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This is a conversation that feels really full circle for me. I've been writing every week for almost 3.5 years, and I credit the willingness to finally do that to advice I got from Rex Woodbury.
Rex and I got to dig into a wide variety of topics. We started out, first, unpacking the thoughtfulness with which Rex has gone about building his own venture firm and trying to counter-position his firm to the asset management status quo of capital agglomerators that I've written about so much.
Next, we talked about this tweet that said "analysis doesn't matter anymore because of ChatGPT; now all that matters is access."
This feels like a pretty dangerous perspective because there is already SO LITTLE analysis happening in venture. To say "the AI can provide the insights; we just have to find the hot deals" is problematic. Rex brought my attention to Rick Zullo's great response to it:
The level of consensus-driven investing feels rabid, and we can often put off the analysis to "has the thinking box been checked?" When, in reality, the thinking part of the job is a critical aspect. Instead, so many get focused on chasing the hottest deals to make sure they don't miss ones that end up being able to translate hype into reality.
We talked about a piece that Rex wrote called Play It Cool: Chasing Heat vs. Being Contrarian in Venture Capital that outlines this idea that, in reality, the most important companies that get built in a given year are rarely aligned to the trend that was "hottest." The deals that people were fighting for "access" to.
From there, we touch on how small funds can compound capital so aggressively, how even the biggest M&A outcomes in history might only return 1/3 of a massive fund, and how CEO ownership at IPO vs. bootstrapping is materially different.
Hope you enjoy the conversation, and be sure to check out Rex on Twitter, Substack, and learn more about Daybreak through their website and this launch announcement!
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