Stanford's Strebulaev: Up to 75% of VC Bets Fail, and That Is the Point

Up to 75% of early-stage venture bets fail — and successful venture capitalists have a higher failure rate than unsuccessful ones. That inversion sits at the core of "The Venture Mindset," a book by Ilya Strebulaev, professor of private equity and finance at Stanford Graduate School of Business, and tech executive Alex Dang, MS '14. Strebulaev laid out its principles in a new episode of Stanford GSB's If/Then podcast, published November 4, 2026, by Michael McDowell.

The book was not written for venture capitalists. "We did write it for people who are located far away from Silicon Valley, thousands of miles away, and for people whose day-to-day professional job has nothing to do with Silicon Valley, with technology, with startups," Strebulaev told host Kevin Cool. He began thinking about the book in 2020 and wrote it with Dang in 2022–2023.

Why do home runs matter and strikeouts don't?

The book's foundational principle carries a baseball name: "'Home runs matter; strikeouts don't' is the first, and I would say foundational, principle of the venture mindset," Strebulaev said. He admits the baseball framing came from his publishing agent, who told the authors a bestseller "must have baseball analogy there." The book contains nine principles in total.

The mechanism is arithmetic, not bravado. VCs accept that failure is inevitable, frequent and expected. A portfolio of 20 to 25 investments aims for one or two outliers whose returns cover all the losses. Strebulaev notes that top home-run hitters in baseball history also had higher strikeout rates — Babe Ruth struck out thousands of times.

The episode opens at Oracle Park in San Francisco, where Lars Leckie, MBA '06 and managing director at Aspenwood Ventures, watched the Giants beat the Cardinals on two solo home runs. "You can only lose one times your money, but you can make five times, 10 times, 20 times, 100 times your money," Leckie said. VCs call their investments "at bats." Leckie added: "It's more of a mindset than a checklist," because markets, people and opportunities keep changing.

How do VCs screen opportunities?

Strebulaev describes a "fast lane" built on mirror questions. Instead of asking why to invest or hire, VCs ask: "Why would I not invest in this opportunity? Why would I not hire that person?" Any red flag kills the deal. Survivors move to the "slow lane" of due diligence, which AI has accelerated — analyzing LinkedIn connections now takes under 10 seconds.

AI is a double-edged sword, he argues. It makes sourcing and diligence easier, but standing out becomes harder because many more people can do the same analysis. Human connection grows more valuable: devoting even 10 minutes of personal time is "a costly signal, and I think that's important."

Who comes first — the team or the idea?

The team. In traditional business, a project gets approved and staffing follows. The venture mindset reverses the order. One unnamed famous VC told Strebulaev: "There's one type of founders I would never invest in, and those are nice people" — because nice people struggle to fire staff or win hard negotiations.

Strebulaev cites Bill Gurley, partner at Benchmark: "If you invest in a company that doesn't work, just fails, you can lose only 1x your money." Miss Google, and you lose 10,000x. VC sleepless nights concern the deals they skipped, not the ones that failed. He also goes "outside the four walls" personally: on every solo business trip he speaks to at least five strangers.

Is venture capital always good for the world? "Absolutely not," Strebulaev said. But competition among companies and countries makes withdrawal impossible. His warning for incumbents: many large companies "will be displaced, and soon, unless their leaders realize that they need to change their paradigm, how they think."