Secret of early-stage investing in a four easy steps:
1. Develop a strong internal sense of what "truly great" looks like. This is the key step. Get this wrong and the rest is irrelevant. Here you must be intellectually honest and very humble. "Truly great" is a matter of fact not opinion. A matter of past not future.
The best way to do step 1 is to encounter truly great. Work at a company that is truly great. Work at a VC firm that is truly great and invests in companies that are truly great. Constantly ask: "did I earn the right to this opinion about greatness?"
Be patient. You will know it when you see it. Mindset is critical.
Step 2. DO NOT INVEST in anything that is not consistent with your earned opinion on what truly great looks like. I don't care who else is investor or how much momentum it has or how much of an exception is it. Don't do it.
Be ruthless. The only way to make room for truly great investments is to avoid investments that are not truly great. Will you miss things by getting this wrong? Yes. But do not swing unless it's clearly in the strike zone.
Step 3. Find investments that show genuine signs of true greatness in accordance with the internal model of greatness you have constructed. Be patient. Be willing to wait until they appear. Never compromise. But when you invest, invest fully.
Step 4. Work like hell to support the founders you have backed to the best of your ability, cognizant all the time that it's not your company - you are just a supporting player.
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