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This letter completely misses the point. The point of any long term investment is what is reversible and what is not. Lets look at the three pillars: 1) Team

This letter completely misses the point. The point of any long term investment is what is reversible and what is not. Lets look at the three pillars: 1) Team - completely reversible. Hence not important. 2) Product - completely reversible. Team can change the product architecture given a strong demand from the strong market. 3) Market - not reversible. Yes, a pivot is possible, but than the company is basically a new venture. To sum up. Market (the idea) is the only thing that counts.

frntier 7y ago
Thank you for the constructive feedback. Let me explore three responses. First, and what will seem like a semantic argument, it is not a matter of reversibility/irreversibility. It is a matter of substitutability (i.e. whether you can substitute the founding team, whether you can substitute the technology/product, whether you can substitute the market). In every instance of a pillar being substituted, the venture would essentially change. Second, each pillar is substitutable. The sweet-spot hypothesis put forward in the newsletter does not argue that each cannot be substituted. Rather, those companies which fall in the sweet-spot are those which require no substitution of any of the pillars. Of course, very early-stage cos may not have got the product or the market (lack of PMF) and may not have the core team (hence, the need to hire); but, this does not mean the pillars need to be substituted (or 'reversed'). Finally, the sweet-spot hypothesis does not dismiss the need for a primary filter. It is highly unlikely that you will find a 'perfect' investment. The latticework of theses and heuristics explored throughout the newsletter aims to identify the risk factors of an investment. If one of the theses/heuristics in your latticework is a primary filter- and that filter is not present- you can avoid that investment. Your primary filter- it seems- would be market and later in the newsletter we identify that this is Scott Kupor's too (see Question 3 in the newsletter).
- streetcat1 7y ago
  So are you a VC? My primary filter is actually more specific than just the market. It is market timing. You have to start around two years before the market starts the growth stage.
  - frntier 7y ago
    Sure- later in the newsletter we explore Timing. Yes- part of timing involves Rogers' Bell Curve (i.e. the technology adoption curve).

frntier 7y ago

Thank you for the constructive feedback. Let me explore three responses. First, and what will seem like a semantic argument, it is not a matter of reversibility/irreversibility. It is a matter of substitutability (i.e. whether you can substitute the founding team, whether you can substitute the technology/product, whether you can substitute the market). In every instance of a pillar being substituted, the venture would essentially change. Second, each pillar is substitutable. The sweet-spot hypothesis put forward in the newsletter does not argue that each cannot be substituted. Rather, those companies which fall in the sweet-spot are those which require no substitution of any of the pillars. Of course, very early-stage cos may not have got the product or the market (lack of PMF) and may not have the core team (hence, the need to hire); but, this does not mean the pillars need to be substituted (or 'reversed'). Finally, the sweet-spot hypothesis does not dismiss the need for a primary filter. It is highly unlikely that you will find a 'perfect' investment. The latticework of theses and heuristics explored throughout the newsletter aims to identify the risk factors of an investment. If one of the theses/heuristics in your latticework is a primary filter- and that filter is not present- you can avoid that investment. Your primary filter- it seems- would be market and later in the newsletter we identify that this is Scott Kupor's too (see Question 3 in the newsletter).

streetcat1 7y ago
So are you a VC? My primary filter is actually more specific than just the market. It is market timing. You have to start around two years before the market starts the growth stage.
- frntier 7y ago
  Sure- later in the newsletter we explore Timing. Yes- part of timing involves Rogers' Bell Curve (i.e. the technology adoption curve).