Focusing only on trendy sectors leads to intense competition where the vast majority of startups fail. True opportunity lies in contrarian ideas that others overlook or dismiss, as these markets have fewer competitors.

Magic Johnson argues that while everyone chases the 'hottest' companies, these ventures are often volatile trends. His success came from investing in unsexy but essential sectors like infrastructure, insurance, and food service, which provide steady, reliable returns and long-term growth without the hype.

Even professional venture capitalists struggle to predict their breakout hits. Morgan Housel notes that at his fund, the companies that became their biggest winners were not the ones they initially expected to succeed, while their 'obvious' bets often failed.

Industries widely considered "terrible businesses," like restaurants, often signal opportunity. The high failure rate is usually due to a low barrier to entry and a lack of business acumen among participants. A disciplined, business-first approach in such an environment can create a massive and durable competitive advantage.

An investment strategy based on simple, powerful observations—like the constant presence of Amazon boxes or packed Costco parking lots—can be highly effective. This "lazy" approach of buying and holding ubiquitous consumer brands often taps into durable trends more successfully than intricate financial modeling.

The best tech investments for non-specialists are often disguised consumer companies that use technology for scale, not for core R&D. Uber is a logistics business and Reddit is an ad business. This simplifies analysis away from complex technology to understandable consumer behavior.

Investor Chris Reisach argues that if an investment doesn't make sense to you, the problem likely lies with the business, not your intellect. He advises junior VCs to trust their confusion as an adverse signal. A founder's inability to clearly articulate their vision is a fundamental flaw, and investing without true conviction is a recipe for failure.

The best business for investment isn't the single world-class location, but the one with a systematized, repeatable model. True reinvestment potential lies in the ability to replicate excellence at scale, not just achieve it once.

VCs are incentivized to deploy large amounts of capital. However, the best companies often have strong fundamentals, are capital-efficient, or even profitable, and thus don't need to raise money. This creates a challenging dynamic where the best investments, like Sequoia's investment in Zoom, are the hardest to get into.