The Privilege of Belief

Some thoughts on firm building and believing in people and ideas

This essay originally appeared on twitter

There is a long silence between making a decision and knowing if it was right. This is where belief lives, and where a lot of it dies.

In investing this shows up everywhere. Mediocre companies die first and great ones take time to grow into their vision, which means you get imprecise negative signal early and you have to hold through it.

There are countless stories of people getting pushed out of investment firms, not once a decision or “bet” is proven wrong, but instead once their partners lost faith in this liminal space between decisions and outcomes.

Often what happens is the partners understand a thesis at a high level or trust the person enough to let them action it, but eventually patience runs low, anxiety runs high, and people let go.

I find this happens because believing in someone during uncertainty is cognitively expensive. It asks us to hold faith and doubt in the same hand, and many of us are not built for that kind of sustained dissonance.

For some reason I find myself giving career advice to mid-career investors a lot these days. One thing I tell them, at a time of mass migration of talent in investing, is that long-duration belief and trust is grossly underrated.

Working with people who believe in you regardless of the mid-term data and volatility is one of the rarest things in the world. We don’t want people who ignore data, that doesn’t make us better, but we do want people who believe in why we’re making a series of decisions, not just that we’re making them, and have a desire to help us continually make better decisions.

Real belief sounds like: “I think you see something, and I’m willing to be uncomfortable while we find out if you’re right.”

This shows up in a few ways.

Steadfast Belief in Thesis

At Compound, we have a saying that in certain areas “we will happily lose money on ___ until we eventually make money on ___.”

To some it sounds reckless, but in reality it is a statement about belief. It means we’ve done the work to build conviction in something so deeply that short-term volatility or lack of progress won’t erode it.

The alternative is abandoning good ideas because they didn’t work on your most optimistic timeline. As someone who very much cares about the inputs to investing, it feels maximally painful to do this.

Belief in Asymmetry

There are certain ideas that deserve belief and trust because of an underlying conviction that it is worth the possible future they represent.

This is asking “what if it works?” over and over again.

We’ve had LPs ask why we invest in bio when the broader promise of TechBio has not materialized, or crypto when bitcoin and stablecoins are the only things to outlast a decade of frauds (or frontier tech broadly for the first 5 years of our firm’s existence).

Our answer is simply that we believe these are some of the most potentially important areas of change in the world, and if they work, Compound specifically will capture a lot of value investing in them.

At many firms, this kind of belief doesn’t survive the downturns across the whole partnership. Factions form, people get pushed out, and the thesis gets abandoned because it didn’t materialize fast enough.

“When you want to know how things really work, study them when they’re coming apart.”

Belief in People

The same logic that applies to theses applies to people.

You don’t believe in a person because you think they’ll be right every time, you believe in them because you hope the arc of their judgment bends toward good decisions, and that over a long enough time horizon the good will materially outpace the bad. I guess you could call this the portfolio theory of belief.

At many points in my career I’ve stumbled, and at many of those points someone chose to believe in me anyway.

In my first two months at CB Insights I almost got fired (literally Anand, the CEO sat me down and told me “this is not working, how can we fix it?”) because I kept incorrectly pulling data and publishing wrong numbers in our research that would be immediately called out by news/media/angry people.

Anand eventually had me and Matt sit next to each other in our tiny office so as to learn from each other by osmosis and help me gain confidence in this sea of unstructured data. It worked and at our peak we were publishing ~12 pieces each per week, alongside spearheading other larger scale research initiatives that helped the company scale.

The best partnerships are ones where people believe in the other person’s ability even when they can’t fully see what that person sees and are willing to extend trust into the proverbial fog. They are about remembering that we are not the outcome of any single decision but instead the collage of decisions and ideas we put out into the world over time.

Cost of Disbelief

Receiving belief from someone in the absence of validation is a rare privilege that we only come to internalize at first when it erodes.

The cost of not having belief is quiet at first. It makes people smaller in ways they don’t notice, compounding whatever imposter syndrome already exists until they stop trusting their own judgment. People who could have been extraordinary become careful as they stop taking the risks that lead to growth but require someone else to hold faith for a while.

Over time, this shapes entire careers and firms, defined less by what they tried and believed in than by what they didn’t.

I’ve been fortunate to experience this type of belief multiple times in my life, often when I didn’t deserve it from people who saw something in me while I was still stumbling through my own ego, insecurities, shortcomings, and plain bad decisions.

The goal, for me, has been being intentional to give that same gift to others. To remember that people have seasons, that there will always be moments when certain people have more edge, more bandwidth, are in a better flow state, and that those seasons cycle more than any of us like to admit.

Some partnerships might endure out of shared intensity, but I think it’s far more rewarding to pair that intensity with the ability to help each other as seasons change.

I believe this to be one of the most generous things we can offer another person and it in the end, might be what allows great things to happen at all.