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Comment by rtpg | Hacker News Reader

I don't get this logic.

Imagine if doctors had 99 failures for every successful operation. "Well that's just the way it has to be for that success".

Sure, maybe Juicero could make money, but maybe $120 million could have been invested into some slightly more useful things?

Who gets to decide? Obviously the investors and VCs, and it's their money.

VCs simultaenously say that their 1:100 hit rate is part of their big strategies and that everything is luck. You can either be gambling your money or you can be using skill, but you can't do both!

(modulo probabilities a bit higher than lottery ticket odds)

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This is an absolutely wrong comparison. Building startups is R&D, it is not the production, so acceptability of failure is much higher. Better compare it this way: what if 99% of all potential new drugs fail clinical trials and never make it to the pharmacy shelves, of which 9% would be deliberate scams devised by con artists to extract funding? That will be just fine, and in fact, that's what it is in the drug world! We are still, as humanity, making great progress in treating diseases.

Marginal decisions are still probablistic.

A doctor with that success rate is terrible because value of success is lower than the cost of failure. A VC with low hit rate is good when value of success is 100x the cost of failure.

VCs are going to have to choose how liberal/risky to be in investing. They could maybe choose to invest less and we'd not have Juicero but we'd also not have many other successful companies. When you investing in many companies some are going to be bad.

Extrapolating Juicero to all of SV is like critisizing a hundred billion dollar infrastructure bill because of one fairly useless hundred million dollar project in it.

It definitely can be both a gamble and a skill - a good investor will get a higher hit rate and a positive net return, and a poor investor won't.

E.g. the difference between getting a 1.5% chance of a 1:100 payout vs a 0.5% chance of the same.

> but maybe $120 million could have been invested into some slightly more useful things?

No. That's precisely why products like this get built.

Interest rates are through the floor, causing assets (stock market, housing, everything) to be pumped up to non-sustainable levels. everyone knows the stock market and housing returns won't be good for the next 10 years. There's waaaayyy too much money floating around. They have to invest it somewhere, and since all the meaningful moonshot innovation is locked up, all that's left is to go for products like this.

I think the SV VC scene is as nutty as anybody, but skill and gambling are most definitely not mutually exclusive. It's not analogous to a lottery, it's more like professional gamblers playing blackjack in Vegas. People can and do make a living at it, even though statistically they're still not going to win the majority of the games they participate in.

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