Investing in tech
Seed investing in tech is different to seed investing in almost anything else. The returns and the timeframes are just so different. As a seed investor in high tech your job is to optimize for one thing and for one thing only which is:
being in the winning companies.
I only fully internalized this when hearing Ron Conway speak. His point was that when you make 1,000x returns on your winners it only matters that you have 999 or fewer losers. When asked how he felt about frothy valuations he said he wasn’t too fussed. He observed that valuations go up and down with the heat of the market but don’t affect the logic of the investment itself. It never makes sense to stay out of a probable winner simply because the valuation higher than you prefer. Tech is not like property where investing over the market rate means you can never profit. Tech multiples are huge. Making 500x rather than 1,000x is neither here nor there. The only thing that matters is making sure you’re on the mega-ships when they dock.