As a right of passage of sorts, after birthing a multimillion-dollar exit, I was invited to work, part-time, for a tiny VC “play” fund for a while, as a venture partner, while operating as CEO of another Silicon Valley startup company.
Nothing specifically bad about that fund, but I would not work in a similarly structured fund anymore. I cannot be a cog in a broken wheel.
Those funds proliferate investor socialism, chockfull of collusion, excessive deal fragmentation, and syndication, fundamentally incompatible with finding outliers of innovation. Worse, the majority of emperors on Sand Hill Road, you are expected to collude with wear no clothes, are nitwits, have little imagination and foresight, and have no real-world understanding of how technology-risk is the least of risks of a technology company.
Venture firms are the reason why innovation has turned subprime, for the investment thesis developed by VC determines what innovation they can discover, in Einstein’s words. And venture firms’ incompatibility with the investable asset is precisely the reason why they are now choking on their own vomit.
You see, real outlier entrepreneurs pursue a new and higher normalization of truth that has no precedent, one that defines a new normal based on the upside of foresight. Such a thesis cannot be found with an investment thesis mired in the dogmas of hindsight perpetuated by the majority of venture firms, eager to agree with each other on the proper collaborative protection of downside. A reason why real entrepreneurs like Elon Musk at a crucial early-stage with Tesla had to raise money from other investors, with better alignment and appetite for outlier risk. None of the traditional venture firms could see the forest through the trees.
So, venture firms over the last twenty years have, by their structure, become macro-economically incompatible with finding outliers of innovation, the reason why I am not interested in working with many of them. But such overwhelming incompatibility yields a fantastic opportunity to invest prime, with a new investment vehicle deploying the antithesis of venture’s sub-priming today.
I will start or join a new type of venture firm to find outliers of innovation the world genuinely cares about, once I am done putting the reinvention of a new operating system for humanity on the rails.