It's upsetting but true that 80% of startups are inevitable zeros (which becomes obvious in the first 1-3 years), 5% are obvious hits (also soon obvious) and 15% are going to take longer--often as much as a decade--to know whether they're going to be 0x, 1x or 10x returns
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Not clear to me which of my portfolio companies is in the 15%. The 5% is clear. The dead and dying 33% is clear. The 15% is somewhere in that 61%. So.
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This is a interesting and good take on VC that might interest you - https://www.theamericanconservative.com/articles/taking-stock-of-venture-capital/ …
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Good subject. As an asset class, VC is still enough inefficient/profitable that we can afford to do more human things. And those irrational human connections keep it attractive. As the industry —> software/efficiency, this will likely diminish & the social contract will change.
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I also question the idea that VC’s make no impact. At Pre-seed and Seed I think a great investor, particularly one who has been an operator, can dramatically alter the course of the company by helping make fundamental changes to product, strategy, customer, team, etc.
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This appears to discounts the value of the 2nd, 3rd hits with founders, who will use the battle scars from first hit to give them a greater chance of being the breakout success VCs need. A lot to be said for playing the long game, not many in the Bay Area seem to agree.
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and that’s why we can’t have nice things... or, more precisely, that’s why entrepreneurs shouldn’t give a rat’s ass to VCs and instead focus on building independent, slow growing, self-sufficient businesses from day one
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1. If the value of VC is in picking, there is no value in it for the entrepreneur. When the money is cheap, why take it from a VC?
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A very good question indeed. Many shouldn’t.
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2. This logic assumes that companies and founders are just independent variables. It is a fixed mindset to think this way. There is a way to influence this and improve the odds to win. How? Exactly by providing value. Founders make similar mistakes that are easily avoidable
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