Markets, Markets, and Markets

Many investors saw the "death blow" to Amazon coming when the big established retailers started selling online. So while Amazon was born out of an initial appreciation for the growth of the internet, they stayed on top with execution. The ability to execute in an internet-native model vs. the transition big-box retailers were trying (and failing) t... See more

I use the word arbitrage because we're not talking about different markets in different geographies. We're talking about different markets that exist in different people's minds. If I can fundamentally understand, and believe in, a market more clearly than any other investors then my equation can change in ways that give me an advantage.

Valuation, growth, burn, and ambition are all a function of the size of the opportunity.

As VCs imagine the future for any given company, take the time to go through that exercise. Talk to the founders and operators who understand that market most intimately. What do people believe will happen? What could they be wrong about? 

Often, companies are underestimated because people believe the market isn't large enough, and the execution will have risks (e.g. Crowdstrike). So how does that translate into the valuation I can pay today? If you have a fundamentally different belief about the size of the market then you believe that the company will be able to address more custom... See more

Again, this doesn't have to be a deep multi-year fundamental understanding of a market. This often comes from an appreciation of reality as it is . The internet is growing 2,300% and it seems to have legs. Building infrastructure is really hard, and we've gotten really good at it.

"dominating the present with insights."

I don't think of this as an affront to the idea that "no one can predict the future." It is, instead, a statement of belief. You're putting your capital and resources behind a future you believe in. Will Bezos' 2,300% internet growth be long-term? Or more volatile, like OpenSea's NFT volumes?

I'm a firm believer that founders are the people who can predict the future. --> "The best way to predict the future is to build it".