Naval treats angel investing as a systems problem rather than a prediction game. His approach is pure financial leverage applied at scale.
This high-volume strategy reflects his understanding of power law distributions. He rejects precision for statistical advantage, knowing he can’t predict individual winners. The humility is critical: “I don’t think I have that capability.”
His track record validates the approach: “probably north of 150” companies including Twitter, Uber, Yammer, PostMates, Wish, Thumbtack, and OpenDNS. This isn’t luck; it’s compound learning over decades.
Here lies the contrarian core of angel investing. But Naval guards against dangerous delusion: “These people are also very hard to separate from delusional, crazy people”. The difference between genius and madness is reality processing - how entrepreneurs integrate feedback.
His selection criteria reduce to three variables: “intelligence, energy and integrity”. Intelligence for problem solving. Energy because “being a founder is brutally difficult”. Integrity as insurance against betrayal - without it, “what you’ve got is a hard working, smart crook”.
The decision speed surprises people: “You’ll decide in the first five minutes of a meeting usually whether you want to invest in the company or not”. This isn’t carelessness; it’s pattern recognition built through repeated exposure. He knows investing is emotional despite “pretending to be very rational”.
The key discipline requires ego surrender: “When you meet with a new company, you have to forget everything you know and you have to shut up and listen”. Old mental models kill returns because “the great new companies always look really strange”.
Through AngelList, he democratized access to this wealth creation machine. The platform embodies his belief in backing underdogs: “we stand for founders; we stand for underdogs”. It’s aligned incentives at scale - helping founders own equity while giving investors optionality.