> If it were true that financiers on the whole make profits slowly for years and then, every once in a while, lose them all and more in sudden “black swan” events, then there should be some way to lose money slowly for years and then suddenly make it all back and more. Black swans are awful in traditional finance, but they’re the winning lottery ticket in venture capital.
Isn't this what every VC is doing? This is why VCs invest in a bunch of startups and expect most of them to fail.
Matt Levine writes about this a lot; he talks about how the real risk for VCs isn't losing 100% on a failed startup, the risk is missing out on the one that hits it big.
I am not sure why the writer thinks this strategy is novel.
Specifically, he's not just investing in startups, but investing in ones that have a factor that is either unknown or unknowable. That's a different strategy from YC's "Invest in promising founders" or the typical VC "Invest in early stage startups with good metrics".
Isn't this what every VC is doing? This is why VCs invest in a bunch of startups and expect most of them to fail.
Matt Levine writes about this a lot; he talks about how the real risk for VCs isn't losing 100% on a failed startup, the risk is missing out on the one that hits it big.
I am not sure why the writer thinks this strategy is novel.