At our annual retreat this summer on the heels of Bessemer’s 100th anniversary, our investment team took a 20 question survey on what the next century might bring. Topics ranged from naval-gazing puffery (Q: how big will BVP be in 100 years? A: it turns out, really really big) to wonkier fare like global population (A: 18B) and life expectancy (A: 106.)
Overall the results were…to be gentle…creative.
Q: What will be the top invention of the next century?
A: (In order of popularity)
1. free, clean energy [source not specified]
2. gene therapy
Immortality…was fourth! Who needs gene therapy?
Closer examination exposed even more mess. A proponent of teleportation as the top invention chose automobiles as the dominant form of transportation. Facebook’s predicted valuation in 2112 ranged from trillions of dollars to bupkis. One investor picked “cure for baldness” as the breakthrough of the next century (yes, he was.) A particularly overworked soul answered “I don’t know” to almost every question – an honest man in a weary world.
Overall, as the average response time of 4 minutes indicated, it’s possible that our group didn’t take the exercise in crystal balling all that seriously. Nor did we expect them to, really.
Strange as it may seem for a venture firm with a successful track record
to admit, we’re not always good at predicting the future.
We have a long history of spotty prognostication. Our missed investment opportunities have been well documented
, until recently our website belonged in a Flash museum
, and today, only twenty years after the trend emerged, we offer our first blog post.
Seaworthy Vessel or Washing Machine?
Even our fund’s namesake, the inventor of the process to mass-produce steel, didn’t get it right every time. His encore to the Bessemer Process was the Bessemer Saloon – a ship designed with a rocking floor to save travelers on the English Channel from seasickness. It had the opposite effect.
Fortunately for us, our investing process is not at all like squinting into a crystal ball…
It’s much more like tossing a coin.
Research out of Stanford
in 2004 showed that careful study of the starting conditions of a coin toss could detect a consistent bias in outcome. It turns out flipped coins don’t only rotate around one axis, but simultaneously spin like a Frisbee, driving a slight tendency to hover with the starting side facing up.
At Bessemer, we love detecting these patterns. We believe in roadmap
investing, where we spend years obsessing over the subtle trends in a sector so that we know every possible tendency of a given toss before the coin is thrown. And it works – the data shows these “roadmap” bets truly do seem to outperform our…ahem…more “experimental” investments.
However, although roadmapping gives us a nice edge, it’s not the most important factor in a good toss.
There are magicians who work for years to develop the ability to toss heads every single time. They create the illusion of a flip by spinning a coin laterally at a 45 degree angle without ever turning the coin over on its axis. These are our entrepreneurs – rare individuals who know how to control a chaotic and sometimes seemingly random ride through a risky environment. Sure, we may polish the coin, check the atmosphere in the room, and hold onto a jacket – but without the magician there is no show.
At BVP we’ve discovered the best way to look like we can predict the future is to stand behind someone who actually knows how to make it happen.
One result from our failed crystal ball survey was encouraging:
Q: What will be the largest company in 2112?
A: (In order of popularity)
1. Not founded yet
We hope as time goes on that this blog provides a window into our worldview and the places where we smell big outcomes, maybe even the #1 spot on the list above. If you know how to make those outcomes happen, call us (if your telepathy is down.) We’d love to help you flip our coin.