Social Proof Is Dangerous

Hunter Walk has a post up suggesting that "social proof" is not as helpful of an indicator of startup quality as it once was.

I have always hated the idea of social proof. It's just the herd instinct at work. It's nonsense.

If you can't figure out why you like an investment and why it will be successful, don't make it.

Yesterday my partner Andy and I met with a company that has had a hard time raising capital. I talked to a bunch of big name investors about it and they all hated it. I told Andy "that makes me like it even more."

We may or may not make this investment. We have to do our work, figure out the market, make the calls on the management team, and figure out how big of a business it can be and whether we can make a good return on it. But we don't care who else wants to invest. In fact, I'd prefer if nobody else wants to invest in it. That would be great.

Make up your own mind. Don't follow the herd. Don't chase.