Be Predictable
We are a research firm that predicts if businesses are likely to survive or fail
Predictions are at the core of every decision. Whether running a business or investing in one, actions are underscored by predictions about what will happen next
Predictions in business are often made based on subjective criteria such as "intuition," "experience" or "gut feel." They can rely on ad hoc anecdotes and flawed heuristics
Predictions are risky and expensive. Inaccurate predictions can be catastrophic
Whether predicting competitive battles in the marketplace or the internal struggles of corporate innovation, we believe that decisions should be based on evidence, empirical data and fact. Yet before one can be guided by the facts one must know what they are. Business must advance further from art to science, with each step creating higher quality outcomes and greater levels of predictability. Growth comes from knowledge. Growth is not random. Growth is a science.
TiE Oregon Keynote and Panel
Predicting the Success of your Business
Where: Portland, OR (Site TBD)
When: Tuesday, September 14, 2010
Registration & Details: (TBD)
Robot Uprising in Venture Capital?
Like it or not, we live in a quantitative world; and it gets more so every day. Manufacturing defects are measured with 99.99966% accuracy. Automated trading algorithms evaluate businesses, prices, alphas, betas, libraries of ratios and make trades based on picoseconds of marginal arbitrage. In 2006, an estimated 40% of trades on the London Stock exchange were done by robotic intelligence. United States estimates are closer to 80%, as anyone paying attention on May 6th got a sense for.
In this world of empiricism, data and calculation, the job of a venture investor seems an anomaly indeed. While there are some exceptions, the majority of venture investors allocate billions of dollars every year based on little more than experience and gut intuition.
This is not to, in any way, detract from successful investors; the ability to pick winners, wrestle out a deal and drive others towards a central direction can require tremendous talent and skill. Rather, the point here is merely to pose a question. Given the dollars at stake and lives in the balance, will venture investing inevitably evolve in a more empirical direction? Will there be a robot uprising? More
Exit Junkies: When Equity Stifles Innovation
Startups and venture investors share a problem; “exit dependence.” Equity investors can’t sustainably invest in startups without exits, because exits are how those investors get paid. They must be able to sell their equity (i.e. stock) at a higher value through a merger/acquisition or IPO. No exit, no returns. There must be a “liquidation event.” Startup funding is hooked on exits.
The Funding Black Hole: A Call for Innovation
There is a funding black hole. It sucks in and destroys the gross majority of startups worldwide. It may have even frustrated more innovation, economic development and human progress than all of history’s wars, diseases and natural disasters combined. This “black hole” is the global gap in startup funding. More
3 Top Trends in Angel Investing
1. Industry as a whole: Despite a global recession the average amount that Angel groups invested in startups in 2008 was nearly identical to the level in 2006 (however 2008 witnessed an 8% drop from 2007). Meanwhile average dollars invested per funding round grew by 14% over the same period. Overall, 2008 US Angel investment represented an estimated $19 billion in 55,000 deals.[i]
Bottom line – Total Angel investment was flat between 2006 – 2008, but the average funding round grew by 14%. Angels began doing fewer, larger deals. More
4 Top Trends in Venture Capital Today
For those wanting a quick update on the US venture capital industry, here are 4 Top Trends:
Marquee Customers: a blueprint for failure?
A MICRO-EXPERIMENT
Framework in Question: Startups should focus on pursuing “marquee” customers. More
Profit from the Core; or not. The myth of adjacencies
A MICRO-EXPERIMENT
Framework in Question: Pursuing “adjacent” markets increases the likelihood of new business success. More
The Impact of Great Leaders; less than you might think
A MICRO-EXPERIMENT
Framework in Question: Great management leadership is predictive of superior firm performance. (i.e. ‘bet on the jockey, not the horse’)
Framework Background: Venture capitalists and angel investors cited the “quality of the management team” as a top indicator of likely startup success in a 2009 poll. Indeed, few people would prefer bad, dysfunctional teams to good, effective teams. There are numerous empirical studies supporting the view that good leadership can, indeed, make a positive difference in company performance. But is it predictive? More