Slashdot Mirror

← Back to Stories (view on slashdot.org)

GV, Formerly Known as Google Ventures, For Years Has Used an Algorithm That Effectively Permits or Prohibits Both New and Follow-on Investments (axios.com)

Posted by msmash on from the closer-look dept.

Dan Primack, reporting for Axios: When most venture capitalists want approval to make a new investment, they go to their partners. When venture capitalists at GV do it, they go to something called "The Machine." Axios has learned that the firm, formerly known as Google Ventures, for years has used an algorithm that effectively permits or prohibits both new and follow-on investments. Staffers plug in all sorts of deal details into "The Machine" -- which is programmed with all sorts of market data, and returns traffic signal-like outputs. Green means go. Red means stop. Yellow means proceed with caution, but sources say it's usually the practical equivalent of red. It was initially designed and used as a due diligence assistant that could be overruled but, according to three sources, it has evolved into a de facto investment committee.

8 of 74 comments (clear)

  1. Responsible for the chaos in Google's messaging? by bogaboga · · Score: 2

    When venture capitalists at GV do it, they go to something called "The Machine." Axios has learned that the firm, formerly known as Google Ventures, for years has used an algorithm that effectively permits or prohibits both new and follow-on investments

    You see, I confidently believe that you all agree that Google's messaging paradigm is in and remains in "chaos/confusion/mayhem/tumult land" right now.

  2. But does it work? by orev · · Score: 2

    It doesn't really matter unless there is data on whether the system works or not. Nothing in the article seems to mention this.

    1. Re:But does it work? by dj245 · · Score: 3, Insightful

      It doesn't really matter unless there is data on whether the system works or not. Nothing in the article seems to mention this.

      This is actually 2 questions. Whether it worked in the beginning, and whether it works now.

      There is presumably no data available for initial or follow-on investments that were not made. The investment either wasn't made at all, or it was invested by someone else so Google probably doesn't have good or any data. Therefore, any adjustments to the algorithm based on greenlighted projects that then failed will probably overfit due to incomplete data on yellow or redlighted projects that could have succeeded. Unless Google deliberately invests in Yellow or Red projects to test the algorithm, the algorithm may get more and more conservative over time.

      --
      Even those who arrange and design shrubberies are under considerable economic stress at this period in history.
  3. In related news ... by fahrbot-bot · · Score: 2

    ... an algorithm that effectively permits or prohibits both new and follow-on investments.

    My parents, friends, wife, etc... sometimes say "yes" or "no" to things I want to do and/or do again.

    [ Is the problem here that's it's an "algorithm" (presumably written by people) or that it made decisions? ]

    --
    It must have been something you assimilated. . . .
    1. Re:In related news ... by suutar · · Score: 2

      from the summary, it sounds like the concern is that it's being treated like an infallible oracle. It may not have come up with a significant false positive yet, but there's no way to tell if it's had false negatives, and unlike human advisors it's probably not very good at explaining why it came to a given conclusion (unless you're willing to trace the code while it processes something).

  4. Juicero by Swistak · · Score: 3, Interesting

    Wasn't that the fund that put shittons of money into a Juicero?

    1. Re:Juicero by HornWumpus · · Score: 2

      From: https://www.bizjournals.com/sa...

      The San Francisco-based company is backed by plenty of Silicon Valley investors including Kleiner Perkins Caufield & Byers, GV and DBL Partners. Other investors include Thrive Capital, Campbell Soup Company, Acre Venture Partners, Two Sigma Ventures, and First Beverage Group.

      Nice job 'redistributing the wealth', Juicero. But that's giving Juicero too much credit. They were apparently not 'smart cynics', but were 'dumbass vegan true believers'. They apparently spent the money overbuilding the juicer, rather than just taking it and running as they should have.

      --
      John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
  5. Meh by TheCastro1689 · · Score: 2

    People are often afraid to make their own decisions. I'm not surprised by this though considering how often banks rely on a computer program to approve or deny each of their products. People make almost zero decisions at many levels.