What Would Have To Be True

A framing that lists the conditions that must hold for an investment to succeed, so each can be judged on its own plausibility.

Example

For this to return 10x: the market must reach a certain size, the company must win a third of it, and margins must reach 30%.

It turns one big hopeful judgement into several smaller checkable ones, and usually exposes the one condition nobody believes.

Load-Bearing Assumption — One of the two or three facts about the world that a thesis rests on, such that if it stopped being true the whole belief would fail.
Bear Case — The most plausible version of how an investment goes badly, argued seriously rather than as a token risk section.
Investment Memo — A written document setting out the case for and against an investment, the key assumptions, and the reasoning behind the decision, prepared before money moves.

If you cannot write a good bear case, you do not understand the deal — A bear case built from generic risk categories teaches nothing. A bear case built from 'what would have to be true' names the specific number the whole thesis depends on. (12 min)