This is a free weekly newsletter about the art and science of building and investing in tech companies. To receive Investing 101 in your inbox each week, subscribe here:

Subscribe now

Starting in 2024, I reflected gratefully on the US of A around the Fourth of July. As a result, I sat down to pen a “love letter to America.” The next year, I found myself revisiting the same theme at the same time, writing about that “ongoing love affair.” Apparently this is a tradition now, which is just a habit you’ve decided to be proud of. So I’m sticking with it.

Speaking in generalities is always dangerous, but despite the need to account for nuance, I can’t help but feel like I’m in a vocal minority within my generation; those willing to kick against the pricks, and position ourselves against the general melancholy most people my age feel about the US.

Regularly, I come across yet another American issue, whether historical context to reckon with, or active decisions being made today that fundamentally violate what I see as good or necessary. Yet, despite that frequent confrontation with the messy nuanced reality of being a global superpower, I find myself firmly rooted upon the same optimistic bent at the end of any rabbit hole about the United States.

The prior two annual love letters, I worked to acknowledge the nuance; in some cases apologetically. I don’t want critics to feel unseen, nor do I want to undermine my authority as a writer by pretending the fundamental issues in the United States don’t exist. But instead of tripling-down on that nuanced middle, I want to explain why, despite anything else that defiles the US in many other people’s minds, I cannot help but love this country. Last year I landed on a phrase that’s been rattling around in my head ever since, and I want to spend a few thousand words exploring it. What I love about the United States is that it is structurally redemptive.

Loving a Flawed Thing

When Thoreau said “the mass of men lead lives of quiet desperation,” I think an element of that desperation comes from living an unexamined life. The same is true of a country, you cannot love it without being willing to look at it honestly. The willing intent to honestly evaluate something is a critical element of sincere love; “warts and all.” In a beautiful speech yesterday, Matthew McConaughey put it this way:

“We need skeptics, yes we do. We do not need cynics. One cares enough to question, which we should. The other one has already quit. We don’t need you.”

The blindly patriotic and the blindly cynical are running the same play from opposite ends of the field; both have decided that admiring a thing and indicting it can’t happen in the same breath, so they choose whichever extreme appeals to them and anchor their personality to it. But duality is possible. I’ve returned over and over and over again to F. Scott Fitzgerald’s missive, “the test of first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.” A love letter to America that can’t embrace flaws and still net out positively isn’t a love letter at all.

The Cost of Redemption

The invoice of American history is not casually itemized: slavery, segregation, Native American genocide and land theft, foreign coups, military interventions, economic exploitation. These aren’t just small sins easily dismissed with hand-waving and cultural exceptions.

American romanticism is tempted to imagine the men who wrote the Declaration standing cleanly above the wreckage, but they didn’t. The same Thomas Jefferson worthy of being held up as the patron saint of free speech was not only a slaveholder, but was, in Joseph Ellis’s telling, the man under whom “the seeds of extinction” for Native American culture were sown. We don’t get to keep the eloquence and discard the man who held the whip.

My own faith tradition has plenty of the same blemishes, from the failed experiment of handcart companies we sent walking into a Wyoming winter to earn their bloody passage into the Mormon Zion, to the Mountain Meadows Massacre where intense anxiety and cultural exhaustion curdled into murder.

Modern imbalances are often economic, resulting in a cultural allergy to talking about inequality. In 1979 the ratio between a typical S&P 500 CEO and their average worker sat at 29:1. By 2024, that had grown to 285:1. That’s just one data point on a long list of financializations in the US. We financialized ourselves into a country that preaches opportunity while often engineering its opposite.

A retired admiral and a former Marine wrote a sentence in 2034, the novel, that genuinely bums me out: “the America that we believe ourselves to be is no longer the America that we are.” That sentiment rings true across culture, morality, opportunity, freedom, equality, religiosity, and on and on.

But the cost of redemption is less about making the failures go away, or hoping desperately that no one brings them up. It’s a willingness to let them be named, weighed, and measured. And, if the net ends up in the black, persevering despite those flaws.

The short bill I’ve laid out in a few quick paragraphs is deceptively brief; each line item houses its own entire academic discipline. Any attempt at justifying my unrequited love for the idea of America requires me to, first, lay that reality on the table. From there, I’m left with an honest line of questioning: what does the country do with its power? Does it aspire to good? And does it allow for internal reform?

The Redemptive Engine

A few weeks ago, a friend of mine put forward what I felt was a pretty brazen claim: he believes America is the single greatest perpetrator of evil since the end of WWII. That blew me away for a couple reasons.

First, because of the other rightful nominees for that title. Mao’s 30M+ body count in The Great Leap Forward, Khmer Rouge killing a quarter of Cambodia’s entire population, North Korea’s ongoing gulag-and-famine system, Chinese mass detention, forced labor, and sterilization among the Uyghurs.

Second, because of the massive balance on America’s positive side, from the Marshall Plan pouring treasure into the rebuilding of a Europe we could just as easily have stripped for parts, to Germany and Japan handed back as functioning democracies rather than left as occupied ash. From Norman Borlaug and a Green Revolution credited with pulling as many as a billion people out of the path of famine. From the US President’s Emergency Plan for AIDS Relief (PEPFAR) and its ~25M lives saved since 2003. From the transistor, the internet, GPS, the moon... most of the compounding architecture of the modern world was built here. Let alone the cultural machine across film, music, and television. Let alone spending decades of holding a loaded civilization-ender and choosing, over and over, not to use it!

But, in particular, because of the historical precedent set by other superpowers. From the Roman Empire to Imperial China, the British Empire, the Mongols, Ottomans, and on throughout history. The precedent each of those set was a war engine built on conquest, slavery, repression, and elite self-interest that ends in empirical domination.

Among all the black marks on America’s record, the fundamental rebuttal is that responsibility scales with power and no hegemon over the last ~100 years has been more consequential than the US. So of course we’ve had our fair share of attempting to play the game and doing it poorly. But had we run back the traditional playbook, we would have dominated Europe post-WWII and set up the empire we’d rightfully earned. But we didn’t!

Moving beyond the “so-and-so is worse” or “what about all the good” balancing acts, the fundamental separation that makes America unique among the powers that have run the world before us stems from the core architecture that we shipped with: a Constitution that established a framework for self-correction through protest, reform, and amendment. And it worked, over and over again. Through abolition, civil rights, suffrage. That is the whole difference between a country that sins and a country that is only its sins. We have redemption built into our source code.

As Lincoln’s biographer, Richard Brookhiser, framed Lincoln’s thinking: “the Declaration is the end, the Constitution the means.” The promise came first, then the machinery to keep delivering on a promise the country couldn’t honor on day one. Redemption was meant to come through us as American citizens, not through some strong man who would fix the broken system by seizing it. Lincoln’s cure for the disease of self-government was self-government.

You find a comparable story in the biography of Benjamin Franklin where he described a religious group called the Dunkers who refused to publish a “fixed creed”:

“When we were first drawn together as a society, it had pleased God to enlighten our minds so far as to see that some doctrines, which we once esteemed truths, were errors, and that others, which we had esteemed errors, were real truths.”

Jefferson, similarly, defended even the right to their perspectives of those who wished to “dissolve the union” who should be left standing “undisturbed as monuments of the safety with which error of opinion may be tolerated where reason is left free to combat it.” The consistent sentiment? Systems will protect us as the quality of shared ideas win out eventually. That’s the redemptive engine; a self-correcting mechanism that can enable and protect freedoms that could destroy it, believing that if it’s good enough it can’t be destroyed, and if it’s not good enough then it should be destroyed.

One critical dynamic of self-government is that it only works if everyone’s in. I keep returning to this idea of an educated electorate; a populace with skin in the game and the wherewithal to understand what’s at stake. The biography of John Quincy Adams references the need for “a nation of free men... to cultivate the gifts of all its citizens.” A monarchy can run on passive subjects; a republic cannot. That’s what Franklin meant when asked what kind of government the delegates had arranged, he answered, “a republic, madam, if you can keep it.”

Good new and bad news about the shared responsibility for our collective redemptive engine. It buys the right to our own end, for better or worse. Lincoln made that clear when he said that all the armies of Europe, Asia, and Africa combined, led by a Bonaparte and with all the treasures of the earth, could not by force take a drink from the Ohio or make a track on the Blue Ridge in a trial of a thousand years. “If destruction be our lot, we must ourselves be its author and finisher. As a nation of freemen we must live through all time or die by suicide.“

That’s the engine I love. Not a perfect nation. Not a faultless empire. But a machine that was built in pursuit of becoming less bad, as long as we can maintain it.

The Opportunity Economy

The thing that gives the citizenry skin in the game is opportunity. There’s a common metric around the idea of Economic Freedom with an ideological lineage running from Adam Smith to Milton Friedman and beyond. Organizations like the Fraser Institute and the Heritage Foundation use dozens of indicators to quantify it.

In 2025, the US was ranked 5th globally for Economic Freedom, and the only global superpower to show up in the top quartile (a few great power countries like Germany, Japan, UK were ranked 13th or lower, and then China and India were in the third quartile, Russia in the fourth). Also, not for nothing, but the only countries ranked higher than the US were Hong Kong, Singapore, New Zealand, Switzerland; and I’m not sprinting for the American exit, destined for any of those spots.

Despite all the complexity; all the ink spilled across the black and the red in the ledger of a country’s merit, the goal of a nation should be a simple scorecard. Create opportunity, which creates wealth, which allows everyone to thrive. Protect the mechanisms of that Opportunity Economy, and other problems start to solve themselves. That’s the American Dream.

James Truslow Adams coined the phrase “The American Dream” in his book, Epic of America when he made a very similar point:

“The American Dream is that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement. It is a difficult dream for the European upper classes to interpret adequately, and too many of us ourselves have grown weary and mistrustful of it. It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.”

Once again, we turn to Benjamin Franklin for insight into this phenomenon, both when he’s describing America as a definition; “not, ‘What is he?’ but, ‘What can he do?’” Or articulating the recipe as how “one man of tolerable abilities may work great changes, if he first forms a good plan and makes its execution his sole study and business.” Tolerable abilities. Not exceptional. The whole premise is that the country is supposed to convert tolerable abilities into great outcomes.

The modern question, though, of the health of that Opportunity Economy is diametrically split.

On the one hand, folks like JD Vance have contrasted his grandparents “almost religious faith in hard work” and the accessibility of the American Dream, against a common modern ailment of “learned helplessness.” So often today, people conclude that the choices they make have no effect on the outcomes of their life.

Then, you have the opposed worldview articulated by Rutger Bregman when he said “there’s almost no country on Earth where the American Dream is less likely to come true than in the U.S. of A. Anybody eager to work their way up from rags to riches is better off trying their luck in Sweden, where people born into poverty can still hold out hope of a brighter future.”

So is the Opportunity Economy anchored in the same old American Dream, its just harder to recognize? Or is it true that we’ve lost the path to prosperity that previously defined what it meant for America to be the land of opportunity?

Here’s my hypothesis. Both camps are describing the same phenomenon from opposite ends. The same access to opportunity does exists; the machine that converts tolerable abilities into great outcomes hasn’t been dismantled. But what’s been lost is the map. The legible, reliable pathways that used to run from effort to reward have been overgrown by cultural warfare, institutional rot, and bureaucratic excess. What’s more, it’s been papered over with well-meaning heuristics that no longer work and often backfire: go to college, just work hard, follow the script.

People try and follow the map. And when it fails to pay out, they assume the system is broken. That’s a rational response. In aggregate, millions of people are running around with outdated instructions that stall mobility. The same logic reframes that inequality. The widening gap between the top and everyone else is less about a broken machine and more about the map surviving mostly for those who already hold it.

Mitt Romney’s biography makes this point; one advantage we have is that “innovation and entrepreneurism are deeply embedded in the American DNA.” But the problem is capital. “Where capital is scarce, hard to find, or not available to entrepreneurs and innovators, good ideas simply die in the mind.”

Many voices in modern American political philosophy anchor to seizure and redistribution; the “democratic socialists” want, simply, to spread the wealth around. But the reality is you cannot subsidize failure and expect wealth. Romney’s biography goes on: “When government heavily taxes investment, innovation, and entrepreneurship, we get less of those things—and fewer new high-paying jobs.”

Our biggest obstacle is that we experienced a post-World War II boom that was so magnificent and empowering that it taught a generation or two of Americans to live life on easy mode (to some extent, especially economically). But, despite that multi-decade data set of wealth and progress with relative ease, the Opportunity Economy is not naturally forming. We might be a nation built on the back of “tolerable abilities,” but someone still has to fund those pursuits, both in time and money.

We used to be quite good at that. We’ve gotten quite bad at that. And it’s caused a whole host of problems for a lot of folks.

Proof Cast In Steel

Over the last few years, as I’ve been writing The Anduril Thesis, I’ve been immersed in the Industrial Golden Age of America during and immediately after World War II.

We went from producing 3K aircraft in 1939 to 96K a year a few years later; we built ships so fast that some were completed in just over four days; we put up the Space Needle in ~8 months, as the front gates of a party. Jon Gertner described Bell Labs as the country’s intellectual utopia, “where the future, which is what we now happen to call the present, was conceived and designed.” Compare the rate of acceleration Bell Labs drove across a host of devices, sometimes 3,000x in short spans; it would be like seeing the modern automobile costing a dollar and going 1K miles on a gallon of gas.

The chip industry, which was born in the US, now produces “more transistors than the combined quantity of all goods produced by all other companies, in all other industries, in all human history. Nothing else comes close.” That’s how Chris Miller puts it. American companies, like Intel, used to stand up proudly and say “venturing is venturing” as they took on Herculean risks. Vinod Khosla borrowed from George Bernard Shaw when he said, “All progress depends upon the unreasonable man.”

Kelly Johnson’s Skunk Works engineers were always a stones throw away from the airplanes they were building. Alan Kay put the whole era’s spirit in a sentence: “the best way to predict the future is to invent it.”

I could go on and on about that Golden Age of Industrial Might. But again, forcing myself to embrace the black and the red ink on the ledger, there is nuance. The same industrial capacity that built a modern empire also sowed the seeds of modern disillusionment. I love the quote from George F. Johnson when he said:

“The trouble with most employers is that they don’t see far enough ahead. If they did, if they had real vision, they’d see that they would be better off paying good wages and helping their workers to lead normal, happy lives, owning their homes and being a real part of the community. But the short-sighted employers want to make quick money, and think they can get it by paying as little as possible, exploiting their workers and the people who buy their product.”

In 1986, Bob Noyce already saw the death spiral America was in as we fell further and further behind in basically every industry. We became what Noah Smith has called the Build-Nothing Country, “where the once-mighty middle class sinks into a genteel poverty and someone else builds the future on the bones of our civilization.”

So we know we can build because we’ve done it in the past. But we don’t today. The biggest obstacle is the loss of the spirit of Redemption. Anchoring any given worldview to a timescale of decades. The belief that we are capable enough and, given enough time, can accomplish anything. That we can redeem ourselves, sins and all. Things can get better if only we think far enough ahead. From capital to culture, the foundation upon which America was built was Optimism.

The Redemptive Spirit

In 1862, Brigham Young led what I believe is the “quintessential American religion” when he built a city in the desert under the refrain: “We are not going to wait for angels, or for Enoch and his company to come and build up Zion, but we are going to build it ourselves.”

In 2008, a Wisconsin town watched its primary employer, a GM plant, quietly die. One woman expressed the same sentiment as the Prophet of my forefathers: “We are not going to wait for the government to come in and rescue us. We are not going to wait for GM to rescue us. We are on our own. Let’s get this job done.”

Two wildly disparate voices across 150 years and dramatically different situations, echoing the same American trueism. “We aren’t going to wait. We’re going to build it.”

It is quintessentially American to try and solve problems. But that has started to dissipate. The hangover of a post-WWII industrial heyday bred a rising generation that were used to good education + good paying job = lifelong security. But that was always a temporary softness, never a structural given.

If we are to rise to the levels of our Redemptive Foundation for the next 250 years, we have some history lessons to re-learn.

But “we’re on our own” never meant every man for himself. The American reflex to being on your own has always been the opposite: to find the others. In Democracy in America, the French diplomat and philosopher, Alexis de Tocqueville, made a keen observation that not only continues to ring true today, but is also under discussed for what it reveals about American Exceptionalism:

“Americans of all ages, all stations in life, and all types of dispositions are forever forming associations…of a thousand different types—religious, moral, serious, futile, very general and very limited, immensely large and very minute….As soon as several Americans have conceived a sentiment or an idea that they want to produce before the world, they seek each other out, and when found, they unite.”

Another author, Matthew Desmond, made the point that ownership, accountability, “association,” comes when there is, as I said before, skin in the game. Again, quoting Tocqueville, “It is difficult to force a man out of himself and to take an interest in the affairs of the whole state. But if it is a question of taking a road past his property, he sees at once that this small public matter has a bearing on his greatest private interests.”

In other words, as Desmond puts it, “it is only after we begin to see a street as our street, a public park as our park, a school as our school, that we can become engaged citizens.” Our desire to associate, be it in the form of startups, communities, churches, social circles — we want to solve problems with likeminded people.

That is a fundamental reason why ease and disillusionment are so deadly. If we see America as neither “our country” nor “our problem,” but a “problematic country” with “unsolvable problems” then we have no incentive or intention to solve it. And that surrender wears both jerseys.

On the left it’s the newly-elected congresswoman who bragged she “wiped [her] hand on the American flag” for lack of a napkin, or Andrew Cuomo’s “We’re not going to make America great again — it was never that great.” On the right, it’s the mirror image. Different politics, same white flag. Marjorie Taylor Greene pronouncing the country “too far gone” and filing for a “national divorce.” Just yesterday, in Mayor Mamdani’s Fourth of July speech, he chose to frame the coming to America:

“Ships full of travelers weary from long journeys, have passed through the narrows, the winds of the Atlantic at their backs. When those passengers lifted their heads to glimpse what lies just beyond the waves, what did they see?… They saw men waiting at the docks to take them into bondage.”

Defaulting to America as an object of shame is a dereliction of duty. A casting off of accountability. Redemption must be sought and claimed, not passively perused. As long as we fail to recognize the critical role that Redemptive Optimism plays in enabling American Exceptionalism, the deeper we’ll fall into a victim mentality of shame culture and disappointment.

A Bet Worth Making

Optimism requires responsibility. My Dad shared the right formula for that with me years ago; “pray as if everything depended on God and then work as if everything depended on you.” Lets shape it to this particular mission. The fuel of the Redemptive Engine of America is hope + labor. Disappointment and shame don’t produce hope. Letting negativity tear us down yields anti-labor; the epitome of counter-productive work.

So let’s shape the bet we need to make around that formula:

• (1) Inspire hope in the Redemptive Engine of American Opportunity

• (2) Build a framework of Productive Labor in pursuit of valuable outcomes

I go back to this idea of an educated citizenry; people educated enough to pursue important ideas that yield hope. John Quincy Adams’ biographer said it well; America “needed eloquent men as no other, lesser nation did.” Eloquence. Narrative. Rhetoric. What Byrne Hobart writes about as “thymos”; spiritedness, a relentless drive to transcend the limitations of a listless present. We’re drowning in eloquence in service of a poisonous thymos. The bet is that we can awaken a national rhetoric in service of a worthy thymos.

Mitt Romney’s biographer makes this point about that need for worthy rhetoric:

“If our children do not learn about and come to cherish America’s heritage, history, culture, and founding principles, how can they be expected to defend the freedoms on which their country is based? How can young citizens become adult citizens equipped to critically examine contemporary political ideas in the light of history, or become informed about matters of public policy, or even simply understand the value of voting?”

This hearkens back to Cicero’s political philosophy that Charlie Munger talks about: “that it was the duty of the citizenry, particularly its most eminent members, to serve the State and its values wisely and vigorously, even if that required a great sacrifice on the part of the servers.”

On the one hand, you have that responsibility of the citizenry. “Cherish America’s heritage”, “serve the State.” Not an unembodied Bureacratic State. Serve the American people; the institutions, systems, laws, public good. On the other, you have the responsibility of American institutions to try and do what’s best for the people, even regardless of their immediate stated preferences.

There is a rich vein of perspectives where great leaders have tried to do what they felt was best for the American Experiment, regardless even of intermediate popularity. From Adams to Lincoln to Kennedy who have held a deep reverence for the authority of their constituents, but are still willing to “defend their interests against their inclinations... to save them from the vassalage of their own delusions.” Lincoln felt he had the power to sign the Emancipation Proclamation, but also thought he might be wrong. So he determined the people would inform him of which answer was right. He “gave ‘em a year and a half to think about it. And they re-elected” him.

People who cherish America’s heritage and set about to serve the State. Institutions who set about to empower the Opportunity Economy. That’s the bet in motion: hope turned into labor. But, more than anything, the most hopeful thing you can do is have kids. The hardest labor of all. Having children is the most hope-filled demonstration you can offer in favor of the future you want to bring about. Being willing to live, fight, and even die for a world you will never get to see, but knowing that they will. There is nothing more satisfying than planting trees whose shade you’ll never sit in. I’ve planted four. I want to invent the future on their behalf, and I’d make that bet again any day.

Therefore, What?

The country I love is defined by optimistic realism. The willingness to recognize a problem and then fix it. Not the ignorant mass of flag-waving with blinders on, nor the unfettered rage of the mob calling for the dismantling of America. The wide-eyed middle, staring down the full catalog of sins and then setting about, stubbornly and unfashionably, to make the next iteration better than the last.

The active ingredient of hope is action. The most dangerous counter-example is comfort. From H.G. Wells’ Time Machine to Amusing Ourselves To Death to Brave New World; I’ve seen dozens of illustrations of the threat of comfort. The most dangerous thing that ever happened to American action was how well it worked. The post-WWII boom was so total, so magnificent, that a generation or two stopped noticing it was a boom at all. Good education plus a good job equaled lifelong security. We inherited the shade of trees we hadn’t planted, and mistook it for the default climate.

The Opportunity Economy doesn’t form on its own. The redemptive engine doesn’t power itself. The new map doesn’t reveal itself. Each one is maintained, or it is lost. It’s not that comfort is a sin, it’s that its a lie. It whispers that progress is the default and decline the aberration, when the truth runs exactly the other way. The poison pill of ease will lead us carefully down to hell. Human intellect commits suicide when it “sets itself steadfastly toward comfort and ease,” with security and permanency as its watchword, and atrophies into helplessness. And that helplessness is where the shame comes from.

But we are not helpless. We are the solution to the ills of self-government. More self-government. More accountability, association, and labor that the boom let us take for granted. The generation that forgot the trees needed planting can be the one that picks the shovel back up. More optimism. Walt Disney, always dripping with optimism, once said “Somehow I can’t believe there are many heights that can’t be scaled by a man who knows the secret of making dreams come true.” And the dream worth dreaming is Utopian. Because, as Oscar Wilde said:

“A map of the world that does not include Utopia is not worth even glancing at, for it leaves out the one country at which Humanity is always landing. And when Humanity lands there, it looks out, and, seeing a better country, sets sail. Progress is the realization of Utopias.”

Progress is the goal. Redemption is the engine that gets us there. Hope and labor are the fuel. Shame, dissatisfaction, disillusionment, and indifference will never yield any fruit worth bearing. You cannot subsidize failure and expect wealth. You cannot hold up disgust and yield love.

That’s my love letter. I don’t love this country because the red ink has been washed from the ledger, or because I’ve figured out a way to effectively ignore it. I love it because it is ink; it isn’t carved in stone. Not a perfect country, but an infinitely redeemable one. And a redeemable country, kept, is the best thing we’ve ever built.

Thanks for reading! To receive Networked Conviction: My Investing Journal, a collection of portfolio updates, Requests for Startups, and investing ideas for paid subscribers, you can sign up below:

Subscribe now

This is a free weekly newsletter about the art and science of building and investing in tech companies. To receive Investing 101 in your inbox each week, subscribe here:

Subscribe now

In 2009, a 24-year-old Harvard Business School student named Tracy Britt Cool did the thing every ambitious finance kid is told to do but never actually does. She wrote Warren Buffett a letter. Cold. No connection, no warm intro, no mutual friend to vouch. Just a kid from a Kansas farm who’d decided she needed a mentor, and who did she want? (Checks notes). Oh, just the greatest capital allocator ever, why not?

But in a fairy tale ending only people who read 10-Ks can romanticize, he said yes. She joined Berkshire Hathaway as his financial assistant, and over the next decade she went on to run a string of Berkshire subsidiaries; Pampered Chef, Benjamin Moore, Larson-Juhl, Oriental Trading. She became one of Buffett’s protégés. Felt like an heir-apparent story was writing itself.

But then, in 2020, she left.

She didn’t leave to go run a multi-billion dollar hedge fund. She wasn’t sucked in by the siren song of a SPAC, a crypto exchange, or even a growth-equity megafund. She left, with her partner Brian Humphrey, to start a firm called Kanbrick whose explicit purpose was to buy the businesses Berkshire had gotten too big to buy. In her own framing, she wanted “businesses too small for Berkshire.” We’re talking family-led companies doing $5M to $50M in earnings, the kind of business that simply doesn’t move the needle on a trillion dollar balance sheet.

There’s a critical learning here that will increasingly become relevant to venture capital. The most telling thing about any capital-allocation machine is the set of deals it can no longer afford to do. Tracy Britt Cool’s departure wasn’t anything to do with a lack of success, but the overabundance of it. Berkshire succeeded so completely at one game that it could no longer play the other. And that, in miniature, is the whole story of where venture capital is going.

The Curse of Size & Scale

A couple years ago, I went back and read every single Berkshire Hathaway annual letter. Throughout those letters, there’s an idea that I’ve highlighted probably more than any other. Countless instances where Buffett talked about the cost of being enormous, and he puts it bluntly:

“A fat wallet, however, is the enemy of superior investment results. And Berkshire now has a net worth of $11.9 billion compared to about $22 million when Charlie and I began to manage the company. Though there are as many good businesses as ever, it is useless for us to make purchases that are inconsequential in relation to Berkshire’s capital... We now consider a security for purchase only if we believe we can deploy at least $100 million in it. Given that minimum, Berkshire’s investment universe has shrunk dramatically.“

And that was in 1994! Today that number is a TRILLION dollars. What changes is not the companies that exist or, in the case of venture capital, those getting built. There are “as many good businesses as ever.” What changed is that Berkshire got too big to care about them. When your floor for a single position is $100 million, an exceptional little company doing $8M in earnings is, mechanically, a rounding error. You couldn’t be bothered. The size that makes you powerful is the same size that makes whole categories of opportunity invisible to you.

In my notes on the Berkshire letters, I made the same note in the margins three or four different times, because it kept showing up: the curse of size and scale. And later: Bigger funds move up market exposing a long tail of businesses that they’ll no longer compete for. And later still, the cleanest version of the idea: massive pools of capital will be a category unto itself.

That’s the exact bifurcation in venture capital I’ve written about before in pieces like The Puritans of Venture Capital. As capital compounds (whether through performance or fundraising), it is mechanically forced upmarket, and in moving upmarket it abandons a long tail of perfectly good opportunities that it is now structurally incapable of pursuing. It’s just math! A $40 billion pool of capital and a $100 million pool of capital are not the same animal doing the same job at different scale. They are different species, and they hunt different prey. Or at least... they should be.

I’ve written over, and over, and over, and over again about “Cottage Keepers vs. Capital Agglomerators.” But the cleanest articulation of why it happens isn’t anything I’ve written about. It’s in a Buffett letter from the 1990s, written about a candy company and a railroad.

Don’t Play Gin Rummy

Now, for those of you who aren’t 90+ year old survivors of the Great Depression, Gin Rummy involves discarding your least promising card. That’s all I cared to figure out. Okay, moving on.

When people thing about Buffett, they often talk about him as a stock picker. And he certainly picked stocks. But the structural genius of Berkshire is the structural ability to never have to sell. Here’s how Buffett explains it:

“You should be fully aware of one attitude Charlie and I share that hurts our financial performance: regardless of price, we have no interest at all in selling any good businesses that Berkshire owns ... gin rummy managerial behavior (discard your least promising business at each turn) is not our style. We would rather have our overall results penalized a bit than engage in it.”

Gin rummy is the perfect metaphor, because it names the thing most investors can’t help themselves but get focused on; selling as often as buying. Just one example from this past week was Mohnish Pabrai, a self-described “clone“ of Warren Buffett, explaining why he put 77% of his portfolio into Micron in 2023 and then sold all of it just six months later, before Micron’s stock went up 15x...

I couldn’t find it, but there was a comment on the tweet where someone said, “all he had to do was nothing!” It reminded of a classic quote from Blaise Pascal that is a favorite of Buffett and Munger; “All of humanity’s problems stem from man’s inability to sit quietly in a room alone.”

However, the inclination to sell is, in large part, structural. PE and VC funds have a fixed life (raise, deploy, harvest, return) across seven to ten years. Those funds are contractually obligated to discard. Playing gin rummy is in the formula, whether you like it or not. The fund schedule forces selling. Buffett built a structure that does the opposite. A structure that has become the new dream of every would-be “AI Operator.” A holding company. A structure for, as Buffett describes them, a “buy and never sell” investor.

But here’s the really important functional distinction about buy-and-never-sell. Buffett makes it clear that its not just a preference for the businesses you know over the ones you don’t. He frames it, effectively, as a neutralization of distinction in investment decisions. The decision to retain earnings is the same as evaluating a new investment. It’s not that you default to never sell; it’s that you treat selling with as high a bar as you treat buying. A hedge against sunk cost fallacy.

