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The 99% (of startups)

justinkan.com

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Re: The 99% (of startups)

#111

Post by sly010 »

sinatra wrote: post #92
coffeemug wrote: post #68

Earlier quoted context omitted.

> This gives an interesting glimpse into the prognostication abilities of supposedly brilliant VC's. The question isn't whether VCs are brilliant according to some absolute metric. The question is whether they deploy capital better than random chance. The numbers show that top ten VCs consistently do.

Well, there's also a self-fulfilling aspect when it comes to top ten VCs doing consistently well. Entrepreneurs and startups that are somewhat successful / proven can pick any VCs they want. And they pick the well respected (ie, historically successful) VCs.

Especially if top 10 is defined as "doing well" :)

Re: The 99% (of startups)

#112

Post by zaidf »

sokoloff wrote: post #101
zaidf wrote: post #93

Earlier quoted context omitted.

I wonder why Zuckerberg didn't buy the $40M stake personally. I'm guessing he was turned down.

Why would he? He wanted the whole company and was spurned. What incentive would there be to then reward the founder with 2 commas of personal liquidity? Zuck's not trying to make small side investments personally that might enrich him but would certainly cause questions of conflict of interest with his CEO role at FB.

Pretty sure the fb board wouldn't have a problem with Zuck getting any in into one of their top competitors. Zuck bleeds fb and a minority stake worth a fraction of his net worth isn't going to negatively impact his judgement.

It's pretty common for companies to get minority stakes in competitors to get an in. Granted that is much more common in the public sector and sometimes sews the seed for a hostile takeover. This is why the snapchat board would never approve the deal; but the fb board would.

Re: The 99% (of startups)

#113

Post by jacquesm »

gyardley wrote: post #94
downandout wrote: post #64

This gives an interesting glimpse into the prognostication abilities of supposedly brilliant VC's. It also shows the the near-impossibility of cashing in private company shares, at least through VC's. In addition to this story, the Sony hack revealed that Evan Spiegel of Snapchat wanted to cash in about $40 million worth of shares just after he spurned Facebook's $3 billion offer. He was also roundly rejected. Had so…

It's not that hard to get some liquidity on the private market, as long as you're not selling quantities so large they can only be bought by a fund. Just work with a specialized broker who does this for a living, and they'll find the buyer for you. If your company's doing well enough, these brokers will even come looking for you.

> If your company's doing well enough

That is the key. And 'well enough' can be a pretty tough hurdle for your typical fast growing start-up-without-a-business-model. Even though it seems to be all about growth (which I disagree with in part) growth by itself does not pay the bills. So you may be firing on all pistons and still find that you can't sell your stock at all.

Re: The 99% (of startups)

#114

Post by pcl »

jacquesm wrote: post #43
thethimble wrote: post #39

Earlier quoted context omitted.

His sentiment is worth much more than the raw numbers. Raising a round is a very very hard thing to do. As an entrepreneur, you look around and all you see are the 1% in the media. On the other hand, the fundraise feels like you go door to door getting your idea shot down by everyone you talk to. The passion and tenacity to fight through this negativity is what Justin is trying to elicit.

No, that's not why no deal happened. I suspect it was because he was not raising money but because he was selling some of his own shares. In other words: he was trying to take some money of the table. And those are very hard deals to close. This is the key line: > I tried to sell some of my shares in a secondary transaction at less than a fifth of that price – and I was turned down by every VC I asked. So, he eventua…

about 80% more

Correction: at least 5x more.

Also: obviously I don't know the full context about this particular deal, but it always seems a little sleazy to me when still-involved founders sell in a secondary without making that deal available to the rest of the owners.

Re: The 99% (of startups)

#115

Post by scythe »

maaku wrote: post #90
Androider wrote: post #80

Earlier quoted context omitted.

Take 1000 people, have each predict a coin flip 10 times. The top 10 players will have predicted way better than random chance would have you believe. Why several of them are even 10 for 10, they must have special prediction powers! ;) Grow the player base, increase the number of predictions, you'll end up with some real super-stars who just go on winning. They'll probably write books and lecture about their techniqu…

Explain Berkshire Hathaway for me then, please.

Extremely unpopular fact: Berkshire has fundamentally the same business model as Bain Capital. They just do it better.

