One of the most paradoxical truths in investing is that brilliant ideas and stupid ideas often look identical in real time. History is littered with examples of investors who passed on generational opportunities simply because the ideas sounded absurd at the time. This cognitive bias—our tendency to dismiss seemingly irrational concepts—creates one of the most powerful inefficiencies in markets. If harnessed correctly, it can be an edge that leads to asymmetric returns.
The Airbnb Case Study: The Fine Line Between Genius and Stupidity
Take Airbnb, for example. In its early days, Airbnb was rejected by over a dozen prominent investors, including Fred Wilson, one of the most respected venture capitalists in history. The concept of letting strangers sleep in your house in exchange for a few bucks seemed ridiculous—who would ever do that? It defied conventional wisdom about trust, safety, and hospitality. And yet, that ‘stupid’ idea went on to become a multi-billion dollar company, fundamentally reshaping the travel industry.
The same applies to Uber. The idea that people would willingly get into a stranger’s car instead of using a licensed taxi seemed absurd at the time. And yet, Uber has become a dominant force in global transportation.
Same thing happened with Bitcoin and a number of cryptocurrencies. The takeaway? Truly disruptive opportunities often appear foolish at first glance. But if a ‘stupid’ idea is gaining traction—if it starts acquiring early network effects—it deserves serious attention.
The Investment Formula: Stupid Idea + Early Network Effects + Huge Potential = High-Conviction Bet
The key to this strategy is identifying ideas that appear stupid but are actually brilliant when viewed through the right lens. These ideas share three main characteristics:
- They sound completely ridiculous at first – Most people dismiss them outright because they violate conventional logic.
- They exhibit early network effects or traction – The market is proving that despite the skepticism, people are using and engaging with the product.
- They have huge potential (Total Addressable Market, or TAM) – If the idea works, it could reshape an industry or create a new one entirely.
This framework has been validated repeatedly in venture capital. Many of the most successful startups of the past two decades fit this pattern. The challenge is overcoming our cognitive biases and recognizing when an idea, while seemingly absurd, is actually gaining real-world momentum.
SPX6900: A Case Study in a ‘Stupid’ Idea That’s Becoming Brilliant
A contemporary example of this principle in action is SPX6900, a meme coin that, on the surface, appears completely nonsensical. Its a coin whose goal is to flip the SPX500, which trades at around $50 Trillion Dollars, nuts right? Dismissing it as a joke would be the natural reaction for 99.9% of investors. But here’s the catch: it is growing. It is acquiring network effects. It already trades for hundreds of millions of dollars in market cap and is listed in numerous exchanges. The name itself, which sounds ridiculous, is also fueling its virality.
Its often made fun of as people consider it too wild to succeed, but the more hate it gets, the more the meme spreads. Its TAM is also huge, its basically anyone on earth, while having a massive price target (measured in the trillions) it checks all the boxes in the stupid-brillant investment strategy.
The conventional investor would scoff at it, just as they did with Airbnb, Uber, or even Bitcoin (or Doge) in its early days. But the counterintuitive lesson is that when a ‘stupid’ idea starts attracting real adoption and community engagement, it is no longer stupid—it is a high-upside bet with asymmetric return potential, a highly postive EV bet. Fading it might save the investor a few pennies when the idea dies out but it will cost them a fortune when the idea explodes, just ask Fred Wilson. When running a VC style portfolio (one with assymetric bets) virtually ALL of the returns lies with the outliers. And “stupid” ideas with massive upside often can be these outliers.
I can already hear the mid-curvers say “but airbnb and uber have revenues, memecoins have nothing!”, for those paying attention, in crypto revenues or profits have never been needed by anything in order to reach huge market caps, Bitcoin, Doge, Pepe, etc. The presence of revenues is irrelevant to the success of an investment in which the main utility is just holding and being part of something! The point is that “stupid” ideas are often mispriced and underestimated by market participants, that is the point!
Cognitive Dissonance and the Illusion of Rationality
Most people believe they make purely rational investment decisions, but in reality, they are heavily influenced by emotions and social proof. As I wrote in my free private discord:
“99.9% of people would have passed on Airbnb also, because early on it sounded insane. But they will never admit that to themselves. 99% of people get affected by price action (prices up, they are bullish, prices down, they are bearish), but they will never admit that to themselves.”
This is the essence of market psychology. Investors anchor their beliefs to what is familiar and logical, often missing the nonlinear potential of ideas that at first glance seem irrational or they just react to whatever prices or the heard are doing, instead of anticipating the next big thing.
Conclusion: How to Apply This Strategy
To capitalize on the Stupid-Brilliant investment strategy, you need to:
- Develop pattern recognition – Train yourself to spot ideas that follow the Airbnb/Uber/Bitcoin pattern.
- Detach from conventional logic – If an idea is widely ridiculed but is showing undeniable traction, investigate deeper.
- Watch for network effects – A ‘stupid’ idea without growth is just stupid. A ‘stupid’ idea with rapid adoption is potentially brilliant.
- Be early but not too early – Timing matters. Entering when the idea is gaining its first wave of believers, but before mass adoption, is key.
Many of today’s best investments will initially appear insane. But history has shown that true disruption often hides behind an illusion of stupidity. If you can see through that illusion and recognize the underlying potential, you’ll find opportunities that the rest of the market is blind to.
Good investing,
-Nando