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The Innovation Blind Spot: Why We Back the Wrong Ideas And What to Do about It
Our innovation economy is broken. But there's good news: The ideas that will solve our problems are hiding in plain sight.
While big companies in the American economy have never been more successful, entrepreneurial activity is near a 30-year low. More businesses are dying than starting every day. Investors continue to dump billions of dollars into photo-sharing apps and food-delivery services, solving problems for only a wealthy sliver of the world's population, while challenges in health, food security, and education grow more serious.
In The Innovation Blind Spot, entrepreneur and venture capitalist Ross Baird argues that the innovations that truly matter don't see the light of day--for reasons entirely of our own making. A handful of people in a handful of cities are deciding, behind closed doors, which entrepreneurs get a shot to succeed. And most investors are what Baird calls "two-pocket thinkers"--artificially separating their charitable work from their day job of making a profit.
The resulting system creates rising income inequality, stifled entrepreneurial ambition, social distrust, and political uncertainty. Our innovation problem makes all our other problems harder to solve. In this book, Baird demonstrates how and where to find better ideas by lifting up people, places, and industries that are often overlooked. What's more, Baird ultimately outlines how to create long-term success through "one-pocket thinking"--eliminating the blind spot that separates "what we do for a living" and "what we really care about."
While big companies in the American economy have never been more successful, entrepreneurial activity is near a 30-year low. More businesses are dying than starting every day. Investors continue to dump billions of dollars into photo-sharing apps and food-delivery services, solving problems for only a wealthy sliver of the world's population, while challenges in health, food security, and education grow more serious.
In The Innovation Blind Spot, entrepreneur and venture capitalist Ross Baird argues that the innovations that truly matter don't see the light of day--for reasons entirely of our own making. A handful of people in a handful of cities are deciding, behind closed doors, which entrepreneurs get a shot to succeed. And most investors are what Baird calls "two-pocket thinkers"--artificially separating their charitable work from their day job of making a profit.
The resulting system creates rising income inequality, stifled entrepreneurial ambition, social distrust, and political uncertainty. Our innovation problem makes all our other problems harder to solve. In this book, Baird demonstrates how and where to find better ideas by lifting up people, places, and industries that are often overlooked. What's more, Baird ultimately outlines how to create long-term success through "one-pocket thinking"--eliminating the blind spot that separates "what we do for a living" and "what we really care about."
240 pages, Hardcover
Published September 12, 2017
66 people are currently reading
1073 people want to read
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Displaying 1 - 30 of 56 reviews
January 15, 2018
I won this book in a goodreads drawing.
A book that examines why so much of our country's new inventions are geared for such a narrow class of people, focussing on apps instead of actual advances in technology.
The answer is a bunch of people with degrees that don't actually know how to do their jobs, or really much of anything. They talk to themselves and disregard the rest of the country. Sounds about right.
A book that examines why so much of our country's new inventions are geared for such a narrow class of people, focussing on apps instead of actual advances in technology.
The answer is a bunch of people with degrees that don't actually know how to do their jobs, or really much of anything. They talk to themselves and disregard the rest of the country. Sounds about right.
March 1, 2018
I will say this was a very easy, flowing read that captured my interest. On that note, I felt this book was much more a theory or opinion based book with the exception (as someone who has just gone through the nightmare process and would choose to bootstrap vs. ever going through it again) of some opinions of venture capital based investments. I think for me when I requested this book off Netgalley, I was seeking out an "action" based business book and didn't walk away with the impression of this book at all. On that note, the author does make some very important commentary on the state of entrepreneurship and why it is a nightmare to be an entrepreneur these days.
Review of Netgalley ARC for review purposes.
Review of Netgalley ARC for review purposes.
November 30, 2017
The book has some good points on how to grab innovative ideas which are missed as they are in their blindspots. Few reasons being -
a) Race/Gender
b) Location
c) Education
d) Scope of idea/Is it un-glamarous for the Silicon Valley?
e) Short term thinking/Eager to generate returns
The problems he has raised with our system which picks "innovative ideas" make sense a lot.
He says "The kinds of technology that VCs are funding in today are doing a tremendous amount for well-educated people on the coasts while doing so little for the middle class America."
That's so true - majority of the population is in a rat-race to earn more money and retire in their own safe pads. Hardly few care about the welfare of the underprivileged, underserved masses.
He made a good point in the last chapter on why the American Dream has taken a hit - one reason is because so much corporate consolidation is happening. Companies like Walmart, Amazon are getting bigger and bigger - driving smaller competition out of business.
Too-big-to-fail and Too-small-to-succeed tendencies are thriving. There's little chance for someone from an unglamorous background trying to solve a meaningful but unglamorous problem. (An app for delivering pet-food will get more funding then an app which aims to solve the housing problem.)
Ross Baird suggests ways on how to fix this and start unearthing ideas which are lost.
Few of his suggestions really stood out for me -
1. Having a stapled green-card for people studied in the U.S and starting their ventures
2. Veterans need more support. They can be a great pool to tap into for innovative ideas.
3. Govt.'s tax incentives for startups. Cities can have policies that giant companies acquiring land or opening offices in their region need to invest 1% of their profits into the local startup community.
4. Having diversity in the workplace.
Overall, the book's point is to invest in the ecosystem, in the communities and identify and bring heroes from within themselves rather than revere the icons generated by the "celebrity culture" mindset media.
Some of the examples of startups from not-so-fancy places which are coming up slowly was really heart-warming to me. It bred some optimism for the future and made me feel like doing something meaningful for the society.
a) Race/Gender
b) Location
c) Education
d) Scope of idea/Is it un-glamarous for the Silicon Valley?
e) Short term thinking/Eager to generate returns
The problems he has raised with our system which picks "innovative ideas" make sense a lot.
He says "The kinds of technology that VCs are funding in today are doing a tremendous amount for well-educated people on the coasts while doing so little for the middle class America."
That's so true - majority of the population is in a rat-race to earn more money and retire in their own safe pads. Hardly few care about the welfare of the underprivileged, underserved masses.
He made a good point in the last chapter on why the American Dream has taken a hit - one reason is because so much corporate consolidation is happening. Companies like Walmart, Amazon are getting bigger and bigger - driving smaller competition out of business.
Too-big-to-fail and Too-small-to-succeed tendencies are thriving. There's little chance for someone from an unglamorous background trying to solve a meaningful but unglamorous problem. (An app for delivering pet-food will get more funding then an app which aims to solve the housing problem.)
Ross Baird suggests ways on how to fix this and start unearthing ideas which are lost.
Few of his suggestions really stood out for me -
1. Having a stapled green-card for people studied in the U.S and starting their ventures
2. Veterans need more support. They can be a great pool to tap into for innovative ideas.
3. Govt.'s tax incentives for startups. Cities can have policies that giant companies acquiring land or opening offices in their region need to invest 1% of their profits into the local startup community.
4. Having diversity in the workplace.
Overall, the book's point is to invest in the ecosystem, in the communities and identify and bring heroes from within themselves rather than revere the icons generated by the "celebrity culture" mindset media.
Some of the examples of startups from not-so-fancy places which are coming up slowly was really heart-warming to me. It bred some optimism for the future and made me feel like doing something meaningful for the society.
February 2, 2019
I first heard about Village Capital when I was an intern at the University Venture Fund in 2015. From there, I’ve always respected them as a firm from afar and had the chance to go to one of their events at Autodesk this year to better connect investors and social entrepreneurs. As part of the event, I was given a copy of Ross Baird’s book. If you’re looking for a perspective on impact investing, this is an incredibly valuable one.
Some Quotes:
“Investors everywhere have blind spots, and as a result, we’re overlooking most great ideas. Three quarters of venture capital goes to founders in just three states: New York, California, and Massachusetts. Some 10 percent goes to women founders, and just 1 percent to African Americans. That’s not right — and it’s not smart. We need everybody on the playing field if we’re going to remain the most innovative, entrepreneurial nation in the world.”
“Huge parts of the system aren’t working. New firm creation in the United States is at a thirty-year low. The biggest investment firms in the country’s wealthiest cities aren’t delivering the best financial returns. And the structural problems in the system make all our other problems nearly impossible to solve. Even though we have more computing power in our pockets today that the entire world did fifty years ago, our food systems struggle to feed the world’s growing population, and our health and education infrastructure an’t take care of the current generation, let alone prepare the next one to lead.”
