3 ms·

"being wrong 90% of the time." They are not wrong 90% of the time. They place correct bets on correct companies, 90% of which will fail. This does not make the

"being wrong 90% of the time." They are not wrong 90% of the time. They place correct bets on correct companies, 90% of which will fail. This does not make them wrong, it makes them excellent gamblers. If I'm getting 100:1 odds to roll snake-eyes (two 1's), that's a great bet, and a correct one, and I am not wrong to take it, even though I'll lose money the vast majority of the time.

majormajor 4y ago
VC isn't just about placing "correct bets." This article pitches it as actually the opposite: what happens after the bet is more important than before, so fund lots of them and help them. But even more generally outside of the YC-model VCs compete on their networks and influence as well. The more connected you are, the better you'll do - it's a feedback loop.[0] Look at the evolution of VC companies. If the skill was just "making correct bets" wouldn't that look like making fewer, but likely larger, bets over time? You grow, on the other hand, if you have some significant influence on the odds or can't tell the odds between companies you select that well. If "success" is 1/10 odds, and "phenomenal success" is 1/100, and you don't think that you are capable of digging deeper to instead find just the ones with 1/20 phenomenal odds, you have a better shot of huge returns if you place 100 bets instead of 10. Then you get more knock-on influence of having a bigger network over time, too! Of course, trying to control the odds is a classic old gambler move too, but if you're caught doing it in a casino "excellent gambler" may not be the label they apply to you. [0] to a certain type of tech enthusiast, the huge political aspects here are very frustrating.
hinkley 4y ago
> They place correct bets on correct companies, 90% of which will fail. It's not the fall that kills you, it's the sudden stop at the bottom?

majormajor 4y ago

VC isn't just about placing "correct bets." This article pitches it as actually the opposite: what happens after the bet is more important than before, so fund lots of them and help them. But even more generally outside of the YC-model VCs compete on their networks and influence as well. The more connected you are, the better you'll do - it's a feedback loop.[0] Look at the evolution of VC companies. If the skill was just "making correct bets" wouldn't that look like making fewer, but likely larger, bets over time? You grow, on the other hand, if you have some significant influence on the odds or can't tell the odds between companies you select that well. If "success" is 1/10 odds, and "phenomenal success" is 1/100, and you don't think that you are capable of digging deeper to instead find just the ones with 1/20 phenomenal odds, you have a better shot of huge returns if you place 100 bets instead of 10. Then you get more knock-on influence of having a bigger network over time, too! Of course, trying to control the odds is a classic old gambler move too, but if you're caught doing it in a casino "excellent gambler" may not be the label they apply to you. [0] to a certain type of tech enthusiast, the huge political aspects here are very frustrating.

hinkley 4y ago

> They place correct bets on correct companies, 90% of which will fail. It's not the fall that kills you, it's the sudden stop at the bottom?