At its heart, venture investing is about making the right choices. The right founders, the right markets, the right business models. And you have to do this with very limited data.
The million-dollar question: how do you discern between the right bet and the wrong one?
Some people claim it’s about taste and vibes. Others say it’s about science—especially today as investors shift away from consumer tech and AI, toward founders who have PhDs.
This question is bigger than the current moment. It’s one I’ve grappled with throughout my career. Probably every VC has their own answer. But I always find myself coming back to what Carl Sagan had to say about discernment.
“It seems to me what is called for is an exquisite balance between two conflicting needs: the most skeptical scrutiny of all hypotheses that are served up to us and at the same time a great openness to new ideas. Obviously those two modes of thought are in some tension. But if you are able to exercise only one of these modes, whichever one it is, you’re in deep trouble.”
– from “The Burden of Skepticism”
The balance that Sagan calls “exquisite” is just that—so delicate, a VC can spend a lifetime perfecting it. Err on the side of skepticism, and you’ll dismiss a once-in-a-generation idea because it seems too hard, or too optimistic. But if you’re too open-minded, you’ll be taken in by a compelling pitch that doesn’t hold up when it comes time to execute.
The tricky part is, experience in venture capital can thumb the scale. Failed investments make you more skeptical, when really what you need to do is stay open. The obvious counterpoint is that success makes you overconfident. But success can even do the opposite. Once you have track record to protect, you may find yourself wanting to avoid risky bets.
The best investors avoid these traps. As science evolves and vibes shift, they stay open-minded and skeptical over a long career arc.