Shawn Carolan, Board Member at Siri and Partner at Menlo Ventures wrote an article on PEHub related to the personal assistant software (in beta) on the new Apple iPhone 4S about Siri, called “The Prettiest Girl at the Ball” which I need to correct.

Without using any proprietary information I had on this company, the overreaching description of the role of Venture Capital (VC) in this article is what percolates the Venture business and creates the fog around the real merit of Venture Capital in the process of producing returns for their investors. The integrity of the Venture Capital process matters, because only real VC merit can produce sustainable returns and therefor be the investment thesis that can instill new confidence with Limited Partners, especially with Venture’s deplorable ten year performance.

Specifically I take issue with the following statement:

...the decision to sell was a tough call and there was lot of hand-wringing at the Board level. Siri had just raised a new round from Horizons and had close to $20 million the bank.

The original document on PEHub appears here, to which I add:

Oh please. You are bending the truth quite a bit. Siri was great technology due to its inheritance from Calo developed at SRI but hardly a business success you seem to suggest that would prevent it from selling (everyone could see that from the App Store ranking). And $20M in the bank does not erase the fact that the business model as an independent iPhone app was flawed and underperforming. So, the value of Siri was primarily related to the value of the intrinsic IP, not the business execution or the role of Venture Capital in that process.I hate it when VC takes credit for what it didn’t achieve and doesn’t take blame for the things they (not entrepreneurs) did. Hence my need to set you straight. And the future of adoption of Siri in the real world remains to be seen (voice recognition is still fraught with many false positives and false negative that will feed Siri incorrect input, and lack of foreign language support that will minimize its global practicality), but if anyone can turn it into a business success in the long haul it will be Apple.Today it is a great marketing tool, a lot of water needs to go under the bridge before it can deliver incremental market access.You got lucky on this one, let’s leave it at that. Just don’t confuse luck with strategy.

Much of the success of Siri was derived from the ability of SRI to harvest the knowledge from a government project into a commercial project. I would recommend SRI to raise its own funds so it does not need to lose future equity in other projects to the external guidance that has proven to deliver only nominal value.

Tags: Siri, SRI, Apple, iPhone