I was talking with a friend about startups and luck.

A founder of a startup has to be above some very high level of ability to be successful.

But if you select down to the population of people with that very high level of ability, which one actually succeeds is largely luck.

This is a phenomenon seen in any highly competitive environment. For example, the outcomes of NBA games are largely explained by luck.

Imagine a choice between two opportunities:

A has a 5% chance of a $1B outcome, but a 95% chance of $0.

B has a 50% chance of $100M outcome, and a 50% chance of $0.

These have the same expected value, but A has much more variance.

Some people will be more motivated by the upside potential of scenario A.

But presumably quite a lot more people will be more motivated by the better odds of B.

The difference between $0 and $5M is way bigger than the difference between $995M and $1000M.

Imagine if a small but diverse set of high-ability people agreed, before they started their companies, to pool any winnings.

You can shift the scenarios quite a bit!

Imagine everyone is in scenario A, but now in the pool.

If they give up 5% of their shares to the pool, they have a 5% chance of $950M, but a 95% chance of $1M.

If they give up 50% of their shares, they'd have a 5% chance of $500M but a 95% chance of $5M.

This is great, because it gives significant downside protection.

(Numbers are not my strong suit, it's entirely possible I messed up this math! Still, the high-level conceptual point stands.)

This pooling would tie their fates together in some way.

Shaving off the best case scenario significantly, but bringing up the worst case scenario significantly, too.

It would also require high trust in one another, and belief that the other people are as similarly high potential as themselves.

There is also a significant moral hazard (for example people going after a fun problem instead of a valuable problem since their worst case is less bad).

But if you could somehow figure out how to make this work, it might unlock a lot of value for society.

Presumably there is a whole class of people of high ability with good ideas who would jump at the pooled scenario but balk at Scenario A.

Getting more of those people off the bench and playing would unlock more great ideas for society.