Aug 23, 2024 · 1h 2m · more-or-less
#61: The Venture Capital Reset Era · More or Less Podcast
Sam Lessin · 21m spoken Dave Morin · 14m spoken Jessica Lessin · 13m spoken Brit Morin · 6m spoken Intro Singer · 9s spoken
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of the More or Less podcast, co-hosts Jessica Lessin, Sam Lessin, Brit Morin, and Dave Morin analyze the macroeconomic reset sweeping the venture capital industry, debating lagging fund liquidity, startup shutdowns, and shifts toward capital efficiency alongside discussions on AI cycles, regional tech migration, and emerging consumer hardware.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The hosts hold 99.6% of the talking time here. How this is scored →
The hosts as informed peer 6.1 Guest teaching 5.0 Guest disagreement 4.8 The hosts pushing back 4.6
speaking balance: gold is the hosts, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 32:16 Challenging the cycle-incineration excuse
Sam rejects Dave's assertion that initial waves inevitably vaporize capital, arguing dot-com was an outlier and refusing to excuse venture capitalists who deploy recklessly for fee collection.
Hardest push from the hosts ▶ 25:42 Refusing obvious consensus commentaryJessica cuts through the agreeable macro summary, directly telling the panel that their points are obvious retreads and insisting they answer what specific funds and models will emerge next.
Biggest teaching moment ▶ 22:52 Historical data on early DPI irrelevanceDave educates the group with European fund-of-funds data tracking 71 vintages, showing that top-quartile funds held zero DPI at year five before returning over twelve-fold by maturity.
The host holds their own ▶ 14:32 Reporting reality check on distressed financingsJessica demonstrates journalistic command by synthesizing Carta liquidity datasets, aggressive cram-down structures, and the contentious Bolt recapitalization to frame the market reset.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The hosts as informed peer | Guest teaching | Guest disagreement | The hosts pushing back | Why |
|---|---|---|---|---|---|---|
| More or Less Podcast Theme Song and Opening Animation | 3 | 2 | 2 | 2 | The co-hosts open with playful banter about summer vacations, DocSend marketing tactics, and whether to format Sam's essay as slides or text. The dynamic is lighthearted and self-referential with no real tension. | |
| Returning to California and Evaluating the State's High Taxes | 4 | 3 | 3 | 3 | The conversation shifts to California taxes and Peter Thiel's appearance on Joe Rogan debating Miami versus California. Sam shares personal anecdotes about Miami's lack of early morning work culture to support Thiel's observations. | |
| The Great Protein Obsession, Fairlife Milk, and Gyms | 4 | 3 | 2 | 2 | Jessica brings up Fairlife protein milk and lifting habits, prompting casual discussion about wellness trends and workout franchises. Sam contributes commercial insight into Orange Theory's private equity payback metrics. | |
| Peter Thiel's Gates Conspiracy and The Big Lebowski Homework | 6 | 4 | 4 | 4 | Jessica critiques Thiel's divorce conspiracy theory regarding the Gates Foundation before steering into hard venture reporting on Carta's liquidity data, down-round cram downs, and Bolt's founder recapitalization. The group trades views on founder fatigue and distressed startups. | |
| The DPI Debate: Fund Liquidity Versus Historical Vintage Performance | 8 | 7 | 6 | 6 | Dave challenges the Carta DPI report as content marketing, citing European fund-of-funds historical data showing a meager 0.22 correlation between year-five and final DPI. Sam pushes back, noting that recent fund vintages are visibly pacing worse than 2017 counterparts. | |
| The Future of VC: Serious Investing and House-Painting Startups | 8 | 7 | 7 | 7 | Jessica pushes the panel beyond obvious talking points to demand specific predictions on fund models and startup sectors. A sharp debate unfolds when Dave suggests technological cycles always incinerate early capital and Sam strongly objects, blaming venture fee incentives rather than technological inevitability. | |
| Shifting Venture Capital Models and Alternative Deal Structures | 7 | 6 | 5 | 5 | Brit suggests alternative venture structures like royalty and revenue-share models as startups focus on early profitability. Sam counters with structural realism, detailing how LP institutional requirements, UBTI, and ECI tax constraints prevent adoption outside classic C-corps. | |
| Forecasting Cycles: Exponentials Versus S-Curves in AI | 8 | 7 | 7 | 6 | Dave lays out a thesis based on exponential improvements in AI developer productivity, prompting Sam to take the under. Sam argues that Silicon Valley's linear-versus-exponential framing is flawed because real adoption follows S-curves, making asymptote prediction the true skill. | |
| Tinkerer VCs Versus Asset Managers and the Rex Woodbury Debate | 7 | 5 | 6 | 6 | Sam and Dave argue that venture influence is reverting from spreadsheet-driven junior financiers back to product tinkerers. When Brit cites Rex Woodbury's newsletter dividing VCs into artisans and asset managers, Sam dismisses the framework, stating the only metric is whether an investor actually returns cash. | |
| San Francisco Startup Revival and the VC Reset Timeline | 6 | 5 | 4 | 4 | Jessica observes renewed in-person startup momentum across San Francisco while zombie companies shut down. The hosts discuss a five-year reset timeline and anticipate technology becoming an ambient layer rather than a distinct investment category. | |
| Gadget Show-and-Tell: Humane AI Pin, Power Banks, and Starlink | 6 | 6 | 7 | 6 | The show transitions to hardware gadgets, covering the Humane AI pin and Nitecore power banks. A rapid-fire argument erupts between Sam and Dave over whether the Starlink Mini requires precise manual directional alignment or functions seamlessly in-motion via the Roam plan. |
Statements from this episode (22)
Sam Lessin Gathered 15,000 VC Emails by Gating His Pitch Deck
“Well, that's basically what I did for my future VC. And I have 15,000 VCs email addresses, which, you know, I now send them my weekly thoughts.”
