Does achieving investment success or personal wealth make an investor better (bolder, less fearful) or worse (overconfident, careless)?

Cyan Banister · Oct 19, 2020

Having an extraordinary first investment made her bolder rather than more cautious

Once SpaceX started launching successfully, the vindication of a decision she initially thought was the worst of her life gave her fuel to launch her investing career

6:07 20VC: Cyan Banister on Her Relationship To Money, Risk, Her Investment Decision-Making Process, Why We Will See A Reckoning in the Early Stage Market, Her Biggest Takeaways from HQ Trivia & The Future of Silicon Valley

Emil Michael · Oct 24, 2022

Financial security produced the opposite effect in him — it made him more willing to risk, and pushed him to back founders with a chip on their shoulder who will win no matter what

Knowing he'd be okay if he lost the money removed the fear, and he identifies with people driven by that same chip

Scope: acknowledges the Uber outcome gave him unusual cushion

10:33 20VC: Uber's Journey to Becoming the Most Valuable Private Tech Company in History, Raising $3BN From Saudi in Just 60 Days, Uber's $30BN Mistake in Food Delivery, Why Recent Uber M&A Will be the Worst in Tech & Mastering Negotiations and Deal-Making with

Harry Stebbings · Oct 18, 2023

Uncapped upside orientation and lack of fear of downside come from having had immense success; managers without that success are much more worried about getting fired

Observed with Sequoia partners who aren't worried about a company going to zero but are very worried about upside maximization

24:03 20VC: Are LPs Open For Business? What Does it Take to Raise a Fund Today? How Has What LPs Want to See in Fund Investments Changed? Why Do LP Incentive Mechanisms Need to Change? Which Funds Will be Hit Hardest with Beezer Clarkson @ Sapphire Partners

Harry Stebbings · Mar 27, 2024 · hedged

Financially secure or rich investors may make better investors because they are not scared of downside and do not bring paranoia to entrepreneurs

They aren't afraid of downside and don't bring paranoia and nerves to the entrepreneur the way an investor who needs the outcome to work does

Scope: framed as his own theory

7:40 20VC: a16z's Chris Dixon on Who Will Win the Next Generation of Venture, The Two Ways to Make Great Venture Investments and Find the Best Entrepreneurs & Why AI Will Strengthen the Position of the Incumbents Moving Forward

Harry Stebbings · May 1, 2024 · speculative

Wealthier investors may make better investors because they aren't afraid of downside and adopt an upside-maximization mindset

They don't worry incessantly about losses

48:44 20VC: Mark Suster on The Biggest Fundraising Lessons for VCs, Why the Correction in Venture is Still to Come, Why Private Equity Will Replace IPOs and M&A as the Exit Path & The Woke Left and a Trump Administration; What Happens?

Harry Stebbings · Nov 27, 2024 · hedged

Success may be exactly the moment an early-stage investor should double down rather than pause, and wealthier investors may be better investors because they aren't afraid of downside

Not fearing downside lets you see the beauty in companies like Spotify, Revolut and Helsing rather than the many reasons to say no

Scope: framed as his own instinct and an open question

7:16 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

Harry Stebbings · Jan 6, 2025 · hedged

Sequoia's success comes from being unafraid of downside because of their track record, which lets them see expansively what a company could become

Having done so well already removes downside fear and enlarges their perceptual vision

Scope: based on his closeness to the Sequoia team

33:40 20VC: How To Do a 10x Seed Fund in 2025 | Three Frameworks to Evaluate Startups an Founders | Lessons from Losing Billions Missing Airbnb and Pinterest & Investing Lessons from Charlie Munger with Mike Maples @ Floodgate

Gili Raanan · Mar 18, 2024

Personal wealth is not what makes an investor good; investing performance is rooted in instincts, knowing your game, pattern matching and network.

Being wealthy made his life more comfortable but the drivers of good investing lie elsewhere.

