4 ms·

A lot of people want to judge investors who passed on Google. They shouldn't. In VC you hit or miss, you win some you lose some. People judge investors who pass

by chirau 7y ago

A lot of people want to judge investors who passed on Google. They shouldn't. In VC you hit or miss, you win some you lose some. People judge investors who passed saying it was a "poor" decision. That's only because you have hindsight and hindsight is 20/20. I am sure there were many other search plays at the time and picking from one was just like picking a crab from a barrel. I doubt investors, who do this everyday and win some and lose some, worry all the time about why they passed on Google.

OnlineGladiator 7y ago
I agree with the general sentiment of your post, and luck is definitely a factor. But investors ultimately care about ROI, and if you didn't invest in Google before the dot com bust then there's a very good chance your entire fund failed. > I doubt investors, who do this everyday and win some and lose some, worry all the time about why they passed on Google. A very famous investor once said to me "you either invested in Google or you lost money."
- omarchowdhury 7y ago
  > But investors ultimately care about ROI, and if you didn't invest in Google before the dot com bust then there's a very good chance your entire fund failed. Google is up 4000% since its 2004 IPO and 1000% from local bottom during the housing bubble crash. Didn't even need to be a VC to get access to VC level gains buying GOOG.
  - OnlineGladiator 7y ago
    I guess I should have specified VC investors (we are talking about tech startups).
  - spaceflunky 7y ago
    >Didn't even need to be a VC to get access to VC level gains buying GOOG. That's a great point. Anyone who shits on a VC for not investing in Google ought to be asked how much Google stock they bought in 2004. 4000% gains is better than most VC get on even the best exits and that opportunity was open to EVERYONE.
  - mattrp 7y ago
    I believe it is Steve jurveston who made the claim that on average, post ipo gains are roughly equal to pre ipo. I Don’t know how one calculates that but it’s an interesting thought.
    - OnlineGladiator 7y ago
      > I Don’t know how one calculates that but it’s an interesting thought. You could get a good estimate of this just checking Crunchbase. Assuming the company is doing well, none of the weird stuff like ratcheting kicks in. So just look at how much money went in and what valuation, apply dilutions for later rounds, and calculate what percentage you own by the time you get to an IPO. This method still isn't perfect (employee option pools being adjusted will not show up, as well as other possibilities), but it'll definitely give you a rough estimate.
chrisseaton 7y ago
I’m not sure what you’re saying - that we shouldn’t assess people whose job it is to pick investments with how well they pick investments? Isn’t it supposed to be their skill to be able to pick things without hindsight? Otherwise what are they doing and why don’t they just gamble the money in a casino instead?
- dabbernaught420 7y ago
  Investors don't work with perfect information. They work with imperfect information. This means that it is impossible to predict with certainty what will happen. So it's important to remember that an investor who passes on a product that goes on to become very successful may have actually made the best possible decision given the information that she had.
  - deleted 7y ago
    [deleted]
  - jdmichal 7y ago
    It's exactly this. You have to judge a decision based on the merits of the decision, not on the outcome. A great example is poker. I should call an all-in on a hand I will win 95% of the time. I will still lose one in twenty times. That does not mean it was a bad decision.
- WilliamEdward 7y ago
  A good decision is not based on how good the outcome is, it's based on how good the reasoning is. At the time, acquiring google would have probably failed their business and we wouldn't have the google we have today, so he actually made a great decision based on the information he had.
- cosmodisk 7y ago
  Some people are a bit better at it, however it's still mainly a gamble. There are so many factors behind it. For instance,what Uber Eats or Deliveroo do today, we used to have about 15 years ago in Lithuania.You could call any taxi driver and say: 'I need a little service'.The driver then asked for specifics, how many bottles of alcohol,what type,etc.go buy it from the shop and deliver to your home.Everybody just assumed it and none had an idea how such a thing would grow into multibillion dollar industry.

by chirau 7y ago

OnlineGladiator 7y ago

I agree with the general sentiment of your post, and luck is definitely a factor. But investors ultimately care about ROI, and if you didn't invest in Google before the dot com bust then there's a very good chance your entire fund failed. > I doubt investors, who do this everyday and win some and lose some, worry all the time about why they passed on Google. A very famous investor once said to me "you either invested in Google or you lost money."

omarchowdhury 7y ago
> But investors ultimately care about ROI, and if you didn't invest in Google before the dot com bust then there's a very good chance your entire fund failed. Google is up 4000% since its 2004 IPO and 1000% from local bottom during the housing bubble crash. Didn't even need to be a VC to get access to VC level gains buying GOOG.
- OnlineGladiator 7y ago
  I guess I should have specified VC investors (we are talking about tech startups).
- spaceflunky 7y ago
  >Didn't even need to be a VC to get access to VC level gains buying GOOG. That's a great point. Anyone who shits on a VC for not investing in Google ought to be asked how much Google stock they bought in 2004. 4000% gains is better than most VC get on even the best exits and that opportunity was open to EVERYONE.
- mattrp 7y ago
  I believe it is Steve jurveston who made the claim that on average, post ipo gains are roughly equal to pre ipo. I Don’t know how one calculates that but it’s an interesting thought.
  - OnlineGladiator 7y ago
    > I Don’t know how one calculates that but it’s an interesting thought. You could get a good estimate of this just checking Crunchbase. Assuming the company is doing well, none of the weird stuff like ratcheting kicks in. So just look at how much money went in and what valuation, apply dilutions for later rounds, and calculate what percentage you own by the time you get to an IPO. This method still isn't perfect (employee option pools being adjusted will not show up, as well as other possibilities), but it'll definitely give you a rough estimate.

chrisseaton 7y ago

I’m not sure what you’re saying - that we shouldn’t assess people whose job it is to pick investments with how well they pick investments? Isn’t it supposed to be their skill to be able to pick things without hindsight? Otherwise what are they doing and why don’t they just gamble the money in a casino instead?

dabbernaught420 7y ago
Investors don't work with perfect information. They work with imperfect information. This means that it is impossible to predict with certainty what will happen. So it's important to remember that an investor who passes on a product that goes on to become very successful may have actually made the best possible decision given the information that she had.
- deleted 7y ago
  [deleted]
- jdmichal 7y ago
  It's exactly this. You have to judge a decision based on the merits of the decision, not on the outcome. A great example is poker. I should call an all-in on a hand I will win 95% of the time. I will still lose one in twenty times. That does not mean it was a bad decision.
WilliamEdward 7y ago
A good decision is not based on how good the outcome is, it's based on how good the reasoning is. At the time, acquiring google would have probably failed their business and we wouldn't have the google we have today, so he actually made a great decision based on the information he had.
cosmodisk 7y ago
Some people are a bit better at it, however it's still mainly a gamble. There are so many factors behind it. For instance,what Uber Eats or Deliveroo do today, we used to have about 15 years ago in Lithuania.You could call any taxi driver and say: 'I need a little service'.The driver then asked for specifics, how many bottles of alcohol,what type,etc.go buy it from the shop and deliver to your home.Everybody just assumed it and none had an idea how such a thing would grow into multibillion dollar industry.