2nd-hand insights

One of the first lessons in venture “pattern matching” is to back founders with domain expertise. These are people who have lived, breathed, and worked in the problem space they are building in. A former HR leader at Facebook building a payroll tool, for example, starts with a sharper reference point than if I started cooking up the next Rippling competitor. 

That said, great companies are often built by outsiders. With AI lowering the cost of building, the goalposts have moved. I’d argue there’s little lasting “moat” in tech today (more on that another time). What matters is speed and distribution, and this domain knowledge functions like seeing the puzzle before everyone else. You move faster from A to B because you already know which pieces click.

When founders build in an unfamiliar space, they often try to close the gap with “second-hand insights”: advice and patterns borrowed from people who’ve been in the industry. Helpful, yes, but second-hand insights are like hand-me-down clothes: a step behind the trends and a bit ill-fitted. Seond-hand insights carry the original owner’s context and what worked under one set of constraints, incentives, and market timing may not "size" to the present. 

Relying solely on second-hand insights keeps founders working at a constant disadvantage. You’re waiting to learn the hard way or chasing someone else’s lessons. There’s already enough learning the hard way in startups. The thoughts of others (advisors, investors, etc.) can’t substitute for the founder’s own lived context; without it, those insights don’t compound.

This is why, as VCs, we hesitate to back teams without a unique angle or background, not because those without the domain experience can’t win, but because at the pre-seed stage, proprietary insight is usually what creates founder conviction. And founder conviction is what creates our conviction that the company could derive a billion-dollar outcome.

1st Hand Insights:

• “At X, I saw/learned X, that influenced X, which I am now building with X” 

  • Second-order effects: Clear articulation around early vision & product 

• “I want to move from X GTM to X GTM just like I did at my previous company/employer.” 

  • Second-order effects: Speed to market, robust pipeline of prospects or pilot customers 

• “What most don’t understand is X, because I know this, I am able to do X thing 10x better than X.” 

  • Second-order effects: Speed of iteration, revenue ramping post launch

2nd Hand Insights:

• “Our advisor shared that X was their experience, and so we are trying/doing/experimenting with X.” 

  • Second-order effects: Slow speed to launch, multiple versions of product (V1,V2,V3) 

• “The sales cycle is long in X, so we are doing X, because it is how X person did it at X.”

  • Second-order effects: Quick no’s from prospects, prolonged sales or implementation cycles, customer feedback that the problem isn’t “urgent” enough to solve for at this time. 

• “X industry has been historically slow to adopt X, because X” (when broad, non-specific**) 

  • Second-order effects: Lose to the incumbent or new solutions, slow growth, no customer network effects 

All of the above is not new – but the gap is widening. I’m watching it in real time. The world is stochastic, and it's better to have your own framework to build on than wait for someone to share theirs.