“Look at bios of founders of their last few investments (as presented on company websites) and see if they follow a pattern. Look at the main characters of the movies they like. Look at their retweets and see what stupid memes they fall for.” This sounds like advice on how to be a better grifter. Is there an implicit step 0 where you try and fail to get money from the less manipulable investors? Is your idea that if some entrepreneurial LW users swallow this particular red pill, they will be less held back by their maladaptive honesty and be more competitive in raising money, and that this will result in more rational entrepreneurs?
Have you read The Scout Mindset? In it, author Julia Galef gives examples of entrepreneurs who honestly and publicly gave low odds of success, but were able to raise funding and succeed anyway (like Musk and Buterin). Were these just random flukes? Did I get the wrong takeaway from that part of the book?
Not exactly. I’ve evaluated project pitches for other people, and sometimes people pitch me personally on ideas. To the extent that I’ve been trusted on technical things by people directing large amounts of money, it’s been a narrow/limited sort of trust, not “let’s do whatever this guy says”.
Where are the investors that you expected?
Relative to VCs, I think (private equity that quietly does large acquisitions) and (internal project evaluations at engineering companies (eg BASF)) do better technical due diligence.
But internal project evaluation at big companies is conservative yet typically requires 15%+ ROI for approval—which is a result of managers’ job cycles. As for private equity, people seem more interested in acquisitions to establish enough of a monopoly to have pricing power than new technology. Which is smart.
The actual answer to that question, tho, is that they don’t exist to the extent it seems like they should, that cultural factors prevent an economic equilibrium. Elon Musk is dumb enough to think the Hyperloop is genius, and there’s free money on the sidewalk for people with that level of technical knowledge who also have either enormous wealth or credibility with and connections to investors. But the selection processes involved reject them at earlier points.
Is this because of that thing about multi-stage processes and Keynsian beauty contests?
Yes, that’s a big factor in how the current situation got established. I thought of that independently and have mentioned it before.
Is your idea that if some entrepreneurial LW users swallow this particular red pill, they will be less held back by their maladaptive honesty and be more competitive in raising money, and that this will result in more rational entrepreneurs?
Partly that. Partly it’s an example of irrational thinking that people might see in their own approach. Partly other things.
Have you read The Scout Mindset?
entrepreneurs who honestly and publicly gave low odds of success
I haven’t.
Bezos gave some of his investors a 70% chance they’d lose their whole investment. Those investors...were his parents.
Elon Musk was hooked up to the Palpal Mafia social network.
Anyway, a lot of stories like that are misleading. My understanding is that those examples are mostly just their after-the-fact disclosures of their private thinking, not what they told investors at the time?
Bezos gave some of his investors a 70% chance they’d lose their whole investment. Those investors...were his parents.
Elon Musk was hooked up to the Palpal Mafia social network.
Anyway, a lot of stories like that are misleading. My understanding is that those examples are mostly just their after-the-fact disclosures of their private thinking, not what they told investors at the time?
Thanks for the reply. Maybe I’ll reread that chapter of the book and see if there are any sharp updates to make.
Here are some questions this post raises for me.
Do people ever try to pitch you on projects, and if so, do the story-based pitches work better or worse than others?
Where are the investors that you expected? With Vision Fund way down, are the reality-based decision makers on the rise, or not?
Is this because of that thing about multi-stage processes and Keynsian beauty contests?
“Look at bios of founders of their last few investments (as presented on company websites) and see if they follow a pattern. Look at the main characters of the movies they like. Look at their retweets and see what stupid memes they fall for.” This sounds like advice on how to be a better grifter. Is there an implicit step 0 where you try and fail to get money from the less manipulable investors? Is your idea that if some entrepreneurial LW users swallow this particular red pill, they will be less held back by their maladaptive honesty and be more competitive in raising money, and that this will result in more rational entrepreneurs?
Have you read The Scout Mindset? In it, author Julia Galef gives examples of entrepreneurs who honestly and publicly gave low odds of success, but were able to raise funding and succeed anyway (like Musk and Buterin). Were these just random flukes? Did I get the wrong takeaway from that part of the book?
Not exactly. I’ve evaluated project pitches for other people, and sometimes people pitch me personally on ideas. To the extent that I’ve been trusted on technical things by people directing large amounts of money, it’s been a narrow/limited sort of trust, not “let’s do whatever this guy says”.
Relative to VCs, I think (private equity that quietly does large acquisitions) and (internal project evaluations at engineering companies (eg BASF)) do better technical due diligence.
But internal project evaluation at big companies is conservative yet typically requires 15%+ ROI for approval—which is a result of managers’ job cycles. As for private equity, people seem more interested in acquisitions to establish enough of a monopoly to have pricing power than new technology. Which is smart.
The actual answer to that question, tho, is that they don’t exist to the extent it seems like they should, that cultural factors prevent an economic equilibrium. Elon Musk is dumb enough to think the Hyperloop is genius, and there’s free money on the sidewalk for people with that level of technical knowledge who also have either enormous wealth or credibility with and connections to investors. But the selection processes involved reject them at earlier points.
Yes, that’s a big factor in how the current situation got established. I thought of that independently and have mentioned it before.
Partly that. Partly it’s an example of irrational thinking that people might see in their own approach. Partly other things.
I haven’t.
Bezos gave some of his investors a 70% chance they’d lose their whole investment. Those investors...were his parents.
Elon Musk was hooked up to the Palpal Mafia social network.
Anyway, a lot of stories like that are misleading. My understanding is that those examples are mostly just their after-the-fact disclosures of their private thinking, not what they told investors at the time?
Thanks for the reply. Maybe I’ll reread that chapter of the book and see if there are any sharp updates to make.