Yahoo Chairman Offers His Best Advice For Startups

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June 9 (Bloomberg) -- Yahoo chairman, Maynard Webb talks to Bloomberg's Cory Johnson on how he finds the 'next big thing'. They speak on Bloomberg's "Taking Stock." (Source: Bloomberg)

Can have a conversation about a conference like this and the notion of a next big thing.

What is the work that you do to try to identify the next thing?

There is a lot.

For me i am always looking for what is the -- who was the person pitching the idea, how relevant is it, how big is the market, and how different is it?

The different part.

There are some weird ideas out there, and some that are not fully formed until the date.

Y become something impressive.

And sometimes the consumer companies have already started to spin, but other companies you have to get it in the formative idea.

The team matters the most he can even if they do not do well on the first idea they can often give it go after the second one.

The second thing that matters a lot is what is the idea, and how much do i believe that it is relevant and can be big?

Do you do the market research , and ba 101 -- mba 101? if i were to show you some of the pitches we get, you would roll over laughing.

Even if you're doing $10 in revenue, next year you're going to do $14 million, and all over the place.

The way they capture market numbers is billions of market.

We do take a look, and that our team goes out and assesses what we believe what market opportunity is when we look at an idea.

But things get funky.

I had a friend who had mapped out 10 years of monthly revenue and cost.

I pay very little attention to anything that is two or three years out at this stage when you are so small.

It will either be way better, or we worst -- way worse.

This is an amazing conference.

And also an amazing fog.

You see a great team, a great pedigree, and the market is big but when do you know?

We see 20 to 25 deals a week, and we only invest in about one a month.

We say no a heck of a lot more than we say guest.

Also, the team may not be quite right or i do not believe that the team is going to be able to pull off what we want them to pull off.

The market may not be where we wanted to be or it may be outside of the sweet spot.

I try to invest in things i have seen or experienced selecting get a little bit of a differentiation and head start.

What throws it off his valuation.

If we are investing very early, we need some good terms because we are taking a lot of rest so the rewards have to be high.

-- risk, so the rewards have to be high.

Everything from on cap notes, to price high, do not giving you enough to get in.

Uncapped notes means you give money to the out of print or and eventually when they raise the funds, you that you can come in what everybody else is that.

Why i don't go back to hedge funds, people are always asking, and the thing was you were always wrong.

If you got it right, and maybe got into late, you should've been earlier, or you should have been in earlier and it did work out yet.

And even when it totally worked for me you were not big enough care to do you look at every investment as a failure?

No.

i look at every opportunity.

I think it is hard to be an entrepreneur, and i am really a fan of all of them out there even the one we have to say no to.

When i have an opportunity to get into my really feel like we are blessed, even at the terms we get in that.

I feel honored to put my 90 affiliates to make the company better.

-- to work to make the company better.

Recently i met one that i thought was awesome, and they offered us a chance and i'm happy to be in.

What about salesforce?

I joined salesforce after they were already public.

I put some of my own money in in 2008 when the market turned down, and everybody saw drop.

I put more money in, and my finance guys managed me into compliance, saying who knows what the market is going to do.

What i wanted to put in, they put in half and said you should have done that.

But lloyd i wish i had done the other half -- boy, i wish i had done the other half.

This text has been automatically generated. It may not be 100% accurate.

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