Morgan Housel discusses the ongoing downturn in venture capital and what investors must endure to survive the market cycle.
Insight
Housel: Extreme founder success is normally paired with undesirable personal traits
“So many, maybe there are exceptions to this, but I think it is the norm that the ridiculously successful, crazy genius entrepreneur also has personality traits that you and I would not want to associate with, probably wouldn't want to work with, wouldn't want …”
Insight
Housel: Investors must believe absurd stories because winning startups also sounded ridiculous
“So the fact that we can point out Theranos and FTX and WeWork, I think doesn't do justice to say that, like, you shouldn't believe in ridiculous stories, because the ones that do work out were also ridiculous stories.”
Prediction Not checkable as stated
Housel: Expect a significant culling of both VCs and startups
“And the hit rate is probably going to be much lower now, and there's going to be a significant calling of both VCs and startups because The stories got ridiculous”
Insight
Housel: VC funds' top winners are rarely the investments expected to drive returns
“When they look back in hindsight and they have two or three massive, massive winners, massive exits by and large, those were not the companies that they expected to be driving their portfolio returns when they first made those investments. And by and large, th…”
Opinion
Housel: 90% of virality in content and business is driven by luck
“I do think, and this sounds a little fatalistic, but I think 90% of virality, whether it's in content Or maybe even companies too, maybe a little less for companies, but a significant part of virality is luck. It's something that you really can't put your fing…”
Insight
Housel: Extreme outlier success is driven primarily by luck, without exception
“Daniel Kahneman, the great psychologist, he said something one time where he said, the greater, the degree of success, like the higher to the outlier the more standard deviations away from norm that you are of successful, the higher, the more luck played a rol…”