Home Runs Matter; StrikeOuts Don’t.
The way successful VCs make decisions is different from the way traditional corporations do: They use what we call the venture mindset. One of its hallmarks is a high level of comfort with failure. VCs expect up to 80% of their investments to fail. This is a feature—not a bug—of their business model. The investment thesis is that even if 19 of 20 start-ups fail, 1 investment will be a home run and cover the losses from all the failures combined—and then some. In other words, home runs matter; strikeouts don’t.
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“If you invest in something that doesn’t work, you lose 1x your money. If you miss Google, you lose 10,000x your money.”
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