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In late 2002, Doug Leone walked into a Sequoia partnership meeting carrying a number nobody in the room wanted to see.

Sequoia Fund IX, raised in 1999 at the peak of the dot-com bubble, was underwater. Sequoia Fund X, raised in 2000 right at the top, was also underwater. The partners around the table had received carry distributions on these funds in 1999 and 2000. They had paid taxes on the distributions. They had spent some of the money.

Now, under the standard clawback provisions in their LP agreements, they were going to have to return all of it.

Some of the partners in the room owed more in clawback than their net worth.

Leone had spent fifteen years in rooms like this one with Don Valentine. He had absorbed the four-corner discipline. He had been told, more than once, that he was not fit to listen to founders. He had been promoted from one-tenth of Valentine's carry to equal partner. He had inherited the firm jointly with Mike Moritz in 1996, on the condition - never written down, never signed, but absolutely understood - that he would hand it over in better shape than he found it.

The math in the room said he was about to fail at that.

He didn't deliver a speech. He didn't lay out a recovery plan. He said one sentence.

"No one's going to lose money at Sequoia Capital. We're going to go to work."

They went to work for ten years.

The argument of Part II

In Part I, I argued that Sequoia is not a venture firm but a multi-generational franchise that happens to be currently expressed as a venture firm. The architectural decisions Don Valentine made in 1972 (naming the firm after the tree, refusing the founder paydown at the 1996 succession, voluntarily equalizing his own carry with the next generation) were the load-bearing structure that made everything else possible.

But the brand everyone now associates with Sequoia - the firm that doesn't lose money, the firm that backs founders for fifty years - wasn't built by Valentine.

It was built by Mike Moritz, Doug Leone, Mark Stevens, and other partners in the decade 2002 to 2012.

This second generation of the Sequoia partnership went through periods of excess and pain, and the defining moments from this vintage came in response to the popping of the dot-com bubble. The partnership decisions made in a moment of weakness would go on to define the next two decades of strength for the firm.

The rest of this piece is for paid subscribers.

Below the paywall:

• What Moritz, Leone and Stevens actually inherited from Valentine

• The October 1999 Google check

• The math problem the partnership faced in 2002

• The decade of pain it took to make the LPs whole

• The geographic expansion

• The arrival of the next generation of stewards

• The Scout Program

• The 2012 handoff

To read the full piece, upgrade here.

One more thing: Our friend Laurie Owen from Refinery is publishing the first VC marketing benchmarking survey. It should take 8-10 minutes to complete, and everyone who submits gets early access to the full benchmarking report before it goes public.

If you work in VC marketing, platform, or comms, this one’s for you.

Venture Capital Marketing Survey 2026 | Refinery Media x Vessel

The first benchmarking study of how VC firms approach marketing. Built by Refinery Media, in partnership with Vessel.

vcmarketingsurvey.com

Together with Rings AI

VCs lose hours a week and miss opportunities by stitching together legacy tools for relationships, processes, email and knowledge management.

Backed by Founders Fund, Rings AI was built by a former top-decile VC to consolidate the front-of-house stack for venture capitalists. In one platform, CRM, sourcing, process tracking, email and knowledge management combine and talk to each other.

Beyond simply consolidation, proactive AI catches tasks for you, preps you for meetings and maps out your relationship paths across the market.

Step into the new operating system for VCs.

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The Sequoia story started 1972, but the true history of the firm precedes the official launch date.

Prior to starting Sequoia, Don Valentine had spent fifteen years inside Fairchild Semiconductor and National Semi. He had worked alongside the traitorous eight at Fairchild. He had been part of the founding sales team at National.

By his own account, these experiences allowed him to see the future before it happened. It also gave him a front row seat to inter-firm dynamics, succession planning, and some of the struggles that eventually emerge with dictator-style partnerships that hold key-man risk. When he set out to start his own firm, all of the experiences played an influence.

Don deliberately did not name the firm after himself. He chose Sequoia.

He said the redwoods grow fast, grow big, and live thousands of years. He said he wanted the firm to take on those traits. What he didn't say - what Mike Moritz would say for him forty-seven years later in the firm's obituary for him - was the unstated implication: he was building something that would outlast him, which meant it couldn't carry his name.

The naming decision was the founding architectural move. Every succession Sequoia has executed since - five over fifty-three years, more than any peer firm in the history of venture capital - was downstream of that one choice.

