Unknown Unknowns and the Problem of Hypocognition
I came across this Scientific American article in August and was struck by its relevance to a number of conversations we were having with investors. Without going into great detail, we were discussing a couple of investment opportunities that could be classified as esoteric or “off the run.” In many of the initial conversations, investors were trying to dig deeper into the opportunity in order to find an analogous thread that they could follow back to a previous investment or experience. While this is extremely valuable in helping suss out the types of risk inherent in any possible investment, what if the exercise misses the mark completely? What if we are applying our past experience incorrectly, neutering our ability to assess something that is truly novel?