Keith Rabois's investment framework for evaluating opportunities seeking outsized returns (50-100x).
1. What is Anomalous?
Identifies unique aspects distinguishing the opportunity—exceptional management, standout metrics, competitive advantages in distribution or capital access.
2. What "Secret" Grounds the Company?
The venture requires a fundamental insight about market inefficiency. Examples:
- Netflix: "Most content will be streamed vs served through cable"
- Amazon: Internet enables service-layer taxation of businesses (AWS model)
3. Could This Be Transformational?
Assesses whether the company could become globally significant, requiring imagination about future scale and impact.
4. What Accumulating Advantage Exists?
Examines how competitive advantages strengthen over time through network effects (Instagram, Facebook, Twitter), data accumulation (Google), or economies of scale (Amazon, Starbucks).
5. Can the Founder Attract Required Talent?
Evaluates leadership's capacity to source and inspire exceptional team members through vision articulation and track record.
6. Why Do We Have Comparative Advantage?
Questions why this investor deploys capital more efficiently in this sector than alternatives or competitors.
Additional insight from Sahil, Sam Altman, and Paul Graham: "compelling founders, mission-driven culture, exceptional products, growing markets, network effects, low marginal costs, rapid scalability."