Crazy + Smart Framework

I was on an email chain with Doug Scott, head of one of the biggest angel syndicates in Europe and early investor in EF, Techstars London, Ignite, Jinn, and Tapdaq, amongst others, when I asked about his investing style. Crazy would be the word I would use to describe it. He laughed.

alt this really is Doug

I've always admired Doug's crazy antics. Not that I'm a fan of pink bandannas and tongues, but that there's a real methodology and framework in which he invests if you go past the crazy exterior.

Doug's framework is similar to what Peter Thiel said on betting on non-conscientious but right. Fred Wilson did as well on his great post on Return and Ridicule.

But it's not as simple as just betting on crazy founders and ideas. That would be way too simple. There were two nuggets that I thought interesting:

smart people do not do stupid things for long

And the other:

So we decided the model was invest in smart people doing stuff that everyone else hated it, including us sometimes:)

This last point reminds me of Benjamin Graham's quote “The investor’s chief problem and even his worst enemy is likely to be himself.”

When you invest in early stage teams, you really are investing in only the founder and the team, not the market, traction, and idea. And you have to strip yourself of your own subjective biases and opinions to evaluate crazy + smart.