- The speaker welcomes the audience and gives some logistical information about parking and communication channels.
- They mention some technical issues from the previous day but assure that they have been resolved.
- Feedback from participants about the need for more community and networking opportunities is acknowledged.
- The speaker emphasizes the importance of not following other investors and making unique investment decisions.
- The topic of the day is making smart investing decisions and the speaker expresses their excitement to learn from the upcoming presentations.
- The first presenter, Dalton Caldwell, will discuss founder meetings and the investment process.
- The importance of having a process and face-to-face meetings in making investment decisions is highlighted.
- A basic process funnel for investment decisions is explained, including leads, intros, qualification, decision making, and closing the deal.
- The speaker advises having a budget and predetermined investment amount to avoid wishy-washy decisions.
- The need to have a clear process and pass rate for the investment process is emphasized.

- When deciding how many companies to meet with, consider the pass rate of your process funnel
- Having a clear decision-making process is crucial for making investment decisions
- Avoid wasting time by doing endless meetings without making a decision
- Once you commit to investing, do not back out as it can have negative reputational effects
- It is beneficial for investors to have different investment criteria rather than following groupthink
- Consider criteria such as team, market size, traction, expertise, and investment terms when making investment decisions
- Personal conviction is important for successful investing
- Avoid making half-hearted commitments or asking for options in a round if you don't believe in the company's ability to raise funds
- Be willing to look stupid or be wrong in order to make potentially successful investments.

- Conviction is important in decision-making and creating a portfolio based on reputation is not ideal.
- Anti-patterns in decision-making include being slow to respond, constantly meeting with others instead of making a decision, and flip-flopping on decisions.
- Meetings should be done in person and should be scheduled in a non-painful way. Being on time and picking a convenient location is important.
- Start meetings with basic questions about the company, team, progress, and funding. Only delve into complex questions at the end of the meeting.
- Trust in the founders is crucial. Gut reactions and feelings of conviction should be considered.
- Bad meetings include investors being distracted by their phones, making the meeting about themselves, and giving excessive advice.
- It is important to communicate decisions clearly and not ghost the founders. Saying no is a normal part of the job and should be practiced.

- The author suggests that angel investors should not avoid saying no and should instead communicate their conviction and excitement when saying yes to an investment opportunity.
- The author emphasizes the importance of following through on investments and not ghosting the founders, as it can lead to complications and being locked out of the investment round.
- The author advises against introducing unnecessary complications or additional requests when making a small investment, as it can hinder the process and lead to pushback from founders.
- The video then transitions to an example investor meeting, where the author asks questions to gain a deeper understanding of the company being pitched.
- The company being pitched is Necto, which helps people create their own internet service providers (ISPs).
- The author delves into the details of the company's current state, including the number of customers and the location of their ISP.
- The author explores the company's big idea, which involves providing software and support to help individuals start their own ISPs without the need for significant financial investment.
- The author asks about evidence of the company's potential success, and the founders mention that they have signed on franchisees in multiple cities.
- The author expresses excitement about the concept and compares it to the business models of Uber and Airbnb.
- The founders explain that their inspiration for starting the company was the frustration with the current state of internet service and the desire to provide a solution.

- The problem of lack of competition in internet service providers (ISPs) is mainly an issue in rural areas and suburbs with regional monopolies.
- Starting an internet provider is difficult, leading to limited competition in these areas.
- The company discussed is not for everyone, but it may appeal to those interested in ISPs and taking on Comcast.
- It is important to ask the right questions and find something to get excited about when considering investing in a company.
- Losing faith in a company as an investor can be complicated, and it depends on the specific situation.
- When saying no to a founder, it is important to be honest but not overly negative, focusing on the lack of belief in the current strategy.
- Asking founders for a deck or data before a meeting may not be helpful, as it can feel low ROI for the founder and may be better to meet first.
- Milestone-based financing may not be the best option for small checks, and it is better to keep the deal simple and leave the option open for future investments.
- Being physically present for deal flow can be beneficial, especially if it is a primary focus. Video calls can be used for smaller checks, but flying to meet founders in person is recommended.

