Moneyball For Startups

Dan Frommer wrote an interesting post on SplatF yesterday talking about the possibility of a quantitative assessment of founders/founding teams, like they use in baseball. Bottom line is that Dan talked to some leading VCs and none of them use quantitative methods to measure teams. It seems like gut instinct is alive and well in VC land.

Dan quoted me on the topic:

“We have not been able to quantify it. We haven’t even tried. Although I am sure someone could do it and they might be very successful with it.

To us, the ideal founding team is one supremely talented product oriented founder and one, two, or three strong developers, and nothing else. The supremely talented product oriented founder should have been obsessed about a product area/idea for a long period of time and just has to build something to satisfy their passion/curiosity. That’s about it. Joshua Schachter/Delicious, Jack Dorsey/Twitter, Dennis Crowley/Foursquare are the iconic examples of this kind of person in our portfolio.”

We very much engage in pattern recognition but not number crunching. There just aren't that many stats out there on entrepreneurial talent. But we sure like to think that when a great entrepreneur walks into our door, we will recognize him or her as such.

#VC & Technology

Comments (Archived):

  1. Steve Hallock

    Seems like the problem is that a baseball scout looks a guy who has played baseball his whole life and tries to project how he will play baseball in a different space in a different unit of time.An entrepreneur necessarily has to be proficient at multiple skills, most of which she has never been tested at before.

    1. fredwilson

      agreed, unless they are serial entrepreneurs

      1. William Mougayar

        But even serial entrepreneurs make mistakes that can run companies down. Especially when they become over-confident. The experience of 2nd or 3rd timers is good, but not an assurance. They can make different mistakes than first timers. 

        1. fredwilson

          so true

        2. Charlie Crystle

          hey keep your voice down!

          1. William Mougayar

            To every rule, there’s an exception…, and a genius (or fool) ready to prove it 🙂

        3. Tom Labus

          Each company and time out for a founder is unique.  You bring your accumulated skills but they may not matter that time.  

        4. Donna Brewington White

          And I wonder how much to factor in circumstances or the conditions under which the first startup emerged on the scene?  Maybe after the second success this is less of an issue — more indication of some sort of secret sauce in the person’s/team’s makeup.   

      2. Steve Hallock

        that’s the best case scenario for risk mitigation.  But even then, presumably their new venture will present a whole different set of challenges.  Plus you have the challenge of evaluating how past successes (money in the bank!) or past failures will affect them.

        1. Steve Hallock

          baseball scouts have it easy!  hitters hit, pitchers pitch.Evaluating an entrepreneur is like evaluating whether a home run hitter would be good at running the team and having a successful marriage.

  2. Timothy Post

    Fred… I’m sure you’ve seen the project (Startup Genome Compass), which is also focused on trying to quantify the factors that contribute to startup success. Here’s a link to the FastCompany article on them… suspect that there’s a prevailing bias in the venture capital world that overweights certain “conventional wisdom” attributes when “scouting” entrepreneurs. What always amazes me is how certain individuals keep getting funded over and over even after lackluster results. If so, then there is a huge opportunity for VC’s to capture above market returns by thinking outside the box… a la Billy Beane.

  3. kidmercury

    moneyball for VCs will be used by the ycombo-like ppl who deal with larger data sets and possess greater opportunities to create network effects. of course all of that stuff can only truly come about in a disruptive way that yields great value (akin to how it is used in baseball) when the system of selling out to wall street is fixed/replaced. as silicon valley investors are way more interested in taking the easy bubble than in doing the hard work of fixing/replacing the system, we are still very far off.9/11 was an inside job,kid mercury

    1. Colin Pape

      Well said.

    2. JamesHRH

      Love the first part of the post – very interesting.

  4. ShanaC

    A) this post seems to have appeared twice (@nickgiglia:disqus you’ve been warned)B)I saw the project.  They are very focused on lean methodology – but what if parts of lean is just smoke and mirrors?C)What if your business is biotech?  Or better performing steel, or batteries, solar panels, ballet slippers, yummy fruit drink with a long shelf life and isn’t just junk? Could that person transfer over to a tech startup, (or vis versa as with Grilled cheese sandwiches)what qualities matter, if you want to play moneyball?

    1. fredwilson

      thanks shanai have no idea how that happenedi can’t remember the last time a post got posted twiceanyway @nickgiglia:disqus will hopefully realize his comment was nuked and come back and repostsorry about that nick

      1. ShanaC

        You’re welcome, any time.

      2. andyidsinga

        fyi the rss still show two posts is blank.



      1. ShanaC

        1) How is lean mathematical reality?  One of the really big issues when looking at is I’m not sure what they are measuring.  I feel like they may be  mistaking dependent variables from independent variables. I’m also not sure what they are counting in terms of success.2)Maybe because I have friends who do a little bit in biotech, and I’ve hit a point where I am ultra concerned, computing has a place there.  Same goes with cheese sandwiches.  There has also been a major, major rant about fashion startups not actually disrupting anything ( ) because no one wants to deal with the nitty gritty of supply management.  And I would argue that to build something effective, you would need to have experience in these fields more than you would with the code (I mean, describing the problems that need to be solves….)

        1. FAKE GRIMLOCK


          1. ShanaC

            I grok it. I grew up reading social science papers, so I just dislike bad social science. And I wonder if the way and parts of “lean” actually work the way everyone is supposing. it’s totally reasonable – it is how to discover new things!

          2. JamesHRH

            One way to skin cat issue with……..

          3. ShanaC

            @jameshrh:disqus what would be another?

          4. JamesHRH

            I look at alignment but at a higher level than the product.Lets call it evolutionary investment.My personal thesis is that markets create opportunity. Startups have an insight that matches the market opportunity. (I also think that founders typically have a personality that matches the opportunity – even if they are not conscious aware of this alignment). Then the company that the founder would build intuitively fits the market opportunity. Kaboom!Look at Apple – its the hip thing to model yourself on ;-)In 2005, there was iPod and BB. My argument would be that without both of those products in the market, the iPhone is not a success. And without the iPhone , the iPad does not connect with consumers, either.My current expectation is that iCould will rock. They will shift their focal point of from the iMac to the cloud. Your media hub will be your Apple account, not your desktop.Again, the consumer is heading there. The market environment is now about consumer positioning – which it wasn’t in 1985 or 1995 ( it was about distribution positioning, which MS crushed ). Apple is far better ,culturally, at seeing what consumer want, compared to competitors.Another example is the current wave of social internet hits – including many of USV successes – would not have been successful without Fb in the market.You can’t push a rope, no matter how much time you have spent putting your metrics together.One way to do things does not work.Your way – and alignment with a market that is ready (which is really what Fred lays out) – works as a predictor of success.But that’s just me.

    3. Cam MacRae

      I’ve looked a little at and wonder about their premature scaling riff. For example, if you scale prematurely (by their definition) and grow did you actually scale prematurely? I’d probably argue no.It seems to me the intent is to increase marginal survivability such that you maximise the probability of a successful pivot. Fine, and very lean, but I don’t know that I want to make marginal survivability too big of a target – better to push like the blazers whatever you do, no?

      1. ShanaC

        Right.   For example, if you scale prematurely (by their definition) and grow did you actually scale prematurely? I’d probably argue no.So what is the dependent variable that would even create the question.  And is marginal survivability the end all be all of “success”?

