Circle of Competence + Tailwinds Venture Selection
Pick industries with real tailwinds, but only inside your actual circle of competence.
- Difficulty
- Easy
- Time to result
- ~months to results
- Steps
- 5
- Confidence
- 75%
Reflecting on his next chapter, Gonzalez lays out a filter — borrowed from the concentrated, circle-of-competence investing style of the firm IGSB — for choosing which company, industry, or investment to pursue next. First identify sectors with genuine multi-decade tailwinds (he names decentralization and decarbonization), then honestly assess whether your specific skills actually fit inside that wave rather than chasing where 'the money is.' Stay strictly within your circle of competence, focus on the underlying economics of any opportunity rather than the narrative, and treat 'who will I work with' as a gating question, not an afterthought — Gonzalez says every major setback in his career traced back to being surrounded by people he didn't love or admire.
Origin
Modeled on the Investment Group of Santa Barbara (IGSB), a small Stanford-linked investment group Gonzalez worked with, which compounded returns for 50 years using concentrated, circle-of-competence bets.
How to run it
- 1
Scan for Multi-Decade Tailwinds
Identify sectors with structural, long-run growth (decentralization, decarbonization) rather than short-term hype cycles.
- 2
Map Your Skills Onto the Tailwind
Honestly ask where your specific experience gives you a real edge inside that trend, not just proximity to the opportunity.
- 3
Stay Inside Your Circle of Competence
Decline sectors you don't understand deeply even if they're growing fast — Gonzalez cites passing on pharma/vaccine development.
- 4
Concentrate, Don't Diversify Blindly
Commit meaningfully to a small number of bets you deeply understand rather than spreading thin, mirroring the IGSB investing model.
- 5
Filter Every Opportunity by Who You'll Work With
Treat working only with people you love and admire as a hard gate, not a nice-to-have.
Pro tip The growth happens in the uncomfortable moments — push your limits with people you trust, not strangers.
Watch out Ignoring this gate is where things 'break down, and they break down quickly.'
In the wild
The Investment Group of Santa Barbara built extraordinary long-term returns by staying tightly within their circle of competence, making concentrated bets, and only partnering with people they liked and admired.
→ Decades of compounding returns that Gonzalez cites as his personal model for what's next.
Despite seeing huge tailwinds in pharma/vaccine development, Gonzalez says he knows nothing about the space and would be operating outside his circle of competence.
→ He chooses instead to explore decentralization and climate, where his experience actually applies.
Common mistakes
Chasing Money Instead of Fit
Gonzalez warns against going wherever 'there's a lot of money to be made' if you're not well-suited to that field, since you'll be fighting uphill the whole way.
Ignoring Who You'll Work With
Every time in his life he 'got it wrong' was when he was surrounded by people he didn't love or admire, and those situations broke down quickly.
Straying Outside Your Circle of Competence
Entering complex sectors you don't understand undermines the concentrated-bet advantage that makes this framework work.
Is it for you?
Not ideal for
Someone deliberately trying to diversify broadly across many unrelated sectors.
From the transcript
“i look for industries that have enormous tailwinds and like where is the growth going to be and then where can i fit inside of…”
“focus on the things that you can be the best in the world at that have a bunch of tailwinds behind them and surround yourself…”
“be super concentrated don't get outside your circle of competence and you know focus on the underlying economics of the business”
From the episode
From NFL to Startup COO to Congressman Regulating Crypto (with Rep. Anthony Gonzalez)
Anthony Gonzalez