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- 4:37 - Equity as a major way into financial freedom
- "The best approach to get rich in the technology industry like any other industry is by owning equity. You won't get rich renting out time. You must own equity - a piece of a business - to gain financial freedom.
- 3 main approaches to gain equity
- Being a founder of a company
- Being a talented employee that gets an equity compensation
- Being an investor in a company
- Investing allows non-linear return
- You can only found one company with 10-100x
- But: You can finance tenth of companies 10-100x
- Investing into IPO's
- You are literally late to the party and profit from less growth of a company vs. when you invest early
- 3 things you need for Angel Investing
- Dealflow i.e. the companies you see & get access to invest in
- Capital i.e. money you need to invest broadly to diversify risk
- Judgement i.e. the skill you need to pick the right companies
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- Investing is about avoiding mistakes, not always being right
- You can never predict outside successor for investments
- Luck is required: right place, time, market forces etc.
- What you can do is to identify things that won't work e.g. founders that are short-term thinkers
- Naval recommends to create an environment that fosters not making mistakes
- He wants to see 10,000 companies, pick 500 that are huge and maintain options to double down on winners
- How doesn't see his capability to see 100 companies and just pick 10
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- Validator founders seek validation and say they can only build something, if they receive funding
- Jason Calacanis instead is convinced, that builders will build, regardless of funding
- And that you should fund builders
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- As an investor you need to be careful since founders nowdays have access to all the information they need to convince investors
- They know exactly what they need to pitch, how and in which order
- This can influence your decision making
- Accordingly, research has shown that perceived passion by founders increases the likelhood of being funded.
