
After 10 Years, Nathan Myhrvold's $3B of Private Equity Funds Show Big Losses - NelsonMinar
https://www.forbes.com/sites/nathanvardi/2018/06/01/after-10-years-nathan-myhrvolds-3-billion-of-private-equity-funds-show-big-losses/
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pg_bot
I'm fairly certain that the decision in Alice Corp v CLS Bank International
put the nail in the coffin of Intellectual Ventures' business model. A large
percentage of the patents in their portfolio[0] are of the abstract idea
implemented on a computer variety. Since patents have a shelf life most of
what they purchased will likely expire returning 0% on investment. This
doesn't mean that patent trolling as a business is dead, but it certainly
looks like it is not scalable which is frankly wonderful news.

[0]: [http://patents.intven.com/finder](http://patents.intven.com/finder)

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NelsonMinar
Since no one has said it directly; this article is about Intellectual
Ventures, the patent troll firm that aggressively weaponized America's poorly
written intellectual property law.
[http://www.intellectualventures.com/](http://www.intellectualventures.com/)

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paulsutter
Title might read "Nathan Myhrvold's Patent Troll Funds Show Big Losses"

> They were designed to invest in patents and innovations, not companies or
> their securities, over a lifespan of 20 years, as opposed to the usual 10 to
> 13 years. Halfway through their run, the funds are deep in the
> red...Invention Investment Fund II was the bigger fund that Myhrvold’s firm,
> Intellectual Ventures, raised in 2008

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bhouston
Good. I hope high profile failures of patent troll funds convince others to
not follow in their footsteps. It also ruined Nathan's reputation.

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vermontdevil
This is ridiculous:

 _Intellectual Ventures has always maintained that “traditional accounting
rules don’t accurately reflect the value of our patent portfolio.”_

Hate when companies not doing well try to dodge by blasting "traditional
accounting rules" when these rules have been crafted over the years to
accurately reflect the value of said company.

Bottom line - the returns for both funds are in the negative. Can't avoid this
by hoping for some 'modernist' version of accountancy that might make the fund
look good.

~~~
ChuckMcM
And yet it is kind of true. Consider that patents in their portfolio are
exactly equivalent to unexpended ordinance, ready to go when the opportunity
presents itself. How do you value that? A patent my go its whole life and
never be infringed, or it might turn into a $500M payday from an Apple or a
Microsoft.

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nradov
The only way to accurately value a patent portfolio would be to sell minority
stakes in it on the open market. But if you expect to hold the patents until
expiration and aren't short of cash then it's hard to see how valuation even
matters.

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imranq
Why assume the market is correct? Most people have no idea about the valuation
of securities and patents are even harder to value

~~~
nradov
It doesn't matter what most people think. Only sophisticated, qualified
investors are even able to bid on assets like fractional patent ownership.

As for whether the market is "correct" that's a meaningless question since the
answer can only ever be determined in hindsight. But so far no one has been
able to find a more correct approach.

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taway20180523
Patent trolls have two revenue streams: 1\. royalties from small businesses
2\. judgments against large businesses

They survive on #1 and make return on #2. It is a good way to turn $1M into
$100M. It doesn't work if you start with $3B.

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greglindahl
Yeah, turns out that there is a maximum amount of money that you can put to
work in that "industry", and it's a lot less than $3B.

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weliketocode
Hindsight is 20/20, though.

At the time he raised the fund, there certainly were plenty of people who
thought patent trolling could scale.

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greglindahl
Yes. They also had other ideas, of a patent marketplace, that failed to
actually happen. And directly inventing stuff, which also failed and always
looked like PR rather than a serious business.

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Ice_cream_suit
"In total Myhrvold’s firm has acquired 95,000 patents and launched or been
behind dozens of lawsuits, making it a giant patent troll. But Intellectual
Ventures’ litigation strategy has been dealt some setbacks. The nation’s top
patent court has thrown out patents Intellectual Ventures has tried to assert
against companies like Capital One. This week a federal appeals court issued a
ruling that will make it very difficult for Intellectual Ventures to assert a
patent it had sued Ericsson for infringing."

