Nivi · June 24th, 2008
He wrote it before he became a partner at Kleiner Perkins and I like his description of the Rocket Ship model of investing (emphasis added):
“Over the last several years… a new investment model has taken hold. Fill each startup with rocket fuel as fast as possible and blast it into space. The ones that fly, fly, and if the rest of them blow up, c’est la vie.
“In fact, the Rocket Ship Model of startup investment has recently produced many of the most prominent Valley successes. But for every one of them, there are many potentially viable companies that might have eventually prospered if they had been incubated longer.
When too much money is pumped too fast into a startup, there’s no room for mistakes. The initial product and the initial fix on the market have to be right. There’s no way these companies can stop and reconsider what they’re doing with out a great deal of pain.
“You have to be able to survive mistakes in order to learn, and you have to learn in order to create sustainable success. Once the market is understood and the product is fully developed, then move fast and hard.”
Some more snippets from the book:
“[Angels] pay for the privilege of helping the company.”
“If I invest, I am prone to think like an investor, favoring my return over what’s best for the team and often its long-term business.”
“In a privately held startup I don’t favor the investors over the founders. This is probably the crucial way my thinking differs from a VC’s.”
“Business is one of the last remaining social institutions to help us manage and cope with change.”
“The rules of business are like the laws of physics, neither inherently good nor evil, to be applied as you may. You decide whether your business is constructive or destructive.”