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Episode 107: Sebastian Mallaby on How Venture Capitalists and Hedge Funds Achieve Success

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CHAPTER

The Power Law in Venture Capital

The idea of the power law is that one or two bets out of 10 will more than make up for the losses on all the others. And therefore in a way, you know, the way to manage risk is not to be fearful and try to make kind of reasonable bets. You sort of have to make unreasonable bets where there's enormous upside, but you might fail That's how you succeed as a venture capitalist.

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