The highest performing venture capitalists in any (rational) environment are likely to have a particularly raw and tactile interface with the world. They are maximally open-minded, energetically curious, and have mastered the reflective act of developing opinions about the future. Most importantly, they have escaped the cognitive prisons of... See more

That fork in the road will be determined by whether or not the industry can develop a more sophisticated view on behavioral economics, and resist current incentives to embrace bias. This is part of a sustained battle to professionalise the strategy and squash rent-seeking grifters who achieved huge success in the ZIRP bull run.

LLMs are powerful tools, but they are fundamentally backwards-looking in their reliance on training data, with limited ability to reason toward novel conclusions. Thus, they are quite specifically unsuited to early-stage venture capital investments where extreme idiosyncracy grapples with realities that may be a decade away.

That’s not to say they... See more

What’s particularly interesting about these studies (detailed below) is the clarity they provide about our vulnerability to cognitive biases. Where investors are able to reason objectively, they comfortably outperform algorithms. Where they can’t, they are soundly beaten.