Take one of Buffett’s more famous hokey investments; See’s Candies. Every dollar a See’s Candies throws off is a dollar Buffett gets to redeploy into the greenest pasture available, anywhere in the empire. He doesn’t have to give it back to LPs. He doesn’t have to time a sale to a fund deadline. He just routes it. He said it most plainly when describing the deal that turned candy money into a railroad:

“We also measure businesses against opportunities available in marketable securities, a comparison most managements don’t make ... Our flexibility in respect to capital allocation has accounted for much of our progress to date. We have been able to take money we earn from, say, See’s Candies or Business Wire ... and use it as part of the stake we needed to buy BNSF.”

See’s Candies operates, he notes elsewhere, on only $25M of net worth while having sent more than $410M in pre-tax profits up to the center “to deploy in whatever way made most sense.” The beauty of the holding company is as a capital-routing engine. And the first law that governs all of it: “what is smart at one price is dumb at another.”

But the same flexibility that lets Berkshire never sell is exactly what drove it upmarket. Once you’re routing tens of billions, you can’t route them into an $8M candy shop. That’s the form of permanent capital, owner-operated, allocated by judgement rather than by a fund clock. Tracy Britt Cool didn’t leave because she had a philosophical disagreement with Berkshire’s scale, it was just acknowledging that she could rebuild at the size Berkshire was forced to abandon.

Venture’s Buy and Never Sell?

Let me turn from Omaha and its intellectual adjacencies to Sand Hill Road now as I think about how these two disparate histories are sort of colliding. Like I said, you’re seeing the exact bifurcation in venture that Buffett’s letter and Tracy Britt Cool lived in real time.

The Capital Agglomerators are completing the move upmarket into a pure AUM game. I wrote about this in The Blackstone of Innovation: “any asset manager is in the business of multiplying 2% by as large a number as possible,” and “business building is the marketing, but asset management is the business model.” That was 2022. It’s only gotten crazier since I wrote that. In January 2026, a16z raised a $15B fund, one of the largest venture raises in history if you don’t count stuff like whatever the eff SoftBank Vision Fund was. a16z is now at more than $90B in AUM, neck-and-neck with Sequoia, and captured over 18% of all US venture dollars in 2025.

Ben Horowitz now describes the mission as “ensuring that America wins the next 100 years of technology.” They’ve always avoided the small partnership vibe, but that’s taking on the language of sovereign-scale capital agglomerator that happens to have started in venture. And the gin rummy math is exactly Buffett’s fat-wallet problem. I’ve written before about how, for a megafund, a $1B outcome is “meaningless.” You need exits “north of $50B,” despite the fact that fewer than 50 public tech companies have ever hit that mark. The agglomerators have moved so far upmarket that the universe of deals that can move their needle has, in Buffett’s exact phrase, “shrunk dramatically.”

The Cottage Keepers, what I called the Puritans, are getting rarer, not stronger. I used to frame Benchmark and USV as the durable counterweight, the firms that refused to grow because “your fund size is your strategy.” But, as I wrote about in Venture Capital’s Fourth Turning, I had to mark the moment the most staunch champion broke ranks when, in June 2026, Benchmark raised a $2B vehicle, its first growth fund, the first time it had meaningfully scaled up since 1999. The gap that opened is almost comical. a16z at ~$90B against Benchmark at roughly $4.8B, an 18-to-19x chasm.

The data reinforces the idea that this is the new normal; established mega-funds took 79.4% of all 2024 VC dollars, and in Q1 2026 about 73% of LP capital went to just five firms. The Cottage Keepers of yesteryear are now rarer than unicorns. The middle, as I keep saying, is being spued out.

But here’s where I think the most interesting opportunity exists, and what got me thinking about the long tail of abandoned opportunities by Berkshire. When you think about all the things that are actually changing, whether its AI Roll-Up HoldCos, solo capitalists managing $1B+ of “owned capital” vs. “borrowed” LP capital, I think there is an opportunity for permanent capital amidst startups.

Buffet’s permanent capital famously came from insurance float. I always think about that as a framework for permanent capital; what would be the insurance float today? Mr.Beast has viewership as “float” that he can use for ad dollars, but also for selling his own products. I’m seeing a lot of AI companies that can quickly spin up products at high margin, spitting off cash, but with literally zero defensibility; like a melting ice cone. The concept of “float” unto reinvestment is a really interesting topic for exploration.

The answer of how, however, I don’t have a great answer to. Which new vehicle inherits Berkshire’s permanent-capital freedom, and where does its float come from? Buffett’s edge was never just discipline. Insurance float was a perpetual, near-zero-cost capital base that freed him from ever having to be a forced seller. The AI native HoldCos have Buffett’s temperament (e.g. buy good businesses, never play gin rummy, route the cash flow to the greenest pasture) but most of them don’t yet have his structure. They still answer to investors who, eventually, want their money back. I’m curious about the firm that figures out the modern equivalent of float that allows for durable, patient, doesn’t-have-to-be-returned capital base, with the ability to target the “weirder” long-tail of startups that the Capital Agglomerator’s scale will eventually force them to avoid.

The giants will keep swelling in size. The AI rounds will keep looking like sovereign wealth; the agglomerators will keep climbing upmarket until the only deals left to them are the 5-10 companies on Earth large enough to matter. Fine. Let them. It is, increasingly, not really venture capital anymore The more relentlessly capital concentrates at the top, the larger and more underserved the long tail of opportunities at the bottom becomes. And, as a result, the more valuable it is to be the patient, permanent vehicle that finally shows up for it. LPs, despite their DNA, will often force you to play the game you, increasingly do not want to play.

Thanks for reading! To receive Networked Conviction: My Investing Journal, a collection of portfolio updates, Requests for Startups, and investing ideas for paid subscribers, you can sign up below:

Subscribe now

This is a free weekly newsletter about the art and science of building and investing in tech companies. To receive Investing 101 in your inbox each week, subscribe here:

Subscribe now

The corpus of my “second brain” comes from the books I’ve read, the essays I’ve written, the meetings / conversations I’ve had, and the tweets I’ve consumed. Over the last few weeks, I’ve been using a personalized iteration of Karpathy’s LLM Knowledge Base to fully ingest all the notes I already have across Roam, Notion, Google Docs, etc.

I’m only ~1/50th of the way through that process and already I have 3M+ words of context in my second brain. But one of the immediate exercises I can do is asking it to look for connections of ideas I’ve tacitly made across book notes and essay research fodder that I may not have explicitly drawn myself. The first one that caught my eye was about moats.

—

Revisiting my notes on Brad Stone’s The Everything Store that I read in 2021, there were two little notes I wrote to myself that, at the time, are direct companions that I didn’t ever connect before.

The first, scribbled around page 390, next to a passage about Amazon’s cost structure: “Being willing to accept the slimmest margins and building an organization that can operate lean enough to not need margin can be a competitive differentiation.”

The second, a hundred pages later, next to a passage about how Amazon’s e-book market share fell from 90% in 2010 to less than 60% by 2012, just four words: “Moats don’t stay impenetrable forever.”

Over the last three years, I’ve written over and over and over again about competitive moats in large part because they represent a paradox to me; simultaneously held up as one of the most critical aspects of any business, while also acknowledging material evidence that they almost never really exist.

But seeing those notes together helped me appreciate that the paradox comes in acknowledging that moats come from a willingness to endure repetitive discomfort. It lasts as long as you’re willing to accept discomfort. Once you’re no longer willing to accept discomfort, its only a matter of time until your moat goes away.

Rather than being an impenetrable wall that remains stable in stasis, its more like a shelf-life; something can last a certain amount of time but it only persists if you’re willing to continue to dig it. The willingness to dig a new moat while the old one is still up.

Thin margins, it turns out, are the cleanest example of both halves of that idea.

Two Kinds of Retailers

The last time I wrote about Competitive Moats, I argued that for most of a company’s journey, defensibility is for dummies. Founders fall in love with a fuzzy story about why they’re safe, right up until the moment they run out of cash, time, or talent and the moat becomes moot. I still believe that. The element of Bezos’ moat formation around Amazon is unique from that idea of comfort in that it comes in the never-ending pursuit of moats that makes the difference.

The famous line is the one he repeated, in Stone’s words, “ad nauseam for years”:

“There are two kinds of retailers: there are those folks who work to figure how to charge more, and there are companies that work to figure how to charge less, and we are going to be the second, full-stop.”

Most people’s perspective on low margins is that they’re a weakness; a sign you have no pricing power, no brand, no defensibility. Every fresh would-be MBA thought-leader treats fat gross margin as the goal and thin margins as ritual humiliation.

But once again, Bezos takes the counter-position:

“Bezos believed his company had a natural advantage in its cost structure and ability to survive in the thin atmosphere of low-margin businesses. Companies like IBM, Microsoft, and Google, he suspected, would hesitate to get into such markets because it would depress their overall profit margins.”

And the cleaner statement of the thesis:

“Bezos believed that high margins justified rivals’ investments in research and development and attracted more competition, while low margins attracted customers and were more defensible.”

That’s a critical crux of the moat discussion. The thing that looks like the weakness is the wall. Fat margins are an open invitation that fund your competitors’ R&D budgets and signal to every adjacent giant that there’s room to come take a slice. Thin margins do the opposite. They’re the double black diamond warning sign that keeps all but the most disciplined operators away. IBM, Microsoft, and Google could have followed Amazon into the thin atmosphere. They structurally wouldn’t, because doing so would crater the blended margins their own shareholders were paying for.

This is, I’ll admit, the inverse of the usual moat story, and for a long time it looked insane from the outside. When Scott Devitt at Stifel Nicolaus upgraded Amazon to a buy in 2007, given their deeply in the red margin profile, here’s what happened:

“I was laughed out of portfolio managers’ offices,” Devitt says. “People were ripping apart every component of my investment thesis. At that point, they thought Amazon was some kind of nonprofit scam.”

A company that looks like a non-profit scam from the outside is exactly what a moat looks like when its being dug; just a giant hole in the ground.

A Wall vs. An Engine

So why does this kind of moat behave differently from the ones we usually obsess over? Because thin margins aren’t actually a thing you just have, they’re a thing you do.

The classic moats, be they patents, network effects, switching costs, regulatory capture, a brand, all get talked about as assets. Things you accumulate and then sit on. One of the other ideas that I touched on the last time I wrote about Competitive Moats was this idea that the real engine getting built is the actual advantage: the intangible muscles a company builds that “never appear on a balance sheet” but “are the single most valuable asset of a company.”

One cultural artifact that comes to mind is the “my body is a machine...” meme. I turn X into Y. That’s a system; an engine.

Thin margins build exactly the kind of muscle that can breed long-term success. Bezos didn’t just find a low-margin advantage lying around; he spent two decades building “an organization that can operate lean enough to not need margin” An engine that gets built piece by piece.

I’ve heard multiple people make an argument that Anthropic’s product advantage has, in large part, come from forced constraints. From the beginning they were always more compute-constrained than OpenAI or any of the hyperscalers. As a result, they had to get better at the intelligence value chain of turning kWh into FLOP into output tokens, than anybody else. That’s an engine built over time.

What makes it a moat isn’t just that your competitor can’t copy it, but that they don’t even want to try. What’s more, accepting the consequences of running the engine aren’t just a matter of saying yes or no any more than me saying my Honda mini-van is now going to hit 160 MPH on the race track. You don’t just decide to have a muscle. You have to build it over time.

Elon Musk’s perspective is that “moats are lame… what matters is the pace of innovation.” My argument in Momentum != Moat was that the whole point is building “high-quality, long-term sustainable economic engines,” not heat-seeking the next data point on your ARR chart. The even harder thing about moats as an engine vs. a wall is that a wall usually breaks down when other people try to pull them down; otherwise, they could just sit there; monopoly style. But an engine breaks down in the process of running. It requires significant maintenance.

Moats Are Never Forever

The key question around competitive defensibility relies on the rate of decay; how quickly does the engine break down once you’ve built it? Because its not just a question of “moats are moot,” and therefore don’t exist.

Even Amazon has run face-first into its own fair share of other people’s moats. One example? In the 90’s, Amazon threw a ton of talent and capital into online auctions and built what they felt was clearly a superior auctions product. But in the end they failed. eBay won. “Network effect mattered.”

But that was a moment in time. Because eBay’s engine was just left running, with no consideration for maintenance:

“At the same time that Amazon’s flywheel was accelerating, eBay’s was flying apart. The appeal of online auctions had faded; a customer wanted the convenience and certainty of a quickly completed purchase, not a seven-day waiting period to see if his aggressively low bid for a set of Cobra golf clubs had won the day... Amazon had battled and mastered chaos; eBay was engulfed by it”

The competitive landscape shifted like sand on the beach, and eBay’s moat fell apart because its engine never evolved. I’ve written before about the way Permanent Equity has described this dynamic:

“Moats are routinely discussed in a static sense, as if they exist in some form or fashion for most businesses. But the facts simply don’t bear this out… Averaged across industries, a business in its 25th year has roughly the same probability of dying as it did in its 10th year.”

Twenty-five years of “moat” and your odds of dying this year are the same as they were at year ten. So... like I said, that’s more like a shelf-life than a defensible wall.

Your Competitors Today vs. Tomorrow

So was Amazon’s ultimate victory assured just by low-margins? Or the willingness to invest in an engine? It’s actually the same. Going back to Bezos’ framework of two retailers; his willingness to be the kind of retailer looking to charge less forced them to trim the fat.

One clear playbook was Amazon’s productization of its cost structure. Since 2005, Amazon has taken every major aspect of their cost structure and turned it into a business line they can not only take advantage of but also monetize. In fact, the final line-item, G&A, you could argue that as Amazon continue to invest in AI and automate portions of its overhead, that could likely also become a product line for them.

But the natural consequence of that kind of responsiveness will expose you to a dramatically broader playing field of competitors. In the 90’s, Amazon was laser-focused on eBay and Barnes & Noble. Now, I can’t imagine either ever comes up as a concern to Amazon. Instead they’re focused on Wal-Mart in ecommerce, Google and Microsoft in Cloud Computing, Netflix and Disney in streaming, UPS and FedEx in logistics, Costco in grocery, and on and on.

When I think about OpenAI, I think that’s one of the reasons their empire expansion is failing. They tried to do everything very quickly because it was there, not because it was necessarily advantageous. Competing across language, image, and video models while also trying to buy Jony Ive to build consumer hardware and raise a trillion dollars for your own compute; it lacked cohesion.

Anthropic, on the other hand, I would argue leaned into a core competency and expanded from there. Their swings are much less egregious; launching a new cybersecurity or legal or design product is quite logical as an extension of their core competency around the intelligence value chain. Meanwhile, OpenAI’s expansion was never funded by its own existing engine; it was speed in pursuit of an engine.

What Elon focuses on with the “pace of innovation” and what I’ve been clumsily circling for three years is really just this: the only durable moat is the capacity to build the next moat faster than the current one decays. Otherwise, you just have an engine that is slowly breaking down. Or worse, a wall that’s just standing there defending nothing worth defending.

Thanks for reading! To receive Networked Conviction: My Investing Journal, a collection of portfolio updates, Requests for Startups, and investing ideas for paid subscribers, you can sign up below:

Subscribe now

This is a free weekly newsletter about the art and science of building and investing in tech companies. To receive Investing 101 in your inbox each week, subscribe here:

Subscribe now

Recently, I was listening to the Binge Mode podcast where each season is an in-depth exploration of a specific universe. Marvel, Game of Thrones, Star Wars -- this particular season was about Harry Potter.

Theirs is a spoiler-full approach, so from the very beginning they’re reading into the subtext. In the first few chapters, Albus Dumbledore is discussing with Minerva McGonagall how exactly Voldemort died when trying to kill the infant Harry Potter. Dumbledore’s response? “We may never know how he survived.”

“Aha,” the hosts exclaim. Armed with the knowledge from later in the series that Dumbledore was very aware of Voldemort’s work with horcruxes that would have informed Harry’s survival, the hosts came to the conclusion that “from the very beginning” Dumbledore is selectively withholding information from even his closest confidants.

Maybe. But in my opinion I think that’s giving J.K. Rowling too much credit.

More often than not, I don’t think most authors have an intricately woven universe perfectly connected in detail and planned from the beginning of a series.

There are, of course, exceptions.

J.R.R. Tolkein famously spent ~40 years developing the Elvish language and the massive canon of lore that eventually became his Legendarium. Brandon Sanderson, similarly, planned out his Cosmere across 35 novels more than 20 years in advance. But these hypernerds are the exception, rather than the rule.

One obscure example of “discontinuity” in world building from my own childhood comes from a Lord of the Rings-esque source. Growing up, my brother and I read and re-read a series of books; the first portion of the series called The Belgariad and the second, The Malloreon. I’ll spare you all the intricate details, save but one.

A core narrative arc through the series is a royal bloodline that controls an important orb of power. A dark god steals the orb and attempts to wipe out that bloodline. But two critical characters to the series, Belgarath the Sorcerer, and Polgara the Sorceress (father and daughter) intervene to preserve the bloodline, taking the sole surviving heir and raising him in obscurity.

In the very first book of the series, we don’t know much of that. We meet Garion, an unassuming farm boy who is raised by his Aunt Pol. Occasionally, an old man comes to visit who Garion knows as “Mister Wolf.” But one night, Garion overhears Aunt Pol confessing to Mister Wolf, “I’m not suited for this task you and the others have given me. What do I know about the raising of small boys?”

You come to find out that Garion is the descendant of that last bloodline whose fate is tied to the orb. And Aunt Pol is Polgara the Sorceress, raising him in obscurity.

But here’s the thing. Years later in the series, the author also wrote two “prequel” books. A biography of sorts, one for Belgarath and one for Polgara. In those books we find out that Garion isn’t the son or grandson of that last heir they saved from destruction. In fact, Polgara has been helping to preserve that bloodline for 1,000 years! So you’d think by the time she got to Garion she would know quite a bit about “the raising of small boys.”

That random example has always stuck with me as just one of millions of nitpicky continuity errors across fiction that a legion of Redditors have made it their life’s work to point out and grumble about.

But nitpicky fantasy lore isn’t what set me on this quest today. All of these various appreciations of world building, from Harry Potter to the Legendarium or the Cosmere or the Belgariad, shine a light on the intricacies required to build a competent world. Whether you’re building a world in fantasy or in fact, world building requires intricate imagination and near-flawless execution.

Competent Creation

When it comes to good stories, people want intricacy and cleverness. They want the creator to be smarter than them. One of the reasons a lot of people like the writing of Aaron Sorkin (The West Wing, A Few Good Men, The Social Network) is because the characters feel very competent, endlessly quippy, and typically a couple steps ahead of you.

But there is a delicate balance between audience delight and disappointment. In The West Wing, President Josiah Bartlett’s staff make up the main characters. They’re often smart, clever, biting. But occasionally, they lose an argument. Then, someone on the opposing side makes a disparaging comment about how “Bartlett crewed up big time.” But instead of taking their licks, they often abandon the intellectual debate, devolving into moral grandstanding: “...that’s PRESIDENT Bartlett.”

You feel cheated of the cleverness. Disappointed by the lack of payoff.

The secret to a good story, holding in balance that cleverness and clarity, is akin to what makes a good magic trick. Being able to follow along but not knowing where the ending will take you.

In Christopher Nolan’s The Prestige, there is a scene when Christian Bale, an up-and-coming magician, is being implored by his wife to explain a particular magic trick. He showed her that he could catch a bullet fired from a gun. She presses him to explain it, but when he finally does, she admits with almost condescending dismissiveness, “once you know... its actually very obvious.”

The magic is gone. The creative compact is broken.

Good mysteries are the same. There have been a handful of plot twists that have rocked audiences over the years, from Sixth Sense to The Usual Suspects, and always the recipe for a plot twist is perfectly walking that line of cleverness and clarity; bringing the audiences along in their understanding while withholding conclusive answers.

If it’s predictable, you’re dismissive. But if it’s too dense then the reveal never lands. Christopher Nolan has done this well, not only with the aforementioned Prestige delivering a death defying twist, but his first breakout movie, Memento.

In contrast, take another Christopher Nolan “classic,” his odd passion project, Tenet. Even die-hard Christopher Nolan fans have to admit that they didn’t really understand Tenet. At the end, Robert Pattinson tells the Protagonist that he was recruited in the past by a future him who is still his future... him. See? It doesn’t land!

Cleverness, certainly, but balanced with clarity.

Free Market Creativity

The market for audience delight is a little bit like capitalism vs. communism, though my brainstorming conversation with Claude tells me this analogy is tepid at best. But stay with me.

In high-level simpleton economics, a key characteristic of capitalism is allowing the market to determine equilibrium. In communism, the Politburo “powers that be” unilaterally decide that equilibrium. But unless they’re all knowing, they’ll always be too inefficient.

Star Wars Case Study

Take Star Wars, for example, as a pot of intellectual property that has been shaped within both versions of the capitalist and communist Creative Markets.

George Lucas made the original Star Wars as a True Blue Creative Capitalist. High risk, high reward. He famously took a huge salary cut to keep merchandizing rights. Even after the success of the first film, George Lucas opted to self-finance Empire Strikes Back because the profits from the market enabled him to avoid studio overreach. Ultimate entrepreneurial capitalism; letting it all ride behind something you believe in and getting a big payout.

Once Star Wars had become large and established, Disney “seized the means of production.” Now, you have a centralized access point to any Star Wars stories, whether you like it or not. And, unfortunately, Disney has been proving the inadequacy of the communist model ever since. It’s been almost 15 years since Disney bought Star Wars and almost a decade since they started making new Star Wars stories, but it seems like they continue to be insulated from the market’s feedback that these new stories are not good.

Granted, you can call this communism or you can chalk it up to monopolism. Whether its communism and you can’t hear the market feedback, or its monopolism and you won’t hear the feedback; the result is the same. Inefficient market equilibrium. And that leads to audience disappointment rather than delight.

You can even look at the evolution of Star Wars. From the original trilogy to the prequel, despite criticism at the time, I think the prequel trilogy has held up incredibly well. People who were kids when they saw the Ewoks got pissed when they saw Jar Jar Binks as adults. But the reality is the movies are good for the same reasons! The same camp, same operatic mysticism, same wooden romance and galactic-politic tedium. George Lucas’ entrepreneurial dream enabled him to control something he believed in and to bring a competent reality to life.

Contrast that with the sequel trilogy. It’s a soulless departure from the original founding ethos. Where Han, Luke, and Leia presented a capable troupe, you instead have Rey who collapses the ensemble into one figure who is immediately excellent at everything and everyone else is just useless window dressing -- classic Mary Sue problem. The centrally planned studio version of Star Wars is meandering and visionless. That’s how you get the whiplash of “who is Rey” “oh she’s nobody” “oh just kidding she’s a Palpatine, and by the way somehow Palpatine returned.”

Knives Out, In Contrast

Another instructive comparison comes from a great series of mysteries; Knives Out. Daniel Craig is an eclectic Southern sleuth; Benoit Blanc. In the first movie he solves the already-solved murder of a millionaire author, in the second he solves the murder mystery within a murder mystery propping up a tech empire, and in the third movie he addresses the unaddressable resurrection of a murderous priest.

Knives Out was also born in the “free market” where Rian Johnson, the director of the series, had control over his set of Agatha Christie-inspired tales. The first movie was a smash success and birthed a franchise. Arguably, the second one was not as good. But I would say Rian Johnson was able to react to the market pressure and improve some things for the third movie.

My take, that I’ll keep simple in case you haven’t seen all three movies, is that Rian Johnson puts up a very specific main character in each film. In the first, its an immigrant nurse named Marta. In the second, its a wronged twin sister named Andi. And in the third, a repentant former boxer turned priest, named Father Jud. The mistake that Rian Johnson made in the second movie was trying to make Benoit Blanc the main character. In reality, he’s like a narrative lens along for the ride. The first and third movies, by contrast, share a more palpable focus on the actual main character.

Here’s one key point I’m trying to make. The Last Jedi, one of the more hated of the Star Wars sequel trilogy, and the Knives Out series? They’re created by the same guy; Rian Johnson. The key takeaway is the characteristics of Free Market Creativity. In Knives Out, Rian Johnson had total control. Star Wars? None whatsoever; totally at the mercy of a centrally planned studio system. But most importantly, there is no time for reacting to “market signal” and feeling out a unique story vs. responding to fan service or studio fears.

I don’t believe this is simply big organizations = bad, small, high agency organizations = good. Big organizations can also tell compelling stories. Love ‘em or hate ‘em, I would argue The Barbie Movie and Oppenheimer were both big studio box office projects, but both successfully crafted a world and were successful in the free market.

Instead, it’s the Creative Capacity to tell a compelling story that the market will want. Not what you think they’ll SAY they want. There’s a fine nuance here between just doing fan service. If you ask an audience what they want, they’ll say cameos. But they also would have said a faster horse. What is the car-equivalent of a story that people want, and even need but don’t know to ask for? Nobody knew they wanted a three-hour talky physics tribunal or a plastic-doll movie that’s secretly about mortality and womanhood, but it turns out a lot of people did want that.

The Creative Capitalist Concoction

Skin In The Game

Lucas was exposed when he risked his own capital. Nolan and Gerwig were exposed when they put their reputations behind fairly odd big budget projects. Johnson was exposed when he tried to convince the world they were still interested in a small scope whodunnit in an age of Marvel Mania.

A few years ago, Will Manidis perfectly articulated something I had been trying to say for years. The defining term of the current generation of 20 and 30-somethings is “optionality.” Will described this as treating life like an index fund.

Putting skin in the game is the ultimate calling card of the Creative Capitalist. Just one massive example that comes to mind; Peter Thiel put up 76% of the first fund for Founders Fund himself. Since then, he has consistently put up ~20% of each fund himself on average.

In any Creative endeavor, be it in the realm of imagination or reality, commitment more often leads to Competent Creation than does hedged decision by committee. Because when you know you’re committed, you care more deeply than anyone. No one cared about Star Wars more than George Lucas. Tolkien and Sanderson committed decades of their lives to their World Building. Elon Musk used $100M of his $180M after-tax fortune from the sale of PayPal to found SpaceX (another $70M he put in Tesla).

Iteration

While the villain of my prior section was consistently Disney, redemption comes from the unlikeliest of places; in this case, from the history of Walt Disney itself. In a quote I’ve written about before, Walt Disney himself articulated how he went about building some of the most durable worlds we still have today:

“There’s really no secret about our approach. We keep moving forward – opening up new doors and doing new things – because we’re curious. And curiosity keeps leading us down new paths. We’re always exploring and experimenting. At WED, we call it Imagineering – the blending of creative imagination with technical know-how.”

The story of iteration is a fundamental element of the free market. Disney’s belief was to keep moving forward, progressing, evolving. What could have stayed a set of worlds focused on the proverbial past, with things like Snow White and Cinderella, also embraced futurism, adventure, and embracing the physical world, not just the imagination.

The idea of planting a flag of the future you want to iterate towards is a function of opportunistic planning. I’ve written before about this idea of starting with the end in mind:

“Planning is an exercise in storytelling. Articulate the story that you genuinely believe (not just the one you’re selling to candidates, customers, or investors). And then constantly evaluate that plan to identify the dependencies you have.”

The exhaustive planning that goes into competent World Building doesn’t always have to be meticulously laid out decades in advance. Things like J.K. Rowling leaving Dumbledore as mysterious, or having things like Tom Riddle’s diary in the second book; those are breadcrumbs. Narrative anchors left as portals in time and story.

Startup narratives operate the same way. You plant a flag in the ground around your North Star vision. But then you build the details up along the way. A good story can flex to fit the details as they develop. Rowling’s horcruxes fit well into a world that was build around connective relationships and artifacts. SpaceX’s “expansion” into AI fits nicely into its core competencies; building Colossus is much more “them” even than competing with OpenAI or Anthropic.

The Stories We Need

Finally, I would say this comes back to the point of being exposed to the Free Market. Again, not as fan service to just toss slop to the piggies of public opinion. But identifying honest-to-god stories worth telling.

This, I think, is one of the hardest things because need and preference so rarely sound the same. How do you know what stories need to be told? What worlds need to be built? Most people find this too difficult and default, instead, to preference. What will people pay for? Finding willing buyers at the fair market price. Despite the buyers being incapable of imagining a better will and the market being, perhaps fair, but far from efficient.

Disney (the communist regime, not the capitalist creator) refuses to feel the need that people yearn for when it comes to Star Wars stories. In a prior piece I wrote about Disney (the capitalist creator, not the communist regime) I talked about what people yearn for in their stories:

“I think one of the reasons culture feels so repetitive and we’re drowning in reboots, remakes, sequels, and prequels is because we’ve lost hope for anything better than what we had. Unlike Walt’s ability to learn from the past by bringing its idealistic aura into the future, we pine for the yesterday’s today. “The way things used to be.” We wish for a world that was the way it used to be, rather than accepting the world as it is and trying to change it.”

People yearn for optimism. But they can’t find it looking forward, so they sulk backwards, looking for it in the past. But the solution is a story worth telling. Spin me tales of a future worth being excited about. One that merits people pouring out their heart and soul in pursuit of it. I touched on this theme previously when I tried to answer the question, “what is an extraordinary man?”

