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The Tricky Thing Venture Capitalists Understand About Startups That Most Entrepreneurs Don’t
You’ll become a better entrepreneur simply by studying how VCs think about investing.
I recently ran a little experiment with my entrepreneurship students at Duke. I divided one of my classes into groups and gave each group a small amount of money with a simple challenge: in one hour, turn this seed capital into as much money as possible.
I didn’t give them much to work with beyond that, so they had to get creative. One group told jokes for money. Another group ran a ping pong tournament. And so on. An hour later, the results were exactly what I’d expected. Most groups came back with little or nothing. A few broke even. But two groups crushed it. They took risks that paid off and returned multiples of what I’d given them.
After all was said and done, I’d made back more than my initial investment. Not because most of my bets were successful — in fact, most weren’t — but because a couple of big wins more than made up for the losses.
As class finished, I found myself thinking about the outcome of the exercise. It wasn’t just a fun way to teach students about entrepreneurship. It also led me toward an unexpected epiphany about the beauty of venture capital.
