Timing and why we’re all VCs

Plus Mithril Capital craziness, seed funding down and more

Timing is the single most valuable skill of the modern economy, but I would argue it’s the least understood and also the least practiced.

Capitalism is fundamentally about timing, since market competition is about finding opportunities before others. When should you start a company? What company should you start? When should a VC invest? When should you join a company? When should you switch industries? When should you back a candidate for public office?

Every single one of our professional decisions is about timing, and yet, we do so little to practice and perfect it. Most employees only make 3-4 major career decisions in their lifetimes — hardly enough feedback for this skill to mature. Anyone who has worked in a large company further knows that timing a product launch or a new marketing strategy has more to do with internal politics than reading market forces.

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Most of us want to make more money and accelerate our careers, but the truth is that these opportunities are few and far between. Most jobs have limited growth potential. Most startups die. Most VCs don’t make money. Most political candidates fail to get elected. The difference between success and failure sometimes has to do with hard work and tenacity, but far more often with the strategy of timing.

It’s obvious that we can be too late to these decisions, of course. We can miss the round of financing, we can start a company a year or two behind someone else and lose the first-mover advantage. But we can also be way too early, ahead of the market and losing out on alternative opportunities that might have been more valuable.

Now, some perceive that “timing” is synonymous with “luck.” There is some truth there, in the sense that life is random and sometimes — completely unintentionally — people stumble upon a treasure chest of gold.

Don’t be distracted by that, because there are also people who just seem to have timing nailed. There are engineers (I know because I have seen their recruiter profiles) who have joined three unicorns in a row in the first handful of employees. There are VCs who get a string of wins that is far from chance. There are CEOs that always seem to guide their companies to the right place at the right time and drive their stock valuations up.

We talked a lot about why we can’t build infrastructure in America. One of the challenges is simply timing: so many things have to happen at once for these projects to get off the ground, and most governors and mayors lack the timing skills required to get them over the finish line.

How can you practice timing? Start writing down predictions about people, companies and markets. Check in with the companies you talked with a few years ago — how are they doing? Ditto people you met a while back. Start evaluating your predictions: were they correct? Were they too early or too late?

More importantly, start cultivating networks of friends who have a sense of pulse on the frontiers of the economy. That could mean someone at the edge of a new science (quantum computing or AI) or someone who gets marketing to new demographics or someone who tracks new regulatory and legal changes. Find a peer group of people who get timing and practice it as a craft.

Between TechCrunch today and my former roles in venture capital, I’ve had the opportunity to practice timing a lot. I have a list of companies that I would have backed, and some have turned into unicorns while others have ended up on the ash heap of history. I’ve predicted some trends well, while flubbed others. I’ve been way too early (a huge bias for me), and sometimes stupidly late.

But all along, I am practicing that timing muscle. It’s the only way forward in capitalism, and it’s worth every investment you can make.

Mithril Capital, management fees and VC strategic drift

Peter Kim via Getty Images

Theodore Schleifer at Recode reported a rare deep dive into the internal intrigue at a prominent VC firm, in this case Mithril Capital. From the article:

Mithril had its best moment yet last week when a portfolio company, Auris Health, sold to Johnson & Johnson for more than $3 billion — returning at least $500 million to the fund.

All appears well. But behind the scenes, a far different story has been unfolding.

The late-stage investment firm has been a slow-burning mess for the past several months, angering current and former employees, limited partners, and, crucially, [Peter] Thiel himself, sources say.

Among the issues is the firm’s huge management fee … and I guess lack of expenses?

The firm is likely collecting as much as $20 million a year in management fees, sources familiar with the figures say.

We don’t know exactly how much the firm spends, but people close to Mithril say they can’t imagine that the firm, given its staff size, is spending more than half of that on operational expenses. [Mithril Capital founder Ajay] Royan’s salary, like that of other venture capitalists, is not publicly disclosed.

One limited partner called the fees, given the size of Mithril’s staff, “outrageous.”

What? I don’t understand this line of reasoning at all. The firm negotiates a fairly standard agreement with its limited partners, and then the LPs are pissed because the firm isn’t spending the money on massive staff and large, expensive offices? The whole point of delegating investment decisions to a GP is to empower them to organize their firm to win deals and get stuff done. If — and it’s a big if of course — they can do that on the cheap, then why should an LP care at all? Burn the management fee in a fireplace if it makes the deals happen.

Ajay Royan told Bloomberg in 2017 that Mithril does not “charge excessive fees.” But he was not exactly known for being thrifty with management money. Former employees describe Friday catered lunches where costs could run over $100 per person, and Royan was known internally for a “book ordering problem” — a former employee said that “unbelievable amounts of books” would be delivered each week to the office by Amazon to maintain the firm’s extensive library.

Pro tip: take on the mantle of book editor for a major tech publication, and the publishers will mail you books for free. We get at least a dozen at the TC offices every week, which is why we write about books so often around here these days. Alas, no $100 catered lunches.

