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As a Professional Investor, Here’s Why I Avoid Trends

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What trend or opportunity are you most interested in as an investor, today? originally appeared on Quorathe knowledge sharing network where compelling questions are answered by people with unique insights.

Answer by Peter Fenton, General Partner at Benchmark, Dad, aspiring Cellist, on Quora.

I don’t invest in trends. I know it sounds a bit too-cool-for-school but what I’ve found is that you get far more insight from purpose than from trends. So, for example, in the case of Docker, I invested in Dotcloud (which became Docker), in the purpose of this radical, intense leader, Solomon, who wanted to give the world’s programmers superpowers, tools of mass innovation. In the case of Yelp, it was Jeremy’s purpose to allow for the truth of great (and bad) local businesses to be visible to all. Or when I met Jack in 2007, he had this unstoppable purpose for Twitter to “bring you closer”. Sometimes that purpose is just this raw force, an energy, like it was in the case of Shay at Elastic in 2012. When I feel like the trend, the space, the concepts vs the tactile reality of a purpose forms the narrative of the investment I lose all interest.

Another way to look at this is that I’ve found the best entrepreneurs have discovered preconditions that enable their purpose, that make it possible today versus in ten years. To increase the odds of finding the extraordinary, it helps to have a point of view about the most dynamic preconditions. As my partner Matt Cohler says, “to see the present most clearly”. Obviously mobile ubiquity is the major precondition today, with the additional attributes of GPS, high quality cameras, and ever improving networks. I don’t think we’ve even started to realize the potential of this enhanced mobile ubiquity. Another precondition is social behavioral norms, our readiness to share, to engage expands in what feels like a geometric way when the conditions are right. An “all cloud” world is another precondition — it forces every layer of the technology stack to be reconsidered and in many cases reinvented for the cloud. Mass compute and mass storage is a precondition for machine learning at scale.

To make this more concrete, take the example of Houseparty. Ben’s an extraordinary entrepreneur, he’s moved by a purpose to make you feel closer to your friends when they’re not physically present, and he has a fresh, new approach using live video. The preconditions of live video open up this world of exploration and the right entrepreneurial mind figures it out. I deeply regret not being his investor!

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