📊 Anti Portfolio Theory of Product →

Often you hear product teams talking about their roadmap in investor-like terms. Managing their upcoming initiatives like a financial portfolio, distributing their bets among things of various categories, sizes, and risks — like a portfolio manager would do to hedge risk. Umang Jaipuria makes the case that product teams should be inverting this logic: concentrating their bets (and therefore, money and energy) behind fewer things.

All product teams should have ONE bet they are making, and put all their effort into making that successful. The fact of the matter is that a product team is not an entire company. A product team does not need to “survive” against all odds and hedge their risk. A product team needs to build a successful product. Even if that means failing after a while and having to start anew or go into maintenance mode or join other product teams that need to scale (that dreaded phrase ‘get reorg-ed’).

He also references the world-class investor Stanley Druckenmiller, and his similar philosophy that’s helped him to generate ridiculous returns over his investing career through this type of extremely calculated, concentrated betting:

“Yeah it’s completely contrary to what they teach in business school which is if you’re highly diversified you have less risk than if you’re highly concentrated. I don’t believe that at all. As an investor when I think most people get in the most trouble is when they have stale longs or stale shorts. When you’ve got 15-20 percent of your asset base or sometimes in macro positions I’ll have two or three hundred percent. Believe me they’re not getting stale and you have to have ruthless discipline and you’re coming in every day just to quote Andy Grove “you could not be more paranoid” and you’re constantly reevaluating.”

As Druckenmiller has famously said, “It’s not whether you’re right or wrong it’s how much you make when you’re right and how much you lose when you’re wrong.”