Re: The 99% (of startups)

#116

Post by jacquesm »

pcl wrote: post #114
jacquesm wrote: post #43

Earlier quoted context omitted.

No, that's not why no deal happened. I suspect it was because he was not raising money but because he was selling some of his own shares. In other words: he was trying to take some money of the table. And those are very hard deals to close. This is the key line: > I tried to sell some of my shares in a secondary transaction at less than a fifth of that price – and I was turned down by every VC I asked. So, he eventua…

about 80% more Correction: at least 5x more. Also: obviously I don't know the full context about this particular deal, but it always seems a little sleazy to me when still-involved founders sell in a secondary without making that deal available to the rest of the owners.

You're absolutely right, what was I thinking. Need to sleep more and more regularly.

> it always seems a little sleazy to me when still-involved founders sell in a secondary without making that deal available to the rest of the owners.

Well, that depends. If the founders have laid everything on the line for a really long time then I can imagine taking some off the table so you don't have to go back to work in your dads garage if things go badly wrong. If someone is past their vesting period and they own the stock free and clear they should be able to sell it if there is a market. Other stockholders will have these abilities as well (assuming there are no limitations or shareholder agreements to the contrary).

Usually the rest of the stockholders would have an option to purchase the stock at the price agreed between the founder and the outside party anyway, and if there are drag-along clauses then the buyer might find himself forced to buy from many parties.

It all depends on what the papers say and what kinds of shares there are.

Re: The 99% (of startups)

#117

Post by serge2k »

downandout wrote: post #64

This gives an interesting glimpse into the prognostication abilities of supposedly brilliant VC's. It also shows the the near-impossibility of cashing in private company shares, at least through VC's. In addition to this story, the Sony hack revealed that Evan Spiegel of Snapchat wanted to cash in about $40 million worth of shares just after he spurned Facebook's $3 billion offer. He was also roundly rejected. Had so…

and they would have an eaasier time getting rid of 200 million worth of private shares right?

Re: The 99% (of startups)

#118

Post by guelo »

coffeemug wrote: post #68
downandout wrote: post #64

This gives an interesting glimpse into the prognostication abilities of supposedly brilliant VC's. It also shows the the near-impossibility of cashing in private company shares, at least through VC's. In addition to this story, the Sony hack revealed that Evan Spiegel of Snapchat wanted to cash in about $40 million worth of shares just after he spurned Facebook's $3 billion offer. He was also roundly rejected. Had so…

> This gives an interesting glimpse into the prognostication abilities of supposedly brilliant VC's. The question isn't whether VCs are brilliant according to some absolute metric. The question is whether they deploy capital better than random chance. The numbers show that top ten VCs consistently do.

Is there enough public visibility into the top ten's deals to know that this is true?

Re: The 99% (of startups)

#119

Post by sliverstorm »

coffeemug wrote: post #68
downandout wrote: post #64

This gives an interesting glimpse into the prognostication abilities of supposedly brilliant VC's. It also shows the the near-impossibility of cashing in private company shares, at least through VC's. In addition to this story, the Sony hack revealed that Evan Spiegel of Snapchat wanted to cash in about $40 million worth of shares just after he spurned Facebook's $3 billion offer. He was also roundly rejected. Had so…

> This gives an interesting glimpse into the prognostication abilities of supposedly brilliant VC's. The question isn't whether VCs are brilliant according to some absolute metric. The question is whether they deploy capital better than random chance. The numbers show that top ten VCs consistently do.

Of course "better than random" is only worth something if the odds are decent, for example if random chance tends to yield $0 (no loss no gain).

Re: The 99% (of startups)

#120

Post by rockinghigh »

maaku wrote: post #90
Androider wrote: post #80

Earlier quoted context omitted.

Take 1000 people, have each predict a coin flip 10 times. The top 10 players will have predicted way better than random chance would have you believe. Why several of them are even 10 for 10, they must have special prediction powers! ;) Grow the player base, increase the number of predictions, you'll end up with some real super-stars who just go on winning. They'll probably write books and lecture about their techniqu…

Explain Berkshire Hathaway for me then, please.

They mostly make money with the private equity business by buying businesses with high cash flow and extracting more cash from them.
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