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Far out-the-money options are where the security price is further away from the strike price (K), hence possessing a low likelihood of paying out anything. That makes them cheap but with an asymmetrically rich upside relative to their initial cost in case of a payout—in a way that’s quite similar to investing in early-stage startups.

Are we back to the good old days of actual contrarian thinking? When a16 invested in Airbnb, market analysis suggested the short-term rental market was too niche and regulatory barriers too high. Their willingness to override consensus analysis—precisely the kind that research agents excel at producing—led to one of venture capital's greatest retur... See more

Similarly, most venture funds perform better in a market of steep ups and downs rather than steady growth. If you own something worth nothing, the dispersion of the potential outcome increases the likelihood that this will be worth something.

The second dimension of skill is the crucial one -and that 's relative skill. You can imagine the skill of players falling along a bell -shaped distribution. The point is that the bell is getting skinnier in a lot of domains, which means that the difference between the very best and the average participant is less today than it was a generation or ... See more

Specialisation, solo-GPs, a separation of advice, money, and control, these are all traits of an unbundling industry.

The same applies to the value of venture portfolios as they have convex pay-off structures like call options, built to capture right-tail events.

This evolution includes the fact that know-how is easy to come by, the importance of personal branding , better tooling , an influx of capital and talent to private markets,