vc

The problem is that when a strategy becomes successful it becomes widely mimicked, and when it becomes widely mimicked it changes the environment, and when it changes the environment, it changes the strategy. Managers lose their edge not because they’ve changed but because the market has. Thus, there is no "equilibrium" here. Just a never-ending ev... See more

It's like hiring Jimi Hendrix and then telling him he can only play songs that the record label (i.e. the committee) approves. You'll get perfectly acceptable music, but you'll never get "Purple Haze."

Over time, they start sourcing deals that they think will get approved, not the deals that excite them most. Group voting structures rob outliers of their agency and completely defeat the purpose of hiring them in the first place!

What both of these approaches mean is that the outlier needs to convince other people to see what they see. But here's the thing: early-stage deals often look, well, completely ridiculous.

So if you believe that venture capital is about outliers, and you believe that outliers cluster, there's really only one way to hire and construct your firm: you hire outliers, and you let them tell you where to invest.

I would posit that outliers cluster together. This isn't just true in venture—it's true everywhere, and the evidence is overwhelming once you start looking for it. You see it in sports, you see it in music, you see it everywhere: outliers cluster. Why? Because people who are exceptional like to be around other people who are exceptional.

I’ve been thinking about what makes certain venture firms work while others don't. I believe the answer might be simpler than anyone wants to admit: outlier firms are built by outlier investors looking for outlier founders .

Smart venture firms are adopting the private equity playbook with remarkable success. Concentrated portfolios enable deeper partnerships with portfolio companies. When you have 15 investments instead of 50, each receives meaningful attention. This hands-on approach drives faster growth, better operational metrics, and ultimately shorter paths to li... See more

Private equity firms solved this equation decades ago with concentrated portfolios and active value creation. They typically hold 10-15 core positions, enabling intensive operational support and strategic guidance. Their three to four-year hold periods align capital deployment with liquidity generation. Venture capital, clinging to spray-and-pray d... See more