        1. Cam MacRae

          I very much doubt it’s a variable per se – more likely a factor(s), but as it says on the tin, it’s a “blackbox” so I can’t / don’t actually know ;)If marginal survivability were the be all and end all of success for venture backed firms then VCs would pretty soon run out of LPs – their money would do better under the bed. What they seem to be aiming at is surviving long enough and remaining sufficiently capitalised to successfully pivot into high growth. My point was that you could misinterpret that to mean “don’t go too hard because eventually we’ll pivot” when in reality you need to be going like the clappers.

  5. John Petersen

    If you tried really hard, you may be able to come up with some metrics on teams that are working on a second or third startup that might help a little – money raised, revenue generated, user growth, things like that. But if you are investing in a repeat entrepreneur, the quantitative data seems much less relevant. Plus, how do you take into account lessons learned?For a team working on their first startup, what would you look at? Where they went to school, did they drop out, GPA? Come on.Frommer is right. Baseball is stat driven. You can even make up your own stats if you don’t like the ones that exist (’s fun to think about, but not realistic.

  6. Wille

    For startup founders, there simply isn’t enough data available to make any quantitative assessment statistically significant, not even for a serial entrepreneur.To make the baseball analogy (which being European, might falter for me): assume a batter with an amazing .40 batting average – this doesn’t mean that out of his first ten steps up to the plate, he hit 4 out 10 attempts, he might actually fail the first 20 times, then hit a hot streak for a while, before falling back again and so on and so forth.Averages are NOT uniformly distributed frequencies. Now take the same example and apply it to a serial entrepreneur, how long does it take even the most prolific serial entrepreneur to work his way through ten startups? Probably at least a couple of decades..

  7. Cam MacRae

    Argh! After I read the SplatF piece this morning I lost 4 hours searching various academic journals for papers, and then lost another couple of hours reading extracts. A lot of people have been looking for the secret sauce for a very long time. There’s a bunch of longitudinal studies which look interesting, and a mountain of papers which probably have some insight to offer, not all of it specific to tech.I’m half of a mind to propose a literature review study as in 5 weeks I’ll be at a loose end for 4 months.

  8. Vineeth Kariappa

    So, the business plans, market analysis, expectations, product, returns never matter. All the years at college down the drain. All depend on the ppl u know n they know. Pretty much how everything else that needs “investment” works. So, whats new? People will always trust their instinct.

    1. fredwilson

      is that what you take away from the post?i think 90% of the people we fund we don’t know and didn’t work with before

      1. William Mougayar

        That speaks to the strength of your assessment skills, regardless of whether you knew the ppl. Most other VCs are stone cold til they know you for a long time. 

      2. Vineeth Kariappa

        Honestly, wouldn’t you credit the person who introduced you? If you dint know person A who introduced you to person B, would you fund person B’s company? (There will always be outliers, and movies made of them. I am talking abt the general scenario)

        1. fredwilson

          source matters a tiny bitbut look at the quote i pasted into my postthat’s the criteria, plain and simplealso, you need to be working in a sector we care about. reading the USV blog and the team members blogs will tell you all you need to know about that

          1. Vineeth Kariappa

            You did mention 3 “super stars”. But, the companies were not their first. Idk, am guessing that you knew them or worked with them before you funded the mentioned companies. So, you would have been the “introducer” to yourself. (hoping that made sense.)

          2. Aaron Klein

            No, not necessarily. There are plenty of founders in USV’s portfolio who weren’t superstars when they were funded.

          3. fredwilson

            delcious was joshua’s first companytwitter was jack’s first companyfoursquare was dennis’ first company to get VC funded

          4. JamesHRH

            VIneeth – Fred’s post below is why Fred is currently a rock star VC: they had a paradigm, it fits the current market environment very well, they execute on it with passion and intelligence.His point is that the founder’s passion and ability ( plus USV’s insight into their likelihood of success ) is what made them rock stars.Great advice here. Find something you can obsess about. Find some others. Contact Fred!

    2. RichardF

      I wouldn’t worry about any of the stuff in this post or the comments if I were you.If  you are able to utilise what you have learnt in college that’s great.  What it comes down to is going out and getting something started.  If it’s a web app then go and find a way to get it built.The mark of an entrepreneur is going out, getting it done and making it happen. Period.There’s a lot of stuff written about rockstar teams and blah blah but fundamentally you have to build something that you and other people want, gain traction and get revenue. Do that and VC’s will come knocking on your door.

      1. Donna Brewington White

        Well said, Richard.

  9. Raj

    I feel certain that you would work with Mark Pincus in just about anything, but is he a product guy?  Was Zynga an “ideal founding team?”

    1. fredwilson

      yes, he ishe is obsessed with producthe spends the vast majority of his time on product

  10. Charlie Crystle

    I would never be chosen by algorithm. It’s tough enough being “old” (thanks SVAnge !), overweight, and righteous. I hate this shit. Let’s see: GPA 2.5degree: English, U of Detime in college: 5 yearstime in HS: 5 yearsfirst job: proofreading for $7/hralbums released:  5money made from that: 0#tech startups: 4# successes: 3, one in progressCrunch that, blue-shirts. +1 for gut– informed intuition.

    1. Carl J. Mistlebauer

      Just as “nerd” is the new cool, one day being “old” will be cool!

    2. ZekeV

      # startups, # successes, albums released…those all seem to be important stats, earned bases if you will. GPA, pedigree, style — those are the batting average and “baseball face” of startup drafting.

      1. JamesHRH

        Weak VC has been papering their butts with the ‘prior successful startup’ Teflon for 30 years.Great VC do structural pattern recognition & experienced based human assessments.Investing in Charlie’s first startup took guts. The 4th one, not so much……..

        1. ZekeV

          you make a good point.the essence of “moneyball” is not so much statistics but the idea that most people focus on the wrong factors as success predictors. the problem is more interesting for VCs and companies that are not top tier, and face a resource constraint. these guys are hiring or funding candidates that have for some reason gone overlooked by more powerful competitors.

    3. MarilynCraig

      Yes, OBP is number of ideas/startups actually started.

      1. Donna Brewington White

        You added a photo.  I see that you mean business.

    4. Donna Brewington White

      “# successes: 3, one in progress”That says it all right there…that the “one in progress” is included as one of the successes.

  11. chrisdorr

    Statistical analysis works in baseball or in any sport because of the very clear and specific limitations that are placed around each sport, i.e. the size of the playing field, the rules of the game, the size of the ball, the list goes on. They provide the platform for consistent comparisons between players over selected periods of time who must always work on this “unchanging” platform.In the world of business, none of these specific non changing parameters exist. The platform is always shifting, driven by ever changing technology, ever changing market parameters, legal parameters, product capabilities, the list goes on. It is a world where pattern recognition has much greater value.  The good news–pattern recognition is what our brain is designed for.

    1. Dale Allyn

      This was my reaction as well, Chris. Baseball has *boundaries*, business has innovation and disruption in addition to fundamentals such as cost containment, operating margins, scalability, etc. (Breaking some rules and boundaries is to be encouraged.)Apply statistics to entrepreneurial businesses at one’s own risk. Poor investments and missed opportunities will be the outcome.

  12. Ela Madej

    I love, love, love this quote: “The supremely talented product oriented founder should have been obsessed about a product area/idea for a long period of time and just has to build something to satisfy their passion/curiosity.”Now, I have no idea how to measure the entrepreneurial talent (other by looking at track record: if they got lucky? how did they deal with challenges? how successful were they in building a great team? are they visionaries? )… but if something makes difference in ANY area of life – it’s passion and the urge to make a difference in that very piece of space you care about. Passion is what will be most likely to keep smart & open-minded entrepreneurs (right, these two are preconditions) focused on their vision, it will keep them going and, hopefully, will keep the team together when things are down.

