Interview, Fireside Chat
Adam Fisher: Why Small Markets are Better Than Big Markets | E1106
- Predicts that hyper-growth ambition often leads to company failure and views the current venture capital speed (decisions in two meetings or seven days) as creating a "horrible" environment prone to poor decision-making due to pressure.
- Anticipates a shift where late-stage investors demand a 1x return within the next 24 months and expects companies with multi-billion dollar valuations and low revenue (e.g., $10 million ARR) to face recapitalization or depressed sales.
- Plans to avoid leading deals in competitive environments or those attempting to create a category "out of nothing," preferring to identify new buyers or verticals where a category already exists.
- Expects that niche markets with adjacent expansion opportunities offer better arbitrage than being number two or three in a large market, rejecting the zero-interest rate era belief that being number three, four, or five is a path to success.
- Predicts that companies raising $50 million at pre-seed or seed stages are inappropriate for early-stage investors requiring evidence of efficiency and customer love, and warns that raising at "exit territory" valuations creates a nightmare scenario where later investors lose their money.
- Believes founders who have not taken basic risks (such as personal debt or working from home) or who have not left their current jobs may lack necessary efficiency and risk-taking propensity.
- Anticipates that first-time entrepreneurs with strong chemistry and fast learning curves are fantastic investments, whereas second-time entrepreneurs blinded by past success or unable to embrace feedback are bad signals.
- Plans to assess candidates for personality and stage fit rather than seeking the "best possible candidate" to avoid "horrible hires" and views board members as a "lighthouse" rather than the "captain."
- Expects to have written off four companies between $10 and $15 million each, including a chip company where the thesis of selling IP instead of developing a chip was wrong.
- Predicts that pattern recognition will be used to avoid bad deals, while outcome scenario planning will focus on growth drivers rather than fixed valuations.
- Anticipates that "outsiders" with naivety and self-awareness can innovate in ways "insiders" blinded by convention cannot, and that misgivings about transparency early on presage future issues.
- Expects the ability to raise money depends on a founder's capacity to tell a story in one-on-one conversations connecting pain points to solutions, and that early sales made by the CEO often signify efficiency.
- Plans to orchestrate exits when a company has peaked or is about to peak, aiming to be "six months ahead of anybody else," with acquisition success often tied to the CEO's charisma.
- Forecasts a real chance of Donald Trump's re-election and a decade-long U.S. failure attempt at isolationism before recognizing its impossibility, while noting the Israeli ecosystem is misperceived as solely cybersecurity-dominated.
- Plans to spend the next 10 years with a smaller board load to focus on reading, writing, and mentoring younger investors.
- Expects that best founders choose investors based on personal reputation and a desire for support through ups and downs rather than brand name alone.