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The professor who made $10B by cutting Google its first startup check
- paulpauper 3y agoThis shows how important important luck, timing, and connections are. And having a lot of money. Bing at the right place at right time means so much for success. Even the best VCs struggle to do this well, and this guy it it on firs try.
- mritun 3y ago… and money. Two years ago before he wrote that check, he sold his last startup for a cool $220M. Money begets money!
- verdverm 3y agoDon't forget they tried to sell their search engine to Yahoo and others for $1m, and only started Google after no one would buy it.
- quickthrower2 3y agoIf that had happened maybe a trillion dollars of productivity since would have been lost!
- verdverm 3y agoI would suspect much more, they are responsible for things like map-reduce, containers, kubernetes, golang, android, Gmail, and so much more. Things billions of people use directly or indirectly every day
- latency-guy2 3y agoDon't you mean a trillion dollars of luck as way too many people on this thread and adjacent bring up? Considering this website, I find it hilarious how the most common talking point on this post is all "luck", like it's a conspiracy. You'd imagine "risk" would come up even once, but a few hours in, I am the only one bringing it up.
- quickthrower2 3y agoNot sure what you mean? Productivity here is in aggregate over the whole economy, whereas luck might come into it where you say "person X got rich off there idea - they were smart, worked hard, but they also needed some luck, such as being born next door to $influencial_person or whatever lucky thing they had.
- latency-guy2 3y agoI guess that no matter what, it's impossible to believe people made things and the magical forces of the universe made it so only a specific people gets to make these things.
- throw0101b 3y ago> If that had happened maybe a trillion dollars of productivity since would have been lost! On the flip side, how much productivity has been lost because of Youtube? ;)
- ElfinTrousers 3y agoWhich is how he was able to write two students a "modest" check for $100,000.
- diversionfactor 3y ago[flagged]
- lotsofpulp 3y agoI disagree. This is about as meritocratic as it gets. A person, the professor, who put in the work to learn an advanced subject with the potential to advance society, evaluated two others who also put in the effort to push the boundaries of knowledge and engineering. Together, they wanted to bet on being able to develop something with a ton of utility. And they did. There is an argument for insufficient social safety nets or excessive wealth/income gaps due to insufficient wealth/income/property/estate tax, but this example is not evidence of an unfair system.
- AndrewKemendo 3y ago>A person, the professor, who put in the work to learn an advanced subject with the potential to advance society, evaluated two others who also put in the effort to push the boundaries of knowledge and engineering. Who was born in Canada in 1951 near one of the best engineering universities in the world, perfectly suited to benefit from economic liberalization and was lucky enough to be interested in computers at a time when almost nobody was and as a result was able to be around the best computer science people. So yeah I'd say born pretty lucky - made a lot of really timely calls that lined up. Lets not pretend this was $10B of hard work - they aren't comparable
- lambdasquirrel 3y agoWhile this is all very true, it seems much more than just excessively cynical to me. There were lots of folks who could have taken the path he took. He had the foresight to see that Computer Science was where interesting things were going to happen at a time when so much of the Western Intelligentsia was not terribly positive about “tech.” I definitely remember the tone of the NYTimes around this sort of thing. It took some real moving against the grain to be positive about the potential that tech had, in the timeframe that this investment happened. It took a lot to even get to be in his position. We were not at all making fat six-figures back then.
- yieldcrv 3y agoPrivate Equity investor sells $100,000 investment for $10 billion
- coding123 3y agoEveryone is equating wealth to "reasons to be alive" in this thread. Are there not people lucky to be born with great genes. There are people that get to have a lot of sex. There are people that can think better than most. So many possible paths in life, don't get caught up in the wealth trap.
- bluefirebrand 3y agoWealth opens more paths than almost anything else in the world. Some people seek wealth just to hoard it because they love having a huge number in their banks. I think the majority just wants to escape the grind. And once you're out of the grind, the world is your oyster.
- ipaddr 3y agoHealth opens up many doors. Wealth also closes many doors.
- worrycue 3y agoWealth helps you stay in good health - you don’t need to stress about money and can afford the best medical treatments available.
- bennyelv 3y agoA very large proportion of the kind of health problems that limit your options in life significantly do not have guaranteed solutions no matter how much money you have. It’s probably more of a US problem when there are guaranteed solutions but you just can’t afford them.
- worrycue 3y agoStress is bad for your body. You can also eat healthier and get more exercise if you are wealthy - you have the time and energy to do so. Your relationship with family members are also less strained - at least when it comes to money. All generally leads to better health.