“The idea that entrepreneurship is a meritocracy is a myth. In the real world, money flows to the ideas that are the most convenient to find or the most familiar, not necessarily those that are the best. Simply put, the blind spots in the way we innovate — the way we nurture, support, and invest in new ideas — make all our other problems even harder to solve.”
“The blind spot: we artificially separate our jobs and our careers from our values.”
“Instead of solving the biggest problems of the day, we’re putting billions of dollars into how to make mobile advertising and clickbait news more effective, and nudging people to buy more stuff.”
“The [2016] election illustrates one basic truth that no poll can capture in full: many people feel that the basic social contract of the American Dream — if you have a great idea, solve problems, and work hard, you’ll be successful — is not true in an ever-globalizing world.”
“Investors like to follow patterns; they often use the phrase ‘pattern recognition’ to justify decisions regarding where to invest their money.”
“Because venture funds are under extreme pressure to deliver quick profits to investors, they prioritize short-term value capture over long-term value creation.”
“Over time, smaller funds significantly outperform larger funds.”
“If you’re unable to raise the money you need, investors often say you should ‘bootstrap’ — self fund your company. But most founders don’t have enough cash on hand to start their dream company — particularly since the Great Recession of 2008. Nor do founders necessarily have wealth in the form of home equity: the US home ownership rate in 2016 fell to its lowest since 1967. To add to the problem, student debt has grown over 100 percent in the last twenty years, particularly among graduates from for-profit and two-year colleges, which low-income people disproportionally attend. And founders who are in debt are less likely to start their own business after graduation.”
“If you invest outside the hotbeds where everyone else is, and the company succeeds, on average you’ll pay 35 percent less to get the same end financial result.”
“From a customer’s perspective, it doesn’t matter what a company’s founder looks like or where they went to school, only whether they make a great product.”
“Many people describe their personal philanthropy as ‘giving back.’ But as eBay founder Pierre Omidyar once said, ‘Giving back implies, at one point, that you were taking. We’re dissociating what we do from what we value, and it’s becoming very difficult to improve the world as a result.”
“I had an economics professor at the University of Virginia who said, ‘Decisions are a combination of information and values. This class teaches you the information. You have to develop your own code of values.”
“The financialization of the economy means that what we invest in is no longer entrepreneurs making goods and producing services, but the creation and leverage of intermediaries who extract tolls, rents, and capital gains. The most valuable companies in the world, from Amazon to Walmart to Facebook to Google, do not produce goods or services but instead are trading companies who mediate financial transactions between producers and consumers.”
“The simple fact is that selling YouTube to Google or Instagram to Facebook realizes success more quickly than investing in a clean energy company that will require years of research and development, or a healthcare company that needs to wait for FDA approval. ‘Investment’ for the short term is capturing value quickly. ‘Investment’ for the long term is creating value that lasts.”
“It’s now who you know, it’s who you get to know” (Chris Matthews, Hardball)
“Experts blamed economic cycles and cautioned the industry to ‘wait and see,’ but Bob hit the road and started talking to his customers” — reminds me of Warren Buffet’s ism of “be greedy when others are fearful and fearful when others are greedy.”
“Bob understood that when your’e investing where no one else is, you can outperform those who are following the same patterns.”
“Makers were better evaluators of new ideas; they tended to view their peers’ ideas not through a lens of ‘How well does this act resemble what has worked in the past?’ but rather ‘How likely is this to succeed in the future?”
“The Maker looks at the idea and thinks of all the reasons why it will succeed. Whereas an assessment is an evaluation against a fixed framework, a forecast evaluates a probability that a certain outcome will happen.”
“Later-stage venture capital and private equity investors deploying tens of millions of dollars in growth capital have years of evidence of a company’s performance and are able to make decisions based on assessing a company’s growth trajectory. But investing in new ideas is a forecasting decision, and we have substantial evidence that entrepreneurs are better at predicting whether an idea and its early execution will be successful.”
“Whether it’s changing the funding process or encouraging a different pipeline, innovations around who gets a chance to access capital yield better outcomes.”
“Have you ever heard of someone telling a middle-schooler they expect them to be a great entrepreneur.” (Jim Clifton, CEO, Gallup)
“Broader societal trends back up what I’m seeing at a ground level: 69 percent of millennials value the impact of their investments over their financial returns.”
“Buffett and other two-pocket thinkers are making two arguments. First, they’re arguing that nonprofits are better than companies at addressing social problems. Second, they’re arguing that companies without a social mission are better than mission-driven companies at making money. I believe these are both myths. Even if the first argument were true — if nonprofits were better at solving the world’s biggest problems — we would still run into another problem: the philanthropic sector is so small that even the most effective philanthropy in the world wouldn’t solve systemic problems. But the second argument is problematic, too. There is growing evidence — from customers, founders, employees, and investors — that it pays off, on the bottom line, to have a long-term mission that matters.”
“In both the cases of Ben & Jerry’s and SKS, as the firm grew, the company often faced difficult decisions between company growth and social capital. But bigger may not always be better: I asked Vikram Gandhi, an investment banker who handled the SKS IPO, what went wrong, and he said, ‘The company wasn’t growing like a bank. It raised all this Silicon Valley money and was trying to grow as fast as a tech company. In its desire to look like a Silicon Valley tech company, it lost an understanding of the problem it was trying to solve.’”
“Kim remembers, ‘I learned that the most important way to be happy is to codify what you want to be: What do you care about? And how can all aspects of your life — work, family, home — reflect that?” Kim recognized early on that the secret to happiness was one-pocket thinking.”
“Do you wish to be great? Then begin by being. Do you desire to construct a high and lofty fabric? Think first about the foundations of humility. The higher your structure is to be, the deeper its foundation.” (St. Augustine)
“Investors’ blind spots are almost always the result of good people trying to do the right thing and getting overloaded, rather than someone trying to be actively harmful.” — similar to heuristics in behavioral economics.
“Type 1 errors occur when you pick the wrong idea; type 2 errors happen when you don’t ever look at the right idea.”
“Type 2 solutions share a common trait: they are proactive. They involve going out and finding ideas — and the people and places from which they come — as well as viewing those ideas through a different and possibly unfamiliar lens. There are no shortcuts to avoiding type 2 errors; you have to invest the time in building the pipeline you want to invest in.”
“The trait most strongly correlated with success was self-awareness. Let’s say an innovator is disorganized, but she’s aware of it. Or an entrepreneur is a jerk, and he knows it. Both are fine — and positively correlated with success. The second trait most correlated with success is whether a firm has a female cofounder. Based on the data, here’s my top piece of advice to any guy starting a company: be more self-aware, and get a woman as a cofounder.”
“Know what you own, and know why you own it.” (Peter Lynch)
“Bryce noticed something curious: the organizations Blue Sky was supporting were more interrelated than he would have thought. He imagined a woman who used to work at a strip club instead working for a living wage at Scarlet’s Bakery, which an investor could support, and living in an affordable home in Louisville, which an investor could also back. He had unintentionally created a portfolio in his mind. Bryce saw the future. To invest in this portfolio, he founded a firm he would call Access Ventures, in the process of becoming one of the world’s foremost one-pocket thinkers that you’ve likely never heard of.”
“Most investors don’t price social and environmental risk in public equities until it’s too late.”
“But many of these apps are dependent on venture capital subsidies. Uber lost $1.2B in the first half of 2016 — and passengers paid only 41 percent of the cost, with the rest subsidized by venture capital. Blue Apron has raised $200M, and Zeel has raised $13M. And the pensions of most Americans are subsidizing these perks. Venture capital funds are often raising capital from teachers and firefighters in New Mexico and Minnesota to subsidize food and massages for tech employees in San Francisco. In my experience, the kinds of technology that venture capital is investing in today is doing a tremendous amount for well-educated people on the coasts while doing little for middle-class America.”
“In a one-pocket world, the cities, states, and countries that are managed with the lowest social and environmental risk are the ones that are the most prosperous.” (How do you measure this though?”
