Real Options

“Sometimes what we are doing is R&D type investing. We are putting money in so that we have an embedded option to keep our money in. That what we are buying is, in the parlance of economics professors, a real option, and the real option is that we don't have to…”

“Real options tend to be relevant when there's a lot of uncertainty, which is almost always true for young companies. Second, when we have an astute management team that knows how to cultivate and ultimately exercise options appropriately, when there's access t…”

“So in an option, what you want is lots of volatility. You want lots of volatility, right? Which is sort of counter. So the more volatile the world is, the more valuable the option is.”