The Ledger
Every statement that passed quotation and attribution checks. Mix any filter with any other: certainty 1/5, debate potential 5/5, or both at once.
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Cahn: Venture capital firms cannot 'king-make' startups with capital alone
“I don't believe in King making and that's maybe a controversial thing to say. I think one of the lessons, you know, you'd think like, oh, Sequoia should be able to King make companies and like, that's so great. And that would be, by the way, if that was true, …”
Cahn: Generating $1B+ Gains Is the Only Definition of Success in VC
“There is a definition of success in this business. You're either a slugger or you are not. If you are generating billion dollar gains, you are a slugger. Doug Leone is a slugger. Pat Grady is a slugger. And Jurita is a slugger, right? So you either are sluggin…”
Cahn: Founders Should Offer Up to 5% Equity for Transformational Hires
“I tell founders all the time, if you find someone who's going to transform your business, give them five percent of the company. Now I say that it's an extreme statement. Maybe it's four percent, maybe it's three percent. But I think we get very married to lik…”
David Cahn: Physical data center construction capability will be a competitive moat
“One of my core perspectives that I've been developing over the last 18 months of writing about this is that construction itself is going to be a moat. The ability to build things is hard. And I think we underestimate that.”
Cahn: Investors overestimate how much individual researchers drive AI progress
“That said, I think we are psychologically biased to overestimate what that percent contribution is. And it may be the case that there's these broader macro variables, which we'll talk about, I'm sure later in this discussion, there's these broader macro variab…”
David Cahn: AI Era Competition Will Prevent Monopoly Profits
“The difference is that these monopolies are not hiding in plain sight. We all now know that if you build an amazing tech company, it can be worth a trillion dollars. In 2000, if you told people that they can have a trillion dollar tech company, they would have…”
Cahn: AI newcomers expect immediate AGI while pioneers project long timelines
“Like the path we're on was invented by these people who are raising the most concern or saying the timeline is longest. And it's the people who've been in AI the shortest who I think are saying like, Hey, it's going to come tomorrow.”
Cahn: Overanalyzing gross margins can impede venture capital returns
“At the end of the day, our job is to invest in companies that become really successful, not to be like super smart about analyzing them. And so I think sometimes the instinct to criticize a gross margin can get in the way of money making.”
Cahn: AI gives junior startup hires near-parity with senior peers
“Maybe 10 years ago, if you joined a startup and people didn't join startups that often, 10 years ago, maybe 10 years ago, if you joined a startup, like there's this whole experience curve, you're the junior engineer. There's a lot of people who are smarter tha…”
Cahn: Big Tech's Overproduction of Compute Directly Boosts Startup Gross Margins
“These big tech companies are producers of compute. Startups are consumers of compute. So if you believe there is an overproduction of compute and that compute prices go down, startups win because they are buying those compute. Lower cost of compute directly tr…”
Cahn: Injecting AI for Marketing Adds Costs Without Pricing Power
“If you are simply injecting AI so that you can tell investors that you have AI and so that you can, you know, talk on your marketing page about how you have AI, then you're just injecting a new cost item with actually no benefit to the consumer. And if there's…”
Cahn: Competing in Frontier AI Requires a Massive Non-AI Cash Machine
“I think the evidence of the last couple of years is in order to play in the big model game, you need a cash machine and that cash machine cannot be the AI business, right?”
Cahn: No Major AI Model Company Holds a Data or Compute Advantage
“I think it's really hard to argue today that any of the big model companies has a data advantage. Compute, it's just a commodity that you pay for. So it's hard to argue that any of them has a compute advantage.”
Cahn: AI's true bottlenecks are servers, steel, and power
“And so I'll propose my own three things that I think are the three things that matter. And I would summarize it as servers, steel, and power.”
Cahn: Infrastructure oversupply in an AI bubble benefits compute consumers
“Consumers of compute benefit from a bubble, because if we overproduce compute, prices go down, your cogs goes down, and your gross margin goes up.”
Cahn: Monopolistic dominance is not the steady state of business
“People over estimate the monopolistic nature of businesses, and that we're living in this sort of unique Gilded Age monopolistic era, and that that Is, is not the steady state of business.”
