The for instance look at public markets. Passive S&P allocations outperform most hedge funds.
You can outperform 99% of hedge funds just by buying the S&P.
The same goes for VCs. Just by spraying small checks over a wide spectrum you can do very well (outperform the S&P and most VCs).
But 99% prefer "me too" investments.
Paul Graham talked about this:
"Whoever the next Google is, they're probably being told right now by VCs to come back when they have more "traction."
Why are VCs so conservative? It's probably a combination of factors. The large size of their investments makes them conservative. Plus they're investing other people's money, which makes them worry they'll get in trouble if they do something risky and it fails. Plus most of them are money guys rather than technical guys, so they don't understand what the startups they're investing in do."
...
"I've tried to explain this to VC firms. Instead of making one $2 million investment, make five $400k investments. Would that mean sitting on too many boards? Don't sit on their boards. Would that mean too much due diligence? Do less. If you're investing at a tenth the valuation, you only have to be a tenth as sure.
It seems obvious. But I've proposed to several VC firms that they set aside some money and designate one partner to make more, smaller bets, and they react as if I'd proposed the partners all get nose rings. It's remarkable how wedded they are to their standard m.o."