“We don’t see more ESOPs because our current investment world is ‘one size fits all.’ One investment banker I spoke to at a well-known bank investigated how ESOPs could create more middle-class wealth. He discovered that ESOPs, if structured thoughtfully, are relatively a straightforward model for founders who want to sell shares in their company to members of their team. He asked his bank, ‘Why don’t we do this more often?’ He learned that the fee incentives that investment bankers received from ESOPs were substantially lower than they would be for a straight transaction: as a result, investment bankers had no incentive to do the hard work of helping founders sell their companies to their team members.”
“We know that diverse teams have a competitive advantage: teams in the top quartile of gender diversity outperform teams in the bottom quartile by 15 percent, and teams in the top quartile of racial diversity outperform teams in the bottom 35 percent.”
“Government has historically played a major role in economic development; federal, state, and city governments have offices that provide cash and tax incentives to bring in new jobs. But although we know that small businesses and new businesses create the vast majority of new jobs, economic development offices tend to focus on getting big businesses to move to their city or state. Government should build, not buy.”
“The problem: most businesses that create jobs are highly illiquid for a while. These startup businesses are often too risky for a bank to lend to, and usually aren’t going to grow fast enough, or big enough, to fit into the venture capitalist’s box.”
“The wrong way to find innovation, Hwang and Horowitt maintain, is to look for the next great idea; instead, investing in the right ecosystem creates an environment in which unexpected ideas can arise and thrive. Topophilia (From Greek topos “place” and -philia, “love of”) is a strong sense of place, which often becomes mixed with the sense of cultural identity among certain people and a love of certain aspects of such a place) is one way to describe why an ecosystem works: people love and invest in where they are.”
“People don’t write books because they’ve got a great deal of wisdom to impart to somebody; they write books because they want to find the answers for themselves and share the search. It’s not ‘I have a thing to tell you,’ even if you say it is. It’s an exploration and a discovery.” (Shelby Foote)
“Our heads-down drive for progress has hollowed out many communities. The thinking behind Peter Thiel’s maxim for entrepreneurs — ‘Be a monopoly’ — has caused a lot of people to lose their livelihoods and their dreams.”
“The problem: When large conglomerates touch every part of everyday life, local problems are harder to solve. Today Walmart executives in Bentonville, Arkansas, and Facebook leadership in Palo Alto make centralized decisions about highly sensitive local problems, and we have fewer local leaders with an independent base and the knowledge of our communities’ problems needed to be able to solve them. As Justice Louis Brandeis once warned, we are becoming a nation of clerks.”
“And big institutions don’t necessarily need to be the enemy — they just need to not be “too big to fail.” Google and Facebook will have better news and content and more relevant ads if they empower, rather than crowd out, local content producers. Banks, venture capital firms, and financial services institutions need to figure out how to invest at the topophilia level if they are going to get truly different, interesting, and profitable ideas. For our innovation economy to succeed in creating a better future, we need to create conditions where everyone is able to play in the innovation game.”
“Do we change the system, and then hope that people’s values change? Or do we change people’s values, and then hope that the system changes to match?”
“But I think the question assumes a false choice. The economic decisions we make are composed of values plus information. But in a big-data world where we are pushing to maximize quarterly earnings and focusing on the most perfect information possible, we have lost sight of the values we care about. We prioritize the quarterly share price of Lowe’s, Walmart, and Home Depot and then later worry about the social fabric of Orange, Virginia, but we don’t recognize that they are interconnected. We can’t price the long-term social and environmental risks that we create with a two-pocket world, so we don’t value them.”
“I didn’t start Village Capital — or write this book — because I think I know all the answers to what’s wrong. I do know that the system isn’t working, and I hope that my career can help me figure out how to make things better.”
Some Quotes:
“Investors everywhere have blind spots, and as a result, we’re overlooking most great ideas. Three quarters of venture capital goes to founders in just three states: New York, California, and Massachusetts. Some 10 percent goes to women founders, and just 1 percent to African Americans. That’s not right — and it’s not smart. We need everybody on the playing field if we’re going to remain the most innovative, entrepreneurial nation in the world.”
“Huge parts of the system aren’t working. New firm creation in the United States is at a thirty-year low. The biggest investment firms in the country’s wealthiest cities aren’t delivering the best financial returns. And the structural problems in the system make all our other problems nearly impossible to solve. Even though we have more computing power in our pockets today that the entire world did fifty years ago, our food systems struggle to feed the world’s growing population, and our health and education infrastructure an’t take care of the current generation, let alone prepare the next one to lead.”
“The idea that entrepreneurship is a meritocracy is a myth. In the real world, money flows to the ideas that are the most convenient to find or the most familiar, not necessarily those that are the best. Simply put, the blind spots in the way we innovate — the way we nurture, support, and invest in new ideas — make all our other problems even harder to solve.”
“The blind spot: we artificially separate our jobs and our careers from our values.”
“Instead of solving the biggest problems of the day, we’re putting billions of dollars into how to make mobile advertising and clickbait news more effective, and nudging people to buy more stuff.”
“The [2016] election illustrates one basic truth that no poll can capture in full: many people feel that the basic social contract of the American Dream — if you have a great idea, solve problems, and work hard, you’ll be successful — is not true in an ever-globalizing world.”
“Investors like to follow patterns; they often use the phrase ‘pattern recognition’ to justify decisions regarding where to invest their money.”
“Because venture funds are under extreme pressure to deliver quick profits to investors, they prioritize short-term value capture over long-term value creation.”
“Over time, smaller funds significantly outperform larger funds.”
“If you’re unable to raise the money you need, investors often say you should ‘bootstrap’ — self fund your company. But most founders don’t have enough cash on hand to start their dream company — particularly since the Great Recession of 2008. Nor do founders necessarily have wealth in the form of home equity: the US home ownership rate in 2016 fell to its lowest since 1967. To add to the problem, student debt has grown over 100 percent in the last twenty years, particularly among graduates from for-profit and two-year colleges, which low-income people disproportionally attend. And founders who are in debt are less likely to start their own business after graduation.”
“If you invest outside the hotbeds where everyone else is, and the company succeeds, on average you’ll pay 35 percent less to get the same end financial result.”
“From a customer’s perspective, it doesn’t matter what a company’s founder looks like or where they went to school, only whether they make a great product.”
“Many people describe their personal philanthropy as ‘giving back.’ But as eBay founder Pierre Omidyar once said, ‘Giving back implies, at one point, that you were taking. We’re dissociating what we do from what we value, and it’s becoming very difficult to improve the world as a result.”
“I had an economics professor at the University of Virginia who said, ‘Decisions are a combination of information and values. This class teaches you the information. You have to develop your own code of values.”
“The financialization of the economy means that what we invest in is no longer entrepreneurs making goods and producing services, but the creation and leverage of intermediaries who extract tolls, rents, and capital gains. The most valuable companies in the world, from Amazon to Walmart to Facebook to Google, do not produce goods or services but instead are trading companies who mediate financial transactions between producers and consumers.”
“The simple fact is that selling YouTube to Google or Instagram to Facebook realizes success more quickly than investing in a clean energy company that will require years of research and development, or a healthcare company that needs to wait for FDA approval. ‘Investment’ for the short term is capturing value quickly. ‘Investment’ for the long term is creating value that lasts.”
“It’s now who you know, it’s who you get to know” (Chris Matthews, Hardball)
“Experts blamed economic cycles and cautioned the industry to ‘wait and see,’ but Bob hit the road and started talking to his customers” — reminds me of Warren Buffet’s ism of “be greedy when others are fearful and fearful when others are greedy.”
“Bob understood that when your’e investing where no one else is, you can outperform those who are following the same patterns.”
“Makers were better evaluators of new ideas; they tended to view their peers’ ideas not through a lens of ‘How well does this act resemble what has worked in the past?’ but rather ‘How likely is this to succeed in the future?”
“The Maker looks at the idea and thinks of all the reasons why it will succeed. Whereas an assessment is an evaluation against a fixed framework, a forecast evaluates a probability that a certain outcome will happen.”
