How to Angel Invest, Part 2


This post is by naval from Naval


A preview of our other podcast

We have another podcast called Spearhead, where we discuss startups and angel investing. This is a compilation of recent episodes. Also, see Part 1.

Everybody Thinks They Already Have Good Judgment

It takes years to know if you have good judgment

Nivi: For the past few episodes, we talked about why you should angel invest and how to get proprietary dealflow by building a brand. Now let’s talk about judgment: how important it is and how to develop it.

Good entrepreneurs don’t want to be associated with bad judgment

Naval: In the long-term, having good judgment is critical. Without it, you’ll end up with a bad portfolio; other investors won’t back you; you’ll lose your money; and your brand will suffer. Good entrepreneurs don’t want to be associated with bad judgment.

At the end of the day, judgment is the single most important thing. It’s more important than access to deals and access to capital.

If you have poor judgment, you won’t know it

The problem with judgment: Everybody thinks they already have it. That’s because your ability to assess your own judgment is subject to your level of judgment.

If you have poor judgment, you won’t know it. This cognitive bias is called the Dunning-Kruger effect after psychologists who popularized the idea. It’s also common sense. People who are not that intelligent usually don’t know it. It’s partly an ego defense mechanism. 

It takes five to 15 years to know if (Read more...)