“If you are consumed by a company ‘mission’ for the sake of having a mission, then you have missed the mark. If you feel entitled to the life force of those around you because you put up your hand and started a company, you are not a good steward of the life force of others. But if you seek to do good. If you seek to make the world better. If you seek to lift up the broken hearted. If you seek to shape the world around you so that others who sit upon that world may sit a little higher, then you have found vision. The mission that you pursue will be worthy of your time and eternal potential. And don’t let anyone tell you that their value system is the only appropriate bar for measuring that mission. Whether it is raising a family, lifting up the sorrowful, demonstrating kindness, or transforming the way the world works with technology. It’s all a function of who you really are and what you really want.”

Worlds Without End

AI will make more software which enables more worlds. And that’s a good thing. The cost of conjuring up our dreams is collapsing. In some ways, the kind of World Building that Tolkien and Sanderson committed decades to is having all the barriers broken down for anyone with a prompt and a point of view. But, boy, is that last part the rub. We can all prompt... but can we opine?

When the cost of creation goes to zero, the concoction matters more, not less. A cheap plentitude of crass worlds formed without care emphasize, even more, the value of the Worlds Worth Building. Skin in the game. Iteration. Honestly building stories that people truly need. All of those are available to us; more available than maybe ever before. The question is do you care enough to create?

It has never been easier to mass-produce a faster horse that nobody asked for. Rather than unlocking creativity, AI will super-charge the race to strip-mine nostalgia, and generate the thousandth reboot nobody wants. The insulated incumbent who stopped listening a decade ago now has a machine that will let it “not-listen” faster than ever. The slop engine will start humming.

But, by the same token (lol) it has never been easier to Imagineer. Walt Disney’s way of framing Imagineering (e.g. creative imagination wedded to technical know-how) reads like a prophecy now. AI unlocks the technical know-how, but it can’t supply the imagination, the conviction, the exposure to the free market vibes, or the contact with that 90% of human feeling in which we are all the same, where Walt Disney thrived.

Whether you like it or not, worlds are going to multiply without end. The question left to us is which worlds will be worth living in? Plant your flag in a future worth being excited about. In the words of Signull:

“Storytelling is the only way to impose meaning on abundance, coherence on noise, and legitimacy on power. Strategy, operations, and capital are all downstream. Without narrative control, none it will ever stick. In a world of infinite output, story is the scarce primitive. Whoever can compress chaos into something people can feel, remember, forgive, and rally around actually runs the system. This skill is worth more than the entire C-Suite combined.”

Thanks for reading! To receive Networked Conviction: My Investing Journal, a collection of portfolio updates, Requests for Startups, and investing ideas for paid subscribers, you can sign up below:

Subscribe now

This is a free weekly newsletter about the art and science of building and investing in tech companies. To receive Investing 101 in your inbox each week, subscribe here:

Subscribe now

In 1997, the two men who coined the term “Millennial” wrote a book called The Fourth Turning. In it, they took the phrase “history doesn’t repeat, but it rhymes,” and added a structural framework to that idea.

Their framework said that every ~80-100 years (the length of a long human life) you had a series of four “saeculums,” or turnings, each lasting about 20 years. They framed the latter half of the 20th century and onward with this framework:

• (1) The High (1946-1964): Strong institutions, weak individualism, confident collective optimism.

• (2) The Awakening (1964-1984): Spiritual and cultural upheaval; the civic order gets attacked in the name of a new values regime (e.g. the Sixties counterculture).

• (3) The Unvraveling (1984-2008): Strengthening individualism, weakening institutions, declining trust, cynicism (e.g. the culture wars)

• (4) The Crisis: a decisive, often violent reckoning where the old civic world order is torn down and replaced. The American Revolution, the Civil War, the Depression + WWII. Writing in 1997, they predicted the next Crisis would ignite around 2005-2008 and climax in the late 2020s.

Between 9/11 and the Financial Crisis, I’d say they nailed the Crisis ignition, and the 2020s are certainly feeling like a climax. Kinda spooky, right? Feels like a book worth revisiting.

In a similar vein, there is a meme using images like Thomas Cole’s “Course of Empire“ series to reflect the phrase, “hard times make strong men, strong men make good times, good times make weak men, weak men make hard times.”

An exceptional, and comparable, line exists in Herdotus’ Histories when Cyrus says, “Soft lands breed soft men; wondrous fruits of the earth and valiant warriors do not grow from the same soil.”

I believe that venture capital is experiencing a comparable Fourth Turning. Venture was born out of the crisis of WWII with an industrial surge and no system to build it; the government bootstrapped a capability with the help of Bell Labs, ARDC, etc., but needed something more sustainable going into the Cold War.

• (1) The High (1960-1980): The new civic order of venture capital emerges. Davis & Rock in 1961, Sequoia and Kleiner in 1972. A confident, cohesive professional craft forms; apprenticeship, power law discipline, partnership norms, strong institutions, shared values, collective confidence.

• (2) The Awakening (1980-2000): Venture catches religion as values are upheaved from a quiet financial craft to a world-changing mission. From Doerr-era mission-driven evangelism to the rapid succession of PC and internet rattling the world. Disciplined guild ethos of the 1970s overheats in the Dot Com amidst a genuine spiritual upheaval.

• (3) The Unraveling (2000-2020): Mission-driven and founder-friendlies win the culture war and become dominant, dismantling centralized standards. a16z starts in 2009 and shatters the partnership model with the platform model while YC industrializes seed investing. The single cohesive guild culture splinters into a thousand different brands, strategies, and personalities. Strengthening individualism (e.g. solo GPs), weakening shared norms (bad behavior abounds).

• (4) The Crisis (2020-2040?): That fragmented, individualized orders gets torn down. COVID may have been the spark, but the 2022 rate shock exacerbates it, we see SVB collapse, plus the 2021 vintage overhang from Tiger, SoftBank et al. Choking denominator effect, zombie funds, capital concentration. Every rebirth is catalyzed as the Crisis forges the new world order. Ours? The AI Supercycle. Do companies need more capital or less? Is capital a barbell or a spectrum?

What’s more, we’ve already started to see the emergence of our meme class representing the “course of empire” for venture capitalists and founders.

There’s an inherent sarcastic appreciation for what was and what is and the reality that something has been lost.

Where we look at the “strong men” that built the foundational technological empire upon which so much of life has improved we note a clear difference between what has gone before and what we have today. So what will venture capital’s Fourth Turning consist of? And what will come out the other end of that Crisis?

Characteristics of Crisis

Each day we see the cracks expand in the default funding mechanism of technological progress.

Valueless Valuations

One of the clearest post-excess hangovers is valuation. Startups have no fundamental correlation to their valuations. The age of excess has established a modicum of mental rot where valuation is a clearing price, with no bearing on a summation of economic value creation potential.

I got into a debate with another VC once about whether the total volume of VC-backed outcomes has increased and he pointed to dozens of companies valued at $10B+. But the reality is that those marks effectively don’t mean anything. There’s $3.2 TRILLION in unrealized value locked in the private markets. If those materialize, then venture as an asset class could mean a lot more. But, increasingly, it feels much harder to realize the high-priced ambitions that VCs have made a fundamental part of their model.

In the mean time, the lack of material outcomes are breaking the broad model of venture. Because exits won’t come, the fund structure itself is being torn down and rebuilt with financial engineering: continuation vehicles, NAV loans, tender offers, GP-led secondaries. As a result, 72% of LPs are reporting reducing their VC allocations.

Some are pure hype; pre-revenue labs being valued at multi-billion dollar valuations. Others represent dislocations from public markets. The obstacle is the uncertainty around what most of these companies will be worth in the long-run. But people are looking at dozens of examples like the below and scratching their heads:

But the obvious pushback on the eve of SpaceX’s long-awaited IPO is that the outsized outcomes are coming! People will say OpenAI, Anthropic, and even SpaceX are the new hyperscalers. But are they? Or are they tentative hype-cycle benefactors with deep question marks around their long-term viability?

The default optimism is to say things like SpaceX is undervalued at $1.75T, its launch business is immaterial relative to the $23T of TAM it’s going after, and the $26B of annual revenue its receiving from folks like Anthropic and Google is definitely durable and not incidental.

And the default logic to support this kind of disparity is the promise of future opportunity. That’s not to say that these exceptional companies won’t prove to be relatively cheap today in the future as their businesses continue to swell. Many have done just that. But, despite the reality of the upside of the power law, that 80/20 split also means that 80% of the companies will NOT drive comparable outsized value to the 20% of outliers that will. As a result, the majority of private companies are likely overvalued and always will be.

AUM-Measuring Contest

The world of venture capital juxtaposed against those valuations begs the questions; why do all these companies need to be so much bigger than ever before? Because the bigger the funds, the bigger the outcomes need to be.

What gets measured gets managed and the focus is, increasingly, being placed on fund size. There has, historically, been a bifurcation between fund sizes. My most popular pieces I’ve ever written was The Puritans of Venture Capital where this was the whole point. “Puritan cottage keepers” on the one end and “capital agglomerators” on the other.

Firms like USV, Benchmark, etc. were built around a disciplined mentality of “your fund size is your strategy.” Meanwhile, capital agglomerators, like a16z, Lightspeed, etc. raced to build larger and larger empires, fueled by multi-billion dollar pools of AUM.

This bifurcation has been eroding for years, but it may have lost its most staunch champion. This past week, Benchmark announced it had raised $2B in new funds. The Cottage Keepers of yesteryear are more akin to Unicorns in rarity than the run-of-the-mill “$1B+ valuation.”

The logic behind Benchmark’s increased fundraise is an acknowledgement of the changing landscape. Bigger companies raise bigger rounds with bigger expectations. And if you’re going to compete, you have to have the capital to play along.

In The Puritans of Venture Capital, I made the point that the last time Benchmark considered raising more capital was in 2021 when they lost out on investing in Clubhouse against a16z. Prior to that, the last Benchmark actually raised a bigger fund was in 1999.

Is this history repeating itself? Rhyming? Or something fundamentally new?

The issue is whether the game, in the long-run, is actually changing. It most certainly is in the short term. AI companies absorbed 81% of all US venture capital in Q1 2026, up from 55% a year earlier. That massive capital influx has pushed folks like Benchmark out from participating; they didn’t invest in OpenAI, Anthropic, or any of the other foundation model companies.

But at some point we have to stop and ask... are those rounds even venture capital anymore? (Side note: Will Quist says “no.”)

The largest are actually more like sovereign / strategic investments: OpenAI’s $122B raise was the largest private round in history at an $852B valuation, and sovereign funds like GIC, Temasek, QIA, and Mubadala have become the definitive players, treating frontier AI as a sovereign-wealth-class asset rather than venture. Akin to new-age oil money.

What’s more, the entire ecosystem is built around dramatically complex and interconnected circular incentives / funding mechanisms. Nvidia committing up to $100B to OpenAI to build data-centers, Google raising $80B in equity because bank financing is choking on the $1T+ investment this whole ecosystem is requiring.

All of it is starting to “rhyme” with the vibes from 1929 or 2000; the kind of economic intertwining that typically precedes a Crisis climax rather than its opening.

Not Pretending Anymore

Even more so than the shifting economic model of venture is the cultural ethos.

In the early 2000s, Google established the motto, “Don’t be evil.” Facebook’s motto of “move fast and break things” was never meant to extend to breaking democracy or people’s brains. OpenAI was started in 2015 as a non-profit to benefit all of humanity until they realized that benefit was so dramatically more monetizable than they originally realized.

Technology, for a long time, had a “make the world a better place” energy. So much so that it was a fundamental part of the joke in a 2014 episode of Silicon Valley making fun of a series of TechCrunch Disrupt pitches.

You look at the categories that used to be hot and how they were framed, and it feels like a relic of a different civilization.

MOOCs (”education for everyone”), One Laptop Per Child, Google Fiber, Facebook’s Internet.org/Free Basics (”connect the next billion”) the “sharing economy” sold as community (Airbnb “Belong Anywhere,” Uber “transportation for everyone”).

Now, everything feels like it’s about arbitrage. Labor arbitrage in marketplaces, the gamblification of everything with prediction markets, AI companions optimized for time-on-app, content farms producing the purest of slop.

That moral repositioning isn’t new; it’s been playing out for the last several years. But now its coming home to roost. People have a default negativity when it comes to technology.

71% of Americans would oppose a data center near their home, up from 42% nine months earlier. A record number of data centers were canceled in Q1 2026 amid community resistance, and Morgan Stanley flagged public pushback as a binding constraint on AI buildout. Data-center even recently opposition helped tip recent elections in Virginia and Republican-leaning Georgia; candidates in both parties now treat it as toxic.

In fact, AI overall is viewed less favorably than Donald Trump or ICE.

The prevalence of gambling apps, read: prediction markets, has also become a flagship venture category, with companies like Kalshi reaching $22B valuation. Beyond just having a corrosive impact on young people getting addicted to gambling under the guise of intellectual arbitrage, it also plays right into power manipulation. Predictions markets are easy wins for insider trading and politicians or campaign staffers to treat inside information like a tradable asset.

All of that, combined with VCs’ broader moves into explicit political activity, venture is transitioning from financier to governing-class actor. That’s a fundamental signal marker for the Fourth Turning that Strauss and Howe articulated in the book.

For its whole history, venture operated inside the civic order’s economic subsystems. A financier allocates capital under rules that someone else writes. But a governing-class actor is something categorically different: instead of following the rules, it writes new rules, staffs its own institutions, and provides its own definition of “legitimacy.”

The Unraveling of the first two decades of the 21st century broke the old system. You see it in the dissolution of institutional trust across the board. A stark contrast between the old-guard “values” that were trying to align with existing systems and “make the world a better place” vs. the new-age stance is Marc Andreessen’s Techno-Optimist Manifesto. You would certainly expect it to lay out the case; what is the clarion call for techno-optimists everywhere? But what it also does is explicitly articulates “the enemy.”

“Our present society has been subjected to a mass demoralization campaign for six decades – against technology and against life – under varying names like “existential risk”, “sustainability”, “ESG”, “Sustainable Development Goals”, “social responsibility”, “stakeholder capitalism”, “Precautionary Principle”, “trust and safety”, “tech ethics”, “risk management”, “de-growth”, “the limits of growth”.”

Almost every facet of technology’s new shape is a representative seizing of the “old guard.” VCs moving directly into government roles, crypto and stablecoin enable a push into monetary control, defense-tech and American Dynamism reaches for the state’s monopoly on organized violence, tech-enabled super-PACs operating as open kingmakers, not quiet donors, network-state and “exit” ideas, charter cities, the Balaji-style ambition to literally reincarnate new nation states.

We’re not making the world a better place. We’re reshaping the world in our image.

Funding “What Matters”

Recently, Marc Andreessen posted about the new moral panic of water consumption in data centers and made the argument that its just the latest entry in a series of “moral panics” that will go away because they’re not actual issues.

And I agree. A huge swath of the anti-data center movement feels manufactured or deliberately misconstrued, whether through Chinese foreign actors or honest-to-goodness stupid mistakes, like Karen Hao doing bad math in Empire of AI.

But this chart also reminds me of a similar chart that compares what Americans actually die from to how much its covered in the media.

Despite over 50% of deaths being caused by heart disease and cancer, they represent ~7% of media coverage. Instead, the media spends almost 60% of its coverage on homicide and terrorism, despite that leading to less than 1% of American deaths.

That feels fundamentally yucky, doesn’t it?

There’s a mixed bag here in terms of what it means for venture capital. On the one hand, I would say that we can make the point that AI is low on people’s list of issues. But then also acknowledge its eating 80%+ of the capital in any given quarter. So are we solving real problems?

The next answer is, “well, AI will have an impact on all sorts of categories.” And that’s certainly true. But the saddest part is that we don’t particularly care about funding solutions in those categories. We care about TAM expansion. We invest money into problem areas, not because they represent problems worth solving, but because they represent sizable financial windfalls.

I gave an interview a few weeks ago where I pushed back on this approach:

“Everybody should be having more philosophical debates about the things that they are investing in. We don’t have nearly enough philosophical debates about the implications. We just say, ‘Hey, this is a hot technology and it looks like it’s ripping and people really like it’ and it’s just so blinders on, focused on ‘big market. Let’s do it.’ I think more people should have to embrace the the philosophical stick that they’re picking up because there’s consequences at the other end of that stick.”

Just one example. We have a portfolio company that went from $24M to $50M in high-margin revenue in Q1 of this year alone and is on track to end the year at $100M. The founder is exceptional, they have massive enterprise relationships with some of the biggest insurance companies in the world, and they’re solving a fundamental problem that can improve the lives of the sickest people in the country.

I introduced them to a few large “Tier 1 VCs” for conversations around their most recent fundraising round. Many of them engaged with the company, but one of them said to me, “I just don’t think this is really differentiated.” I genuinely almost laughed in their face, given the fact that they just finished investing in their fourth AI foundation model company and their third AI model orchestration company.

The Phoenix Reborn

So… what happens now?

Criticizing anything can be a real struggle because everything has nuance.

Has technology become riddled with arbitrage-driven exploitation? Yes. But has it also always had a role in improving people’s quality of life? Also yes.

And that continues. Biotech, GLP-1s, industrialization, etc.

Focusing on The Fourth Turning can feel like a Nihilistic exercise; it ends with the Crisis. Bummer. But the reality is the Crisis is the only turning that builds. The High doesn’t author its own values; it inherits them from the Crisis that came right before it. The confident, institution-rich America of 1946 wasn’t conjured in 1946. It was forged between 1929 and 1945. The worldview of the rebirth gets written during the reckoning, not after it.

So the Crisis isn’t the point to languish on. The focus, instead, should be on the rebirth. The Rising. The Unraveling hollowed out the old order. But, candidly, there’s a lot that needed to be hollowed out. The world is too complex and moving too fast to forever be determined by old white dudes in suits doling out cash. The evolution within venture capital is good. You’ve got to break a few eggs!

As painful and demoralizing as the Crisis can be, it is effectively opening up the room where someone decides what replaces it. And right now, that someone is us. Every check written and every fund raised is a vote on what the next forty years will value. As I’ve written about before, investments are a leading indicator of your beliefs, and the industry is voting, whether it’s thinking about it or not.

So, as much as we can chronicle the rot left over from the era of excess, we also have to acknowledge the critical reality that will shape the new world order.

AI is not bad. The same model architecture that powers the slop farm also powers my portfolio company going from $24M to $100M while helping the sickest people in the country. GLP-1s are quietly rewriting the metabolic future of tens of millions of people. Foundation models are folding proteins, reading scans, and compressing discovery timelines that used to be measured in decades. Fire is the oldest dual-use tool we have. It cooks a meal AND it burns down a house, and the difference has never been the fire’s decision. It’s ours.

Industrialization is not regression, either. Granted, I’ve spent a lot of this year nervous about venture’s lurch toward raw political power. But. Re-learning how to build ships, munitions, energy, and chips is not the same thing as a power grab. It’s the thing that keeps free societies defensible in a world where the alternative is very much knocking on our door. A liberal democracy that has forgotten how to make things is a liberal democracy with an expiration date. Rebuilding that capability is among the most genuinely good things this Crisis could produce.

Who Are We?

So… are we in a Crisis?

Yes. Unambiguously. Negative favorability, data-center revolts, SVB’s collapse, the $3.2 trillion of trapped value, the moral hangover… welcome to the Fourth Turning.

Strauss and Howe’s book doesn’t leave it at “here it comes!” The question, instead, is who you’ll be inside the Crisis?

Hard times make strong men. But that’s not the whole story. Because nothing makes you strong by default. Plenty of hard times have produced bitter, brittle, smaller people; the cycle only rhymes when somebody chooses to make it rhyme. A Crisis is a refiner’s fire, and fire does two very different things to two different metals. It tempers the steel that was worth tempering. But it consumes everything else. What you walk out as depends entirely on what you carried in.

The Hero generation that Strauss and Howe say comes of age in every Fourth Turning isn’t born heroic. It becomes heroic by being handed an impossible decade and choosing to: (1) build instead of extract, (2) steward instead of strip-mine, (3) fund the thing worth solving instead of the thing with the biggest market. That’s the menu of options.

So, so, SO many people are overcome with pessimism. It is SO much easier to be negative and grumpy and defeatist. Cynicism is free. And, increasingly, its in-group reinforcing. You belong by being negative. The other side of the coin isn’t as simple. Hope requires something of you. Maybe in the olden days, you could smile and assume the world around you would get better without you contributing anything. But that is not the times we live in. If you want to be optimistic, you have to put something on the altar. You have to strive for it. But as for me and my house, we choose optimism. Because the alternative is to concede the rebirth to the people writing the slop.

So… what kind of men and women will we be coming out of this?

Let’s be the kind of people that build the next High worth living in.

God speed.

Thanks for reading! To receive Networked Conviction: My Investing Journal, a collection of portfolio updates, Requests for Startups, and investing ideas for paid subscribers, you can sign up below:

Subscribe now

This is a free weekly newsletter about the art and science of building and investing in tech companies. To receive Investing 101 in your inbox each week, subscribe here:

Subscribe now

Growing up, we didn’t fly very much. I remember once, for my birthday, my Mom’s present was to take me on a plane to Arizona to visit some relatives. I remember the awe of watching the plane take off. Much the same way I remember the wonder as my brain understood what a website was for the first time.

Because we didn’t fly, anywhere we went we were driving. With Albuquerque, New Mexico as our starting point, we drove to Montana, Missouri, Illinois, etc.

Whenever we would drive, I remember distinctly talking to my Dad about all these towns that we would drive through. Taking speculative guesses at why they were there based on what we saw. College towns? Refineries? Factories? Military bases?

On one particularly eventful trip, we drove the ~27 hours to Orlando, Florida to go to Walt Disney World. A core node in my brain revolves around city building and urban development because of Walt Disney (I’ve written about that over, and over, and over, and over again.)

On another trip we drove to Nauvoo, Illinois. It’s a town that has a unique religious importance for me because it was a city that my ancestors, early members of The Church of Jesus Christ of Latter-Day Saints, built with their bare hands, carving it out of a swamp until it eventually rivaled Chicago in size at the time.

In fact, in the very first blog post I ever wrote on Investing 101, I talked about different portfolio ideas I have that I aggregate information around, and one of them was “City Building.” In it, I mentioned a napkin that I wrote up when I was 11 and we were touring Nauvoo. The vision was to build a Disney-esque getaway location where you could enjoy an authentic frontier town experience.

The reason my mind is dwelling on the science of towns is because I’m off the grid this weekend in Luna, New Mexico along the New Mexico-Arizona border; population ~150.

Named after Solomon Luna, the wealthiest man in New Mexico at one point, but it was settled by Mormon ranchers in 1883. One of those ranchers? William Laney Jr. His father, William Leany, was born in Logan, Kentucky in 1814 and was baptized into The Church of Jesus Christ of Latter-Day Saints in 1833. He then moved to Missouri to join with the main body of the church. After being chased out of Missouri and Nauvoo, he moved to Utah.

His son, William Laney, Jr. was born in Salt Lake City, Utah in 1848. At the age of 35, he was asked to move with a group of Saints to settle in New Mexico. He was my great-great-great grandpa. Since then, there have been Laneys / Thompsons / Shupes living in Luna. My daughter’s name is Eve Luna Harrison.

The reason I’m in Luna this weekend is because all of my siblings and cousins are there with our kids alongside our 90+ year old grandparents who have property there. We’ll be riding ATVs, roasting marshmallows, testing the structural integrity of the tire swing that held us when we were 12, and exploring the nearby hills. Hills that our ancestors have walked for five generations.

To some extent, this piece is another entry in my Touch Grass series that I’ve written about over, and over, and over, and over again.

But in a broader sense, I believe that having structural “portfolio ideas” in your life is a critical aspect of opening yourself up to serendipity. “City building” is my portfolio idea. That’s led me down rabbit holes around urban development, architecture, city politics, community development, cultural artifice, and tourism as an industry.

Everyone should spend more time weaving their ideas into a select set of concepts that resonate with them at a high level and represent an opportunity to improve their thinking. And that broader framework adds more meaning to casual consumption of information.

For me, a big piece of that directional information ingestion comes from having Luna in the back of my mind. It’s certainly no Vail or Jackson Hole or Sun Valley. But it means something to me. And wanting to find ways to help it thrive is a compelling intellectual exercise for me, whether I’m successful or not.

So I’m off. To touch some grass and get out of my digital bubble. And who knows, maybe I’ll come back with some increasing clarity on the noise of everyday life that I’ll share with you later on. Until then.

Thanks for reading! To receive Networked Conviction: My Investing Journal, a collection of portfolio updates, Requests for Startups, and investing ideas for paid subscribers, you can sign up below:

Subscribe now

This is a free weekly newsletter about the art and science of building and investing in tech companies. To receive Investing 101 in your inbox each week, subscribe here:

Subscribe now

This week, I got my first death threats on the internet.

Now, some of you might be surprised. But I’ve got quite a Twitter addiction, so homicidal commentary is nothing new to me. It’s just never been directed at me. And those of you who are maybe even more chronically online than I am are nodding their heads with this kind of response.

So what was my crime? I made the mistake of firing off a tweet of a casual thought I had when I got to my destination in a Waymo 20 minutes early and wished I could push a button, and pay a little more to just sit in it for a bit.

Like many (many) of my tweets, it sat for a bit. Casual commentary. Limited engagement. Exactly my sweet spot for content creation. Maybe a few snide comments rolled in. “That’s called a library.” “Have you tried a cafe?”

Then, a particular retweet sent a lot of people into my comments. The retweet said, “these people aren’t human like you and me.” 2.5K likes! Others piled in. “You seem like a waste of humanity.” “You are a lobotomized tech slave.” Eventually, took a turn with “Put this guy in the ground.”

This turned out to be the perfect segue into a topic I’ve wanted to think about for a bit anyways: violence. But it drove it home far more personally that I would have expected.

Now, don’t get me wrong, I don’t think anyone is going to kill me because of my Waymo tweet. But the thought crossed my mind when I read some of those comments at 3 AM and thought “...am I sure I locked the front door?” And what’s more, it triggered a growing fear that violence is increasingly being presented as a justified response to disagreement. What struck me about these people’s responses was that it had nothing to do with me as a person; it seemed, to them, an appropriate response based just on my worldview.

That led me through an intellectual exploration of violence’s place in the human story.

Violence As Default

Everybody’s journey is different. But one “ice breaker” question I don’t think I’ve ever been asked is, “have you ever been punched in the face?” My answer would be only once when a kid in high school decided he didn’t like me and hauled off between classes. Before and since, my experience with physical altercation was limited to football, wrestling, and the occassional fistless fistacuffs with my neighbor friends. With kids, I’ve got some pretty rip-roaring wrestle sessions, but no one has thrown a punch (other than my 4-year old daughter).

But over the course of my entire adult life I have never gotten in an actual physical fight. I honestly wasn’t sure if that would be something I had in common with most people, but turns out it is. One survey I found indicated that 83% of American’s say they never get in fights. Even growing up, the survey said only 58% of people said they occasionally got in fights as kids.

That being said, I can’t say that I don’t ever think about violence. When I’m in more volatile situations, or on sketchier roads at night, especially when walking with my wife, or with my kids in crowded places. I think about our physical safety. With the ever-present loom of shootings, who doesn’t? But even more than mass casualty events, I think about individual conflict. In disagreements with strangers, like car accidents, I find myself wondering what I would do if this person swung at me.

By and large, I find that violence is not a common part of my life. But the more you read history, the more it feels like that’s an anomaly more than a natural state. I wrote last week about how I’m reading Will Durant’s Story of Civilization and one thing, in particular, that has struck me is just how unapologetically violent most civilizations were.

Impalement, mutilations, flaying, ritualized human sacrifice of men, women, and children, dismemberment as routine judicial practice, public torture as entertainment, graphic methods of intense suffering for execution.

I came across a book recently that tried to make the argument that “organized brutality” has actually enabled an increase in violence, contrary to perspectives like Steve Pinker’s book, The Better Angels of Our Nature, where he makes the case for a “long decline of violence.” Organized brutality is talking about how violence at higher volumes is possible. But I’m talking about micro violence; not macro violence. And granted, this is coming from a place of intense privilege; not everyone in the world has escaped violence the way someone like me has.

But I think it’s fair to say that, on an individual level, generally speaking, our lives are less violent today than they would have been at any other time in human history. The question, then, for me, becomes one of whether that is a new normal or a temporary status? Protected, as I am, from the threats of my opponents who have been defanged by the digital distance our computer screens render. Because, for many, there is the rising sense that maybe violence could solve everything.

The Natural Meritocracy of Violence

The natural meritocracy of violence isn’t a phrase I came up with. And I am, by no means, a capable historian of violence, or anything else for that matter. I’m just reacting to sources that have been put in front of me. That phrase, instead, comes from a great follow on twitter; Roman Helmet Guy. He put it quite eloquently:

There’s a lot of nuance in the immigration debate here, but the core point about violence is an important one. Civilization is an active protection against the “natural meritocracy of extreme violence.” Every aspect of our nations, laws, standards, and morals have wrapped themselves around us to give us an unfair advantage. Unfair in the sense that, compared to those left naked from the womb to fend for themselves, we start on protective third base.

Another classic line comes from Margin Call in an exceptional monologue:

“It’s just money. It’s made up. Pieces of paper with pictures on it so we don’t have to kill each other just to get something to eat.”

