Google does use their money comparatively wisely. While I despise some of their business behaviors (the Bowman’s Brigade issue and the concessions they gave to operate in China), one can’t argue with the fact that they do keep coming up with “cool” tech. Anyone who hasn’t used Google Maps recently should check out their new “street view” option available for many areas. Pretty friggin’ awesome.

No, it’s much different. Madoff duped investors by concealing what he was doing; investors didn’t know what was really going on. In the case of PE lending the borrowers disclosed everything, and the lenders knew everything but chose to accept (or disregard) the risks.

I personally don’t buy the Sarbox argument. Sarbox adds a cost, but so do regulations, taxes, and everything else. If the markets are doing OK, you can IPO and make your profits with or without Sarbox. I am not saying that Sarbox is a good idea or am in favor of it, I just don’t think that it is that much of a killer, especially compared to all of the legal burdens and taxation issues companies face. It doesn’t help, though.

Some of the most ambitious VC ventures are being picked up by those Paypal guys… one is actually creating a rocket company that is getting a NASA contract! Those guys seem to be the ones to watch. I think that the VC’s that raise funds don’t want to be saddled with those kinds of risks because you can’t explain it to your backers – “you invested in a rocket company?” if it fails.

The general point I am making is not for or against this type of work, just that most of it is pretty predictive, using available tools and processes, and not worth the 2% / 20% model. It isn’t like those guys went out there and “beat” the market. They failed like everyone else, just more expensively.

I generally abhor those that took pretty well functioning (if flawed) companies, loaded them with debt, TOOK THAT MONEY OUT FOR THEMSELVES, and then watched the company get swamped when the economy tanked. Ouch.

I don’t think this usually applies, though, to non-Internet-based businesses like one focused on an improved internal combustion engine or a new steelmaking process, or to any business that requires the creation of a large sales organization.

The quality of VCs has fallen every decade. Their backgrounds are no where near as strong as 30 years ago. John Doerr? I worked for Gene Kleiner. Doerr’s no Gene Kleiner.

Back to the bench.

A lot of VC partners have strong technology & startup backgrounds themelves, and often really do bring something to the table in terms of management.

Danny L. McDaniel
Lafayette, Indiana