Black swan farming
Paul Graham's Blog, 2012
Abstract
The success of startup investing is heavily influenced by two crucial factors: a small number of major winners account for the majority of returns, and the most promising ideas often initially appear counterintuitive. Successful investing in this domain calls for recognizing and prioritizing potential outliers, even if they appear to have a low probability of success. However, this strategy is rendered more challenging by the delayed nature of returns and the misleading nature of traditional metrics like fundraising success. The author emphasizes the need to take calculated risks and avoid excessive conservatism in order to optimize returns. – AI-generated abstract.