    1. fredwilson

      yup. that has been proven to me time and time again



      1. Ela Madej

        haha, well said!

      2. Tom Labus

        and right vintage and proof.



    1. fredwilson

      this is exactly correct

    2. David Esrati

      must start in a garage too. HP, Apple, Google.

      1. William Mougayar

        Homes and coffee shops are the new garages.

        1. Luke Chamberlin

          Coworking spaces are the new garages

          1. William Mougayar

            Very true. We’re in one of them ourselves.

        2. Matt A. Myers

          Liked from a cafe.

        3. FAKE GRIMLOCK


          1. JamesHRH

            Skype is the new garage, too.

    3. Matt A. Myers

      “To us, the ideal founding team is one supremely talented product oriented founder and one, two, or three strong developers, and nothing else. The supremely talented product oriented founder should have been obsessed about a product area/idea for a long period of time and just has to build something to satisfy their passion/curiosity. “This is my situation minus the other strong developers. I am a ‘genius’ UX/product guy and have oriented every decision around UX/branding and usefulness – but I’m hoping to get seed to develop further to make company more valuable first before using equity as leverage.I don’t want to give large of chunks of equity to developers who may not workout long-term; I realize you can make % vested over time but it will still be harder to attract as good as developers without giving them very large %s, which when even 10% equity in exchange for $100k-$250k could result in the quality of work needed initially.My concern? You don’t know how hard a developer working just for equity (initially) is going to work, nor can you fully know if they’re doing a good job.I think there’s high value in that I own 100% equity still, and that I know what I am doing and I will be able to guide development and I know the narratives very well for the features I want to create, and the path I want to take for each project – and it’s changed over time as I’ve seen competitors get ridiculous amounts of money for expansion, so I’ll just ride natural organic growth and build better product than them – because in 5-10 years those competitors won’t be able to make as much money; They’re clearly going for the quick build and IPO to get out of a rapidly changing market (no, not talking about Groupon).I’m an insane workhorse. During the summer I did a 200-hour Hatha yoga teacher training, and I had bootstrapped enough money to hire 2 full-time developers for a month and a half, and managed them at the same time I was doing 9-5s, 4 days per week, including homework. I have a strong yoga practice to counter-balance the stresses of how much I try / want to get done each day. I’m constantly on the move and then I eat better, I sleep better – I end up feeling productive and amazing. When I’m unable to build at full speed I feel stagnant.I’m a thinker and have been evolving my theories for 6 years and basing my product design around those (and learning and developing in design since I was 11; 17 years ago). I’ve evolved my theories into a solution I want to try for de-centralizing the web, and I can use my projects to start testing it; Worse case scenario my own projects will benefit from it.I know investors want the dream team with developers on-board early because it potentially makes their costs less, meaning making their risk lower but I’d rather have 5-10% equity initially (instead of giving away 20-50% vested equity to bring on very high quality developers initially).It makes more sense to bring on extremely high quality people once there are complex problems to solve (having a foundation and things are developing and traction is occurring as planned); How many of the original founders of Twitter, Tumblr, etc. had enough expertise to problem solve scaling fully themselves? I know it’s possible, but not as likely for those driven entrepreneurs who aren’t working side-by-side other engineers/developers at Google, or whatever company they get an idea at and branch off into their own thing.. and in that environment you can actually experience their skill/workflow and get a feel for how they handle different situations.Perhaps I am delusional. Perhaps I’m just worrying too much. I just want to be able to continue. I’ve been sitting at a computer for the majority of most of my days since I was 11. I feel like I go crazy when my creative energy doesn’t have a productive outlet.My hope is to get next bigger chunk of money, hire good devs + smaller amounts of equity — maybe my understanding of what ‘founding partners’ is off. I do think it’s more beneficial for everyone involved and having even smaller amounts equity if there’s more equity available later for fundraising or further quality hires, etc., and to only give more equity over time as people have proven themselves – reward them and keep them at the company.Wow. That got long. Kudos to anyone who reads it..



        1. Matt A. Myers

          At some point yes, it makes sense to have quality people for missing skills and different perspective as partners – though I’m fairly good at see many different perspectives; I understand the fallacy that exists in that statement. I do get perspective outside of my own as well.So yeah – the non-indepth version is “get partner.” What that path looks like isn’t going to be clear nor the same for everyone.

          1. JamesHRH

            Matthew – stop and listen.You lack confidence in your ability to choose people. Why is that? Because you don’t see it as important and you have not put in any reps on the issue.You are wrong with this assumption. Businesses are about attracting people: partners, co-workers, investors, customers, supply chain partners, etc.The product and the money are the what. You are stuck on the Why and the How. Check this out: have been there ( I call it Constanza mode – doing everything backward ). When the light goes on for you here, everything will come quickly and you will begin to trust yourself on these issues.

          2. Dave Pinsen

            I doubt someone who considers himself a “genius” lacks confidence. 

          3. Matt A. Myers

            You can be confident in some areas but not others. And it can stem from understanding. I over-think sometimes, a lot of the time. People aren’t something as predictable as other things.. and yes, I have some trust issues with people – which makes me cautious with decisions relating to potentially being stuck with someone for prolonged periods of time — too cautious perhaps.I’m actually pretty humble. Just frustrated. I put genius in quotes because the concept of genius is arbitrary. I’m good at what I’m good at and there are reasons behind it.

          4. JamesHRH

            @daveinhackensack:disqus I find that people who lack confidence in dealing with people make mistakes like describing themselves with terms that they think are objective, but are received by people as anything but……@twitter-115424261:disqus did you check out Simon Sinek’s site?

          5. Susan Rubinsky

            Getting good people requires giving them a part of the action. You don’t have to give them a % of the company. you could give them a % of investment shares if you structure the company properly. Create management shares and investment shares. Investment shares can be created in any number of ways that will give enough incentive to get good developers but to allow you the control you need as a founder. Also, it’s been my experience that 1.5 -2% of net revenue is a typical investment share that will get you good developers. Since you already have the vision and the plan you just need to lead the developers.

          6. Matt A. Myers

            I did, last night. Simon Sinek’s TEDx video is great. I’ve thought through a lot now. And I’m listening – very closely. Thank you.I do see choosing people as important, I see it as very important.There are some underlying trust issues I am having to fight which are adding resistance. I certainly see now I am procrastinating from making certain decisions, but I’m not overly sure how to combat it or what I need to do.Perhaps I’m afraid of making a decision that will make me / the company less desirable to invest in, for example, if I find a partner who isn’t local to where I am. I am currently 100% mobile, though there are benefits to staying where I am. It’s been suggested to me to move to a bigger city like Toronto, and I know some companies who have their teams divided in say Toronto and then have a team also in San Francisco, even smaller size teams (obviously you don’t need big teams and many employees to have big revenues/profits).I do know the why with what I am doing. Maybe I’ve not kept my guidance based on it, and perhaps I don’t have it on the forefront of my mind enough. I can and do attract people with what I want to do – I think it’s the follow-through and the resistances I have making it difficult/impossible to go where I need and do what I need to find viable partners. I’ve felt vulnerable saying all of this, though clearly it is something I am in need of talking about.

