
The secret algorithm one VC firm uses to pick entrepreneurs - iProject
http://gigaom.com/2012/12/23/the-secret-algorithm-one-vc-firm-uses-to-vet-entrepreneurs/
======
w1ntermute
> We get the age of cellphone number through a process called cellphone
> underwriting, which reveals all of the above and more, and which is
> perfectly legal but secretive enough that I won’t reveal how it works. At
> the end of the day, we’re looking for entrepreneurs who are young, stable,
> middle class, and who have the support of family and friends networks — and
> the age of the cellphone number tells us all those things.

> So, I take the approximate age of a founder’s cellphone number and then
> during due diligence, I get a stat: The average time of their first phone
> call in the day. If you and your entrepreneur team are making and taking
> calls at 6:30 a.m PT, you’re probably talking with people back East and
> there’s a 50-50 shot you’re making north of a million in revenues.

This smells like complete bullshit. There are no other (relevant) Google
results for "cellphone underwriting":
<https://www.google.com/search?q=cellphone+underwriting> (add the quotes
yourself, they're being removed by HN's comment code)

GigaOM has really gone to the dogs.

~~~
zomgbbq
It seems their algorithm has codified age discrimination. It's a shame really
that this is a component of their strategy.

~~~
ojbyrne
Except that their algorithm, overall, seems like a failed strategy.

------
downandout
I didn't see one thing in there about evaluating the business. That said,
assuming that this isn't a prank post, perhaps this kind of reasoning is
behind the fact that many great ideas flounder for lack of funding while many
bad ones do get funding. Perhaps the VC's behind those ventures aren't looking
at the business at all - they are just looking at the age of the founders'
cell phone numbers.

I do believe that alot of this kind of thing goes on though. I invented some
authentication technology back in 2004 and couldn't get anyone to take me
seriously. After a former friend of mine with serious credibility in the tech
investor community came along and formed a business around it, he was
instantly able to raise money and soon thereafter sold it for $64 million
(incidentally, he screwed me out of the $13 million I was supposed to get, but
that's a story for another day). The point is that great technology often goes
nowhere until the "right" people are behind it - which probably does all of us
a serious disservice.

Rather than rejecting great technology with what the investor believes are
weak founders for arbitrary reasons, they should keep teams of what they
consider to be great founders around to help those "weak" teams with great
ideas.

------
aqme28
This sounds more like augury than algorithm.

Unless they have any stats to show me (which I doubt), I'm concluding that
there's nothing scientific or even logical about any of these "secrets".

If you claim your method is based on statistics, show me some statistics. This
article is the antithesis of the Moneyball approach.

~~~
saosebastiao
Came here to say this. Show us results, not something that sounds like it was
pulled out of thin air.

------
ojbyrne
I found that terrifically lame, right from the moment when they injected "big
data" into Moneyball. Yes there's statistics in Sabermetrics, but I'm pretty
sure you can fit all the data in a relatively small amount of storage, like a
usb key.

~~~
paulgb
Yep. I wouldn't want a VC firm that didn't understand the difference between
data and "big data". Good thing I wouldn't pass their tests.

------
dlf
It's dangerous to make the comparison to Moneyball when none of the factors
used in this "algorithm" track cleanly to measurable statistics that are
indicative to future success like you have with sports.

There is also nothing in this algorithm that seems to account for scrappiness,
determination, ability to take hard hits, and a host of other intangibles that
make someone a good entrepreneur. I'm not sure you can measure that
algorithmically, other than possibly from past entrepreneurial experience,
although that's a story better told by the entrepreneur rather than some
arbitrary proxy.

If I ever take VC, I hope it's from a VC that believes in me, my team, and
what we're doing, and not just whether I fit into their mold of what they
think an entrepreneur should look like.

~~~
biesnecker
Agreed, Moneyball works because of the vast amount of data that is collectable
in baseball. Even more fluid sports like basketball and football have a hard
time applying algorithms to player ratings (though it's beginning to happen).

While I do think there are probably some useful objective ways to measure
entrepreneurs, unless someone has enough data points under his or her belt the
"Moneyball" approach is never going to give reliable results.

------
KaoruAoiShiho
I really need to waste less time reading total shit on HN.

------
nbashaw
Is this a joke? I seriously can't tell

~~~
rdl
It's a joke, but it's possible neither GigaOm nor the author is in on it.

It's a pseudonym for Larry Chiang, a MLM/credit score/etc. promoter who I
believe has some kind of fraught relationship with YC.

