Zollman explains how this happens and draws out some of its less obvious implications. One that seems particularly important is a variation of the
friendship paradox - the fact that in a network of people, it can be the case for
most people that
most of their friends have a particular belief, even if that belief is rare. How?
It’s interesting to speculate about how, because venture capital is a tightly networked industry, this might contribute to (until recently) ever rising startup valuations. If the best investors are both (a) the best networked and (b) investing in the best, and so most expensive, companies, it might lead most of the industry to believe that valuations are
rationally increasing across the board. Of course, that’s
not the only explanation, but it’s a useful nudge to pay attention to what we we
think we know about what others believe.