Builders

We find that builders tend to have the traits we’re looking for in founding teams. Years of building things usually leads to a focus on the process rather than the outcome, and to an inherent understanding that greatness is in the details. Builders tend to love building things for their own sake, and as a result have usually gotten pretty good at building amazing things. Their tools and canvases may vary, but we believe that their shared love of the building process itself and an internal scorecard gives them a distinct advantage over the get-rich-quick crowd.

Logic

We love meeting people that think for themselves and that have the courage of their convictions. In our experience, great companies are not usually the result of playing by the same set of rules that everyone is following today, but of coming up with your own set of rules from the ground up based on the first-principle problem that you're focused on. This usually requires a much greater amount of mental effort and logical discipline, a desire to uncover and understand fundamental truths, a healthy outsider’s perspective and contrarian streak, and the ability to be comfortable with uncertainty.

First-Principle Problems

A first-principle problem is a problem based on a basic, foundational proposition or assumption deduced from fundamental truths and direct observation, and not from any other proposition or assumption.

Having a valid first-principle problem is, alongside the founding team, the most important thing we look for in a potential investment. In fact the team and the problem they're working on are usually so interrelated that we find separating them into two distinct concepts is somewhat misleading. In our experience great founders will already think in ways that will make them only want to work on solving first-principle problems.

Without a true first-principle problem to help define and shape its vision, a company will often end up without a clear sense of direction in a chronically leaking boat. In the words of Albert Einstein, one of the greatest problem solvers of all time, “the formulation of the problem is often more essential than its solution.”

Markets

Early stage investing is an inherently risky proposition. In a business where returns tend to follow a power law distribution, this requires us to look for large markets where a significant amount of value can be delivered by solving the problem at hand.

That said, it's important to note that we primarily look at the breadth and depth of the problem a company is solving, rather than the economic size of the market today. We've found that great companies often start by focusing on small, first-principle problems that were not always obviously good businesses at the time.

Portfolio