The OP is yet another effort at 'understanding' venture capital investing. There's something strange here: At
http://avc.com/2013/02/venture-capital-returns/#disqus_threa...
that is, VC Fred Wilson's blog, is some data that shows that on average in the US, information technology venture capital returns in one word suck, that is, are really poor, bad, low, etc.
So, in trying to understand how venture capital investing works, at least on average we are trying to understand something that works poorly.
Below I explain how to do much better, but broadly that VCs struggle so much, as is clear in the OP, is from incongruous to absurd.
The OP is awash in some really bad news that shows that the VCs admit that, really, they don't much know what the heck they are doing and, instead, are reading tea leaves and then shooting in the dark; such nonsense is unnecessary.
Let's consider some quotes from the OP:
"even the top VCs write off half their deals."
Dumb. Each year a VC gets 3000 deals, looks carefully at maybe 200, invests in maybe 20, and 10 flop. Clearly something's seriously wrong here.
"And of course, you make all your money on successful and non-consensus."
That the good deals should be so difficult to evaluate that there should be no "consensus" is absurd. Sure, detecting the next SnapChat is difficult, but largely we should set aside such deals -- based on, what, starting a fad of teenage girls having fun being 'improper'. Instead it is possible to have plenty of deals that are fairly easy to evaluate.
"And let me translate ‘non-consensus’: in sort of practical terms, it translates to crazy. You are investing in things that look like they are just nuts.”
E.g., another SnapChat is that way, and that's why a VC should not take seriously such deals. E.g., someone comes out with a better version of the same basic idea, but maybe SnapChat is hurt by their installed base that becomes dragging a big anchor to responding.
But there are much better deals than SnapChat where nothing looks "crazy" or "nuts". Putting up with deals that are crazy or nuts is, well, crazy and nuts.
“The entire art of venture capital in our view is the big breakthrough for ideas. The nature of the big idea is that they are not that predictable.”
Yes, “The entire art ... is the big breakthrough for ideas"; the problem is that, flatly, VC (1) is working with "ideas", e.g., SnapChat, that are based on fads, etc. and, thus, are essentially impossible to evaluate and (2) VC doesn't understand what really good, "big breakthrough ... ideas" are, where to find them, and how to evaluate them. For the good, big breakthrough ideas, accurate evaluation is quite doable, and there is little that is' not "predictable”. VC doesn't understand (1) and (2), and I explain below.
“Most of the big breakthrough technologies/companies seem crazy at first: PCs, the internet, Bitcoin, Airbnb, Uber, 140 characters.. It has to be a radical product. It has to be something where, when people look at it, at first they say, ‘I don’t get it, I don’t understand it. I think it’s too weird, I think it’s too unusual.’”
“Most of the big breakthrough technologies/companies seem crazy at first" is only true because VC has been, to borrow from a movie, "digging in the wrong place".
“You want to have as much ‘prepared mind’ as you possibly can. And learn as much as you can about as many things, as much as you can. You want to enter as close as you can to a zen-like blank slate of perfect humility at the beginning of the meeting saying ‘teach me’…. We try really hard to be educated by the best entrepreneurs.”
Sorry, I have a serious background in how to "learn", and my experience is that VCs are quite poor at it and need to 'put on their game faces' and 'up their game' several notches from some very good sources, and some popular Silicon Valley coffee or sandwich shop is NOT such a source.
“You want to tilt into the really radical ideas… but by their nature you can’t predict what they will be.” “There will be certain points of time when everything collides together and reaches critical mass around a new concept or a new thing that ends up being hugely relevant to a high percentage of people or businesses. But it’s really really hard to predict those. I don’t believe anyone can.”
"Really radical" is fine, maybe often necessary, but, of course, not nearly sufficient; but it is just crucial to have ideas that can be evaluated accurately and to do the evaluations. For "really really hard to predict those", VCs are "digging in the wrong place". Instead, with good "breakthrough ideas", "really radical", provocative, shocking, "crazy", "nuts" that can be evaluated and that have a good evaluation, being able to "predict" is really, really easy.
“We are looking for a magic combination of courage and genius"
Looking for "magic"? Looking for magic went out of style back in the "Age of the Reason". Looking for magic is wandering and shooting in the dark. As I explain below, there is a way to find the light switch, turn it on, and see what's happening (thank you A. Wiles).
“The thing all the venture firms have in common is they did not invest in most of the great successful technology companies.”
There is a reason: VC has concentrated on deals, "digging in the wrong place", that are essentially impossible to evaluate. Instead, concentrate on deals that can be evaluated and, then, evaluate them. What deals are those? I explain below.
"The challenge in the field is all of the great VCs over the last 50 years, the thing that they all have in common, is they all failed to invest in most of the big winners."
Again, the VCs were "digging in the wrong place". Yes, even in that place sometimes there is some gold there, but that doesn't much help because the gold is in a form essentially impossible to recognize, that is, evaluate. So, dig in the right place where can recognize, evaluate, the gold that is there. The right place? I explain below.
The theme of the Andreessen remarks is wandering and shooting in the dark. But that is unnecessary.