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Summary:

“When people are part of a new company that gets very successful very quickly, such as Google (but this effect is by no means limited to Google), they sometimes confuse the root of this success and incorrectly assume that the success was due to their own […]

“When people are part of a new company that gets very successful very quickly, such as Google (but this effect is by no means limited to Google), they sometimes confuse the root of this success and incorrectly assume that the success was due to their own actions. They then want to translate this experience to other opportunities, either in the same or in related spaces, which in some cases may turn out, but in most cases will fail, just like the majority of all VC investments fail. … The only thing different about the Google mafia compared to other similar periods in history is that more money was made at Google by more people (and more money will be lost here).”

Andy Bechtolsheim, co-founder Sun Microsystems and angel investor in Google.

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  1. The Sun Micro Mafia has done very well over the years. In fact, the Sun Mafia seems to be a Who’s Who of success story after success story. It will be interesting to see how many of the Google, Twitter and Facebook alums go on to create success after success. As Mr. Bechtolsheim says, they will get their chance to make change, grow co’s and likely make money (or lose it).

  2. Andy Bechtolsheim nails the “entrepreneurship exodus” which typically occurs after a given company has a successful exit, which is indeed attractive to the VC industry. I’ll add that this predictable trend leads to VC industry types referring to these entrepreneurs (and teams) in terms such as “proven”, “rock stars”, “seasoned”, and others terms stating that VCs invest in entrepreneurs with said qualities. VC’s infer that these types of entrepreneurs mitigate more investment risk versus entrepreneurs who don’t fit this pattern despite a preponderance of research that clearly indicates VC investment patterns match poorly with successful entrepreneurial profiles. Clearly VC inferences in regards to entrepreneurial traits are way off.

    It is puzzling that we continue to see poor investment decisions in the valley. This is not to say that VC investing is easy, it isn’t in my opinion. However, maybe the VC industry should take a hard look at how it sources and selects opportunities in which to invest. There are likely systemic problems and inefficiencies that result in most VC’s drinking spoiled kool-aid. Most VC’s are bright in my view and experience, and i’m sure the VC industry and the valley would benefit if VC’s took a hard look inward.

    My $.02,

    Best.

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