Investors often chase opportunities in startups, hoping to profit from future growth, which can lead to inflated valuations that may not be sustainable.

When investors have significant capital, they tend to invest in teams that appear to be attractive to other intelligent investors, which can lead to inflated valuations based on perceived potential rather than actual performance.

Valuation matters, but it shouldn't be the sole focus; understanding the potential return on investment is crucial, as a single successful investment can significantly outweigh losses from others.

Valuation refers to the estimated worth of a startup based on the last investment round, but it doesn't guarantee a liquid market like in public companies, making it more of a measure of perceived value.

The current AI landscape doesn't show signs of a bubble yet, as there aren't many companies going public without intrinsic value.

Investors know that founders want high valuations and often leverage this by offering a desired valuation while asking for unfavorable terms.

Entrepreneurs often overvalue themselves and may exaggerate their understanding of the market or the capabilities of their product.

The crypto boom showcased how distributed systems experience could lead to massive valuations without any product or even a white paper, highlighting a pattern of overvaluation in speculative markets.

Companies should avoid overpaying for talent during rapid growth, as it can create unsustainable salary expectations that are difficult to reverse later.