- It is suggested to fly around and meet with potential investors regularly to maintain a strong deal flow.
- It is important to be locally present to provide support to investors.
- Some investors only attend demo days and write checks, which is also a valid approach.
- When an investment is not performing well but not failing, it is recommended to ride it out and see if it turns into something big.
- It is not advisable to force a company to sell if it has a long time horizon.
- When discussing competition with founders, it is important to ask neutral questions and gauge their response.
- If you have information that founders don't know, it is generally better to keep it to yourself.
- If you're unsure about investing in a company that hasn't received much interest from other investors, it is best to be honest with the founders and express your concerns.
- It can be difficult to decide whether to invest early or wait for more funding, as there is a risk of missing out on a successful company.
- It is recommended to wire the investment money once committed, as there have been cases where investors back out.
- YC has a complex process and continuously reviews their decisions to improve their investment strategy.
- The team is considered the most important factor in investing, and lessons are learned through trial and error.

- The speaker invests in startup ideas and sometimes loses money due to difficult founders or poor communication.
- They believe that learning from these experiences builds confidence as an investor.
- The speaker emphasizes the importance of experiencing both winners and losers to feel the pain and learn from it.

- The speaker welcomes the audience and provides logistical information.
- Technical issues from the previous day have been resolved.
- Feedback about the need for more community and networking opportunities is acknowledged.
- The importance of making unique investment decisions is emphasized.
- The topic of the day is smart investing decisions.
- The first presenter, Dalton Caldwell, will discuss founder meetings and the investment process.
- A basic process funnel for investment decisions is explained.
- Having a budget and predetermined investment amount is advised.
- The need for a clear process and pass rate is emphasized.
- Consider criteria such as team, market size, and expertise when making investment decisions.
- Personal conviction is important for successful investing.
- Anti-patterns in decision-making include being slow to respond and flip-flopping on decisions.
- Meetings should be done in person and start with basic questions.
- Trust in the founders is crucial.
- Communicating decisions clearly and not ghosting founders is important.
- Angel investors should communicate conviction and excitement when saying yes to an investment opportunity.
- Avoid introducing unnecessary complications or additional requests when making a small investment.
- An example investor meeting with the company Necto is discussed.
- The company's big idea is providing software and support for individuals to start their own ISPs.
- The problem of lack of competition in ISPs is discussed.
- Losing faith in a company as an investor depends on the situation.
- Milestone-based financing may not be the best option for small checks.
- Being physically present for deal flow is recommended.
- It is important to be locally present to provide support to investors.
- Riding out an investment that is not performing well is suggested.
- When discussing competition with founders, ask neutral questions.
- It is best to be honest with founders if unsure about investing in a company.
- Deciding whether to invest early or wait for more funding is a risk.
- Wiring the investment money once committed is recommended.
- YC continuously reviews their decisions and learns from trial and error.
- Experiencing both winners and losers builds confidence as an investor.

- The video is about slides on a website
- The speaker greets the audience and tells them to look at the site
- The content of the slides is not mentioned

- The speaker apologizes for technical issues with the live stream but assures that all slides will be available on the website within 24 hours.
- The next presenter is Paul Buchheit, an investor and partner at YC, who will talk about his experiences and patterns in investing.
- Buchheit believes that good startup ideas often appear bad because big companies would have already pursued them if they were obvious.
- He shares his experience with Google, where he joined because he was a user and because they were doing cool things with Linux.
- Buchheit didn't expect Google to be a successful business but went in to learn about startups.
- He eventually left to get back involved in startups and joined Y Combinator's Summer Founders Program in 2005.

- The speaker first got involved with Y Combinator after being intrigued by Paul Graham's essays and cold emailing him for a chance to help out.
- The speaker's first angel investment was in a YC company called Wufoo, which was initially mocked but later had a successful exit.
- Another investment was in Justin TV, which struggled initially but eventually pivoted to become Twitch and was sold to Amazon for a billion dollars.
- The speaker emphasizes the importance of investing in founders who are better than themselves and highlights the success of the team at Facebook as an example.
- The speaker mentions the challenges of finding great founders and gives the example of Meraki as another successful investment.

