The VC & the Dead Horse

Before I share an exclusive video interview, I’ll share a great story of the VC and the dead horse. Caveat emptor with most startups being hocked out there as stallions, when they’re old mares at best and dead horses at worst.

A west coast VC is visiting an east coast friend in the Hamptons for the weekend. He drives by a farmer with a horse and offers him $1,000 for the horse. The farmer accepts and agrees to transport the horse to the VC out west. After a few days, the farmer calls the VC and says the horse has died but he can’t refund the money because he’s already spent it. The VC says: “Don’t worry. Deliver me the dead horse.” The farmer, shocked and confused, complies. A week later the farmer calls the VC, feeling terrible about the money and curious what the VC could possibly do with dead horse. The VC explains: “Don’t worry. I made $19,990 off your horse.” The farmer stunned asked, “How?!” The VC said, “I advertised a lottery for a horse. At $10 a ticket, I sold 2,000 tickets.” The farmer incredulous demanded, “But...but wasn’t the winner furious he won a dead horse?” The VC smiled, “Yep—and I gave him back his $10.”

And that’s how the VC made nearly 20x his money on a dead horse.

Meanwhile if you’re looking for a big idea and a horse and a jockey to bet on: Last week in Forbes studio I sat with the very intelligent partner of Shai Agassi and Head of Oil Independence Policies at Better Place, Mike Granoff. Watch our exclusive interview here and find out why electric cars are actually good for Arab population: http://video.forbes.com/fvn/clayton/electric-cars-vs-gm