We have hundreds, if not thousands, of years of fighting and bleeding upon which to build a foundation that lets us have any semblance of “meritocracy” atop a floor that has been set for our physical safety. Someone can compete with me in the free market, can even engage in cutthroat competitive dynamics (figuratively speaking), but they CAN’T kill me to get an edge on my lemonade stand.

I’ve written before about a common idea I return to:

“Compare the thinking of John Adams vs. Thomas Jefferson. There’s a lot of meat on the idea so I’ll just summarize it. On the one hand, people will act in their own self-interest and should be left free to do what they want, giving unfettered power to the people (Jefferson). On the other hand, people are riddled with inadequacies and easily swayed by misaligned incentives. They need guard rails, guidance, and systems to ensure people are protected from each other and themselves (Adams).”

This contrast of unfettered human freedom vs. guard rails gets to a fundamental question I think about constantly around human nature. Unfortunately, I think, I fall on the side of people needing guardrails; protections from themselves. “The lesser demons of our nature.”

And lately, it feels like people are increasingly giving into those lesser demons.

At the time of Charlie Kirk’s assassination, I wrote a reflection on the impact that violence had on me. First, there was a quote from Charlie Kirk, himself, that felt representative of what happened to him:

“When people stop talking, really bad stuff starts. When marriages stop talking, divorce happens. When churches stop talking, they fall apart. When nations stop talking, civil war ensues. When you stop having a human connection with someone you disagree with, it becomes a lot easier to want to commit violence against that group. Whether it be the horrible genocides of the last 100 years; people stop talking with each other because they lose their humanity. What we as a culture have to get back to is being able to have a reasonable disagreement where violence is not an option.”

My conclusion was this:

“When you have people declaring that any alternative expression of perspective represents violence akin to actual violence, and merits the return of physical violence? I am not convinced by that argument.“

The rhetoric of violence as an appropriate response to disagreement continues to rage on. Recently, there was a video I saw making the rounds of some “journalists” responding to the murder of Brian Thompson, the UnitedHealth CEO. Here was their position on violence:

“F—k Brian Thompson. “His children are better off without him. They need to learn to not be like their dad. And enjoy the blood money, kids. He’s responsible for more deaths than Osama bin Laden, and I remember Americans celebrating when Osama bin Laden was killed. It’s not like we don’t understand heroic violence, or, like, when violence is good.”

I can feel that protective shell of ensured safety starting to fade. Those people cheering its evaporation appreciate the validation of their violent worldview its disappearance offers.

I don’t mean to frame this as a political evaluation either. It’s not that liberals are suddenly becoming more bloodthirsty. January 6th was also violent. Police brutality, riots, vigilante street justice with backwards baseball caps, firebombing CEOs. Violence, violence, violence. Some of its structural, like more dangerous streets with lenient drug policies. Some of its political, like disagreements, such as the case with Brian Thompson or Charlie Kirk. But, increasingly, I believe it could become a default for many people.

The more we establish a framework for justified violence in the face of disagreement, the more our problems start to look like they fit perfectly into a “violence solves everything” framework. And the next hotbed opportunity for “justified violence?” Anti-technology.

The Artificial Meritocracy of Excel

René Girard’s book, Violence and the Sacred, is a Peter Thiel classic. The TLDR is this framework of “mimetic desire.” I’ll summarize it poorly. He proposes that people don’t want what they want because of “who they are” and the deepest desires of their heart of hearts. We desire what others desire, imitating them as models. This leads to violence because when two people desire the same object through each other, they become rivals and then mirror-image antagonists, locked in escalating reciprocal conflict that spreads contagiously through a community.

The book is dense and filled with sacrificial theory and explorations of why all of religion is framed around this attempt at superseding mimetic desire; temporarily placating the demand for conflict. But let’s focus on this simple ideological flow: desire stems from envy, envy leads to competition, competition leads to violence.

Juxtapose that framework against recent events. Former Google CEO, Eric Schmidt, was giving a commencement address at ASU, and started talking about AI. Unfortunately, he dramatically misread the room and was booed, as one outlet put it, “into oblivion.” Ashlee Vance said this is one of the most confusing things he’s ever seen in tech. How can the rising generation be so angry about AI?

Like any complex social issue, I don’t think it is just one thing. There’s plenty of Chinese (and domestic) misinformation about data centers, water, and energy. You have the unforced error of Sam Altman and Dario Amodei scaring the bejeezus out of everyone they talk to. But more than any of that I think you have Girard’s mimetic desire supercharged by economic, technological, and cultural envy unlike anything any of us have seen in our lifetime.

Millennials own 1/5 the assets of boomers. Millennials and Gen Z are making 20% less in wages than boomers did at the same age. The share of first-time homebuyers has plummeted to 21%; the median home price has risen 400% since 1990. Nine out of ten graduates in 2026 are nervous about AI replacing their job prospects. Entry level jobs have dropped by 15% while the number of applicants to any given job has increased by 30%. Gen Z are now three times more likely to report that the American Dream is out of reach, jumping from 11% in 2017 to 36% in 2024.

While the average young person is watching every social, economic, cultural, and technological opportunity dim, you have the pleebs in San Francisco chittering about the “permanent underclass.” While we in the tech community marvel at the capabilities of the latest AI models, we’re unknowingly surround by a deep cultural resentment of any technical enablement for a critical reason; most people enviously believe they will not be enabled or advantaged by any technological progress. Enter violence-inducing envy.

First They Ignore You, Then They Fight You

Tech, as an industry, was once a playground of outcasts and misfits. They were largely ignored as starry eyed dreamers; hobbyists hoping for a better world.

But today, technology can no longer be relegated to the fringe. It has eaten the world. Congratulations to all who drove forward the unstoppable arc of progress. It has arrived. But, as many before me have pointed out, it is not evenly distributed.

The people who felt immediately inclined at the glimpse of an eye and a click of the thumb to wish me violence for ideating around autonomous vehicles? Those are the people who are very much no longer ignoring us. They are now prepared to fight us. One person’s response to my Waymo tweet was “you need to be attacked.”

Whether we like it or not, technology is poised to be at the top of everyone’s hate list. Supposedly AI is polling at lower approval ratings than Trump or ICE. This, intuitively, makes sense to me because of all the multi-faceted ways it threatens people that I mentioned earlier. And, unfortunately, we have very few general audience charismatic leaders in tech who can turn the tide on sentiment towards technology. So what are we to do?

Humanity’s Violence Formula

I’ve come to the conclusion that I just don’t believe violence will go away. That may be unsurprising. I just wrote a 300+ page book on conflict deterrence. The very first sentence of the book is this: “There have always been people willing to use violence to pursue their interests.”

So instead of trying to fight against those fundamental elements of human nature, I think there is value in reflecting on some of the components behind it and trying to wield them for good, rather than for conflict. Because, while violence is likely unavoidable, I don’t think violence needs to be physical. And it doesn’t need to be weaponized in cultural disagreements.

I tried to think through some elements of the violence formula and what, if anything, we could do to try and redirect that energy in healthier ways, both within ourselves, and those within our circle of influence.

Revenge

I read an essay by Will Sloan on Quentin Tarantino recently that played into some of the themes of justified violence. Tarantino’s films are, obviously, famously violent. But this essay made the point that Tarantino’s personal framework for violence often revolves around revenge.

In 2009, when he was promoting Inglorious Basterds, he made this comment about the Holocaust:

“Holocaust movies always have Jews as victims. We’ve seen that story before. I want to see something different. Let’s see Germans that are scared of Jews. Let’s not have everything build up to a big misery.”

He’s done similar things in other movies, like Django Unchained, where he inverts victimhood into positions of power. Sloan was reminded of this comment when, recently, Tarantino made the comment that the only thing stopping There Will Be Blood from being a near perfect movie is Paul Dano.

“The flaw is Paul Dano. Obviously, it’s supposed to be a two-hander, but it’s also drastically obvious that it’s not a two-hander. [Dano] is weak sauce, man. He is the weak sister... He’s just such a weak, weak, uninteresting guy.”

For those of you who haven’t seen There Will Be Blood, its important to note that the purpose of the two main characters is to contrast cruel strength (Daniel Day-Lewis) and vindictive weakness (Paul Dano). But Tarantino’s comments seem to hold a “contempt for weakness.” Tarantino believes violence can be straightforwardly good when directed at the right targets. Revenge is a fitful framework for why violence is merited; because violence has been done to me. And, rather than being a “weak” victim, violence is the mantle that can be lifted up and leveraged for empowerment.

The same is true of many, many people. “An eye for an eye” is still going strong. Of course, we can have the desire for transcendent civilizational repentance where everyone can seek out a higher law, like Christ saying “turn the other cheek.” Or the line, supposedly from Gandhi, that “an eye for an eye will make the whole world blind.”

But the classic problem is that our solution can’t rely on “if people would just...” because they often won’t. Instead, we have to acknowledge that revenge is a fundamental part of people’s psychology. And in our messaging we should strive to humanize everyone, apply as much mercy as possible, and compromise where possible. In the words of Peggy Carter:

“Compromise where you can. Where you can’t, don’t. Even if everyone is telling you that something wrong is something right. Even if the whole world is telling you to move, it is your duty to plant yourself like a tree, look them in the eye, and say, ‘No. YOU move.’”

On those things that cannot be compromised we must help the victims who would seek revenge understand their own victimhood. If they have been wronged, help them seek rightings without proportional violence. If they haven’t been legitimately wronged, help them avoid the intellectual sinkhole that is unjustified victimhood.

Glory

Robert Fagles describes this idea of violence being a “permanent factor in human life” for more high-brow reasons than just achieving your aims:

“The Iliad accepts violence as a permanent factor in human life and accepts it without sentimentality, for it is just as sentimental to pretend that war does not have its monstrous ugliness as it is to deny that it has its own strange and fatal beauty, a power, which can call out in men resources of endurance, courage and self-sacrifice that peacetime, to our sorrow and loss, can rarely command. Three thousand years have not changed the human condition in this respect; we are still lovers and victims of the will to violence, and so long as we are, Homer will be read as its truest interpreter.”

People want to fight for what they believe in. To demonstrate endurance, courage, self-sacrifice. What we have lost sight of in the US is the mechanized war engine that has become impersonal. Basically post World War II, we’ve lost the moral high ground because our conflicts are rarely out of justice.

But that hunger for pursuit; what Fagles calls a “strange and fatal beauty, a power,” is, I don’t think, necessarily coupled with physical violence. It is connected to pursuit. To striving. People need things to believe in. To fight for. To be grateful that they are pushing forward, and that make them feel they are being tested. The loss of religion, patriotism, communalism, and most other forms of organized commitment have left us as empty shells. Still filled with the hunger, but with no outlet to quench it.

People need to be engaged with missions. You see a lot of this in mission-driven startups; people feel like they’re building towards something. But so many people feel aimless. And the way they quench that uncomfortable thirst for meaning is by identifying an enemy. And if the tech industry doesn’t hold up a mission worth pursuing then we will become the enemy worth attacking.

Goodness

Finally, I want to emphasize that this isn’t meant to be a defeatist formula. “We’re all gonna be violent, so why not bank and cool the masses as best we can with video games and opioids?” That is the furthest from my point. My point is that people have passions; rightfully so. But those passions have been ill-fitted to modern society, both economically and technologically. So those passions need to be acknowledge, addressed, and assuaged.

I think about this Annie Dillard line that Michael Dempsey shared once:

“In the deeps are the violence and terror of which psychology has warned us. But if you ride these monsters deeper down, if you drop with them farther over the world’s rim, you find what our sciences cannot locate or name, the substrate, the ocean or matrix or ether which buoys the rest, which gives goodness its power for good, and evil, its power for evil, the unified field: our complex and inexplicable caring for each other, and for our life together here. This is given. It is not learned.”

Violence is there. But deeper down you find “the substrate...which gives goodness its power for good and evil its power for evil.” We have an intense caring for people that gives us power. The problem is individual caring doesn’t scale. In the words of Jimmy Carr, “you’re a communist with your family, a socialist with your community, but then you get to nation state level and you go, ‘...f*ck those guys.’”

But that doesn’t mean we emphasize the loss of empathy at scale. It means we need to lean into the power of empathy in close proximity. That was Jesus’ point with the parable of the Good Samaritan. When He says “love your neighbor,” the question is “who is your neighbor?” And the answer is everyone.

Cultural Paradox

There is so much nuance in the human experience. Nitya Prakash said, “do you understand the violence it took to become this gentle?” Richard Siken makes the point that “gentleness comes, not from the absence of violence, but despite the abundance of it.” Intense contrast.

Violence exists and should be watched. But it doesn’t need to define us. We don’t need to live in fear. But we also cannot live in ignorance. Hence, the John Adams school of thought when it comes to human nature. It isn’t that people are fundamentally wicked or default evil. But they need guard rails and protections, both against themselves and against others.

But the deeper truths are that humans will tend to have finely developed senses of revenge and glory, but also goodness. How do we maximize the natural tendency towards avoiding the need for revenge, offering capable, worthy outlets for glory, and incentives to maximize goodness?

Technology can, and should, play a role in that higher discussion. Unfortunately, as of right now, we very much are not. We are dramatically more focused on capability over cause. In the famous words of Ian Malcolm, “so preoccupied with whether or not [we] could, [we] didn’t stop to think if [we] should.”

We are not addressing difficult issues with technology. We are developing unnerving capabilities with technology. And then assuming that the unnerving capabilities will work out what to do about the difficult issues. I think, in the same way that we are no longer ignored by society as rebels and outcasts, we can also not afford to disconnect ourselves from negative externalities. We have to start thinking about the interconnection our technology has to the fundamental elements of the human experience. Because if we don’t, violence may be the logical response.

Thanks for reading! To receive Networked Conviction: My Investing Journal, a collection of portfolio updates, Requests for Startups, and investing ideas for paid subscribers, you can sign up below:

Subscribe now

This is a free weekly newsletter about the art and science of building and investing in tech companies. To receive Investing 101 in your inbox each week, subscribe here:

Subscribe now

In 1870, Ralph Waldo Emerson published a collection of essays entitled “Society and Solitude.” One essay, in particular, has stuck with me for years; it is simply called, “Books.”

In it, Emerson lays out his philosophy towards books, both those that do nothing for us and those that “redeem us.” One section, in particular, I haven’t been able to forgot since I first read it, sitting on a bench on a road in Waynesboro, Pennsylvania in 2011:

“Be sure then to read no mean books. Shun the spawn of the press on the gossip of the hour. Do not read what you shall learn, without asking, in the street and the train. If you should transfer the amount of your reading day by day from the newspaper to the standard authors—But who dare speak of such a thing? ... The three practical rules, then, which I have to offer, are:

1. Never read any book that is not a year old.
2. Never read any but famed books.
3. Never read any, but what you like. Or, in Shakespeare’s phrase: “No profit goes where is no pleasure ta’en. In brief, sir, study what you most affect.”

I’ll start with the last at the first. I wrote a few weeks ago about using your excitement as your guide. In the words of Paul Graham, “focus on what you personally find most exciting. You can’t get that wrong.” This is markedly different than “following your passions.” It is, instead, finding where joy, preference, satisfaction, fondness come from and letting that be your guide. You will find it difficult to do anything consistently if you don’t enjoy it. And if you can’t do it consistently, then you’ll likely never do it well.

The second, I find to cause a cognitive dissonance for me. On the one hand, there is a Lindy effect in literature. The longer something has stayed in rotation, the more likely it is to be better. I think this is largely true, and was certainly even more true in Emerson’s day; information worth having was worth re-printing.

That being said, I think the “always on” framework the internet has applied to information can short circuit the law of natural selection for ideas. Ideas can become pervasive, not because they’re good, but because they’re known. The prevalence of Twilight or Fifty Shades of Grey may speak to this phenomenon.

But, as with all proverbial arcs, this one bends towards truth. The test of time will often root out what was incidental excitement in favor of longevity-prone truth.

Finally, we come to the first principle. This is the one that most stuck with me over the years. “Never read any book that is not a year old.” Pmarca recently declared his barbell approach to content: tweets by the minute on one end, 50-year old books on the other. But why does Emerson shortchange the cutoff at just one year? Why not 100 years? The books he goes on to list in his essay have authors like Homer, Shakespeare, Herodotus; hardly just a couple years old, even when Emerson wrote it in 1870.

The principle, I think, in modern parlance, is distance from “the current thing.” How often have there been books that feel rushed to production? Dozens and dozens on the most recent thing Donald Trump has done that everyone hates. Or the O.J. trial, Princess Diana’s death, 9/11, COVID, each spawned countless renditions of breathless commentary. But none have stood the test of time.

But what you need is what Emerson was prescribing. Distance from the current thing. Another piece of commentary in the Emerson excerpt above, that I love, is when he says, “do not read what you shall learn, without asking, in the street and the train.” Without asking. Because the current thing, as we know, will assault your sense whether you like it or not.

So, where do I find myself in the pursuit of the old? As I wrote about in my first post of the year, a great post from Gregory Blotnick inspired me to read Will and Ariel Durant’s Story of Civilization. I’m about 500 pages into the first book; maybe 55% done? At this rate, it’ll take me ~8 years to finish all 15K pages. It took Blotnick 5 years, so I need to pick up the pace!

But, already, I can see the “test of time” being unable to touch that series. I don’t mean that everything is up to date; the first book was written in 1935. Plenty of new archeology and scholarly work has been done to shift what was known when the Durants were writing it. Instead, I mean the level of quality and ambition that went into its production. You can feel it on the pages. From the Preface, alone, I was gobsmacked.

Let me set the stage. Will Durant was born in 1885. In 1915, he was 30 years old and he said to himself, “I want to write a history of civilization.” His friends may have asked him, “which civilization?” And he said, “all of it.” Then, he proceeded to do it over the course of the next 40 years; publishing the eleventh volume in 1975. He died six years later at the age of 91. He poured his life force into these books.

I’m no historian. And my editor at Contrary Research is much more of a Classics guy than I am, so I’m sure he would have a more articulate perspective. But my cursory justification for why Story of Civilization holds up so well, despite not being “cutting edge archeology” is because what Durant isn’t seeking either end of the informational extremes. It isn’t a perfect, exhaustive, detailing of facts. But it also isn’t a salacious click-baity call for attention.

History was the backdrop against which Durant sought truth. He wasn’t mired in the academic minutia of covering every detail. In fact, he frequently says “I cannot cover everything we know.” But that’s why he called it the “Story of Civilization,” rather than something like The Civilizational Encyclopedia.

Take just one example from a chapter I recently finished on Akbar The Great in India. His children actively sought his death in hunger for his throne, despite him being what Durant called “the justest and wisest ruler that Asia has ever known.” In the first section after his death, the Durant’s include this observation on the children of great men:

“The children who had waited so patiently for his death found it difficult to hold together the empire that had been created by his genius. Why is it that great men so often have mediocrities for their offspring? Is it because the gamble of the genes that produced them -- the commingling of ancestral traits and biological possibilities -- was but a chance, and could not be expected to recur? Or is it because the genius exhausts in thought and toil the force that might have gone to parentage, and leaves only his diluted blood to his heirs? Or is it that children decay under ease, and early good fortune deprives them of the stimulus to ambition and growth?”

Whether the book is 1,000 or 100 or 10 years old, I’m seeing a comparable pattern. Another book I’m reading right now is Only The Paranoid Survive, written in 1999 by former Intel CEO, Andy Grove. He wrote it as an exploration of “crisis points” when businesses experience “10x changes.” But what I noticed was that the principles are true, regardless of the time and circumstances. The relevance feels particularly poignant amidst, for example, an AI Revolution.

In conclusion, read old books.

There are great companion pieces about why to read and how to read. But once you’ve warmed up the engine and put it in drive, the question is where to go.

My suggestion?

Read old books.

Thanks for reading! To receive Networked Conviction: My Investing Journal, a collection of portfolio updates, Requests for Startups, and investing ideas for paid subscribers, you can sign up below:

Subscribe now

This is a free weekly newsletter about the art and science of building and investing in tech companies. To receive Investing 101 in your inbox each week, subscribe here:

Subscribe now

There’s a common bell curve meme that makes the rounds. While the majority of weepy nobodies screams about the complexity, both idiots and gurus on either end of the spectrum unite around common simplicity. A similar idea came to mind today, albeit the bell curve moniker isn’t right. Instead, its a balance of nuance.

When it comes to forming a belief system as an investor, its more about finding this nuanced middle. There are gigachad’s on one end who want to preach unrequited optimism. “You can just do things.” On the other end there are Perma-Bears; people incapable of seeing the opportunity or upside in anything.

But my position on determining your belief system rests somewhere in the middle. It kicks outside the standard bearish / bullish mentality and embraces, instead, the messy middle of nuance where you’re forced to not just pick a side (e.g. anti- or pro-), but to, instead, articulate your worldview. And you get there by asking a question that rings through investing of almost every shape and size: “what do you have to believe?”

Passing

Across thousands of meetings with startups over the course of my career, I’ve passed on dramatically more opportunities than I have chosen to invest in. As a result, I have a fairly broad corpus of experience passing with people; i.e. letting them know I’ve chosen not to invest. Lately, I’ve found the framework that best articulates my “pass rationale” is this idea of “how many things have to go right and not being able to get comfortable with that.”

I was talking about this with a friend and his response was fair and direct: “is there any case of a startup that doesn’t need a lot to go right to go big?” My response was that it isn’t a binary; either this will be easy or this will be hard. In fact, if there is one binary in startups it is the universality of the fact that this will be hard.

Instead, as I explained to my friend, its a spectrum. A weighted average of all the things that have to go right. I’ve written before about how Marc Andreessen calls this “the onion theory of risk.”

The Onion Theory of Risk

When I first wrote about this topic over three years ago, this is what I said:

“Building a company is a massive multivariable calculation of risk-adjusted outcomes. Think about all the checklists you’ve ever seen where investors tick through the aspects they look for in a potential investment. Marc Andreessen calls this the “onion theory of risk”. Each aspect of a business is another layer:

Andreessen’s original list still holds up. Each is a layer:

• Founder Risk: Does the startup have the right founding team? A great technologist, plus someone who can run the company? Is the technologist really all that? Is the business person capable of running the company?

• Market Risk: Is there a market for the product (using the term product and service interchangeably)? Will anyone want it? Will they pay for it? How much will they pay? How do we know?

• Competition Risk: Are there too many other startups already doing this? Is this startup sufficiently differentiated from the other startups, and also differentiated from any large incumbents?

• Timing Risk: Is it too early? Is it too late?

• Financing Risk: After we invest in this round, how many additional rounds of financing will be required for the company to become profitable, and what will the dollar total be? How certain are we about these estimates? How do we know?

• Marketing Risk: Will this startup be able to cut through the noise? How much will marketing cost? Do the economics of customer acquisition — the cost to acquire a customer, and the revenue that customer will generate — work?

• Distribution Risk: Does this startup need certain distribution partners to succeed? Will it be able to get them? How? (For example, this is a common problem with mobile startups that need deals with major mobile carriers to succeed.)

• Technology Risk: Can the product be built? Does it involve rocket science — or an equivalent, like artificial intelligence or natural language processing? Are there fundamental breakthroughs that need to happen?

• Product Risk: Even assuming the product can in theory be built, can this team build it?

• Hiring Risk: What positions does the startup need to hire for in order to execute its plan? E.g. a startup planning to build a highscale web service will need a VP of Operations — will the founding team be able to hire a good one?

This is the framework that is most often in my head when I’m evaluating any particular investment opportunity, at least as it pertains to startups. Each risk is a dial. In some cases, certain aspects of a business can be relatively derisked, so the dial is low. In others, the crux of the business is dependent on a very high risk variable. Again, there is no binary equation that will yield a go / no go conclusion. Instead, it is a gradually deteriorating feeling of comfort.

When I first wrote about the onion theory of risk it was in a piece called Risk Management in the Age of YOLO. Looking back, I think its actually probably one of the better pieces I’ve ever written. I ended that piece with this paragraph:

Risks come in all shapes and sizes—personal, spiritual, physical, professional. In the words of Andy Rachleff: “Human nature is not comfortable taking risk; so most venture capital firms want high returns, without risk, which doesn’t exist.” Risk is very similar to failure: “The less time people spend with [it] the less comfortable with it they become.”

The “comfort” level I feel with risk is not innate; it is honed. Over time you become more comfortable with certain types of risk. Market risk is much less scary when I’ve seen how almost every market I’ve ever evaluated has proven to be larger than I expected. Hiring risk has become inextricably connected to “marketing risk” or “storytelling risk.” One leads to the other, so my comfort with one depends on my comfort with the other. But some risks have become unequivocally critical, like founder risk. There’s no chance if you get that one wrong.

One of the ways to become comfortable with risk is to think about it more. A LOT more. Sequoia has a practice in their investment memos that we adopted when I was at Index Ventures. Originally, I believe the idea came from Larry Summers: the pre-parade and the pre-mortem. Roelof Both explains it this way:

“At the outset [of an investment], dream, for a second, if everything goes right. In the pre- parade, why should we imagine that this company could yield a 10x or 100x return for us? And then the pre-mortem really helps you focus on the key challenges the company has to overcome. There’s a version of that that the management team themselves needs to conduct which is; forget about the fact that you have three three years of runway; [what if] you only had 12 months left? What would you do? It is really clarifying to focus the mind.”

Two thought experiments: (1) one where everything has gone gloriously right, and (2) one where everything has gone catastrophically wrong. Most founders I meet have done a half-version of the first one (usually labeled “vision”) and almost none of the second.

The Pre-Parade

The pre-parade asks: what is the forward-looking best-case scenario? What does this company look like in 5–10 years if everything we underwrote actually works out?

The reason this matters is all about calibration. If the best-case looks like a $300M outcome, then the math of an early-stage venture investment is already broken. You can’t take a 10% chance at a $300M outcome and call that a venture deal; the expected value doesn’t get you to a fund return. The pre-parade is the discipline of asking, “if I’m right about everything, am I right enough?”

The very best founders I’ve met can articulate the pre-parade unprompted. They’ve thought through what the company looks like in a decade, not just in hand-wavy ambition terms, but with a clarity of thought that is palpable They can describe the scaffolding of the future they want to build. And critically, they want the consequences of that future. They’re not just saying it because investors like big numbers; they actually want to live in the world the pre-parade describes. That, I’ve written before, is the single most important characteristic an ambitious person can have: the willingness to want the consequences of what you want.

The Pre-Mortem

The pre-mortem asks the harder question. What is the forward-looking worst-case scenario? What does this company look like in 5–10 years if it goes wrong, and what specifically went wrong?

The pre-mortem is harder because it requires a particular kind of paranoia that most founders have been coached not to display. A founder is supposed to project conviction. But the best founders I’ve met are paranoid in private and confident in public. They’ve already imagined every way the thing dies.

There is a great line in The Founders about David Sacks’s tenure at PayPal:

“‘One of the thought experiments I ran through was, if I was running eBay Payments, what would I do to kill PayPal?’ Sacks said. ‘And I came up with lots of different things! I was always worried that one day they were gonna figure it out.’”

That is the pre-mortem in operating mode. Sit in your competitor’s chair. Imagine the smartest, best-resourced version of the entity that wants to kill you. What do they do, and how do you survive it?

The OG of this paranoid posture, of course, is Andy Grove, the former Intel CEO. The book he literally titled Only The Paranoid Survive is the foundational text on this idea:

“Business success contains the seeds of its own destruction. The more successful you are, the more people want a chunk of your business and then another chunk and then another until there is nothing left. I believe that the prime responsibility of a manager is to guard constantly against other people’s attacks and to inculcate this guardian attitude in the people under his or her management.”

So what does that entail? Just constant worry with no plan in sight because any attempt at planning should only be met with more fear? Wrong. Andy has a great framework for how to plan in this kind of environment:

“You need to plan the way a fire department plans: It cannot anticipate where the next fire will be, so it has to shape an energetic and efficient team that is capable of responding to the unanticipated as well as to any ordinary event.”

Notice that he isn’t telling managers to predict the specific death. He’s telling them to build the muscle that survives the unpredicted death. That is the right way to do a pre-mortem. You’re not trying to forecast which onion layer fails. You’re trying to know that one of them will, and to be the kind of organization that responds.

Granted, no founder can predict the future with certainty. But there is a meaningful difference between the founder who has war-gamed the death of their company in private and the founder who hasn’t. The former has ten more years of survival muscle than the latter, and you can feel it in a 30-minute pitch.

Therefore, What?

Back to the original question. What do you have to believe?

Every investment is a stack of beliefs about a stack of risks. The onion. The dial-by-dial accumulation of comfort and discomfort. You cannot remove the risk. You can only increase the surface area of the things you’ve actually thought about.

The pre-parade forces you to be specific about what success even means. The pre-mortem forces you to be specific about what failure even means. Most investors and most founders skip both, and then act surprised when the outcome doesn’t match the vague gut they were running on. You can’t eat narrative.

I’ve written before about how every decision is made on data and then measured by outcomes. We are wrong 90%+ of the time. But we still bother. We bother because we believe. Believing; actually believing, is being able to articulate, with specificity, what you have to believe and why.

Thanks for reading! To receive Networked Conviction: My Investing Journal, a collection of portfolio updates, Requests for Startups, and investing ideas for paid subscribers, you can sign up below:

Subscribe now

This is a free weekly newsletter about the art and science of building and investing in tech companies. To receive Investing 101 in your inbox each week, subscribe here:

Subscribe now

In July 2020, Contrary invested in Anduril. In September 2022, I started Contrary Research. In October 2023, I started writing a book about Anduril.

