Focus On Investment Floor

Shaan Puri shares his perspective on evaluating investments, particularly focusing on the importance of understanding both the minimum guaranteed outcomes (floor) and maximum potential (ceiling) when assessing investment opportunities. He uses Post Pilot as a case study to illustrate this approach.

Key Investment Philosophy:

• Investment Assessment Framework:

  • Focus on establishing a "high floor" (minimum outcome) first
  • Then evaluate the "unknown ceiling" (maximum potential)
  • Prioritize investments that have clear minimum outcomes over speculative ones

• Risk Evaluation:

  • Look for investments where "this isn't going to be a 0"
  • Personal investments can be justified with clear minimum outcomes
  • Fund investments need different profiles (suggesting higher potential upside)

• Real Example (Post Pilot Investment):

  • Clear minimum outcome: "definitely gonna work"
  • Uncertain maximum potential: Could be "$50M, $100M, $500M, or $1B business"
  • Investment decision based on confidence in minimum outcome
  • Personal investment of ~$25k due to clear floor despite uncertain ceiling

• Investment Sizing:

  • Smaller personal checks for opportunities with clear floors
  • Investment size correlates with confidence in minimum outcome
  • Don't need maximum conviction in ceiling potential if floor is solid

• Exit Scenarios:

  • Worst case: 4-5x return potential
  • Best case: "many hundreds of millions" potential
  • Focus on likelihood of minimum return rather than maximum potential

This approach emphasizes risk management through understanding minimum guaranteed outcomes while remaining open to upside potential.