Seed Investments Have to Be Reasonably Unreasonable.

Anything “reasonable” is either wrong or will get competed to death.

Markets are generally and increasingly efficient (or at the very least it’s incumbent on you to prove otherwise if you think they’re not). If something seems reasonable (sound, straightforward, uncontroversial/unobjectionable, etc.) one of a few things must be true

1. It’s just flat out wrong for some reason or else it would already exist

2. It does already exist and you just don’t know

3. Everyone else can see the same thing and cost of capital/returns will go down (price goes up)

4. Everyone else can see the same thing and competition goes up producing a category of losers/low returns.

Instead you need to find opportunities that are unreasonable at first blush but with some explanation you can get begrudging acceptance and agreement from the insiders who know best.

This is part of what we/Sam means when we talk about seed investing not returning to the past decade’s form: reasonable ideas attracting massive funding, numerous copycats, and generating bad returns/outcomes.

If something is reasonable or too obviously a good idea, assume that it’s obvious to everyone else.

Do something unreasonable. Be right.