While GenAI can improve worker efficiency, it can inhibit critical engagement with work and can potentially lead to long-term overreliance on the tool and diminished skill for independent problem-solving. Higher confidence in GenAI’s ability to perform a task is related to less critical thinking effort. source: The Impact of Generative AI on Critical Thinking This… Continue reading Venture Capital’s ‘Knowledge Work’ Problem
Escaping the Cycle
I had a meeting once with Howard Marks, who I had wanted to meet for a long time. He’s a famous bond investor that does a lot of writing. For 15 minutes he asked me questions about the venture industry, a lot of structural questions, and I answered him as best I could. He said,… Continue reading Escaping the Cycle
Venture Banks
In venture capital circles, the most widely discussed trend of 2024 (outside of AI) has been the concentration of capital into “venture banks” like Andreessen Horowitz, General Catalyst and Thrive Capital. The household names of venture capital have had a blockbuster year, while others carefully ration the tail-end of their last fund. The first quarter… Continue reading Venture Banks
Venture Capital Abandoned Deep Tech and Is Paying the Price
The venture capital industry, once lauded for its role in fostering innovation and technological breakthroughs, has lost its way. The pursuit of hyperscalable software companies, fueled by incentives tied to management fees and opaque valuation practices, has led VCs to prioritize short-term gains over long-term value creation. This shift has effectively sidelined deep tech startups… Continue reading Venture Capital Abandoned Deep Tech and Is Paying the Price
6 Measures to Correct VC Incentives
This is just a start. The highest level changes that should be made to correct some of the perverse incentives in venture capital today, providing adequate accountability for public capital. There’s much more to talk about in terms of diverging small AUM and large AUM managers, or standards for valuation and reporting marks, but that… Continue reading 6 Measures to Correct VC Incentives
The Rot of Short-Termism in VC
Venture capital is a seriously long-term game, with investments taking somewhere between 8 and 16 years to return liquidity. The distance to that horizon creates a lot of eccentricity. For example, VC does not reward following patterns or navigating market movements, neither of which is relevant to decade-long cycles. Consensus of pretty much any kind… Continue reading The Rot of Short-Termism in VC
Why venture capital should embrace divergence
In the last post, I talked about the hunt for liquidity in VC and the role that transparency has in building a healthy secondary market. To take that further, we should look more carefully at the structure of venture capital, the direction the asset class is moving, and lay out a direction which can address… Continue reading Why venture capital should embrace divergence
VC has trust issues, not a liquidity problem
In a strange twist for an asset class built on patient capital and outsized returns, finding liquidity for investors has become a matter of urgency for VCs. On the surface, this is a story about venture capital’s evolution and fund managers adopting more sophisticated liquidity strategies. Pry a little deeper, and you’ll find LPs reneging… Continue reading VC has trust issues, not a liquidity problem
The failure of due diligence (in Fintech)
For as long as there has been business, there has been fraud, and ‘cooking the books’ is about as old as it gets. In recent years, the extreme focus on revenue has produced dangerous incentives for founders and investors to cut corners. Those chickens are now coming home to roost. Now a regular feature in tech… Continue reading The failure of due diligence (in Fintech)
Deus ex machina
The success of AI is existential for venture capital Imagine entering VC in 2020, full of enthusiasm about a the unstoppable wave of technology. Your peers are impressed; it’s a prestigious industry that is perceived as commanding a lot of power through capital. You have to put aside your personal thesis in favour of the… Continue reading Deus ex machina