RAW TRANSCRIPT:

SLOPER: Those are the guys that they want to be [unclear 0:15:47] in girls, that they want to be associated with. It’s no coincidence.

FLETCHER: Will it be politically correct there.

SLOPER: I try my best.

FLETCHER: The question is why do more agents… we got the Low Information Agent, we know who they are, these are the people who get into the real estate, they want the hopes and dreams, so Till has a good point about this. He was asked the question why do so many investors spray and pray instead on focusing on just five to seven companies in each fund like you do at founder’s fund.

Do you have any rules you follow or tips for those who want to invest in early stage ventures more intelligently? He answers the question, “I think people would say that spray and pray because some kind of portfolio theory, some kind diversification theory.” If that’s true, that might work. I don’t actually believe that’s true.

I think the real reason people spray and pray in their investing is because there lacking any conviction. And perhaps they’re too lazy to really spend the time to try to figure out what companies are ultimately going to work. Now the same thing could be said about your marketing strategies, about positioning strategies.

In here we have agents, founders of their own company, just like Peter Thiel, they’re going to invest in something why do more not take the time to figure out which strategies are ultimately going to work, and so Peter he jumps back in, “I think it’s terrible to treat, founders of companies as lottery tickets.” And you think about how agents, a lot of them treat their business, he goes on to say, “I also think it’s really bad as an investor, I also think it’s really bad as a business owner.” Once you say there is small probability of a pay big pay off, small number times big number, normally equals a smaller number.

“Once you’re thinking in terms of lottery tickets, you’ve already psyched yourself into writing checks without thinking, and therefore, losing money. I think the anti-lottery ticket approach… is to try to be concentrated, because that forces you to have high levels of conviction.” Now, I’m hearing him say this. This is a guy, how he articulates his idea, you can tell he’s on an entirely different level of thinking. And you ask yourself, he’s a billionaire, “How did he get to this different level?” and so he was asked another question.

As I was listening to this there’s insight. You studied philosophy as an undergraduate what this philosophy have to do with business and how has philosophy helped in your investing and in your career today? Here is where he picks up, “I’m not sure how much the formal study of philosophy matters but I think the fundamental philosophical question is one that is important for all of us. It always is this question of, ‘What do people agree with merely by convention and what is the truth? This is always the fundamental distinction inside.”

There is consensus of things that people believe to be true, and maybe that those conventions are right, and maybe they’re not. And we never want to let convention be a shortcut to truth. We always need to ask, “Is this true?”

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