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Maybe the way to put it is - "failure is not something to be that scared of." I didn't like the article. It felt shallow. The real issue is that in the US we h

Maybe the way to put it is - "failure is not something to be that scared of." I didn't like the article. It felt shallow. The real issue is that in the US we have a tendency to not second-guess people's decisions about how to invest their money. Yes, this means that some people will be ripped off, but it also means that they, and the society as a whole can be in rapid learning cycles about what makes a good investment. It's clear that the US has a very different take on acceptable risk and as a result they more big wins and big losses. Can't have one without the other.

Silhouette 13y ago
It's clear that the US has a very different take on acceptable risk and as a result they more big wins and big losses. Can't have one without the other. Is that really true? If you ever make a big loss, in the sense that backing something like Google or Facebook would have been a big win, you're probably doing investment wrong. The dominant US tech investment strategy today appears to be accepting many relatively small losses on the basis that one smash hit will outweigh them all. I've noticed that in US-centric discussions, the distinction often seems to be stated in terms of "risk-aversion", with a focus on how much downside is acceptable and how US investors tend to accept more risk. In discussions on this side of the pond, we might rather distinguish based on "expected returns", with a focus on how much upside is likely across all outcomes and an emphasis on the mean rather than modal return.
- michaelfeathers 13y ago
  What if we shift the discussion from investor risk and reward to founder risk and reward? In the US it's possible for founders to win big and I suspect that is the reason why startups gravitate to the US. On the risk side, yes you can lose your shirt and so can your investors, but the system considers it normal to get up and try again. I don't like the fact that we don't have much of a social safety net in the US but that can be considered one of the larger risks founders face as well.

Silhouette 13y ago

It's clear that the US has a very different take on acceptable risk and as a result they more big wins and big losses. Can't have one without the other. Is that really true? If you ever make a big loss, in the sense that backing something like Google or Facebook would have been a big win, you're probably doing investment wrong. The dominant US tech investment strategy today appears to be accepting many relatively small losses on the basis that one smash hit will outweigh them all. I've noticed that in US-centric discussions, the distinction often seems to be stated in terms of "risk-aversion", with a focus on how much downside is acceptable and how US investors tend to accept more risk. In discussions on this side of the pond, we might rather distinguish based on "expected returns", with a focus on how much upside is likely across all outcomes and an emphasis on the mean rather than modal return.

michaelfeathers 13y ago
What if we shift the discussion from investor risk and reward to founder risk and reward? In the US it's possible for founders to win big and I suspect that is the reason why startups gravitate to the US. On the risk side, yes you can lose your shirt and so can your investors, but the system considers it normal to get up and try again. I don't like the fact that we don't have much of a social safety net in the US but that can be considered one of the larger risks founders face as well.