A Micro History of Venture Capital

In 1946 American Research & Development Corporation (AR&D) was formed by Georges Doriot with the intention of investing in other companies. One of its famous investments was a $70,000 funding for Digital Equipment Corporation in 1957. Eleven years later, DEC went public with a valuation of $355 MM, or a return of over 500 times.

Doriot, who was a French immigrant and a Harvard professor, is much regarded as the father of venture capitalism and the first to teach entrepreneurship. In 1937 he taught a strangely named Manufacturing class which had nothing to do with manufacturing. Instead, he preached the principles of entrepreneurship, though he have always avoided that word. In his classes he would tell you how to dress, how to read a newspaper in less than a minute, and even what kind of a women to marry! Many would say that he taught a philosophy of life.

Despite all the investments that were happening at the time, many say that Arthur Rock was the first to coin the term Venture Capital. One of his first investments was when Gordon Moore and Robert Noyce approached him with the idea of creating a semiconductor company which we now know as Intel. At that point Arthur Rock was the business guru of the group so he wrote the business plan – a one page, double spaced business plan with few misspellings. They were seeking $2.5 MM for 50% equity. Rock was so well-networked in the business world that he secured the funding in two days. Two years later they went public, coincidentally the same day that Playboy went public.

Couple of years later and venture capital firms started to takeover Sand Hill Road (pictured above). Firms like Kleiner Perkins and Sequoia were some of the first purposefully structured efforts in that region. In 1977 Steve Jobs was working for Atari when he and Wozniak created Apple One. They offered Nolan Bushnell (founder of Atari) one third equity for $50,000 but he refused. Don Valentine (founder of Sequoia) was the first venture capitalist to meet the couple. He was very uncomfortable with the unkempt looks of the two, so he passes on their offer, only to join them in later funding rounds.

Fast forward to 1997 and 2000 and you get the dot-com bubble. At this stage the Silicon Valley is saturated with all kinds of venture capitalists and entrepreneurs. It was reported that during the dot-com madness many venture capital firms were automatically placing a pre-money valuation of $5 MM on startups so as to avoid the tedious ordeal of due diligence and valuation. They called this the “standard offer”.

Today, we are swamped with venture capitalists, angel investors, and screaming entrepreneurs. The term sheet have evolved into uncontrollable complexity and competition have never been more fierce.

In the future, my bet is on crowd funding platforms gaining even more popularity with an exponential maturity and spread of prototyping machines and collective innovation platforms. Can’t wait!

Forty-Seven Ronin

The story begins with Asano, a samurai in the year 1701 who was invited to the court of a Japanese Lord. Everyone was hustling for an exaggerated reception of the Emperor’s envoy, when a court official insulted Asano by calling him a country boor with no manners. Asano was enraged and attacked him with a dagger, only to wound the court official in the face.

Drawing a sword in the castle is utterly forbidden, and for that Asano was ordered to kill himself by performing seppuku, making forty-seven samurai he mentored masterless, and craving for revenge.

Asano’s forty-seven ronins (the name for masterless samurai) were infuriated. They plotted to assassin the court official. After two years, they attacked him in his home. In the fierce struggle, one of the ronins was killed, and the battle ended with the decapitation of the court official’s head.

They rinsed the head, took it to the grave of their master and payed their respect, then took it back to the Lord’s court.

In the castle, and as they expected, they were all ordered to kill themselves by performing seppuku, ending the lives of the remaining forty six… (real story)

How’s that for revenge?

Have You Met Samir?

Last week I stumbled upon Share Beirut, an event around activism, hackerspaces, and culture. So I packed my bag and bought a ticket. There I stayed at my uncle’s and was often driven around the city by his personal driver, Samir.

Samir is a cool 54 years old ex-sailor with few words to share. Years ago when my uncle first met him he asked Samir how come he’s still not married. Samir mumbled “I forgot”. That’s when my uncle thought (in his own words) “This guy’s a keeper!”

One morning I asked Samir to take me to a quiet place for coffee so we headed to the Coniche (pictured above). There he started reminiscing about the region and pointed to an orange building across the road and said “there lived my fiancé in 1985”. I interrupted “So you were married?” he answered “No. She died.” There was a robbery down the building and she was looking from atop when the thugs washed the building with bullets, killing her on the spot. Few months later, he started a 23 years journey as an oceanic cargo sailor. From what I gathered he visited every country on the map.

With her, they used to sell newspapers on the same street we were looking at. He says the Saturday sales were enough to feed them for the whole week.

I loved Beirut. The underground night life is out of this world. The lively cafes. The graffiti. Absolute beauty and difficult to get over.

Bizarre Cyber World

While going through your monotone quiet day, you sit down and bring up your laptop.

You have entered this bizarre world of zombies caged behind firewalls, viruses seeking ring-0 power, and worms running away from silent daemons. A world that is full of backdoors, classified by neural networks, and indexed by crawling spiders.

Welcome to your computer.

The Elegance of Children's Books

I acknowledge that it is somewhat weird for an adult to have great admiration for children’s books, but I do. Get over it.

Take one into your hand and read through it slowly. The illustrations, the play on words, the creative adventures, and the lessons – carefully orchestrated for an astoundingly elegant work. The outcome is a simple creation that doesn’t relieve a pain or solve a problem, but generously give people joy, inspiration, and hope.

You have brains in your head. You have feet in your shoes. You can steer yourself any direction you choose. – Dr. Seuss, Oh! The Places You’ll Go

Unless someone like you cares an awful whole lot, nothing is going to get better. It is not. – Dr. Seuss, The Lorax

Oh, please don’t go – we’ll eat you up – we love you so! – Maurice Sendak, Where the Wild Things Are

Listen to the mustn’t, child. Listen to the don’ts. Listen to the shouldn’ts, the impossibles, the won’ts. Listen to the never haves, then listen to me. Anything can happen, child. Anything can be. – Shel Silverstein, Where the Sidewalk Ends

I read somewhere that Lewis Carroll, author of Alice in Wonderland, suffered from migraine and epilepsy causing symptoms that are very similar to the more imaginative features in his novel.

Recently I watched The Lorax by Dr. Seuss, a movie about an entrepreneur’s journey in creating a fashion startup and the difficulties he faced in acquiring customers. Good movie. (note: the IMDB page promotes a slightly different pitch.)

I can totally see myself writing a children’s book: Ahmad wanted to go to space. Ahmad had everything in place. He built a rocket made of wood. He painted it bright red, he made it good.