VC behavior sometimes looks insane, but generally it’s just sound economics.  It’s crazy but true: if you know how a VC gets paid, you can pretty much read their mind.  Here’s a few examples:

Great article, Matt. I re-stashed this from you.

My favorite paragraph:

Before a VC makes an investment, they’ve got to do a ton of background research on the market to create their investment thesis. How big is it? How fast is it growing? Who are the competitors? Is there a “venture scale exit” (10x ROI) here?

Now, there’s two ways to do it. One is a lot of work. The other involves copying your neighbors’ homework, which is usually a very poorly kept secret.

If your neighbor is someone who does a lot of work putting together their investment thesis – and on Sand Hill Road, everyone’s everyone else’s neighbor – it’s probably a lot easier to borrow their thesis and just fund something else along those same general lines.

This is part of why we talk about competitive companies "validating" a space. Real validation comes from customers, of course.

And for what it's worth, journalists like "horserace" stories, too.

This article reminded me to re-read To the "A" round go the spoils.

Funny to see that statement, and then right afterwards read

http://cdixon.org/2012/03/07/the-problem-with-investing-based-on-pattern-recognition/

and

http://andrewchenblog.com/2012/03/08/how-sheep-like-behavior-breeds-innovation-in-silicon-valley/

Those are both excellent reads, Julian.

A foolish consistency is the hobgoblin of small minds.