Non-Consensus TAM Views Drive Growth Investing Outperformance

Key Quotes

"one of the foundational frameworks that i developed coming out of it was what makes a breakout or successful growth investment or sort of pattern recognition of what i look for in almost all cases for me that has come down to you know a great founder and then a theory on busting through consensus view on total addressable market or tam the consequence of that is a company that grows faster you know faster and or longer than expected"

David George explains that his foundational framework for identifying successful growth investments centers on two key elements: a strong founder and a contrarian view on the total addressable market (TAM). George argues that this combination leads to companies that exceed expectations in their growth trajectory, both in speed and duration.

"one of the counterintuitive observation from my time at ga and my pattern recognition coming out of it is exceptional business models are are just table stakes in growth investing they're not actually in my experience what gives you edge in making great growth investments so you know we don't take risk on investing in anything but high quality business models but in my opinion this is not where you generate outsized returns you can make mistakes here but it rarely surprises to the upside"

George presents a counterintuitive observation from his experience: while exceptional business models are a prerequisite for growth investing, they do not provide a competitive edge for generating outsized returns. He believes that high-quality business models are essential but do not typically lead to unexpected upside, suggesting that true edge comes from other factors.

"the benefit of a single trigger puller model as opposed to committee decision making is it's the ultimate measure of conviction so if that individual has conviction and gets feedback from the partnership and maybe the feedback is constructive or negative and still wants to make the investment that's conviction"

David George highlights the advantage of a "single trigger puller" decision-making model over a committee-based approach. George explains that this model serves as the ultimate test of conviction, as an individual investor must proceed with an investment even after receiving potentially negative feedback, demonstrating a strong belief in the opportunity.

"we look for what we call glengarry glen ross market structures so you know the famous movie this is like independent valuation so what that means is there's a scenario uh have you seen the movie i haven't so explain it for me okay all right it's sort of like a boiler room sales old school movie so there's a scene where alec baldwin is presenting to his team their monthly sales competition it's his famous line where he says okay here's the prizes first place gets a cadillac second place gets a set of steak knives and third place gets fired and we actually think most many or most tech markets play out in a market cap in a similar way where the leader captures the vast majority of the market cap creation"

George describes a market structure framework he calls "Glengarry Glen Ross market structures," referencing a scene from the movie where sales competition prizes are awarded. George applies this to tech markets, suggesting that similar to the movie's scenario, the market leader captures the vast majority of market capitalization, making it challenging for others.

"i have to ask man we mentioned the price changes and the increasing price that we've seen over the last especially a year but last few years you know we've seen p hedge funds crossover funds i mean everyone and their mother investing in late stage and pre ipo i've got to ask man when you look at it how do you think about this massive proliferation of capital at the late stage especially with players who seem to be playing a different game in terms of return expectations willingness to pay two x what we pay how do you think about this new landscape and how you win in it"

Harry Stebbings questions David George about the significant increase in capital flowing into late-stage and pre-IPO investments, noting that new players seem to have different return expectations and are willing to pay higher prices. Stebbings asks George how he navigates this landscape and maintains a winning strategy amidst this proliferation of capital.

"what drives you today and how do you think about your relationship with money on a plane last night i was texting with ali about something similar it's not money is not what drives me i love learning new things every day i get the chance to work with the best founders in the world building awesome companies just like you you know i love my job i work all the time i do have a deep fear personally and paranoia of failure and i'm extremely competitive so returns and generating returns are one element of the scoreboard for me like and i love that competition and i want to be the best"

David George states that money is not his primary motivator, but rather a love for learning, working with exceptional founders, and a deep-seated fear of failure coupled with extreme competitiveness. George views generating strong returns as a measure of success in this competitive environment, indicating a drive to perform at the highest level.