Venture capital depreciation funds

The NYT is reporting on the poor performance of venture capital firms. Some of their limited partners have been publicly criticizing the VC firms in the past few weeks. They say that they have not gotten meaningful returns on their investments in years.

“It’s been almost a decade,” said Eric Doppstadt, director of private equity for the Ford Foundation, which invests in venture capital firms. “I find it shocking that an asset class that has provided so little payback continues to attract so much capital.”

And in the VC world, most of the big returns came from just a small number of VC firms. From 1986 to 2002, just 32 firms accounted for 56 percent of money distributed.

The overall performance of VC firms, on the other hand, has been terrible for the past eight years. In fact, their median return was negative every year from 1999 through 2006. (Except for 2001, at the tail of the Internet bubble, when they returned just 1%).

Some in the VC industry say that this is the lingering affect of the dot-com bust.

There are many venture-backed companies from that period that are biding their time, waiting to go public, be acquired, or, conceivably, face the prospect of going out of business.

“The stark reality is the true impact of the bubble bursting is starting to hit,” he said.

Just when you thought it was safe to get back in the market.

Canadian coin technology

A 2004 commemorative quarter issued by Royal Canadian Mint apparently caused a panic among U.S. contractors who thought they were covert surveillance devices.

Poppy quarter led to U.S. spy warnings

The odd-looking — but harmless — “poppy coin” was so unfamiliar to suspicious U.S. Army contractors travelling in Canada that they filed confidential espionage accounts about them. The worried contractors described the coins as “anomalous” and “filled with something man-made that looked like nano-technology,” according to once-classified U.S. government reports and e-mails obtained by the AP.”

It did not appear to be electronic (analog) in nature or have a power source,” wrote one U.S. contractor, who discovered the coin in the cup holder of a rental car. “Under high power microscope, it appeared to be complex consisting of several layers of clear, but different material, with a wire like mesh suspended on top.”

The confidential accounts led to a sensational warning from the Defence Security Service, an agency of the Defence Department, that mysterious coins with radio frequency transmitters were found planted on U.S. contractors with classified security clearances on at least three separate occasions between October 2005 and January 2006 as the contractors travelled through Canada.

Canadian poppy quarter

Aliens and global warming

A friend recently sent me a copy of Aliens Cause Global Warming , a speech that author Michael Crighton delivered at Caltech in 2003. In it, he argues that climate science is fraudulent, motivated by politics rather than facts.

Crighton is obviously a smart man, and holds strong opinions. Unfortunately he uses the very tactics that he attacks in others. Rather than examining the underlying science, he uses oratory and analogy to justify his own beliefs.

He uses a lot of analogy to disparage climate science. He sets up straw men and lumps together very different research fields under the rubric of “fraudulent science”. (SETI, “Nuclear Winter”, and climate science are all equivalent to him). But he doesn’t actually analyze the current research or predictions of climate science.

He correctly notes that scientific theories must be testable. But then he dismisses all computer climate models, because some early predictions could not be substantiated. But that is to misunderstand the scientific process. Every good scientist proposes hypotheses that initially cannot be tested. And many of those hypotheses turn out to be wrong. But we don’t dismiss a researcher for making incorrect hypotheses. Her next hypothesis might turn out to be correct. And that speculation and testing is at the heart of the scientific method.

Crichton’s also seems not to understand some fundamental issues about climate research:

Nobody believes a weather prediction twelve hours ahead. Now we’re asked to believe a prediction that goes out 100 years into the future? And make financial investments based on that prediction? Has everybody lost their minds?

This is the classic fallacy of confusing weather with climate. Weather might actually be chaotic, and therefore long term weather forecasting isn’t very accurate. But climate is by definition the behavior of an environment over a very long time, which averages out short term weather fluctuations. As such, climate models are more accurate over the long term (decades or centuries) than over the next few years.


Game drone

A new survey from Game Developer magazine says the average salary in the video game industry is $73,000. That seems like a good wage, until you factor in location. Many of the companies are in San Francisco and LA. Given the cost of housing, it’s no wonder that only 36% of California game developers own their own home. Of course, the 80 hour weeks might have something to do with it too.

“The outdated American standard of having a wife and a kid and a house is pretty hard in the Bay Area,” says Dan Chao, a producer and designer with PlayFirst in San Francisco.

Christine Miller, a Seattle-based level designer with seven years of experience, agrees. “$73,000 sounds great until you realize you’ve just spent 6 months or more working 80 hour weeks, your friends forgot who you are and you haven’t seen your new niece or nephew yet,” she says.

Never eat anything bigger than your head

Back in college, the head of the Lab for Computer Science had a reputation for agressively pursuing grants and equipment. One of my professors used to joke: “If you offer Prof. Brown five pounds of bat guano, he’ll immediately ask for ten”.
Turns out, most people behave the same way. According to Cornell Prof. Brian Wansink, author of “Mindless Eating”, you can get people to eat really old, stale popcorn, as long as you give them a big enough tub of the stuff. And people will always eat more if you serve food on bigger plates.

His overarching conclusion is that our decisions about eating often have little to do with how hungry we are. Instead, we rely on cues like the size of a popcorn bucket — or the way we organize our refrigerator — to tell us how much to eat.
The scariest part is that most of us think we are immune to these hidden persuaders.

Mr. Wansink and his team were so taken aback by the results of their experiments on the shape of glasses that some of them went home and replaced the squat glasses they owned with tall, skinny ones. Mr. Wansink also uses dinner plates from the 1940s, which have the double advantage of being smaller and being more interesting than your typical Crate and Barrel fare.