In a town of gamblers, Mattermark is counting cards(venturebeat.com)
venturebeat.com
In a town of gamblers, Mattermark is counting cards
http://venturebeat.com/2013/08/22/in-a-town-of-gamblers-mattermark-is-counting-cards/
5 comments
At this point, I agree with you. Right now it's a score based on a combination of publicly accessible metrics. With that said, I think they are still very early stage and their vision to provide robust growth metrics to the investor community is much needed.
Now, if they can pull it off or not is yet to be seen.
Now, if they can pull it off or not is yet to be seen.
If you could provide information useful enough to provide a competitive advantage in investing, why provide it at all? Just invest in the companies yourself and put the millions in your own pocket.
To me, what it looks like (not saying it's true) is that it's a ycombinator shill company the backers of ycombinator are using to pump up other companies. After all, a lot of these companies are successful/bought out because of self fulfilling prophecies: they're successful because people think that they're successful.
To me, what it looks like (not saying it's true) is that it's a ycombinator shill company the backers of ycombinator are using to pump up other companies. After all, a lot of these companies are successful/bought out because of self fulfilling prophecies: they're successful because people think that they're successful.
A competitive advantage is not a sure thing, its just an edge. Their tech could make a 90%/10% fail/win risk a 85%/15%, which would be a huge boon, but extremely dangerous for someone to place their life's savings on.
Speaking of, just because I may know a good investment, doesn't mean I have the resources to actually capitalize on it. I may know a likely way to make 10 Million/year, but if the buy in is 5 million, I'd be out of luck. Might as well sell that information to someone with 10 Million and make a cool 50k/100k for myself in the process.
During the goldrush, selling pickaxes and pans to miners was often a better way to get rich than to actually take the risk of mining yourself. You can see a modern day parallel in the custom bitcoin rigs. The companies selling them could just fire the machines up themselves. In the long run however, its better to sell the machine that could make 10k/yr for a guaranteed 2k in your pocket.
A bird in hand is better than two in the bush.
Speaking of, just because I may know a good investment, doesn't mean I have the resources to actually capitalize on it. I may know a likely way to make 10 Million/year, but if the buy in is 5 million, I'd be out of luck. Might as well sell that information to someone with 10 Million and make a cool 50k/100k for myself in the process.
During the goldrush, selling pickaxes and pans to miners was often a better way to get rich than to actually take the risk of mining yourself. You can see a modern day parallel in the custom bitcoin rigs. The companies selling them could just fire the machines up themselves. In the long run however, its better to sell the machine that could make 10k/yr for a guaranteed 2k in your pocket.
A bird in hand is better than two in the bush.
Say there is a game at a casino, that has a 1/100 chance of winning, and if you win, you get a payout of 100.01(original bet). You have $100. How would you play without it being extremely dangerous?
By the Kelly criterion, you should bet edge/odds of your bankroll. Your edge here is 0.01 * 0.0001 = 0.000001. Your odds are 0.01. Therefore you should bet 0.0001 of your net worth. So if you had a million dollars, that $100 bet would be a sensible investment. If you've only got, say, $100k then you should only bet for entertainment value.
The investment rule that underlies Kelly is to maximize the log of your net worth. Why? Bets multiply your net worth by a random factor, take logs and you're adding a random factor. In the long run a sum of independent random factors tends to converge to the expected value, so maximizing the expected log of your net worth will result in a strategy that with 100% odds will, in the long run, beat any other.
The investment rule that underlies Kelly is to maximize the log of your net worth. Why? Bets multiply your net worth by a random factor, take logs and you're adding a random factor. In the long run a sum of independent random factors tends to converge to the expected value, so maximizing the expected log of your net worth will result in a strategy that with 100% odds will, in the long run, beat any other.
Sorry, I was being rhetorical, I guess it wasn't obvious. My point to the parent was that no need to bet your entire life savings on one company, you can split it among hundreds and take advantage of your edge.
Great question and it does make you think. I did notice the story quickly made the front page with very little up votes or maybe I just don't understand the ranking algorithm that HN uses.
The best way to get rich in a gold rush is to sell the shovels.
Is there really a gold rush going on? From everything I see, the startup market is maturing, not emerging.
