Playbooks

1. Prizes can be a great way to generate leverage on innovation.

• If done right, the X Prize and other industry prizes like it (e.g., Netflix Prize, DARPA Challenge, etc) can bring an order of magnitude more talent to bear on a challenge than what the same dollars alone could hire.
• The challenge is to create a prize that inspires and draws in a large enough pool of contributors. The aerospace industry’s “cool” factor may be what allowed the X Prize to succeed and explain why prizes aren't employed as often in other sectors.

2. When trying new things, most people want to go second — but those willing to go first get the best returns.

• Being first into new markets carries high risk (including/especially reputational), but often also offers asymmetric upside. Investing in a new frontier when others think it’s crazy is a recipe for success — if you’re both contrarian and right.
• Chamath took a huge turn from the traditional VC playbook when he launched his first SPAC in 2017, years before they went mainstream. He and his investors have now generated over $1B in profits from that vehicle (which merged with Virgin Galactic), and have since built on that win to launch five more.

3. The best time to invest was yesterday, the next best time is today.

Great investors don’t miss the chance to invest in big markets because they’ve passed on it before. Richard Branson passed on investing in the X Prize twice before partnering with Burt Rutan's winning team to build Virgin Galactic.

4. Whenever a market's prices aren't being set by supply and demand, there's probably an opportunity to disrupt that market.

The traditional IPO pricing process is managed by third parties (investment banks) that represent both sides of the transaction and also have their own economic interests at play — the equivalent of a real estate agent representing both the buyer and seller. As a result, many technology IPOs have left hundreds of millions or billions of dollars on the table. SPACs and direct listings are now solving that problem. Any other market with this dynamic should be fertile ground for entrepreneurs.

Links

• Virgin Galactic's "One Small Step" reservation program
• The November 2020 launch delay announcement‍