4 ms·

A big part of investment is pattern recognition. Of course they try to understand what people are doing but that only gets you so far. Ideally, you would want t

by cnaut 13y ago

A big part of investment is pattern recognition. Of course they try to understand what people are doing but that only gets you so far. Ideally, you would want to be able to learn from your previous decisions and improve on your process. If you have real data and a way of using it for more insight then you can make much better decisions.

graycat 13y ago
Their version of "pattern recognition" is just hopeless for what they are trying to do. E.g., how to use pattern recognition in the industry of leading edge military aviation to evaluate what Kelly Johnson said about building an airplane that would go at Mach 3+ and 80,000+ feet for 2000+ miles without refueling? Can't do it. Instead have to look at the mathematics, engineering, etc., especially a special engine just developed at a special Pratt and Whitney site in Florida. Information technology venture capital needs to find projects that have powerful, valuable new work and are exceptional. There is no way to evaluate such projects by simple, empirical 'pattern matching' from the past of business and venture funded projects. Venture capital looks at sectors, the demeanor of the founders, maybe their socks, the jut of their jaw, etc. because that is all they know to look at. One could count on two hands all the information technology venture partners in the US able to do a competent review of projects submitted to the NSF. E.g., the last paper I published in computer science is for a quite practical problem in practical computing, but I doubt that anyone at A16Z could read that paper or even direct a competent review of it. Thankfully for US national security, how to review projects in technology is very well known and done very well everyday, for 70+ years, by NSF, NIH, DARPA, etc. For Silicon Valley for information technology (the situation for biomedical technology is quite different), there's essentially no chance of competent technical review, not at A16Z, KPCB, Sequoia, Benchmark, etc. For an analogy, for the SR-71, Lockheed could build several, have some fly successfully over Russia and get some fantastic pictures, and then venture capital might invest to buy some of the jet fuel. Instead, the USAF, CIA, etc. did some really good work reviewing the really excellent work of Lockheed, all from what Lockheed submitted just on paper. Net, Silicon Valley venture capital just absolutely, positively, flatly doesn't have even as much as a weak little hollow hint of a tiny clue about how to do or evaluate original, exceptional, powerful, valuable information technology projects. Sorry 'bout that.
- ironchef 13y ago
  "Net, Silicon Valley venture capital just absolutely, positively, flatly doesn't have even as much as a weak little hollow hint of a tiny clue about how to do or evaluate original, exceptional, powerful, valuable information technology projects. Sorry 'bout that." - Your use of hyperbole is amazing. The original point of venture capital was to "aid in the development of new or existing businesses into companies of stature and importance". Venture capital arose after world war 2 when banks wouldn't bankroll some of the businesses and new ideas that were coming out. Since then it could be argued that VCs direction has changed to investing the 3rd party pooled money into businesses that are employing some novel technology or processes. VCs typically have employees who are familiar with industries, business, and / or technologies to help identify candidate investments as well as to help said investments to flourish. Finally to brush the successes of venture capital over the years in IT projects is just disingenuous. VCs had quite a bit to do with DEC, Fairchild, the whole damned semi conductor business, and the expansion of the computer industry. Was a lot of it on the backs of other projects and companies? Of course. DARPA, Xerox, etc. played HUGE roles in the advancement of technology.
  - graycat 13y ago
    > Since then it could be argued that VCs direction has changed to investing the 3rd party pooled money into businesses that are employing some novel technology or processes. The information technology (IT) VCs are essentially hopeless at the crucial work of evaluating the "novel technology". The US DoD, NSF, NIH, and DARPA are quite good at such evaluations. > VCs typically have employees who are familiar with industries, business, and / or technologies to help identify candidate investments as well as to help said investments to flourish. For good exploitation of technology, what you are describing is not nearly good enough. The IT VCs need very much to up their game to whole new levels. They need, say, to be able to do or at least direct evaluations of anything that arrives in their e-mail in IT that might make a big pot of money, and they can't and won't do that.

by cnaut 13y ago

graycat 13y ago

Their version of "pattern recognition" is just hopeless for what they are trying to do. E.g., how to use pattern recognition in the industry of leading edge military aviation to evaluate what Kelly Johnson said about building an airplane that would go at Mach 3+ and 80,000+ feet for 2000+ miles without refueling? Can't do it. Instead have to look at the mathematics, engineering, etc., especially a special engine just developed at a special Pratt and Whitney site in Florida. Information technology venture capital needs to find projects that have powerful, valuable new work and are exceptional. There is no way to evaluate such projects by simple, empirical 'pattern matching' from the past of business and venture funded projects. Venture capital looks at sectors, the demeanor of the founders, maybe their socks, the jut of their jaw, etc. because that is all they know to look at. One could count on two hands all the information technology venture partners in the US able to do a competent review of projects submitted to the NSF. E.g., the last paper I published in computer science is for a quite practical problem in practical computing, but I doubt that anyone at A16Z could read that paper or even direct a competent review of it. Thankfully for US national security, how to review projects in technology is very well known and done very well everyday, for 70+ years, by NSF, NIH, DARPA, etc. For Silicon Valley for information technology (the situation for biomedical technology is quite different), there's essentially no chance of competent technical review, not at A16Z, KPCB, Sequoia, Benchmark, etc. For an analogy, for the SR-71, Lockheed could build several, have some fly successfully over Russia and get some fantastic pictures, and then venture capital might invest to buy some of the jet fuel. Instead, the USAF, CIA, etc. did some really good work reviewing the really excellent work of Lockheed, all from what Lockheed submitted just on paper. Net, Silicon Valley venture capital just absolutely, positively, flatly doesn't have even as much as a weak little hollow hint of a tiny clue about how to do or evaluate original, exceptional, powerful, valuable information technology projects. Sorry 'bout that.

ironchef 13y ago
"Net, Silicon Valley venture capital just absolutely, positively, flatly doesn't have even as much as a weak little hollow hint of a tiny clue about how to do or evaluate original, exceptional, powerful, valuable information technology projects. Sorry 'bout that." - Your use of hyperbole is amazing. The original point of venture capital was to "aid in the development of new or existing businesses into companies of stature and importance". Venture capital arose after world war 2 when banks wouldn't bankroll some of the businesses and new ideas that were coming out. Since then it could be argued that VCs direction has changed to investing the 3rd party pooled money into businesses that are employing some novel technology or processes. VCs typically have employees who are familiar with industries, business, and / or technologies to help identify candidate investments as well as to help said investments to flourish. Finally to brush the successes of venture capital over the years in IT projects is just disingenuous. VCs had quite a bit to do with DEC, Fairchild, the whole damned semi conductor business, and the expansion of the computer industry. Was a lot of it on the backs of other projects and companies? Of course. DARPA, Xerox, etc. played HUGE roles in the advancement of technology.
- graycat 13y ago
  > Since then it could be argued that VCs direction has changed to investing the 3rd party pooled money into businesses that are employing some novel technology or processes. The information technology (IT) VCs are essentially hopeless at the crucial work of evaluating the "novel technology". The US DoD, NSF, NIH, and DARPA are quite good at such evaluations. > VCs typically have employees who are familiar with industries, business, and / or technologies to help identify candidate investments as well as to help said investments to flourish. For good exploitation of technology, what you are describing is not nearly good enough. The IT VCs need very much to up their game to whole new levels. They need, say, to be able to do or at least direct evaluations of anything that arrives in their e-mail in IT that might make a big pot of money, and they can't and won't do that.