Investing
Rapidly Growing Valuations Shouldn’t Scare You Off
Humans are bad at understanding exponential growth
Good investors show their best deals to their friends, so one subtle type of social proof is when you see a group of investors who like to invest together. More
Reading Social Proof Is an Art Form
The ultimate social proof is a credible VC increasing their ownership
Social proof only works when the actors are independent and it matches up to your diligence and conviction. More
Social Proof Is a Valid Signal
Every investor brings new information to the table
Social proof can get a bad rap, deservedly so because it can be a herd mentality where one monkey imitates the other.
There are reasons why humans follow social proof. More
Ask About the Metrics They’re Not Showing You
One weird trick to get the truth about metrics
There’s a psychology trick you can use when you’re trying to find out why someone does or doesn’t do something. More
It’s Easy to Exaggerate Early Traction
Put yourself in the customer’s shoes instead of fixating on traction
Everything Is a Proxy for Traction
The holy grail is explosive growth, stickiness and an ability to monetize
At the end of the day, everything is about traction. You pick a great team, go for a big market and invest in great products because you’re trying to predict what masses of people will use or pay for. More
Early Winners Don’t Always Make It to the Finish Line
Competitors can catch up while the market’s still small
Ben Horowitz is credited with the line: “The best product doesn’t always win, but the winning product becomes the best product.”
There are exceptions, though. More
Invest in the First Credible Mover
Pick the right founder at the right time
Because of the nature of the Internet, products that seem extremely niche can spread quickly across the world, get into everyone’s phones and saturate entire markets before the competition knows what’s happening. More
Monopolies Fall When Platforms Shift
Companies that fail to innovate will get displaced
The important concepts in modern microeconomics are: monopolies, network effects, supply and demand, cumulative advantage, moats, lock-in, marginal costs, consumer and producer surplus, price discrimination, pricing power, viral networking, viral adoption, and economies of scale, among others.
Most of the valuable businesses are natural monopolies. More