In general, I don’t like [investing in] founders from the industry. I typically avoid them like the plague. I actually prefer people who are much more naive. I think you can always hire experts later, and mostly industry expertise teaches you what you can’t do or shouldn’t do, not how to do it. And you don’t ask enough why questions, like, “Why is this that way?” So I strongly prefer people without industry expertise.
At PayPal, we had only two people, maybe three, in the entire company who knew anything about financial services. And at Square, very consciously, we kept the number of people from the financial-services industry low. There were only a handful of people in the four hundred employees at Square who knew anything about financial services.
I think the most innovative companies actually don’t have a lot of domain expertise.
Enterprise software might work a little bit differently. And the rules may be different. I don’t typically invest in enterprise software companies. I grant that there may be a formula in enterprise software where you take domain expertise and leverage it. But in consumer and micro merchant and SMB [small/ medium business] companies, which are canonically what I have invested in, I don’t think expertise helps.
I occasionally add a personal note to them.
The whole collection is available here.