The fifth handoff

In November 2025, Sequoia Capital handed itself off again.

Roelof Botha - three years into his role as sole Senior Steward - stepped aside. Alfred Lin and Pat Grady, who had spent fifteen and eighteen years respectively inside the partnership, became co-stewards. Doug Leone, who had run the firm before Botha, returned as Chairman with an active investing role. Botha kept his board seats and his office. The transition was orderly. No lawsuit. No leaked memo. No founder paydown. No sale of equity to an outside firm. No reshuffling of LPs. The partnership announced it on a Tuesday, and on Wednesday the firm operated as before.

This is unusual because of how few venture capital firms have been able to execute a clean leadership transition even once.

Kleiner Perkins - once Sequoia's exact peer - has notoriously struggled to move past John Doerr. Founders Fund still operates almost entirely around Peter Thiel's personal brand. Andreessen Horowitz remains in its first generation sixteen years in. Most of the eponymous firms of the 1970s and 1980s either folded, sold themselves to a parent, or quietly faded as their founders aged out. The firms that have tried to outlive their founders mostly haven't.

Sequoia just did it for the fifth time.

What this series is

As I said in the Outlaw manifesto, the firm sits on the shoulders of giants. As a student of history, I am trying to build the firm after some of the most notable firms and investors that have come before me.

Sequoia is near the top of that list.

I have spent the past ~12 months studying Sequoia's architecture in granular detail - every fund, every senior partner, every essay and interview, every succession event, the Moritz internal memoir on Valentine that every new Sequoia hire reads on day one. I have read or listened to every long-form interview Doug Leone, Roelof Botha, Pat Grady, Alfred Lin, and Andrew Reed have given in the past decade. I built a 21-entry archive of the firm's canonical writings. I tracked the genealogy of every senior partner and the structural mechanics of every fund cycle from 1974 to 2025.

I believe every firm is a living organism. The Sequoia of today is different than the Sequoia of 1972, and I think it is worth studying the decisions that have allowed the firm to become what it is in 2026. The best way I have found to do that is to break down the firm into different fund cycles and study the people who were driving the decisions across those different fund cycles.

Screenshot from my Notion where I have organized takeaways from different partners and fund cycles

The synthesis from my research is this: Sequoia is not a venture firm. It is a multi-generational franchise that happens to be currently expressed as a venture firm.

That distinction is the source of every architectural decision the firm has ever made. The naming choice. The refusal to sell stakes. The voluntary equalization of carry across generations. The 2021 evergreen restructure. The 2023 geographic split. The five successions. They all flow from one structural commitment that Don Valentine made in 1972: the firm is held in trust, not owned. Each generation inherits without paying. Each generation hands off without charging. The economics are a fiduciary arrangement, not an extraction vehicle.

Most VC firms cannot make this trade because they're designed the opposite way - to maximize the founder's personal economic outcome over a single career arc. Sequoia's compounding curve is the proof case that the other trade is possible.

This is the first of four pieces. Over the course of the series I'll work through the founding architecture (this piece), the apprentice era of Moritz and Leone (Part II), the actual operating system of the partnership (Part III), and the modern pivot - Capital Fund restructure, geographic split, the Botha removal, and what comes next (Part IV).

The goal is not a history lesson. There are already two of those - Sebastian Mallaby's The Power Law and the Acquired Sequoia episodes.

The goal is to extract the architectural blueprint. What did Valentine actually build, mechanism by mechanism? Which of those mechanisms are portable to the next generation of firm builders? Which are specific to Sequoia and cannot be copied? And how does a new firm inherit the most important parts of the Sequoia operating system without trying to replicate the entire firm?

That's what we're going to figure out, and we’ll start with the original architect: Don Valentine.

The rest of this piece is for paid subscribers.

Below the paywall: who Don Valentine actually was, how he raised the first $5M, the Atari and Apple deals, the foundational mistake that restructured the LP base for fifty years, the Valentine operating philosophy in his own words, the four-corner partnership template that every senior hire since has fit into, and the 1996 succession that established the stewardship economics every subsequent transition has run on.

To read the full piece, upgrade here.

Together with Rings AI

VCs lose hours a week and miss opportunities by stitching together legacy tools for relationships, processes, email and knowledge management.

Backed by Founders Fund, Rings AI was built by a former top-decile VC to consolidate the front-of-house stack for venture capitalists. In one platform, CRM, sourcing, process tracking, email and knowledge management combine and talk to each other.

