Korva is a scroll of the internet’s best ideas.
Golf's lesson
Golf shows how it works. Getting the ball close to the pin again and again takes practice, and that is the hard work and the smart work. The hole in one is luck. Nobody controls it, but the more balls land near the pin, the more chances one has to drop.
Investing the same way
Investing follows the same logic. An investor backs one or two companies a year, and 18 over twelve years, each with a lot of skin in the game. Working with special people on unbounded opportunities puts a lot of balls near the pin, and from time to time one drops.
Where timing fits
Timing sits on the luck side. The chipmaker Cerebras tried to go public in 2024 at a valuation much lower than where it later landed, and it didn't work out. The 18 months that followed made all the difference, for reasons partly outside the company's control. Cerebras went public in May.
How much better are pros' hole-in-one odds?
According to the National Hole-In-One Registry, a professional golfer's odds of an ace on a par 3 are about 1 in 2,500. The gap between pros and amateurs comes from how often a tee shot finishes near the hole. Both groups still depend on a bounce or roll that no one controls. The registry puts an average amateur's odds at about 1 in 12,500.
Why does IPO timing swing so widely?
Companies can go public only when investors are willing to buy new shares, and that willingness follows interest rates and market mood. US IPO activity reached a record in 2021, then fell sharply in 2022 as interest rates rose. A company ready in a closed window has to wait or sell at a lower price. IPO issuance in the United States stayed low through 2023.
Why do venture returns depend on a few hits?
Venture returns follow a power law, in which a small number of investments produce most of a fund's gains. Most startups return little or nothing, so a single outlier decides how a fund turns out. That is why investors weigh the ceiling of an opportunity heavily. Funds typically hold somewhere between ten and a few dozen companies.
More from Invest Like the Best with Patrick O'Shaughnessy
