Charles HudsonFounder and Managing Partner, Precursor Ventures

The Hot Hand Fallacy In Venture

27 Jun 2025 · 1 min

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0:31

Charles Hudson explains why the hot hand fallacy works differently in venture than sports. In basketball, Steph Curry's accuracy is real. In investing, you get rewarded for taking shots, not for the ones that land, which means comfort with failure is the actual skill.

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One of my favorite comparisons in the entire episode was when they talked about the hot hand fallacy and talking about how, ironically, it doesn't apply to somebody like Steph Curry, who is paid tens of millions of dollars because he has a high percentage hit rate on the shot that he takes. It does very much apply to venture most cases. Josh and Jack talked about how investors are actually rewarded on the shots that they take, not the shots that they actually make. How do you think about that and venture and get comfortable with that?