Think Illogically
We know about the Google’s and the Facebook’s, companies that went from zero to tens of billions in the blink of an eye. But have you wondered how the venture capitalists, the people who fund such companies when they are starting, decide how to pick them? Which companies to fund, which ones to ignore? Paul Graham from the venture fund, Y Combinator, described the very interesting and, of course, counter-intuitive way of thinking (if it was intuitive, would we be asking the question?) that is needed. Most of us are risk-averse: we dislike losing more than we like winning. So if asked to invest, our first instinct is to ask, “Is it likely to succeed ?” The right question for a venture capitalist, however, is: “Is it likely to succeed really, really big ?” Which is very hard, because as Graham says: “You have to ignore the elephant in front of you, the likelihood they'll succeed, and focus instead on the separate and almost invisibly intangible question of whethe...