Silicon Valley a Systemic Risk?

The WSJ has a good editorial about why venture capital could never pose systemic risk. And I agree, but what is really revealing about this conversation about regulation and risk, is that the prevailing logic on venture and risk is absolutely wrong: everybody thinks risk taking is good. And the more risk, the better.
 
There is a sense that “good old American risk taking” is somehow the goal in itself: “venture capital is exactly the place where we have to encourage risk.”
 
I would argue that the goal of venture capital is exactly the opposite: to mitigate as much risk as possible. The best entrepreneurs know this. They use their insight and experience with customers to mitigate as much risk as possible before they start a new venture.
 
The problem is that venture investors and entrepreneurs are not very good at mitigating risk. The dismal venture track record is a result of investments made based on “passion and vision” and gut feel about the market.
 
Don’t take risk – mitigate it.