Scope: wealth does remove one source of worry

48:58 20VC: 19 Company Portfolio: 1 Decacorn, 7 Unicorns, 4 Acquisitions; One of the Best Seed Investors of All Time on How to Pick Generational Defining Founders, Why Nothing but the Founder Matters & Why the Best Investors are Never Happy w/ Gili Raanan

Mark Goldberg · Oct 25, 2024 · hedged

Wealth itself doesn't make investors better; what correlates with being wealthy in venture is a deep love of the craft, and that love is what makes them good

His gut says wealth correlates with a lack of hustle, but that isn't what he has observed; to reach that level you need such a love of the job that the money becomes an afterthought

Scope: explicitly unsure whether the 'I don't give a shit anymore' effect matters

52:02 20VC: The Truth About Multi-Stage Firms; Why Portfolio Services are for VCs not Founders | Why Politics is Rife & Decision-Making is Broken in Large VCs | Why Reserves are Bad for Founders & How Boutique Firms Will Win with Mark Goldberg @ Chemistry

Klaus Hommels · Nov 27, 2024 · hedged

Having more money does not make you a better investor because conviction driven by technology and founders doesn't scale with capital

Some wealthy investors pour money in on momentum, but his own decisions come from falling in love with the technology and founder, which requires a special moment rather than more capital

Scope: 'not sure'; distinguishes different genres of investors

7:36 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

Martín Escobari · Nov 11, 2022

The most common investing mistake is hubris after a home run — investors feel invincible after a first billion-dollar gain and become reckless on the next large transaction

He nearly did it himself after XP

40:08 20VC: Why Market Size is Everything | Three Signs of a Bull Market and How To Remain Disciplined | Why Investing is a Young Person's Game | The Secret to Negotiation | Missing a $200M Opportunity in Nubank and more with Martín Escobari, Co-President @ Ge

Nick Huber · Aug 21, 2023

Becoming successful and notable is dangerous because you start treating yourself as your own idol, filter information to confirm your views, lose large amounts of money, and become a worse person

With hundreds of thousands of people hanging on your every word you start believing you're special, and a closed mind creates blind spots

Scope: framed as 'a theory'; especially acute for notable people with large followings

12:55 20VC: The Biggest Lies of Silicon Valley, Why Entrepreneurship is Not For Everyone, Why VCs are Out of Touch, Why Many Would Be Great Entrepreneurs Will Burn Out, Why You Should Let Your Children Suffer and Why You Will Choose The Wrong Partner with Nick

Doug Leone · Sep 14, 2021

His early run of seven successful investments screwed him up by creating a false sense of confidence, and was as much luck as skill

He landed at the beginning of software — right place, right time — and the false confidence led him to jump into telecom and optical networking with his whole body, waking up in 2000 on twelve boards with no winner

21:45 20VC: Sequoia's Doug Leone on What Has Been Instrumental To Scaling Sequoia Over Generations, How Sequoia Think About International Expansion and What They Learned From China and India & Why When You Lose Pre-Seed You Become Private Equity

Harry Stebbings · Oct 11, 2021

Having three big hits (IPOs) as one's first three investments distorted Doug Leone's investing mindset.

6:18 20VC: Chris Sacca on Coming Out of Retirement To Unf**k The Planet with Lowercarbon, How Chris Evaluates His Relationship To Money Today, Why We Have Bred a Generation of Ass**** Kids, Do VCs Provide Any Real Value and The True Unfiltered Opinion on Faceb

Klaus Hommels · Nov 27, 2024

Investors should deliberately pause investing after a big win because success breeds overconfidence

Success makes you believe you can walk over water, so you need forced humbling moments to remember the role of luck and avoid silly mistakes

6:29 Pause after big wins to counter overconfidence

Chris Dixon · Mar 27, 2024

The core driver of bad investor behavior is principal-agent misalignment rather than personal wealth per se; professionals at firms with misaligned incentives panic just as much

Junior investors get roughly three shots on goal and get fired if none hit, so their individual incentives diverge from the LPs' financial interests

8:03 Principal agent misalignment not wealth explains bad investor behavior

Sam Corcos · Dec 11, 2023

Successful people and companies should take bigger risks as they accumulate resources, but in practice reputation makes them more afraid of failure and more conservative

Having cash should enable moonshot bets, but throughout history the more reputation you have the more you fear failure — an ironic default of human nature

9:16 Reputation not wealth drives increased risk aversion despite more resources