[[The Power Law -- The Steep Distribution of Value|The Power Law -- The Steep Distribution of Value]] emands a focus on finding and backing singular, potentially transformative opportunities instead of broad diversification. ## For VC > This implies two very strange rules for VCs. First, only invest in companies that have the potential to return the value of the entire fund... Second: because rule number one is so restrictive, there can’t be any other rules. ## For Individual Development > The power law is not just important to investors; rather, it's important to everybody because everybody is an investor. ... When you choose a career, you act on your belief that the kind of work you do will be valuable decades from now. The most common answer to the question of future value is a diversified portfolio: “Don’t put all your eggs in one basket,” everyone has been told. As we said, even the best venture investors have a portfolio, but investors who understand the power law make as few investments as possible. The kind of portfolio thinking embraced by both [[Secrets that are contrarian to conventional wisdom are the basis of innovative businesses that provide unique value|folk wisdom]] and financial convention, by contrast, regards diversified betting as a source of strength. The more you dabble, the more you are supposed to have hedged against the uncertainty of the future. But life is not a portfolio: not for a startup founder, and not for any individual. An entrepreneur cannot “diversify” herself: you cannot run dozens of companies at the same time and then hope that one of them works out well. Less obvious but just as important, an individual cannot diversify his own life by keeping dozens of equally possible careers in ready reserve.