Agreed - the essay is decent and asks an interesting question (how do you find the right tail of venture returns?)
In normal tech hiring (eg Google), they're not necessarily looking for high variance individuals. They're often looking for people who can slot into existing roles. That means the interview process by design should cut off the tails of the distribution.
Venture investing is different because you really want the tail of the distribution (in terms of success). Variance reduction is a bad idea! You want higher variance. In the words of Matt Levine:
> And then [Neumann] met SoftBank Group Corp.’s Masayoshi Son, who “ appreciated how he was crazy—but thought that he needed to be crazier,”
Yes! This exemplifies what an investor might do to increase the variance of the returns of the founder/fund!
As it turns out, Neumann paid himself handsomely and none of this made any money for investors, but the article sort of explains why they would invest in him for WeWork and again for Flow
In normal tech hiring (eg Google), they're not necessarily looking for high variance individuals. They're often looking for people who can slot into existing roles. That means the interview process by design should cut off the tails of the distribution.
Venture investing is different because you really want the tail of the distribution (in terms of success). Variance reduction is a bad idea! You want higher variance. In the words of Matt Levine:
> And then [Neumann] met SoftBank Group Corp.’s Masayoshi Son, who “ appreciated how he was crazy—but thought that he needed to be crazier,”
Yes! This exemplifies what an investor might do to increase the variance of the returns of the founder/fund!
As it turns out, Neumann paid himself handsomely and none of this made any money for investors, but the article sort of explains why they would invest in him for WeWork and again for Flow