This link has been bookmarked by 49 people . It was first bookmarked on 02 Mar 2006, by John W Redelfs.
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Bryce Roberts ended up saying something very similar in email:
This move is not about what's right for the entrepreneur, it's about Odeo and YouTube.
I spent some time on Sand Hill road last week and the refrain from every VC I met was the same- this is a hits business and we just don't know who the winners are going to be any more. The old formula was one that they were all comfortable with - get a proven team in a hot market and you've got a winner. Then Odeo happened (CRV was the primary backer). Rockstar team, smoking hot market, all-star angels -- and it didn't deliver the hyper growth traditional VCs need for their return profile. YouTube on the other had was a couple of junior guys from PayPal moving into a saturated market which had never really panned out. $1.65B later, the VCs are scratching their heads as to how this could happen. Looking out across recent wins, you don't see all-star proven teams. You see scrappy entrepreneurs long on ideas and enthusiasm, but short on actual management experience like those at Facebook, Digg, Flickr, etc.
So what's a VC firm to do- spray and pray? If the odds of getting into a hit deal are akin to hitting it big in Vegas, it's about making a lot of bets. This program aims to make 50 loans in two years between two partners. Those two partners would historically make 2 investments per year, period.
The heart of the venture business is being able to separate signal from noise, rolling up your sleeves and working with the entrepreneur to build something successful. Is there any coincidence that Yahoo, Google, YouTube and so many of these "hits" have come from a handful of firms? Certainly timing and luck play a huge part in our business, but minimizing it to a seat at a roulette table is a shame...
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