Venture Captial (VC) is huge in our modern society. They have lots of money and they make lots of money. VC’s say they are worth the money since they take on some risk by investing in early-stage companies hoping to have a few of the bets turn into a boatload of cash.
This VC investment also helps picks winners and losers. Without the money, the idea might not have the chance to grow and spread into a viable business.
How VC firms work is that if they invest in 10 start-ups. They know that 7 might not make any money and that 2 start-ups might make their money back but they hope that 1 will go crazy and 10x their fund.
And if the fund picks a winner, they won’t stop telling you about it. It is like someone that does CrossFit, is vegan, or went to an Ivy League school… Did I mention I went to Brown?
But the winner is not always the most interesting start-up to think about, what is often more interesting to consider are the losers.
Win with Losers
If you think about it, 1 out of 10 isn’t even a flip of the coin luck, it is dumb luck. They have got 90% of their decisions wrong, hoping the one right guess will cover the losses and return a profit. It sounds more like a bad gambler down at the track than a titan of finance.
The question then isn’t what did they get right to pick the one winning start-up idea, the better question is what did they see in the other 9 options that they were so wrong about.
Don’t Fall for the Success
We all want to believe we are beautiful, intelligent, unique butterflies and when we only consider our decisions based on the idea that we are perfect we neglect to learn from our mistakes.
Yes, you might have gotten it right, but you also got it wrong and there is growth in both. Mark Twain once said “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
Considering what you knew and how the idea failed can help understand what you can control and what you can’t. Any decision contains some element of risk. Nothing is completely known or controllable.
Fail (which sucks) and Learn
Learning from your past decisions can create a better idea of what is out of your control which gives you a better indication of the actual risks you are dealing with.
When you only look at your success you ignore all the potential calamities that might have been a millimetre away. Since the lightning didn’t strike, you think you are a genius when you just could be really really lucky.
Looking at your successes you can read into things that aren’t there but are hidden by success. Looking at your failures can help you consider what you thought was right but clearly wasn’t.
Luke McMeeken-Ruscoe 