111–120 of 161 posts
More on my blog:
http://smoothspan.wordpress.com/2008/04/15/how-to-fix-ventur...
"Any really good new idea will seem bad to most people." This is a very true statement. The danger that I've seen is so often people think, "My idea seems bad to most people, ergo it must be good!" How do you separate the seemingly bad from the actual bad? Figure _that_ out, and you'll make something of yourself.
"We are all agreed that your theory is crazy. The question which divides us is whether it is crazy enough to have a chance of being correct. My own feeling is that it is not crazy enough."
Yes, and if they were technical guys, they would for the most part be certain that the startup is doing something stupid. Take for example the typical techno-geek reaction to hotmail or the iPod.
Instead of making one $2 million investment, make five $400k investments... If you're investing at a tenth the valuation, you only have to be a tenth as sure. I don't agree with this. The investors have to be just as sure of the risk involved in each valuation as before in order to have the same expected value for the overall portfolio. However, investing $400K in 5 companies instead of $2M in a single company will r…
Suppose your threshold for investing in a startup is an n% confidence that they'll one day have a market cap of a billion dollars. Suppose instead you split that investment between 10 companies at a tenth the valuation. How confident do you have to be that any given one will become a billion dollar company? You have the same percentage in all these companies that you would have had in the case of a single, big invest…
"Why are VCs so conservative? ..." I just read a fascinating book - Gut Feelings by Gerd Gigerenzer. It's by the guy who did most of the research that Malcolm Gladwell's Blink is based upon. The central thesis was that people have evolved heuristics for decision making that let them quickly make snap decisions more effectively than gathering full information, but a couple chapters were on an interesting corollary: in…
"If VCs actually had solid conceptual frameworks and good data for evaluating possible opportunities, they could rely on that rather than on their peers' evaluations." This is basically the argument for thesis driven investing. If you Google the term there is some good stuff, especially the posts by Bill Burnham and Fred Wilson.
Comparisons to Google are worthless, primarily for 2 reasons: 1. Every logical mind (even within Google) in 1999 would have seen that Google was heading for failure - there was no money in search. They got lucky in finding one -adwords - that worked. 2. Had the timing of their discovery been off, or had the dot-com bubble busted a few months earlier, they would have died. In saying that, they are useless as a measure…
Every logical mind (even within Google) in 1999 would have seen that Google was heading for failure I didn't think that. I remember telling the powers that be at Yahoo in 1999 (I worked there then) that they ought to buy Google, and it was the only company I ever suggested they buy.
My point was that "most people" would have considered Google a bad investment prior to adwords. Given the response, it's obvious I should have been more clear.
Earlier quoted context omitted.
I forgot it was 2008. Cripes, I'm getting old.
Probably not. I turned 40 last month. I find that I'm much less likely to write the wrong year on my checks than I was 10 years ago. When you're younger, what year it is seems permanent, hard to change. Later you're no more likely to forget what year it is than you are to forget what month it is.
I wonder why time seems to accelerate as we age. Is it because we are more busy, and hence spend less time being bored? Or is it somehow related to the fact that any given year's memories are an ever shrinking percentage of my overall memory store? If I were rich I would study people's perception of time, because it seems so non-linear.
If you expect the VCs to be hip to the 'new era' of investing, then perhaps you, as a startup, should show your own hipness by not showing up at the door of Kleiner Perkins, or Sequoia. A true show of your own non-conservatism.
And remember, the expectations for startups and VCs are reversed (which would seem to explain much). Startups are expected to fail, and its OK if they do. VCs are expected to succeed, and its NOT OK if they don't.