Sam Altman said something this about YC once "if your hit rate as a vc is high, you're doing it wrong"
in vc and startups, you're not supposed to be right most of the time, you're supposed to take big swings on seemingly impossible companies - the crazy ideas that could change the world if they work
yes, you can make money investing in b2b saas that does slightly better expense tracking. nothing wrong with that
but the best vcs are backing founders who sound delusional to most people. rockets, brain interfaces, fusion energy, whatever
the math works because one crazy bet that hits pays for 50 that don't
a high hit rate with a small number is a lot of luck, but with a high number, it's not venture risk/return
portfolio construction people talk about it like they are investing in public markets
they've turned venture capital into something it was never supposed to be. venture was created to fund the unfundable. the stuff banks wouldn't touch. the ideas that seemed insane until they weren't
now we have vcs bragging about their "disciplined approach" and "portfolio construction" like they're running a hedge fund.
this results in founders with genuinely world-changing ideas get passed over because they can't show a clear path to 3x in 5 years. meanwhile the safe bets get funded, return 2-3x, and everyone pats themselves on the back
this is what most of the venture industry that's long on returns and short on actual innovation
the vcs who changed the world - the ones who backed apple, google, spacex - they looked stupid at the time. that's the point. if it was obvious, it wouldn't need venture capital
if you want a high hit rate, go buy index funds
it’s funny how wisdom works. you aren’t always ready to receive it. it sounds stupid, borderline retarded, so you laugh at it and ignore it.
until one day, when you've lived enough life, seen enough things, and suffered enough pain, you finally remember it. and then it clicks.
i don’t think you understand
you train a small model on scikit-learn
it gets 80% accuracy
you fine-tune a huggingface transformer
it gets 90% accuracy
you build a custom data pipeline
it gets 93% accuracy
you ensemble three models with voting
it gets 95% accuracy
you throw in feature engineering and SHAP
it gets 96% accuracy
you replace it with a gradient boosting tree
it gets 97% accuracy
you build a custom loss function for your niche problem
it gets 98% accuracy
you realize the labels were wrong
fix them, retrain
it gets 99% accuracy
you make a tiny architecture change
it beats human baseline
you remove half the parameters
it runs in real-time
you quantize the model
it runs on a potato
you distill it
it fits in a JavaScript bundle
you deploy it to edge
it autocompletes before users even type
you realize
you haven’t written a paper
but you built god
i don’t think you understand
Elon Musk posted on X that Grok 4 is planned for ‘'just after July 4"
xAI engineer Tim Li said the intelligence of the new model (previously dubbed Grok 3.5) will be “unmatched”.
Musk previously said it will reason from first principles
@primal_brainer One of our VCs confidently stated, “Distribution eats product for breakfast. So build distribution first.”
This changed the way I look at entrepreneurship.