Venture Capital Success: Luck vs. Gut

Paul Kedrosky sparks an interesting debate with himself in two separate posts over whether or not successful venture capitalist have a keen gut instinct (7/21/06) or are just plain lucky (12/3/05).

As I wrote in a comment* on Mr. Kedrosky's 12/3/05 post on luck, I believe that there are many aspects of success that make additional success easier, such as reputation, contacts and just plain having seen the show before. However, I suspect that both luck and gut instinct also play roles in venture capital success... as they do in many aspects of life. I do believe that there are some circumstances where data and/or indicators of success are only recognized subconsciously, which creates a hunch or gut instinct. Yet, the concept of gut instinct is over used. Furthermore, gut instinct is commonly used to explain success that otherwise has no explanation, ie, luck. Frankly, whenever someone attributes past success to gut instinct it sets alarm bells off with me.

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*Too bad I didn't have coComment then!