Zero-to-One: Post #5--Money

 Money. There’s an interesting discussion of venture capital, citing that it takes about 10 years for a company to grow up and be sold. However, most venture backed companies fail—so VCs are like lotto ticket buyers. Venture capital is what Thiel calls a “spray and pray” approach. But they bet on the few that will blow it out and make it worth all their failed investments. The winners are Zero-to-One firms!

The Harvard Business Review—March 2010: Post #2

The BIG Idea: We need an industry dedicated to funding inventions that could transform the world. (“Funding Eureka” by Nathan Myhrovold)

Just like venture capitalists provide a market for start ups, an invention capital system would accelerate technical progress. Currently, inventing is a cash-starved venture that is overly dependent on the government and unrelated to profit making. Solution: create a marketplace where patents are traded and licensed through fund managed by professional capitalists operating in a way that benefits inventors, universities, investors and ultimately the world. Consider how long it took the Internet from its invention in 1968 to ready use as a viable commercial application! The authors argue: “The U.S. with its research talent, openness to financial innovation, and culture of inventiveness, is positioned to lead this new industry.”

Fascinating statistic: “Federal Spending on academic research rose by only 60% from 1983 to 2007. By contrast, investments in the business sector by the VC and private equity soared by 1,140% and 1,940%, respectively.”