The podcast hosted by @APompliano with @m2jr was like a master class in early stage investing.

These are my notes from it, along with my application of @m2jr's principles my three VC-backed experiences and my current bootstrapped company.

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Before I start, I want to make the point that early stage investing is a form of capital allocation. As a CEO, you make thousands of capital allocation decisions. Learning how others outside your domain allocate capital will make you a better allocator.

Now the notes... 2/

invest in the power of the insight

"All I can really evaluate is the power of the insight."

3/

great founders can see the future...they are like time travelers from the future 4

three types of insights:
1. plausible insights (Okta)
2. possible insights ( @pmarca at UofI)
3. preposterous insights ( @elonmusk)

5/

inflection types:
1. technology
2. adoption
3. regulatory
4. belief

inflections drive exponential opportunity
6/

TAM doesn't matter. You can't tell TAM at the insight stage. Founders have a secret. You can't establish a TAM when the world doesn't know the secret. 7/

The future is designed by founders. The future is what we design 8/

product-market fit is a dance 9/

talk to founders to discover secrets (this reminds me of Peter Thiel in 0 to 1 saying: "What important truth do very few people agree with you on?") 10/

an insight is a bet on a future you can't see 11/

an arbitrage between your understanding of the future and the present 12/

the entrepreneur's job is to come from the future to the present and pull people in a structured way to the future 13/

an entrepreneur is like Yoda, not Luke Skywalker 14/

the best founders see the future as inevitable 15/

confidence vs. arrogance: arrogant people can't backup their insights 16/

founders that know what to focus on are the ones that consistently win 17/

current investment opportunities: fixing broken health care system, remote health, remote work, remote education, infrastructure/climate change 18/

"Inflection is the magic that animates startups." What are you fundamental insights? 19/

During this pandemic, @m2jr believes that inventions and break throughs will come from people who don't know what the rules are suppose to be. 20/

Applying all of this to my four companies: Napster, SNOCAP, imeem, and Sporcle. 21/

Napster (1999-2002): We were able to create Napster in 1999 because we didn't know the rules. But we could totally see the future. Spotify proves that we were right about the future but what we got wrong is the regulatory inflection we were betting on didn't happen. 22/

SNOCAP (2003-2008): We were older and jaded, so we knew the rules but the adoption inflection never appeared, at least not in the market we were going after. Ironically, the technology inflection did happen, but we were too early and others like Shazam and YouTube won. 23/

imeem (2004-2009): We were attempting to realize the future that Napster promised. We got some adoption but Spotify's technology turned out to be superior. 24/

Sporcle (2010-present): We are bootstrapped and profitably serving a niche market, so the principals of insight and inflection don't directly apply. But they are very relevant to capital allocation decisions we make around growth and investing in new lines of business. 25/

Sporcle (cont'd): Incremental investments lead to linear growth — and linear growth is fine when you're bootstrapped and own the whole thing. Exponential growth comes from investing in the right insights before key inflection points. 26/

Thanks for @m2jr for articulating things I already knew and felt in such clear language and to @APompliano for being a great host.

You can listen to the podcast yourself here.

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