Hoffman: Silicon Valley dominates by ignoring traditional DCF analysis
Reid Hoffman · Reid Hoffman: Why The AI Investment Will Pay Off · Jan 29, 2025 · at 5:14
Reid Hoffman explains why Silicon Valley venture capital outperforms traditional finance by backing cash-bleeding companies over long compounding horizons.
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“This is actually one of the reasons why Silicon Valley tends to create so many of the technology companies that dominate the globe, because if you take an overly kind of classic DCF analysis, business school prof analysis, et cetera, which many, much of the world does in investing and doesn't say, No, actually, in fact, it's a feature that you're investing massively on something that at the moment looks, you know, like today's iBanking analysis is not pretty good, but two, three, five, seven, and by the way, venture investments can go out to 10, you know, kind of years, and plus, if it's compounding and growing the right way can be, you know, kind of just epic investments”
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