{"id":495,"date":"2012-05-11T11:31:32","date_gmt":"2012-05-11T15:31:32","guid":{"rendered":"http:\/\/blog.payne.org\/?p=495"},"modified":"2012-05-11T11:31:32","modified_gmt":"2012-05-11T15:31:32","slug":"concentration-of-returns","status":"publish","type":"post","link":"https:\/\/payne.org\/blog\/concentration-of-returns\/","title":{"rendered":"Concentration of Returns"},"content":{"rendered":"<p>I thought it was very interesting that 9 (!) of the 100 people on the <a href=\"http:\/\/www.forbes.com\/lists\/midas\/2012\/midas-list-top-tech-investors_list.html\">2012 Forbes Midas List <\/a>of top tech investors had Facebook as their &#8220;big deal&#8221;. \u00a0The venture funds that had early Facebook investments will show very, very good performance relative to their peers (to the point where it&#8217;s not even fair to compare). \u00a0Early angel investors will get a nearly 10,000X return on their money. \u00a0That pays for a lot of writeoffs.<\/p>\n<p>This shows how skewed and concentrated technology returns have gotten. \u00a0In the old days, a venture investor might have hoped for one home run in 10 for the investment math to work. \u00a0Now, it&#8217;s more like 1:100, or even worse. \u00a0How many groups went through Y Combinator before <a href=\"https:\/\/www.dropbox.com\/\">Dropbox <\/a>and <a href=\"http:\/\/www.airbnb.com\/\">Airbnb<\/a>?<\/p>\n<p>For many Internet software and mobile investments, I think this is a symptom of the &#8220;<a href=\"http:\/\/blog.payne.org\/2011\/11\/06\/the-gaaf-ecosystem\/\">gorilla ecosystem<\/a>&#8221; that I&#8217;ve written about. \u00a0 Many startups end up paying a tax, in some form, to Amazon, Google, Apple, and\/or Facebook, causing a significant fraction of startup value creation to flow to the gorillas.<\/p>\n<p>Net, net: \u00a0instead of a nice stream of $1b exits for the last 5-10 yrs, we&#8217;re going to have one <strong>gigantic<\/strong> $100b exit.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>I thought it was very interesting that 9 (!) of the 100 people on the 2012 Forbes Midas List of top tech investors had Facebook as their &#8220;big deal&#8221;. \u00a0The venture funds that had early Facebook investments will show very, &hellip; <a href=\"https:\/\/payne.org\/blog\/concentration-of-returns\/\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-495","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/posts\/495","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/comments?post=495"}],"version-history":[{"count":0,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/posts\/495\/revisions"}],"wp:attachment":[{"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/media?parent=495"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/categories?post=495"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/tags?post=495"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}