- throw0101b 3y agoAlso, Andy Bechtolsheim: > Bechtolsheim and Cheriton were two of the first investors in Google, investing US$100,000 each in September 1998. When he gave the check to Larry Page and Sergey Brin, Google's founders, the company had not yet been legally incorporated. Claims that Bechtolsheim coined the name "Google" are untrue. However, he did motivate the founders to officially organize the company under that name.[14][15] * https://en.wikipedia.org/wiki/Andy_Bechtolsheim#Investments https://en.wikipedia.org/wiki/Andy_Bechtolsheim#Investments
- vlovich123 3y ago> Cheriton stands as one of the luckiest and wealthiest educators of all time Ugh. Repeated in this thread too. > VMware, where he was an early investor;[4] and Arista, where he was cofounder and chief scientist. He has funded at least 20 companies.[5] > He campaigned against Asynchronous Transfer Mode (ATM) that was favored by telephone carriers, preferring Ethernet, which he saw as a simpler, proven option. Ethernet gradually superseded alternatives Sure he's lucky with the 10B, but this guy is very clearly someone who knows what makes a successful company and understands which technological advances have a good likelihood of winning. It would be interesting to see the returns of his investments aside from Google but: * VMWare: Early investor, the company would go on to be acquired for 625M by EMC before being spun out into IPO. * Kealia: Founder of a company that got acquired by Sun. Deal undisclosed but probably $10-20M. * Arista: Founder of a company that IPO'd at ~8B and is worth 44B now. * Aster Data Systems: Investor & advisory board member acquired for $263M in 2011 * Tintri: Early investor, company IPO'ed at $220M before going bankrupt a year later & getting acquired for 60M (still would be a healthy exit for him) At whatever point repeated luck is a signal of skill, this guy has heartily hurdled it as far as I'm concerned. Sure, maybe he wouldn't be a billionaire, but he'd still be fabulously wealthy and he keeps taking so many successful shots that if it wasn't Google it would probably be something else (not to mention someone like him was probably already getting well-compensated by Stanford). [1] https://en.wikipedia.org/wiki/David_Cheriton https://en.wikipedia.org/wiki/David_Cheriton
- jrflowers 3y ago> At whatever point repeated luck is a signal of skill Has he invested in anything that didn’t work out?
- cpach 3y agoI don’t know for sure, but it’s probably safe to assume that he has.
- quags 3y agoOne thing with investing is you don’t need to be right all the time. It’s show more here with huge returns but even picking individual stocks a few winners tend to massively outperform the losers as long as you are not doing something like buying massively on margin.
- balderdash 3y agoI think the more interesting thing is that he was actually in the position to come into contact with all these people. Let’s say he didn’t invest and was just a professor, there are very few people who can look around around and say “yeah I know a couple of dozen people who became fabulously wealthy” Seems like he was in the right orbit of people at the right time, and then put his money where his mouth was.
- wmf 3y agoSpecifically, he worked at a VC fund that has a top university attached to it.
- ipv6ipv4 3y agoHe's also a spiteful, not very nice person. He had an acrimonious divorce where he essentially refused to minimally support his children as a multi millionaire.[1] He cofounded Arista, but also sued Arista, and lost[2], through OptumSoft, his pet company, out of what can be summarized as spite[3]. [1] https://caselaw.findlaw.com/court/ca-court-of-appeal/1071866.html https://caselaw.findlaw.com/court/ca-court-of-appeal/1071866... [2] https://www.networkworld.com/article/3016667/court-finds-for-arista-in-eos-suit-with-co-founder.html https://www.networkworld.com/article/3016667/court-finds-for... [3] https://finance.yahoo.com/news/why-arista-networks-billionaire-co-214025776.html https://finance.yahoo.com/news/why-arista-networks-billionai...
- thr-nrg 3y ago[flagged]
- vlovich123 3y agoI read [1] but I didn’t get the impression that he “minimally” supported his kids, especially since the wife’s appeal was basically largely ruled in his favor. Also, can we talk about how toxic some of the legislation in this area? > Children should share in the standard of living of both parents. > child's need is measured by the parents' current station in life. Basically seems like a principle guaranteed to cause children of rich people to grow up entitled. Additionally, all we know here are the financial amounts. I don’t think it tells us anything about his qualities as a parent. As for the lawsuit against a company he held a 20% stake in: > OptumSoft's CEO Henk Goosen tells us Arista hasn't lived up to its end of the bargain, and hasn't given back all the improvements made to TACC. I don’t really see where the spitefulness comes in here. Seems like a legitimate contracts dispute. Can you elaborate on where you’re getting this characterization of him personally? I’m not saying he is or isn’t. I’m just saying a couple of lawsuits tell you nothing about a person and a divorce proceeding rarely gives you a good representation of that person’s behavior as a spouse and parent.
- cloverich 3y agoIts not a law designed for billionaires, but rather reflects that people often choose to have kids based on their current and expected future station in life; pulling the plug on that isnt a choice we generally respect. Raising wealthy kids to be respectable citizens is something many rich people manage to do, but you likely need to be an involved parent to get good results. (agree with your general points)
- onetokeoverthe 3y ago[dead]
- iJohnDoe 3y agoSilly question. How did he turn that $100k into $10 billion? Early stock options? What did he negotiate early on to get that type of return?
- crazygringo 3y agoHe's an investor, so he just owns stock directly, presumably. And the value of Google has grown many, many orders of magnitude since then. I mean, it's a return of 100,000x, but Alphabet's market cap is $1.5 trillion. The math works fine I think, it's just getting extremely lucky on the very ground floor.
- wmf 3y ago$10B is less than 1% of Alphabet today so it could have been a typical angel deal like $100K for 5% (with subsequent dilution).
- Animats 3y agoI had no idea he'd done that well. I was in one of his classes back in the 1980s, before he did all this.
- gnicholas 3y agoWhen I was a young lawyer in Silicon Valley, I recall a senior partner (who was himself very successful) telling a group of us about how the wealthiest lawyer he knew was a modestly-talented lawyer who went to work for eBay in its early days. Timing/luck can play a large role in life, especially if you look at the tail ends of a distribution.
- sireat 3y agoAhh the suits are back in style. This is a classical submarine PR blurb: http://www.paulgraham.com/submarine.html http://www.paulgraham.com/submarine.html Notice the last paragraph talks about some crowd funding platform - their PR guys did this article. Not that it is a particularly bad article, just need to be aware of where it comes from.