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There is a common saying from investors: “I want to invest in the best companies.”
I believe that this mentality results in backing cookie-cutter opportunities that are likely 10x more expensive (e.g., Stanford CS, previous exit, etc.) and lead to mediocre outcomes.
Using a billion-dollar company that I will not name as an example, I caught up with an investor last week who said that when he got on the first call with the founder several years ago, he was shirtless and smoking a cigarette.
That investor and every other investor passed for the right reason, but they did not make money...so how do you get comfortable with the "ugly parts" of an investment?
Maybe I am more comfortable with 1 or 2 things being off because I grew up like this myself - middle-class immigrant family, public school education, corporate job - things that one might think would not lend themselves to someone being a great investor…but I still have done well in my career despite people not believing in me for a very long time, and perhaps I am more accepting of that in others because I know how it feels to be the underdog with something to prove.
Perhaps this is why I sometimes think that “every deal has a price” - of course that’s a stretch and not true, but there is something to be said about “non-consensus and right” deals (where you make the most money) having something off (e.g. founder, structure, thesis, geography, etc.) that makes most investors say no.
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