rational vc

Key Takeaways

People often underestimate the role of chance in their achievements
Mild success can be explainable by skill, but wild success is attributable to variance
In the long run, the “lucky” regress to the mean
Understand Power Laws when investing; the wins of a few investments make up for the losses on many investments, and then some
Survivorship Bias: the tendency to focus on successful individuals without considering those who failed due to random factors
The probability of the loss must be judged in connection with the magnitude of the outcome; it is not the likelihood of an event that matters, but the magnitude of the outcome in connection with the likelihood of the event that does
Maximizing the probability of winning does not maximize the expected value from the game
The confidence in which you make your decision is more important than the expected value that comes from that decision
A mistake is not something to be determined after the fact, but in the light of the information until that point

Every podcast episode we explore a Lindy book, and find ideas you can use in business and life. Join 3,000+ curious minds and avid readers @ rationalvc.com to get free access to essays and exclusive content. For the video version of episode click here.

Timestamps:

(00:00) Intro / chit-chat
(20:11) Randomness & Luck
(24:46) Monte Carlo Simulation
(31:09) Ergodicity
(31:39) Hindsight Bias
(38:00) Survivorship Bias
(39:50) Asymmetric Bets / John & Nero
(49:53) Skewness & Asymmetry
(57:19) Pascal's Wager
(1:00:53) Induction & Chaos Theory
(1:03:22) Chapter 11
(1:08:45) System-1 vs System-2 Thinking
(1:10:03) Satisficing
(1:20:08) Normative vs Positive Thinking
(1:25:52) Signal vs Noise
(1:28:20) Heuristics
(1:33:45) Final Part of Book (Part 3's Importance)
(1:44:41) Favourite Quotes / Our Lives
(2:06:11) Final Thoughts

Our website (all essays and podcasts): rationalvc.com
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Disclaimer: The materials provided are solely for informational or entertainment purposes and do not constitute investment or legal advice. All opinions expressed by hosts and guests are solely their own opinions and do not reflect the opinion of their employer(s).

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