Intellectual Honesty
I recently had a discussion with a mentor about the notion of being intellectually honest. Of late, I have been wondering if technology growth/venture investing prevents you from truly being intellectually honest. There are several aspects of this job that I struggle to fully understand.
How much of investing is just investing in logos? The presumption here is that the companies in our consideration set are well-regarded category leaders. Maybe an investment in OpenAI is just what my firm needs from an optics perspective. I know that in the shorter-term, there is sizable TAM to justify such an investment. What happens when you cannot find an explanation for a TAM expansion anymore? This is certainly why model providers like Anthropic are moving up into the application layer. Regardless, is it an intellectually honest process to underwrite a deal in a company that you just know will be as big as the numbers need it to be (even if that isn't clear now)?
The way I've observed at least some of these deals happen so far is that when a startup notifies that it's raising, there is a full sprint from the investors side to do everything possible ahead of that possible term sheet signing. In part, I think it's exciting to feel the adrenaline rush. However, I believe corners can get rounded to meet with these sometimes artificial timelines. I am candidly inexperienced, which certainly explains away some of this feeling. I can't attribute it entirely, though. Therefore, is it intellectually honest to let the FOMO on a deal compel you on the margin to do it? I think so. The counterexample here is that FOMO never is a force on the margin, but I think that is too difficult to speculate on from a broader perspective. The case I'm making is that if you work in tech investing, it's hard to be intellectually honest 10/10 times.
Do investors really like all the founding teams as much as they say they do? I'm not sure, but I can't imagine I would like all the people I should be investing in (if I truly cared about my LPs and my platform). I don't like the aspect of having to pretend to like certain founding teams as I invest in their company. That's not honest to myself. I get that as an investor you want to invest in the people you perceive to build a company best. There is no precondition of liking the team. However, my issue is that being in venture can require you to project more conviction or warmth than you actually feel. What I struggle with the most is that it seems like you may have to perform enthusiasm beyond your internal state.
None of this is intended as a critique of venture as an industry. I'm treating it more as a reflection on whether certain environments -- especially ones built on narrative, competition, and asymmetric upside -- make perfect intellectual honesty structurally hard. Maybe the real question isn't whether you can be intellectually honest 10/10 times. Maybe it's whether you can build habits that keep you honest enough -- about logos, about FOMO, about founders, and about yourself. I wonder if investors in other asset classes struggle with similar issues. If you're reading this, I'd love to hear.