
Interesting Corollary of the Power Law in Venture Investing - rahulchhabra07
I just realized an important corollary of the Power law in Venture Investing. Basically, think there are so many startups who hire people without ever finding a PMF. And I was thinking how are these startups able to justify their value in the economic world. Like every startup doesn&#x27;t create enough economic value to hire employees, right. But they don&#x27;t need to. They just need to convince some VC to raise money. They don&#x27;t need revenues. They can possibly fail even. But then who loses, if the founders took salaries, employees took salaries, is it the investors? But then you realize, no. Even the investors are fine losing on 9&#x2F;10 bets if 1&#x2F;10 is a 10x return generating. Which means the companies which really generate economic value, they just don&#x27;t create wealth for their employees and investors, but they also financially support so many failed ventures indirectly, hence spurting cycles and ripples of innovation and risk-taking in this world.
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galaxyLogic
Right. Something similar happens in the R&D departments of every big
corporation. Only 10% of the projects become products. But a difference may be
that when a venture-capital-backed startup fails the same venture capitalists
won't be hiring the same employees? Well maybe

