Principle 6 on how to think like a VC: Focus on Portfolio Returns

The board should really be focused on justifying not the investments that they're making at an idea level, but the success of the investments that they're making in the whole portfolio. So if you think about how venture capitalists operate, they'll go out, secure funding based on expected returns from their entire portfolio, right? They're not justifying each investment that they're making to limited partners separately. Similarly, your board should be raising a pool of capital, most likely from your finance department or CFO and allocating it really strategically over time without constantly having to seek approval from finance for individual projects, because that is going to be like wading through treacle ultimately. And again, it's only by focusing on the portfolio as a whole that you can minimize the impact of individual failures. You know, by having this big diverse portfolio, you can absorb those failures and still achieve massive overall success.