Stanford professor on the importance of bets and how to think about business successes and failures

14 Jan 2025 · 1 min

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Short excerpt from a YouTube video in which a Stanford professor (featured by Guy Kawasaki) argues that businesses should prioritize pursuing rare 'home run' successes over avoiding failures. The speaker cites research-derived guidance — '21' — and states that roughly 1 out of 20 early-stage VC bets becomes a major success; therefore organizations should treat initiatives as a portfolio of bets and accept most will fail to find the occasional 'internal unicorn.'

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The first principle is home runs matter, strikeouts don't. Staying focused on winning a jackpot is far more important than fearing losses. I would prefer to think about this principle as 21. 21 comes from my research. Statistically, just about 1 out of 20 early stage VC bets result in a in a great success in a home run. You should think of your organization as a portfolio of existing lines of businesses, but also portfolio of bets. And some of these bets may result in exceptional success, but more importantly, most of those bets should be unsuccessful. If you really would like new successes, you have to embrace those unsuccessful ones. So the true failure is missing your internal unicorn.