- The speaker visited a startup called Meraki that had impressive hardware but had not raised any money, which intrigued the speaker.
- The speaker contrasts Meraki with Juicero, a company that spent $100 million on a product without talking to customers, which the speaker considers a bad approach.
- The speaker mentions Cruise, a self-driving car startup, and how the founder was willing to take on a seemingly impossible challenge and succeed.
- The speaker also discusses Boom Supersonic, a company building supersonic jets, and praises the founder's ambition and ability to clearly communicate the business idea.
- The speaker encourages investors not to be afraid to invest in non-software companies and mentions the potential for big exits in the bio industry.
- The speaker admits to missing out on investing in Dropbox and Airbnb due to poor investor behavior and prioritizing their own startup.

- Moving slowly in investment decisions leads to adverse selection
- Investing based on a good price or out of pity does not lead to profitable returns
- Cynical ideas and investments based solely on impressive numbers have not been successful
- The checklist for investing in startups includes traits such as clear communication, fast execution, accomplishing a lot with limited resources, implausibly ambitious or frivolous ideas, attracting top talent, and making something people want.

- The speaker funded a food delivery company because he wanted food for himself
- Determination is the most important trait in a startup founder
- Founders who have easy backup plans may not be fully committed to their startup
- Founders who have never failed may be scared of failure and may not stick with their startup
- The speaker invested in a group of founders because they had a simple and unpredictable idea and were willing to take action quickly
- The speed at which a startup moves forward is important for success
- During interviews, clear and concise communication is crucial in determining whether to fund a company
- Most investments will not work out, and overthinking can lead to missing out on good deals.

- The video is about slides on a website and the speaker apologizes for technical issues with the live stream.
- Paul Buchheit, an investor and partner at YC, talks about his experiences and patterns in investing.
- Buchheit believes that good startup ideas often appear bad because big companies would have pursued them if they were obvious.
- He shares his experience with Google and why he joined the company.
- Buchheit emphasizes the importance of investing in founders who are better than themselves and gives examples of successful investments.
- The speaker encourages investors to not be afraid to invest in non-software companies and mentions the potential for big exits in the bio industry.
- The speaker admits to missing out on investing in Dropbox and Airbnb due to poor investor behavior.
- Investing based solely on impressive numbers or out of pity does not lead to profitable returns.
- The checklist for investing in startups includes traits such as clear communication, fast execution, attracting top talent, and making something people want.
- Determination and the speed at which a startup moves forward are important for success.
- Most investments will not work out, and overthinking can lead to missing out on good deals.

- The danger of coming up with complex theories is that investors can talk themselves out of good deals.
- Companies can fail for various reasons, some of which may not be apparent.
- Overlearning from past mistakes can cause investors to miss out on good opportunities.
- Most ICOs are scams and unlikely to succeed.
- Having too much money can be a liability for startups as it can lead to a disconnect from reality.
- Determination is an important quality in founders, but it is difficult to determine during the investment process.
- It is important to avoid overestimating one's own knowledge and experience.
- Unlearning what one thinks they know can be necessary in order to make good investment decisions.

- The class is halfway through and the remaining presentations will focus on investing perspectives from outside of YC
- Questions about ICOs, SAFs, and crypto should be saved for day 4 when the CEO of CoinList will be presenting
- The next presenter, Michael Seibel, talks about his experience with angel investing and his lessons learned
- He emphasizes the importance of writing a big enough check and creating a system to invest quickly
- He also mentions the "FOMO slash friend rule" where if a friend's company has potential, it's wise to invest
- When investing in YC companies, it's important to do prior research, reach out to the founders, and consider investing 6 to 12 months after demo day if necessary
- The most hyped investment on demo day is often not the best one

- The speaker believes that the crowd at demo day is not as smart as it seems and that investors often hype up their investments.
- The speaker mentions that their company was not the best investment in their batch and that another company called Gusto was a better choice.
- The speaker learned that writing bigger checks leads to bigger returns and that conviction is important before making larger investments.
- A+ investors can have a significant impact on a company, but they are rare.
- The majority of YC companies will fail, and only 20-30% will raise follow-on funding post-demo day.
- The speaker missed out on investing in some big companies due to being on the fence and being busy with their own companies.
- Being a great investor requires hard work and conviction.
- Party rounds do not scare the speaker, but unequal equity splits and founders selling a large portion of their company early do.
- The speaker models out a series A and series B with 20-35% dilution and considers the founder's equity after those rounds.
- YC often helps companies clean up their cap tables and convince previous investors to change the company's setup.