        2. Carl Rahn Griffith

          Nowadays, I ‘hear’ your nuggets of wisdom, FG – I now have a vision of Darth Vader being a VC ;-)But, not on the ‘dark side’, I hasten to add! 🙂

          1. RichardF

            I’m still hearing FG as the cookie monster 🙂

      2. ShanaC

        It will get better 🙂

      3. Dale Allyn

        Matthew: don’t be stingy with equity if you find the right partner. A half loaf of bread is better than no bread at all. The right co-founder will contribute to success, and will help you do it in less time. S/he will also see things you miss, or help you set concerns aside when you’re over-thinking, etc. It can be cheaper in the long-run. 

        1. FAKE GRIMLOCK


          1. Dale Allyn

            I’ve seen it many times, not just startupland. Mining gem minerals, wholesale distribution companies, and especially family-run businesses which are being out-maneuvered by competitors yet they won’t share equity with key non-family people who could make the difference to bound ahead. I also see it in tech startups, just as you point out. We’re not suggesting one be frivolous with equity, just recognize the potential value in partners. And further recognize the potential resentment that builds if major contributors are not equally compensated with ownership.

          2. PhilipSugar

            Me always say piece of watermelon always much bigger than whole grape. 

          3. Guest

            That is a good one; might have to use that in the future.

          4. LE

            A total “Danger Will Robinson” if I may say so. Classic mistake of focusing on the upside without considering the downside.

      4. andyidsinga

        my 0.02 – maybe find a partner who is as passionate about the problem space as you are and gradually become good friends…wouldn’t worry so much about skills … people are remarkable at building skills and practising them over time if they are interested and having fun.

      5. ed

        So you’ve told us you’re a genius. Now show us, big boy. Words are for pussies and politicians…and people who spend lots of time commenting on blogs.

        1. RichardF

          in your case, words are also useful for making anonymous smart arse comments.

          1. ed

            The Founder Fathers made “smart ass” anonymous comments. They’re called, among other things, the Federalist Papers and are considered among our countries most important foundational texts.But more curiously: why do you doubt my name is Ed?

          2. Matt A. Myers

            He’s not doubting your name is Ed, he’s drawing attention that you’re afraid to link the comment to your identifiable-self.Even if your name was Fred Wilson and you said that same thing – I’d rather it be known who’s saying it rather than hiding in fear of being identified for whatever reason.And I’m not saying there isn’t value in your comment either, and in your mind it might not be possible for you to link it to your identifiable-self – so the fact that you can post anonymously is still valuable, but not my preference and not many people’s preference.I put myself in a pretty vulnerable spot and opening myself up and writing out my intimate thoughts of where I am at to a high-traffic blog, and people who are my peers – most whom I’ve never met and most who I will never meet. I think the least people can do is reply with their identifiable-self. Not trying to persuade you either.Be yourself and people will take value from it how they want. Some people will applaud how you react, others will not. Haters gonna hate, as they say..

      6. ErikSchwartz

        Don’t take this the wrong way but does anyone else think you’re a “‘genius’ UX/product guy”? Do you have a track record of successful products in the marketplace? Surely someone you’ve successfully worked with in the past has the technical chops to get you to a minimal product.If you don’t have the technical chops to make the first version of the product yourself then you are screwed until you get someone who does. There are two ways to do that, pay them cash or give them equity.

        1. Donna Brewington White

          Asking questions like this is one of the best favors we can do for people.  

        2. Matt A. Myers

          Not taken the wrong way at all. Fair questions. And the answer is on a UX/product features/workflow etc. basis, yes. My projects are only 5% of where I want them to be, including lacking some polishing, but people at least 75% of people I show, who are just consumers, comment on how well things are laid-out / easy to navigate (without me prompting them); I know that alone doesn’t prove I’m good at it and honestly where my knowledge and understanding is now have evolved over the past 6 months, the 6 months before that, and so on. I just know what works, with what I am doing. I’m not claiming to be the best, nor to know it all.I also feel I need to add that my path in life so far hasn’t been a standard one compared to most, so comparisons of where I should be and where I am at and experiences I have had so far aren’t necessarily on par.And I already have prototypes, but just not for everything I wanted to have done – though it possibly is enough, I’m just not sure. I like to be sure of things.. My ideas have evolved and over the years I’ve started multiple projects – partly due to ADD and partly due to impatience. It’s helped me learn more though and I also have more focus now. The different projects relate back to a common point.Maybe I’m reaching for something I’m not capable of. Can’t know if I don’t try.Worse case scenario if I’m not cut to do all the business functions I need then I get out of business and just become a full-time yoga instructor, though I’d like to start a yoga studio someday as well.

          1. testtest

            Worse case scenario if I’m not cut to do all the business functions I need then I get out of business and just become a full-time yoga instructor, though I’d like to start a yoga studio someday as well.I don’t think I could stop. And I’m not sure if I wish I could.

          2. Matt A. Myers

            I’m not sure I could either – or that it wouldn’t be easy. I would still need an outlet, which I partially see as being politics-related.

          3. ErikSchwartz

            So if I understand correctly.A) You lack the skills to build it yourself.B) You lack the funds to pay someone to build it.C) You won’t share enough equity to get anyone to do it on the come.D) You have expressed that you don’t have the skill set to know how well a 3rd party is executing.The bottom line is you NEED a co-founder. Without one the company is DOA. You can’t build the product without help. You are unlikely to get funded from the current stage. You lack the development skill to put together a tech team even if you had cash.Finding a co-founder is really hard. It took me a year to find the right co-founders for my current project. The wrong co-founder is as bad as no co-founder. All of these are some of the reasons that most companies fail.But what you need to decide is whether this is something you NEED to do, or if you’re happy to float around the edge of the startup world as-is as yet another wantrepreneur.

          4. Matt A. Myers

            I already have prototypes built, I just wish certain other parts were already created. It very possibly is enough to find enough money, along with explaining where I am taking things, features and narratives as to why, etc.. I just like to have my hand stacked when making a play.I do believe it will work out and that I can find some good co-founding team members/partners, though less equity will have to be given out if I have some money to pay them as well – and things will be done faster as they could work full-time because they won’t need to subsidize their living otherwise.Re: How well a 3rd party is executing, many people will take shortcuts when they don’t have equity..

          5. ErikSchwartz

            Good luck.Unless you have a long track record of success getting a minimal prototype with no traction funded without having the team lined up to execute the plan is a long and very tough road.

      7. Donna Brewington White

        Yes, it is dang long, but I read it, because it’s you.  (and I’m one to talk about long comments, right?)You are a super-smart guy, but you need another perspective.Anything you can do alone you can do better as part of the right team.And you need at least one or two other productive outlets for all that creative energy.  This will also bring perspective.Cheering for you!  You rock.

    4. testtest

      Get renaissance, do it all.

    5. JamesHRH

      Define brilliant developer please. Woz post-Apple not, uh, brilliant. Why is that?I think my partner is a brilliant developer ( lots of people do ) but she is also a strong CTO type and a darn good team leader. I define her as a startup tech executive and total pro. That’s what I was looking to find.My customer operations partner has a personality type that I was looking to fit into this role & tons of execution success in startups. We will execute like demons & rock Customer Satisfaction under her leadership. The sales leader we just brought in will also make us efficient and effective in going to market ( tons of relevant success and eager to build her own team for the first time ).Could not be happier.We have no developers yet and our team is 4 deep. That’s also a recipe for building a business.



        1. JamesHRH

          ‘retire from brilliant’ – LOL / love it!It is too bad that Woz never found someone else to inspire him to un-retire!

          1. JamesHRH


        2. JamesHRH

          Developers coming in now – finding experienced strong people, all good.They see the business is prepared to grow & they make the commitment with full certainty.