The project started as a typical company deep dive for Contrary Research. But as I started to immerse myself in the rich history of the military industrial complex I came to appreciate that Anduril is unique among high growth tech startups. It was not just a group of hyper talented people building exceptional products. It was actually a deliberate counter-position to almost 100 years of military history.

So instead of a typical company deep dive, I decided it deserved a more thorough treatment. Granted, the project was on and off as I had other stuff come up. Plus the world kept changing around us. Plus plus Anduril kept launching new products. But after several years, 35 different drafts, and some exceptional help from the folks at both Contrary and Anduril, The Anduril Thesis is here. (Readers of this blog got a sneak peek a few weeks ago).

Below I’ll share what I see as the “greatest hits” of what became a 300-page, 100K+ word in-depth overview. But you can also see an even more thorough overview of Anduril as a company at our memo, which you can consider as The Anduril Thesis Lite. Then, obviously, you can order the full book of The Anduril Thesis here. Finally, you can check out this video interview that I did with Molly O’Shea at Sourcery.

Below is my “greatest hits” highlights of the book.

The Anduril Thesis

I believe Anduril may very well be the most important company of the 21st century. Not OpenAI or Anthropic, or SpaceX. It may be our best chance at deterring “Great Power” conflict with China.

But when we sat down to write the story of Anduril we realized that it merited an outsized level of attention.

Before you can understand what Anduril is building with the “future of warfare,” you have to understand the 100 years of military history in the US that Anduril is deliberately counter-positioned to.

Timeline

Industrial powerhouse

Around / during WWII the US represented 40% of global manufacturing capacity. You had Silicon Valley literally born from the aftermath of WWII industrialism when Frederick Terman set up Stanford Industrial Park. And the DOD was a first-in-line customer for that budding technology industry.

The DOD represented 36% of GLOBAL R&D! They had an incredible handle on technology and they put it to work over the course of the Cold War, with defense projects leading to the birth of dozens of innovations across the space program, the internet, and everything in between. A golden age of American industrialism.

Smothering the Golden Goose

Robert McNamara, who came in as Secretary of Defense and broke the golden goose in the 1960s

Planning, Programing, Budgeting Execution (PPBE) was his process baby and it represented a rats nest of process for military procurement. Ben Rich who ran Lockheed’s famous Skunk Works said it descended like a plague of auditors and bean counters

Everything was centrally planned. Matt Grimm jokes that “everyone, even Russia and China, has given up on communism, except for Cuba and the DoD.”

McNamara thought we should spend less, so he added intense bureaucracy. And that did control spending, for a couple years. But then you get Korea, Vietnam, the Cold War, and now we’re ramping up spending again but because of McNamara’s friction we’re getting way less bang for our buck.

Consolidation

Post Cold War we had a high friction machine but now with a much smaller market. William Perry, deputy defense secretary, held The Last Supper, where he congregated the leaders of all the defense contractors at the time and told everyone to consolidate or die.

So they did. And we went from 107 major contractors down to 5

Boeing is the poster child of consolidation woes. They want from gold standard engineering to buying a cutthroat profit-driven competitor in McDonnell Douglas that ruined their ability to innovate, have had tons of high profile failures, and may be engaging in a shadow cover up to silence a lot of would-be whistleblowers.

Broken Things

The result is a broken, bureaucratic nightmare that only knows how to make big expensive things that take 10 years longer and are 2-5x over budget.

The F-35 will cost $1.5 TRILLION to field, and by the time we get it it will be dramatically outdated!

Meanwhile we are actively in one of the most conflict-prone periods of time since the Cold War and the state of warfare has changed DRAMATICALLY.

Defense Industry Today

Palmer Luckey often talks about how “problems that took decades to make will take decades to solve.” Before you can start to get to some of the early improvements happening in defense today, you have to understand the decades that caused the problem.

• Cost-plus vs fixed cost: The government would rather have a $1B program with a 10% margin than a $100M program with a 50% margin for the same outcome

• Built-to-spec: “We know what’s best.” That worked when DoD was 36% of global R&D but now they’re less than 1%.

• Software allergic: Selling software to the government means you sign IP rights where, if they decide you suck, you could lose you your source code.

• Not picking winners: The government is managing capacity, not quality outcomes. There’s a story in Ben Rich’s SkunkWorks about feeling like Lockheed was a shoe-in for a bomber program, but the DOD gave it to Northrop; not because they were better, but because they needed it most. But that led to the program being years behind schedule and billions over budget.

• Special interests: The F-35 is built using 1.9K suppliers from 48 states (representing 350 different congressional districts). Far from a streamlined approach.

Modern Conflict

Day One Framing

The US military industrial asset base is built around “day one framing.” Have such a big stick that you demonstrate overwhelming force that could end the conflict on day one.

Extended Tactical Warfare

But that’s not how conflicts work today. Russia thought they would march into Ukraine and serve a decisive blow within a few weeks. Four years later it’s been death by a thousand cuts

Operation Spiderweb was a mission where Ukraine snuck $1M worth of small drones across the Russian border and autonomously delivered $7B worth of damage wiping out 1/3 of Russia’s long-range bomber fleet

In Iran we’re responding to a $50K Iranian drone with a $4.5M missile.

Ted Lieu just a couple days ago called this “throwing Ferraris at frisbees.”

Warfare, today, is defined by autonomous high volume, low cost assets.

Reintroduction of Urgency

Proving the “End of History” Wrong

Palmer loves telling this story about Norman Angell who wrote a book called The Great Illusion in 1909 saying war in Europe was incomprehensible. The world was too interconnected. It was a bestseller! Five years later, World War I started.

After the Cold War ended there was a triumphalist belief that became widespread in Washington that the whole world had converged around the idea of liberal democracy and there would never be any serious conflict between great powers again.”

Francis Fukuyama wrote an essay in 1989 entitled The End of History?” But now we are in the midst of what historian Niall Ferguson calls Cold War II, with China picking up where the Soviet Union left off.

There’s a great novel called 2034 that predicts what a conflict between the US and China could look like. There’s a line that says these great acts of violence, like Pearl Harbor, or 9/11 catch Americans off guard isn’t a failure of intelligence. It’s a “failure to imagine.”

Prophets of Urgency

What’s crazy is there have been people trying to shake the US out of its hubris for years.

In 1992, Andrew Marshall, who ran the Office of Net Assessment put out a report that completely nailed the future of high volume precision warfare we had today. But we didn’t listen.

Admiral William Owens, when he retired in 2001, warned that the US was too smug and that usually resulted in ending up as the loser in the next big conflict.

In 2012 Mitt Romney said our biggest geopolitical threat was Russia and Obama laughed at him because he didn’t say Al Qaida.

In 2017, Robert Work, the deputy secretary of defense, warned of a “reemergence of great power conflict” and that the US had a technological advantage that was rapidly eroding.

Wake Up Call

Ukraine was a wake up call for a lot of people, but not everyone.

But it’s starting to trickle. Chinese support of Russia or Iran are proxy wars. Chinese posturing around Taiwan are warning shots.

A conflict over Taiwan could be a $10 TRILLION hit to the global economy. That’s as real as it gets.

China: The Biggest Threat

In the history of warfare, industrial capacity is upstream of military strength, and right now China is eating our lunch when it comes to industrial capacity. Anduril’s approach is partially about working within those constraints, using commercially available components, developing low-cost weapon systems, and revitalizing America’s defense-industrial base.

From 1999 to 2017, the Chinese military budget increased 900%

They’ve developed missiles affectionately referred to as “carrier killers” that make it incredibly difficult for us to commit a large swath of our largest naval assets because a $20M missile could destroy a multi-billion dollar ship.

Contrary Research’s Tech Trends Report felt like a depressing scorecard of how well China is doing across shipbuilding, munitions, and just raw industrial output.

Military-civil fusion means the Chinese military gets the cutting edge of anything the commercial market can come up with.

War Games

Since 2001, we’ve had inklings that America could be denied the ability to fight in a large scale conflict.

In basically every war game pitting the US vs China since 2015, we’ve lost.

We have to fix this. As Palmer likes to say, “problems that took decades to cause will take decades to undo.” So time is of the essence.

Anduril’s Mission

Conflict Deterrence

Pacifism is a privilege of the protected.

In that same novel, 2034, there is an incredible line: “Inherent in all wars is a miscalculation because both sides have to believe they can win.”

Great power conflict is here whether we like it or not.

The idea of Thucydides Trap comes from a fifth century BC historian who chronicled the Peloponnesian War. In a book explaining the concept, it lays out 16 examples throughout history of an emerging power threatening to displace a ruling power; 12 of which resulted in war.

Making our allies, like Taiwan, into prickly porcupines that China doesn’t want to step on.

Founder-Led Innovation & Military Mavericks

History of military achievement is a story of exceptional pairing between founders and military mavericks.

William Moffett (founder) modernized the Navy, President Hoover (maverick) kept his political opponents from removing him.

Ben Rich (founder @ Skunk Works) made the U-2 spy plane that was critical during the Cold War with the help of Richard Bissell (military maverick).

Bernard Schriever (founder) developed intercontinental ballistic missiles with the support of President Eisenhower (military maverick).

Anduril’s Founding

Palmer and Trae Stephens, his Anduril co-founder, were both interested in journalism at one point early in their careers. Anduril is as much a propaganda engine as it is a product engine.

When those two met they literally bonded over both wanting to build a real-life Stark Industries.

Matt Grimm and Brian Schimpf worked together in college in 2006 on the DARPA Grand Challenge.

Chris Brose and Matt Steckman are the non-founder unsung heroes of the Anduril story. Brose worked with McCain in the Armed Services committee and saw, first hand, what people were getting wrong. And Steckman knows how to sell into the government like few people alive.

Anduril’s Product Philosophy

Mosaic Warfare

Described by DARPA in 2018 as individual warfighting platforms that fuse together into a larger “force package.” Anduril embodies that with having networked assets across every domain that can be fused together with Lattice.

Software-Defined, Hardware Enabled

Lattice + every hardware platform. Imagine an Eagle Eye AR helmet where you can fuse insights from a Sentry tower, a Sentry Seabed sensor, and a Ghost drone overhead and, based on that unified picture, you can deploy a Ghost Shark, and Roadrunner counterforce to stop certain approaching assets while also deploying Fury fighter jets to gather intelligence and ward off the second wave attack. All from one guy with a headset. That type of multi-domain, multi-asset action would require a room full of dozens of people today, if it was even possible.

Built-to-mission vs Built-to-spec

Palmer likes to say “we listen to our customers and trust them to understand their problems, not necessarily the solution.”

High volume, low cost

The designs for Fury and Anduril’s other products aren’t specially built where they can only be built at Arsenal-1. They can be made in any machine shop in the US.

Fixed-cost

“We only want to get paid if we do well.”

Rapid Iteration

Palmer has said there are things they won’t do because they’re not sure they could do it better than what’s out there and he’s not interested in competing with companies who are already doing something well. The example he gave a year ago was cyber. But then in a recent interview with Brian Schimpf, the CEO, he hinted that Anduril was starting to do cyber. That’s the mindset of Anduril. It doesn’t make sense for us to do this YET. But every product is sequential and building into a multi-modal integrated platform.

Policy-as-a-Product

In the early days, Anduril had more lobbyists than engineers. They understand it’s their job to educate the government on what’s possible. But it’s not their job to dictate to the government what they can and can’t do with their technology (ala Anthropic).

Importance of being first

Putin was saying in 2017 that “whoever controlled AI would control the world.” Imagine trying to dictate nuclear arms policy globally during the Cold War if you didn’t even have your own nuclear weapons.

Autonomy

Killer robots

We’ve had autonomous weapons for decades. Aegis missile defense weapons on ships can’t wait for people; they have to respond immediately. But we already have command-and-control frameworks for accountability. Just because someone isn’t firing, they’re still responsible for turning it on.

Ethical debate

There’s nothing moral about letting a worse solution stay in place because it’s human vs machine. Autonomous vehicles could save 40K+ people a year; there’s nothing moral about letting that keep happening for fear AVs might occasionally also accidentally kill people. As Palmer says, what’s the moral virtue in a dumb landmine that can’t tell a school bus full of kids from a Russian tank.

Trae’s Arc of Precision

Went from min to max destruction and now we’re focusing on precise destruction. “Enhance Just War Theory.”

Capability

Most categories of automation aren’t because we don’t like humans. It’s that humans struggle to do the job. Rooms of a dozen tired, distracted, stressed people switching back and forth between screens is NOT going to lead to an optimal outcome.

Anduril’s Products

Fun fact: Do you know what Anduril’s first product attempt was? It WAS called Sentry, but it wasn’t the towers. It was an autonomous firefighting tank.

Chris Brose, Anduril’s Chief Strategy Officer, talks all the time about a “military internet-of-things.” Think DARPA’s Mosaic Warfare. An integrated web of capabilities across domains, skill sets, and force levels (from as simple as stationary sensors to as complex as a web of loitering munitions.

Anduril has hinted at its products through anime demo videos. At the end of a video about Fury fighter jets it sunk into the water and hinted at Copperhead torpedoes. Then at the end of that video it hinted at autonomous surface vessels. Just this last week Anduril announced a partnership with Hyundai where now they’re doing that.

Some of the networking stuff Anduril has done can’t be overstated. These autonomous vehicles have to be capable of being networked to direct command-control, collaboration with other autonomous assets, have their network jammed and fly solo still sticking to their mission, and then post-jam recovery be able to resync with the network of assets and determine where they should be.

Anduril is officially working with the US government on the Golden Dome; a networked air and space missile defense response system.

Fun story: Anduril built a vertical takeoff and landing (VTOL) autonomous air vehicle and named it Roadrunner because Raytheon calls their comparable product “Coyote.”

Anduril has been increasingly getting into rocket motors and is now the third largest vendor of them in the US because it’s such a brittle supply chain. We invested in another company called Galadyne that uses liquid propulsion systems that can help alleviate some of that bottleneck

Eagle Eye is a fascinating example of Anduril calling its shot but waiting for the time to be right. In 2017, when Anduril started, Palmer wanted to compete for the IVAS contract that Microsoft eventually won. Now, almost a decade later, they’ve come full circle and won a $22B contract to build this shell helmet for warfighters. Story of soldiers using a combo of Eagle Eye + Ghost drones to literally see through walls.

Future Opportunities

Becoming the world’s “gun store.”

Great line from Palmer about “got ya” questions where journalists ask whether he’ll ever sell to China or North Korea. (1) He doesn’t get to decide who he sells to and (2) optimistically, he hopes he gets to sell to China because it would mean we are allies. Look at our relationship with Japan from WWII and now they’re one of our closest allies.

Say what you will about Trump’s threats to pull out of NATO, but the end result is pushing our allies to be more responsible for their own defense capabilities vs just relying on us.

Other Domains / Weapons

Palmer loves to talk about subterranean warfare. 3 years ago it was a joke, today there are companies doing this (including Anduril, supposedly).

Tactical nuclear weapons, biological warfare, human augmentation (eg super soldiers), energy weapons.

Key Risks

Reliance on Chinese manufacturing as a nation will continue to be an existential threat.

Political controversy will continue to impact the company; not just from a marketing perspective, but administration change, etc. will always cause volatility.

Misinformation is a critical battleground. The (former) CEO of Apple cant criticize China’s human rights violations because the company’s dependence on the country represents an existential threat.

The TLDR? America is bad at propaganda. We decided in the 50s that propaganda was something Nazis and Commies did. But today, Palmer openly acknowledges that part of his role is as a propagandist (throwback to him and Trae being interested in journalism.)

One Final Takeaway

We have over 500 different sources in the book, including dozens of interviews from the founding team at Anduril. Across all of those conversations, the word “hope” appears 44 times.

“We would not be doing this if all hope was lost.”

Anduril was deliberately built to counter position itself against the status quo of hubris and stasis that prevail in the defense industry.

Anduril’s mandate isn’t to defend a specific nation, but a set of ideals and values. Liberal democracy with checks and balances. A fundamental protective view of human rights. The belief in strong rule of law. Despite any flaws the US and its allies may had, Anduril believes they are worth defending.

Anduril, Flame of the West, embodied in the quote from the Two Towers:

“I do not love the bright sword for its sharpness, nor the arrow for its swiftness, nor the warrior for his glory. I love only that which they defend.”

Thanks for reading! To receive Networked Conviction: My Investing Journal, a collection of portfolio updates, Requests for Startups, and investing ideas for paid subscribers, you can sign up below:

Subscribe now

This is a free weekly newsletter about the art and science of building and investing in tech companies. To receive Investing 101 in your inbox each week, subscribe here:

Subscribe now

I started writing this blog consistently at the beginning of 2022. That means I’ve written once a week every week for 225 weeks in a row. In that time, 26K of you have come along for the ride as subscribers. I appreciate you!

But every once in a while I think about some pieces that I wrote years ago when I only had a few hundred subscribers. Pieces that, despite having an outsized impact on my thinking and work, never got much attention because I published them so early in my writing career. I’ve revisited a few pieces in the past, like A Tale of Two Markets, Competitive Moats, The Death of a Venture Fund, and a bunch of others.

This week I’ve been thinking about outcomes and how they tend to reshape reality. At the time I wrote this piece originally, it was in July 2022 when the market was sinking into oblivion and everyone thought the world was ending. Pre-ChatGPT and post-ZIRP, we had nothing but self-loathing.

Today, the situation is very different. Despite a lot of speculative hesitation, markets continue to rip in a lot of ways. Even as SaaS stocks die all around us, the market roars ahead. In the same way that believing negative outcomes reshape reality, its also important to understand that positive outcomes don’t change reality either, though it certainly makes it easier to numb the obligation we have to reality.

So, here is my slightly revised take on The Outcome Distortion Complex.

--

The Regrets of a Tiger Mom

In 2015 my brother graduated from law school and the keynote speaker at his commencement was Amy Chua, a lawyer, Yale professor, and author of the book “Battle Hymn of The Tiger Mother.” She was a captivating speaker and I came away impressed by the way she talked about grit and approaching life with determination.

I didn’t think much about Amy Chua for the next 4 years other than knowing that her Tiger Mom book was on my list of things to read when I got the chance. In 2019 I finally read the book and was surprised by the contents. The book was much less Parenting 101 and more a long and uncomfortable story about what, to me, felt like verbal abuse and a tenuous relationship with her daughters at best.

She chronicled how she would berate, yell at, and ridicule her daughters into endless hours of practice on the violin and piano. I remember distinctly thinking to myself, “this doesn’t seem okay. But then again, how many musical prodigy’s have I raised? She must know what she’s doing.”

Soon after I finished the book I was googling Amy Chua and found out that in 2018 her husband (also a law professor) had been accused of sexual harassment. Any moral license I had been affording her for what felt like over-the-line parenting immediately went away. “No, there is a lot of weird stuff about her family. I don’t think I’ll listen to her.”

Now say what you will about tiger parents, law professors, and whether or not the bad behavior of a person’s spouse should determine your perspective on them but the key point I often think about is this. The outcome, in this case, shaped my comfort with the means surrounding it. Whether we like it or not we’re often not so much interested in the justification of the means so long as the outcome is something we can agree with.

In investing there is a question of whether something is a winner and, more importantly, whether you care very much about how it became a winner. I’ve always bristled at the idea in finance that any business has the fundamental purpose to “maximize shareholder wealth.” That always struck me as a way to hide a multitude of sins. You can justify any number of behaviors as long as you “maximize shareholder wealth.” Instead, it’s critical to understand the good and the bad of the way you invest. Because whether you like it or not the ups and downs are part of the journey to get where you’re going.

The Outcomes We Deserve

Some people have seen gains from Allbirds pivoting to AI or Leopold pitching memory stocks. While a huge swath of others are witnessing the wholesale slaughter of software stocks with no rhyme or reason, outside of an Anthropic announcement. For most traditional investors it can feel pretty bleak these days. But think back to a long, long time ago in a different world, to mid-2021. Companies and investors alike were caught up in excess. Larger and larger rounds, bigger and bigger valuations, more and more dramatic amounts of burn. For a brief moment we stopped and looked back in retrospect, thinking “maybe X wasn’t such a good idea after all.”

A lot of people looked at one-click checkout as a massive opportunity. They laid out the thesis for how winning the race to control the customer checkout would be a great frontier opportunity in owning the relationship with the customer across merchant sites. After over $1B in funding you now have a defunct hype machine that never generated more than $600K in revenue and another getting sued by their largest customer.

In the crypto world we saw the implosion of the Terra Luna ecosystem. They launched with a big vision of getting people to use Bitcoin as a payments mechanism as opposed to credit cards. But when LUNA lost 99.9% of its value it led to $40B of value in the crypto market getting wiped out. When you consider the fact that Bitcoin can process ~4 transactions per second vs. 3K+ with Visa you start thinking, “maybe the world wasn’t ready for this yet.”

A lot of people are ready to jump up and down on these failures and even use the outcome as evidence of a bygone conclusion. But most of the time these are companies that got built around a lot of good ideas that just turned out to be wrong. And often investors are the fuel on the fire that is raging in the wrong direction.

At the time, there was a quote that attempted to take to task the investors who drove these behaviors of excess:

“Private companies haven’t adjusted for today’s market—and venture capitalists are in part to blame for that. We collectively [told] companies to build [in] a very different culture than the culture we have today, economically. You read all of these blogs out there from investors saying, ‘Here’s what you need to do, companies,’ and the reality is, investors told companies to do a very different thing for the last two years. I think we collectively as investors need to acknowledge our huge role in this.”

That was in 2022. Fast forward to today; 2026. And we’re right back at it again. How you needed to build going into the Black Swan of COVID was the opposite of how you needed to build in the heyday of ZIRP, which was immediately reversed course in the downfall of 2022, that has now come roaring back in the post-ChatGPT heyday of AI mania. Where does it end? What is normal anymore?

The insane prisoner’s dilemma we’ve been in the for the last few years with investors and founders triggering each other’s FOMO deserves a post all its own. But the key question that never got asked in 2022 among investors is “what role did I play in these companies that got ahead of their skis? What do I owe to those companies I’ve led astray? And how can I make sure that doesn’t happen again?”

And today, again. What accountability do we take for the excess we’re plowing into these companies? “This time is different” is the clarion call of every major capital destruction event. This one is likely no different.

The difference between now vs. 2022 is the outcome isn’t yet known. We’re still flying high on hubris. And, certainly, there will be no reckoning until the hype machine dies down. Unfortunately, if 2022 is instructive at all, there still won’t be a reckoning after the hype machine dies down either.

You’d Better Be Right

I’ve written before about two case studies of excess: Uber and WeWork. Uber is a $152B+ company generating $52B+ in revenue. WeWork is a ~$3M company currently going through bankruptcy. One company is seen as a success, one a failure. The failure wiped out ~$20B of capital invested. But the success had accusations of covering up sexual assault and harassment, property theft, and more.

The amount of cover an outcome can provide an investment is staggering. Bets on growth that don’t work out are labeled ponzi schemes and huge financial successes are able to brush just about anything under the rug.

When you look at a company like Tesla, the reality is they’ve produced more cars than any company founded after 1967. Lots of people are still skeptical of the company, which is totally fair given Elon’s unorthodox methods (to say the least). But those people will feel like they must be crazy because the outcome puts pressure on their healthy skepticism.

In 2022, Josh Wolfe said:

“I still, and I will sound like I’m absolutely crazy, but I still believe there is massive accounting fraud [at Tesla] and maybe it gets uncovered one day, maybe it doesn’t.”

The reality of capitalism may be that there isn’t much you can do to change this. More investors, regulators, founders, and employees should try to hold companies accountable for the good and the bad that they produce. But if the outcome is making people money most of the time “the ends justify the means.”

As an individual investor I can’t change that that’s how a large swath of the world works. But I can take that into account when I determine my own priorities and values. I can focus on my own circle of influence. I can work hard to make sure that my efforts are focused not just on the ends, but also understanding and feeling good about the means.

What Does This Mean For Venture Capital?

Katherine Boyle has done a lot of writing about “American Dynamism.” She’s chosen to focus much of her investing efforts on companies “that support the national interest, including but not limited to aerospace, defense, public safety, education, housing, supply chain, industrials and manufacturing.” She looks at venture as a vehicle that, for all its faults, is actually more effective in tackling these areas than a lot of government efforts.

“Venture capital is better at monitoring outcomes: it turns out that professional investors, even in a bull market, care more about value creation than bureaucrats who are not measured by or compensated for their success.”

There is a “Good -> Better -> Best“ framework in measuring outcomes in venture. “Business as usual” is focusing on investing in companies that seem to check the boxes and are on track to financial success. Having a focus on financial success vs. the alternative isn’t bad; it’s good. But there are better ways investors to align their efforts to the best outcomes.

The world needs more conviction-driven investors. Investors who aren’t focused on what other people are doing or just on what can make money. Imagine the world you believe should exist, and then wonder whether the companies you’re investing in will make that world more realistic or not.

Thanks for reading! To receive Networked Conviction: My Investing Journal, a collection of portfolio updates, Requests for Startups, and investing ideas for paid subscribers, you can sign up below:

Subscribe now

This is a free weekly newsletter about the art and science of building and investing in tech companies. To receive Investing 101 in your inbox each week, subscribe here:

Subscribe now

This piece was originally published in Arena Magazine. I very much enjoyed writing it. I felt the strong kinship of both a faith I hold deeply and an industry I cherish. I had to trim some of it for publication, so below is the full, expanded version. Enjoy!

—

Everyone in tech knows a Mormon. Whether it’s the clean cut guy knocking back Diet Coke at the office happy hour or the engineering manager who is not only incredible at her job, but you’re shocked to find out she also has five kids. Outside of tech, your cultural exposure to Mormons might be limited to the white shirts and black name tags you’ve seen on the street, or social clips of Mitt Romney debates (being very right about Russia in 2012, even though he was mocked for it). Surprisingly, Mormons are not only a surprisingly present force in the tech industry, but Utah also has an undeniable tech-forward mandate as well. Just last year, Utah broke ground on what could be the first fully deployed small modular nuclear reactor in the US and kicked off “the largest cloud seeding project in modern American history.”

All of that may come as a surprise to anyone who sees Mormons as an odd, yet simple offshoot of Protestant Christianity. But the reality runs much deeper than that. The heritage of success in business and technology is tied not only to Latter-Day Saint history, but the religion’s very theology. From Bryan Johnson (Don’t Die) to Clayton Christensen (Innovator’s Dilemma) or Keith Johnson (the head of Sequoia’s family office), and across the founding stories of companies like Adobe, The Trade Desk, JetBlue, Stance Socks, Vivint, Ancestry, and countless others — the spirit of the quintessential American religion has left its mark.

An American Moses

America is a nation built on the dual concepts of restoration and reinvention. Making what is old into something also new. Americans reinvigorated and perfected little-r republicanism, little-d democracy, and inalienable rights.

American religious life is no different. While we transplanted Old World religion, we also made way for the reinvigoration of American prophetic voices. Where the ancient Moses had tablets, as a member of the Church of Jesus Christ of Latter-Day Saints, I believe that the American Moses had a pen.

In 1831, Joseph Smith, under a prophetic mantle, took up that pen and wrote words that fell from the lips of God, as far as we’re concerned. In what he wrote, you find articulated a fundamental ethos that rings true in the heart of every so-called Mormon: “Men should be anxiously engaged in a good cause.”

While we may not like being called Mormons, members of The Church of Jesus Christ of Latter-Day Saints have ultimately felt that anxious pursuit driving us forward. It’s how we became, arguably, the most influential American-made religion, spanning millions of members across 150 nations. Almost any entry over the last 200-or-so years of that history could justify its own book.

Put Your Shoulder To The Wheel

Chased from a half dozen towns, murdered and persecuted along the way, we built a city out of a swamp in Nauvoo, Illinois. At its peak, it reached a population of 12,000, rivaling Chicago at the time. After our first prophet was murdered, our second one, Brigham Young, led 148 fearless pioneers across a 1,300-mile trek to Salt Lake City. Then, we turned around and spent the next twenty years helping 65,000 other people join us there. We spent over $50 million — adjusted for inflation — helping poorer European immigrants make the journey, spreading out across the west, not just Utah, but also Idaho, Arizona, and California. And, these frontiersmen succeeded: the first millionaire in California, Samual Brannan, was a Latter-Day Saint businessman literally selling picks and shovels to gold miners (digging in gold mines discovered by the Mormon Battalion).

We imported industries wholesale to Utah to reinforce our self-reliance. From iron to textiles, we saw physical toil as a spiritual commandment. Our own scriptures reinforce that every commandment from God is spiritual; never temporal. We didn’t build industry to get rich, we did it to build the Kingdom of God, our own home-grown Zion. In fact, arguably the first full-line department store in the US was the Latter-Day Saints’ Zion’s Cooperative Mercantile Institution (ZCMI) founded in Salt Lake City in 1868 that pooled industrial output and local buying power into one enterprise.

Out of a barren desert, my ancestors built Deseret (the name we wanted for what is now “Utah” before the feds forced us to abandon the name), a Book of Mormon word that means honeybee — the perfect mascot for a hard-working, industrious hive.

By the 1860s, out-of-state travelers said Utah looked more akin to established Eastern towns like Chicago or New York, rather than the western outposts they were expecting. Brick homes, wide streets, mills, stores, schools. In fact, at a time when 20% of the US population was illiterate, only 2.5% of Utah had the same disadvantage. Our economy was well-rounded and strong, resisting the swings of the mining boom towns that then dotted the American West. Utah was built for broad stability, not quick fortunes.

