Trend Chasers Get Crushed
Naval: Trend chasing is a lot like macro chasing — and often it's too late. AI burst onto the scene. Tons of companies talked themselves into building specialized models that would be better than OpenAI. Many got crushed by the recent announcements.
Trying to chase someone who's already established an industry is usually not the right way to go. You get drowned in a sea of copycats. You might get seed funded, but the A round funding dries up.
You get drowned in a sea of copycats. You might get seed funded, but the A round dries up.
Build What You're Obsessed With
Naval: The thing that's always the best to do is something you know really well and have conviction about. You've worked on a product because you want it to exist for yourself. Or there's some technology you're passionate about that other people don't get.
My favorite companies are always doing something technologically challenging and difficult — the founder is passionate about it, but it's not in any field that's currently a trend or can be easily defined. If you can very easily define it and fit into it, I don't think it's that interesting.
My favorite companies are doing something that can't be easily defined. If you can easily define it, it's not interesting.
Knowledge Is the Scarce Resource
Naval: Wealth is a byproduct of knowledge. David Deutsch says wealth is the set of physical transformations you can affect — and knowledge is the more important component by far. The Earth has always had all these resources lying around. We're not running out. We're just redefining things we didn't know were resources.
What you should be doing when creating a startup is not asking 'what space is hot?' It's asking — what knowledge do I have? As Peter Thiel says — what is your secret? What do you believe and know to be true that other people don't? You're only going to know that if you've been intellectually obsessed with this space.
What is your secret? What do you know that others don't? You only know that if you've been obsessed.