1/ This is an interesting and important insight about venture capital, and I want to post some thoughts about it. Early stage venture capital IS all about believing in ambitious people and supporting them early on.
2/ The earlier you are willing to believe, the smarter you look when you're right, and the sillier you look when you're wrong.
3/ Investors, in general, vary greatly in a) WHAT makes them believe and b) WHEN they're able to believe.
4/ The three main WHATs are the Product (product idea, traction, engagement, etc), the Market (market size, market growth, severity of problem, etc), and the Team (prior achievements, perceived ability to execute, founder/market fit, etc).
5/ Investors care about all of these things, but usually really care about one of them over the other two. So if a VC is focused on finding the best teams, they are going to be hard to sway with a huge market or a great product -- unless those things also come with a strong team.
6/ The preference for one of these three attribute typically leads to each investor's greatest hits & biggest misses. E.g. a VC who overweighs teams will make "genius" bets in teams w/o an idea that end up succeeding, and also "dumb" bets in teams w/bad ideas that end up failing.
6b/ (Hat tip to @nabeel for pointing this out to me a few years ago.)
7/ The WHEN also varies. If an investor loves products, then when would they believe your product will be a winner? For some it can be an idea on a napkin. For others it's a prototype, or a launched MVP, or a product w/heavy traction. Some ppl are more conservative than others.
8/ The earlier someone believes, the more they have to be willing to be a laughing stock or outcast if things go wrong, and the smarter they'll look if things go right.
9/ An analogy is how ppl pick movies to watch. Some care about reviews but not the cast, others are the opposite. Some want one great review, others need to see 50. And if you love dystopian sci-fi regardless of reviews, that can lead you to Dark City -- or to Battlefield Earth.
