“Don’t tell me what you think, tell me what you have in your portfolio.”

-Nassim Taleb

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I believe that all investments are downstream from world beliefs, and you cannot truly evaluate an investor without first understanding their views on the world.

These are some beliefs that I hold that have led me to certain my choices, shaped my world view, and influenced my investment approach.

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Volatility is becoming more volatile

“Focus on payoff of outcome, not probability of outcome.”

-Jordan Nel

Black Swan events are increasing in frequency, the world is becoming more volatile, and in this type of environment, you want to own options rather than equity.

If you want to hedge negative tail risk, buy puts or gold.
In a world of increasing extremity, allocating to the “sure bet” is increasingly a worse idea.
Fatter tails mean more returns come from the outliers (less from the median).
You get to the tail by increasing the variance (or the scale) rather than raising the expectation.

Venture’s mechanics benefit from chaos as a venture fund is a portfolio of (out-of-the-money) call options.

Specifically in venture, this phenomenon has created:

Increased surface area for path dependent outcomes. Things compound faster, and the money printer has given us fatter tails and a bigger power law. COVID pulled forward retail trading demand, GFC allowed for trustless money, and bank runs (SVB) was a catalyst for stablecoin infrastructure. Each of these represents a discontinuous shift where the “sure bet” incumbents were poorly positioned, and the variance (outliers) captured disproportionate value.
Speed to scale has dropped considerably. Never in history have companies been able to accomplish more, faster. It took the internet 13 years to reach 800m users. ChatGPT was able to reach the same scale as two. Although ChatGPT remains an outlier, there are countless other examples of companies reaching $10m ARR, $20m ARR, and $50m ARR at lightning fast paces.
Power laws changing underwriting expectations. The winners have become much bigger. A decade ago, seed funds would underwrite an outlier as a company exiting at a billion dollar valuation. Today, Stripe, Databricks, Anduril, Anthropic and many others are valued at $100b+ as private companies.
Winner-take-all dynamics have accelerated. There is a case to be made that if you aren’t in the top ~15 names each year, the math tells you it doesn’t make sense to be in the asset class. More on the math behind this logic is found in the section below.

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In a more and more volatile world, the worst thing to do is to invest in stability. I believe the best move is to position yourself to invest in the chaos.

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Feast or famine and the cruel mistress of power laws

“All the critiques about the “VC industry” miss the fact that it is and always has been the best business in the world if you’re really good at it and terrible if you’re not.”

-Jeremy Giffon

Venture math:

Number of companies that raise VC funding per year	~4,000
Number of those companies backed by “tier one” funds	~200
Number of those companies that reach $100m ARR	~15
Percentage of returns that those companies create for the asset class	97%

People math:

# of employees at the ~15 companies that matter (assuming ~500 employees / $100m ARR)	~7,500
% of employees from the founding phase	~2%
% of employees from the initial scaling phase	~3%
Number of employees responsible for ~95% of equity appreciation	~375

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Very few companies are responsible for the bulk of returns. Very few people within those companies are responsible for the bulk of the decisions that led to scale. The secrets to scale are underpriced, they are not public, and very few people have them.

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Investing in extreme individuals

“The people who are the best in the world at what they do aren't 2-3x better, they're 100-1000x better."