A technology like AI can create immense societal value without generating wealth for its early investors or creators. The value can be captured by consumers through lower prices or by large incumbents who leverage the technology. Distinguishing between value creation and value capture is critical for investment analysis.

Samesh Dash of IVP passed on DoorDash because he couldn't reconcile its negative gross margins with its valuation. This highlights the venture dilemma of choosing between a visionary founder with a massive vision and the harsh reality of current, unsustainable unit economics during a heavy investment phase.

DFJ Growth passed on a pre-revenue LinkedIn at a $1B valuation because they lacked a clear revenue signal. This highlights a common VC pitfall: over-indexing on current financial metrics and under-valuing powerful network effects and analogous, proven business models from other tech giants.

Investors often reject ideas in markets where previous companies failed, a bias they call "scar tissue." This creates an opportunity for founders who can identify a key change—like new AI technology or shifting consumer behavior—that makes a previously impossible idea now viable.

Mike Maples Jr. passed on pre-YC Airbnb because a failed demo and bizarre funding tactics obscured its massive potential. He couldn't see past the execution chaos and the existing free competitor, CouchSurfing.com, to grasp the fundamental insight. This exemplifies how non-traditional signals can cause investors to miss outlier opportunities.

Established VCs described their job as plucking deals from a "sushi boat" and treating LPs like "mushrooms." This blatant arrogance and complacency signaled to the a16z founders that the industry was locked in old patterns and that genuine competition would be easier than they thought.

While massive "kingmaking" funding rounds can accelerate growth, they don't guarantee victory. A superior product can still triumph over a capital-rich but less-efficient competitor, as seen in the DoorDash vs. Uber Eats battle. Capital can create inefficiency and unforced errors.

When an idea is met with a "wall of skepticism" from investors, it can be a positive sign of a good, non-obvious market. If every VC immediately validates your idea, it's likely too obvious and crowded. Proving early skeptics wrong with traction is a powerful path to building a defensible business.

When evaluating revolutionary ideas, traditional Total Addressable Market (TAM) analysis is useless. VCs should instead bet on founders with a "world-bending vision" capable of inducing a new market, not just capturing an existing one. Have the humility to admit you can't predict market size and instead back the visionary founder.