Power Law

“Right now, clearly the power law is more extreme than it has been in the last, you know, 10 to 20 years of technology investing, probably going back to, you know, the emergence of the network effect driven consumer companies.”

“The catch here is that the power law is only true in retrospect and it is very obviously true.”

“There's a power law in everything, and power law in business, power law in venture, power law in your life, and there's typically one thing every month or quarter that if you accomplish is worth more than everything else combined, and figuring out what that on…”

“If we can create more tools to have more founders to scale, then we can actually manufacture more outliers than the ones that naturally exist on the power law.”

“If you look at someone like Neil Mehta's track record, it's like, is his hit rate, like, 90%? No, there's, like, a ton of flame outs in there. But he's just invested in situations where he's put, you know, 400 in and gotten five billion out. And it turns out, …”

“These marketing buyers did have, there are a lot of network effects of marketing, because if I'm running much better marketing than you are, and we have a very similar sort of brand, I'm going to win and I'm going to win really big. I'm going to win sort of li…”

“I think Paul's got, his superpower is like not, he only sees what's possible and like how valuable or big could this thing be if everything works and he ignores every other outcome that's possible. And that is probably the right way to do seed investing, you k…”

“It's especially hard in a venture firm in light of the power law, right? Again, very few companies are going to Create returns, which means there's likely to be concentration among different investors. Which suggests that you can have a skew of ego or insecuri…”

“Given it's such a, and the industry is so driven by the power law, like, I think people can withstand cycles longer than we probably give them credit for.”

“Power laws pretty much end at about a hundred million dollar valuation, right? Depending on obviously like whether stuff will expand, you can't invest out a five hundred million dollar valuation, get a thousand X. It's just the math. Math doesn't work”

“One undisputable law, empirical law of a venture is the power law, right? And so the rare thing is not price. The rare thing is conviction and the company. And so if you've got conviction and you found the company, you write that check, 10,000,020 million, a h…”

“Unless you're a, I'm going to call it a tier one firm who has a history of getting amazing deal flow from the best founders, it's really tough to live on the power law and expect to get a unicorn in every fund.”

“So I've heard a lot of angel investors who are patient for two, three, four years, and then like exit soon as the company breaks out, right? And I would say this is probably one of the worse things you can do for yourself. And you know, if you sort of look at …”

“The lifespan of firms, some of them can be really short, but if you happen to get really big, you're going to last a long time. That should be a power law, and it is. It's also true that the lifespan of species phylogenera in ecology, you can think of that as …”

“With a power law, the more investments you make, the higher your average.”

“If you believe in the power law and you invest that way, excuse me, then what you're not going to do is waste time negotiating downside protection, because what you've realized is that eking out a one and a half X return On all these little investments is not …”

“The power law means that your single best investment will be worth more to you in return than all of the rest of your investments put together. Your second best will be better than three through infinity put together.”