I think the unproportional returns of the really big hits are blinding investors, and even pg a bit in this essay. Yes, it's easy to look at it from that viewpoint and say - 3/4 of our returns are from 2 companies and 1/4 from all the rest. But it misses a couple of important points - 1/4 of 10 billion is not small change, you would still like to have those companies in your portfolio, all things considered, and second, considering the (very) small sample size - it could've been just 1 company worth a 1/4 of the total or 0. That's how variable it is.
Another thing to consider is that the best teams often pivot into a big success rather than start with it. There are countless of such examples, and it just goes to show that even starting with what appears a relatively safe but limited idea can eventually grow into a huge success. Sometimes founders need to get their hands dirty in the market to realize what is the real opportunity. If you pass those teams up because you think their idea cap is too small, you'll be missing a lot of big hits.
What it all comes to for me is investing in people. People make big hits, not markets. Markets can grow and startups can span multiple markets, but it all starts with the people who direct it forwards.
Another thing to consider is that the best teams often pivot into a big success rather than start with it. There are countless of such examples, and it just goes to show that even starting with what appears a relatively safe but limited idea can eventually grow into a huge success. Sometimes founders need to get their hands dirty in the market to realize what is the real opportunity. If you pass those teams up because you think their idea cap is too small, you'll be missing a lot of big hits.
What it all comes to for me is investing in people. People make big hits, not markets. Markets can grow and startups can span multiple markets, but it all starts with the people who direct it forwards.