- The speaker discusses whether large companies are better at identifying talent now compared to the past
- Startup founders are often unemployable, but still have potential for success
- The speaker believes that over-intellectualizing decisions can be counterproductive
- YC has an open application process and values talent over networking skills
- YC grades itself internally based on the experience of the batch and the success of companies in raising Series A funding
- The speaker emphasizes the importance of learning from and helping YC alumni
- The speaker warns against investors who claim to be A-plus investors based solely on past success, as luck plays a significant role in investing.

- Complex theories can lead investors to miss out on good deals.
- Overlearning from past mistakes can prevent investors from seizing opportunities.
- Most ICOs are scams and unlikely to succeed.
- Having too much money can disconnect startups from reality.
- Determination is important in founders, but difficult to determine during investment.
- Avoid overestimating knowledge and experience.
- Unlearning what is thought to be known can lead to better investment decisions.
- Remaining presentations will focus on investing perspectives outside of YC.
- Questions about ICOs, SAFs, and crypto should be saved for day 4.
- Michael Seibel shares his experience with angel investing and lessons learned.
- Importance of writing big enough check and investing quickly.
- "FOMO slash friend rule" advises investing in friends' potential companies.
- Prior research, reaching out to founders, and investing after demo day are important when investing in YC companies.
- The most hyped investment on demo day is not always the best one.
- Conviction and writing bigger checks lead to bigger returns.
- A+ investors have a significant impact on companies but are rare.
- Majority of YC companies will fail, and only 20-30% will raise follow-on funding.
- Being a great investor requires hard work and conviction.
- Unequal equity splits and founders selling a large portion of their company early are concerning.
- YC helps companies clean up cap tables and change company setups.
- Large companies may not be better at identifying talent compared to the past.
- Startup founders are often unemployable but have potential for success.
- Over-intellectualizing decisions can be counterproductive.
- YC values talent over networking skills in its application process.
- YC grades itself internally based on batch experience and success in raising Series A funding.
- Importance of learning from and helping YC alumni.
- Luck plays a significant role in investing, so claims of being A-plus investors based solely on past success should be questioned.

Startup Investor School is a free, 4-day course designed to educate early stage investors interested in investing in startups. We'll cover the fundamentals of investing, from investing instruments to legal and accounting basics to evaluating startups and managing deal flow. Our hope is that more people, from a wide range of backgrounds will consider investing in startups and that those who do will be better at it.

The course will run from March 5th, 2018 through March 8th, 2018. The course will be offered live online and in-person in Mountain View. All of the course content, including the curriculum, lectures and other resources will be made available to the public once the course ends.

We have a lot to do today, so I'd like to get my way, my part out of the way as quickly as possible.

Good morning again and welcome to our second day of Startup Investor School.

My role is a little bit more but not much more than telling everyone not to park over there.

Apparently, there's a lot of parking behind 335.

There's parking here, and there's parking on the street.

Or there's this great services called Uber and Lyft.

So we had our startup growing pains yesterday.

And the live stream was almost invisible.

Maybe that was actually a feature since I was the first person talking and it got better after that.

I can at least testify to the fact that the coffee is now hot.

So as a reminder, can you just put the, as a reminder, if you have questions out in live stream world, you can tweet them to YCSIS or with hashtag YCSIS.

For those of you who are here in person, I think you've all been invited.

There's a Slack channel for just communications between you guys, and a Slack channel for questions.

You can ask questions and then upvote those questions and we will hopefully get to some of them time willing.

I will also go through all the questions afterwards and try to do a piece answering the questions that I can answer.

So there will be wine and beer on Thursday.

Small amount of time for networking for you guys.

And I don't know how much time, but I guess it depends on how much wine and beer there are for that.

There was some really great feedback, helpful feedback from you guys.

Probably the biggest thing everyone said is, boy, we'd really like to have more community and we'd really like to be able to network.

Mark and a few others sent me more detailed information about how we can do a better job of helping you all network.

So far, we have a Slack channel, And we'll think about that.

I don't know how much progress, how much change we'll make during this version of Startup Investor School, but we really appreciate that feedback.

And we obviously take it really seriously.