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greglindahl
Myhrvold hasn't been as successful as Perfect 10 at establishing useful
precedents, but he's not far behind.

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partycoder
Nathan Myhrvold had enough money to retire, but instead he decided to start a
trolling business.

I imagine what would it be like to wake up every morning, look at yourself in
the mirror and say "Today I am going to troll people with patents".

I would feel probably more satisfaction living in the streets than making
money (in theory, since he is apparently losing money) trolling people.

~~~
vernie
Being so up-your-own-ass about cooking is expensive.

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sunstone
It's instructive to consider Mr. Myhrvold and Mr. Musk over the past 10 years.
One decided to tackle hard problems because they were important for the future
of all mankind. The other decided to take advantage of what seemed like a slam
dunk legal anomaly in order to get rich quick at the expense of actually
productive people. It's nice to see that poetic just sometimes has its way.

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jacquesm
Good. The Sooner Intellectual Vultures dies a terrible death the better.
Myhrvoid is an excellent example of someone I can't make my mind up about.
Child prodigy, absolutely a genius but the whole patent story is just plain
disgusting.

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sixQuarks
He's undoubtedly a genius, but I see him as a greedy asshole.

He's the author of Modernist Cuisine, a cookbook based on science. He has done
all the experiments to determine the scientifically best ways to cook things.
Instead of making it an affordable book, he priced it at over $600.

yes, he spent millions in the process, but he's a multi-billionaire. He's
never going to recoup the $25 million he spent on research, why couldn't he
have done that as giving back to the community?

I just don't get that.

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lgf
>He's the author of Modernist Cuisine, a cookbook based on science. He has
done all the experiments to determine the scientifically best ways to cook
things. Instead of making it an affordable book, he priced it at over $600.

$600 is not that extreme a price in the 'technical food book aimed at
professionals' realm (which is where the book was originally aimed).

There are 4-volume references like Hui and Sherkat's "Handbook of Food
Science, Technology, and Engineering" which retail at $1,800
([https://www.amazon.com/Handbook-Food-Science-Technology-
Engi...](https://www.amazon.com/Handbook-Food-Science-Technology-
Engineering/dp/0849398479\);) a number of single-volume Wiley handbooks have
prices around $290.

Factoring in that Modernist Cuisine is 23kg, 7 volumes, had an initial print
run at 6,000 copies and an unusual volume (the kitchen manual is printed on
plastic)...it's hard to see how this is a reasonable criticism, especially
when Modernist Cuisine at Home (which is targeted at a wider audience and
covers many of the same bases) is priced at $112.

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sitkack
Myhrvold had a chance to build something wonderful to do good in the world.
Hopefully he still does and takes it.

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rsync
He did:

[https://en.wikipedia.org/wiki/Modernist_Cuisine](https://en.wikipedia.org/wiki/Modernist_Cuisine)

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sitkack
A $600 cookbook isn't the level of impact I was thinking of.

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weliketocode
I'd love to know what the goal with Intellectual Ventures actually was.

Did Myhrvold really think he was going to be bring liquidity and transparency
to the patent market? Or was the intention really to be a giant patent troll?

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jmull
I think you can judge intentions based on what IV actually attempted to do
with their resources.

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jasonmp85
Good.

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beedogs
Good riddance to an awful business model. Hopefully he'll disappear and never
be heard from again.

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imranq
Personally I think Myvhold’s company is not as evil as people say. It actually
makes a lot of sense if you take a long term view. The goal is to create a
market for innovation and decentralize DARPA-like institutions so that market
forces can create a sustainable source of innovation.

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buttcoinslol
Nathan, this is a bit transparent...

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dang
Please don't do this here.