The wider story here though appears to be one of a firm completely strategically adrift. Mithril is struggling to compete against ferocious competition in the growth-stage equity market. The best deals are obvious to dozens of firms, and the ones that are less obvious have huge risks attached to them that make it hard to write the big checks required.

“[Royan] literally did not want to compete. If there was a process or bidding war or something resembling a competition, he would just walk,” the employee said. “And he would just say, ‘I don’t want to outbid.’”

Mithril is hardly the only VC firm that is strategically adrift. Every time I go back to SF, this seems to be the norm these days among venture capitalists. There is a huge amount of money sloshing around, and very few deals that are in that sweet spot between obvious and highly risky. Startups either get three dozen term sheets or none at all, since every firm is walking around with the same frameworks and metrics in their head.

It’s so rare to actually hear a VC strategy that isn’t generic capital, that has some differentiation on sourcing, and picking, and growing businesses beyond the “we invest in great companies.” VCs don’t like strategy because it means making choices, and making choices means saying no to certain things, and those things might be the next Facebook. So they do everything, all the time, which really means they do nothing. And so we get book ordering problems and expensive lunches and weirdly angry LPs. What a boring mess.

Quality tech news from around the web

Written by Arman Tabatabai

Carl Larson Photography via Getty Images

South California is also seeing declining seed investment

Today, the Los Angeles Economic Development Corporation (LAEDC) published its updated economic forecast for LA and the Southern California region. One interesting note in the report is an observed slowdown in early-stage venture investing. The report highlighted that while growth-stage investments in California were hitting record highs, total deal count and seed investing — both in terms of total seed dollars and seed deal count — were at their lowest points since 2012.

The data points in LA, Southern California and the rest of the state seem to follow the trend of declining seed rounds seen in the rest of the country. While the topic is one we’ve previously discussed and one which has heated up in recent weeks with commentary from Marc Suster, Fred Wilson and others, it’s interesting to see the trend occurring even in more nascent startup markets.

Will “Diet CA-HSR” even get done as feds look to pull back California funding

The federal government announced that it would be pulling back $1 billion in funding that was slated for the California high-speed rail project through 2022, while also pursuing legal action to help recoup the $2.5 billion it has already coughed up. The Federal Railroad Administration is arguing that the state’s updated plan — completing only a route from Bakersfield to Merced — is starkly different from the plan for which the funds were originally allocated. Ouch.

As stock exchanges compete to attract IPOs, unicorns and investors win?

It might be getting easier for companies to go public around the world. With ample late-stage capital keeping more companies staying private for longer, looser rules from the SEC and the Hong Kong Stock Exchange may be on the way to help entice more IPOs.

In the U.S., the SEC proposed allowing all companies to market themselves to investors before announcing IPOs versus just those that fall under the agency’s “emerging growth” definition. Across the Pacific, Bloomberg reported that Chinese tech companies have been lobbying the HK Exchange for a number of more favorable rules, including allowing companies to maintain extra voting rights and letting major shareholders buy extra stock in the process. With a serious number of Chinese companies opting to list on foreign exchanges last year, the HK Exchange might be feeling pressure to cough up concessions that could help them win local listings — especially if the U.S. moves forward with friendlier rules.

How Japan lost half its citizens with poor data

The Japanese government failed to pay out billions of yen in government benefits for years due to faulty data. If that wasn’t bad enough, Nikkei Asian Review reported yesterday that the government is struggling to even locate roughly half of those who are owed since they don’t have their current addresses on file.

As simple as it may seem, tracking the indebted is actually a tall task since citizens have changed residences, changed names, and since the Japanese government has historically destroyed benefit applications (containing address info) after the period required to maintain them. At this point, it’s unclear whether everyone who is owed will even end up getting paid, with the Japanese government now offering a prime example of how poor data maintenance and not just poor data collection can make a situation go from bad to a whole lot worse.

Can the race to build roads in Southeast Asia avoid development gridlock?

As we harp on our “Why can’t we build anything?” obsession, infrastructure development in Southeast Asia is continuing to heat up and everyone seems to want a piece of the pie. Japan announced plans to further accelerate investment into infrastructure and urban development in the region — where China is also actively engaged — with initial expansion talks focused on Cambodia and the Philippines. At the same time, a newly unveiled government budget in Singapore and the ongoing election in Indonesia have brought infrastructure development strategies into the spotlight, with open debate on how these projects have been and should be funded.


  • More discussion of megaprojects, infrastructure and “why can’t we build things?”
  • We are going to be talking India here, focused around the book “Billionaire Raj” by James Crabtree.
  • We have a lot to catch up on in the China world when the EC launch craziness dies down. Plus, we are covering The Next Factory of the World by Irene Yuan Sun.
  • Societal resilience and geoengineering are still top-of-mind.
  • Some more on metrics design and quantification.


To every member of Extra Crunch: thank you. You allow us to get off the ad-laden media churn conveyor belt and spend quality time on amazing ideas, people and companies. If I can ever be of assistance, hit reply, or send an email to danny@techcrunch.com.

This newsletter is written with the assistance of Arman Tabatabai from New York.

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