“What I wish I had said about FTX” by AppliedDivinityStudies

The failure rate is not 0

The base rate of failure for startups is not 0: Of the 6000 companies Y Combinator has funded, only ~16 are public. This is the wrong reference class for FTX at a $32b valuation, but even amongst extremely valuable companies, failures are not uncommon:

• WeWork had a peak valuation of $47b
• Theranos had a peak valuation of $10b
• Lucid Motors had a peak valuation of $90b
• Virgin Galactic had a peak valuation of $14b
• Jull had a peak valuation of $38b
• Bolt had a peak valuation of $11b
• Magic Leap had a peak valuation of $13b

That is only a handful of cases, but the reference class for startups worth over $10b is also pretty small. Maybe 45 private companies and another ~100 that have gone public. I'm playing pretty fast and loose here because the exact number isn't important, the odds [...]

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Outline:

(00:04) The failure rate is not 0

(03:54) Why does risk matter?

(06:45) Looking back from today

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First published:
October 31st, 2024

Source:
https://forum.effectivealtruism.org/posts/f5YfiCrunAHFeDpSQ/what-i-wish-i-had-said-about-ftx

Narrated by TYPE III AUDIO.

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