Comments on: Rocket Science 2: Drinking the Kool-Aid http://steveblank.com/2009/07/02/rocket-science-2-drinking-the-kool-aid/ Entrepreneurship and Conservation Mon, 06 Sep 2010 17:00:29 +0000 hourly 1 http://wordpress.com/ By: The failure of a promising developer – in slow motion | Control Pad http://steveblank.com/2009/07/02/rocket-science-2-drinking-the-kool-aid/#comment-1236 The failure of a promising developer – in slow motion | Control Pad Wed, 29 Jul 2009 19:49:12 +0000 http://steveblank.com/?p=1899#comment-1236 [...] Peter described the first company in which “Hollywood meets Silicon Valley” and we were enthralled. When he elaborated how CD-ROMs were going to change both the nature of gaming and the economics of the content business, we were certain he had a brilliant idea and by the end of the meeting convinced that this was a company would make a ton of money. (read more of part one) [...] [...] Peter described the first company in which “Hollywood meets Silicon Valley” and we were enthralled. When he elaborated how CD-ROMs were going to change both the nature of gaming and the economics of the content business, we were certain he had a brilliant idea and by the end of the meeting convinced that this was a company would make a ton of money. (read more of part one) [...]

]]> By: Data, Death, and Reality Distortion Fields http://steveblank.com/2009/07/02/rocket-science-2-drinking-the-kool-aid/#comment-801 Data, Death, and Reality Distortion Fields Sat, 04 Jul 2009 15:41:54 +0000 http://steveblank.com/?p=1899#comment-801 [...] Steve Blank warns us of Drinking the Kool-Aid. While an Entrepreneur-in-Residence (a sweet position by Steve’s standards) he experienced [...] [...] Steve Blank warns us of Drinking the Kool-Aid. While an Entrepreneur-in-Residence (a sweet position by Steve’s standards) he experienced [...]

]]> By: Mark Essel http://steveblank.com/2009/07/02/rocket-science-2-drinking-the-kool-aid/#comment-800 Mark Essel Sat, 04 Jul 2009 15:12:43 +0000 http://steveblank.com/?p=1899#comment-800 Good points Dmitriy, but I believe you may have made a stereotyping mistake. Not all VCs are equal. Sure when clumped together they perform worse than some other asset classes (Fred Wilson made a good post on this: http://www.avc.com/a_vc/2009/03/venture-capital---thoughts-on-the-asset-class.html) The performance of a limited partner's investment is clearly a product of the team of VCs you invest in. There appears to be a saturation point within this market space. Good points Dmitriy, but I believe you may have made a stereotyping mistake. Not all VCs are equal.

Sure when clumped together they perform worse than some other asset classes (Fred Wilson made a good post on this: http://www.avc.com/a_vc/2009/03/venture-capital—thoughts-on-the-asset-class.html)

The performance of a limited partner’s investment is clearly a product of the team of VCs you invest in. There appears to be a saturation point within this market space.

]]> By: Dmitriy http://steveblank.com/2009/07/02/rocket-science-2-drinking-the-kool-aid/#comment-792 Dmitriy Fri, 03 Jul 2009 04:10:27 +0000 http://steveblank.com/?p=1899#comment-792 To me this looks like inherent problem with venture capital model. Lots of ideas sound exciting because people are clueless. As a VC you have to park your money somewhere, so many awful deals get done. If you are entrepreneur with a solid business that actually makes money you would know that VC has the highest cost of capital imaginable and would find better options. Of course there have been many VC-backed successes because when new markets rise someone is going to win and many companies take the money along the way. But I wonder if the success is due to or in spite of VCs. Of course, they could be useful in creating liquidity events, but absent bubbly environment and disrupting marketplace what is the point? By 10-year data, now excluding dot-com era, VC is officially the worst asset class! To me this looks like inherent problem with venture capital model.

Lots of ideas sound exciting because people are clueless. As a VC you have to park your money somewhere, so many awful deals get done. If you are entrepreneur with a solid business that actually makes money you would know that VC has the highest cost of capital imaginable and would find better options.

Of course there have been many VC-backed successes because when new markets rise someone is going to win and many companies take the money along the way. But I wonder if the success is due to or in spite of VCs. Of course, they could be useful in creating liquidity events, but absent bubbly environment and disrupting marketplace what is the point?

By 10-year data, now excluding dot-com era, VC is officially the worst asset class!

]]> By: links for 2009-07-02 « Blarney Fellow http://steveblank.com/2009/07/02/rocket-science-2-drinking-the-kool-aid/#comment-791 links for 2009-07-02 « Blarney Fellow Fri, 03 Jul 2009 01:13:35 +0000 http://steveblank.com/?p=1899#comment-791 [...] Rocket Science 2: Drinking the Kool-Aid « Steve Blank (tags: vc startup) [...] [...] Rocket Science 2: Drinking the Kool-Aid « Steve Blank (tags: vc startup) [...]

