Why this matters?
- This was just too beautiful of a “why” post not to highlight. In a world where risk and being contrarian are encouraged, the truth is that the majority of the time it’s suppressed. The reality of delivering returns to LPs hardly emboldens risk and contrarianism, and it’s fair to suggest that the traditional LP model has some serious flaws in this regard. It speaks volumes to the state of the model right now, that truly being contrarian with your mission statement and strategy can make you stand out.
- However, it’s not just the LP and returns reality that plays a part in this. The fact is, you need others to believe you are right to attract co-investors, follow-on investors, hell, customers (remember them?). The trick is not going right when everyone else is going left, it’s knowing when to be right. In my opinion, a winning strategy for picking winners combines both approaches. Go with the crowd part of the way, then turning around and running in the face of conventional wisdom, in the right moment.