Above: Google Ventures partner Kevin Rose.
Shoot for the moon, land in a smoking crater?
Still, in spite of the statistics, in spite of the huge investment of resources, venture capital is as much of a gamble at Google as it is at Sequoia or Bessemer or any other firm.
And for Google, that risk is an acceptable one.
“Larry and Sergey are crazy. Larry would rather see a smoking crater in the ground than a mediocre result,” Kraus tells me back in his office of Google’s famous founders, Larry Page and Sergey Brin.
So far, the fund has made fairly early-stage investments — smaller amounts, but with a much greater risk factor. Throwing $1 million at a three-dude “company” that barely has a working product together is cheap (by Google’s standards), but the odds of success are slim, something like 18 percent for first-time entrepreneurs. Throwing $100 million at a proven winner like Instagram is a much surer bet that you, the investor, will get your money back.
Larry would rather see a smoking crater in the ground than a mediocre result.
Joe Kraus, partner,
“It’s really easy to find Series A and Series B companies that are already on a path to success, then you invest in them and double down,” said Rose. ”The most exciting thing to me is when it’s just in the wireframe stage. It’s just a seed of an idea, and it’s the boldest thing you can do in investing.”
In those late-stage investments, there’s nothing to build, nothing really to grow. You toss money on an already racing horse that’s several lengths ahead, and you let momentum do its job. A few months or years later, you get a check in the mail. And where’s the fun in that? I don’t think Kraus, Rose, or anyone else on the Google Ventures team would find it to be much fun at all.
“Building keeps me feeling useful,” Kraus said, “like I’m not just — just picking. It’s never boring.”
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