Invest in the Smartest Scientists in a New Field

Naval: There are many ways to build good judgment. The timeless kind of judgment—good decision-making and the ability to size people up—comes with experience. You can develop it by reading great works at the intersection of science, business and philosophy. Read books that cover how smart people think. Build so-called “mental models” and develop an understanding of microeconomics, mathematics and game theory.

You’re not going to become a great investor by reading TechCrunch

You can build timely specific knowledge in a field by diving in and learning everything you can about it, as quickly as possible.

You won’t become a great tech investor by reading about technology on TechCrunch or Bloomberg News. You have to go to the source. You shouldn’t hesitate to read scientific papers and journals. You should brush up on your mathematics. You should genuinely enjoy the act of learning science and technology. After all, technology is applied science.

Invest in the smartest scientists in a new field

You can also develop good judgment by investing in the smartest scientists and technologists in the space. Even if they don’t make you money, they can perform due diligence for you on deals. They can validate and calibrate deals for you, and they can send other great scientists your way. Perhaps you’ll make them advisors to your fund, give them a piece of your carry, or let them invest with you. 

I did this early on, when I invested in cryptocurrency companies. I became friends with Zooko Wilcox-O’Hearn, who started Zcash; Juan Benet, who started Filecoin; Ryan Shea and Muneeb Ali, who started Blockstack together; Bram Cohen, who started BitTorrent; Eli Ben-Sasson; and Andrew Miller. They became my go-to people for vetting and validating deals. They told me which technologies were real and which ones weren’t; and which scientists were credible and which ones weren’t.

Scientists and technologists are a secret weapon 

If you surround yourself with top scientists and technologists, they will become your secret weapon. They tend to be no bullshit—they’ll tell you exactly what they think of a new technology. And they’ll refer you to their networks.

You’ll need to use your own judgment to decide when they’re being unnecessarily negative or jealous, because that’s human nature. Overall, very technical people tend to be extremely objective. They’re used to corresponding with the real world and scientific results, rather than people who are influenced by subjectivity.

If you can find a group of painfully honest and distinguished scientists and technologists, that will be a secret weapon throughout your investing career.