  14. William Mougayar

    I don’t believe startups can be quantified meaningfully as such. There are checklists, yes. But every VC will have their own because they are each looking for different things. A bad investment to one might be great for the other. Paul Graham said they don’t look at data, but gut feel. But gut feel comes from experience, and trusting your gut to lead you. As a VC, if you’re not confident or don’t know your markets, you will resort to data as a refuge, as an excuse, as a false justification.

    1. LE

      “Paul Graham said they don’t look at data, but gut feel. But gut feel comes from experience”In negotiation I go on gut feel. Yes gut feel isbased on experience.But the gut feel is also based on all sorts of data that I collect including each and every word in emails and conversations that I have, including the nuance of someone’s voice. (Sensing fear, desperation, bs as only a few examples.)And if I happen to be able to tape record a conversation I will review it for vocal inflections and word emphasis, pitch and tempo among other things.Face to face it gets  more data rich since you  gatherthe additional facial reactions and micro expressions as well. But then it’s a little harder because you have to suppress your own reactions and there is more data process in real time. And of course since negotiation involves lying (sorry it’s true) it’s easier to lie by email then in person.The decision on whether to deal one way or another consequently is based upon interpretation of the data of the situation to decide the best way to even conduct the negotiation so as to gather more data and make a decision.

      1. Charlie Crystle

        gut = informed intuition. 

        1. William Mougayar


        2. JamesHRH

          Intuition can be sharpened if you are consciously putting in the reps in an area that interests you, don’t you think?Overhyped 10,000 hour rule……

      2. William Mougayar

        Agreed. The data is already processed in the gut, and that’s what makes the “feel” more accurate.

      3. andyidsinga

        In the interview with Charlie Rose, Paul Graham also said something along the lines of ‘they look for their peers’ ( i.e. hackers, makers etc ) …that seems more like a kind of pattern matching more than gut interview here ( 24:39 )

  15. zubinwadia

    This is like trying to come up with metrics that highlight an ideal “athlete” for the Olympics, regardless of sport. Bolt can’t win the marathon. It just can’t work with a domain as big and diverse as the start-up universe can be, hence patterns and hunch are all we have. Baseball has the luxury of being a constrained domain with a very long history of consistent statistical logging across well established parameters. Same goes for Cricket. That makes moneyball possible. 

    1. JamesHRH

      Again, it is important to remember that Moneyball does not win World Series.It has no pitching component for starters.It is a great story but not a success story.

  16. BradDorchinecz

    There is a firm called Correlation Ventures that uses a predictive model to make co-investment decisions that is quite unique. Here’s their approach:

    1. Tom Labus

      What’s the track record?

  17. Prof. Noam Wasserman

    Fred: A recent alum of my Founders’ Dilemmas MBA course atHBS pointed me to this article.  I completely agree with the need to takea rigorous, data-driven approach to testing and correcting the anecdotes andrules of thumb that founders and investors use to make key earlydecisions.  To do so, since 2000, I have collected data on 10,000 foundersfrom 4,000 tech and life-sciences startups.Those data, and almost two dozen case studies I have written to translate myresearch results into the classroom, are the backbone of my course.  (Ifyou want to see Inc. magazine’s writeup on the course, it’s at…More important for your post, those data and cases are also the backbone of anew book that’s being published in March.  (The title of the book is The Founder’s Dilemmas: Anticipating andAvoiding the Pitfalls That Can Sink a Startup.)  The book will hopefully help spark much moreof a rigorous, “Moneyball” approach to our shaping those critical earlyfounding decisions.Noam Wasserman, Harvard Business School 

    1. fredwilson

      thanks for the linki will check it outfascinating stuff

      1. Prof. Noam Wasserman

        Disqus appended two characters to the Inc. link.  In case it didn’t work, it’s supposed to be

        1. JamesHRH

          @mattamyers note the issues listed in this article about Prof Wasserman’s class are all people based……..My experience is that the majority of startup failures are due to internal issues. Most frequently, this is based on the founder’s inability to build the team that builds the company ( see trust discussion in the article ).

          1. Carl J. Mistlebauer

            After graduating from college four really good friends and myself sat down and came up with an idea for a company, this was in 1980.  I still marvel at the fact that the idea was probably the most brilliant I have ever seen but it did not get off the ground because none of us had a clue how to build a team successfully…and so nothing happened.  One thing I have learned since then is that every successful company needs a visionary and they need a diplomat.  Someone who understands sees the vision and marshals the necessary people and material to succeed.To be a successful start up or small business you better have a diplomat on the team or you better understand yourself very well.  

          2. JamesHRH

            Carl – exactly!I have extended it a bit further. Every business has the same functional needs – acquire customers, keep customers, operate offering, develop offering, audit, finance, HR.Startup CEO, as Fred Says, has this job: ‘ hold product vision, build world class team, don’t go broke.’If you have enough experience to know your market opportunity ( IMO ) you build the senior team first ( to de-risk the company ) and then you build the product.The longer the team can go without a material change to it’s structure ( hiring on top or switching out ) the lower your risk profile.if you don’t have enough reps under your belt in the areas you want to disrupt ( or in startups ) then Fred’s approach is bang on and his incredible ( @charliecrystle credit ) informed intuition gets you underway,in a big way.All this is really just to say that there is more than one way to skin a cat (but no more than 3! ) and the rareest of all is the sole founder.

    2. ShanaC

      Thank you.  I’m glad there are people thinking about rigorous approaches to these questions.  what do you think of

  18. Jamie Flinchbaugh

    The other side of Moneyball from using quantitative methods properly is how baseball was also using them improperly – for example, overly focusing on the batting average. While this isn’t done for entrepreneurs, it is done for companies. Some of the arguments for why one multiple of EBITDA versus another multiple is, either intentionally or unintentionally, often using stats that are pretty much shots in the dark, but make you feel good about ‘doing the math.’  In the end, I think the lessons of Moneyball beyond baseball are: be very aware of how your decision making works, and whether your model is valid or not. 

  19. MRH

    I am really interested  in this subject. I built a simple recommendation engine for investing in semiconductor start-ups this past fall. I has to limit it to an industry because gathering enough data was very painful. Anyways- I played a lot with the feature set and at the end I came up with a “people quality” measure that was a good predictor of success  (money raised, VCs, technology, etc was completely secondary and practically irrelevant). Only people quality was a good predictor. People quality is not just where you went to school but really tries to identify the psychology of the founding team.  This is very hard to get data on other than by meeting the person or really knowing the person. Checkout NYT article for some potential ways of measuring likelihood of success CPA (

  20. Tom Labus

    You can have all the “right stuff” but if you are not in the right atmosphere you will not be released.Sometimes you have the passion and sometimes it doesn’t happen.It is like ball players,  You can be a dud on one team and an all star elsewhere.

    1. Donna Brewington White

      This is incredibly true.In my business (executive search), the rule of thumb is that past performance is the best predictor of future performance and for the most part I adhere to this.  But, I’ve learned that I need to hold this loosely and/or evaluate the circumstances closely. You have to look at surrounding circumstances and assess how a person performed in relation to those circumstances.  That relationship between the individual and circumstances is intensely informative.  Someone who on the surface may not have performed as well could in fact be a rising star.

      1. JamesHRH

        Totally agree – I call it ‘betting on the come’ for the rising star and ‘situational success’ for the person who cannot make it happen, but can be part of it happening.

        1. Donna Brewington White

          Great phrases. Will need to add these to my vocabulary.

      2. Tom Labus

        Making people shine to their max.

    2. JLM

      The greatest coaches “coax” the best performance out of their players at the critical instant when performance is decisive.

