The goal

My impression is that many people who make investments (especially angel investors) don’t have a thorough systematic process that they follow when considering people/ideas at each stage in their funnel, especially people who haven’t yet gotten traction.
I want to have a page/process I can point to when reaching out to investors to explain why I think I would be worth giving money to.
- Example: I once reached out to an angel about some ideas I wanted to work on, and I felt a little frustrated when he said, “Keep me posted if you build any of them out more.”, because I knew that it could take a tremendous amount of my free time to build out the ideas, making it very risky in terms of life-lost, whereas if I was able to replace my normal working hours with work on my ideas, I could still enjoy some free time, making it less risky to work on each idea, and it would be a lot easier to stay motivated to work on the idea for however many months it would take to get its features fleshed out.

Summary / guiding ideas

You’re trying to evaluate two things:
- What’s the expected value of investing in this particular founder/idea in terms of the result of this particular idea?
- What’s the expected value of investing in this particular founder in terms of the other ideas they might work on and have you invest in, if this project didn’t work?
Evaluating the person/people:
- Warren Buffett said you want to look for three things: intelligence, energy, and integrity.
Evaluating the ideas:
- Ask the founder what other ideas they have so that you can get a sense of what else you could try together if the first idea didn’t take off.
- Consider whether the idea will be so expensive to test that the founder(s) will only get one shot before they need more money.
- Determine whether you’d be interested in giving the founder(s) more money in the future for other ideas even if this idea failed (based on how expensive the ideas are to try).

2011.03 - AVC - Passing on Airbnb
- We couldn't wrap our heads around air mattresses on the living room floors as the next hotel room and did not chase the deal. Others saw the amazing team that we saw, funded them, and the rest is history. Airbnb is well on its way to building the "eBay of spaces." I'm pretty sure it will be a billion dollar business in time.
  We made the classic mistake that all investors make. We focused too much on what they were doing at the time and not enough on what they could do, would do, and did do. I am proud that our portfolio is full of companies where we saw the vision before other investors did and backed a great team. But we don't always get it right. We missed Airbnb even though we loved the team. Big mistake.

TODO: Search through the tweets of VCs/angels to find their thoughts on this topic.
https://twitter.com/sama/status/1289609927657365506
- Giving capital to promising people “too early” in their career is a great idea with much further to go, and the power law provides an interesting way to finance it.
- YC is a great example. You can imagine taking that further—giving $25k to the smartest and most determined 100,000 people you can find each year to work on whatever they want, in exchange for the right to invest in their next startup. A country could make the economics work.
- Giving 10 years of “tenure” to a group of 20 super promising 22 year old researchers finishing up undergrad is not that expensive relative to the value it would likely create, and there seem like a bunch of ways to capture a part of it.
- Same thing for high-potential artists in exchange for some percentage of future sales.
- Income sharing agreements seem hugely better than charging tuition, for the obvious reason of alignment. Current versions seem one iteration away from a transformative idea.
- And lots more. If I were not so busy with AI, I’d be very tempted to explore the craziest-sounding ideas in this direction I could think of.