Doerr’s Stealth-Phase Approach and a Network of Mutual Support

Today we continue with John Doerr’s investment philosophy. 1. The best stage for venture capital investment is the stealth (“sneaking”) stage. 2. Venture capital requires insight and risk-taking, rather than democratic decision-making. 3. To do venture capital well, you also need a different perspective. Many of Doerr’s views differ sharply from everyone else’s. He often looks at things differently, taking a closer look at areas others overlook to find companies operating in stealth. He also takes a closer look at risks others miss, so he can prevent problems before they arise. Doerr says SGI (Silicon Graphics) died because its gross margins were too high. At the time, SGI’s products were considered the most technologically advanced and competitive, giving it extremely high gross margins—as high as 70%. For a time, it grew so rapidly that people even thought it would replace Sun. According to Doerr, SGI’s gross margins were so high that it passed on everything it ought to have done that offered a lower margin, missing many opportunities along the way. Once the economy weakened and demand in its existing market began to change, its performance fell off a cliff. Accustomed to high profits, SGI did not know how to endure hard times. It could not even put up a fight and went straight into bankruptcy. Many people may never learn to make Doerr’s judgments about industries and technology, and may not consider that particularly important. But his distinctive way of looking at things can offer some inspiration to venture capital practitioners. 5. Make the venture capital model a repeatable norm, rather than the lucky outcome of a handful of geniuses. One admirable aspect of Doerr’s venture capital work is his effort to make making money a repeatable norm, rather than the lucky outcome of a handful of geniuses. 6. Doerr gets all the companies he invests in to help one another. Look at the list of companies KPCB has invested in and how they exited. Some went public, but more were acquired by other companies it had invested in. Doerr places particular emphasis on relationships among his portfolio companies. If you accept his money, you should be prepared to help other companies he has backed. Think of it as an alumni network in a broad sense. Looking ahead, Doerr believes the people he invests in should help one another and lead the way into the future. That means he is investing not just in isolated companies, but in a network of future leaders. 7. Rather than concentrating on detailed financial figures, Doerr focuses on companies’ future development and the changes they can bring to the world. In Doerr’s investment philosophy, you do not see the minute financial calculations investors make in secondary markets—the stock and bond markets. Instead, the attention goes to future development and the impact a company can have on the world. None of us can become Doerr, and we may struggle even to meet his expectations of an outstanding entrepreneur. Yet his views on people and promising ventures offer us a great deal to learn from. --- #得到 #吳軍矽谷來信 #Dedao #WuJunLettersFromSiliconValley