> [VC] economics come from the few huge outcomes where founders also have a life changing outcome. Also, gambling has a negative expected value,
VCs get more shots on goal, so the typical outcome of a VC could approach that of the average of the industry. (It doesn't, but that's for other reasons.)
Founders can't because they have too few shots on goal.
Suppose that I'll give you a 10% chance at $100k if you pay me $1k.
If you can take that offer "enough" times, you have reasonable odds of making 5-12x on your money.
However, if 100 people take that offer once each, around 90% of them will lose their $1k. (They should pool.)
VCs get more shots on goal, so the typical outcome of a VC could approach that of the average of the industry. (It doesn't, but that's for other reasons.)
Founders can't because they have too few shots on goal.
Suppose that I'll give you a 10% chance at $100k if you pay me $1k.
If you can take that offer "enough" times, you have reasonable odds of making 5-12x on your money.
However, if 100 people take that offer once each, around 90% of them will lose their $1k. (They should pool.)
https://www.nature.com/articles/s41567-019-0732-0.pdf