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Just a reminder that no one knows what’s going to happen economically. Fred Wilson’s predictions are as valuable as yours or mine. People guess, people hope, p

Just a reminder that no one knows what’s going to happen economically. Fred Wilson’s predictions are as valuable as yours or mine. People guess, people hope, people pump, people with influence try to make it so, and statistically some will be right because when all possible outcomes are predicted then sure someone will have luckily hit the mark. I have friends who constantly read financial news and are constantly predicting the future and telling me and I keep saying “no one knows”, and my friends keep updating their predictions. When VC’s tell you that they predict that seed valuations will be $10M, that’s price anchoring, not prediction.

FreakLegion 4y ago
The valuations are the most transparently self-interested prediction he gives. VCs want desperately to frame investment in terms of business metrics, but it's a market like any other. There are more VCs competing to put money into relatively fewer compelling companies, and that means paying a premium. The big firms I talked to in H2 2022 were still looking at $15-20m A rounds for 20% of $1m+ ARR companies (meaning $75-100m post-money valuations), on average.
thenerdhead 4y ago
Great comment. Predictions used by people with platforms are in their best interests given they can sell or anchor their products better. It’s win win for them even if they are terribly wrong.
- deleted 4y ago
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robocat 4y ago
Some stories become self-perpetuating, and memes can change the world via those with influence. > Fred Wilson’s predictions are as valuable as yours or mine. A cynic might say don’t listen to anyone, while an optimist might say try to find people that can spot trends (even if they are not 100% reliable). Perhaps Fred has the market pulse at his fingertips? Edit: I would strawman paraphrase your comment as “everyone has equal predictive ability” or “everyone has the same predictive ability as a dog”, either of which make your statement look very weak. > When VC’s tell you [snip] that’s price anchoring, not prediction. If the outcome is that they have predicted the market, then that is prediction, even if some of it was influence. Fred is not in charge and he has a chance of being wrong: you pointed out that no-one knows so I think you even contradict yourself. Edit: this relates to George Soros’ Theory of Reflexivity. Can anyone tell me the generic economic term for the concept that sometimes markets self-perpetuate their own facts? https://duckduckgo.com/?q=george+soros+theory+of+reflexivity https://duckduckgo.com/?q=george+soros+theory+of+reflexivity
- andrewstuart 4y ago
  >> If the outcome is that they have predicted the market, then that is prediction, even if some of it was influence. Fred is not in charge and he has a chance of being wrong: you pointed out that no-one knows so I think you even contradict yourself. It's price anchoring - a message to the startups that ask him for money, it sets in advance the expectations for how much money their startup is worth even before they meet. https://en.wikipedia.org/wiki/Anchoring_(cognitive_bias) https://en.wikipedia.org/wiki/Anchoring_(cognitive_bias) http://changingminds.org/disciplines/marketing/pricing/price_anchoring.htm http://changingminds.org/disciplines/marketing/pricing/price...
  - robocat 4y ago
    No. Only if he were the single VC with near market dominance, however he absolutely is not. Fred influences by his words, but he is not setting the market price. He influences for reasons of his own hidden incentives, but he doesn’t control. He is predicting what other VCs will do.
    - thenerdhead 4y ago
      Influencers influence markets. That’s his point. Doesn’t mean it comes true, but it can influence it.
    - andrewstuart 4y ago
      >> he is not setting the market price. That's not what price anchoring is. In this case, the price anchoring is relevant only when a startup walks in the door of Freds office (figuratively speaking) and asks for money. He is anchoring the price not to many people, but to people who come asking him for money.

FreakLegion 4y ago

The valuations are the most transparently self-interested prediction he gives. VCs want desperately to frame investment in terms of business metrics, but it's a market like any other. There are more VCs competing to put money into relatively fewer compelling companies, and that means paying a premium. The big firms I talked to in H2 2022 were still looking at $15-20m A rounds for 20% of $1m+ ARR companies (meaning $75-100m post-money valuations), on average.

thenerdhead 4y ago

Great comment. Predictions used by people with platforms are in their best interests given they can sell or anchor their products better. It’s win win for them even if they are terribly wrong.

deleted 4y ago
[deleted]

robocat 4y ago

Some stories become self-perpetuating, and memes can change the world via those with influence. > Fred Wilson’s predictions are as valuable as yours or mine. A cynic might say don’t listen to anyone, while an optimist might say try to find people that can spot trends (even if they are not 100% reliable). Perhaps Fred has the market pulse at his fingertips? Edit: I would strawman paraphrase your comment as “everyone has equal predictive ability” or “everyone has the same predictive ability as a dog”, either of which make your statement look very weak. > When VC’s tell you [snip] that’s price anchoring, not prediction. If the outcome is that they have predicted the market, then that is prediction, even if some of it was influence. Fred is not in charge and he has a chance of being wrong: you pointed out that no-one knows so I think you even contradict yourself. Edit: this relates to George Soros’ Theory of Reflexivity. Can anyone tell me the generic economic term for the concept that sometimes markets self-perpetuate their own facts? https://duckduckgo.com/?q=george+soros+theory+of+reflexivity https://duckduckgo.com/?q=george+soros+theory+of+reflexivity

andrewstuart 4y ago
>> If the outcome is that they have predicted the market, then that is prediction, even if some of it was influence. Fred is not in charge and he has a chance of being wrong: you pointed out that no-one knows so I think you even contradict yourself. It's price anchoring - a message to the startups that ask him for money, it sets in advance the expectations for how much money their startup is worth even before they meet. https://en.wikipedia.org/wiki/Anchoring_(cognitive_bias) https://en.wikipedia.org/wiki/Anchoring_(cognitive_bias) http://changingminds.org/disciplines/marketing/pricing/price_anchoring.htm http://changingminds.org/disciplines/marketing/pricing/price...
- robocat 4y ago
  No. Only if he were the single VC with near market dominance, however he absolutely is not. Fred influences by his words, but he is not setting the market price. He influences for reasons of his own hidden incentives, but he doesn’t control. He is predicting what other VCs will do.
  - thenerdhead 4y ago
    Influencers influence markets. That’s his point. Doesn’t mean it comes true, but it can influence it.
  - andrewstuart 4y ago
    >> he is not setting the market price. That's not what price anchoring is. In this case, the price anchoring is relevant only when a startup walks in the door of Freds office (figuratively speaking) and asks for money. He is anchoring the price not to many people, but to people who come asking him for money.