When History Rhymes (with Beezer Clarkson)

The Wisdom of Cycles & The Importance of Thinking For Yourself

Kyle Harrison

Feb 08, 2025

Transcript

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If you're using the bird app formerly known as Twitter correctly, you'll start to find your kindred spirits. You're talking about the same things, exploring the same ideas, getting in the same arguments.

That's how I feel about Beezer Clarkson. She's a partner at Sapphire Partners, leading the firms investments in venture funds. She's also the co-founder of OpenLP, which is a huge resource to demystify the LP perspective, and the host of the Origins podcast.

It's insane to me that this conversation is just 30 minutes because we managed to cover so much interesting ground.

The Wisdom of Cycles

Right off the bat, we hit one of my favorite topics. While everything feels new and exciting, the market is made up of cycles. Even AI, with all its glamor, may be a cutting edge, but it certainly rhymes with paradigm shifts of the past.

What is always surprising to students of history is how much the lessons of the past have NOT been distilled. Beezer made the point that VCs often have a head-in-the-sand approach when it comes to broad macro trends that move fairly cyclically (like interest rates).

There is also a real cyclicality in the over-funding and under-funding of startups. We are, unsurprisingly, in an over-funding cycle right now. But the reality is that the last few decades are replete with examples where that has not necessarily been a good thing. Despite all of that, the broader funding ecosystem feels uninterested in dealing with that reality.

The Loudest Models

We then touched on something that is, clearly, becoming a favorite topic of mine. It was a central point of my conversation with Trace Cohen a few weeks ago. The loudest models are becoming the dominant models.

Beezer and I dug into the head-scratching reality of the ecosystem today. It seems obvious that there is not a direct correlation between the volume of capital and the number of successful startup outcomes. On top of that, it feels like all the air in the ecosystem is getting sucked up by the biggest firms, the biggest LPs, investing in the most aggressive companies. Exactly what I wrote about in The Unholy Trinity of Venture Capital.

A Shortage of Great Investors

One interesting point that Beezer made was how some LPs justify investing in capital agglomerators that are, pretty definitively, going to have lower returns than smaller funds, is a question of investor access.

And I'm not talking about getting access to specific firms, but to specific investors. There is a shortage of great VCs actively investing today. And if investing in a massive firm is the only way to get access to that individual, for many people that's worth it.

One unlock to that conundrum is what I wrote about in Venture Capital Unbundled. As more great investors seek opportunities to build their own firms, you unlock the ability of some LPs to invest more directly in those great managers.

Thinking For Yourself

Final call out from the conversation that I loved the most. Beezer emphasized the increasing importance of thinking for yourself, rather than getting sucked into hype cycles:

"Just because the voice is the loudest doesn't make it the smartest or the most thoughtful or the best or the right one from your strategy."

That can extend to defining your own product as a firm and having a specific value prop, but if you fail to think for yourself you're dramatically more at risk of falling victim to the bubble brains of Silicon Valley. So tread lightly!

Enjoy my conversation with Beezer.