If we’re talking specifically pornography, then I have no idea how big it is, but it certainly seems to be in a state of flux at the moment. I would love to see some additional resources describing cash flow in that industry and where things are currently moving.
Yea, see I wouldn't include strip clubs, lingerie, etc. as porn, personally. But if you add that back in, plus prostitution and all sex work, $97b is attainable. I guess my view is slightly less encompassing then others'.
I would expect that the classification is due to some combination of the gambling mechanics surrounding many popular videogames and the moral panic of today's youth spending time indoors engaging in virtualized violence.
It’s probably because there’s an actual gambling industry related to esports. Just like betting on horses at the track, or gambling on football, or whatever.
Afaik it's also a (the?) major source of funding for esports companies as well so if you're going in to the esports space then there's a very good chance you're going to have to dance with that devil at some point. Football at least - I don't know about horses - seems to be able to support itself off of viewership. Whereas the last dota tournament I watched had "Betway" at the start of its name.
I didn’t understand either why “gambling, esports” were listed separately in the article. Why would esports in general be vices in the way the other industries are.
I get there are CS:Go tournies where people pretend shoot each other in a video game, but I don’t see how that is more damaging to people than sports like boxing or MMA. Idk, is there still a ‘vice’ sentiment that “video games turn kids into killers”?
Are you thinking of Fantasy Sports ? I mixed the two initially as well. I see why Fantasy Sports (assembling virtual teams of real athletes) would be there, it's purely gambling, but e-sports (competitive gaming)… it's just like any other non-physical game, like chess or scrabble or whatever.
The difference is the chance involved. Chess involves no chance. Scrabble involves the chance of the tiles you get, there's still a lot of skill involved. E-sports is more like scrabble than chess.
Top e-sports games such as Dota 2, CS:GO and StarCraft 2 are highly skill based games where strategy and teamwork (in the first two games) is all that matters. There are, in Dota 2, a few chance based characters you can play, but in the grand scheme of things it doesn't make "chess to scrabble". In my opinion you seem ill informed and biased.
In my opinion you sound like you're feeling attacked, Mr. Anonymous Made-an-account-to-make-this-comment.
We're arguing about degree here, and it's pointless. You say it's a low degree of chance. I say it's a low degree of chance.
Just like professional body based in-person sports, chance is an integral component to e-sports. Football, soccer, tennis are based partially on chance. That's how multiple houses agree, more or less, on the chance spread.
Someone asked how it is considered a vice. Sloth is considered a vice and playing video games fits right in there in the judgement of enough that it gets mainstream play.
As far as TV goes, we heard the same thing about tv warping kids' minds years ago.
Seven vices, sloth is one...citation needed for that?
Or that people think that playing video games is for the lazy?
Someone specifically asked what vice video games would be (esports actually). I said sloth (being lazy) is what some would accuse them of. There is nothing weasel about that unless you set the bar so high that everyone must agree that something is a vice, in which case virtually nothing is.
Which is it? Is sloth not a vice? Or is playing video games not considered being lazy by a significant number of people?
There have been countless stories about video games promoting obesity (sloth, gluttony) or violence (wrath) or objectification (lust). I'm sure greed, envy and pride could all make an appearance if we tried hard enough.
Citations needed...nope. Accusations of today's youth being lazy and playing video games are abundant enough that if you can't find them you've obviously been playing too many video games.
> I can't tell if you think what you're saying is correct (and you're wrong) or if you think what you're saying is wrong (and you're still wrong.)
That's just rude and didn't contribute anything. You haven't made any argument other than I'm wrong. Have a point. I'm not going to play the citations game. Put forth a counterargument that is coherent and contributes to the discussion or move along.
> Citations needed...nope. Accusations of today's youth being lazy and playing video games are abundant enough that if you can't find them you've obviously been playing too many video games.
Countless unfounded stories, and then implication that those "playing too many video games" aren't in the know.
Your viewpoints seem antiquated in this day in age where everyone is always on their phone, playing a video game when traveling or waiting.
Is a crossword app a video game? I didn't realize the NYT crossword app was targeting lazy youth.
> Or that people think that playing video games is for the lazy?
This part. My earlier post meant to say that I can't tell if you think those people are correct (which is wrong) or if you think those people are wrong (but are still citing them?)
Ones passive and ones active though, they’re completely different. If you fall asleep playing a video game the game doesn’t finish itself.
This is anecdotal but I’ve definitely heard people who will happily talk about binge watching a box set (easily a 50+ hour investment) also say they can’t understand how people can waste so much time playing videogames.
I am skeptical, given that the in the US the average household watches more than 8hrs per day[1] (kind of an odd measure, but it seems likely that most members of the household are at least making it to your 4hr threshold, unless there's just one doing some real binge-watching).
I think they are night and day. The amount of engagement that video games demand on the brain makes them completely different. I enjoy documentaries, but otherwise find television insanely boring and that it tends to make people dull, unlike video games.
People bet on chess as well, I have old colleagues who do it actively. That’d fall under this VC’s purview as well.
I have hold no stigma against gambling, I used to gamble professionally. I just think it’s important to acknowledge what is and isn’t gambling and to acknowledge society and legislation generally have a stigma against it.
I do not know, but have a suspicion, the esports gambling is a bit more intertwined with the esports itself. I'd be surprised if we don't have some scandals come out of that, if anyone ever decides to take a close look.
It's called VICE Ventures. Not EDGY Ventures. Anyway, she has 4 investments and 3 are in beverages, 1 is in video games. Pretty far from "taboo" that the parent article states in the headline. This is simply astroturf produced by a PR firm.
After closing the huge sign-up popup, dismissing the Medium-App-suggestion and closing the cookie-banner I lost all interest in reading the article, which is a shame.
I sometimes hate the internet.
At least the HN comments were insightful, unlike my rambling. Sorry about that.
"After closing the huge sign-up popup, dismissing the Medium-App-suggestion and closing the cookie-banner I lost all interest in reading the article, which is a shame."
If everyone on HN spoke up about this maybe this issue would get fixed. Ban any site that bombards us with pop-ups or begs us to disable private mode from HN and this place would be a lot better off.
I was trying to read it on an iPhone using Safari. The mobile "experience" is way, way worse compared to that on a big screen. At least two thirds of my screen estate were blocked by popups and that's how the vast majority of (mobile) users are going to experience it as well.
I say “some of”, because things like magazines and accessories are usually included in the “prohibited goods and services” clauses, even though they are typical subject to no specific regulation at either the state or federal level. It’s honestly kind of weird to me.