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Act with full belief until proven
Traditional Early-Stage Investing
The most traditional form of early-stage investing is simple: start early with a company, take a significant position, never sell it, and work on the company until it works, gets sold, or dies. There is wonderful alignment and simplicity in that, and everyone is a product of their own investing experiences.
Slow Starters
Sigma, Notion, and Rippling each took a minute to begin to work or weren't obvious at the beginning, and nobody would bet on a company hoping it takes four or five years to find the thing. Holding a point of view that isn't obvious to the market, then acting on it until it is true or not, is a great way to be a partner to somebody building a business.
Conviction as a Name
That stance gives the firm its name, Conviction, which is an aspiration. It also shapes the partnership: every investment has an owner who has to make the decision, and colleagues ask that person whether they believe it, ask them to convince the team, and ask how the team can help them decide.
Why do a few investments drive venture returns?
Startup outcomes follow a power law: most companies return little or nothing, and a small number return many times the money invested. Because losses are capped at the amount invested while gains are not, one huge winner can return an entire fund. That math explains why firms hold winners for the long term instead of selling early. Peter Thiel wrote about this pattern in his 2014 book Zero to One.
How did Notion survive its early years?
Notion was founded in 2013 and nearly ran out of money by 2015. Cofounders Ivan Zhao and Simon Last laid off most of the team, moved to Kyoto, Japan, and spent more than a year rebuilding the product from scratch. They relaunched it in 2016.
Why do firms give each deal one owner?
Committees tend to favor choices that nobody strongly opposes, which can screen out unusual bets. Psychologist Irving Janis described groupthink, in which a cohesive group suppresses dissent and settles on a consensus, while studying decisions such as the Bay of Pigs invasion. Janis published his book Victims of Groupthink in 1972.
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