A Game Theory Analysis of Venture Capital Dynamics

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WeWork’s Adam Neumann and SoftBank’s Masayoshi Son (Credit: Getty Images, iStock)

Imagine this game: Four guys are chilling at a bar, and they are all enraptured by a group of beautiful girls, all but one of them brunette. The guys begin to banter about who will successfully woo the blonde. If you were one of the guys, should you disregard what the other boys would do and try to approach the blonde first? What if everyone goes for the blonde?

The most overhyped startups in Silicon Valley are like the blonde among a group of brunettes, while venture capitalists (VCs) are like the guys swooning all over her. …


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Photo by Hikersbay Hikersbay on Unsplash

“The thing you’re doing now, reading prose on a screen, is going out of fashion. … The defining narrative of our online moment concerns the decline of text, and the exploding reach and power of audio and video.”¹

Shhhhh.

Welcome to the p̵o̵s̵t̵-̵t̵e̵x̵t̵ ̵f̵u̵t̵u̵r̵e̵ Star Wars galaxy, a highly functional post-literate society where we transfer information more fully and effectively via dynamic multimedia than static text, learn new things more easily and quickly from verbal and tonal memories like Luke’s Jedi tutelage, review and search archives in holographic video recordings, and converse with people who speak different languages in real time with the help of increasingly smarter protocol droids. …


The unspoken power of signaling could ace or ruin your Series A

You’ve probably been to an Apple store. Even if you’ve only once walked past one, you would’ve noticed that Apple stores always seem packed with customers. In sharp contrast, Microsoft’s retail stores never seem to have enough customers despite the warm decor, plenty of helpful staffers and an array of devices.

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Photo by Pixabay from Pexels

Steve Jobs liked to see long lines of people waiting in front of Apple stores to buy the latest Apple products. Why?

  1. Long lines are perhaps the most visible signal that the product is in high demand.
  2. Long lines increase the value and appeal of the product at a significantly lower cost. …


How Descartes Effortlessly Killed Your Entrepreneurial Dreams

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Image by rawpixel on pexels

When you start living the life of your dreams, there will always be obstacles, doubters, mistakes and setbacks along the way. But with hard work, perseverance and self-belief there is no limit to what you can achieve.

— Roy T. Bennett

In France, people pride themselves on what is known as the Cartesian method, named after their renowned 17th-century natural scientist and philosopher René Descartes, who was the quintessential methodist (in the Chisholmian sense of the word). He developed a problem-solving approach founded on the principle of suspicion: You start with a hunch that things may not be as simple as they seem, which helps you identify a problem, and you refuse to accept anything as true until you know it as such without a single doubt. Then you break it down into parts, prioritize the steps of your solution, and systematically march forward from the simplest to the most complex, taking care not to overlook any part of the whole. …


Move Fast, Fix Shit, and Learn Faster

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The first poster printed in the Facebook Analog Research Laboratory said “Done is Better than Perfect.” It was followed closely by “Move Fast and Break Things,” and “What Would You Do if You Weren’t Afraid?” (Image: Facebook)

If hard work is the key to success, most people would rather pick the lock. — Claude McDonald

“Moving fast and breaking things” is at the heart of the startup philosophy of being scrappy. Facebook was a notable proponent and adorned every one of its offices with the such posters — as a celebration of the hacker mindset and a reminder that the college kids were running the social show.


Resources are hired to give results, not reasons.

― Amit Kalantri, Wealth of Words

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Image credit: Pickles by Brian Crane

Almost everyone who has tried to make a dentist appointment knows it sucks. There are never any available slots when you want them — and it's even more disheartening because you know that many of the people reserving those very slots you want are going to end up canceling or not showing up.

Why all the aggravation? Because all appointment slots have exactly the same cost, which in this case is $0. Note that I'm talking about the time slot itself and not the actual service you receive once you are in the chair. Anytime the cost of something is too low, people will squander it and thus reduce the supply. …


10 Ways You’ll Probably F**k up Your Startup

I recently read Ryan Holiday’s latest book, Conspiracy: Peter Thiel, Hulk Hogan, Gawker, and the Anatomy of Intrigue, a riveting story about Gawker’s death at the hands of Hulk Hogan and Peter Thiel. It’s an interesting book interspersed with conversations with Peter Thiel, Nick Denton, Hulk Hogan and other characters, laced with a discussion about conspiracies, secrets and strategy.

In hindsight, Gawker had numerous opportunities to prevail over Hogan & Thiel Co. What started out as a David vs. …


The greatest shortcoming of the human race is our inability to understand the exponential function.

— Albert Allen Bartlett

The biggest secret in venture capital is that the best investment in a successful fund equals or outperforms the entire rest of the fund combined.

— Peter Thiel

In What is Code?, Paul Ford points out how the profession of programming is highly adaptable to change. Programming languages written to solve one set of problems are often — inevitably — adopted to solve a problem in another. …


The explosion and mainstreamization of “success porn”

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I found it hilarious that Apple made its debut into the world of original TV programming with “Planet of the Apps” — a 10-episode reality show that brings app developers in a competition to try to get mentoring and assistance from hosts Jessica Alba, will.i.am, Gwyneth Paltrow and Gary Vaynerchuk. Contestants (app developers) describe their proposals as they ride an escalator down onto a stage where the judges sit, and then Q&A begins.

The show’s one slick “innovation” is the escalator pitch. (You read that right; I did not mistype “elevator pitch.”) The show begins with an overly brief set-up segment, which doesn’t spend much time explaining the rules of the show, and which also assumes that a viewer will know who host Zane Lowe is, though a reasonably large chunk of the audience won’t. Soon enough, app developers step into a pitch room with a very long escalator in the middle of it. As the four judges listen (often with looks of glacial boredom on their faces), the aspiring app creators have one minute of escalator time to tout the product they want funding for. After the app makers get to the bottom of the conveyance, the judges (or “advisors”) vote yea or nay. …


A peek under the veneer of specialized hardware for machine learning

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What’s the whole point of being pretty on the outside when you’re so ugly on the inside?”
— Jess C. Scott

A U.K. startup called Graphcore has been promoting its Intelligent Processing Unit (IPU), specifically targeted at computational graph models used by machine learning frameworks.

Probabilistic graphical models (PGMs) are a well-explored machine learning framework for exploiting many problem structures. Using a PGM usually involves proposing a probability distribution regarding your data that factorizes into functions of just a few variables each, and representing that factorization with a graph.

These aesthetically enjoyable images provided by Graphcore certainly exuded an organic feel, and the intricate detail gave the impression that a lot of information was represented. I couldn’t help but wonder, what the hell is this supposed to tell me? What do the various colors represent? Why is everything rendered inside a circle (like a Petri dish under a microscope)? …

About

The Quantified VC

building the future with open source robotics | devil's advocate & intergalactic mathemagician | venture capital & startups 🔢 calculus > statistics

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