      1. JamesHRH

        In hockey, the biggest compliment you can give a goaltender is not statistical (i.e., wins, goals against, save %).It is: ‘he makes saves when we need them.’Down a goal early, up a goal after being up three, etc.Totally unMoneyball.

  21. ErikSchwartz

    There just are not enough relevant data points to do a decent job of quantitative analysis.To carry the moneyball analogy forward it would be like choosing major league ball players by looking at their physical education grades in elementary school.

  22. reece

    pattern recognition has its perks, but the best investors, by now, are probably open to the black swans out therei meet a lot of early stage teams looking for advicemy gut instinct is usually pretty strong as to who will and who won’t get any traction, but i never count anyone out because some people will simply claw their way through

    1. Donna Brewington White

      “some people will simply claw their way through”exactly

  23. Aaron Klein

    I’m a big fan of the book but I think it’s important to remember that building great products (and therefore picking a great team to do that) can’t be done solely on a quantitative basis.For all its strengths, a purely quantitative approach couldn’t have built a transformational product like the iPhone. As Henry Ford said “if I’d asked my customers what they wanted, they’d have said a faster horse.”

    1. Cam MacRae

      I agree, but I think the value in a quantitative approach would be in predicting the fledgling business most likely to succeed irrespective of product. The literature I’ve read thus far seems to suggest that there are models that enable you to predict who will still be around in 3 years time, but that a predictive model for growth is not as straightforward. Given any given fund is probably made by one or two companies with extraordinary growth, this seems to be a fairly big problem for a quantitative only approach to VC.

      1. Aaron Klein

        I’m pondering this because my love for data-driven predictions makes me want to believe that would work. My world view that companies can’t succeed irrespective of product is making that tough.

        1. Cam MacRae

          There seems to be some confusion as to whether we’re modelling the process of entrepreneurship etc. or modelling portfolio allocation based on some predictive model of success. I took the latter meaning from the SplatF piece, so:Could a quantitative approach build the iPhone? No.Could a quantitative approach predict which team might build the iPhone? Possibly.Could such a quantitative approach better predict that team than @fredwilson:disqus ? No idea, but it sure would be a nice edge.Does that notion sit better with you?

          1. Aaron Klein

            Ah, that makes more sense. I’m not sure if I still believe that can be quantitatively measured but it’s a lot more likely to be possible.Thanks for explaining what was meant…

          2. Cam MacRae

            Yeah. I think it’s more likely possible for very early stage ventures using similar techniques to those used for small businesses, but I sincerely doubt it would outperform something like YCombinator’s incubation model, and given the bias baked into the model would introduce undesirable side affects e.g. perpetuating the old boys club.

          3. Donna Brewington White

            Nice analysis/clarification of the questions.

      2. testtest

        What’s the best paper on this?

        1. Cam MacRae

          At this point I have no idea. The Journal of Business Venturing has some promising looking stuff, but I haven’t got past the extracts (and may never!).

          1. testtest

            OK, thanks

  24. Rpezman24

    I could not disagree with the above analysis more. A founding team needs to serve 3 functions (and they could all be done by the same person in certain circumstances)1) A person who can sell anything to anyone at any price and who feels the product or service they are selling is truly needed.2) A person with exceptional PM skills who will work their a$$ of to deliver a product of greater than expected quality to the customer at lower than expected cost to the company. Even if they have to hire 50 developers or just 1.3) A person familiar with financial and legal matters to make sure the firm doesn’t blow up on one bad decision.

    1. andyidsinga

      i was going to argue with your #1 and say : anyone can sell anything to anyone at any price if the price drops to zero …then i thought of having a garage sale and how i’ve failed to even give things away for free 🙂

    2. JamesHRH

      That’s a ‘not fail’ recipe, not a ‘win big’ recipe.

  25. Jan Schultink

    VCs cannot pick investments based on stats,but institutional investors should be able to pick VCs based on it

    1. Rpezman24


    2. JamesHRH

      The financial markets are littered with people who have eras of success and then explode.Stats do not make Accel who they are today. Their stats in the years leading into the Fb investment were horrible and major institutions were dropping Accel like a hot rock. You would have had to know people and know Jim Breyer to bet on him at that point in Accel’s history.Pattern recognition and human assessment. Not stats.This is the same kind of thinking that turns people into addicted gamblers……..

      1. Jan Schultink

        Stats can probably weed the obvious poor VC performers. The candidates for investment merit closer inspection

        1. JamesHRH

          That is what Harvard and the other major investors were doing to Accel – using their stats to eliminate them as a candidate for investment – just before they invested in Fb…..Although I tend to agree with you!

    3. Donna Brewington White

      I was thinking something similar.  Seems like the wrong question is being asked (or rather the wrong subject being identified) in terms of making predictions.

  26. SeanMEverett

    There’s actually something called Effectual Entrepreneurship, with a lot of scientific data compiled by a researcher named Sara Sarasvathy (spell check me on that).It shows what makes the best entrepreneurs aren’t surroundings or personality or team, but rather using prior experience and your network to create meaningful value efficiently.Google effectual entrepreneurship and you’ll find a ton of information on it. There’s also a Google group dedicated to it, though it’s not very active, unfortunately.

  27. Luke Chamberlin

    Google Ventures has an algorithm they use to influence investment decisions.Edit: here is the link:

  28. Dave Carvajal

    Perhaps vc investing is more about viscerally assessing the core competencies of a winning entrepreneur? The best writers have a strong measure of emotional intelligence and rational objectivism. They have a fine read on human sensibilities.  Perhaps this is also true of top UX designers & product people.  And, maybe the best vc investors are people who can not only easily discriminate these qualities but also help strengthen and complement entrepreneurs operating capabilities.  Michael Moritz and Bill Campbell are great examples of guys who embody these qualities on the West Coast – the more mature startup environment.  I would argue that what we need on the East Coast is more investors that ‘get it’ on these core competencies and are willing to “coach” first-time entrepreneurs to success.  The NYC Internet ecosystem needs more Bill Campbells.If the story of Moneyball was the turning point for the quantification of baseball, perhaps the future of startup investing is moving the other way towards investors who are well informed & well practiced at having a strong ‘gut’ sense for picking top talent?

    1. Donna Brewington White

      Great comment.Was thinking that this type of “thinking” felt familiar…then noted your profession.  We should meet sometime.

    2. JamesHRH

      The story of Moneyball is really the story of the 2002 draft class. The did well with a large number of picks that were outside the top 20 but inside the top 100 or so.

  29. Luke Chamberlin

    Moneyball works because the rules of baseball don’t change. Scouts don’t look for players who’ve invented new bats or creative ways to run around the bases. It’s all about percentages based on a limited scope of interactions (left-handed pitcher vs right-handed batter, e.g.).Startups don’t play baseball – they invent new games.Algorithms for innovation are difficult because by definition innovation is new or different and thus there’s no track record or data to examine. By the time you have enough data you’ve probably missed your investment window.Everyone is looking for the next Google or Facebook. Can you think of an algorithm that would have said “yes” to an early Facebook investment? What would the criteria have been?

    1. JamesHRH

      Money ball does not work, as a baseball success method. It is merely a way to find productive players at a low cost.Billy Beane is a horrible founder prototype as his singular defining personality trait is lack of confidence.His Moneyball theory is driven primarily by his obsession to understand why Lenny Dykstra could hit Steve Carlton and he could not.He has never developed a method for winning and when given the chance to run the BoSox, he passes, because he realizes that he will no longer have the excuse that allows him to stay employed by the A’s ( small market, low budget).Micheal Lewis ( I have all his books, this is the weakest by far ) doesn’t take an interest, he’s out of baseball.

