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More than 60,000 Americans lost jobs this week, including more than 45,000 this past Monday alone. Predictions from several economists are that we could see 2.5 million additional jobs shed before the end of 2009. While I’m not trying to be a downer, I think it’s time for some straight talk about how to try […]
I recently read Malcolm Gladwell’s new book, Outliers, with great interest and delight. Gladwell is a fantastic author: always thought-provoking on human behavior and a quick, entertaining read. But I confess this book did not resonate with me or strike me as relevant for the VC-entrepreneur dance in the same way his previous book, Blink, did (see: VCs Blink). It was intellectually interesting, but not professionally illimunating. Instead, I have been even more taken by another book, which also analyzes human behavior in a thought-provoking way called Sway. Written by Ori and Rom Brafman, Sway was recommended to me by my friend and co-investor Howard Morgan at First Round Capital. It is a fascinating analysis of why human beings naturally fall into irrational behavior. The book has very relevant implications for venture capitalists and entrepreneurs, particularly in today’s environment, as VCs are likely to allow irrational behavior to seep into their portfolio management decisions in the coming years.
Gradually, in increments of tens of billions of dollars, we are nationalizing America’s banking system. Without a plan, without an organizational structure to oversee the new ownership and without an exit strategy, the nation is in the midst of a seminal shift in the relationship between the public and private financial sectors. We learned that […]
We are experiencing interesting times in M&A. Almost every piece of data published indicates a negative projection for M&A in 2009. For the most part, popular belief is that 2009 will stink. The crazy thing is that I think 2009 will actually be a great year to buy companies, and for the first time in […]
Every year, Probitas Partners surveys institutional LPs to determine how they perceive the market. This year’s survey attracted over 400 responses in the midst of the current market turmoil in late November and early December. Two of the most interesting questions for us where whether the impacts of the Denominator Effect were as bad as […]
I’ve received invitations to at least a dozen seminars focused on how to navigate the changes that will come with Barack Obama as President. So I’ve started to wonder what “change” would really mean, for both our nation and our industry. When I went to the dictionary to look up “change,” I found that synonyms […]
One of our portfolio companies is raising money this year. It’s a great company, run by a great CEO, and it will get funded in a competitive process. The CEO was briefing our partnership the other day and listed the firms he is talking to. In another startup a number of years ago, he had been backed by […]
As I continue to ponder how we have found ourselves in such a pickle I can’t help but wonder how so many very smart people seem to have overlooked or ignored the increasing risk taking that became the norm in the financial marketplace? What could cause such a contagion of self delusion? I believe a glimmer of an answer lies in the concept of “executive function." A psychiatric term, it “describes a set of cognitive abilities that control and regulate other abilities and behaviors. Executive functions are necessary for goal-directed behavior. They include the ability to
The subprime investment tactics by venture capitalists have had a damaging impact on the returns provided to limited partners, and on the technology asset class as a whole. We predict that as a result — and within 2 years, when the gestation period of the post-911 VC funds has expired — LPs will dramatically reduce the inflow of […]
To paraphrase Warren Buffett: As prices fall, a huge amount of financial folly is exposed. You only learn who’s been swimming naked when the tide goes out — and the financial shrinkage we’re witnessing is uglier than George Constanza’s worst nightmare. It was in 2007 that adjustable-rate, subprime mortgages issued during the boom years began […]
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