I will point out, as Sam said yesterday, that 1 of the worst things you can do as an investor is to be sheep.

The best investment decisions you'll make are the ones that other people aren't making.

Like when people come by with really stupid ideas, like having air beds in someone's home after a conference.

No one's going to invest in that 1 except for you.

And then you'll make a billion dollars, and then you can laugh.

So we covered a little bit about Sam's introduction and then a lot more about SAFEs and how people do startup investing.

We're going to cover more today on the how, so I'll get back to that in a sec.

Just a quick word on equities versus safes.

It's a very complex, on the surface it seems like a simple topic.

As you heard yesterday, it's actually rather complex.

Well, because it's simple, It's easy, it's fast, and it's cheap.

It's sometimes hard to know what happens with the dilution.

AngelCalc is linked on the site, But we'll also put up, we don't have it up yet, but we will put up a spreadsheet for those of you who are more comfortable with old-fashioned tools.

And you'll be able to model cap tables and conversions.

But we actually do have a spreadsheet that helps you figure that out.

So dilution can be a little weird to understand, and it is important to understand it both for founders and obviously for investors as well.

So with that, we're going to get to the topic today.

And I am actually really excited myself to listen today because hopefully I'm going to learn something about how to be a better investor because I have made many mistakes.

And if you guys want to corner me later, I can tell you about a few dozen mistakes that I have made.

So the topic really today is overall how to make smart investing decisions.

All you have to do is make correct predictions about the future.

Well, the way you start off deciding whether to invest is you find companies you meet, you want to, you think you're interested in, and meet with them.

So our very first presenter is my friend and partner Dalton Caldwell, who is the founder of a couple of companies, I-meam and App.net.

He's been a partner at YC for 4 years now.

He my favorite quote from Dalton, because it's 1 of the few I could find, but it's a good 1, is if someone tells a coherent story with the beginning, middle, and end, explaining what their product is, who wants it, what it does, Just that.

So here's Dalton Caldwell to talk about founder meetings.

So I'm going to be talking about founder meetings and process.

So this is the, we're going to break down how you think about making investments and how tactically to do it.

And we have lots of examples of maybe not the best approach, the naive approach.

Even if your process is I have no process, I've never done this before, and I don't know what I'm doing, That is in fact a process, I would suggest.

So I would encourage you and what we're going to talk about over the next few slides is to think about how you make a simple, simple, simple process for yourself just to get started with on how you make investment decisions, right?

How you choose who to invest in, how much to invest, all this good stuff, it's good to have the process.

It's good to have some sense of what your process funnel is, and I'll talk about what that means in a second.

And I would argue 1 of the most important parts of a process is the face-to-face meeting.

The face-to-face meeting is pretty much where everyone that's done a lot of investing, that's the meat and potatoes of how you tend to make investment decisions.

You do a bunch of qualification and then the face-to-face meetings are where you decide whether you're actually going to invest or not.

So we'll talk a bit about face-to-face meetings as well.

OK, so here's a very basic process funnel.

This is people that you might want to invest in.

It's maybe things that you read in the press.

It's people you see at Demo Day, very straightforward.

These are folks that you actually have some introduction to, and you have some exposure to the company.

For instance, is this even in an industry that I'm interested in?

Is this something that I'm excited about funding?

Does this fit with whatever kinds of companies I said to myself that I wanted to fund?

Then you have some decision making process, which is how do I decide whether I'm a yes or a no, which is actually quite tricky.

And then finally the last bit is actually making the investment and closing the deal.

So again, very straightforward, just like a sales funnel if you've done sales before, but it's worth thinking about your investment process this way.

Because again, If you're not, if what you're doing is saying, I don't know, I'm going to take some meetings and maybe, and you have a wishy-washy approach, you're probably not going to make optimal investment decisions.

So here's an example of a process funnel.

The first thing, it's actually good to think about what your budget is.

I don't know if other folks have already talked about this or will talk about this, but if you don't know how much you want to invest and what your budget is, you're probably going to be making suboptimal decisions.

It's good to think here's how much I'm willing to invest across a bunch of startups beforehand versus being like, well, you know, I have some money saved away and I was thinking about maybe doing something else with it, but I'm going to meet with some startups and maybe if 3 or 4 of them can convince me it's good, then I'll invest in them.

