[Zandikar]

It's a bad idea for the small business owner/startup to pursue, because investors buy into it for the 1 in how-ever-many that get big. 1 facebook is worth many failures. And to be fair, they're not just throwing money at the wall and hoping it sticks - though there is some element of that. There's also the many companies that don't make headlines but are generally - if modestly - successful as well. So, the investors don't want to lose money of course, but they're okay weathering several losses if the occasional win is big enough to more than compensate.

On the flip side, if you're a small business trying to grow your company, this hole "carve out the market operating a loss in hopes that you'll make it big" idea doesn't work in your favor most of the time, statistically speaking.

Modest investment for modest gains for modest success for long term growth is the smarter bet for the business owner (usually), but that's not as flashy, headline worthy, or profitable for the investors as the go-big or go-home approach.

So, it depends on what perspective you're taking as to whether this "conventional wisdom" really is good or bad.