This section is the one that sticks out to me the most:
"When you make a contrarian investment as one of these funds, the entire market contorts itself to understand why their instincts are wrong and you are right."
I frequently wonder to what extent prominent funds can create manias or successful exits through sheer reputation alone? E.g. A couple prominent funds inflate the potential value of a sector or company long enough before reality hits and people realise the unit economics or market size aren't good enough.
It's easy to recognise failures in hindsight, but it can feel like you're being gaslit until the company crashes. Were there genuine metrics to support an investment thesis or was it all halo-effect and hype?
If memory serves, Andreessen Horowitz during the 2021-22 VC/Crypto mania are (allegedly) a good example.
1. Andreessen Horowitz invests in crypto project in return for project coin
2. Project is hyped/pumped because Andreessen Horowitz invested
3. Project offers ICO
4. Andreessen Horowitz offloads coins at profit to retail customers
🙌 Preach! 🙌
This section is the one that sticks out to me the most:
"When you make a contrarian investment as one of these funds, the entire market contorts itself to understand why their instincts are wrong and you are right."
I frequently wonder to what extent prominent funds can create manias or successful exits through sheer reputation alone? E.g. A couple prominent funds inflate the potential value of a sector or company long enough before reality hits and people realise the unit economics or market size aren't good enough.
It's easy to recognise failures in hindsight, but it can feel like you're being gaslit until the company crashes. Were there genuine metrics to support an investment thesis or was it all halo-effect and hype?
If memory serves, Andreessen Horowitz during the 2021-22 VC/Crypto mania are (allegedly) a good example.
1. Andreessen Horowitz invests in crypto project in return for project coin
2. Project is hyped/pumped because Andreessen Horowitz invested
3. Project offers ICO
4. Andreessen Horowitz offloads coins at profit to retail customers
5. Project crashes
Source: https://davidgerard.co.uk/blockchain/2022/04/11/web3-a-vc-funded-gig-economy-of-securities-violations/
The interesting thing is some funds do this deliberately and others do not - but the have such a strong halo effect that it happens anyway.