• Brown fitted Khosla’s archetype of the ideal entrepreneur. He had the dazzling intellect, the willingness to put his own neck on the line, the glorious hubris and naivete.
• 5% of the total capital deployed generated fully 60% of all the Horsley Bridge returns during this period.
• the best investment in a successful fund equals or outperforms the entire rest of the fund
• each year brings a handful of outliers that hit the proverbial grand slam, and the only thing that matters in venture is to own a piece of them
• Khosla’s first jackpot, Juniper Networks, built internet routers: he invested $5M and reaped an extraordinary $7Bn for Kleiner’s fund - 1,400x
• Extrapolations from past data anticipate the future only when there is not much to anticipate; if tomorrow will be a mere extension of today, why bother with forecasting?
• They will emerge as a result of forces that are too complex to forecast - from the primordial soup of tinkerers and hackers and hubristic dreamers - and all you can know is that the world in ten years will be excitingly different.
• The future can be discovered by means of iterative, venture-backed experiments. It cannot be predicted.
• Experts may be the most likely source of incremental advances, but radical rethinks tend to come from outsiders. “If I’m building a healthcare company, I don’t want a healthcare CEO”.
• Venture capitalists have achieved this disproportionate impact because they combine the strengths of the corporation with the strengths of the market. They channel capital, talented employees, and large customers to promising startups; in this way, they replicate the team formation, resources, and strategic vision to be found in corporations.
• Most financiers allocate scarce capital based on quantitative analysis. Venture capitalists meet people, charm people, and seldom bother with spreadsheets.
• Venture capitalists look for radical departures from the past. Tail events are all they care about.
• In a world of intensifying geoeconomic competition, the countries with the most creative innovation hubs are likely to be the most prosperous and ultimately the most powerful. In a world of intensifying income inequality, the countries that can foster greater regional diversity in the locations of those hubs will be happier and more stable.
• West Coast counterculture, which freed people to imagine technologies as yet unboard
• The hippies’ anticorporate vibe drove them to share ideas rather than run to the nearest patent lawyer, according to this narrative
• But the valley distinguishing genius is that the patina of the counterculture combines with a frank lust for riches
• By 2014, an astonishing 70% of the publicly traded tech companies in the Valley could trace their lineage to Fairchild
• Unlike other investors, venture capitalists could not diversify their risk across stocks and bonds and real estate: they were bound to hold lumpy, concentrated bets on a small number of technology startups.
• New ventures generally required at least a year of R&D before they began selling their product, and then, if the product proved successful, they typically wanted to reinvest every dollar of income in scaling up their sales effort before a rival copied them
• Trying to play it safe in small companies is, to my mind, self-defeating.