]]> By: Twitted by altgate http://steveblank.com/2009/07/02/rocket-science-2-drinking-the-kool-aid/#comment-789 Twitted by altgate Fri, 03 Jul 2009 00:22:17 +0000 http://steveblank.com/?p=1899#comment-789 [...] This post was Twitted by altgate [...] [...] This post was Twitted by altgate [...]

]]> By: steveblank http://steveblank.com/2009/07/02/rocket-science-2-drinking-the-kool-aid/#comment-787 steveblank Thu, 02 Jul 2009 19:22:54 +0000 http://steveblank.com/?p=1899#comment-787 Aamir, The game business is different from the tech business in some obvious and non obvious ways. - You're in a "<em>hits-based</em>" entertainment business like movies or music rather than a product business like traditional high-tech. - You can be an Independent studio or do "work for hire" (either a revenue share or buy-out model) - If you're an independent studio you have a set of choices for distribution channel and marketing models. - etc. We understood none of this. More detail in future posts. steve Aamir,
The game business is different from the tech business in some obvious and non obvious ways.
- You’re in a “hits-based” entertainment business like movies or music rather than a product business like traditional high-tech.
- You can be an Independent studio or do “work for hire” (either a revenue share or buy-out model)
- If you’re an independent studio you have a set of choices for distribution channel and marketing models.
- etc.
We understood none of this.

More detail in future posts.

steve

]]> By: Aamir http://steveblank.com/2009/07/02/rocket-science-2-drinking-the-kool-aid/#comment-785 Aamir Thu, 02 Jul 2009 17:18:40 +0000 http://steveblank.com/?p=1899#comment-785 Awesome post Steve... but isn't drawing the business model for a gaming company going to be easy? Make game, market, sell, profit? Awesome post Steve… but isn’t drawing the business model for a gaming company going to be easy? Make game, market, sell, profit?

]]> By: Mark Essel http://steveblank.com/2009/07/02/rocket-science-2-drinking-the-kool-aid/#comment-784 Mark Essel Thu, 02 Jul 2009 16:14:24 +0000 http://steveblank.com/?p=1899#comment-784 Reality distortion field isn't the basic technique covered in startups 101? I just assumed the distortion field must be propagated until it meets reality with widespread adoption. If entrepreneurs can't imagine and convince us that we can achieve the impossible, who will? Failed concepts require the courage to recognize the need for business redirection. I'm sold on people, not their favorite idea of the moment. If long term investors fall prey to UBER pitches, at the very least their investing in a master salesmen- leverage that brilliance in another tractable venture. Ps: my limited perspective comes with self recognition of a lack of hands on experience always enjoy it when I stop in to read here Steve Reality distortion field isn’t the basic technique covered in startups 101?
I just assumed the distortion field must be propagated until it meets reality with widespread adoption. If entrepreneurs can’t imagine and convince us that we can achieve the impossible, who will?

Failed concepts require the courage to recognize the need for business redirection. I’m sold on people, not their favorite idea of the moment. If long term investors fall prey to UBER pitches, at the very least their investing in a master salesmen- leverage that brilliance in another tractable venture.
Ps: my limited perspective comes with self recognition of a lack of hands on experience
always enjoy it when I stop in to read here Steve

]]> By: Wyatt O'Day http://steveblank.com/2009/07/02/rocket-science-2-drinking-the-kool-aid/#comment-783 Wyatt O'Day Thu, 02 Jul 2009 15:18:41 +0000 http://steveblank.com/?p=1899#comment-783 Great post, Steve. I love all these war stories. Great post, Steve. I love all these war stories.

]]> By: William Pietri http://steveblank.com/2009/07/02/rocket-science-2-drinking-the-kool-aid/#comment-782 William Pietri Thu, 02 Jul 2009 14:11:55 +0000 http://steveblank.com/?p=1899#comment-782 Like so many of your posts, this is fascinating. Thanks for sharing the lessons you've learned, especially the ones where the cost is measured in years. I've heard say that people who are used to selling are especially prone to being sold. You mention above being on both sides of a reality distortion field. Do you think your skills made you any more (or any less) prone to believing? Like so many of your posts, this is fascinating. Thanks for sharing the lessons you’ve learned, especially the ones where the cost is measured in years.

I’ve heard say that people who are used to selling are especially prone to being sold. You mention above being on both sides of a reality distortion field. Do you think your skills made you any more (or any less) prone to believing?

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