a good investment

Filed in archive Venture Capital on October 25, 2004

How do you determine a persons value? Sounds harsh but when evaluating the value of start ups or finding the partner for your venture this question is at the table (outspoken or not).

Auren Hoffman has some smart thoughts on putting it in some formulas (although it can't be handled like this no doubt):

"he net present value of a 93-year-old who is worth a billion dollars is probably worth less then a billion (unless, of course, you are anna Nicole Smith). Whereas the net present value of a smart 23-year-old computer science major in Silicon Valley is a lot higher then her $4000 in savings.

When looking at a person there are growth stocks that are highly volatile and mature stocks that pay dividends. Some people have lots of assets on the books but are stodgy and risk-averse and thus have a low P/E ratio. Other people might have a really high P/E but a really low E.

Henry Ford, before he started Ford Motor Company, was essentially a failure. He tried and failed at numerous businesses. But he still had a high P/E as he was persistent and a good risk.

Obama has a high P/E while Senator Byrd has an extremely low P/E. Some people, like Warren Buffet and Michael Dell and Arnold Schwarzenegger, have had an high P/E ratios all their life -- and those are the people you want to invest in."