5 ms·

"Lack of bandwidth, hyper-velocity, a pittance of sleep" If we are just going to put together words to describe concepts that make no sense then you are probab

"Lack of bandwidth, hyper-velocity, a pittance of sleep" If we are just going to put together words to describe concepts that make no sense then you are probably meeting people that have never made a dollar on their investment. Some of the best VCs are original thinkers and will take their time making investments. The thing about them is that they will be the first to making an investment in a company even before it has become the hot new thing.

andrepd 7y ago
Venture capitalist success is indistinguishable from randomness. It's pure, unadulterated luck. "The best VCs are thinkers and visionaries" is post-hoc bullshit justifications to make their wealth seem the result of wits and hard work, and not just the product of luck + the pre-existing capital to invest.
- azinman2 7y ago
  They all typically have some kind of hypothesis that guides their investing. That doesn't come out of the blue. Now what their investment strategy is versus what pays off, well that I'd love to see empirical data to shed some light. I'll also say that building up their networks to get those deals is not just a matter of luck, especially for those that repeatedly do well.
- barry-cotter 7y ago
  Ron Conway alone disproves your thesis. Some people are just very good. Some prescriptions are also very good, like Sequoia or Kleiner Perkins. And the success of the good is not purely Matthew Effect, rich gets richer stuff, as Andreesen Horowitz shows. If you’re good enough you can go from not a VC firm to top 5 VC firm in under five years.
  - MiroF 7y ago
    In no way do these people disprove the argument or other EMH-like arguments (efficient market hypothesis). In many random distributions, if you sample enough you're going to get outcomes at the tails.
    - pmoriarty 7y ago
      How can the EMH be falsified?
    - barry-cotter 7y ago
      That would imply mean reversion. Investors who have been successful in the past should be no more likely than average to be successful in the future. That is not what we observe in VC.
  - momentbruh 7y ago
    You do not understand probability.
    - barry-cotter 7y ago
      Here’s an explanation in terms of folk probability. Ron Conway is playing poker, not roulette. He’s exposed to many opportunities and he chooses the ones he thinks are good bets. He earns far higher returns than he would if he picked randomly from the set of opportunities he is offered. The difference between him and the average angel investor is due to skill. No doubt he makes many bad bets but he is on the far, far right tail of investor returns for angel investments and has been for decades.
- thu2111 7y ago
  I don't see how that can be true. Gambling is pure luck. I've heard too many stories of impressive moves by VCs that paid off for it to be exactly equivalent to gambling. I think it may look a lot like luck because they make so many speculative 'bets' and so many don't pan out, but that's more a function of the vast sums the successful ones end up being given to invest combined with poor deal flow. But they still aren't random odds. Simple example: the VC that invested into WhatsApp and got a massive payout when Facebook bought them. Nobody in the Valley VC community knew about WhatsApp because it had no penetration in the USA. But the firm had hired a developer intern to write a script that downloaded the app store listings for every country in the world individually and calculate fast risers. So this VC was the first to realise that WhatsApp was getting huge everywhere except where they actually lived. But then he visited the WhatsApp website and discovered there was no address or contact information anywhere. He did some research and discovered they were based in Mountain View, but literally couldn't find an actual address anywhere. So he did the obvious thing - he walked the streets of Mountain View systematically looking at every single office building until he found them, tailgated his way in and then sweet talked the receptionist into giving him a meeting with the CEO. Well the CEO didn't want to take VC investment. So then the guy started on the final stage: convincing him it was a good idea. Eventually the WhatsApp founders concurred and took the money. Those sorts of actions aren't the actions of gamblers. The guy had a thesis, he worked to put it into action, he even did a lot of physical work and ended up getting a distinctly non-random reward.
  - Bry789123 7y ago
    That is a fascinating example of sourcing. Do you happen to have an article or source where I can read more about this?

andrepd 7y ago

Venture capitalist success is indistinguishable from randomness. It's pure, unadulterated luck. "The best VCs are thinkers and visionaries" is post-hoc bullshit justifications to make their wealth seem the result of wits and hard work, and not just the product of luck + the pre-existing capital to invest.

azinman2 7y ago
They all typically have some kind of hypothesis that guides their investing. That doesn't come out of the blue. Now what their investment strategy is versus what pays off, well that I'd love to see empirical data to shed some light. I'll also say that building up their networks to get those deals is not just a matter of luck, especially for those that repeatedly do well.
barry-cotter 7y ago
Ron Conway alone disproves your thesis. Some people are just very good. Some prescriptions are also very good, like Sequoia or Kleiner Perkins. And the success of the good is not purely Matthew Effect, rich gets richer stuff, as Andreesen Horowitz shows. If you’re good enough you can go from not a VC firm to top 5 VC firm in under five years.
- MiroF 7y ago
  In no way do these people disprove the argument or other EMH-like arguments (efficient market hypothesis). In many random distributions, if you sample enough you're going to get outcomes at the tails.
  - pmoriarty 7y ago
    How can the EMH be falsified?
  - barry-cotter 7y ago
    That would imply mean reversion. Investors who have been successful in the past should be no more likely than average to be successful in the future. That is not what we observe in VC.
- momentbruh 7y ago
  You do not understand probability.
  - barry-cotter 7y ago
    Here’s an explanation in terms of folk probability. Ron Conway is playing poker, not roulette. He’s exposed to many opportunities and he chooses the ones he thinks are good bets. He earns far higher returns than he would if he picked randomly from the set of opportunities he is offered. The difference between him and the average angel investor is due to skill. No doubt he makes many bad bets but he is on the far, far right tail of investor returns for angel investments and has been for decades.
thu2111 7y ago
I don't see how that can be true. Gambling is pure luck. I've heard too many stories of impressive moves by VCs that paid off for it to be exactly equivalent to gambling. I think it may look a lot like luck because they make so many speculative 'bets' and so many don't pan out, but that's more a function of the vast sums the successful ones end up being given to invest combined with poor deal flow. But they still aren't random odds. Simple example: the VC that invested into WhatsApp and got a massive payout when Facebook bought them. Nobody in the Valley VC community knew about WhatsApp because it had no penetration in the USA. But the firm had hired a developer intern to write a script that downloaded the app store listings for every country in the world individually and calculate fast risers. So this VC was the first to realise that WhatsApp was getting huge everywhere except where they actually lived. But then he visited the WhatsApp website and discovered there was no address or contact information anywhere. He did some research and discovered they were based in Mountain View, but literally couldn't find an actual address anywhere. So he did the obvious thing - he walked the streets of Mountain View systematically looking at every single office building until he found them, tailgated his way in and then sweet talked the receptionist into giving him a meeting with the CEO. Well the CEO didn't want to take VC investment. So then the guy started on the final stage: convincing him it was a good idea. Eventually the WhatsApp founders concurred and took the money. Those sorts of actions aren't the actions of gamblers. The guy had a thesis, he worked to put it into action, he even did a lot of physical work and ended up getting a distinctly non-random reward.
- Bry789123 7y ago
  That is a fascinating example of sourcing. Do you happen to have an article or source where I can read more about this?