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What Rehab Is Teaching Me About Making Bad Investments


For as long as I can remember, I have been an enthusiastic participant in sports. To be clear, I’m not a great athlete (in fact, I’m the only one of the five Flybridge General Partners that wasn’t a varsity athlete in college), just good enough to participate passionately and aggressively like the prototypical weekend warrior. During any of my amateur sports efforts — whether competing in mini-triathlons, tackling hard ski runs, or trying to jump the wake while Water-skiing — I’ve always enjoyed pushing myself and approaching the task fearlessly.

This week, for reasons that will become clear shortly, I was reflecting on why it is that I am fearless as a competitor, even as I've gotten older. I came up with two reasons. First, I'm not afraid of losing or failing and, second, I'm not afraid of getting hurt. The former is probably because winning has never my ultimate objective, but rather the fun of competing and the enjoyment of achieving some level of mastery.

And I've probably never been afraid of getting hurt because I've never gotten hurt. I've been simply very lucky. That is, until 6 weeks ago when a collision during a Saturday morning pick-up basketball game caused my ACL tendon to rupture. My luck ran out.

That's why I'm typing this blog from bed, with my left leg strapped into a continuous motion machine, barely able to propel myself on crutches, and in excruciating pain.

During my recuperation period this week, one question I've been contemplating is - when I'm back to full strength, will I return to sports with the same aggression, or will I have lost some of my fearlessness?

Ironically, it is the identical question I struggle with as an investor. Vinod Khosla once said it takes 7 years and $30 million in losses to train a venture capitalist. Although I haven't lost $30 million of my LPs' and partners' money in my 7 years as a VC, I have made my share of bad investments. When I look back on my struggling deals and do my post-mortem with my partnership (something we do during our annual strategy offsite), I point to the mistakes I made and errors I'll try to correct the next time.

But I think I now appreciate that Vinod's point is something broader than being a good VC requires learning from failure. It also requires the fearlessness to pick yourself up after failure and take high risks again and again. Not losing confidence in your ability to judge good people, good opportunities and good markets is the key to transforming those early failures into more consistent successes going forward. Vinod and other legendary VCs still make their own investment mistakes 20 years later, but they remain fearless in willing to plunge forward to back the next big idea and great entrepreneur.

With this challenging economic environment, VCs are facing more than their share of failure - and there's more to come. Let's hope for our industry's sake that we VCs all bounce back with the same spring in our step that I intend to have 6 months from now on the basketball court.


Steve Ballmer, Power Forward
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