Can Being Divisive Build the World’s Best Investment Strategy? Yes. Fight Me!
Being divisive is actually super important to developing a tangible investment strategy that is built out of empirical experience. In my experience, you have to fight to gain experience. And you have to struggle to get to the point where you see the truth, rather than accept what most consider to be the truth.
If you can’t be hard-edged to do that fighting, then you don’t belong in non-mainstream, non-cautious investing. Venture capital especially is all about taking the risk, and the first thing you have to fight through to take risk is other people’s complacency.
And complacency is the norm in investing.
Many people I have met in the venture capital community, or in the invesment banking circles, tend to come at investments with group think. They think because they can articulate a thesis that everyone shares better than anyone else says it that this makes their approach and their investment stronger.
They want to feel safe. They pack their charts with data that show the past. They pack their pitch decks to committee with statistics and proof that seal up their argument to the point that you can’t actually see that they have a thesis. They are so buttoned up that they forget that the honesty that is needed in making a venture capital investment has more to do with what goes on inside the founder’s head, rather than what goes on in the P and L sheet.
The truth about great investments, and huge home run hits, is that they come out of nowhere, and you are likely only going to be able to carve out space to think about it in an investment committee or a board of trustees by pushing and pushing and pushing to make people see your point. You can’t make a home run investment, if you are too busy making sure your approach to making the investment ticks all the boxes that make it look like an investment that has already been done before.
VC investing is about non-duplicable approaches to creating superstrong growth curves. You cannot get there by looking at the past of business performance. You can only get there by dismantling everything that stands between you and the psychology of the person who is making the new reality.
I think that any VC shop that builds a divisive culture can actually go far. The fighting passionately for what you believe in, and throwing bullshit back at the person flinging it, is a good way to establish trust. When people feel emboldened to be sharp, to be critical and to to be honest, then you know they mean what they say and they mean that they will stand behind the money they put up.
There are not many places that will encourage this, especially in Asia. But it’s super important to encourage it.
Reality can only be changed when you come at it with a hammer.