Serendipity in Early-Stage Investing

And why the best founders and investors experience it more often

A friend recently sent me a post titled “The Power of People on the Edges”¹ by Tobias Stone, founder of innovation agency New Square. In venture we often talk about finding outlier founders (thank you, Malcolm Gladwell) pursuing (what sound like) crazy ideas (space manufacturing, anyone?). Much ink has been spilled about this topic, especially focused around technical experts, people who won national chess competitions in high school, and the like. There’s even a podcast called “Outlier Founders.”²

But in Tobias’ piece he covers what I think is an equally important part of building venture-scale companies, the importance of people on the edges of social networks.

Here’s my favorite quote from the piece that summarizes the value these people provide:

“They connect the dots — introduce new people, introduce ideas, disrupt ossified thinking.

They live in between the silos; the undefined spaces where possibilities exist.

Weak tie networks are scattered, chaotic, and untidy. They allow for randomness and serendipity.”

Of all the potential value unlocked by these “people at the edge”, I’ve found what they do best is create serendipity. And somewhat unsurprisingly, I’ve found serendipity tends to happen to the best investors and the best companies most often. I don’t think this is an accident. The best investors create opportunities for serendipity (for potential new investments, for existing investments, and more) by thinking long-term and focusing on relationship-building. They focus on being positive sum and prioritize working with people who think the same way. And most importantly, they have an ability to think non-linearly. Very little of what they do is transactional. They focus on creating moments of opportunity within their networks of trusted, ambitious people.

I’ve been iterating on what to call this idea and how it can apply to being a better founder and investor, but haven’t come up with anything yet. But maybe that’s intentional. The most important things are often hard to describe in words!

Any ideas?

1. H/t Austin Bishop @ Tamarack!

2.