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| Noam doesn't make a data-based argument. He uses an anecdote. And that argument is then countered with another anecdote. The only way to really win this argu

| Noam doesn't make a data-based argument. He uses an anecdote. And that argument is then countered with another anecdote. The only way to really win this argument is by releasing all the data. Not thinking that's likely to happen.

asdfologist 11y ago
Definitely agree. This reminds me of Nick Ciubotariu's attempt at a "data"-driven rebuttal to the NY Times article on Amazon working conditions: "The NY Times said so-and-so happened at Amazon, but I have never seen it with my own eyes!"
7Figures2Commas 11y ago
You can probably find IRR figures. But there's a wise saying in private equity, "You can't eat IRR."
- ironchef 11y ago
  The first fund's were around 50% if I recall (as they included Skype and Nicira which were both _great_ returns).
gozo 11y ago
It's also a very strange anecdote since the NYT articles primary point is that A16Z are pushing up valuations so deals like the one Peter Thiel made are no longer possible. Quoted in this blog post from the NYT article: "It’s easier to triple or quadruple your money when you’ve invested $10 million in a $100 million company than when you’ve invested nearly $100 million in a $1 billion company [...]" Peter Thiel invested $500,000 for 10.2% i.e. in a $5 million company. Unless there's something I'm missing here?
- austenallred 11y ago
  The point is that A16Z is paying high prices (and you correctly note that everyone is). Tan's point is that there are still power laws at play, and that choosing one random investment to disprove portfolio theory is incongruent.
  - chetanahuja 11y ago
    "Tan's point is that there are still power laws at play, choosing one random investment to disprove portfolio theory is incongruent." Except that he made no such point and just countered the anecdote with his own anecdotes. The original NYT article comes across as a well-researched, sensible piece of writing compared to this lazy, ill thought out blogpost.
    - austenallred 11y ago
      > Multi-billion dollar companies happen when non-obvious ideas and huge market needs meet perfect execution. We've seen it before our eyes — Uber, Airbnb, Dropbox, Stripe, Instacart — and when you have the potential for 100X to 4000X returns, it's not about avoiding loss or minimizing downside. A proper venture portfolio is not like your 401K. The only way startup investors truly lose is if they miss the Uber.

asdfologist 11y ago

Definitely agree. This reminds me of Nick Ciubotariu's attempt at a "data"-driven rebuttal to the NY Times article on Amazon working conditions: "The NY Times said so-and-so happened at Amazon, but I have never seen it with my own eyes!"

7Figures2Commas 11y ago

You can probably find IRR figures. But there's a wise saying in private equity, "You can't eat IRR."

ironchef 11y ago
The first fund's were around 50% if I recall (as they included Skype and Nicira which were both _great_ returns).

gozo 11y ago

It's also a very strange anecdote since the NYT articles primary point is that A16Z are pushing up valuations so deals like the one Peter Thiel made are no longer possible. Quoted in this blog post from the NYT article: "It’s easier to triple or quadruple your money when you’ve invested $10 million in a $100 million company than when you’ve invested nearly $100 million in a $1 billion company [...]" Peter Thiel invested $500,000 for 10.2% i.e. in a $5 million company. Unless there's something I'm missing here?

austenallred 11y ago
The point is that A16Z is paying high prices (and you correctly note that everyone is). Tan's point is that there are still power laws at play, and that choosing one random investment to disprove portfolio theory is incongruent.
- chetanahuja 11y ago
  "Tan's point is that there are still power laws at play, choosing one random investment to disprove portfolio theory is incongruent." Except that he made no such point and just countered the anecdote with his own anecdotes. The original NYT article comes across as a well-researched, sensible piece of writing compared to this lazy, ill thought out blogpost.
  - austenallred 11y ago
    > Multi-billion dollar companies happen when non-obvious ideas and huge market needs meet perfect execution. We've seen it before our eyes — Uber, Airbnb, Dropbox, Stripe, Instacart — and when you have the potential for 100X to 4000X returns, it's not about avoiding loss or minimizing downside. A proper venture portfolio is not like your 401K. The only way startup investors truly lose is if they miss the Uber.