8 ms·

Super important to note here that this entire thing is based 100% on the feelings or sentiment of VCs.

ttul 7y ago
They forgot “random dumb luck” as a character trait. Point your clown car toward what you hope is a gold mine. The character trait of dumb luck then takes over. VCs are biased to see genius where there is dumb luck because the people without luck fail before they have a chance to be recognized for whatever other random assortment of traits they have.
- aledalgrande 7y ago
  It'd be interesting to see a real study of how much randomness plays a role in success. What if it is the majority? Humans want causality, and want to believe they can influence everything, but it might be far from the truth.
  - TuringTest 7y ago
    The "Talent vs Luck" model is such a study, and it shows that indeed randomness is the deciding factor. Sure, it's a toy model -akin to a thought experiment- but the result is an emergent property of very simple principles, like most models in mainstream economics. https://www.businessinsider.com.au/this-study-shows-talent-is-overrated-as-luck-plays-a-huge-role-in-success-2018-11 https://www.businessinsider.com.au/this-study-shows-talent-i...
    - lordnacho 7y ago
      That photo of a poker table is quite apt. Even if you play sensibly, if you're sitting with a bunch of people who aren't, there's a fair chance one of them will hit the card he needs and beat you. In the economy this can also happen. Consider that you might make a bet on some business because you have done good research (your estimate of the future is what it actually averages to) and it shows the business will do well. A load of random people will have varying degrees of correctness of analysis that will give them too optimistic or pessimistic estimates. The future itself is also affected by noise, and business conditions may change. You're going to end up seeing a bunch of winners who were too optimistic about some business, but the winds changed and they won bigtime.
    - aledalgrande 7y ago
      The starting point on distributions of talent vs success really nails it.
  - ttul 7y ago
    The best solution for randomness is to try multiple times. Unfortunately humans only have one life to live and limited capital. This is why rich kids more often end up founding successful companies - they were able to try again after their first failure(s).
pm90 7y ago
True. I found the article interesting in the classification of founders that VC's see. Going from that step to making a judgement call on the desirability of characteristics seems slightly far fetched.
achow 7y ago
This is made quite clear at the end, and makes sense. They are doing this exercise for themselves and are sharing with others. Our job as a seed stage investor is to look for brilliant entrepreneurs when their success is not yet obvious.
TuringTest 7y ago
For a more rational analysis on the correlation between personal traits and success in a meritocracy, the "Talent vs Luck" model provides some eye-opening results. https://www.businessinsider.com.au/this-study-shows-talent-is-overrated-as-luck-plays-a-huge-role-in-success-2018-11 https://www.businessinsider.com.au/this-study-shows-talent-i...
- lnsru 7y ago
  I think, there is another factor - endurance. Luck does not come instantly, one needs to survive few lows before reaching high.
  - TuringTest 7y ago
    Good observation. The toy model in the paper has some obvious limits, for example it also doesn't account for accumulated capital allowing to "create your own luck" nor exploit successful events more easily. However, neither accounting for endurance nor wealth changes the fact that luck is a main determinant of final success. Those with early luck will not need endurance to survive, and those with the longer overall run of lucky events will come on top of those with fewer lucky events.
  - aledalgrande 7y ago
    As this is true random, I don't think endurance or even number of tries would make any difference. It's like saying continuously trying the same number at the lottery would finally give you the jackpot. That is not mathematically true, unless you try an infinite number of times.
    - lnsru 7y ago
      Second lottery ticket doubles your win chance. Very true mathematically, just the probability is terribly small in general. While I am working on my (hardware) idea, I see, that this is a marathon, not sprint. And with amount of development job done potential clients or partners take me more seriously I reach every milestone. So increasing win chance is also possible.
aledalgrande 7y ago
Yes, I find no statistical validity in this study. For example, how is the age/success relationship influenced by the fact that VCs mainly fund a certain age group?

ttul 7y ago

They forgot “random dumb luck” as a character trait. Point your clown car toward what you hope is a gold mine. The character trait of dumb luck then takes over. VCs are biased to see genius where there is dumb luck because the people without luck fail before they have a chance to be recognized for whatever other random assortment of traits they have.

aledalgrande 7y ago
It'd be interesting to see a real study of how much randomness plays a role in success. What if it is the majority? Humans want causality, and want to believe they can influence everything, but it might be far from the truth.
- TuringTest 7y ago
  The "Talent vs Luck" model is such a study, and it shows that indeed randomness is the deciding factor. Sure, it's a toy model -akin to a thought experiment- but the result is an emergent property of very simple principles, like most models in mainstream economics. https://www.businessinsider.com.au/this-study-shows-talent-is-overrated-as-luck-plays-a-huge-role-in-success-2018-11 https://www.businessinsider.com.au/this-study-shows-talent-i...
  - lordnacho 7y ago
    That photo of a poker table is quite apt. Even if you play sensibly, if you're sitting with a bunch of people who aren't, there's a fair chance one of them will hit the card he needs and beat you. In the economy this can also happen. Consider that you might make a bet on some business because you have done good research (your estimate of the future is what it actually averages to) and it shows the business will do well. A load of random people will have varying degrees of correctness of analysis that will give them too optimistic or pessimistic estimates. The future itself is also affected by noise, and business conditions may change. You're going to end up seeing a bunch of winners who were too optimistic about some business, but the winds changed and they won bigtime.
  - aledalgrande 7y ago
    The starting point on distributions of talent vs success really nails it.
- ttul 7y ago
  The best solution for randomness is to try multiple times. Unfortunately humans only have one life to live and limited capital. This is why rich kids more often end up founding successful companies - they were able to try again after their first failure(s).

pm90 7y ago

True. I found the article interesting in the classification of founders that VC's see. Going from that step to making a judgement call on the desirability of characteristics seems slightly far fetched.

achow 7y ago

This is made quite clear at the end, and makes sense. They are doing this exercise for themselves and are sharing with others. Our job as a seed stage investor is to look for brilliant entrepreneurs when their success is not yet obvious.

TuringTest 7y ago

For a more rational analysis on the correlation between personal traits and success in a meritocracy, the "Talent vs Luck" model provides some eye-opening results. https://www.businessinsider.com.au/this-study-shows-talent-is-overrated-as-luck-plays-a-huge-role-in-success-2018-11 https://www.businessinsider.com.au/this-study-shows-talent-i...

lnsru 7y ago
I think, there is another factor - endurance. Luck does not come instantly, one needs to survive few lows before reaching high.
- TuringTest 7y ago
  Good observation. The toy model in the paper has some obvious limits, for example it also doesn't account for accumulated capital allowing to "create your own luck" nor exploit successful events more easily. However, neither accounting for endurance nor wealth changes the fact that luck is a main determinant of final success. Those with early luck will not need endurance to survive, and those with the longer overall run of lucky events will come on top of those with fewer lucky events.
- aledalgrande 7y ago
  As this is true random, I don't think endurance or even number of tries would make any difference. It's like saying continuously trying the same number at the lottery would finally give you the jackpot. That is not mathematically true, unless you try an infinite number of times.
  - lnsru 7y ago
    Second lottery ticket doubles your win chance. Very true mathematically, just the probability is terribly small in general. While I am working on my (hardware) idea, I see, that this is a marathon, not sprint. And with amount of development job done potential clients or partners take me more seriously I reach every milestone. So increasing win chance is also possible.

aledalgrande 7y ago

Yes, I find no statistical validity in this study. For example, how is the age/success relationship influenced by the fact that VCs mainly fund a certain age group?