“Later-stage venture capital and private equity investors deploying tens of millions of dollars in growth capital have years of evidence of a company’s performance and are able to make decisions based on assessing a company’s growth trajectory. But investing in new ideas is a forecasting decision, and we have substantial evidence that entrepreneurs are better at predicting whether an idea and its early execution will be successful.”
“Whether it’s changing the funding process or encouraging a different pipeline, innovations around who gets a chance to access capital yield better outcomes.”
“Have you ever heard of someone telling a middle-schooler they expect them to be a great entrepreneur.” (Jim Clifton, CEO, Gallup)
“Broader societal trends back up what I’m seeing at a ground level: 69 percent of millennials value the impact of their investments over their financial returns.”
“Buffett and other two-pocket thinkers are making two arguments. First, they’re arguing that nonprofits are better than companies at addressing social problems. Second, they’re arguing that companies without a social mission are better than mission-driven companies at making money. I believe these are both myths. Even if the first argument were true — if nonprofits were better at solving the world’s biggest problems — we would still run into another problem: the philanthropic sector is so small that even the most effective philanthropy in the world wouldn’t solve systemic problems. But the second argument is problematic, too. There is growing evidence — from customers, founders, employees, and investors — that it pays off, on the bottom line, to have a long-term mission that matters.”
“In both the cases of Ben & Jerry’s and SKS, as the firm grew, the company often faced difficult decisions between company growth and social capital. But bigger may not always be better: I asked Vikram Gandhi, an investment banker who handled the SKS IPO, what went wrong, and he said, ‘The company wasn’t growing like a bank. It raised all this Silicon Valley money and was trying to grow as fast as a tech company. In its desire to look like a Silicon Valley tech company, it lost an understanding of the problem it was trying to solve.’”
“Kim remembers, ‘I learned that the most important way to be happy is to codify what you want to be: What do you care about? And how can all aspects of your life — work, family, home — reflect that?” Kim recognized early on that the secret to happiness was one-pocket thinking.”
“Do you wish to be great? Then begin by being. Do you desire to construct a high and lofty fabric? Think first about the foundations of humility. The higher your structure is to be, the deeper its foundation.” (St. Augustine)
“Investors’ blind spots are almost always the result of good people trying to do the right thing and getting overloaded, rather than someone trying to be actively harmful.” — similar to heuristics in behavioral economics.
“Type 1 errors occur when you pick the wrong idea; type 2 errors happen when you don’t ever look at the right idea.”
“Type 2 solutions share a common trait: they are proactive. They involve going out and finding ideas — and the people and places from which they come — as well as viewing those ideas through a different and possibly unfamiliar lens. There are no shortcuts to avoiding type 2 errors; you have to invest the time in building the pipeline you want to invest in.”
“The trait most strongly correlated with success was self-awareness. Let’s say an innovator is disorganized, but she’s aware of it. Or an entrepreneur is a jerk, and he knows it. Both are fine — and positively correlated with success. The second trait most correlated with success is whether a firm has a female cofounder. Based on the data, here’s my top piece of advice to any guy starting a company: be more self-aware, and get a woman as a cofounder.”
“Know what you own, and know why you own it.” (Peter Lynch)
“Bryce noticed something curious: the organizations Blue Sky was supporting were more interrelated than he would have thought. He imagined a woman who used to work at a strip club instead working for a living wage at Scarlet’s Bakery, which an investor could support, and living in an affordable home in Louisville, which an investor could also back. He had unintentionally created a portfolio in his mind. Bryce saw the future. To invest in this portfolio, he founded a firm he would call Access Ventures, in the process of becoming one of the world’s foremost one-pocket thinkers that you’ve likely never heard of.”
“Most investors don’t price social and environmental risk in public equities until it’s too late.”
“But many of these apps are dependent on venture capital subsidies. Uber lost $1.2B in the first half of 2016 — and passengers paid only 41 percent of the cost, with the rest subsidized by venture capital. Blue Apron has raised $200M, and Zeel has raised $13M. And the pensions of most Americans are subsidizing these perks. Venture capital funds are often raising capital from teachers and firefighters in New Mexico and Minnesota to subsidize food and massages for tech employees in San Francisco. In my experience, the kinds of technology that venture capital is investing in today is doing a tremendous amount for well-educated people on the coasts while doing little for middle-class America.”
“In a one-pocket world, the cities, states, and countries that are managed with the lowest social and environmental risk are the ones that are the most prosperous.” (How do you measure this though?”
“We don’t see more ESOPs because our current investment world is ‘one size fits all.’ One investment banker I spoke to at a well-known bank investigated how ESOPs could create more middle-class wealth. He discovered that ESOPs, if structured thoughtfully, are relatively a straightforward model for founders who want to sell shares in their company to members of their team. He asked his bank, ‘Why don’t we do this more often?’ He learned that the fee incentives that investment bankers received from ESOPs were substantially lower than they would be for a straight transaction: as a result, investment bankers had no incentive to do the hard work of helping founders sell their companies to their team members.”
“We know that diverse teams have a competitive advantage: teams in the top quartile of gender diversity outperform teams in the bottom quartile by 15 percent, and teams in the top quartile of racial diversity outperform teams in the bottom 35 percent.”
“Government has historically played a major role in economic development; federal, state, and city governments have offices that provide cash and tax incentives to bring in new jobs. But although we know that small businesses and new businesses create the vast majority of new jobs, economic development offices tend to focus on getting big businesses to move to their city or state. Government should build, not buy.”
“The problem: most businesses that create jobs are highly illiquid for a while. These startup businesses are often too risky for a bank to lend to, and usually aren’t going to grow fast enough, or big enough, to fit into the venture capitalist’s box.”
“The wrong way to find innovation, Hwang and Horowitt maintain, is to look for the next great idea; instead, investing in the right ecosystem creates an environment in which unexpected ideas can arise and thrive. Topophilia (From Greek topos “place” and -philia, “love of”) is a strong sense of place, which often becomes mixed with the sense of cultural identity among certain people and a love of certain aspects of such a place) is one way to describe why an ecosystem works: people love and invest in where they are.”
“People don’t write books because they’ve got a great deal of wisdom to impart to somebody; they write books because they want to find the answers for themselves and share the search. It’s not ‘I have a thing to tell you,’ even if you say it is. It’s an exploration and a discovery.” (Shelby Foote)
“Our heads-down drive for progress has hollowed out many communities. The thinking behind Peter Thiel’s maxim for entrepreneurs — ‘Be a monopoly’ — has caused a lot of people to lose their livelihoods and their dreams.”
“The problem: When large conglomerates touch every part of everyday life, local problems are harder to solve. Today Walmart executives in Bentonville, Arkansas, and Facebook leadership in Palo Alto make centralized decisions about highly sensitive local problems, and we have fewer local leaders with an independent base and the knowledge of our communities’ problems needed to be able to solve them. As Justice Louis Brandeis once warned, we are becoming a nation of clerks.”
“And big institutions don’t necessarily need to be the enemy — they just need to not be “too big to fail.” Google and Facebook will have better news and content and more relevant ads if they empower, rather than crowd out, local content producers. Banks, venture capital firms, and financial services institutions need to figure out how to invest at the topophilia level if they are going to get truly different, interesting, and profitable ideas. For our innovation economy to succeed in creating a better future, we need to create conditions where everyone is able to play in the innovation game.”
“Do we change the system, and then hope that people’s values change? Or do we change people’s values, and then hope that the system changes to match?”
“But I think the question assumes a false choice. The economic decisions we make are composed of values plus information. But in a big-data world where we are pushing to maximize quarterly earnings and focusing on the most perfect information possible, we have lost sight of the values we care about. We prioritize the quarterly share price of Lowe’s, Walmart, and Home Depot and then later worry about the social fabric of Orange, Virginia, but we don’t recognize that they are interconnected. We can’t price the long-term social and environmental risks that we create with a two-pocket world, so we don’t value them.”
“I didn’t start Village Capital — or write this book — because I think I know all the answers to what’s wrong. I do know that the system isn’t working, and I hope that my career can help me figure out how to make things better.”
