"It's easy to look at Paul Graham and think - hey, he's one of the boys! He's a hacker, just like us! He cares about the technology! Well, if you ever were put in Paul Grahams position as a partner in an investment portfolio, you would stop being the way you are now. Being an investor means that you are playing a hacking game too, but the object of this hacking game is to make you some money. And to do that, you cannot take 10 risky investments - you have to go with 8 safe investments, and take 2 risky investments."

The point of diversifying is that you can make only risky investments. If a VC is honestly putting his money into the safest companies, rather than the ones with the highest risk-adjusted return, he should be fired.