Sam Lessin: Prenuvo Is 'Screwed' if Netflix Is Its Only Differentiator
“When that is the differentiator, we're fucked. That company's screwed. It's like, here's what we're gonna do. It's the same thing as everyone else, plus your Netflix.”
Dave Morin: Vocal Tech Transplants Are Moving Back From Miami to SF
“I do like that all of the Miami people are moving back here, and some of the most vocal Miami people have moved back.”
Sam Lessin: Orangetheory Fitness Studios Have $1M Build-Outs and Strong Paybacks
“Yeah, just like, it's all, it's like a million dollar build out. The payback's really good on them. It's like a good, it's a good business.”
Thiel Claimed Bill Gates Founded His Foundation to Pay Off Melinda
“The one thing that really pissed me off about the Peter Thiel, Joe Rogan interview was a long section where he Sort of claims in that Peter Thiel way that the only reason Bill Gates started the Gates Foundation was to pay off Melinda Gates instead of giving he…”
Lessin: Carta Report Shows Venture Funds Failing to Return Capital to LPs
“CARTA, the company that helps people
track their cap tables and has other sorts of data and occasionally gets in trouble, but that is a topic for another day.
Released a really interesting report that basically said venture capital funds are not returning mon…”
Lessin: Bolt Founder Ryan Breslow Pitching Self-Dealing Return Proposal to Investors
“Ryan Breslow, the founder of Bolt, who had left the company, is staging a comeback with a very audacious proposal that he's pitching investors on for him to return.
Includes a lot of self-dealing, as reported in the information.
Also reported that investors se…”
Sam Lessin: Depleted Fund Reserves Are Fueling Startup Cramdowns and Hostile Recaps
“You are seeing a lot of rights offerings or people doing cram downs.
And look, why?
It's like a bunch of old funds are in.
The thing didn't work.
There's a pivot.
The funds don't have any money to support it.
Someone new comes in and thinks there's value and s…”
Brit Morin: Seed-to-Series A graduation rates halved from 30.6% to 15%
“In 2018, there were 30.6% of companies that raised a seed round and then made it through series A within two years. Now that's only 15% in the last two years.”
Dave Morin: Carta's VC report is content marketing nonsense evaluating immature funds
“Like this Carta report is kind of content marketing nonsense because these funds are just too young to have any meaningful metrics or DPI in the first place.”
Dave Morin: Year-Five Fund DPI Has Only 0.22 Correlation With Mature Returns
“They analyzed 71 funds from vintage years, oh five to oh eight. And they found that the correlation between year five DPI and current DPI was just 0.22.”
Brit Morin: Bridge rounds made up 42% of priced seed rounds in Q1 2024
“42% of all price seed rounds in Q one this year were bridge rounds.”
Lessin: Most Seed VC Funds Will Vanish in a Few Years
“Like, again, they're just like, I think most of the seed venture funds that exist today will not exist in a few years because to the point we're talking about, there's like, there's no DPI and people's appetite to fund these things because they under think of …”
Lessin: Peter Thiel's monopoly thesis failed outside one or two cases
“Cause it turned out almost none of them became Mark Zuckerberg and Peter Thiel's monopoly thing didn't really play out, right? Outside of like one or two cases.”
Morin: Alternative venture deal structures could become standard within 10 years
“And so I think the nature of the venture capital deal is, is slowly changing. I think it's still definitely like the margin, like the edge case, but I could see that becoming a new norm, you know, 10 years from now.”
Lessin: Institutional LPs resist non-equity deal models over tax and legal rules
“Interestingly, I actually find that LPs are quite resistant to that because they, even for like legal reasons and technical reasons, like the, you know, ECI, UBTI type issues, like there's all these things that make it very hard for most LPs to deal with non-t…”
Dave Morin: AI Makes the Average Silicon Valley Engineer 3x More Productive
“AI is making the average software engineer inside of a Silicon Valley company. Let's call it three X more productive with today's models.”
Lessin: Tech is moving from exponential hype to S-curve realism
“I think we're at the end of truly people just being obsessed purely with exponentials and thinking they're very smart for exponentials and people getting serious about what an S curve looks like.”
Sam Lessin: Venture Capital Power Is Shifting From Finance to Builders
“This might be an interesting, different thing we haven't said, which is, I actually do believe that the power goes back to VCs who build and tinker, and away from finance people. Because I think VC, I think what's happened, you know, VC basically became mini i…”
Sam Lessin: Three Slow Ventures Portfolio Companies Shut Down This Week
“At least three companies this week have said bye-bye that should have said bye-bye to us, which is great.”