Adding Investment To Industry

The first generation of Latter-Day Saint entrepreneurialism after Utah’s settlement revolved around industrial categories: iron, sugar processing, utilities, and railroads. All were capital-intensive endeavors. When the Union Pacific and the Central Pacific railroads finally met, connecting the east and west coasts, they did so in Promonotory, Utah. The arrival of the railroad in 1869 brought cheap products from the east, crowding out local industry. The Church was left carrying millions in debt with industries that were much more exposed to competition.

In the late 19th century and early 20th century, Utahans, determined to create heaven on Earth, continued to build everything from Church-owned enterprises, across media, insurance, and construction, to adjacent projects in the state. Founded in 1940, Hill Air Force Base became a major Air Force base with 22,000 personnel during World War II, offering critical maintenance. Thiokol, founded in 1929, manufactured everything from rubber to missile propulsion systems, including Minuteman ICBMs and the airbags on the Mars Pathfinder. Geneva Steel, founded in 1941, was at one point producing 60% of the steel in the Western US.

The same tenacity that powered my ancestors through spiritual and physical obstacles in the quest to find our American Zion prepared us to tackle financial obstacles at the turn of the century. Weathering the Great Depression and World War II redoubled our focus on self-reliance. One old pioneer motto came in handy: “use it up, wear it out, make do, or do without.” The Church created the Church Security Plan in 1936 to supplement government relief, provide food, jobs, and resources, and encourage self-reliance. By the 1960s the Church was solvent, but not wealthy. Then, N. Eldon Tanner helped introduce modern financial discipline into the hearts of every Latter-Day Saint.

Tanner was an oilman and politician in Canada, but was chosen as a modern-day Apostle in 1962. That was an unusual call at the time, given most Apostles came from academic and legal backgrounds. Upon becoming a senior leader of the Church, he was “thrust into financial affairs.” He took the raw fundamentals of self-reliance and grit among the Latter-Day Saints and supercharged it with corporate-style accounting, an aversion to debt, and a diversified investment portfolio.

Tanner pushed the Church towards an additional golden rule: “We do not spend money we do not have.” From debt-ridden to conservative spending to building up long-term reserves, the Church’s financial picture changed dramatically. Over the next 60 years, the Church built on a foundation of industriousness and financial discipline following scripture. The call from God was to “organize [ourselves] and prepare every needful thing.” So we did.

By the 2020s, the Church had built a net worth of $265 billion. That includes 290,000 acres of ranch land and citrus in Florida, one of the largest cattle ranches in the country, billions in real estate, a $55 billion equity portfolio, and on and on.

The entire purpose of the Church’s aggregation of financial assets had nothing to do with amassing wealth. The late president of the Church, Russell M. Nelson, may have been the head of a $265 billion organization. But he had a net worth of a few million as a former renowned heart surgeon, and was earning a $120,000 annual salary working full-time for the church, all while wearing a thirty dollar Timex Casio wristwatch and vacuuming his own house.

So what, then, does the Church do with the $265 billion empire it has built? The leaders of the Church will be the first to reemphasize the mission: “help people learn about and live the teachings of Jesus Christ, to share that message with the world, to strengthen and unite families, and to care for the poor and the needy.” The Church spent $1.45 billion in 2024 alone on humanitarian aid and welfare efforts across over 3,000 projects in 192 countries. Beyond physical needs, the Church invests in supporting its members’ spiritual needs. That includes access to over 200 temples. Not just casual chapels, but sacred sanctuaries we believe are literally “the House of the Lord.”

We built industries, amassed financial assets, and gathered a reserve that can support millions of people spiritually and physically. But we didn’t stop at shaping the physical world. The digital world has been just as fertile a playing field for Latter-Day Saint grit.

“The Glory of God Is Intelligence”

In February 2024, Sam Altman said something that made the ears of every Latter-Day Saint perk up: “I grew up implicitly thinking that intelligence was this really special human thing and kind of somewhat magical. And I now think that it’s sort of a fundamental property of matter.”

Latter-Day Saint scripture teaches that all matter is eternal and can be neither created, nor destroyed. It can simply be organized, right in line with the law of conservation of mass. Where religion is often framed as being at odds with science, my religion offers a fundamental cosmology that has remained the same since at least 1833 (if not since, you know… forever).

Far from a congregation of Luddites, Latter-Day Saints have embraced science as frequently as possible. One of the most noteworthy entries in Utah’s technological history came from the University of Utah’s computer graphics lab in the 1960s and 1970s. Our own home-grown Traitorous Eight, this group yielded an insanely dense pool of technology titans from Ed Catmull (founder of Pixar) and Jim Clark (founder of Silicon Graphics and NetScape) to John Warnock (founder of Adobe) and Alan Kay (one of the most influential technologists to come out of Xerox PARC).

They may not all have been “Mormon” (Alan Kay and Jim Clark weren’t), but their technical training sprouted from an institutional environment fostered in Utah where, at the time, 70% of the population was LDS. That environment also enabled adjacent technology history to grow up around it. In 1969, in large part because of that graphics lab, ARPANET (a fundamental precursor to the internet) set up its fourth node at the University of Utah! (The first three were all in California.)

One graphics lab alumni, Alan Ashton, developed WordPerfect in 1979, which eventually became the dominant word processor in the 1980s before Microsoft Word came on the scene. That same Utah environment birthed Novell, an early pioneer in networking founded in 1980, reaching 70% of enterprises at its peak, and Cirrus Logic, the first fabless semiconductor company before Nvidia made it cool.

Most of that technical prowess in Utah over the second half of the 20th century grew out of a comparative advantage. Members of the Church were disproportionately literate, multilingual (almost half of Latter-Day Saints serve on a two-year mission, often learning a second language), globally comfortable, industrious, and thrifty. But every aspect of that character grew out of our heritage.

Our Heritage

Members of The Church of Jesus Christ of Latter-Day Saints make up just 2% of the US population, but we’ve taken seriously Christ’s admonition to be the “salt of the earth.” Preserving something uniquely American that is more rare these days. Derided as un-American pariahs in our early years, the Church has steeled itself around what we see as fundamental American principles: fairness, kindness, service, unrelenting optimism, and a commitment to the American ideal.

In a great piece called The Most American Religion by McKay Coppins, himself a member of the Church, he makes the argument that Latter-Day Saints didn’t become this “Norman Rockwellian ideal by accident.”

“We taught ourselves to play the part over a centuries-long audition for full acceptance into American life. That we finally succeeded just as the country was on the brink of an identity crisis is one of the core ironies of modern Mormonism.”

There’s an apocryphal story among members of the Church about a prophecy that, one day, the US Constitution would hang by a thread, “only to be saved by a ‘white horse’ from God’s true Church.” Coppins explains why this story resonates so much with Latter-Day Saints: “It appeals to the Mormons’ faith in America—and to their conviction that they have a role to play in its preservation.”

While the American ideal that the culture of The Church of Jesus Christ of Latter-Day Saints was built around felt fundamentally American over its first two centuries, it’s become increasingly true that that American identity is much more rare than it used to be. Where we anchor to kindness, there is often suspicion. Where we seek for unity, we’re surrounded by division. While we strive for optimism, there is an unending wave of pessimism about the world around us. That optimism was on full display last year as we dealt with the loss of our Prophet, and reacted to a shooter in one of our chapels on the same weekend. How did we respond? We set up a giving campaign for the family of the shooter who was killed.

As our late Prophet, President Nelson, once said: “We exist to make life better for people.” Our hope is that our heritage is clear from the way we live our lives. We work hard to build things and impact people as positively as we can. And we want that impact to be as long-lasting as possible; ideally forever.

In the first book of the science fiction series, the Expanse, written by a non-Mormon author, there is a critical side plot where, in the year 2350, “the Mormons” have built the LDSS Nauvoo; an interstellar ship running the length of 6 of the longest aircraft carriers in the world. A “portable Eden” built for a 100-year voyage to Tau Ceti.

In a world of raunchy musicals like The Book of Mormon and other “cultural artifacts” like the reality TV show, The Secret Lives of Mormon Wives, a more true to life portrayal of the Latter-Day Saint character would be calling out the grit, self-reliance, and commitment that it would take to self-finance an intergalactic ship. Something I have no doubt we could roll up our sleeves and do if God asked. The LDSS Nauvoo represents an embrace of, if my co-religionists will allow me, a techno-Mormon future. And the utopia we’ve been tasked with creating on Earth is just as much a techno-utopia as it is a spiritual utopia.

Thanks for reading! To receive Networked Conviction: My Investing Journal, a collection of portfolio updates, Requests for Startups, and investing ideas for paid subscribers, you can sign up below:

Subscribe now

This is an entry in Networked Conviction: My Investing Journal; a weekly newsletter for my paying subscribers where I share portfolio updates (including current, future, and anti-portfolio mentions), Requests For Startups, and investing ideas. To access this newsletter weekly, subscribe here:

Subscribe now

One of the simultaneously most satisfying and disheartening parts of my job is constantly being a mile wide and an inch deep in some of the most interesting conversations in the world.

Yesterday, alone, I went from talking about growing human organs for transplants, to rebuilding manufacturing from first principles, and finished the day pondering the connection between God, the Singularity, and intelligence. That was just a Monday!

As part of my investing journal, I often want to try to both capture and articulate some of the most interesting nuggets. One of the obstacles to me being able to consistently publish Networked Conviction to a small group of people comes from the inability to find the throughline each week. I struggle to get everything to link up and ultimately fail.

So, instead, this week I’m attempting something different. This is a round-up of some of the most interesting insights I had over the last week or so from the conversations with some of the smartest people in the world. Some of these are from potential portfolio companies, existing portfolio companies, or anti-portfolio companies (the ones that got away). So I’m considering these a smattering of portfolio-derived insights.

From reckoning with the cognitive dissonance of AI business models to the premium placed on founder charisma unlike anything I’ve ever seen, to the opportunity that exists in building from first principles, and beyond.

Let’s dig in!

Read more

This is a free weekly newsletter about the art and science of building and investing in tech companies. To receive Investing 101 in your inbox each week, subscribe here:

Subscribe now

For whatever reason, I’ve been thinking about The Matrix a lot lately. The particular scene that came to mind this week is when Neo is talking to the Oracle about whether he’s The One. She points his attention to a sign that reads “Know Thyself” in Latin. She follows up with “I’m going to let you in on a little secret. Being The One is just like being in love. No one can tell you you’re in love. You just know it. Through and through. Balls to bones.”

That scene came to mind as a a statement about the nature of self-knowledge itself. You can’t be told who you are. You can’t A/B test your way into identity. You can’t read enough Twitter threads or listen to enough podcasts to have someone else hand you the answer. You either know, or you don’t. And most people don’t.

In particular, that came to mind this week because I had a conversation with a friend who is considering new roles and, like so many conversations I’ve had about career paths, it always came back to belief systems and knowing enough about yourself to know what your motivations should be.

Naval’s Compass

I’ve written before about a quote from Naval Ravikant:

“All you should do is what you want to do. If you stop trying to figure out how to do things the way other people want you to do them, you get to listen to the little voice inside your head that wants to do things a certain way. Then, you get to be you... Be yourself, with passionate intensity.”

Naval’s whole framework boils down to a deceptively simple idea: no one in the world is going to beat you at being you. Your specific combination of knowledge, capability, and desire is a product of your unique nurture and nature. It’s unreplicable. Trying to emulate someone else isn’t just less than ideal, but is actually unachievable.

I believe that. And I think its important. But its also incomplete.

Because here’s the practical problem: whether it’s what you build, what you fund, or where you join, the decision should be a function of knowing yourself. But what if you don’t? What if the little voice inside your head is saying twelve things at once and half of them are just anxiety?

This conversation I had with my friend, it felt like all the options were of pretty equal fit, despite being very different. It’s not that the options were bad. The options were fine. The problem was that every option looked equally plausible because there was no internal filter to run them through.

It’s like trying to use a compass that doesn’t know where north is. You can spin it all you want. It’s not going to help.

So where do you get your filter?

Two Theories of Motivation

Just in the last few weeks I’ve seen two frameworks for what internal filter you can anchor to. And they are... not the same.

The first comes from Paul Graham:

“When you’re deciding what to [focus on], don’t try to predict what will be valuable in the future, because that’s so hard that you’ll probably get it wrong. Instead focus on what you personally find most exciting. You can’t get that wrong.”

This is the interest-first model. Follow your curiosity. Chase the thing that makes you lose track of time. The market will figure out how to value that eventually, but you can’t fake genuine obsession. And you shouldn’t try.

Then there’s Palmer Luckey, who is... less gentle about it.

Palmer’s argument, stripped to its core, is this: don’t follow your dreams. Follow your talents. Because most people’s dreams are bad. The number one most desired job for kids today isn’t astronaut; it’s YouTuber. And we’ve built an entire cultural apparatus around telling kids that if they just follow their passion, anything is possible. He thinks that’s a lie. Not a well-intentioned oversimplification. A lie.

His point is anchored to skills: if you’re an average kid who isn’t particularly charismatic, isn’t particularly good at video editing, isn’t particularly good at any of the things required to be a successful YouTuber... why would we tell that kid to follow that dream? In fact, their lives will be miserable trying to chase something they’re not equipped to do. Think how much happier they would be if they focused on their actual skill set and said, “Where can I punch above my weight? Where do I have an unfair advantage?”

I don’t think Palmer is anti-dreams of any kind. He’s anti-bad dreams. He’s fine with astronaut dreams. He’s fine with moon-colony dreams. (He literally wants to be the mayor of a city on the moon; a very Palmer Luckey thing to want.) His issue is with dreams that were implanted by an algorithm rather than forged by genuine capability and curiosity.

Pretty important distinction.

The Stick Has Two Ends

So which is it? Follow your interest or follow your talent?

But that, to me, doesn’t feel like the right question. The right question isn’t passion or skill. It’s do you know yourself well enough to understand where those two things overlap?

Because here’s the thing. Paul Graham isn’t telling you to follow a dream divorced from capability. He’s telling you to follow excitement which, in his framework, is a signal from your subconscious that you’ve found something you’re wired to be good at. Interest isn’t random. It’s diagnostic. The things that genuinely fascinate you tend to be the things where your brain has some structural advantage, some pattern-matching instinct that makes the work feel less like work.

And Palmer Luckey isn’t telling you to grind away at something you hate just because you’re good at it. He’s telling you to be honest about the gap between what you want and what you can do, and then either close that gap or pick a different dream.

They’re both saying the same thing from different directions: know thyself.

PG is saying your interests are data about who you are that you should learn to trust.

Palmer is saying your capabilities are data about who you are that you shouldn’t ignore.

And Naval brings it back together with the whole package, across knowledge, capability, and desire, that is unreplicable. In other words, stop trying to import someone else’s answer.

I’ve written before that “being willing to define success for yourself is being committed to the idea that, once you’ve determined your values, you’re willing to stick to them even if society balks at that decision.” That’s what this is.

The Whiplash Problem

When it comes to questions of defining your drivers, there can be a fine line between letting society balk and actually isolating yourself from anyone not on your journey, which I think is an overreaction.

There’s a scene in Whiplash that I think about whenever someone tells me they’ve “found their calling.” Miles Teller has found his skills-based passion; jazz drumming. The kid who wants to be one of the greats. In this particular scene, his drive has led him to the conclusion that he needs to break up with his girlfriend. And his reasoning is... brutal.

He tells her, essentially: I’m going to keep pursuing what I’m pursuing, and it’s going to consume me. I won’t have time for you. And even when I do, I’ll be thinking about drumming. You’ll start to resent me. I’ll resent you for asking me to stop. We’ll hate each other. So let’s just end it now.

And she pushes back. She says: So I’m just some girl who doesn’t know what she wants, and you have a path, and you’re going to be great, and I’m going to be forgotten?

And he says: “That’s exactly my point.”

And she says: “What the f*** is wrong with you?”

There’s a whole other piece I could write (and many others have) about ambition porn; these movies that languish salaciously in the hard work required for any particular vision. But the key point here is inability to articulate anyone else’s role in your pursuit of self. I hear this a lot from people who don’t want to have kids until they’ve accomplished something great.

But knowing yourself doesn’t mean knowing yourself in isolation. It doesn’t mean constructing a hermetically sealed identity and then demanding that everyone else accommodate it. That’s not self-knowledge. That’s narcissism with a business plan.

Real self-knowledge includes knowing what you need from other people. What you owe other people. That’s a huge part of having kids in the first place; owing it to someone to bring them into the world and make the world a better place for them. Where your ambition ends and your humanity begins. Miles Teller knows what he wants. But he doesn’t know who he is. And there’s a massive difference.

The First Principles of You

I’ve written before that “identifying the first principles of who you are is becoming dangerously well-packaged from all sorts of identity groups.” And I think that’s gotten worse, not better. There are a hundred frameworks now for telling you who you should be. Your Enneagram, your attachment style, your MBTI, your political tribe, your diet, your productivity system. All of them offering a pre-fab identity you can adopt wholesale rather than doing the harder work of building one from scratch.

The more you cede personal responsibility for deciding who you are, the more you empower the people who ultimately are deciding the value system of your in-group. And that’s dangerous. Because those people don’t know you. They can’t. They’re optimizing for the group, not for the individual.

The Oracle doesn’t tell Neo he’s The One. She actually tells him the opposite. But the sign is still there. Temet Nosce. Know Thyself. The answer isn’t going to come from a framework or a personality test or a well-meaning mentor. It’s going to come from the accumulated evidence of your own life; what you keep coming back to, what you’re willing to suffer for, where your interest and your capability and your sense of meaning converge into something that looks, from the outside, like obsession.

I’ve said before that your outputs are a function of your inputs. That’s true for companies and it’s true for people. But here’s the corollary: you can’t optimize your inputs if you don’t know what you’re solving for. And you can’t know what you’re solving for if you haven’t done the work of knowing yourself.

Not what the market wants you to be. Not what your parents expected. Not what looks impressive on a resume. You.

These conversations; career decisions, startup ideas, fund strategies, relationship choices. They get easier across the board when you have a body of work that communicates your interests and perspectives. When you’ve built enough evidence of who you are that the compass finally has a north.

Like being in love. You just know it. Balls to bones.

And if you don’t know it yet? That’s okay. But stop pretending you do. Stop borrowing someone else’s north. And start paying attention to the data your own life is already generating.

The Oracle was right. No one can tell you. You just know it. Through and through.

Thanks for reading! To receive Networked Conviction: My Investing Journal, a collection of portfolio updates, Requests for Startups, and investing ideas for paid subscribers, you can sign up below:

Subscribe now

This is a free weekly newsletter about the art and science of building and investing in tech companies. To receive Investing 101 in your inbox each week, subscribe here:

Subscribe now

I have three sons, but only two of them are conversational (so far). Of the two chatty ones, they approach life a little differently. Dax is a rule follower, always looking for the right answer. Jed, on the other hand? His life is lived through a lens that none of us can see. Imagination station is the only station his train stops at.

When it comes to coloring, Dax is a sort of neoclassicist. How is it supposed to be done? Jed, though, is an impressionist. Painting with all the colors of the wind. And regardless of the shape of his drawing, he shows me the drawing, locks eyes with me, and expectantly asks, “what do you see Dad?” His tone of voice indicates there is clearly a right answer.

Wavy lines? “It’s a dragon.” Large blob? “Dragon.” An entire page covered purple? “Also Dragon.”

Like his own homemade Rorschach test. Though, the thing about a Rorschach test is that, unlike Jed’s drawings, there isn’t a right answer, there’s only your answer.

This week, an equally insightful Rorschach test broke out online when the New York Times published a piece about Matthew Gallagher and his company, MEDVi, that supposedly scaled to $1.8B in revenue in 14 months. People’s reactions, like any good dragon drawing, say more about them than it says about the reality of the situation.

The Test

Here’s the story.

Gallagher launched MEDVi in September 2024 from his house in LA. He used ChatGPT, Claude, Grok, Midjourney, Runway; the whole AI stack. Those tools built the website, generated marketing assets, handled customer service, and wired together the backend. All in, he spent ~$20K to get the thing off the ground.

A lot of the praise online made it seem like this vibe coding wizard had called forth the elements from the four corners of the earth and crafted a Fortune 500 from whole cloth. There’s a lot to unpack in all of that.

My first immediate takeaway was this: MEDVi is not, in any meaningful sense, a healthcare company. It doesn’t employ doctors. It doesn’t run a pharmacy. It doesn’t manufacture or distribute drugs. It doesn’t do clinical oversight. It doesn’t manage patient care. All of that; literally all of the actual healthcare, is outsourced to two platforms: CareValidate and OpenLoop Health. CareValidate connects patients with doctors and pharmacies. OpenLoop handles the clinical infrastructure. MEDVi is, functionally, a marketing layer on top of rented telehealth infrastructure.

That’s not an insult. I think we’ve all matured past the point of criticizing “wrapper companies.” Lots of businesses are marketing layers. In fact, many are saying distribution is all that matters. That “marketing layer” did $400M in its first year across 250K customers, supposedly spitting off a 16.2% net margin. Now they’re (and by they’re I mean he’s?) on track for $1.8B.

Across dozens of reactions I saw just about every version of a dragon people could have seen. So I wanted to unpack each of them.

Dragon No. 1: “This Is an AI Story”

The framing of the story from the jump is “AI built this billion dollar company.” Everyone who has been talking about “one person billion dollar companies” since ChatGPT launched saw in this headline the appearance of their promised messiah. The AI story of the century!

But here’s the thing. It’s not. Now, I’m not here to pass judgement (at least... not in this particular paragraph). But what the NYT wants to scream or what ever honors Tech Twitter is lining up to bestow, framing this as an AI story misses the mark.

Here is the actual stack of preconditions that had to be true for MEDVi to exist:

First, telehealth infrastructure had to exist at a level where a random guy in LA could plug into a licensed physician network and a compliant pharmacy supply chain with essentially no healthcare expertise. That infrastructure has been years in the making, accelerated by COVID, and is what CareValidate and OpenLoop built (with ~700 employees, btw). Not him.

Second, the regulatory environment around telehealth had to be in a state of, let’s call it, permissive ambiguity. During COVID, the bumpers on the healthcare industry got thrown out the window. Restrictions on telehealth prescribing relaxed dramatically. A lot of the oversight mechanisms that existed to prevent exactly this kind of thing just... got quiet. And many of them haven’t come back.

Third, GLP-1 demand had to be absolutely insatiable. And it is. The demand for weight-loss drugs in America right now is, to use a technical term, bonkers. Wegovy, Ozempic, compounded semaglutide -- people want it, they want it now, and they don’t want to go sit in a doctor’s office to get it.

All three of those things had to be true. Independent of AI. Gallagher could have done this seven years ago if those three conditions had existed seven years ago. The AI part, whether its the website generation, the ad creative, the chatbot, they’re all certainly nice and I’m sure were faster and cheaper than they would have been 7 years ago. Efficient, no doubt. But it’s the wrapping paper, not the gift.

As one person on Twitter put it: calling this an AI company is like calling a Shopify dropshipper a “manufacturing company” because they have a nice storefront. The storefront isn’t the business. The supply chain is the business. And the supply chain here is 100% human, 100% regulated, and 0% built by ChatGPT.

Dragon No. 2: “This Is Genius Execution”

Some people looked at the story and saw something more refined: a visionary growth hacker. A generational marketing mind. A guy who cracked the code on distribution in the AI age.

The “congrats” and “total Chad” and “get it, bro” sentiment was... robust. My favorite genre was the “they’re just mad cause they didn’t think of it” crowd. Classic.

Again, I’m not here to pass judgement (that paragraph comes later). Getting to $400M in revenue in your first year is an extraordinary marketing achievement. The conversion funnel, the Facebook ad optimization, the sheer volume of customer acquisition all take real skill. Anybody who tries to deny that has never tried to do anything similar themselves. In telehealth, you can think of a particular concept we’ll call “prescription friction,” which is basically the drop-off rate between someone clicking an ad, landing on a site, and then actually completing a prescription. MEDVi clearly reduced that friction to near zero.

But here’s the thing about reducing friction to near zero in healthcare: some of that friction exists for a reason.

The Quiet Part Out Loud

If you’ve been reading my writing for a while, you know that one of my most consistent themes is the importance of recognizing when people are playing different games. And I recently wrote about how every once in a while, someone says the quiet part out loud. They tell you exactly who they are and what game they’re playing, and most people just... don’t listen.

Gallagher is shouting the quiet part from the rooftops. A lot of people pointed out he should maybe be shouting less loud (and in mediums that aren’t admissible as evidence in a court of law). And what he’s screaming is: I built a marketing machine on top of rented healthcare infrastructure, reduced every possible safeguard to minimum viable compliance, and rode the greatest demand wave in pharmaceutical history to a billion dollars in revenue.

But immediately, upon hearing the congratulatory shouting, a good swath of good ol’ tech twitter felt their eyebrows start to rise. Here’s what our little army of online sleuths pulled together.

MEDVi’ss website featured fabricated doctors. People found physician profiles with clearly fake names like the “you’re telling me that names not real” Dr. Tuckr Carlzyn, attached to stock photos that have no corresponding medical professional anywhere on the internet. If you put fake doctors on your website to sell drugs, that isn’t technically “growth hacking.” In fact, the technical term is *checks notes* fraud.

On top of that, the site’s intake process has essentially no meaningful clinical guardrails. Multiple people tested it by entering absurd parameters. One person said they wanted to go from their current weight to 60 pounds. Approved. Another entered a birthdate of February 31st. Accepted. The system told a 7’11”, 350-pound person they had a 94% chance of hitting their goal weight. It even included the helpful note that they wouldn’t even need to change their diet.

Pretty rough.

It’s not just consumers noticing stuff. Even before the New York Times piece came out, MEDVi had received an FDA warning letter for false and misleading information violations. The violations weren’t just at the “marketing layer,” they were at the infrastructure layer too! MEDVi’s clinician network partner, OpenLoop, suffered a data breach in January 2026 that exposed 1.6M patient records. That, plus AI-generated fake before and after pictures, a class action lawsuit in Delaware... and ALL of this was BEFORE the New York Times got wind of the story and thought “this is about AI!”

The biggest flaw here lies in the question of the “one person billion dollar company.” Billion dollars of what? Revenue? Here’s the thing. When your margins have 3-5 different exorbitant “takers” then, at some point, its more of a vanity metric than an actual worthwhile number. If you’re (1) paying two other companies for your entire physical infrastructure, (2) paying ungodly customer acquisition costs in an insanely competitive and completely commoditized market, (3) constantly losing customers to whoever has the latest “sign up now” discount, and (4) it’s only a matter of time before “lawsuit costs” becomes a consistent part of your P&L, then I’m pretty hesitant to use “revenue” as an anchor for any company’s value.

Hims & Hers did $2.4B in GLP-1 revenue with 2.4K employees and generated 5.5% net margins. Again, people anchor to this guy doing ~16% margins with one person (two if you include his younger brother), then its a glorious tale of AI’s efficiency gains. But, in my mind, that margin difference is a function of what other legitimate players are paying to adhere to compliance standards. If I don’t have to actually worry about the patient’s care experience, then sure... that saves some nickels.

Crimes Pays, Actually

When someone says they (he) “vibe code a billion-dollar business,” I instinctively start running the numbers. And the numbers here tell a very specific story: you can make a lot of money selling drugs if you don’t care about the health of the people you sell them to.

Now, importantly, that has always been true. Snake oil salesmen, the quintessential “guy selling nothing while promising everything” wasn’t a motor oil or a skincare oil. It was OG D2C healthcare. And, shockingly, I’m still not here to judge. Cause that will (I promise) come later. But I can’t stand by and nod to the dragons people are seeing in this odd Rorschach test. It’s not about AI. It’s not about “distribution is all that matters in a meme economy.” It’s not just “the golden age of the idea guy.”

The main takeaway is this: If you remove most (all) of the regulatory guardrails around selling a supposed miracle drug, all while using fabricated medical testimonials and sourcing grey market, if not black market, products that are divvied out with little (no) clinical oversight, and ride that demand wave for all its worth, then sure. “Crime” pays. As someone very wisely tweeted about this particular case: at some point, “move fast and break things” just became “move fast and break laws.”

The Disappointment

Now, finally, we arrive at the moment of truth. Here is where I have come to judge.

But I’m not judging Mike Gallagher and MEDVi. I’m not even judging telehealth regulators or growth hackers or even, apparently, snake oil salesmen. COVID was tough and we’re going through a paradigm shift alone, never mind the miracle drug that is flooding the market.

No... the people I’m disappointed with are the journalists, founders, operators, and pundits who are happy to lift this up as a textbook case of AI opportunity when it clearly is not.

I am deeply optimistic about the power of technology, AI, private markets, innovation, and all that jazz. But this is NOT the poster child of that. And the fact that people are so desperate for the “one person billion dollar company” made possible by AI, that they’re willing to overextend this analogy to check that box?

This is why technology has a public relations crisis. Not just in AI, but across crypto, fintech, longevity, and everything in between. One person on Twitter (said) it best:

“I hate what a lot of VCs are doing to builders and AI startups. They’re hyping up a lot of what’s either blatant fraud or not real revenue numbers and attributing it to AI. I get it, you want your AI acceleration and 2-person 1B company narrative to stick. But in your rush to prove your investment theory correct, you’re hurting the credibility of AI companies... We don’t need to turn AI into yet another one of those pump-and-dump cycles. Do your due diligence, stop pushing false narratives. We want public to trust startups coming out of valley and your false Twittter narratives are painting a target on the back of the companies.