November 19, 2017
The most useful thing in this book is the VIRAL pathway, which is a way to describe company maturity for venture-backed businesses. It gives a start-up and an investor a common way to measure where you currently stand and where you’re trying to go. This is key: https://goo.gl/images/PxSptx
The Two Camps of Investors
The majority of investors want to quickly flip a company and get the biggest return on investment possible in simple financial terms. Charitable donations, impact on the community is considered a different pocket “two pocket” investors. A smaller subset (Baird among them) measure return in a wider definition than the numbers. They consider the broader impact on the community and factor that into valuation. When people talk about it taking a village, the impact on community, double / triple bottom lines, or social impact they fall into the Baird camp. If they talk cult of the founder, what’s your exit strategy, hockey stick, etc, they’re most likely a two-pocket investor.
One Pocket OGs / Examples: Jim Sorenson, Pierre Omidyar, YCombinator, Rockefeller Foundation, Antony and Jed Emerson. Ben & Jerrys. New Belgium beer company. Social Finance, Pay for Success at Harvard. Anyone on the Giving Pledge. Dan Gilbert in Detroit.
Main Ideas of the Book
Other important ideas from this book. The way we fund start-ups is wrong. We fall into the same bias patterns that influence other parts of life. We make type one and type two thinking errors. Instead of backing the right ideas or looking at a wide enough spectrum, venture capital firms fund people that look like them (white guys), went to the right schools, and use the right buzzwords. This is why it’s easier for Silicon Valley company to millions to fund a $1500 juice maker but a cash flow positive, non-sexy company in “fly over” country struggles to raise a few hundred thousand.
We are stuck in a way of thinking about profits and funding companies that started in the 1800s for funding whaling expeditions. We think “two pocket” (business profit, then philanthropy) instead of considering the positive net impacts of an overall investment “one pocket thinking.”
Quotes
Innovation today suffers from three major blind spots. The first has to do with how we pick new idea, the second with where we find new ideas and who we invest in, and the third with why – why we invest in new ideas to begin with…In 2015, 78% of startup investment in the United States – and half of all startup investment in the world – went to three states: Massachusetts, New York, and California. Less than 5% of investments in the United States went to female founders, and less than 1% went to companies started by African-American and Latinos. Front 2007 to 2012, 10% o all startup financing in the world went to graduates of just six universities (Stanford, Harvard, Berkeley, MIT, NYU, and UPenn) [There are an equal percentage of people without college degrees running Fortune 500 companies than graduates from Ivy League schools].xvii
In January 2016, I reviewed the industries of over 150 “unicorn” companies I found that only 15% of the enterprises were solving problems in the top six areas that the majority of the world’s population spends its budget: food, health, energy, agriculture, financial services, and housing. Xx
Most of the venture capital process today is a “one size fits all” system that has its origins in nineteenth-century whaling. 11
AOL founder Steve Case often calls the company, “an overnight success that took ten years.” Microsoft likewise took ten years to reach its IPO. Hewlett-Packard, Silicon Valley’s original innovator, took nearly twenty years. Nike took twenty-five. 39
Makers versus managers [the idea here is an entrepreneur is a better predictor of whether or not a company will succeed than an investor]. Makers never stop generating new ideas, which helps keep their minds open to novel ways to succeed…mangers bet on what they have seen work before, rather than forecast what might work in the future. 51
In his award-winning article “Exploring Intuition and its Role in Managerial Decision-Making” (https://www.researchgate.net/publicat... are great at figuring out how new ideas might fit into existing patterns (assessments), but they often stifle creativity regarding how ideas might work in the future (forecasting). 52
Teams evaluate one another on two criteria: potential and return on investment. The rating are public. 56
We know what things cost but have no idea what they are worth. We no longer ask of a judicial ruling or a legislative act: Is it good? Is it fair? Is it just? Is it right? Those used to be political questions, even if they invited no easy answers. We must learn once again to pose them. –Tony Judt, Ill Fares the Land 73
The company raised all this Silicon Valley money and was trying to grow as fast as a tech company. In its desire to look like a Silicon Valley tech company, it lost an understanding of the problem it was trying to solve. 84
The second-best time to plan a tree is now. –Chinese proverb.
Do you wish to be great? Then begin by being. Do you desire to construct a high and lofty fabric? Think first about the foundations of humility. The higher your structure is to be, the deeper its foundation. –St. Augustine 93
When we make mistakes, they fall into categories that logic experts call “type 1 errors” and “type 2 errors.” Making a bad decision is a type 1 error: if I’d had a chance to invest in AOL in 1987 and said no, that would be a type 1 error. Often, the bigger problem is the type 2 error, which happens not when you make a bad decision, but when you fail to consider an option entirely. In other words, type 1 errors occur when you pick the wrong idea; type 2 errors happen when you don’t ever look at the right idea. If I assumed there were no good startups in Washington DC in 1987 I wouldn’t have been looking for AOL. That’s a type 2 error. 94
“Today’s culture of quarterly earning hysteria is totally contrary to the long-term approach we need.” –Larry Fink, CEO, BlackRock
The 20 wealthiest zip codes have seen a 300% increase in business activity over the past 30 years, while the rest of the country has seen a decline in firm creation. 141
GVAP. In any interaction, you should have a Goal, a Value you’re proposing, an Agenda, and Permission. 159
The Two Camps of Investors
The majority of investors want to quickly flip a company and get the biggest return on investment possible in simple financial terms. Charitable donations, impact on the community is considered a different pocket “two pocket” investors. A smaller subset (Baird among them) measure return in a wider definition than the numbers. They consider the broader impact on the community and factor that into valuation. When people talk about it taking a village, the impact on community, double / triple bottom lines, or social impact they fall into the Baird camp. If they talk cult of the founder, what’s your exit strategy, hockey stick, etc, they’re most likely a two-pocket investor.
One Pocket OGs / Examples: Jim Sorenson, Pierre Omidyar, YCombinator, Rockefeller Foundation, Antony and Jed Emerson. Ben & Jerrys. New Belgium beer company. Social Finance, Pay for Success at Harvard. Anyone on the Giving Pledge. Dan Gilbert in Detroit.
Main Ideas of the Book
Other important ideas from this book. The way we fund start-ups is wrong. We fall into the same bias patterns that influence other parts of life. We make type one and type two thinking errors. Instead of backing the right ideas or looking at a wide enough spectrum, venture capital firms fund people that look like them (white guys), went to the right schools, and use the right buzzwords. This is why it’s easier for Silicon Valley company to millions to fund a $1500 juice maker but a cash flow positive, non-sexy company in “fly over” country struggles to raise a few hundred thousand.
We are stuck in a way of thinking about profits and funding companies that started in the 1800s for funding whaling expeditions. We think “two pocket” (business profit, then philanthropy) instead of considering the positive net impacts of an overall investment “one pocket thinking.”
Quotes
Innovation today suffers from three major blind spots. The first has to do with how we pick new idea, the second with where we find new ideas and who we invest in, and the third with why – why we invest in new ideas to begin with…In 2015, 78% of startup investment in the United States – and half of all startup investment in the world – went to three states: Massachusetts, New York, and California. Less than 5% of investments in the United States went to female founders, and less than 1% went to companies started by African-American and Latinos. Front 2007 to 2012, 10% o all startup financing in the world went to graduates of just six universities (Stanford, Harvard, Berkeley, MIT, NYU, and UPenn) [There are an equal percentage of people without college degrees running Fortune 500 companies than graduates from Ivy League schools].xvii
In January 2016, I reviewed the industries of over 150 “unicorn” companies I found that only 15% of the enterprises were solving problems in the top six areas that the majority of the world’s population spends its budget: food, health, energy, agriculture, financial services, and housing. Xx
Most of the venture capital process today is a “one size fits all” system that has its origins in nineteenth-century whaling. 11
AOL founder Steve Case often calls the company, “an overnight success that took ten years.” Microsoft likewise took ten years to reach its IPO. Hewlett-Packard, Silicon Valley’s original innovator, took nearly twenty years. Nike took twenty-five. 39
Makers versus managers [the idea here is an entrepreneur is a better predictor of whether or not a company will succeed than an investor]. Makers never stop generating new ideas, which helps keep their minds open to novel ways to succeed…mangers bet on what they have seen work before, rather than forecast what might work in the future. 51
In his award-winning article “Exploring Intuition and its Role in Managerial Decision-Making” (https://www.researchgate.net/publicat... are great at figuring out how new ideas might fit into existing patterns (assessments), but they often stifle creativity regarding how ideas might work in the future (forecasting). 52
Teams evaluate one another on two criteria: potential and return on investment. The rating are public. 56
We know what things cost but have no idea what they are worth. We no longer ask of a judicial ruling or a legislative act: Is it good? Is it fair? Is it just? Is it right? Those used to be political questions, even if they invited no easy answers. We must learn once again to pose them. –Tony Judt, Ill Fares the Land 73
The company raised all this Silicon Valley money and was trying to grow as fast as a tech company. In its desire to look like a Silicon Valley tech company, it lost an understanding of the problem it was trying to solve. 84
The second-best time to plan a tree is now. –Chinese proverb.
