TIP801: Value Investing Meets Venture Capital w/ Kyle Grieve

You're listening to TIP. Let's imagine for a second that you made 100 investments over your lifetime. Now, imagine that only three of those investments generated more than half of your total returns. That might sound crazy at first, because most investors think about returns like a bell curve. We imagine a few winners.

a few losers, and a large number of outcomes in between. But that's not really how investing works. In reality, investing tends to follow something called a power law, in which a small number of outcomes drive the vast majority of results. And interestingly enough, there's one corner of the investing world that has developed very deep insight into this dynamic. venture capital.

Now if you're a value investor, venture capital might seem like the last place that you'd look for lessons on how to improve your investing. After all, venture capital firms primarily invest in early stage companies where most investments not only fail to make money, but often go to zero. But when you look a little deeper, venture capital has developed some incredibly powerful frameworks for thinking about asymmetric returns. risk management, position sizing, and long-term decision making. And many of these frameworks translate surprisingly well to investors operating in public markets.

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