What Do You See?

When you look at the MEDVi story, you see yourself. You see your incentives. You see the game you’re playing.

If you’re playing to make AI the default tool the world over, you see validation. The prophecy fulfilled. The one-person unicorn.

But if you’re playing to survive for the long-haul? If you’re trying to actually build something durable, something real, something that helps people and lasts? You might see something much simpler.

You see a guy who made a crappy website, slapped it on top of someone else’s healthcare infrastructure, pointed Facebook ads at people desperate for GLP-1s, and didn’t bother to check whether the fake doctors on his site would pass a Google search or if losing 85% of your body weight would *checks notes* kill you. And you see an entire industry falling over itself to call that genius.

The problem is that nobody thinks there’s a right answer. And when I look at Jed’s drawings? That’s true. They can all be dragons, why not? But in the world of business building, customer needs (and potential death), margin pressure, and durability? There is a right or wrong answer. And I don’t think this is the right answer.

Thanks for reading! To receive Networked Conviction: My Investing Journal, a collection of portfolio updates, Requests for Startups, and investing ideas for paid subscribers, you can sign up below:

Subscribe now

This is a free weekly newsletter about the art and science of building and investing in tech companies. To receive Investing 101 in your inbox each week, subscribe here:

Subscribe now

On the Apollo 13 mission, an onboard explosion and mechanical failures meant that the ship’s CO2 filter was malfunctioning and could have killed the astronauts. In the movie, there is a scene where a team at NASA dumps boxes of random items that represent everything the astronauts have onboard, saying “we need to find a way to make this round filter fit in this square hole.”

I would describe this moment as quintessential techno-solutionism. So much conversation revolves around two extremes of a philosophical spectrum: techno-optimists and doomers. But technology is, at its core, about solving problems. In fact, I would argue that just about every aspect of life is about solving problems.

Doctors solve sickness problems. Artists solve soul problems. Accountants solve tax problems. Therapists solve mind problems. Garbage folks solve *checks notes* garbage problems.

I only came across the techno-solutionist moniker this week, thanks to Alec Stapp, but he got it from a 2021 piece by Jason Crawford, who laid out the history of the concept back to at least the 1960s.

He describes the contrast between the defeatist pessimism of the late Paul Ehrlich on one hand, who wrote The Population Bomb, and declared the fight to feed humanity as “over.” We’d lost, he said. And then Norman Borlaug on the other, who developed high-yield varieties of wheat that dramatically pushed forward that same fight to feed humanity. Pessimistic about the problem, but not complacent, and optimistic about finding a solution. Jason describes a solutionist this way:

“Solutionists may seem like optimists because solutionism is fundamentally positive. It advocates vigorously advancing against problems, neither retreating nor surrendering. But it is as far from a Panglossian, “all is for the best” optimism as it is from a fatalistic, doomsday pessimism. It is a third way that avoids both complacency and defeatism, and we should wear the term with pride.”

The reason that the spectrum of optimism and doomerism isn’t quite right is because it invites a lack of critical thinking. Being blindly optimistic is just as ineffective as being blindly pessimistic. They both have second order effects, though I would strongly argue that if you have to be one of them, be blindly optimistic. But if your primary north star is progress, it isn’t enough to be optimistic. You have to be a solutionist.

Venture Capital: a Case Study

My pondering on this topic came from a conversation I had this week that gave me pause. A person who works in tech but isn’t a VC, and has read a fair bit of my writing, posed this idea:

“You can’t really build a business that does any real good in the world -- with that as your primary aim -- if you raise venture capital.”

My immediate response was to reject the premise. And, in fact, her assumption that I would agree with that idea is one of the key fears I have in much of my writing. If you look at my most popular pieces on this blog, 9 of the top 10 most popular pieces are, in one way or another, a criticism of venture capital. Ironically, I refer to my writing as a personal diary of self-loathing because, and I hope this doesn’t come as a shock to any of my readers, I am a venture capitalist.

But my fear is that my criticism of venture comes from a place of understanding that the average reader may not have. And frequently I have found that I may feel like I’m saying “this is broken, lets fix it!” and the response I get is, “yeah, it’s broken! Lets burn it to the ground!”

I was reminded of a quote I’ve referenced before from Walter Isaacson’s biography of Leonardo da Vinci about understanding the rules before you break them:

“The Last Supper is a mix of scientific perspective and theatrical license, of intellect and fantasy, worthy of Leonardo. His study of perspective science had not made him rigid or academic as a painter. Instead, it was complemented by the cleverness and ingenuity he had picked up as a stage impresario. Once he knew the rules, he became a master at fudging and distorting them.”

I believe the same is true in criticizing almost anything. In order for it to be constructive, it has to first be understood. My criticism of venture capital as an industry comes from a place of love. That’s what makes it constructive criticism.

But when this person’s conclusion was “you can’t do good if you raise venture capital” it came from the assumption that venture capital was focused on profit maximization. But this comes from, I think, a lack of understanding of the capital allocation mechanism.

A Defense For Capitalism

First, I am abundantly and unequivocally a capitalist. I believe capitalism and market forces have done more to improve the global quality of life than anything, other than the ministry of Jesus Christ.

There was a series of tweets this week, the first saying “capitalism creates poverty,” and then a retweet doubling down and saying, “capitalism requires poverty.” The replies had dozens of responses demonstrating just how untrue those statements are.

The idea that NOT having a profit motive would improve capital’s ability to make the world a better place has just rarely been true. On scale alone, the three buckets of capital in the US are (1) philanthropy ($390B), (2) government ($3.9T), and (3) capital markets ($65T). The vast majority of capital is being allocated along profit lines. But when you look at the outcomes that capital has driven, the optimal outcomes have almost always come from capital markets.

There’s a famous chart that often makes the round, showing how prices of different commodities have changed over time. Notice anything?

All of the things that got cheaper are exposed to market forces. All the things that got more expensive are either entirely, or excessively, government run or highly regulated. Take just one example. China pulled 680M people out of poverty between 1981 and 2010 after liberalizing its markets, reducing extreme poverty from 84% to 10%.

So when my friend says that you can’t do any good if you’re raising venture capital, that is a false premise. If “doing good” is making the world a better place, venture capital can be an incredibly effective tool to do so. Any critical evaluation of venture capital has to start from the premise that it has been and can be useful. If you can fully internalize that, then you’re caught up to where I am whenever I write this self-deprecating blog.

The Sins of Venture Capital

I won’t rehash everything wrong with venture capital because this blog represents 300K+ words on the subject. But suffice it to say, venture has many, many sins. There are dozens of structural problems, both at the level of financial incentives and within the psychology of the participants in the industry.

In addition, there are countless instances where venture capital has been deployed in pursuit of innovations that make the world a worse place. That is also true. A few weeks ago, I broke down where the $3 trillion of venture capital over the last 20 years has gone:

• Big Wins: The mystical power law 20%; maybe ~$600B went into Google, Facebook, Uber, Airbnb, Stripe, etc.

• Modest Returns: The 1-3x returns that make up ~15%; ~$450B that didn’t return entire funds for investors, but didn’t lose money.

• Productive Failure: The ~25% of failures that make up a bedrock of what I’ve written about before as Silicon Valley’s accelerated failure archive; a “density of documented, autopsied, learned-from failures.” That’s like $750B of the total.

• Ineffectual Waste: This is a ~27% cut that starts to get into our playbook; the $800B that went to the 47th food delivery app, the 18th D2C mattress brand. This category exploded during ZIRP and took a lot of capital with it.

• Spectacular Failure: This is the 10% of capital that found its way into massive black eyes; $300B for Jawbone, Katerra, Hopin, Quibi, the SPAC-era, most of the SoftBank Vision Fund, or even going back to the Dot-Com blowups like Webvan and Pets.com.

• Outright Fraud: Finally, we have the ~3% that went to the criminals; $100B for FTX, Theranos, Nikola, Wirecard, SEC violations and DOJ indictments.

Based on this rough math, there is ~40% of capital that goes to the worst outcomes. You could argue maybe another 10-20% went to “winners” that were net negatives for society (e.g. cannabis, gambling, porn, etc.)

But when high-quality founders receive high-quality capital from high-quality allocators, that is often the most effective way to make the world a better place. More effective and expedited than any philanthropy or government programs.

My goal in writing this blog is the hope that we can increasingly push towards higher quality across the founders and allocators involved in the ecosystem. But in order for me to feel like I have moral license to engage in that kind of constructive criticism, I had to first come to a place of understanding.

The Character of Constructive Criticism

A critical component of Solutionism is constructive criticism. The danger of default optimism is that it doesn’t open itself up to the truth behind criticism. But the danger of default pessimism is that it represents an existential threat to the thing you’re trying to solve.

If you’re saying “I don’t want venture capital to exist” then no one in the venture capital apparatus has any interest in your criticism. The same is true if Democrats or Republicans think the opposing party should be wiped out. Or if atheists think Christianity should be outlawed. Constructive criticism can only come from a place of love; anything else is an existential risk and will be treated as such.

The problem is that people get addicted to criticism. They love fault-finding, especially with large organizations or amorphous industries. It can feel like a unifying force of any in-group; to identify your villains, and rage against the machine in an endless stream of displeasure and disappointment.

Earlier, I mentioned that 9 of the top 10 most popular pieces on this blog are a criticism of venture. Funny enough, the only piece in my top 10 that isn’t really about venture is an extension of why being a Solutionist is the optimal path forward: because complaining is the mind killer. As I wrote a few months ago:

“Complaining is literally voluntary brain damage. We’re choosing to damage our psyche. And, like any addiction, it becomes intoxicating not to stop. The more you complain, the better it feels to keep complaining. It’s your default mechanism.”

It may feel like “I have to criticize for thing to improve.” But solutions rarely come from criticism without empathy.

The Church of Jesus Christ of Latter-Day Saints: a Case Study

Another aspect of my life where I see this is within my faith. The Church of Jesus Christ of Latter-Day Saints has millions of members that have found a rich and fulfilling relationship with Christ through its teachings. And I believe that, quite consistently, people who follow the teachings of the Church are not only exceptional people, but also usually quite happy, and often very successful. But we also have a multitude of detractors.

Leaders of the Church are the first to emphasize that “while the Gospel is perfect, the people are not.” One modern day apostle once said:

“Except in the case of His only perfect Begotten Son, imperfect people are all God has ever had to work with. That must be terribly frustrating to Him, but He deals with it. So should we. And when you see imperfection, remember that the limitation is not in the divinity of the work.”

As a result of that human imperfection, there are certainly ways that the organization and administration of the Church could improve. But so many of the critics of the Church do not come from a place of constructive criticism. They represent Destructive Criticism; they do not think the Church of Jesus Christ of Latter-Day Saints should be allowed to exist. As a result, we are not interested in their criticism.

Meanwhile, there are dozens of people working within the faith to understand aspects of our history, our doctrine, our culture, and to inform and instruct and cajole in a better direction. That kind of constructive criticism is the only path towards any real viable solutions.

Everything Can Be Fine

When I was on my mission, I spent two years feeling deeply inadequate. As far as I was concerned, Jesus Christ had personally called on me to be a minister of his gospel. And I sucked at it. No matter how well I did, I could always see the limitations of my being. I had a sort of catch phrase when I would evaluate myself; “I have to be better.” I have to be better at talking to people on the street, at studying the scriptures, at teaching lessons, at being patient, at being kind. I have to be better.

Towards the end of my mission, I had a powerful spiritual experience. The whole point of Jesus Christ is to enable us to overcome mortality. We aren’t meant to be perfect. We’re meant to be progressing. So, towards the end of my mission, my catchphrase changed from “I need to be better” to “I can be better.”

Inherent in that statement is The Spirit of Solutionism.

The reality hadn’t changed; I still do need to be better. I’m not doing well enough and I can’t be complacent about that.

But the optimistic belief is that I can be better; it is possible. In that particular example, its because Jesus Christ enables me to be better.

But the same is true in every aspect of life. There is literally never a reason to be a defeatist. Even in the face of death, there is no reason to lose hope. As Gandalf said:

“No. The journey doesn’t end here. Death is just another path; one that we all must take. The gray rain curtain of this world rolls back and all turns to silver glass. And then you see it... white shores. And beyond? A far green country into a swift sunrise.”

The Techno-Solutionist Commitment

Everything can be better. But it requires work. Alec Stapp summarized Jason’s Solutionist article this way:

“We can’t just sit idly by and believe things will get better in the future because they have in the past (they might not!). We have to proactively identify problems and engineer targeted solutions to fix them.”

There is a saying that something can’t be hurt by the truth. And if it can? Then it deserves to be.

Two years ago, I wrote a piece called Oh Say, What is Truth? where I issued a clarion call that is as true today as it was then:

“The only thing that can save us now, across almost every aspect of our lives, is a renaissance of truth seekers.

Not argument builders. Not people who are incredibly capable of supporting an argument, building a bull case, or dreaming the dream.

Not influencers; people who can take their unequivocal opinions and super charge it with either dollars or followers.

But people who are genuinely, spiritually, morally, and financially motivated by finding and displaying the truth, whatever the truth may be. People who want to find the truth so that they can act on it. Not people who write the “truth” because of the decisions they’ve already made.”

Solutionism is the commitment to both seek out the truth, no matter how painful it may be, and then to act on it, no matter how difficult it may be.

The Techno-Solutionist Commitment is to seek the underlying truth behind technology’s capabilities; both for good and for evil.

The same social networks that connect us may poison our minds.

The same apps that empower our savings may demolish our livelihood.

The same AI that unlocks us may trap us behind an authoritarian paywall.

We don’t embrace those truths because they mean technology is doomed. We embrace them because they chart the course to technology’s exaltation; a lifting to a higher state of being.

Only in acknowledging our vices can we accentuate our virtues. Knowing what is not working defines the roadmap to what needs to be fixed.

There is a path, but we must walk it. It can’t carry us without our consent or contribution.

Thanks for reading! To receive Networked Conviction: My Investing Journal, a collection of portfolio updates, Requests for Startups, and investing ideas for paid subscribers, you can sign up below:

Subscribe now

This is a free weekly newsletter about the art and science of building and investing in tech companies. To receive Investing 101 in your inbox each week, subscribe here:

Subscribe now

“Death begets death begets death.” (Lorn au Arcos; Golden Son)

Technology has experienced any number of cycles. Some, like the internet and AI, have created super cycles that lead to massive speculative economic bubbles (e.g. the Dot Com and...whatever we’re calling this). Others have created fertile playing fields, like SaaS and mobile.

But, like any cycle, it includes ups and downs. Rising and falling.

When I started my investing career in 2014, investors still branded themselves with deliberate monikers attached to particular tech cycles. People thought of themselves as “internet investors” or “software investors.” They build specialties around specific categories, playbooks, and replicable motions.

Increasingly, those labels are meaningless. Every technology company uses the internet. Each of them leverages SaaS, mobile, and now, AI. To call yourself an AI investor, today, feels trite. Whether you like it or not, we’re all AI investors.

But what the rapidly increasing speed of these tech cycles feels like its doing to all of us is increasing our appetite for death.

Consumer Is Dead

Consumer investing, arguably, lasted from 2005 (founding year of companies like Reddit and Yelp) to 2016 (founding year of TikTok). Since then, “consumer investors” have been desperately searching for the next great consumer platform. They tried D2C commerce, subscription boxes, scooters, incidental social, like BeReal, etc.

But, arguably, the only consumer platform to be build in the last 10 years, was ChatGPT. And most, if not all, of them missed it.

Software Is Dead

Software had a bull run from 2008 to 2019. Since then, a lot of people would argue that software has been propped up by zirpy free money environments and, as a result, have seen massive bloat both in headcount (and its dark spectre; stock-based compensation) and S&M spend.

I don’t buy into the SaaSpocalypse doomerism that people are just going to vibecode SAP. But there is a fundamental question of what these “terminal value” SaaS companies are really worth. And no one has a good answer.

AI Is Dead?

The feeling of consumer having been dead for a while and SaaS increasingly seeming like a zombie seems to have made people addicted to seeing death in the face of everything around them.

With AI, there are plenty of perma-bulls; horny for the latest doomer claim from Dario or whoever else, saying that we no longer need mothers and fathers, because AI will raise our kids, and its only a matter of time before we replace Congress with “sovereign AI”, whatever that means.

And there are AI perma-bears who are convinced its fake, or simple, or incapable of ever driving real business value. They breathlessly share the latest stat of how little business ROI the most recent batch of AI projects are actually yielding.

But even those less prone to shout “the emperor has no clothes” about AI seem intent to look for the signs of rigor mortis forming amidst the AI giants. Take, for example, OpenAI’s stumbles over the last few weeks.

In-chat shopping isn’t converting the way they thought it would (so says their partners at Walmart), business adoption is slow (so they’ll spend $10B with PE firms to deploy it), consumer adoption of ChatGPT has slowed (they thought they would blow past 1B users, but at EOY 2025, they slowed and have barely reached 900M).

So, now, they’re starting to refocus the business. No more Stargate, no more in-house chips, internal hardware, etc. Even more telling, they’re shifting focus away from consumer and going more all in on enterprise coding, where Anthropic has dominated.

But what’s really happening?

Adoption Behavior Has Metastasized

On the consumer side, I think there was a handful of mega businesses that got build right as we were all coming online and our consumer behavior formed around their products. But since then, that usage has metastasized and failed to evolve much beyond where it landed in ~2016.

On the enterprise side, the consumerization of the enterprise has followed a very similar trend. We’re not rapidly adopting fundamentally new products. We’re frequently searching for the N+1 improvement to our existing workflows.

In terms of AI, there is clearly a different story. Countless AI companies have scaled first to $100M ARR, then to $1B ARR so rapidly. Clearly something magic is happening, right? Well, there’s a couple things we need to parse:

• (1) Some AI traction is exaggerated: A LOT of AI revenue numbers are taking their highest performing week and multiplying it by 52. Or annualizing free trials as if they were paid. Or just straight up lying because no one is checking. That doesn’t mean ALL AI revenue is fake. But a good portion of it is not adequately reflected in reality.

• (2) Experimentation is in vogue: A lot of AI revenue is coming from experimentation budgets. People feel intense pressure to deploy AI, so they turn on the budget to make it happen. Their CEO or CTO or COO has had an incredible experience with Claude Code and suddenly pushed the entire org to figure out how to get that same “AI experience” elsewhere in the business. How durable that revenue is? Time will tell.

• (3) AI turtles all the way down: A good chunk of the value chain of revenue ramps that we’re seeing are coming from labs that need data, model companies that need inference, and applications that need tokens. AI paying for AI to pay for AI that pays for AI. Everything from circular deals to booking revenue that you then buy back as a cost. This is the most difficult layer to parse because its opaque.

None of this is to say that AI is fake. But AI is still very similar to the obstacle of a metastasized adoption universe that we’re already seeing in consumer and enterprise. Its just that factors, like the three I listed above, make it more difficult to see that behavioral limitation. But its there.

The Pill Analogy

Over and over again, I return to this pill analogy for AI. Its, candidly, where we’re spending the most time. You can have a really effective protein (AI) and a really nasty disease (human workflows) but you still need a delivery mechanism to get the drug into the body (the pill, or, in this case, applied AI).

We have a lot of people focusing on the cutting edge. And I think thats great. There’s a whole ecosystem of researchers spinning up massive amounts of compute, training, inference, and test cases to rapidly improve the quality of the models and architecture we’re leveraging. That’s the equivalent of the fiber that got laid down in the Dot Com. It will eventually get used, whether or not the demand materializes now or more over time.

But what I see very few people paying attention to is just how much people are overwhelmed by their digital processes. They don’t have a good delivery mechanism to get, what is clearly a capable drug, into their disease.

And until we confront the reality that AI, like software and consumer before it, is butting up against the ornery stubbornness of human behavior, we’ll keep assuming that the deployment curve is occurring as rapidly as the development curve; but that just isn’t true.

“Consumer is dead.” “Software is dead.” “AI is dead.” That’s the morbid addiction talking. What is instructive is not perpetual pessimism. The most informative element of this dynamic is acknowledging the obstacles that exist in deploying the latest and greatest technology effectively, and leaning into that messy process.

Thanks for reading! To receive Networked Conviction: My Investing Journal, a collection of portfolio updates, Requests for Startups, and investing ideas for paid subscribers, you can sign up below:

Subscribe now

This is a free weekly newsletter about the art and science of building and investing in tech companies. To receive Investing 101 in your inbox each week, subscribe here:

Subscribe now

This week, I talked to Madeline Renbarger about megafunds. Why? Because this past week, Founder’s Fund raised $6B, Spark raised $3B, and GC is reportedly in talks to raise $10B. Her question struck me as an important one that I’ve found myself responding to more and more lately:

“What does this mean for the future of venture capital?”

And here was my answer: venture capital doesn’t exist. At least, not in the way we all keep talking about it. This catch-all for every private company raising capital. And continuing to pretend that it does exist in that form does a disservice to everyone involved.

Instead, what we all keep calling “venture capital” is a conflation of four different things: (1) seed stage investing, (2) traditional venture, (3) supercharged growth investing, and (4) previously small cap growth tech stocks. But now we’ve got folks with 2-years as PMs + 2 years of business school helping deploy capital into everything from $1B “seed rounds” to “seed→A→B” rounds in a matter of months.

But for those with eyes to see and ears to hear, each of these categories of investing does still exist. You just have to sift through the noise.

The Seeds of Seed Investing

From whaling expeditions to ARDC, Arthur Rock, and the birth of venture capital as an industry, there’s always been the concept of “seed money.” Seeding an entrepreneurial endeavor. The term “seed round” came later, call it ~2005, and has a rich history but it was meant to be a middle ground between “friends and family” angel money and a “proper” Series A. As Bryce Roberts described it:

“We would write small checks that not only validated the ideas and entrepreneurs as ‘fundable’ but we worked closely with them as board members and mentors to answer the questions follow on capital needed answered.”

There was a logical derisking that could occur in a more formalized pattern than just wealthy angels whipping small checks. But as startups have become more legible, the feeling is that the need for that “on ramp” has become superfluous. But this is less a function of truth and more a function of convenience.

Despite the dozens of scout programs and angels and incubators and accelerators and hacker houses and bootcamps, there is still raw untapped potential in the world of the entrepreneurially minded. There are still people with the intellectual horsepower and cultural grit to shape the future, they just lack the familiarity with how to “play the game.” Seed investing can still offer these people a supportive on-ramp.

Seed investing became diluted because it just became “the first formal round.” And that leads to silly things like calling Thinking Machine’s first round a $2B “seed round.” This isn’t seed investing. Seed investing is defined by playing its role as an on-ramp.

Venture Classic

Over the course of my career, I’ve worked at five different venture firms. I did regional seed investing as a scout at Kickstart Fund in Utah, I was a growth investor at TCV, I was a crossover investor at Coatue, I did venture classic at Index Ventures, and now I do product-led venture at Contrary.

Venture classic does still exist. And arguably, it is a niche category with a sizable amount of risk and outsized reward that is closer to what venture capital has always been. What’s more, its not nearly as competitive as you might think. Will Quist at Slow Ventures is probably the prophet of venture classic, so I’ll summarize what I think he would say.

Venture classic is a narrow, principled version of capital allocation that revolves around funding high-risk experiments to test novel hypotheses with the potential of exceptional economics and value creation, typically at early stages where outcomes are highly uncertain and unknowable in advance. Some key criteria on what it is not?

• It is NOT late stage investing (e.g. investing in Stripe at $159B)

• It is NOT growth equity, pouring fuel on a proven fire

• It is NOT buyouts; financial engineering a P&L into a multiple-expanded outcome

• It is NOT “pro” equity investing, akin to the “private capital version of the Russell 2000... a place for the largest players to park capital and get exposure to technology companies, in exchange for solid (if not astronomical) returns.”

When you really focus on some of the criteria of venture capital, you see some hints of it in frontier categories like biotech or new materials science. But giving $500M to an AI lab right out of the gate is a bastardized version of venture capital because it is operating on the assumption that either (1) the outcomes are fairly certain, or (2) the risk of the experiment is capped because there will always be demand for AI labs, just like there is always money in the banana stand.

Close to the spirit of venture capital, but the heart of it is far removed.

The purpose of venture classic is to let founders run experiments against hypotheses that are knowable and testable, but uncertain. Apple, Microsoft, even Google raised dramatically less capital for their “experimentation” phases, leaning on alternative capital for later growth and expansion. The problem with the non-existent cesspool catchall we keep calling venture capital is that is far more defined by consensus than contrarian experimentation.

Supercharged Growth Investing

What most of the capital deployment we have today would fit into is a very odd bucket that feels akin to old-school growth investing, but it is supercharged. The forces conspiring to supercharge this type of growth investing include the volume of capital competing for deals, the capability of AI as an enabling technology, and the financial profiles of the underlying companies.

In the last 90 days, there were 2.2K funding rounds in the US. In that basket, there were rounds like Skild AI raising a $1.4B round, or World Labs raising $1B, or Zipline raising $600M, or ElevenLabs raising $500M, or Etched raising $500M. I would describe all of these as relatively unproven businesses. Most of them have incredible revenue ramps or technological achievements. But they haven’t been hardened by years of operating the way that traditional growth equity would look for. Instead, the underwriting case for those businesses is momentum rather than fundamentals.

That doesn’t mean they’re bad businesses, or even bad growth investments. But the combination of AI and broad technological experimentation becoming very much in vogue, these companies are moving at unprecedented rates. The danger of this kind of “growth investing” is this: what can go up fast can go down just as fast. We saw that in 2021 with the crypto boom. Companies that raised at prices they’ll never make it back to.

The Small Cap Stocks of Yore

In that same basket of 2.2K funding rounds you also have companies like Anthropic raising $30B, or Databricks raising $5B. These companies, 15-20 years ago, would be public right now. Databricks is valued at $134B. There are only 38 other tech companies valued higher than that in the public markets today. Those rounds should be large hedge funds investing into fast-growing tech stocks.

But a combination of being able to access more capital as a private company and the appeal of avoiding the overhead of operating as a public company has enticed a generation of businesses to stay private dramatically longer than they ever would have before. And because the private moniker makes them less accessible, you get a pool of capital deploying into a hodge podge of secondary tenders and over-priced rounds, just to get exposure.

The Sum of the Parts

None of these are signals of good companies or bad companies, or good investments or bad investments. They’re just different. And, most importantly, they are NOT all venture capital. But each of these asset classes does exist in a way that “venture capital” as this cesspool catchall does not, in fact, exist. And, as with most things that exist, there is a strategy.

Small cap stocks are, primarily, a game of capital. If you have enough capital you can often find your way into Databricks’ $5B round, or Stripe’s latest tender. The trick is you have to have a shiz ton of capital. If you do, you can probably get it in if you work hard enough and you’re not a foreign adversary (though, even then, you have a shot).

The danger is in your returns profile. Odds are that, because they’re illiquid, these companies are counterintuitively being priced to the absolute max. Because the price isn’t a function of logical future business fundamentals; they’re a function of access. So you should assume that the returns on those rounds will very likely be quite low, relative to other index opportunities. Especially if you’re paying 3 and 30 or more to get in.

Supercharged growth investing is primarily a game of access. These hot companies are raising capital, usually off of very little traction. But in an age of froth like the one we’re currently living through, people will compete to get access. Better to do it at a couple billion dollar valuation, in case they really take off. If you have access to these high-flying companies, then you can succeed.

The danger is in the adverse selection. If you try and get into the highest flying growth names but struggle with access, you may find yourself investing in names that look like the highest flyers, but don’t have the special sauce. That’s what made the smartest money avoid them, and made room for you to get “access.” But those companies will never make it to the heady “small cap stocks” of today.

Venture classic is a game of finding high-risk, high-reward experiments in uncertainty. If you know that something will work, either because its obvious, or because the bubble will make it work even when it doesn’t work, then it lacks the je ne sais quoi inherent in the uncertain experimentation. Nothing ventured, nothing gained. Today, AI-native software feels consensus. Vertically-integrated hard tech. Stablecoin payments, AI labs, etc. These categories contain commoditized consensus. Will there still be venture-scale returns from some of the companies in these categories? Yes. Are they likely be in consensus-hyped party rounds of $500M+ for a pre-product, pre-revenue company? No. They’ll be found in the weird, odd stuff that most people think you’re stupid for trying. They’ll look like they have no market, no momentum, no downstream capital. Until they do.

The danger is in the value chain of capital. High-risk experiments are often not executed on one-and-done funding rounds. You need to keep raising capital. And when so much of the capital ecosystem is tied up in consensus-seeking, it can mean that a lot of downstream capital is indisposed at the moment. Which could put your big venture classic bet at risk. The solution is a combination of lean operations, finding odd capital partners (true believers who will be rewarded when it works, or handed a venture-scale loss if it doesn’t), and desperately trying to prove key milestones.

Seed investing is a game of people. The idea, candidly, doesn’t really matter very much. Seed investing is about finding exceptional people with exceptional gumption who will run through walls to shape the world around them. You can support these people, you can help round some of their roughest edges, you can help them become more legible to downstream capital. But, ultimately, it is 99.99% about the people.

