ugly duckling or black swan? ignite presentation 12/6/07 dfj portage venture partners, llc one...
TRANSCRIPT
Ugly Duckling or Black Swan?
Ignite Presentation12/6/07
DFJ Portage Venture Partners, LLC
One Northfield Plaza, Suite 530 Northfield, IL 60093
847/ 446-9460
-2-DFJ Portage Fund I 04/18/23 19:39
Blog:www.vcconfidential.com
Draper Fisher Jurvetson Portage
Network Resources35 offices100+ partners500+ portfolio companies$7B under management
-3-DFJ Portage Fund I 04/18/23 19:39
Blog:www.vcconfidential.com
Audible at the Line
Was going to do a presentation on how to raise capital
• Decided on a topic change this AM
Original Fundraising Pitch will be on my blog:
• www.vcconfidential.com
Many thanks to our partner, Steve Jurvetson
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Blog:www.vcconfidential.com
What Is A Black Swan?
A black swan is:
• A rare event
• With high-impact
• Hard to predict (pattern attributed post event)
Examples include:
• 9/11
• 1987 stock market crash
• Penicillin
• eBay, Paypal
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Blog:www.vcconfidential.com
Why Are They Important
A small number of events explain most of the world’s developments
Infinite white swans prove nothing, but one black swan negates entire theories
Unstructured randomness, not planned approaches, have led to all significant discoveries
Negative black swan’s have cataclysmic & dire consequences
Positive black swan’s drive exponential improvements in life
Evolution occurs on the fringes (mutation)
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Blog:www.vcconfidential.com
What Does This Mean for Entrepreneurs?
Payoff is inversely proportional to predictability
• Everyone sees it, dozens of competitors arise
At the time, everyone thinks the idea is crazy or dumb
• Can lead to years in the wilderness
• Visibility is uncertain as is success
One must expose oneself to as many black swans as possible
• This means iterating often and killing ideas quickly
It also means creating a culture that embraces failure
• It is a necessary part of success if you don’t labor on it
It also means thinking revolution not evolution
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Blog:www.vcconfidential.com
The Two Worlds
Mediocre world
• Routine, obvious & planned
• Governed by bell curves & reversion to the mean
Extreme (or Black Swan) world
• Unexpected, unpredictable
• Governed by chaos theory and fat tails
• Experts & Nobel laureates are dangerous (LTCM)
“It takes a 28 year old to lead a revolution” -- Tim Draper
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Blog:www.vcconfidential.com
Implications
Being agile & open-minded is much more valuable than being smart
Realize that you will have no idea where success will come from
• Iterate & make your own luck, don’t stop moving
Pull analogs & approaches from other disciplines
• Seeing chemistry, biology & computers merging
Be humble, be hungry, be open
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Blog:www.vcconfidential.com
The Great Reckoning
“The financial crisis … is back with a vengeance. I’ve never seen financial insiders this spooked — not even during the Asian crisis of 1997-98.
This time, market players seem truly horrified — because they’ve suddenly realized that they don’t understand the complex financial system they created.”
- Paul Krugman, NYT
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Blog:www.vcconfidential.com
You Ain’t Seen Nothing Yet…
Past 100 years: US highway system, microwave oven, antibiotics, recombinant DNA, airflight/jets, space program, global electric & phone systems, universal access to education, integrated circuit, articial heart, fusion/atomic bomb, polio vaccine, electron microscopes, cell phones, radio, television, air conditioning, lasers, imaging, fiber optics, nylon, radar, PC, eBay, online payments, etc…
“The next 20 years of change will be equivalent to the past 100 years of change.” -- Ray Kurzweil Accelerating Returns
Destructive Capitalism Has Always Driven Innovation