Do you wish to be great? Then begin by being. Do you desire to construct a high and lofty fabric? Think first about the foundations of humility. The higher your structure is to be, the deeper its foundation. –St. Augustine 93
When we make mistakes, they fall into categories that logic experts call “type 1 errors” and “type 2 errors.” Making a bad decision is a type 1 error: if I’d had a chance to invest in AOL in 1987 and said no, that would be a type 1 error. Often, the bigger problem is the type 2 error, which happens not when you make a bad decision, but when you fail to consider an option entirely. In other words, type 1 errors occur when you pick the wrong idea; type 2 errors happen when you don’t ever look at the right idea. If I assumed there were no good startups in Washington DC in 1987 I wouldn’t have been looking for AOL. That’s a type 2 error. 94
“Today’s culture of quarterly earning hysteria is totally contrary to the long-term approach we need.” –Larry Fink, CEO, BlackRock
The 20 wealthiest zip codes have seen a 300% increase in business activity over the past 30 years, while the rest of the country has seen a decline in firm creation. 141
GVAP. In any interaction, you should have a Goal, a Value you’re proposing, an Agenda, and Permission. 159
December 17, 2018
Really enjoyed this book by first-time author Ross Baird. He does an insightful job of pointing out the ways in which our current approaches to venture capital investing are sending much-needed money to the same sort of entrepreneurs solving the same sort of (largely unimportant) problems for the same sort of customers. Baird's approach is an intentional prescription to go against the grain by investing outside Silicon Valley, with entrepreneurs whose background aren't typical, and whose startups are solving big problems. Great read.
November 19, 2017
One-pocket investing
The concept of two-pocket investing vs one-pocket investing that Ross talks about in the book is interesting. Moving to a one-pocket mindset is like making sure you are one whole-person, not one type of person at work and another type of person at home.
The concept of two-pocket investing vs one-pocket investing that Ross talks about in the book is interesting. Moving to a one-pocket mindset is like making sure you are one whole-person, not one type of person at work and another type of person at home.
September 9, 2017
"The idea that entrepreneurship is a meritocracy is a myth." Ross Baird bases his debut book, The Innovation Blind Spot, on the premise that capital fails to flow to the most innovative and useful new ideas. Instead, he argues, "money flows to the ideas that are the most convenient to find or the most familiar."
Baird identifies three major blind spots hindering our innovation process. How we pick new ideas, where we find new ideas, and who we invest in all present problems in the innovation economy.
He crafts his arguments to appeal to both logical and emotion-oriented audiences. Utilizing a mixture of hard data and anecdotes from his venture capital experience, Baird makes cases against the traditional due-diligence process, warm introductions, and pattern recognition. Overall, his attempts to eviscerate traditional investment thinking prove potently effective. However, a critic with no solutions is about as valuable as an angel investor promising capital he doesn't possess (read the book and you'll get the reference).
Luckily, Baird dedicates a resounding 100 pages to describing on-the-cusp solutions to mitigate blind spots and develop flourishing entrepreneurial ecosystems. He lays out a multitude of impact-oriented ideas for investors, governments, and entrepreneurial ecosystem builders. His proposals even extend to ways in which entrepreneurs and large-company employees can play roles in mitigating biases. Although he occasionally delves into the weeds of high-level concepts, his solutions are generally accessible and filled with forward-thinking wisdom.
As the President of Village Capital, Baird brings a unique perspective to venture capital investing. His firm uses a peer-selection model where entrepreneurs rank one another, and the top two startups receive seed-stage capital. Most importantly, Village Capital employs one-pocket thinking by investing in social ventures, rather than focusing purely on profits and making philanthropic contributions on the side (two-pocket thinking). Village Capital’s fund invests in 5 sectors (Financial health, Education, Healthcare, Energy, and Agriculture), which are addressing pressing global problems that affect the majority of society.
Along with promoting one-pocket thinking and peer-selected investment, Baird elaborates on intriguing models for impact investing. Using Access Ventures as a case study, he describes how investors can focus on impact-oriented returns across asset classes and cultivate entire ecosystems. This is a particularly useful model for institutional investors and hedge funds. In the venture capital arena, Village Capital’s VIRAL (Venture Investment Readiness and Awareness Level) provides a brilliant mechanism to break down communication barriers between investors and entrepreneurs.
The concluding section of the book, "Topophilia" (love of place), is where Baird's voice and vision resonates the loudest. He discusses the creation of thriving entrepreneurial ecosystems outside of Silicon Valley, New York City, and Boston. Tying all of his ideas and actors together, "Topophilia" opens the doorway to a future of bottom-up economic and cultural development, restoring the American Dream.
If you possess an inkling of intrigue about Ross Baird’s vision and ideas, I highly recommend purchasing The Innovation Blind Spot. This book will open your eyes to a plethora of possibilities for a future world, filled with one-pocket thinking and bottom-up ecosystem building.
Baird identifies three major blind spots hindering our innovation process. How we pick new ideas, where we find new ideas, and who we invest in all present problems in the innovation economy.
He crafts his arguments to appeal to both logical and emotion-oriented audiences. Utilizing a mixture of hard data and anecdotes from his venture capital experience, Baird makes cases against the traditional due-diligence process, warm introductions, and pattern recognition. Overall, his attempts to eviscerate traditional investment thinking prove potently effective. However, a critic with no solutions is about as valuable as an angel investor promising capital he doesn't possess (read the book and you'll get the reference).
Luckily, Baird dedicates a resounding 100 pages to describing on-the-cusp solutions to mitigate blind spots and develop flourishing entrepreneurial ecosystems. He lays out a multitude of impact-oriented ideas for investors, governments, and entrepreneurial ecosystem builders. His proposals even extend to ways in which entrepreneurs and large-company employees can play roles in mitigating biases. Although he occasionally delves into the weeds of high-level concepts, his solutions are generally accessible and filled with forward-thinking wisdom.
As the President of Village Capital, Baird brings a unique perspective to venture capital investing. His firm uses a peer-selection model where entrepreneurs rank one another, and the top two startups receive seed-stage capital. Most importantly, Village Capital employs one-pocket thinking by investing in social ventures, rather than focusing purely on profits and making philanthropic contributions on the side (two-pocket thinking). Village Capital’s fund invests in 5 sectors (Financial health, Education, Healthcare, Energy, and Agriculture), which are addressing pressing global problems that affect the majority of society.
Along with promoting one-pocket thinking and peer-selected investment, Baird elaborates on intriguing models for impact investing. Using Access Ventures as a case study, he describes how investors can focus on impact-oriented returns across asset classes and cultivate entire ecosystems. This is a particularly useful model for institutional investors and hedge funds. In the venture capital arena, Village Capital’s VIRAL (Venture Investment Readiness and Awareness Level) provides a brilliant mechanism to break down communication barriers between investors and entrepreneurs.
The concluding section of the book, "Topophilia" (love of place), is where Baird's voice and vision resonates the loudest. He discusses the creation of thriving entrepreneurial ecosystems outside of Silicon Valley, New York City, and Boston. Tying all of his ideas and actors together, "Topophilia" opens the doorway to a future of bottom-up economic and cultural development, restoring the American Dream.
If you possess an inkling of intrigue about Ross Baird’s vision and ideas, I highly recommend purchasing The Innovation Blind Spot. This book will open your eyes to a plethora of possibilities for a future world, filled with one-pocket thinking and bottom-up ecosystem building.
