My articles and research on ‘Venture Capital’

A $32,000 Startup That Was Sold for Millions

I meet entrepreneurs all over the world who think that venture capital is a prerequisite for starting a company.  They write business plans and ask for introductions to venture capitalists.  I tell them that they should instead bootstrap their startups; that what would have cost millions of dollars a few years ago now costs thousands. Think about it.  Today’s laptops have the same processing power as the...

Washington Post: Google — not Goldman Sachs — deserves our best minds

Collateralized debt obligations, credit default swaps, and structured investment vehicles are some of the greatest innovations created by the financial industry in recent times. What did this get us? Subprime loans, the housing bubble, and the financial meltdown.  And with high-frequency trading and other technology gimmicks that investment banks are increasingly using to skim money off the top of stock trading...

Wall Street Journal: Silicon Valley Has a Code Name for Sexism & Racism

On the surface, Silicon Valley looks like the perfect meritocracy. Half its startups are founded by immigrants. You see people from all over the world collaborating and competing. And race and religion are no barriers to success. But when you look closer, you begin to notice something strange: that, with a couple of notable exceptions, women are rarely found in the executive ranks of tech companies. The...

WSJ: Don’t Confuse Investors with Mentors

Entrepreneurship is like a computer game in which you have to master every level before achieving success. Startups repeatedly stumble and have to go back to the drawing board. The best way to skip some levels and to increase the odds of survival is to learn from others who have already played the game. That is the value that mentors provide and the reason why you need to start building relationships with people...

WSJ: Debunking the Myth of the Dorm-Room Billionaire

During the mid-‘90s, cardiologist and researcher David Albert had the idea to develop a handheld device that displays an electrocardiogram. He believed that this would save lives by providing immediate information to patients wherever they were. In those days, even the most powerful handheld computers didn’t have the needed capabilities. So Albert dropped the idea because it was impossible. Myths abound...

Wall Street Journal: Forget Angels, Try Your Parents or Piggy Bank

The conventional wisdom in Silicon Valley is that venture capitalists and angel investors provide funding for the majority of startups. So most entrepreneurs start their journeys by knocking on their doors. But this is almost always a waste of time because angels and VCs fund only a tiny portion of startups. Harvard Business School professors William R. Kerr and Josh Lerner, and Antoinette Schoar of MIT,  researched  the...

Washington Post: Don’t get tangled in the IPO yarn

In 2009, during the tumult of the economic downturn, SAS CEO Jim Goodnight decided that, despite the risks, he would not downsize his company. Goodnight announced that there would be no layoffs at any of SAS’s roughly 400 worldwide offices. The company implemented hiring freezes and cut costs, but Goodnight refused to follow the path of SAS’s competitors. That year, the company reported 2.2 percent revenue...

Washington Post: Facebook and the big IPO letdown

Facebook’s IPO has raised hopes in Silicon Valley that the tech industry’s days of wine and roses will soon be back with hundreds of start-ups going public. Even President Obama seems excited. He recently proposed an “IPO on-ramp” to help young, smaller companies go public. Sadly, everyone is going to be disappointed. We are not going to see the flood of IPOs that happened during the late 90’s. The...

Washington Post: Five tech predictions for 2012

The past year in technology was pretty wild. The really big Internet IPO returned and the massive venture capital funding bubble inflated, which seems difficult considering that the venture capital industry is far smaller than it was three years ago. But look at some of the crazy valuations on revenue-less photosharing start-ups like Color and Path. And there is clearly another bubble inflating in the cloud...

Washington Post: The case for old entrepreneurs

“People under 35 are the people who make change happen,” said venture capitalist Vinod Khosla, “People over 45 basically die in terms of new ideas.” Khosla, who believes that old entrepreneurs can’t innovate because they keep “falling back on old habits,” said this at the NASSCOM Product Enclave in Bangalore, on Nov. 9. He isn’t alone in his views. Silicon Valley VCs talk openly about their...

Washington Post: Five myths about entrepreneurs

The legends of Bill Gates, Steve Jobs, Mark Zuckerberg and other high-tech entrepreneurs have fed a stereotypical vision of innovation in America: Mix a brainy college dropout, a garage-incubated idea and a powerful venture capitalist, stir well, and you get the latest Silicon Valley powerhouse. That’s Hollywood’s version of technological innovation; unfortunately, it’s also the one that venture capitalists...

Bloomberg TV/Washington Post: The tech bubble is coming. Prepare yourself.

Word leaked out Wednesday that LivingSocial is preparing for a $1 billion dollar IPO. (LivingSocial co-founder Tim O’Shaughnessy is the son-in-law of Washington Post Co. chairman Donald Graham.) The Washington Post also has a marketing partnership with the firm. LivingSocial follows on the heels of its competitor Groupon, and other hot tech companies, namely LinkedIn and Pandora. That the door has finally...