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The biggest problem with attempting to institutionalize entrepreneurship is reversion to the mean.  Entrepreneurial activity is, by definition, outside the norm, which is why truly innovative startups sometimes generate outsized returns.

 

In 1983, when I first raised venture capital, the asset class was $3.2B.  IBM's R&D budget was $4.4B.  In part, the VC asset class was so low because of the perceived risk.  Since then, the VC asset class has swelled to over $120B at its peak.  Yet, in that same time, the performance of the asset class has gone from gains of 20%/year to a loss of 0.5%/year.  This is not hard to understand.  An unrealistic view of riches-to-be-had has attracted gigantic amounts of capital, followed by bell-curve distribution populations of investors, inventors and other hangers-on. The result cannot be Lake Woebegone, in this Universe.

 

The deterioration of the US macro environment has forced more people to consider entrepreneurship as the only way to build a future.  An entrepreneurial-industrial complex has emerged in the same way jeans makers and mining supply makers flourished in gold rushes prior.  History teaches us about the ultimate long-term winners in this scenario.

 

The recent news reports about Silicon Valley "rediscovering" hardware product startups is a potential point of light.  The reasons why are a subject for a long post elsewhere, perhaps one will appear at:http://lminfernaloptimist.blogspot.com/

2 years, 1 month ago on The Acqui-hire Scourge: Whatever Happened to Failure in Silicon Valley?

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