October 17, 2017
Silicon Valley has written the playbook for building innovative companies that have transformed the global economy.
But it doesn’t hold the exclusive patent on the only path to innovation. That’s the view of Ross Baird, the co-founder and CEO of Village Capital, a Washington, DC-based social impact venture firm, and author of the new book “The Innovation Blind Spot.”
“The American dream has been replaced by the Silicon Valley dream, and that dream is only accessible to a tiny percentage of the population,” Baird told me in an interview.
In essence, he says that dream has increasingly become the exclusive realm of a narrow group of people—think Mark Zuckerberg-esque, Ivy League education, young, and connected.
“We must find—and promote—entrepreneurs and innovators everywhere, not just those who went to the best schools, know the right people, and live in the most developed innovation cities,” he writes in “Blind Spot.” “We need everybody on the playing field if we’re going to remain the most innovative, entrepreneurial nation in the world.”
Take venture capital as a proxy for who are America’s innovators. Today, Baird points out that an overwhelming majority of funding goes to founders in three states: California, New York, and Massachusetts. Women founders only receive 10 percent of funding, while just 1 percent goes to African-Americans.
Money is the lifeblood of an innovation ecosystem. Without it, young companies die. But if that key ingredient fails to reach large parts of the population, Baird writes in his book, “the idea of entrepreneurship as a meritocracy is wrong.”
For more of my review, please click here: http://www.xconomy.com/texas/2017/10/...
But it doesn’t hold the exclusive patent on the only path to innovation. That’s the view of Ross Baird, the co-founder and CEO of Village Capital, a Washington, DC-based social impact venture firm, and author of the new book “The Innovation Blind Spot.”
“The American dream has been replaced by the Silicon Valley dream, and that dream is only accessible to a tiny percentage of the population,” Baird told me in an interview.
In essence, he says that dream has increasingly become the exclusive realm of a narrow group of people—think Mark Zuckerberg-esque, Ivy League education, young, and connected.
“We must find—and promote—entrepreneurs and innovators everywhere, not just those who went to the best schools, know the right people, and live in the most developed innovation cities,” he writes in “Blind Spot.” “We need everybody on the playing field if we’re going to remain the most innovative, entrepreneurial nation in the world.”
Take venture capital as a proxy for who are America’s innovators. Today, Baird points out that an overwhelming majority of funding goes to founders in three states: California, New York, and Massachusetts. Women founders only receive 10 percent of funding, while just 1 percent goes to African-Americans.
Money is the lifeblood of an innovation ecosystem. Without it, young companies die. But if that key ingredient fails to reach large parts of the population, Baird writes in his book, “the idea of entrepreneurship as a meritocracy is wrong.”
For more of my review, please click here: http://www.xconomy.com/texas/2017/10/...
June 25, 2018
Ross has really important messages made abundantly clear in this book:
Entrepreneurship is not a meritocracy.
The VC model is broken, biased and set to continue fueling not only poor innovation, but uneven benefits from innovation.
It pains me to not give more than 3 stars, for the following:
- Ross sees entrepreneurship as the solution to many of the ills of society. A nagging feeling stayed with me all along the book - as I need Ross to demonstrate to me that he's not also being a victim of his own narrow mindedness and his own experience. Claiming entrepreneurship as the solution seems to be the bias of the entrepreneur.
- Book remains too theoretical: while the online resources page remains laudable, it's not enough. The solutions given throughout the book are also not enough: not in number, not in quality, not in development.
- The two reasons above combined: lack of awareness of systems. How one contribution affects the system as a whole. From the discussion of "why do we need jobs" which should underline all efforts of sustainable entrepreneurial community building to "is this fix enough? how do we really know it is delivering?".
Nevertheless, I'll recommend this book to anyone who wishes to understand the first step of my own personal journey towards better entrepreneurship.
Entrepreneurship is not a meritocracy.
The VC model is broken, biased and set to continue fueling not only poor innovation, but uneven benefits from innovation.
It pains me to not give more than 3 stars, for the following:
- Ross sees entrepreneurship as the solution to many of the ills of society. A nagging feeling stayed with me all along the book - as I need Ross to demonstrate to me that he's not also being a victim of his own narrow mindedness and his own experience. Claiming entrepreneurship as the solution seems to be the bias of the entrepreneur.
- Book remains too theoretical: while the online resources page remains laudable, it's not enough. The solutions given throughout the book are also not enough: not in number, not in quality, not in development.
- The two reasons above combined: lack of awareness of systems. How one contribution affects the system as a whole. From the discussion of "why do we need jobs" which should underline all efforts of sustainable entrepreneurial community building to "is this fix enough? how do we really know it is delivering?".
Nevertheless, I'll recommend this book to anyone who wishes to understand the first step of my own personal journey towards better entrepreneurship.
October 23, 2017
Smart, contrarian and practical take on the venture capital industry and how to foster innovation in how we invest in order to capture more big ideas. Explains how venture capital as an industry holds one of the most potent keys to unlocking change on a global scale, by backing entrepreneurs who come from diverse backgrounds and who understand huge global problems in industries like housing, education, and food. Shares examples of existing industry innovations, like Village Capital's peer selection model, as well as a thoughtful selection of fresh ideas that can be applied not only in VC but in government and by entrepreneurs themselves. I would definitely recommend this book to VCs and other innovation-enablers.
December 9, 2018
In this book, Ross argues a thought-provoking case on how most investors and many entrepreneurs miss the innovation happening around us. Mostly due to having a blind spot where we try to implement one-size-fits-all thinking on all businesses created.
Moreover, society has reached a point where having a great idea, solving problems and working hard does not always lead to a successful life. All because the surrounding system favours certain people, locations and ideas over others.
Yet great ideas can come from anywhere. And those investing where no one else is can outperform everyone else.
So how not to miss those that others overlook?
Read more: https://medium.com/sander-gansen/sand...
Moreover, society has reached a point where having a great idea, solving problems and working hard does not always lead to a successful life. All because the surrounding system favours certain people, locations and ideas over others.
Yet great ideas can come from anywhere. And those investing where no one else is can outperform everyone else.
So how not to miss those that others overlook?
Read more: https://medium.com/sander-gansen/sand...
April 26, 2021
A refreshing perspective on who and how traditional venture capitalists invest in and the long term societal issues/solutions that can be addressed by updating the investing system, policy making and how blindspotted entepreneurs profile themselves. Very readable, well structured and strong insights.
A couple of limitations I found in the book was it could have been stronger with more research and case studies than from a limited network of trusted impact investors quoted once too often sometimes coming across as marketing. Also the author seemed to have strong personal views on topophilia and elite university brands which could have been more balanced in perspective on the limitations of mainstream capitalism and values the American society has been limited to celebrate.
A couple of limitations I found in the book was it could have been stronger with more research and case studies than from a limited network of trusted impact investors quoted once too often sometimes coming across as marketing. Also the author seemed to have strong personal views on topophilia and elite university brands which could have been more balanced in perspective on the limitations of mainstream capitalism and values the American society has been limited to celebrate.
August 11, 2021
I come for the VC industry, and have been quite excited to read this book. I think Ross has painted a good way of traditional Vc process is, though don’t think did a great job being convincing enough to state that his method is better. For instance, one of the metrics he uses is return multiple on investment, which most if not all VC uses as well, and some has been performing so good based on that metric. Which makes me think that all the talk about how VC is broken, is nonsense since many of those traditional VC that follow the ild model are over performing. The second point is that the fact that Ross did not have a track record using a traditional process, make him less likely the perfect candidate to criticize the traditional model.
November 2, 2017
I received a free copy of this book from Goodreads Giveaways.
This was a very thorough, but clear and to-the-point look at why innovation isn't happening at the same rate in America and some techniques to improve that. It has tips for investors and potential entrepreneurs, as well as a very brief explanation of venture capital and how it works. Even if you've never considered starting your own business, this is a good read because these types of blind spots and how to correct for them occur in everyone's every day life and the tips in here are relatively easy to adjust to your own particular situation.
