1. “The top investment is worth the total amount of all the other projects and more. You’re looking for the one high water mark, not the average. People don’t come to you looking for singles.” Venture capitalists focus on hitting tape measure home runs because that is what overwhelmingly drives investor return. A portfolio of 30-40 bets on startups per fund, with massive potential upside and small downside, will have […]
Vinod Khosla started Khosla Ventures in 2004 after a very successful career beginning in 1987 as a venture capitalist at Kleiner Perkins Caufield & Byers. Before becoming a venture capitalist, he was a co-founder of Sun Microsystems. Khosla Ventures announced that it is in the process of raising a new $1 billion fund this past week. 1. “It doesn’t matter what your probability of failure is. If there’s a 90% chance of failure, there’s a 10% chance of […]
Marc Andreessen is able to explain himself so well that I should have less commentary to add to the quotations in this post than usual. But where is the fun in that? My primary task with this blog post has been assembling the quotations and placing them in an order which flows well, since understanding the earlier topics helps the reader understand ideas which come later in the list. Each set of […]
I was introduced to Michael Mortiz only once many years ago during a visit to Sequoia. I know of him only through stories told by others, his writing and what I have read in the press. His accomplishments are impressive, as is his insight on topics like the venture capital business. 1. “When we help organize one of these companies at the beginning, it never looks like the world’s greatest idea. I think it’s […]
Since the contributions of business executives with great operations skills are too often underappreciated I decided to do a blog post on a notable example. I intend for this post to be a natural follow up to my recent blog post on sales, marketing and distribution. While there are a significant number of executives who excel at business operations, I decided to pick someone who is less boring than may typically be the […]
Many very smart people (e.g., Warren Buffett, Michael Mauboussin) are recommending William Thorndike’s book The Outsiders. Thorndike’s book describes certain attributes/methods of “top performing” CEOs. (page IX) What does the author mean by a “great” CEO? In short: “return relative to peers and the market” measured by “compound annual return to shareholders during their tenure.” (page IX) 1. The Outsider CEOs are “positive deviants… deeply iconoclastic” (page 3)- The way I […]
In the past few blog posts I have explained what creates a “moat” (i.e., a sustainable barrier to entry against competitors). Costco is an interesting case in that instead of a dominant reason for the moat’s existence (for example, self-reinforcing demand side economies of scale/network effects in the case of Google) there are lot of little things which create the Costco moat. As is the case with Starbucks, the moat […]
1. “Most businesses actually get zero distribution channels to work. Poor distribution—not product—is the number one cause of failure.” (Peter Thiel) Legions of businesses fail every day because the people involved in the company do not know how to market, distribute and sell their goods and services. The right training can help a person understand that while potential customers don’t like salespeople, they do like to buy products and services. […]
Warren Buffett is famous for using the term “moat,” which is very similar to what Michal Porter calls “sustainable competitive advantage.” An obvious question is: does Berkshire Hathaway itself have a moat which will survive when Warren Buffett/Charlie Munger depart. The Economist’s recent article on Berkshire essentially asserts the moat is all about Warren Buffett. Since the Economist article may be behind a paywall for a reader of this blog, here is […]
1. “Success is best when it’s shared.” “Culture and values trumps strategy.” “Business is a team sport.” “Service is a lost art in America. It’s not viewed as a professional job to work behind a counter. We don’t believe that. We want to provide our people with dignity and self-esteem, so we offer tangible benefits.” Bricks and mortar retail means people directly interacting with people. Former Starbucks executive Howard […]