What Did Naveen Rao Change His Mind About?

Naveen Rao changed his mind in the last 12 months on the useful metric for progress in investing. Market validation is an old way of looking at it. For deep technical problems the market is already there, so the metric that matters is progress on solving the problem.

The old metric comes largely from SaaS. Market validation makes sense when there is no deep technology route and the company is building a product that serves a purpose. When a goal is almost true by inspection, as with curing cancer, there is no need to validate the market. The need is to validate progress on the technical problem.

Investors now fall into two camps. One camp invests heavily and treats valuation as secondary. His company is one of the companies getting that investment. The other camp calls the same bets undisciplined for lack of market validation. He calls the second view fundamentally wrong, and a lot of growth investors still hold it. He grew up reading the books about how to look at risk and investing, and the change is significant, not only because his company is doing it. The work now is robotics, computing, and biology. Solve the problem and 100% of people are going to buy it.