

The Industries Plagued by the Most Uncertainty - prostoalex
http://blogs.hbr.org/2014/09/the-industries-plagued-by-the-most-uncertainty/?utm_source=Socialflow&utm_medium=Tweet&utm_campaign=Socialflow

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ChuckMcM
Sad that they fail to mention the lower left corner of their chart is anchored
by 'prostitution' and the upper right corner by 'flying cars' :-)

Most of the venture folks I've talked with over the years talk about "stacking
risk" rather than uncertainty but its the same thing. Trying to figure out if
you can eliminate the risk of something before the big investment pays huge
dividends. A lot of the 'create a signup page' kinds of ideas are built around
this.

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cookingrobot
Flying cars are bottom right: everyone wants one, no one knows how to build
it.

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jreimers
I am interested to know what the correlation is between uncertainty and
returns. Are companies that succeed in highly uncertain spaces more profitable
than those which succeed in well known markets? If you include companies that
fail in uncertain spaces, is the average return still greater than those in
more certain markets?

I would think yes, otherwise we would all be sticking with mining precious
metals.

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nandemo
Do you know about Modern Portfolio Theory and Capital Asset Pricing Model?

Granted, they don't refer to "uncertainty" exactly, but rather about
quantifiable risk in the form of volatility. Also, the key word is "returns"
(not exactly profits, but roughly the ratio of total profits over the initial
investment). Basically, while investors have different levels of risk
tolerance, a rational investor requires higher expected returns for higher
expected risks.

While a lot of researchers have been questioning the validity of MPT and CAPM
(because these e.g. rely on a lot of questionable assumptions), empirically
the answer to your question seems to be "yes". Small cap stocks historically
have higher returns than large cap stocks, and tech stocks have higher returns
than utilities.

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bootload
_"... fortunately, experiments with customers trump opinions at Google.
Following the advice of then CEO Eric Schmidt to “get 100 happy users inside
Google,” Bucheit prototyped solutions that eventually proved demand and won
the day. ..."_

source of the 'a handful of users who really love you' idea pg sprinkles in
his essays?

