Early stage investing is hard. Who would’ve had the foresight to see that a taxi cab app would become a universal transportation service or that a multi player online game would become what everyone uses for chat at work?
If there's one lesson I've taken away from early stage investing, it's that predicting the future is a fool's game. While sometimes you can see a rough silhouette of the future in the early days, more often than not the final form is very different than what you expected.
That's why an oft repeated slogan in early stage investing is that it's not really about the idea, but more about the people. Find great people, put the blinders on and just invest without overthinking it. Ideas are easy to change, but people are not.
While I generally ascribe to this philosophy, I think it's worth being slightly more specific. "Investing in great people" is vague and subjective. What is great? What one person calls great can be trash to another.
What I find more useful is to expand the idea of "investing in great people" to "investing in great people with great problem founder fit".
Problem founder fit is a unique thing but you know it whewn you see it. The founder is deeply obsessed with the problem (notably not the solution!) and will stop at nothing to solve it. If their company failed, you know the next day they would start over and try again.
But it's not just an obsessive desire that makes great problem founder fit. The founder also needs to have the requisite skills to solve that problem. ie if a founder is obsessed with gene editing but has no science skills, it will likely be pretty hard to build a successul gene editing company.
It's easy to identify, but hard to find. In practice I think it's actually very rare. Sometimes you meet great founders but unfortunately without great problem founder fit. Sometimes you meet founders with great problem fit but aren't the right founders to tackle it. Threading the needle is tricky!
When you do find it though, it's a magical thing. I always say that David at Retool is a great example. He was a lifelong developer, had built internal tools at Palantir, and you could tell that he had the juice. Founders like David you should insta-fund.
Sometimes you meet great folks without problem founder fit but they seem like exceptional founders. The argument here is that even if it's not this startup, the next startup will be good, so you should still fund them. I've fallen victim to this myself and while I've gotten lucky here and had it work out, I'd say that I think this happens far less often than you might think. If there really is an exceptional founder, you should probably fund them no matter what but oftentimes it's just the heat of the moment and worth waiting for real problem founder fit.