Should investors worry more about mistakes of omission (missed winners) or mistakes of commission (money lost)?

Bill Gurley · Dec 6, 2021

The real risk in venture is missing a generational company, not losing the money invested in a bad deal, because returns are asymmetric

A $10M loss is capped at $10M, while his misses came from failing to imagine how high the upside could go — as with Google at 25 employees and Square

34:53 20VC: Bill Gurley and Michael Eisenberg on The First Signs of an Impending Bust, What Happens with a Market Crash, How Do Public Markets Impact Private Valuations & The Biggest Lessons from 20 Years Investing in Venture

Julio Vasconcellos · Sep 23, 2022

A venture fund should play to win — aiming not to miss the next huge hit — rather than play to minimize losses

You can't win by playing not to lose; it matched his own gut instinct

Scope: some traditional LPs reacted negatively to the idea of not minimizing losses

28:48 20VC: Why Greed is the #1 Enemy of Venture Returns, Why Not Enough VCs Play to Win and Lessons from Scaling to $100M and 1,200 Employees and Then Cratering with Julio Vasconcellos, Founder @ Atlantico

David Tisch · Feb 5, 2024

The cost of omission at seed vastly exceeds the cost of commission: saying no to the wrong company blows your returns while saying yes to the wrong one is a rounding error

Finding 32 reasons to say no is easy; the job is to squint and see the one reason it will work

36:59 20VC: The Biggest Misconceptions & Hardest Truths About Seed Investing Today; Why The Best Founders Don't Need You, Why Uncapped SAFEs Are Good, Why Reserves Are Bad, Why Signalling is BS, Why Price Doesn't Matter with David Tisch & Terrence Rohan

Danny Rimer · Jun 17, 2024

The opportunity cost of time spent trying to turn around a failing investment is more expensive than the follow-on capital lost in it

He had pounded the table twice at Nasty Gal, got a weaker vote the second time, and felt responsible to partners for putting good money after bad — but the time not spent on the next great opportunity cost more

51:12 20VC: Index's Danny Rimer on Investing Lessons from Hits like Figma, Discord and Etsy to Missing Snapchat, Airbnb, Facebook & Spotify | Why Valuation is a Trap and Market Sizing, Signalling and Sector/Geo-Specific Funds are all Noise

Shardul Shah · Sep 16, 2024

In venture the sins of omission are much greater than the sins of commission, distilling into three lessons: don't be cute on price, don't overthink it, don't pass on generational founders

Derived from an Index off-site where each partner wrote a postmortem on a company they could have made a billion dollars of gain on

12:33 20VC: Index's Shardul Shah on Why Market Size is a Trap | Biggest Lessons on Pricing from Leading Rounds in Wiz & Datadog | Why Benchmarks & Averages in VC are BS | How Index Makes Decisions and Why Growth & Early are the Same Investing Style

Klaus Hommels · Nov 27, 2024

Mistakes are not bad by design; an investment approach that eliminated his mistakes would also have excluded the companies that made it

The same openness that produces errors is what gets you into the winners; the task is only to avoid repeating the same mistake

8:55 20VC: Why Price Sensitivity is BS | Why "Portfolios" are Merely a Construct to Make LPs Happy | Why the Best Investment Never Happen in "Fundraising Rounds" | What Europe Needs to do to Become a Superpower Again | Klaus Hommels, Lakestar

Philipp Freise · Jun 30, 2025

Passing on the chance to invest in Alibaba was a big mistake

Scope: deal came through early angel/family KKR activity, where he was the one with venture experience

56:25 20VC: Inside KKR's Monster $8BN European Fund | The $500M Turkey Gamble That Went Wrong | Do Andreessen & General Catalyst Scare KKR? | Will AI Kill the PE Model? | Can The PE Model Survive without IPOs and Where is the Liquidity with Philip Freise

Harry Stebbings · Aug 11, 2025

His biggest lesson is that he would have made more money by saying yes to every company he met and doing the deal at pre-seed

He didn't meet many companies, so the ones he did meet and pass on or delay were the cost

64:47 20VC: Figma, Scale, Wiz: Inside Index's Decacorn Factory | Decision-Making, Investment Process, Biggest Lessons, Biggest Misses | Why Gross Margin is a Fallacy at Seed | Never Turn Down a Deal on Price with Martin Mignot, Partner @ Index Ventures

Martin Mignot · Aug 11, 2025

Index would have performed substantially better if it had said yes to every single company that presented at the partnership

They ran the analysis; it follows from the power law — missing even one company like Spotify outweighs the losers you would have added

64:59 20VC: Figma, Scale, Wiz: Inside Index's Decacorn Factory | Decision-Making, Investment Process, Biggest Lessons, Biggest Misses | Why Gross Margin is a Fallacy at Seed | Never Turn Down a Deal on Price with Martin Mignot, Partner @ Index Ventures

Marc Andreessen · Mar 30, 2026

In venture capital one should be far more worried about mistakes of omission (missing a Google) than mistakes of commission (losing money on a failed investment), and at this stage Marc and Ben are not micromanaging the firm's investment decisions

They have spectacular senior and junior partners making the decisions; their value-add is reminding people to let go of emotion from past bad experiences

7:00 20VC: Marc Andreessen on The Future of Venture Capital: Will a16z Go Public | Why Labour Displacement with AI is Wrong | Why Introspection is Dangerous | Why "Diamonds in the Rough" is BS in VC | Why a16z Invested $300M into Adam Neumann

Larry Aschebrook · Jun 16, 2025

Fund managers should not expect praise for distributing capital — it is the LP's baseline expectation — and the real discipline is reducing losses

In a short fund life liquidity is already hard, so mistakes that lose LPs hundreds of millions offset the wins

33:29 Reducing losses not distributing capital is the real manager discipline