I agree that the issue is a problem of management. Though without oodles of cash to wash away missteps, poor management would be much more obvious. The ability to distill user feedback into the minimum number of valuable feature enhancements is what sets successful product orgs apart from failed ones. When cash is largely not a constraint, the tendency is to build exactly what each customer has said they want rather than try to come up with succinct improvements. The result is often bulky products that cost a fortune to maintain and only appeal to small number of customers.

VC is good if used correctly. But dumping wads of cash into a company to develop a product that isn’t capital intensive (like web or mobile tech) has the tendency to create bloated product orgs which optimize for the wrong things.