Not if you know where the gold is buried and no one else does (which is what their purpose is). In your analogy, the shovels would be something like Meteor, or one of those "learn to rails in 24 hours!" startups.
Or Mattermark just has slightly better shovels than the competition, and they know that focusing on keeping a slight lead in shovel making by selling a ton of shovels is more profitable in the long run than going for a single quick pile of gold asap.
Edit: Especially so if the gold doesn't want to be 'discovered' by just anybody. Founders have VC preferences.
Edit: Especially so if the gold doesn't want to be 'discovered' by just anybody. Founders have VC preferences.
What I don't get it how relevant this info is for companies at such an early stage. For the few home runs each year, oftentimes a bunch of the success can be attributed to aid provided by some of the VCs. They may provide value between seed and an A round since the investors often matter less there, but one there is a provable business model after A or after B, the investor, if chosen correctly, can be a big multiplier of value, especially for first time entrepreneurs.
Good VCs like A16Z, help with hiring, provide great signaling to potential partners, potential hires and future investors, and well as helping refine the business model.
Seems like any score they ascribe to a company would have to incorporate the value of each of their clients. e.g. the scores given to A16Z would look different from VenRock, since the compatibilities between the startup and the VC matter. VenRock is likely to multiply the value of a health-related startup in a way that most other VCs can't and this changes things.
I'd even go as far as saying that for some VCs the partner you get should be factored into the scores as well.
Good VCs like A16Z, help with hiring, provide great signaling to potential partners, potential hires and future investors, and well as helping refine the business model.
Seems like any score they ascribe to a company would have to incorporate the value of each of their clients. e.g. the scores given to A16Z would look different from VenRock, since the compatibilities between the startup and the VC matter. VenRock is likely to multiply the value of a health-related startup in a way that most other VCs can't and this changes things.
I'd even go as far as saying that for some VCs the partner you get should be factored into the scores as well.
On the enterprise or business to business side, signals are weaker, and signs of traction are harder to identify. However, Mattermark has found that tracking sales support materials (videos, whitepapers, and other documentation) is a signal and makes it easier to view traffic as an exhaust of the sales process.
Through this method, Mattermark listed cloud hosting startup Digital Ocean as its top pick for a pre-Series A company. The company raised a healthy round a few months later, mainly because of its success with developers.
For new investors, Mattermark and Dashboard.io aim to be a check on a startup’s performance. Both companies are also experimenting with their notifications system. Based on an investors’ specifications, they may be able to alert customers to a hot opportunity.
One of Morrill’s favorite examples is Instagram, a startup that was acquired by Facebook for a cool $1 billion, making its investors extremely rich. Back in Instagram’s early days in 2010-11, before the founders raised any significant funding, the photo-sharing app was growing its Twitter following at a double-digit percentage each month.
“It would have been a great signal that consumers were hooked, [and] the reality is that we could have identified it,” says Morrill.
The idea that Mattermark or a similar service could have identified Systrom and company before they were tapped into top-tier funding sources, enabling a less-than-well-connected angel or second or third-tier venture firm to get in on Instagram's Series A, is utterly unrealistic.
The serious angels and firms are actively engaged in the market and talking to founders on a daily basis, and serious founders looking for funding are making the rounds on Sand Hill Road, volunteering the most salient data that is almost never shared publicly (think revenue, revenue growth, etc.).
Mattermark's proposition seems to be "There are a couple of young guys who are wet behind the ears in a garage somewhere with a hot app, and if you call them up, you might be able to convince them to take your money before [insert prominent angel or firm] discovers them." That is a flawed proposition because this is simply not how the game works.
Love the multibillion dollar remark by Morrill. That's confidence.
Now, when I say that what I am building will be in multibillion territory, people just look at me funny, although I even got my PhD just to be able to build this thing :-)
Now, when I say that what I am building will be in multibillion territory, people just look at me funny, although I even got my PhD just to be able to build this thing :-)
> I really think I’m building a multibillion dollar company
AWESOME! :-D
AWESOME! :-D
To me it just sounds like another meaningless score, much like technorati was back in the day or klout (albeit more business minded than both). Is it an attempt to use big data to determine winners in the startup game? That also sounds like a terrible idea.
(The above is my initial reaction - I haven't researched this and I might be woefully wrong; which I why I ask for some explanations.)