It would be more useful if there was such a thing as a check list for good bets, but it’s fairly interesting (at least to me) that the founder’s background is consistently over-valued in the results.
This has always seemed fairly logical to me - at the end of the day the users are investing in a product while the investors are investing in a person. The mismatch here is bound to create loss but this presents data to support.
I'm curious if anything was modeled being undervalued for predictive value.
Human sight is overvalued in the context of identifying optical illusions, but we don't have a lot of effective alternatives for making decisions about how we move about the world.
Isn't background pretty much the deciding factor when investing in a company? If we would look at the background of the founders of all the YC companies, I suspect almost all will have a "good" background.
The point here at least is that the data is showing that this is a poor way to judge the outcome of the company.
This stands to reason, valley investment is often a conveyor belt of:
Ostensibly good school -> Ivy League STEM programme -> Tech job / investment
That's a very narrow selection pool to part your money on the basis of, given that by default it will produce candidates with little experience of the real world or the realities of competing in a marketplace right before they compete in a global marketplace.
There are obviously exceptions to the above (there's a great many even within YC) but it just reinforces the point that having a few people pick other people to give money to based on them being their kind of people to outcompete a globally large group of yet more people performs relatively poorly as an investment strategy.
Comments
It would be more useful if there was such a thing as a check list for good bets, but it’s fairly interesting (at least to me) that the founder’s background is consistently over-valued in the results.
This has always seemed fairly logical to me - at the end of the day the users are investing in a product while the investors are investing in a person. The mismatch here is bound to create loss but this presents data to support.
I'm curious if anything was modeled being undervalued for predictive value.
Human sight is overvalued in the context of identifying optical illusions, but we don't have a lot of effective alternatives for making decisions about how we move about the world.
Isn't background pretty much the deciding factor when investing in a company? If we would look at the background of the founders of all the YC companies, I suspect almost all will have a "good" background.
If background is pretty much the deciding factor, the stumble from “reliance” to “over-reliance” is foredoomed.
I mean I guess?
The point here at least is that the data is showing that this is a poor way to judge the outcome of the company.
This stands to reason, valley investment is often a conveyor belt of:
Ostensibly good school -> Ivy League STEM programme -> Tech job / investment
That's a very narrow selection pool to part your money on the basis of, given that by default it will produce candidates with little experience of the real world or the realities of competing in a marketplace right before they compete in a global marketplace.
There are obviously exceptions to the above (there's a great many even within YC) but it just reinforces the point that having a few people pick other people to give money to based on them being their kind of people to outcompete a globally large group of yet more people performs relatively poorly as an investment strategy.