MTG to MIT to VC: How a Black Lotus Inadvertently Started My Investing Career

OpenView
OpenView
Nov 7 · 4 min read

by Mackey Craven

Mackey is a Partner at OpenView.

Unlike many of my peers at MIT, I did not start programming as a kid. I didn’t take household appliances apart and put them back together, and I certainly wasn’t a gearhead. Strategy, rather than engineering, occupied my world. Specifically, that of Magic: the Gathering, or Magic for short. Magic is a trading card game that was created by a math PhD student in 1993 and grew like wildfire from there. Today there are over 38 million players around the world powering a $500m revenue business for Wizards of the Coast and it’s parent company Hasbro. Magic is a startup success story in itself.

Magic also started my investing career. I made my first investment at age 12, pouring all of the $220 I had earned caring for my neighbor's pets into a Black Lotus, the most powerful Magic card ever printed. That card is now worth $45,000, representing an IRR of 32.3% for 19 years. While minuscule dollars in the world of venture, it’s emblematic of what I look for in an investment, remarkable value for a large number of end users and an enduring competitive advantage, as well as how I behave as an investor: I invest in what I know, I invest early, I do so in a concentrated way and I tend to hold for a long time.

There are over 16,500 unique Magic cards, so what makes the Black Lotus so special? In short, it gives the player using it a tremendous resource advantage over his or her opponent, particularly if used at the beginning of the game. Using it is like starting the opening drive of a football game from the opposing team’s 10-yard line. You can lose, but the odds are heavily tipped in your favor. In addition, it can be used alongside any strategy. Keeping with the football analogy, starting from the 10-yard line is a boon, whether you’re heavy on passing or running. It’s good every time, no matter your strategy. This power imbalance was noticed very early in the history of Magic, and the card was never reprinted after 1994.

So in the world of Magic, the Black Lotus was valuable to everyone who played the game and powerful enough that it was no longer being made — and therefore unlikely other cards would be made with similar power. A paragon of value and long term competitive advantage. You hear VC’s talking about secular bets on market trends, and the Black Lotus was my 12-year-old self’s secular bet on Magic.

While the Black Lotus remains the only collectible I’ve ever invested in, the principles of investing in what I know, investing early, making concentrated bets and having a bias toward holding for the long term guide what I do at OV every day.

Invest in What I Know

OV invests exclusively in software companies, and I focus on infrastructure, data-driven businesses and machine intelligence. As a recovering engineer and applied mathematician from MIT, nothing gets me more excited than an innovative solution leveraging data and machine intelligence to solve a large problem.

Invest Early

In the lifecycle of large and enduring businesses, we partner with entrepreneurs at the expansion stage. Once it’s clear the product is differentiated and creates substantial value for a potentially large number of customers, more commonly known as product-market fit, we roll up our sleeves to help you scale.

Make Concentrated Bets

While I’m a fan of the law of large numbers, I don’t want it to govern our return profile. OV invests in 5 to 10 companies a year, and puts all of the resources of the firm behind those entrepreneurs and their businesses. In fact, the ratio of OV team members to portfolio companies is greater than 1:1. We go all in from day one.

Bias Toward the Long Term

We partner with teams who are building companies that have the potential to be large and enduring businesses, with an emphasis on enduring. For example, we continue to work with a company from our first fund that’s leading it’s market 13 years later. As context, we’re investing out of our fifth fund now. We’re here not just to help you scale, but to dominate.

While many VCs hunt for unicorns, I’m more interested in finding the next Black Lotus: a business that creates remarkable value for a large number of end users with an enduring competitive advantage. If you’re building one, I and the OV team want to meet you.

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OpenView

Venture capital tailor-made to build expansion stage software companies into market leaders.

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