| Well, the line between a risky investment and a stupid investment isn't always obvious. If my business plan is to make wifi-enabled juicing machines that cost $400 and only work on proprietary, DRMed packets I sell at a huge margin - great investment? Or stupid investment? If my business plan is to make a $2,000 stationary bicycle, when most competing products cost <$400 - and it'll come with a subscription, but only people who've paid $$$$ upfront will be able to subscribe - great investment? Or stupid investment? If I'm going to take out long cheap leases on office space, spruce them up a bit and sell short expensive leases? And some of the long leases will actually be from the CEO who personally owns some office buildings - great investment? Or stupid investment? What if I run a website that lets strangers talk to each other, and I have a lot of users, barely any revenue, decades of losses, and I have no plan to make a profit. The users hate ads. Great investment? Or stupid investment? It turns out some investments that seem dumb have worked out much better than I would have expected. Others not so much... |
> Juicero
Huge margin, going for rich, health conscious consumers - great investment on paper. Shitty due diligence by investors who thought they could grade the investment by the numbers and not by the actual hardware, juice bags, etc.
> Peloton
Taking a commoditized product and differentiating with a premium offering offering high margins is literally a phenomenal investment, if you can find a market for the premium offering and can build a moat. Pharmaceutical companies do this all the time with drugs that are about to lose patent protection, put in a little tweak, get the patent moat back, market the hell out of it to get doctors to prescribe it instead of the suddenly cheap generic version.
> WeWork
You literally described a way to buy low and sell high, taking advantage of latent inefficiency in the market due to misaligned incentives on the part of real estate owners vs. short-term tenants. Basically run hotels but for entrepreneurs instead of tourists. Sounds like a pretty phenomenal investment to me! Too bad the CEO was unstable and let valuations run out of control.
> Social media
Facebook specifically actually was a pretty stupid investment. FB didn't just have a ton of users who hated ads, it had a CEO who foreswore ever deploying advertising, whose board structure kept him from ever getting fired. Pretty sure early FB investors are thankful that some business sense was knocked into Zuck before they went bankrupt.
Twitter, on the other hand, was a far better investment. If you can get strangers to talk to each other, you can get people to talk to brands. Of course that's valuable.