From the Harvard Business Publishing Article: > "Before the 1950s, lending depended on the wisdom and judgment of loan officers. Then, a company called Fair Is

From the Harvard Business Publishing Article: > "Before the 1950s, lending depended on the wisdom and judgment of loan officers. Then, a company called Fair Isaac developed a way to use four simple variables to develop a credit score that reliably predicted the risk of lending to an individual." That is a very misleading analogy. YouNoodle is not the present-day analog of Fair Issac. This goes back to the idea that while it's very difficult to predict random events individually, you can predict them well in aggreggate. Fair Issac isn't really betting on customer X defaulting on a loan -- they're really betting on a thousand customers like X. Same with insurance premiums. A model won't be a great predictor of one person, but if you have hundreds of thousands of customers, you can have a much more accurate estimate. This is the law of large numbers. For a simpler example, you wouldn't want to bet on the outcome of a single coin toss, but it's a pretty safe bet that if you toss a (fair) coin a million times, the heads percentage will be very close to 50%. Fair Issac played the game by lending to lots of customers. YouNoodle is trying to play this game for each individual case. They're bold enough to mathematically estimate the value of one individual startup, and say that they have some confidence in it. It's the analog of making a loan to 1 person, insuring 1 person, or betting on a single coin flip. Probability tells you this is very risky. VC don't make thousands of bets like insurers or banks do. For the bank, my individual outcome doesn't really matter to the big picture. VCs on the other hand invest in a very small number of startups - each startup matters.