This was a very thorough, but clear and to-the-point look at why innovation isn't happening at the same rate in America and some techniques to improve that. It has tips for investors and potential entrepreneurs, as well as a very brief explanation of venture capital and how it works. Even if you've never considered starting your own business, this is a good read because these types of blind spots and how to correct for them occur in everyone's every day life and the tips in here are relatively easy to adjust to your own particular situation.
December 26, 2017
Excellent read for aspiring entrepreneurs, economic development folks, or investors. I heard a talk recently by the author based on the ideas presented in the book - and after reading the book, I am convinced of three things: investment money is out there, it's being invested in extremely limited ways, and the potential exists to do things differently. I also loved how the author presented the idea of "one-pocket" thinking - touching on the idea of 'purpose-for-profit' or social impact business (and investing). This idea alone has sparked alot of energy in my mind. As an aspiring entrepreneur I highly recommend this book.
April 25, 2018
Ross makes a convincing case to rethink the way we currently dichotomize doing good and doing business. He recognizes that markets don't work perfectly as long as they're run by humans with biases, and he points out many of the biggest biases in entrepreneurship and venture funding and how to overcome them, individually and as a society. However, he doesn't seem open to the possibility that "one-pocket thinking" isn't the best mindset for every person in every scenario. Overall, Baird's thoughts provide a few great ideas to add to one's toolbox for analyzing the world, but are oversold as a way to fix most of society's ills.
August 23, 2017
Quick and insightful read.
Baird comes from the world of venture capital, but he defines innovation as any solution to big problems in our world today. That could include high-growth startups, but it could also include non-profit innovation, corporate innovation, etc. He takes the reader through the different implicit biases and thought-patterns that keep people from recognizing the best ideas - very reminiscent of Daniel Kahneman and Malcom Gladwell.
Would recommend for anyone interested in how we (as a society) choose which bets we make on the "next big thing".
Baird comes from the world of venture capital, but he defines innovation as any solution to big problems in our world today. That could include high-growth startups, but it could also include non-profit innovation, corporate innovation, etc. He takes the reader through the different implicit biases and thought-patterns that keep people from recognizing the best ideas - very reminiscent of Daniel Kahneman and Malcom Gladwell.
Would recommend for anyone interested in how we (as a society) choose which bets we make on the "next big thing".
September 3, 2017
This is a thoughtful exploration of the factors that make a startup successful and how we can do more to encourage an ecosystem of entrepreneurs to build positive impact businesses in their communities.
The answers are often surprising, but inspiring. For example, female founders and co-founders are more likely to create more revenue and jobs than male-led ones.
Baird also includes some unusual funding models to enable startups in non-traditional areas to get off the starting blocks and gain momentum.
The answers are often surprising, but inspiring. For example, female founders and co-founders are more likely to create more revenue and jobs than male-led ones.
Baird also includes some unusual funding models to enable startups in non-traditional areas to get off the starting blocks and gain momentum.
October 11, 2017
I received this book for free through Goodreads Giveaways and have chosen to give my honest opinion about it.
This was an interesting book with very interesting topics discussed. I found that this book broaden my prospects while it also helped sharpen some of them, and added clarity to our chaotic society, which is why I think it was a valuable read. However, sometimes the information seemed borderline irrelevant or too much information was supplied, and became a bit too numbing to thoroughly process. Still, the book was well organized and with decent headings and relevant topics!
This was an interesting book with very interesting topics discussed. I found that this book broaden my prospects while it also helped sharpen some of them, and added clarity to our chaotic society, which is why I think it was a valuable read. However, sometimes the information seemed borderline irrelevant or too much information was supplied, and became a bit too numbing to thoroughly process. Still, the book was well organized and with decent headings and relevant topics!
January 20, 2018
As full disclosure, I went to college with the author and know him somewhat well. In fact, I picked this book up because I was curious to hear about his thoughts in the venture / entrepreneurship space. I was pleasantly surprised by how much I enjoyed the book. It was a great mix of storytelling, contrarian viewpoints, and well placed statistics. As a entrepreneur, I firmly agree with Ross' take that too much of the business world is split into thinking that businesses can only be profitable or socially impactful, and that that seriously needs to change.
January 20, 2018
As full disclosure, I went to college with the author and know him somewhat well. In fact, I picked this book up because I was curious to hear about his thoughts in the venture / entrepreneurship space. I was pleasantly surprised by how much I enjoyed the book. It was a great mix of storytelling, contrarian viewpoints, and well placed statistics. As a entrepreneur, I firmly agree with Ross' take that too much of the business world is split into thinking that businesses can only be profitable or socially impactful, and that that seriously needs to change.
May 20, 2018
I used this book in my "innovation for sustainability" class, and it was a great conversation starter. Baird talks a lot about how the American Dream isn't working for most of America, and he scrutinizes how Silicon Valley's venture capital landscape perpetuates current inequities.
It's refreshing to hear from an entrepreneur/investor who wants to use capital to actually solve real, complex, deeply entrenched problems.
The book is a little repetitive at times, but the message is clear and important, and the writing is engaging and good.
It's refreshing to hear from an entrepreneur/investor who wants to use capital to actually solve real, complex, deeply entrenched problems.
The book is a little repetitive at times, but the message is clear and important, and the writing is engaging and good.
July 4, 2018
Baird has done a great job with Village Capital, they are deservedly very well respected. I would liked to have heard more about their process, their insights and successes, and more ideas inspired by that knowledge. There was a little towards the end, which was good stuff. But not enough and that's what I was interested in. The main points of the book are spot on, no dispute there. The book seems geared for people who are not that familiar with impact investing, so maybe I am the wrong audience. But there are other, better books on impact investing if you want to dive deeper.
July 21, 2021
The book is mostly focused on the American scenario. However, I found the idea of decentralizing innovation quite interesting (e.g. Silicon Valley). Promoting innovation among local communities is critical to provide the most valuable innovation for such economies. For example, Uber/AirBnb are valuable innovations, but they’re not relevant for agriculture-based areas like where I come from. However, as in such areas nobody is promoting an innovative environment for technology, they remain often unserved or misunderstood by large companies or Silicon Valley startups.
October 16, 2017
A must-read for anyone wanting venture capital to do more, and do it better.
The first sections are where the meat is, delving into how venture capital is failing us and yet how much amazing opportunity there is. It’s a quick survey course on how much VC could be doing but isn’t, and who is out there trying to do something different.
The rest is an interesting study in what role different organizations can have in driving the kind of change this book is demanding.
The first sections are where the meat is, delving into how venture capital is failing us and yet how much amazing opportunity there is. It’s a quick survey course on how much VC could be doing but isn’t, and who is out there trying to do something different.
The rest is an interesting study in what role different organizations can have in driving the kind of change this book is demanding.
January 7, 2018
Quick Read on the Evolution of Venture Capital and Impact Investing
Baird does a good job of outlining a framework for effective impact investing with a healthy dose of examples along the way. His fundamental proposition is that there are gaps in our current entrepreneurial ecosystem that are largely the result of our own inherent biases. By delineating and understanding these biases, we can correct for them and achieve better outcomes - both financially and socially.
Baird does a good job of outlining a framework for effective impact investing with a healthy dose of examples along the way. His fundamental proposition is that there are gaps in our current entrepreneurial ecosystem that are largely the result of our own inherent biases. By delineating and understanding these biases, we can correct for them and achieve better outcomes - both financially and socially.
March 12, 2018
Writer explain well the blind spots that are present in the current VC industry and how he and his team are using innovative approaches to clear these blind spots and make better decisions by investing in businesses which have enormous potential to solve the real issues on our planet.
A must read for anybody to understand the genesis and requirement of impact investments. Also this will help you in thinking about the blind spots that you may be having while making decisions.
A must read for anybody to understand the genesis and requirement of impact investments. Also this will help you in thinking about the blind spots that you may be having while making decisions.
October 17, 2017
The mission of this book is orientated towards two types of people. The investor and the investee. I find the ideas about the investee to more important. The book had an America Only approach. The author sometimes spoke in international investment. The author kept the tone of the book as us versus them.
May 15, 2020
Learning how to foster innovation is an interest of mine. This book approaches this from the standpoint of venture capital. The approach to fostering innovatiin in venture capital is unique but certainly not limited to venture capital endeavors only. Thus book provides significant insight into how to foster innovation.
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