Petersen: VC incentives create herd mentality and cross-firm collusion
Ryan Petersen · Unicorn Founder on Unseen Arbitrages, the Paradox of Wealth + Charlie Munger Wisdom · Nov 11, 2024 · at 40:25
Flexport CEO Ryan Petersen critiques standard venture capital compensation and career risks, arguing that ten-year feedback loops incentivize risk-averse consensus-seeking.
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“So therefore, the way to avoid getting fired in VC, again, this is not Founders Fund. This is what I like about them, that they're very different. But is it, the way to avoid getting fired is to be, well, to double check everything you do with other VCs. To make sure everybody agrees. And you don't want to do it internally, because then you look like you got no opinions. And you can't operate. So you do it with all your buddies and all the other VCs. So it's just a collusion, massive collusion racket on purpose. Like, there's no, the incentives are just structured Such that everybody's talking to everybody to double check and make sure. And then that leads to regression herd mentality, regression of the mean.”
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