Sam Altman on startup investing:
I’ve been thinking a lot about what [seed stage] investments have in common, and what about them was different from other investments. The most striking observation is that, in my experience, the “hot seed rounds” that everyone is fighting to get in are anti-correlated with very successful investments…For all of the really good seed investments I’ve made, other investors I respected thought they were bad ideas.
Great companies often look like bad ideas at beginning…[but] being contrarian and wrong is still bad—you have to be contrarian and right. I think the only takeaway about what other investors think is that you should ignore it.
To be clear: I don’t think seed investing is random. Far from it. I just think it’s really important to think independently and take the time to really get to know founders and understand businesses instead of just following other investors.