That's a really tricky thing to do if that's the way you think about it because you're going to end up negotiating against yourself and there's a good chance you'll end up in this wishy-washy maybe land and wishy-washy maybe land is just not a great place to be as an investor.

So say you decide, okay, I have a 500K budget per year that I'm going to allocate to this asset class, and I've talked to my wealth manager, whatever, and everyone's on board with this.

I've talked to my significant other, and this makes sense to make this financial decision.

And so the way I'm going to stage out this is do a certain number of investments.

If you're going to do it off YC Demo Day, it's pretty straightforward.

You show up to Demo Day, and you pick the 5 companies you would want to invest in.

But if you don't want to do it through YC Demo Day, you want to allocate it in other ways, put that on a calendar.

And then think about what is the pass rate of your process funnel going to be.

For instance, in this case, that's about picking 5 of your favorite 20, right?

So you probably don't want to meet with 150 companies if you're only going to be making 5 investments, probably not a good use of your time or the company's time.

So you want to do a little bit more on the qualification step.

On the other hand, if you want to make 5 investments and you only meet with 5 companies, probably you're not going to be making optimal investment decisions.

So I would think a little bit, I would work backwards from what your financial commitment to making investments are to how you decide how many leads to qualify and how many meetings to actually do.

So let's talk about how you make a decision once you've gone through this super basic funnel bit.

The most important thing is to have a process in your own mind about how you will make decisions.

You need to negotiate with yourself of What does it mean to make the decision to actually write the check?

What is my burden of proof to be convinced by the founder that I want to invest in their company?

There's some criteria that you should decide ahead of time.

And again, it's good to actually think about these things versus ending up in this wishy-washy land where you're doing meetings and you don't even know what you're looking for.

You also want to think about how many meetings or interactions it will take for you to end up with a yes or no.

Something that we see a lot as an anti-pattern in investor behavior is folks that just do meeting after meeting after meeting after meeting and don't ever make a decision.

And that's actually worse for founders than just saying no.

The investor that just wastes a ton of time and feels like they're just on the edge but never say yes, that's very hard for a founder to deal with that.

So it's actually better off just to figure out what your process is and if you're maybe, that's probably no, tell them no and move along.

That's a much better way to run a process like this.

The other thing that sometimes happens is someone will say yes, but not actually say the amount they're going to commit, or they will say yes and then change their mind.

You know, If you're new, maybe you're not used to making decisions.

But once you make that decision that you say yes and you commit, you are fully committed.

And trying to back out of the deal after committing is a huge faux pas and will have far-reaching negative reputational effects.

So once you reach this decision, you're in and that's that.

So let's talk about what the criteria are to make investments.

It's really good if everyone has different investment criteria.

We want everyone to have different investment criteria.

Otherwise, what's the point of having a bunch of investors that just be there just be a computer that does the math, you feed in the 4 inputs and boom, that's a yes or no and the money goes in.

This is an example of a wisdom of crowds type thing where a bunch of people with different criteria are much more likely to find really interesting outlier companies and generate great returns versus if everyone has precisely the same criteria.

That's definitely part of our investment criteria.

But You can make your own decision about just how important the team is.

How important is it that there are really strong programmers on the team?

How important is it that they have relevant experience in the industry they're in?

How important is it that you have some touch points that someone else you know knows them and vouches for them.

So there's a number of different ways that you can create in your own personal process different criteria around team.

Market size is pretty important to a lot of folks.

For other folks, market size doesn't matter.

If you did a market size on the original Airbnb thing, it'd be very hard to determine what the market of airbeds were, and you would probably say no if you were purely looking at market size.

Similarly, something like Uber, the market size of people calling black cars was very, very small at the time.

And so you could have easily disqualified that just on that criteria alone.

Traction, there's some investors that say I invest when there's no traction.

There's some investors that invest lots of traction.

So think about where you come in on the traction criteria.

The other thing is that a lot of folks decide no on investments if they don't have the relevant expertise.

We have a number of bio companies or hard tech companies at Demo Day.

And a lot of folks just hard pass on all of them because they don't have the relevant expertise.

But it's good for you to know, am I willing to invest in something that I have absolutely no background in or am I just going to stay away from that and stick to what I know?

