Decision Analysis

We didn’t invent decision analysis. We are, however, among a very small group of VCs using decision analysis as a primary tool to evaluate potential investments.

The mathematics of probability were laid out by Blaise Pascal in 1654. Daniel Bernoulli described utility theory in the 18th century. In 1947, John von Neumann and Oskar Morgenstern laid the groundwork for expected utility theory. In 1964, Stanford professor Ron Howard coined the term “decision analysis” and made several advancements in translating decision-making theory into real-world practice. He co-founded a management consultancy called Strategic Decisions Group (SDG) to bring decision analysis to corporate clients making long-term, risky project investments. The late Amos Tversky and Nobel Prize winner Daniel Kahneman together pioneered the field of behavioral economics and studied cognitive biases that are introduced when people (including experts) assess subjective probabilities.

Joe was fortunate to have studied decision analysis extensively under Professor Ron Howard while earning his master’s degree in engineering at Stanford. Joe worked with Professor Howard as a teaching assistant and then worked three years at SDG. (Joe went on to co-found The Decision Company, where the founders practiced and taught decision analysis to corporations.) While at Stanford, Joe was also fortunate to take a class in cognitive biases in prediction and decision making with Professor Amos Tversky. 

After selling StarMine, Joe began angel investing and naturally applied his decision and risk analysis experience to the evaluation of seed-stage investment decisions.