Partly raw tape
D 3 · C 5 · P 4 · Cm 4 4.00
Q That's very interesting. So you think that actual kind of portfolio theory can be achieved in successful returns to LPs cash on cash wise? You know, I think three to four ice is considered a very successful fund for a mid-tier fund in the US. Uh, you think that can be achieved with the, The medium home runs that you just mentioned.
A Well, I think, I think power law exists, and I, I do think that, um, it will, it will be true that the best companies, um, are just, you know, orders of magnitude more than, than the worst companies or even the median companies, but I do think that there, you can create more best outcomes by looking for companies that have a more stepwise function into a large outcome that, that start with small markets and grow. You know, my, my favorite analogy is Peter Thiel and Facebook. You know, if you looked at Facebook in the earlier days, it was, wow, they're really good at getting college students to This doesn't look like a very interesting business, but when you look at how quickly they monopolize the Harvard campus, you know, they had 60% of the population in something like seven days. That is a very auspicious start, and if you can monopolize small markets, you can quickly aggregate those markets into larger markets, which then produce large outcomes. I think one of the problems with venture today is that everyone just looks at what's the fastest line of sight to a huge market, Which does, you know, it's a home run strategy. I swing at every pitch to try to get a home run. Um, but I think there's a lot of pitches that are hittable, uh, if, if they weren't trying to do home runs off the first, uh, first swing.
AI assessment note: “you can create more best outcomes by looking for companies that have a more stepwise function”
Answered raw tape
D 4 · C 4 · P 4 · Cm 4 4.00
Q Absolutely. The alignment is a fundamental issue with public markets and the hedge funds shorting companies and destroying and potentially, uh, It's a very, it's a very interesting dilemma in terms of kind of the regulation and structure around, around the ecosystem. Samuel Shaw, one of your investors, asks, how would you like startup financing to be regulated in the future then?
A A lot of people view regulation as bad, uh, inherently. I, I don't view it as bad, uh, inherently. I think it can be used poorly, but I think when done well, it's done right. It's a, it's a huge advantage, actually. Um, and so, for example, one of the One of the reasons that I think cost of capital for startups is so high is because there's lack of regulation. There's a lack of liquidity, you know, to raise 50,000 dollars from an angel investor in a seed round. It's not just that they're, they're putting risk of dollars on. They're putting liquidity risk because they know they won't get this. They have no way to exit this, uh, uh, for a decade. Uh, and they also know that they are required to do any diligence and there's no recourse that they've been defrauded. And I think introducing liquidity and regulation as an example could drive down the cost of capital for entrepreneurs. And so when I think about regulation in a private market, I, I get personally quite excited. If you looked at regulation and if, when you look at regulation today in the public market, and you'd like take series seven exams and all of those things, all of the regulatory functions, You can tie almost any regular regulation in the public market model to somebody got defrauded. And so we put in this rule to make that happen. And it's a patchwork of rules that holistically don't make a ton of sense. And if y…
AI assessment note: “introducing liquidity and regulation as an example could drive down the cost of capital”