It's good if everyone has different ideas around that But it's worth thinking about beforehand how much you feeling like an expert in the field matters.

And then finally, the last bit, investment terms.

Some folks say, oh, I only pay very low prices.

Some folks require certain amounts of structure in the deal or certain ownership goals and all the other good stuff.

That's okay if that's what your actual model is.

But if you have no idea here, it's worth thinking about a little bit how much the actual terms matter.

What often happens, I mean, you already heard group think, you'll hear a lot of this again, is the people's actual investment criteria is the thing that everyone else talks about and seems to think is going to work is the thing they want to invest in.

And I would again suggest that this is not the optimal way to make investment decisions.

So the other thing that's not great about groupthink, just to add a little bit more color on that, is it creates nonoptimal returns.

Everyone will just try to plow into the same deal and the company will end up being overfunded if it's perceived by everyone.

And it's actually not super great for the company if it gets overfunded.

Investors tend to get a little bit grouchy if they can't get into the deal and they all want to invest in it.

And as Jeff just mentioned, really good investments are often contrarian or unfashionable or somehow are deeply unappealing to everybody else.

Those are the really good ones, is that you see something that other folks don't, and the fact that it's deeply unappealing is what creates such a great opportunity for you.

And so again, why am I spending all the time bringing this up?

It's worth thinking about what your process is and knowing what it is versus having your process be, I don't know, I'm going to go ask 10 people what they think is good.

And whatever's on their list of what they want to invest in is going to be on my list, too.

And I'm going to do that for everybody and then end up with this meta group think list.

That's how A lot of people, from what I can tell, do it.

Something super important in making investments is having personal conviction.

You have to really believe to make this kind of bet.

You're putting the money in, and you're probably never getting it back.

There is no undo button on making an investment.

And if you do not have the personal conviction, And even when you say yes, it's sort of half-hearted.

You're going to have a very hard time as an investor.

So 1 thing that we hear a lot of, especially for folks that haven't done much of this, is they say, okay, I'm in once you go find the rest of the round.

And this is the cheapest of cheap shots that you can possibly do, because what you're actually saying is I would like an option that's guaranteed in your round, but I do not believe you can actually raise it.

If you prove me wrong and you raise it and all the other investors invest, then I'm in.

And I can understand why, from the perspective of an investor, this feels like a super clever ninja move.

But holy cow, is this not beloved by founders and not great from a reputational perspective.

These are the folks, these are the fair weather friends, these are the folks that didn't actually believe in you And all they want is the right to get in if the deal happens to be hot because everyone else invests in it, right?

And so perhaps you've said things like this, or perhaps this is things that have happened in the past.

I just I wouldn't recommend phrasing this way.

I would just say the honest answer if you're in this situation, which is I'm worried about the financing risk.

But let's talk later if more financing momentum happens.

Because then you're being explicit that the answer is actually no and not like oh, yeah, I'm in just go get everyone Just go raise 2000000 dollars and I'll be the last check in right?

That is not a great move and 1 of the thing that's kind of interesting if you think about investor mentality is you have to be willing to look stupid and be wrong on these things.

If the only investments you make are ones that are super defensible and make sense to everyone and that could never be made fun of because that's such a fantastic business, you're going to be missing out on a lot of investments.

By having the personal conviction that you know why you're investing in the company, you should be okay with the fact that people are like, oh, what companies have you invested in?

Wait, you invested in the air bed company?

Why did you invest in the air bed company?

You have to be willing to take that potential embarrassment that you're like, yeah, I did invest in the air bed company.

This is 1 of the reasons why conviction is so important, versus just creating a portfolio of things that you think seem like that will make you look good from a reputational perspective.

So in terms of some anti-patterns on decision making that we see a lot, 1 of them is just going really, really slow.

Disappearing for weeks, not responding to emails, not following up.

Another anti-pattern is you're not really sure whether to invest or not, so you ask them to meet your friend.

And you can keep doing this over and over and over again.

And that's a way to defer making the decision making process.

The other thing is flip flopping where you're saying yes, and then you're like, oh, actually, how about no or how about you need to do this other thing and you're sort of moving the goalposts over and over again.

As I said a second ago, the way you should think about it is if you're not a yes, you're a no.

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