I love Don Valentine’s framework for investing:
- Invest in markets and not people.
- Invest in a market where there is a primary product + opportunity to invest in complements.
This is an amazing talk by the founder of Sequoia Capital: Don Valentine, Sequoia Capital: “Target Big Markets”. He talks about how when he decided to invest in Apple he realized personal computing would never take off with audiotape memory (highly unreliable as primary memory). So he decided to invest not only in Apple but also other disc companies. Floppy discs and disc drives were compliments that needed to take off for the PC market to grow. He then started investing in the system application level.
As someone interested in startups, I have collected a bunch of investment frameworks followed by VCs. I will share them in a later post.