Cahn: Low early gross margins do not prevent long-term software success
“Plenty of companies that get critiqued for having low gross margins end up being super healthy businesses in the long run. You know, Snowflake was one of the big indicts on Snowflake in the early days was that it had a low gross margin. Obviously it's a very g…”
Cahn: Cloud Providers Are Trapped in an AI Capex Prisoner's Dilemma
“The cloud guys are stuck in more of a prisoner's dilemma. They have to keep investing. If they do not invest, they risk losing market share in one of the greatest businesses of all time.”
Cahn: Hardest part of VC is taking personal risk, not finding good deals
“And something I like to say to people is I don't think the hardest part of venture is figuring out what are the good companies. I think the hardest part of venture is figuring out when are you going to put your neck on the line for this company and all good pa…”
Cahn: Deal selection is more critical than winning or sourcing in VC
“Selection is the most important and I think, and then I think winning comes behind that and sourcing probably is actually, maybe it's tied, but I think it's probably third.”
Cahn: The best founders do not want to meet with VCs
“The best founders don't want to meet with VCs. That's the reality of it. You have to convince them.”
Cahn: Venture investors cannot force a startup to succeed
“The lesson that punches you in the stomach in venture is you can't make a company succeed.”
Cahn: The best venture investments are companies that don't want capital
“And I think some of the best investments are those companies that don't want to raise capital.”
Cahn: AI market consists of roughly 10 recursive major players
“There's like 10 players around this big chessboard, and they're extremely powerful, and each of their moves affects the other people's moves, so it's kind of recursive.”
Cahn: Scaling $0 to $100M ARR signals true product-market fit in AI
“Everybody's on the internet and everybody wants to buy AI. So if you have something really good, it's going to get adopted really fast. And so I do think to the point of playing the game on the ground and adapting to what you see in the market, the biggest thi…”
Cahn: Raising Seed through Series B in 12 months is a false narrative
“Most, there's this false narrative, I think, that, like, all the good companies, they, you know, they raise the seed, and then they raise the A, and then they raise the B, and it's all in 12 months, and it, Revenue, that's not really how most of these companie…”
Cahn: Long-term market volatility is irrelevant unless overextension causes bankruptcy
“Anything multiplied by zero is zero. And I think that's one of the really tricky things in investing, which is just to say that market volatility doesn't matter in the long run if you have a great business. But if you overextend yourself and then some crash ha…”
Cahn: Founders should be maximally aggressive while investors provide perspective
“Your job as a founder is to be maximally aggressive. And you should do that. And then the investor should hopefully be giving some advice, helping think these things through, giving some perspectives you know, understanding the, a broader time horizon perspect…”
Cahn: Generative AI breaks traditional recursive career algorithms
“The recursive algorithm of, like, what did the guy a year above me and the person a year above me do is actually breaking because those people didn't have this information. They didn't know that AI was going to change the world. They didn't understand gen AI.”
Cahn: Massive AI cloud capital requirements create significant barriers to entry
“Now, in order to be an AI cloud, you need to be willing to light a bunch of money on fire, right? And so I think that that is a pretty significant barrier to entry for new entrants.”
Cahn: Nvidia's fat gross margins will inevitably draw heavy competition
“NVIDIA earns a big gross margin. And when you, when anyone sees a fat gross margin in a big market, people come chasing.”
Cahn: Focus on Software Customer Behavior Over Stated Churn Intentions
“So I think the lesson is you have to listen to what customers do. They continue to pay for the, especially expensive products. If people are paying for expensive products and telling you they're going to churn, you probably shouldn't listen to that. They're pa…”
Cahn: Replicating 80% of 10 peers' distinct superpowers drives investor success
“I'm probably not gonna be as hundred percent as good as you if this is your superpower, but I'd like to be 80% as good at you at your superpower, and if I can be 80% as good as 10 people on each of their 10 superpowers, then I'll probably be pretty, pretty goo…”
Cahn: Optimal Venture Strategy Today Is a Barbell Approach
“And so I think the right strategy is this barbell approach, right? Where you're doing early companies and you're also doing late companies.”
David Cahn: Building a $10B+ company requires four distinct founder attributes
“I think if you have one of these, you can be very good. I think if you have two of these, you can be great. I think if you have three of these, you can build a billion dollar company. You need all four of these to build a ten billion dollar company, a hundred …”