      1. Luke Chamberlin

        I thought that was the idea behind this post. Some sort of Moneyball method for investors to find productive startups at a low cost (to use your terms).

        1. JamesHRH

          I assume that VC requires a World Series for 2 out of every 10 portfolio companies, in order for the VC to be successful.The Moneyball problem is that it is not a philosophy for building World Series teams, but that it is a tool for being competitive with fewer resources.

          1. fredwilson

            One out of ten is all you need

  30. Jay Janney

    I’m curious on two points:1.  Does your firm do a post-mortem on failed investments, and if so, what do you look for in he post-mortem?2.   What do VCs consider a good “batting average” for selecting portfolio companies?   It seems to me that if 70-80% fail (a commonly cited average),  that doesn’t seem real good, but in baseball, batting .300 is a starting player.  In basketball, .400 form behind the 3 point range is very good (except during lockouts).  In football, a kicker who hits only 40% of field goals is known as “the former kicker for the ….”

    1. fredwilson

      yes, we do post mortems. we find them invaluable.a respectable batting average in VC is 1/3 fail, 1/3 work but not particularly well, and 1/3 work out well

      1. JamesHRH

        Isn’t this the classic ratio: 2 fail, 6 wash, 2 homers? 

        1. fredwilson

          More or less

  31. matthughes

    The other fundamental of Moneyball is finding ‘undervalued productivity’…Is a start-up investor looking for undervalued productivity?Or potential upside in productivity?

  32. Carl J. Mistlebauer

    Oh, great!  Lets turn VC’s into teams and divide them into leagues.We will go from funding start ups to drafting talent.  Can’t wait till “Sunday Night Start Up” airs on television.  Would they be like reality shows, or maybe they would mimic Food Truck Races or Iron Chef Challenges.What kind of entertainment would you develop for the halftime show of the Start Up Superbowl?I want the contract to supply league uniforms.

  33. 1683wpf1225

    Wow. Predictable given the plethora of VC’s who have engineering and MBA educations. As an executive coach (company founder and VC GP prior), I’ve found  psychological tests predict little. Research shows that interviews are concluded too often with bias. The best assessments of people I’ve ever encountered have been done by mental health professionals. In 50 minutes they can really size people up. Their secret: they show up, pay attention, and they don’t lie to themselves about the biases the interviews trigger. They know themselves. They really show up and listen for 50 minutes and ask very few questions, and the questions are neutral in tone and non-judgmental. Then people tell them things that are extraordinarily revealing. I’ve seen few VC’s operate that way. It’s a time consuming effort that ultimately saves time and money.

  34. rick gregory

    Beane wasn’t the first to use stats to analyze baseball though, not by a long shot. He was the first to use stats to identify hidden gems who, individually were not recognized as superstars and meld them into a team. The reason he did that was that he couldn’t go get superstars since he didn’t have the budget.Your approach is fine, but will pick off the founding teams that stand out, much like baseball scouts will pick out the star talent in that realm. It’s the VC equivalent of going after a hot young prospect that most people would recognize as outstanding. Applying the Moneyball approach to funding would be useful for spotting those teams that aren’t getting traction from VCs but who really do have a high chance of succeeded.However, the approach is flawed for two main reasons. First, baseball has obsessively collected stats for decades – Beane thus had an informationally rich environment to work with. Second, the system was useful in finding underrated players who could be molded into a great team. There’s no real equivalent for startups. Sure, we could argue whether startup = player and team = portfolio, but, well, they don’t. Interesting food for thought, but not really an approach that can go anywhere at the moment.

  35. Tereza

    If they can come up with an algorithm to quantify resilience, then maybe they can do it.  Without it, any packaged measure is bound to be misleading.Also in my observation, the biggest wins in innovation cross lines of what we consciously know, so that they’re not really measurable YET.That’s why the one with the real gift is the one who can see what other people can’t…yet.

    1. Donna Brewington White

      That’s why VCs play the role of prophet to some extent.  

    2. RichardF

      Absolutely Tereza.  I read this quote a while back on Gigaom“One of the secrets of entrepreneurship is to have that unconventional, fundamental insight that the rest of the world hasn’t and be in the position to act on that insight.  And by the time the rest of the world figures it out, you are king.”–  Mike Maples Jr., managing partner of Floodgate Capital 

  36. Avi Deitcher

    Fred, doesn’t this directly contradict your input from Eric Ries’ book? His main point there is that you cannot use the algorithm of market research+budgets+project planning = market success in startup-land; it only works in existing well-established markets where the rules are well-known and can, essentially, be plugged into a formula. For startups, you need to experiment, run a series of tests to see what works, which of your assumptions is valid, at the lowest cost possible, in order to know when to persevere and when to pivot.Like Luke said earlier, for baseball (or any other sport; I prefer hockey) the list of skills required in a player is well-known, the variations and permutations in building a player and/or team is large but finite. For startups, it is, by definition, unknown territory and so the old algorithms do not work.That having been said, I think you *can* quantify some of what works. But in the end, success will come from what it always has: a few basics, such as good founding team, real product that addresses as real need in an innovative way, willingness to test assumptions and pivot when needed, large enough market with no dominant player, willingness on the part of customers to change behaviour, and a lot of luck. There is definitely room for some research here, and a lot goes on, but down to a science? I wish….

    1. Avi Deitcher

      BTW, remember SMARTS, Westchester company bought some years back by EMC? They had Codebook technology, essentially mapped out all the possible permutations of network device events, to lead to events A+G+T = root cause X. It was great, much better than the “Christmas Tree” effect network ops teams used to have.It works because you could apply formula to finite but large number of permutations.Then they tried to get into the application and server management market. It flopped, because of the same reasons Ries gives: using a formula-based approach for an environment with infinite permutations, constantly being changed and reinvented, just doesn’t work.

  37. Dave Pinsen

    If memory serves, there is a company that developed a quantitative model to evaluate the potential of start-up founders. I think I read about that in the WSJ years ago. Don’t remember the name of the company though. 

  38. Anne Libby

    My Moneyball takeaway was less about the quant side and more about asking the right questions.   When you’re acquiring talent — whether you’re a professional investor, or a hiring manager — what’s the equivalent of “bad body”/”ugly girlfriend”?   

  39. Derek Pappas

    A team sport is played on a field or court by two teams using a set of rules, skills, tactics, and strategy. I coach a sport in my spare time. Yes I run a start up but I get out of the office. I learned that lesson a long time ago on an Intel microprocessor project, you need down time.I go to top international competitions and measure the relationship between the execution of the skill and the result. Shots on goal can be measured based on the skill level of the player. The skill level of the player is directly related to the player’s ability and the coaching that they have received over their career. Golf is a game that you can to a certain extent look at a players technique and determine their scoring ability. What you cannot determine when looking at a player hit shots is their ability to deliver under pressure. Delivering under pressure separates the winners from the losers in golf, engineering, and start ups.Startups are subject to many outside variables such as the economy, sudden disruptions in the market, new hot markets, availability of engineering and marketing talent, … Factoring in these variables to a “money ball” equation will be interesting.  The macro factors must be included in the equation to yield a meaningful result unlike a sports equation. Moreover, there is a certain amount of luck involved in getting funded. Having been a sales guy before I became an engineer I know that selling to a certain extent is a matter of timing. Meet the customer too early or too late and you lose the deal. This is true for a start up also. So the luck factor needs to be included in the equation. Excuse the grammar and spelling errors. Its late in Belgrade.



