Imagine you're a VC. Meal prep kit investments are hot. Your investors, the people giving you the money, come and say "how come you don't have the a meal prep k

Imagine you're a VC. Meal prep kit investments are hot. Your investors, the people giving you the money, come and say "how come you don't have the a meal prep kit startup in your portfolio?" Your choices are: 1. Don't invest, and lose your investors to a competing VC firm. 2. Invest, even if you think it's a bad idea. Worst case if it blows up you blew up in a popular way, "I didn't do any worse than our competitors, what do you want?" Thus once something is hot, it gets lots of investments even if the people doing the investing think it's a bad investment. This is the same reason most mutual funds and hedge funds invest in similar ways to index funds: incentives for the fund managers are to lose in a popular way. (This is a variant on the "principal-agent problem".)