Kind of like becoming a referee in soccer, learn to play soccer first before you become its referee. Same with venture capital, learn how to run an outlier startup before you become its arbitrage. Or else you, too, will become a member of the following.
We have way too many venture capitalists today who do not know anything about what it takes to build outlier propositions capable of producing venture-style returns limited partners “hired” them to deliver. They fundamentally deploy risk incorrectly and perpetuate a sub-priming of innovation intake that yields nothing more than cheap downstream optimizations a greater-fool has no way of distinguishing from outliers upstream, who instead rely on a new normalization of truth.
I explain ad nauseam why the current model of venture capital is fundamentally and macro-economically incompatible with finding outliers. That is not to say your role cannot be different, but it means you must heed my warnings before you get in.
You see, a referee in soccer can destroy gameplay, much like what today’s overwhelmingly subprime investment thesis of venture capital arbitrage does to innovation. But a referee cannot make the game of soccer worthy of watching. Same with venture capitalists, they cannot guarantee the success of a startup. Their only respite being their unique alignment of foresight with an outlier as the viable investment “thesis to determine what can be discovered,” in Einstein’s words. Hence, their thesis must fundamentally change from shallow-and-wide private-equity hedging of sub-prime risk to the deliberate narrow-and-deep pre-chasm pursuit of prime risk, to find an outlier that knows no precedent.
We, as a society and limited partners deploying capital, must build better systems that mimic the risk of the underlying asset and in doing so, take into account what socioeconomic value strengthens the evolution of mankind. Or otherwise venture capital will remain the hollow goose-chase only a hand-full of venture capital firms manage to escape from.
As a technologist, I am frankly disgusted by how I see venture capitalists erode the integrity of innovation and take the innocent public for a triple ride. First, by the public money they are entrusted with from limited partners of pension funds and the like, second, by how their investments create products and services with false propaganda-driven suppositions of value sold to the public, third, by how post-IPO valuations leaves the public as the last of innocent “greater-fools” with high-and-dry scraps.
If you have any morals and consider your role on earth to becoming anything more than becoming the wealthiest societal bank-robber in the cemetery, I suggest you chart a course diametrically opposite to venture capital’s overwhelming sub-priming today.
