You actually answered your own question: to make generational/outsized returns, you need to be contrarian (think Open AI first round, Palantir, Uber's seed, bitcoin, ETH ICO etc...).
You can make money with non-contrarian bets, but it is much more difficult because:
- entry valuations tend to go up
- more rounds raised = more dilution along the way
- more competition for the startup = less odds of creating a generational company
- more competition for the round = lower allocations/harder allocations
I don't understand this need for the startup ecosystem to be "non consensus". Non consensus means willing to take a bet that no one (or few) would be willing to make. By definition this excludes all already attractive / high-growth / proven (or well on their way to proving) businesses. Why would any want to pass on those?
So while there might be some outliers in being non-consensus, and it's a muscle to maintain, I agree with Martin's original point about consensus — by and large, you have to chase the heat, and win on different abilities than being non-consensus.
You actually answered your own question: to make generational/outsized returns, you need to be contrarian (think Open AI first round, Palantir, Uber's seed, bitcoin, ETH ICO etc...).
You can make money with non-contrarian bets, but it is much more difficult because:
- entry valuations tend to go up
- more rounds raised = more dilution along the way
- more competition for the startup = less odds of creating a generational company
- more competition for the round = lower allocations/harder allocations
Thoughtful!
I don't understand this need for the startup ecosystem to be "non consensus". Non consensus means willing to take a bet that no one (or few) would be willing to make. By definition this excludes all already attractive / high-growth / proven (or well on their way to proving) businesses. Why would any want to pass on those?
So while there might be some outliers in being non-consensus, and it's a muscle to maintain, I agree with Martin's original point about consensus — by and large, you have to chase the heat, and win on different abilities than being non-consensus.