Comments on: Once again: Is it the jockey or the horse?

By: Arthur Lipper

Arthur Lipper — Wed, 20 Feb 2019 00:13:59 +0000

A good jockey can make a good horse perform better, but even a good jockey cannot make a bad horse a winner.
A good entrepreneur can achieve greater success with a good idea, but even a good entrepreneur cannot make a good business from a bad idea.

Horses and business ideas have to be good to succeed. Those in control of both can be pluses, but are not magicians.

By: Joe Milam

Joe Milam — Tue, 19 Feb 2019 18:52:53 +0000

The answer is yes.

The challenge comes in who is doing the analysis.

And more importantly how the analysis is structured.

Nobel Prize Winner Daniel Kahneman would suggest that having an individual doing the judging – on either the jockey or the horse – is sub-optimal at best. https://cfa.is/2taH9qJ

Think ‘MoneyBall’. Algorithms outperform personal judgement, and simple algorithm (properly constructed) outperform complex ones.

That takes away the ‘punch bowl’ most angel investors like to drink – thinking they can pick winners. Performance data on the venture industry supports what is common knowledge in the public markets – stock picking doesn’t outperform passive/index investing over time.

Yet VCs are continually able to fool LPs that they can find the next Facebook (and charge 2/20 in the process), while hobbyist angel investors try to become vcs – that are pursuing a flawed model to begin with.

Question: What is the professional licensing required to become a VC? Academic curriculum requirements? Continuing education requirements?

By: Mr. Louis Dienes

Mr. Louis Dienes — Tue, 19 Feb 2019 17:40:06 +0000

Possibility 3: Or is it the track? Sometimes circumstances beyond the control of the jockey or the horse dictate the outcome.

By: Larry Hall

Larry Hall — Tue, 19 Feb 2019 17:34:17 +0000

All great points. And the “jockey” becomes even more critical if the company needs to call an audible and execute a complete pivot. At that point, the old business plan and all derivations thereof become nearly irrelevant and the jockey and his/her team remain essential.