    1. JamesHRH


  41. Matt Straz

    There are at least three factors that even pattern recognition can miss. I say this as someone who pitched my previous startup, Pictela, to USV in 2009 as well as a number of other VC’s without success. Fortunately we eventually did get funded and things worked out.Here they are:- The “Chip” Factor – How big of chip on their shoulder does an entrepreneur have? How bad do they really want it? When Fred and Brad turned us down I went into overdrive fixing the product, meeting with Yahoo, Microsoft and Facebook to get distribution and lining up clients across the country. I’m a highly competitive person even though you might not know it if you met me for the first time – or maybe even the second or third time.- The “Network” Factor – What kind of a professional network does an entrepreneur have? This may be less important in B2C startups but for B2B it is critical. I had worked for the world largest media buying agency, GroupM, for seven years before starting Pictela. I knew every online publisher and dozens of marketers personally.  This matters not only building the business but also in the exit. We were able to exit to AOL after just 26 months because people in the industry knew us or knew of us.- The “Reputation” Factor – It’s not enough to just be networked. People must actually like you and be willing to make good on the hundreds of favors that you will need to create a business.I don’t know if these intangibles can ever be made quantifiable but if they could you’d probably have the basis for one of the more powerful forms of “Moneyball for Startups.”

    1. LE

      “There are at least three factors that even pattern recognition can miss”Matt all of the above sounds great. (Really) I’m just wondering if when you made your pitch did you somehow manage to work all of the above into the narrative?Did you mention those facts as part of your presentation?

      1. Matt Straz

        LE – To be honest  I wish I had done more of it — even though many VC’s focus on the idea. This time with my current startup, Namely, I’m being much more direct with potential investors:- I have already proven my ability create, build and market beautiful products that customers love and companies want to acquire.- Namely is my third company. The first two were acquired by WPP and AOL.- I have lined up some of the best people in the industry as angel investors. If I feel like you will add value you’re in. I take money the same way that I believe that VC’s should give it – based on a personal fit and a shared vision.Finally, I’m going for it on this one. I still have a chip on my shoulder and a lot to prove. This is my Hawaii Ironman Triathlon.

    2. RichardF

      great comment Matt

  42. testtest

    Quantitive analysis requires quantitive data. This can be thrown off naturally by some endeavors, others require layers of abstraction.

  43. testtest

    I don’t think there is a formula Fred. To reduce distorts.Embracing complexity allows for contrarianism.  

  44. leigh

    The notion that quantitative data is more objective then other forms of pattern recognition is a misnomer. There are always human assumptions and bias in them.  There is no Santa Claus.  

    1. Donna Brewington White

      I think I was getting at something similar in the comment made at almost the same time.I do believe in some degree of predictability. I see it in hiring. But predictive assessment is not infallible and to fully rely upon it — in hiring, at least — is amateur in my opinion. (One of the ways I have used it is to determine what questions to further investigate.) Also, quantitative is not necessarily more reliable than qualitative. Especially in making a qualitative decision.

    2. JamesHRH


  45. Donna Brewington White

    Isn’t the more important question about whether or not assessment can predict the outcome, not so much whether or not the the predictive method is “quantitative”?

  46. testtest

    Using quantitive analysis for finding rare events doesn’t work. The tools are wrong, for example Gaussian distribution. It becomes harder to predict the greater the standard deviations of the mean.Twitter are 5 omega (or whatever). You’re looking for outliers not average. Wrong tools, we’re not modeling blackjack here.

  47. davidhclark

    I’m that passionate product guy. Can’t wait to walk through your door.

    1. fredwilson

      I hope you are working in an area that interests us

      1. davidhclark

        I do too! I have shown mock-ups of the product to co-founders or leaders of Facebook, Google, Kleiner, Felicis, SoftTech, and others (just at Disrupt SF), and they all sincerely agreed that I’m building something very interesting. I’ll email you.

  48. Jeffrey C

    Fred you end the post with “But we sure like to think that when a great entrepreneur walks into our door, we will recognize him or her as such.”There is ample evidence out there that data driven decisions are nearly always more accurate. “experts” typically latch on to the few times they were right.  It would be interesting to the list of founders you didn’t like and invest in, and see how that lists stacks up against the ones you did.Baseball and most other sports all thought the same way years ago, and now the teams  that embrace datat are winning a lot more often.  I Think of it this way; if using a Moneyball like process can get you one extra twitter-like investment…it has to be worth the effort.

  49. Dave W Baldwin

    Another great post and batch of comments.I don’t see any way you can do this without your gut.  Integrity is a very important factor, especially if too much depends on coders who will probably fly.  So you have to get back to the visionary and figure out if he/she has it for the long haul with a design that has shelf life.

  50. Hals

    There was a seminal attempt to quantify the high tech venture process in 1991. Gordon Bell, inventor of VAX the most successful mini computer in history and currently principal researcher at Microsoft.  Gordon studied the issue, created metrics, wrote and published  High Tech Ventures, by Bell and McNamara in 1991.  More recently, Heidi Mason and Tim Rohner wrote The Venture Imperative, published by Harvard Business School Press that describes the use of the model for corporate ventures.While in this book you’ll find many of the metrics needed to assess new venture investment decisions in a thoughtful way, no Saber metrics type following developed – VC’s too busy to become engaged – so data points are too few and all by one team, to be generalizable. But it’s a beginning. In fact however, early stage investors still prefer “She’s got the 5 tools” approach as these comments to Fred post show. 

  51. Carl Rahn Griffith

    Great summary of the core team profile.Trouble is – all too often/all too soon – quantitative easing is applied to too many start-ups(!).

  52. RobinLukasik

    I just got a $827.89 Samsung Galaxy Tab for only $103.37 and my mom got a $1499.99 HTV for only $251.92, they are both coming tomorrow. I would be an idiot to ever pay full retail prîces at places like Walmart or Bestbuy. I sold a 37″ HTV to my boss for $600 that I only paid $78.24 for.I use

  53. Dave Pinsen

    I was sucking wind Friday (when I left that comment on your blog). Then I sat down and wrote this article, which led to some new customers the next day, one of them a potential strategic partner of sorts. Maybe not big breaks yet (time will tell about the potential partner), but little breaks, at least, and better than a sharp stick in the eye.

  54. Donna Brewington White

    “You need the small breaks.”So true that it hurts.  And exactly what I need to hear.I wonder if some of the people we think of as lucky are those who recognize the small breaks…which comes from being more aware than the average person.You’ve got me thinking, Mr. Crystle…. or maybe will just start calling you Gandalf.



  56. Donna Brewington White

    @FakeGrimlock:disqus Thanks for that.  (comment re: luck)  Needed that one too!BTW, have been thinking for days about your statement — “Be awesome.”  It’s really messing with me!  In a good way.

  57. Dave Pinsen

    I do the repetition. The article isn’t a mention, it’s one I wrote. That one got about 4500 hits so far, but my average is about 2800 hits (I’ve been writing about 5-6 articles plus some guest posts per week). That last one (“Gold gets hammered”) was a follow up on one I wrote last month (“Why you should consider hedging if you own gold”). Anyone would read the first article and hedged is probably glad they did, given the beating gold took last week.Would be good to get some mentions though by someone with a megaphone. No luck with that yet, but working on it. Also working on adding some new capabilities.Would be good to meet sometime. Maybe this week if our schedules permit.

  58. Donna Brewington White

    …sorry put this in wrong place…moving(Hi Dave)