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b'My guest this week is Jerry Neumann. Jerry is one of the most thoughtful early stage investors that I\\u2019ve encountered, and his writings at reactionwheel.net are my favorite on this topic. He applies an incredibly structured way of thinking to a notoriously mysterious investment category. This is our second conversation, in which we cover why investing with one\\u2019s gut is a bad idea and why some of the popular edges in startups, like network effects, may be picked over. Please enjoy our conversation.\\n For more episodes go to InvestorFieldGuide.com/podcast.\\n Sign up for the book club, where you\\u2019ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.\\n Follow Patrick on Twitter at @patrick_oshag\\n \\xa0\\n Show Notes\\n 1:17 - (First Question) \\u2013 His take on the venture landscape and the type of investments new VC\\u2019s are making vs what they should be making\\n 3:44 \\u2013 Most important implications of excess VC firms\\n 5:32 \\u2013 Misalignment of incentives in the VC space\\n 8:19 \\u2013 What he does differently from angel investors or VC\\u2019s\\n 10:11 \\u2013 The notion of risk and the types of risk the people he invests in takes\\n 14:33 \\u2013 Protections that he thinks about when it comes to the ideas he invests in\\n 19:37 \\u2013 Is there an area of expertise that provides an edge for startups\\n 20:11 \\u2013 Network effects are picked over\\n 21:35 \\u2013 IP protection\\n 23:08 \\u2013 One of the two most interesting things for VC\\u2019s to go after, brands\\n 25:13 \\u2013 The other most important thing, the value chain\\n 27:42 \\u2013 A current example of a disruptive value chain\\n 29:14 \\u2013 Innovation as the source of profit\\n \\xa0\\xa0\\xa0\\xa0\\xa0\\xa0\\xa0\\xa0\\xa0\\xa0\\xa0 29:16 \\u2013 Schumpeter on Strategy\\n 31:50 \\u2013 Efficiency innovation vs value innovation\\n \\xa0\\xa0\\xa0\\xa0\\xa0\\xa0\\xa0\\xa0\\xa0\\xa0\\xa0 31:52 \\u2013 Energy and Civilization: A History\\n 35:50 \\u2013 Efficiency investments he\\u2019s made\\n 37:13 \\u2013 Investment in Unsupervised and the machine learning landscape\\n 41:25 \\u2013 Investment in Sila\\n 43:14 \\u2013 Investment in Edmit\\n 44:44 \\u2013 investing on gut\\n 50:32 \\u2013 Black boxes and their value in investments\\n 53:23 \\u2013 Metrics about the predictive level of whether people are going to succeed\\n 54:45 \\u2013 What defines good people worth backing\\n 57:50 \\u2013 Advice for LP investors in this space and how they should evaluate VC\\u2019s in this space\\n \\xa0\\n Learn More\\n For more episodes go to InvestorFieldGuide.com/podcast.\\xa0\\n Sign up for the book club, where you\\u2019ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub\\n Follow Patrick on twitter at @patrick_oshag'