Investors, Gamblers, and Rules

Yesterday I was talking with my brother Levi who runs a highly successful financial services company about different types of investors.  As sometimes happens, a 2×2 matrix began to emerge.

This not only describes different investor types but also different types of gamblers.  If you know anyone really into either gambling or investing (this goes for both stock investors and VC’s) you’ve probably picked up some variation of these four basic types.

The types are about the way rules and systems are viewed.  I’ve spoken with a great many investors who live by them.  They tell me their sound rules built on solid theory and insight are the only thing that keeps them disciplined and keeps emotion in check to sustain long run returns.

Others say that if rules worked everyone could be rich.  It’s only by breaking rules and being unbound by rigid formulas that you can win big.

I suspect that both of these are true and the key might be to discover your own personality, risk tolerance, and unique intelligence or insight that you do (or do not) bring to the table.  Some people need rules.  Some people would be hampered by them.

Here’s a rough attempt to show some archetypes in the investor world that might illustrate the four categories:


If you don’t recognize some names or you’re not sure what is meant by them, here’s a chart that describes the characteristics of each:


If you recognize these categories, which are best to work with?  Say you are seeking funding for some project or startup.  Some investors have very tight criteria for who they’ll work with.  It can be good and it can be bad, depending upon what you want and what the criteria are.  Many people imagine that the best case would be an investor with no rules, who they could win over on gut instinct and then have a smooth, easy process of getting funding and using it.  This may be true, but it could also mean a) you get no valuable insight from the investor or, b) you get weird, unpredictable phases of meddling and odd requests for pivots.

This chart gives a little description of what working with each category might be like:

Working with

I don’t pretend to have a lot of experience working with investors or gamblers, but I’ve been around enough to see these types pretty clearly.  I’m probably missing some big things and offending some people, and my descriptions may not be reflective of your experience.  This is the result of one short conversation, not a lot of study.

If you strongly disagree or see something I’m missing, hit me up with your take!