The danger is picking the wrong people. Because so many capital allocators have become generalists of both sector and stage, they bring their pre-conceived “pattern recognition” to a “people recognition” game. They try and see “the idea” or “the market” or “the execution.” But, as I said, they do not matter. If you try and engage in seed investing as an ideas / market / execution guy, you will fail. If the horse can’t get itself to water, its probably still gonna die even if you lead it there.

The Aggregate

So, in summary, I’ll use the paraphrased, and probably made up words of Billy Beane:

“Guys, you’re still trying to replace venture capital. I told you we can’t do it, and we can’t do it. Now, what we might be able to do is re-create it. Re-create it in the aggregate.”

Venture capital does not exist. Not the way we use it. What does exist is this aggregated pool of private tech capital deployment. And the more we acknowledge those individual parts, the better off everyone will be. And if large capital agglomerators want to deploy capital out of the same fund into all four types of investing, they are more than welcome to try. And some of them will do quite well.

But founders and funders alike would do well to step back and ask themselves, “what game are we playing?“ Because the unfortunate reality is that most of them actually genuinely don’t know.

Thanks for reading! To receive Networked Conviction: My Investing Journal, a collection of portfolio updates, Requests for Startups, and investing ideas for paid subscribers, you can sign up below:

Subscribe now

This is an entry in Networked Conviction: My Investing Journal; a weekly newsletter for my paying subscribers where I share portfolio updates (including current, future, and anti-portfolio mentions), Requests For Startups, and investing ideas. To access this newsletter weekly, subscribe here:

Subscribe now

I’ve written before (a couple of times) about how much I love Disney. I feel the Spirit of God when I walk down Main Street in Disneyland. Call me a consumerist shill, but I can’t help it! There’s something special about the world building on display there.

One thing, in particular, that I would love to spend more time drilling into is Imagineering. Disney’s version of a captive skunkworks; a permanent, multidisciplinary studio where everything from artists to architects, mechanical engineers, software developers, storytellers, lighting designers, and on and on all come together to translate creativity into physical manifestations.

Imagineering has always struck me as one version of a common mechanism that have happened in some of the most compelling ideation organizations. From Bell Labs to Lockheed’s SkunkWorks to IBM’s Wild Ducks; finding a mechanism to translate uncertainty through the lens of creativity into a vessel of productivity.

Yet another discovery mechanism has been proven out comes from Flagship Pioneering; the biotech incubator of sorts that birthed a $75B portfolio that includes the likes of Moderna. That’s what has my investor brain itching today.

In a world of AI, we’re getting exposed to exponentially more uncertainty. Across categories, I’m seeing an incredibly compelling opportunity to replicate the Flagship Pioneering model within opportunity discovery for AI deployment. So that’s what I wanted to unpack today.

Read more

This is a free weekly newsletter about the art and science of building and investing in tech companies. To receive Investing 101 in your inbox each week, subscribe here:

Subscribe now

Stories run the world. Every movement, every nation, every life choice. They all stem from stories. From phenomenal cosmic stories about the makings of the universe and the identity of God down to the most minuscule motivations to wake up early and workout in the morning; every aspect of our existence revolves around a story that we’re choosing to believe.

Granted, plenty of it is subconscious biological framings and pre-programmings. But in terms of the active energy origination of our lives, the vast majority of it is dictated by stories.

Those stories, however, aren’t always good stories. Sometimes they’re stories woven together to prey on our fears. Nazi Germany is a hallmark of bad stories. Other times the stories are too good to be true... because they are. Frauds, cons, and fantasies.

One of the most disconcerting realities of capital allocation is the incredibly fine line between fraud and fancy. Are we investing ahead of future inflection? Or are we the last sucker at the dance? For every Sam Walton, there’s more than one Bernie Madoff. For every Steve Jobs, there’s more than one Elizabeth Holmes. For every Elon Musk, there’s more than one Adam Neumann.

Billions of dollars have been deployed both for good and for ill. Towards meaningful long-term outcomes and towards flash-in-the-pan fantasies. So much of my obsession with the art of capital allocation is in pursuit of more effective allocation. So when you see billions of dollars being deployed towards ineffectual missions, it grinds my gears.

So this is the attempt at a hijack. I want to try and hijack the playbook that the Huckster Elite have perfected to siphon billions of dollars. There are worthier causes that could use that capital to build real things, while leveraging the appeal of the more clandestine con folk.

The History of Hucksterism

There’s a rich history of the con that goes back hundreds of years. A personal favorite of mine is the invention of a country out of whole cloth. In the early 1800s, Gregor MacGregor raised the equivalent of ~$1B in today’s dollars and told the tale of Poyais; a nation in South America that he described as having a bustling economy with its own currency, coat of arms, and a 350-page guidebook to navigate the nation’s inner workings.

Hundreds of settlers set sail for a new life in this new nation, promised to provide fertile land, fresh fish, and deer just waiting to be hunted. What they found was completely unpopulated, unsettled jungle. More than half died of malaria and yellow fever. The promise of Poyais never materialized.

From Charles Ponzi, the namesake of the Ponzi scheme, to Bernie Madoff (where I assume the phrase “he madoff with other people’s cash” comes from). Fraud-laced hustles are far from one-offs. You can study undertakings like Wirecard, who raised ~$1B in 2019, rode a fabricated pool of $2B+ in revenue to a market cap of $20B+ before tanking into the ground.

We can learn from the tactics of FTX, Theranos, Fyre Festival, and dozens of others.

One of the immediate hesitations you might have with this comp set is that they’re not necessarily apples-to-apples. Hucksters come in all shapes and sizes.

Huckster Variants

• Straight-Up Fraud: These are the companies that we’ll describe as “actively” committing crimes. Wirecard fabricated bank statements, Luckin’ Coffee fabricated retail receipts, Charlie Javice made up users, Headspin made up fake invoices.

• Roads To Nowhere: Here’s where some tricky nuance comes in that requires this to be “the gospel according to Kyle.” Many (most) of the people in this bucket also committed crimes. But my sense is that they were “fake it ‘til you make it” tactics taken too far. Plenty of successful companies, like Reddit, faked users early on. Some just took it dramatically too far. And you could say the straight-up frauds were too, but faking a paper trail vs. faking capabilities feels different to me; so sue me (no... don’t sue me.) Theranos, FTX, Nikola Motors, Chesapeake Energy, all built their roads on crime. But then there’s Quibi, Stability AI, Juicero, Hopin. Not crimes... but not good.

• Bridges To Ugly: This, I would describe, as a uniquely difficult bucket to qualify for. Seemingly, no crime. Also, not failing to do what they said they would do. In fact, they did exactly what they said they would do. But it turned out to be just absolutely horrific business internals to the point where the collapse is caused not by a shifting macro or falsified narrative. It just turns out to be an ugly business. The only example of this I could think of? WeWork. Maybe there are others. But I think its a pretty unique story.

• Fakery In Flight: Here we tread dangerous water. Because, on these, the jury is still out. Prime example? Figure AI. The company has raised $2B+ at a valuation of $39B, all with effectively no revenue. Brett Adcock, the CEO, has claimed the company has a massive deployment unfolding at a BMW plant. But BMW pushed back on the details. Met with skepticism, Brett’s gotten spicy online, sometimes litigious. Who knows, maybe he’ll pull it off. Granted, we’re still waiting for his last company, Archer Aviation, to turn a profit.

Hype machines also go through evolutions. There are plenty of people who believed Tesla was a house of cards for years (some of them still believe that.) This is what I’m talking about; the fine line between fraud and fancy. Startups are, inherently, built on hot air. It can be difficult to toe the line between the two. But when things do turn to fraud, or even just ineffectual waste, like some of the non-criminal Quibi’s and Hopins of the world, it is a legitimate cost!

The Real Cost of Hucksterism

Let’s do some rough math (read: estimates). From 2000 to today, there was ~$3 trillion of venture capital deployed in the US. As we all know, a good chunk of venture-backed startups fail. At least ~50% of that went to zero, so $1.5 trillion. But, similar to the inequality of hucksters, not all failure is created equal. Break down all $3 trillion into a couple buckets:

• Big Wins: The mystical power law 20%; maybe ~$600B went into Google, Facebook, Uber, Airbnb, Stripe, etc.

• Modest Returns: The 1-3x returns that make up ~15%; ~$450B that didn’t return entire funds for investors, but didn’t lose money.

• Productive Failure: The ~25% of failures that make up a bedrock of what I’ve written about before as Silicon Valley’s accelerated failure archive; a “density of documented, autopsied, learned-from failures.” That’s like $750B of the total.

• Ineffectual Waste: This is a ~27% cut that starts to get into our playbook; the $800B that went to the 47th food delivery app, the 18th D2C mattress brand. This category exploded during ZIRP and took a lot of capital with it.

• Spectacular Failure: This is the 10% of capital that found its way into massive black eyes; $300B for Jawbone, Katerra, Hopin, Quibi, the SPAC-era, most of the SoftBank Vision Fund, or even going back to the Dot-Com blowups like Webvan and Pets.com.

• Outright Fraud: Finally, we have the ~3% that went to the criminals; $100B for FTX, Theranos, Nikola, Wirecard, SEC violations and DOJ indictments.

So what does that mean? The chunk I’m most concerned with is the ~40% of venture dollars since 2000 representing ~$1.2 trillion that went to ineffectual waste, spectacular failure, and outright fraud. Thats the allocated capital that we need to strategically reallocate; find a way to send it somewhere else.

How do we do that? We hijack the hypebook. I tried to drill into the characteristics that attracted capital towards that ~$1 trillion hole in the ground. Granted, a lot of it is “lie to your investors” or “commit crimes” or, in some very rare cases, murder people. So... you know. Don’t do that. Instead, I tried to separate the learnable components in hopes of offering it to founders who are building more worthwhile endeavors.

The Hypebook’s Table of Contents

Secrecy: Deflection & FOMO

In almost every case, secrecy was a big part of the equation. Theranos would have candidates sign NDAs before even being able to interview for the job. When employees left, they had their backpacks searched and even, on at least one occasion, when an employee refused, a Theranos co-founder called the police, saying the employee had “stolen property in his mind.” In fact, Theranos operated in stealth for a full decade from 2003 to 2013.

FTX had no board at all. When asked to create one, SBF’s response? “Go f*ck yourself.” The company split its audit between two small firms so no one ever saw the whole picture. Wire approvals were set to auto delete after signing.

One of the best canary in the coal mine stories of secrecy is when Hindenburg Research found out that Nikola Motors had forced the actors standing next to their demo truck to sign NDAs. As their report described the beginning of an insightful rabbit hole: “What proprietary secrets could an actor standing next to a truck possibly learn that require them to be muzzled?”

Wirecard would push for regulatory investigations of journalists and short sellers who dared to ask questions. There was even a massive spying operation against people who were speaking negatively about the company!

Artificial Urgency & Scarcity

Often, founders will pray on an investor’s loss aversion and FOMO. Like Kahneman’s prospect theory, “missing a winner is more painful than overpaying now.” My good friend, Matt Mazzeo, described this element of “borrowed conviction” that hucksters can instill in investors. No one is actually doing their own homework because they assume someone else is doing it. After a few rounds, you assume the company has been well-vetted. Mazz compared it to the CDO crisis. You have round after round of F-quality diligence rounds, all being packaged together into a, supposedly, AAA-funded company.

Hopin’s founder, Johnny Boufarhat, has been described as one of the best fundraisers in the game. As I’ve written about before, he managed to raise $1B for Zoom conferences. The company’s valuation went from $2B to $7.7B in less than 12 months. The ZIRP-fueled phenomenon created intense FOMO that turned professional investors into “dumb money” that were doing no diligence, despite frequently leading mark-up rounds. That company eventually tanked into the ground, being bought for ~$5M, with Boufarhat taking home ~$200M in secondary sales.

Media Manipulation as Air Cover

Theranos was constantly lauded as a breakthrough on Forbes, Inc., Time, etc. FTX had the infamous Sequoia profile where he was playing League of Legends while pitching. On top of that, he was a major donor and/or investor to publications like Semafor and ProPublica. He even appeared on stage NYT DealBook Summit after being indicted but before being charged!

Nikola Motors pursued public listing through a SPAC than enabled Trevor Milton to get online, and any media platform that would have him, to offer up what future prosecutors would describe as “lie after lie after lie.”

WeWork had an absolutely bananas profile of WeWork’s Adam Neumann where he said his aspirations included living forever, becoming the world’s first trillionaire, expanding WeWork to Mars, becoming Israel’s prime minister, and becoming “president of the world.” WeWork’s infamous S-1 from hell was clearly framed as a media document: it used the word “community” 150+ times, included Neumann’s personal mission statement about “elevating the world’s consciousness,” and positioned a commercial real estate company as a spiritual movement.

Hopin’s CEO had a media story to die for; a young founder with an autoimmune disease, confined to his house, who invented a virtual events platform right before COVID locked everyone indoors. The sympathy-inducing was palpable.

Quibi ran a $5.6M superbowl ad before it had even launched. Katerra called itself “the Tesla of construction.”

Not to mention the all-powerful 30 under 30 prison pipeline: SBF, Holmes, Charlie Javice, Martin Shkreli, and on and on.

Litigation As Cleanup

Theranos had a “threatener-in-chief” with David Boies who took 400K shares of stock in exchange for intimidating whistleblowers and racking up litigation. When whistleblowers did come forward, the pushback added up $400K in legal fees for the former employees.

Wirecard can only be described as deploying litigation at industrial scale. Suing everyone from large multinational publications to literal government entities. Wirecard had a half dozen elite law firms in multiple countries attacking any critics. When Singaporean authorities launched an investigation, Wirecard sued the investigators as individuals!

Nikola Motors spent $27.5M on legal expenses going after short sellers, including spending over $8M in advanced attorney fees for Milton himself.

Adam Neumann used structured litigation for personal enrichment, rather than defensively. From leasing his own properties to WeWork, or trademarking the “We” name and licensing it back, one report found he had gotten $1.7B in payments to himself.

Quibi has been described as a company more interested in legal warfare than product-market fit, given it was suing a competitor during its lackluster launch. Spending millions defending intellectual property that they couldn’t give away for free!

Validation By Association

Theranos had probably one of the most prestigious boards out there. Three former cabinet secretaries, two former senators, a retired admiral, a retired general. Tim Draper was defending Elizabeth Holmes, even after she was sentenced!

Quibi was right down the fairway for media mogul founder, Jeffrey Katzenberg, a former Disney exec and DreamWorks founder, that he brought his own “associative approval” to the table.

SBF paid Tom Brady $55M, Steph Curry $35M, and Larry David $10M, all to endorse FTX. Some people described the strategy as “credibility laundering.” It didn’t stop at individuals. The company spent $130M on an NBA sponsorship, $135M to name the Miami Heat stadium, and on and on.

Nikola Motors deliberately got large OEMs, like GM and Bosch, to invest in the company, framing it as having been vetted by “some of the largest organizations in the world.”

Adam Neumann had Jamie Dimon vouching for him, both personally and as the company’s banker. He brought along “the world’s smartest money” - - T. Rowe Price, Fidelity, Goldman Sachs, Harvard Management Company.

Personal Mythology

Elizabeth Holmes had her famous black turtleneck and deep voice. She said she had 50+ turtlenecks, even tracking down Issey Miyake to get her own authentic “Steve Jobs turtlenecks.” When she got drunk, she would let the deep voice slip. It was her way of “being taken seriously.”

SBF had his messy hair and cargo shorts. In fact, the company’s Bahamas HQ was supposedly designed based on SBF’s crazy hair. Michael Lewis, who wrote The Big Short, was following SBF around for a book during his fall from grace, and yet Lewis’ book still came out pretty grandiose / complimentary of SBF!

Adam Neumann is, honestly, more myth than man. Barefoot walks through the streets of New York, ayahuasca-laced corporate retreats, the mission of “elevating human consciousness.”

The founder of Wirecard cultivated the image of a quiet, brilliant Austrian technologist who “preferred letting the numbers speak.”

Hopin’s CEO? Every profile repeated the same arc: sick kid, bedroom coder, pandemic prophet, billionaire.

Invented Metrics as Goalpost Shifting

WeWork’s infamous Community Adjusted EBITDA that took out *checks notes* “marketing, G&A, development, design costs, building-level operating expenses including rent, utilities, building staff salaries, and amenities.” What’s even crazier? WeWork’s CFO said he got “no pushback from investors” on that metric...

I don’t even know how to begin to unpack FTX’s creation of its token dynamics as a mythical “metric.” SBF used Alameda to prop up the price of FTT and the rest is history.

Theranos was focused on “tests per drop,” saying the company could run 200+ diagnostic tests from a single drop of blood.

Trevor Milton would claim that the Nikola One had 1K horsepower, zero emissions, and a range that would make diesel trucks obsolete. Literally, just defying the laws of physics left and right.

Honestly, Wirecard’s entire revenue paradigm was invented. Revenue attributed to “third-party acquirers” (TPAs) was effectively fictitious. But because these TPAs were in international jurisdictions they were unauditable.

Renderings as Reality Substitutes

Nikola’s infamous electric semi rolling down a hill. Not only did the truck not have an engine, but the camera was tilted to make it look like it was rolling on flat ground. Not enough? The doors were also taped shut to avoid flapping on the go.

Theranos secretly acquired Siemens equipment and even faked blood tests. Magic Leap used CGI to generate supposed product demo videos; it was done by the same special effects company that made Mad Max and The Hobbit. Katerra showed sleek robotic assembly lines producing modular housing components but they literally never finished a construction.

And then there’s WeWork... honestly WeWork’s “rendering” was the S-1 itself. The infamous document that “presented” the commercial real estate company as a tech-enabled spiritual movement.

The Good, The Bad, & The Ugly

Plenty of bad behavior. Remember, the point of this is NOT “do more crimes.” But the are investors who deployed billions into these companies weren’t looking to support a fraud or get taken advantage of. Some of them were just stupid, granted. But a lot of them were well-meaning. What was it that they latched onto as indicative of a safe haven for capital? Here’s what I’ve tried to do: Learn what is worthy of being learned, and leave the rest behind.

In the same way that we can anecdotally learn from the list of Horrendous Hucksters, we can also learn from the Honest Hucksters. The companies that have also used big visions and lofty ambitions to attract attention and capital, but that have actually delivered. Companies like SpaceX, Tesla, Anduril, OpenAI, Amazon, Nvidia... even the Walt Disney Company could fit in this bucket! I’ll use that list as a backdrop to illustrate.

We Don’t Need The Secrecy

If there’s one element of the huckster’s playbook that I think has much less to teach the Honest Huckster, its secrecy. Granted, there are plenty of examples of trade secret protections or defense-related clearance. But one key example is the fact that Elon Musk famously open-sourced all of Tesla’s patents back in 2014! Anduril loves to talk about the products and projects its putting out when it can (barring secrecy requirements from the DOD).

Sam Altman has been criticized as not being “consistently candid,” but I would describe that as more of a personal characteristic than a company mentality. Just because OpenAI isn’t actually “open” doesn’t mean they’re hiding in the shadows.

Bezos’ shareholder letters were a multi-decade act of transparency. Jensen Huang might be the least secretive founder there is. They’ve made an entire business of building the CUDA ecosystem to be as transparent as possible.

Walt Disney would often use shell companies for land acquisition, but that was a strategic move to avoid speculators buying up land around his future parks. He, famously, aired the building of Disneyland live for ABC in a radically transparent marketing exercise.

The type of NDA-laden, litigation-heavy type of secrecy that many of the grandest hucksters have engaged in just isn’t very common in companies that are actually capable of achieving the grand ambitions that they lay out. So I think we can lay that element of the playbook aside as unnecessary for the Pure of Heart builders.

Calculated Urgency

Here’s the first clear actionable takeaway for the would-be Honest Huckster: artificial urgency vs. calculated urgency.

Some of the most effective Honest Hucksters have deliberately used urgency to drive the mission forward. SpaceX was often raising as a life-or-death need, especially in the early days when they were frequently blowing up their rockets. In 2008, Musk went to Founder’s Fund to raise ~$20M for their fourth attempt at launching the Falcon 1. Musk knew it would be their last try. But here’s the difference between the fiction and the fantasy... they actually did it! As Musk famously said, “fourth time’s the charm!”

Anduril is built on urgency, not because of the company’s artificial schedule, but because of the reality of the geopolitical environment in which the company is built. Tensions are rising, conflict is inevitable, and its only a matter of time until US military capacity is called into question.

Bezos leveraged some versions of operational urgency, like the famous “Day 1 philosophy,” saying that “Day 2 is stasis, followed by irrelevance, followed by excruciating painful decline, followed by death.”

Humans are, quite often, herd animals. Herd animals need to be shepherded. Without urgency, people default to stasis; to inactivity. Investors are a cornucopia of cognitive deficiencies. It’s not a matter of manipulation, its a matter of communication. Artificial urgency is trying to lie to shake people into action. Calculated urgency is the presentation of the facts so as to articulate the stakes.

Stories Worth Telling

In a Hype world of media manipulation and litigation for air cover, there is a surprising amount of emphasize on the truth over the myth. SpaceX has been live-streaming rocket launches for years, despite knowing that a large portion of them would explode. He made failure the story. Elon has done plenty of press, don’t get me wrong. And his predictions for Tesla are so famously wrong that there is an entire Wikipedia page dedicated to the 30+ times Elon has predicted autonomous vehicles from the company. But the story is about the myth and ambition of what’s possible. Not an artificial color palette to put lipstick on a pig. It’s to embrace the glory of what the pig could be in the future; warts and all.

Anduril is very similar. Palmer Luckey is a character in a larger cultural drama, always hitting the same notes in every conversation. The lie of the “End of History,” the rising geopolitical tensions, the industrial limitations of the US military base. Palmer is more than willing to get in fights with journalists about inaccurate coverage, but its never under the guise of hiding the truth. Its a representation of the idea that “no company can be hurt by the truth; and if it can, then maybe it deserves to be.”

OpenAI is much more complicated. I would describe Sam Altman as a policy propagandist; regulatory capture is front and center, served up with a plate of fear-mongering. But again... I still think the playbook here is nuanced. There’s plenty of press (plenty!) But every time its focused on the narrative opportunity and attemptive framing of the reality rather than a deliberate misrepresentation of facts (that is, unless you believe some of the more salacious OpenAI conspiracy theorists.)

Walt Disney was the quintessential proponent of “stories worth telling” working to provide direct access to the inner-workings of the reality of the park and projects. That being said, there’s plenty of propaganda. Disney famously edited the photos of Walt to get rid of the cigarettes in his hand. Though, I would chalk that up to future media manipulation. Walt Disney, in his hey day, was no golden child, but my opinion is his narrative forming focused on the reality of the accomplishments over the forced narrative put in place by manipulation and threats.

Again, the ways in which these companies do play into the common threads of the Huckster’s Hypebook are in places where they fit the mold. Amazon and Disney are also famously litigious, whether around IP protection or anti-trust defense. It’s not that these companies don’t “play the game,” but the reasons they play the game feel more strategic than defensive. They’re not trying to cover something up; they’re trying to reinforce what they believe is their need to succeed.

The Average of Who You Hang Out With

Where hucksters are hiding behind a smokescreen of “validation by association,” the reality of Honest Hucksters is that they are just naturally going to attract high quality people. But one key critical difference is that honesty can attract skill, hype can only attract panache.

Theranos is the perfect example. Impressive board? Absolutely. But was there a single medical expert? Not one. They had to keep the actual experts as far away as possible. Why? Because they smelled something fishy immediately.

Meanwhile, SpaceX attracted people like Tom Mueller, one of the world’s foremost rocket propulsion engineers. Anduril brought on Christian Brose, who was previously the staff director of the Senate Armed Services Committee under John McCain. People who bring legitimacy to a high-ambition vision.

Personal Mythology

If there is one thing that all of the characters we’ve brought into the conversation have in common, its personal mythology. From Elizabeth Holmes, SBF, and Adam Neumann on the one hand, and Elon Musk, Palmer Luckey, and Steve Jobs on the other. Each are unique representations of a “known quantity.” Jensen’s leather jackets, Steve Jobs (and Elizabeth Holmes’) turtlenecks, Palmer’s Hawaiian shirts, Elon’s autism. Delectable characteristics.

But here, again, you see a clear contrast. Many of the hucksters worked backwards from their “costumes.” Elizabeth Holmes was play acting with the turtlenecks and deep voice; same with SBF’s crazy hair or Neumann’s Jesus routine. They created a character they wanted to embody. The mythology is load-bearing; once you remove it, there’s nothing underneath.

The honest ones, one the other hand? The costumes often act as amplifies. Anyone who thinks Palmer Luckey is just a jabroni in a Hawaiian shirt isn’t paying attention. Whether you like him or not, he is clearly one of the sharpest minds of his generation. People who think Elon Musk is just an autistic leech on the government’s teat fundamentally misunderstands the highly technical role he’s played. Jensen, Bezos, Jobs; they’re all similar. Anyone who knows what they’re talking understands that they were all dramatically more capable than just being able to command an aura.

Fraud mythologies pull attention towards the founder to distract from the company / product. Honest mythologies, on the other hand, push attention outward to the product. After hearing the story, are you more intrigued by the founder or the product? In fact, the real question is whether the founder is the real product. Because if it is, that’s a con.

Beyond dawning a particularly unique uniform, whether its leather, leopard-print, or anything in between, I think this has more to do with who you are as a founder. When I asked some of my close friends who also happen to be quite successful investors, the most consistent pattern that each of them saw in the most effective fundraisers? Competent charisma. You could compare this to what I’ve written about before as “clarity of thought.”

Understanding North Star Metrics

Where hype enthusiasts are eager to anchor to metrics that best represent their narrative vs. the reality of the business, the Honest Hypers frequently have core metrics that make or break the business. Jeff Bezos famously eschewed GAAP earnings in favor of “free cash flow per share”. He saw earnings as misleading and focused on the long-term value of the business instead. Elon saw the core formula of SpaceX revolving around the cost per kilogram delivered to orbit. Walt Disney had his flywheel, Anduril has self-funded R&D.

The most consistent pattern is that honesty yields independently verifiable metrics vs. internal metrics of fluff. In particular, the goal of honest metrics are meant to be comparative. The hucksters will, instead, opt for a metric that no one else is measuring so that no one can really know what it means.

Embrace Reality, Warts & All

In a world of fake electric trucks rolling down hills and fake blood tests, the honest huckster embraces the good, bad, and ugly of reality. Tesla is willing to shatter the window of a cybertruck live, SpaceX will livestream exploding rockets, Anduril has a strict “no renderings” rule, OpenAI does live demos, Amazon hated powerpoint presentations and wanted raw thinking in writing.

I said it earlier, but the idea of “a good company can’t be hurt by the truth, and if it can, then maybe it deserves to be” is an exceptional guide. Representations of reality by companies that are still in the early days of building out their massive ambitions, the key differentiator is whether those renditions obfuscate reality or embrace it?

Go Forth, Hucking In Righteousness

The above is a long ocean of anecdotes. I did that deliberately, feeling like the best way to hijack the huckster’s hypebook is to see it in action. But I’ll also try and sum it up briefly here:

• Radical Candor: Secrecy is, more often than not, a smokescreen for incompetence. Rather than trying to keep everything under wraps, embrace the public reality of what you’re building. Debate openly the merits of your worldview and how it shapes the company you’re building. Silence the skeptics with the truth, rather than silencing truth with the lawyers.

• Calculated Urgency: Understand the stakes of what you’re building. Not because you want to make people move quick, but because you need people to move quick. A bias for action requires a consistent throughput of hyperactivity. When you are hyperactive, you will genuinely feel the pressure to move quickly rather than the performative version of urgency.

• Becoming the Chief Evangelist: Create spectacles, generate stories, present strong opinions strongly held, be the absolute best Chief Evangelist, not only for your company and product, but for the category generally. Use media, yes. Understand litigation strategically, sure. But, first and foremost, you are a prophet of the cause. Everything else comes second to that truth.

• Build Your Mythology: A company can only have one Chief Evangelist. It doesn’t have to be the CEO necessarily, but it should be. The person who is the most effective mouthpiece for the mission. Your mythology should be one of competence, not a con. Manifested, not manufactured.

• Lean Into Meritocracy: Rather than flashy names bringing validity, emphasize the sequencing of achievement, then validation, then more resources (capital, people, partners, etc.) Earn your validators by making them dependent on you, rather than paying them to stand next to you. Seek the validation of your “ride or dies” who understand the mission and the stakes. Not the stuffed shirts.

• Find Your Formula: As Will Manidis wrote in “Legible to capital“, every great company can be understood fundamentally as an equation / trade. Understand your North Star equation; your metric formula for success. Anchor every measurement around that. And have it be discernible reality, not performative theatre.

• Embrace Reality: Acknowledge that reality is messy, but do so in an aura of experimentation. You know the messiness of life because you have embraced it more wholeheartedly than anyone else could. You speak to that messiness with personal anecdotes, not theories.

Use this playbook for good. Unpack the details of these methods as they relate to commanding dramatically more capital. Never use them for evil. We have enough hucksters. Identify a quest worth pursuing, and then hijack the huckster’s hypebook to aggregate more capital to your pursuit of truth over the huckster’s pursuit of profit. God speed!

Thanks for reading! To receive Networked Conviction: My Investing Journal, a collection of portfolio updates, Requests for Startups, and investing ideas for paid subscribers, you can sign up below:

Subscribe now