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I'd like to call this "Black Swan Hunting". The idea seems similar to purchasing (wholesale) a crate full of swans (some of which might merely be dyed black) i

I'd like to call this "Black Swan Hunting". The idea seems similar to purchasing (wholesale) a crate full of swans (some of which might merely be dyed black) in the hopes that one of them will be a genuine black swan. In many ways, this isn't a new idea. How many car collectors have dreamed about answering a classified ad for an "old car in the barn" only to have it turn out to be a Bugatti Type 57SC Atlantic? But the reality is that 99.99% of the time, it's a rusted out Buick. It's true we need these "diamond in the rough" hunters out there, and I must admit that if I had many millions of dollars I would probably set up just such a "Black Swan Fund", but I've always imagined that I would style it after the various X-Prize-type competitions that became popular starting around the middle of the last decade. It seems to me that most such ideas can be funded "a step at a time". The other way to do this would be to consider it as artistic patronage. That way you wouldn't expect a return on your investment other than the creation of something that might not have been there before. Of course you still keep a nice chunk of any potential earnings just in case you get lucky. :)

jacques_chester 14y ago
> I would probably set up just such a "Black Swan Fund" I think that's what venture capitalists already do. They place lots of "small" bets. They lose money on most of them. But a small percentage do very well, and those investments "make the fund" -- that is, they cover all the other losses and create an overall profit. I remember when Andreessen Horowitz launched, to great fanfare. What was their revolutionary plan? To focus on investing in companies that would turn them a profit. And people were slapping their foreheads as if this were some great revelation. "Of course! VC has been run as a charity!" It's like saying "I am going to start a horse racing fund. I will only bet on the winning horses". That's not a statement of investment strategy. It's a statement of wishful thinking.
gpcz 14y ago
The "Entrepreneurial Business Fundamentals" class I'm taking right now made an analogy of success as starting a fire, and described this type of startup as "waiting for lightning to strike." It's an extreme end of the venture capital risk/reward curve. The stated purpose of the class is to teach a more consistent way of starting a fire (making sure the business fundamentals line up). I'm concerned about the ethical implications of glamorizing and advertising this style of venture capital, though -- it may entice young people who otherwise wouldn't do this type of thing to make incredibly risky life decisions for a really low chance at being the lightning that strikes. The investor might lose $20k or something on their angel investment, but the young person might screw up their life. It feels extremely exploitative to me. I understand that it would ultimately be the young person's decision to go through with it, but would they have done so if it wasn't glamorized by articles like this?

jacques_chester 14y ago

> I would probably set up just such a "Black Swan Fund" I think that's what venture capitalists already do. They place lots of "small" bets. They lose money on most of them. But a small percentage do very well, and those investments "make the fund" -- that is, they cover all the other losses and create an overall profit. I remember when Andreessen Horowitz launched, to great fanfare. What was their revolutionary plan? To focus on investing in companies that would turn them a profit. And people were slapping their foreheads as if this were some great revelation. "Of course! VC has been run as a charity!" It's like saying "I am going to start a horse racing fund. I will only bet on the winning horses". That's not a statement of investment strategy. It's a statement of wishful thinking.

gpcz 14y ago

The "Entrepreneurial Business Fundamentals" class I'm taking right now made an analogy of success as starting a fire, and described this type of startup as "waiting for lightning to strike." It's an extreme end of the venture capital risk/reward curve. The stated purpose of the class is to teach a more consistent way of starting a fire (making sure the business fundamentals line up). I'm concerned about the ethical implications of glamorizing and advertising this style of venture capital, though -- it may entice young people who otherwise wouldn't do this type of thing to make incredibly risky life decisions for a really low chance at being the lightning that strikes. The investor might lose $20k or something on their angel investment, but the young person might screw up their life. It feels extremely exploitative to me. I understand that it would ultimately be the young person's decision to go through with it, but would they have done so if it wasn't glamorized by articles like this?