TLDR:
Key Points:
- Successful decisions in Silicon Valley are not made on a whim but require rigorous analysis.
- Venture investors spend an average of 118 hours scrutinizing facts and stats before investing in a startup.
In the article “The Power of the 118-Hour Decision” by Ilya Strebulaev and Alex Dang, the myth of high-stakes, fast decisions in Silicon Valley is debunked. The authors emphasize the importance of a disciplined approach to decision-making, particularly in the world of venture capital. Successful investors are not risk seekers, but rather, they focus on minimizing risks through extensive due diligence. The article highlights the process of creating investment memos, which are detailed documents that analyze the pros, cons, risks, and potential of a startup before making an investment decision.
Investment memos serve as tools for structured decision-making, encourage healthy debate among partners, and help in retrospective analysis of investment decisions. The article also mentions how the practice of creating detailed memos has been adopted by companies like Amazon to guide their decision-making processes. Contrary to popular belief, successful investors in the venture capital space are more inclined to say no to ideas quickly to save time for thorough due diligence on the best opportunities.
The authors stress the importance of taking the time to make well-informed decisions to avoid making mistakes. The venture mindset requires a prepared approach to decision-making, rather than relying on intuition or quick judgments. By following the 118-hour rule of extensive research and analysis, investors can mitigate risks and increase their chances of success in the fast-paced world of startups and venture capital.