Beyond simply consolidation, proactive AI catches tasks for you, preps you for meetings and maps out your relationship paths across the market.

Step into the new operating system for VCs.

This country was founded by outlaws. 

Our culture was formed by them. Our economy was built by them. The future will be created by them too.

Outlaws of history are not meant to be for everybody. They are spiky, top-percentile on a trait or obsession that separates them from their peer class. The maverick mentality required to make somebody truly exceptional in any field often alienates them from the crowd. 

If you study some of the most iconic entrepreneurs of the last generation, almost all of them went through periods of being completely misunderstood before becoming totally understood.

• Henry Ford was called a socialist for doubling worker wages and instituting the 8-hour work day. The wage hike eliminated turnover, attracted the best workers, and seeded the American middle class - which then bought every Model T he could build.

• Walt Disney mortgaged his house to finish Snow White (a film projected to lose money). It became the highest-grossing film in history at the time, and Disney used the proceeds to build a studio campus and start work on Pinocchio, Fantasia, and Bambi simultaneously.

• Elon split his last $40m in 2008 to save Tesla (running out of cash + weeks from bankruptcy) and SpaceX (three consecutive rocket failures and one launch attempt left before going under). Both companies today are worth a combined $1.5 trillion.

• Travis Kalanick launched Uber in cities where the service was explicitly illegal. The Uber playbook - launch first, apologize later, weaponize user demand against regulators - became the template for an entire generation.

We think the best entrepreneurs share two traits: high rebellion (distaste for authority) + high commerciality (creating more value than capturing) = high return on luck.  

The quadrant most of venture capital has been competing inside for the last decade has been the upper left. The pattern-matched founder. The Stanford CS dropout, the second-time exit, the well-networked technical hire from a hyperscaler. These are real assets. The industry has bid their valuations up accordingly.

The lower right quadrant produces some of the most fascinating people in history but very little economic value. Pirates. Mafia heads. Criminals. The romantic ideal of rebellion without the discipline that turns it into something (legal) the world can use.

The interesting quadrant is the one in the upper right. The people who scored well on both axes - who had orthogonal paths, refused to do things the way they were supposed to be done, and who built businesses that changed industries.

Jobs was an outlaw. So was Rockefeller. So was Disney. So was Ford. So is Bezos. So is Jensen. So is TK. So is Musk. 

If people weren’t naturally drawn to these types of individuals, we wouldn’t make them mononyms. 

The next era of iconic founders will look no different.  

Outlaw is a $10m investment firm that will become the chief capitalist to the upper-right quadrant. We invest as early as possible, and we make it our job to turn these people and their companies into the iconic names of the decades to come. 

Below is how we got here, more on what we believe, and why we think now is the right moment to do this.

TL;DR

The fund in four bullets

For readers who skim, here's the 30-second version:

• Out-of-distribution people → out-of-distribution companies. We invest in individuals before we invest in companies, and the bulk of our underwriting goes towards the founder(s). 

• API to the network. Six years of writing has created an army of 20k investors, founders, and operators who align with our worldview, trust us, and can act as an extension of our team when it comes time to work. 

• The pursuit of 1.5% of a $5b business. Outlaw I is a $10m pre-seed fund. 40 investments, $100k-$200k initial checks, 20% reserved for follow-ons.

• We are raising under 506(c), which means we can talk about this in public. Most of the time, a new fund gets announced after it’s closed. We’re still fundraising while actively deploying, and there are still ways to get involved.

Only accredited investors are eligible, and all prospective LPs should know that investing in venture capital funds is inherently risky and illiquid. We are not registered as an investment adviser and this email is not investment advice. This fund is adhering to a traditional fee structure (2% management fee, 20% carry), and we are holding our next close on May 31.

Follow this link to apply to join Outlaw Fund l.

How we got here

I consider myself a student of the internet, and Outlaw is a byproduct of remixed ideas from a collection of teachers.

Permissionless leverage

Traditional wealth was built on top of two forms: capital and labor. These are permissioned forms of labor and require buy-in from lenders or partners (capital) and employees or contractors (labor).

Naval introduced me to the idea of building wealth through new forms of leverage: products with no marginal cost of replication. Code. Media. Anything that compounds without consent. Jack Butcher's visual treatment of the same idea reinforced it further. 

If you look at most of the wealth generated since the start of the century, it has come via these new forms of leverage. 

That led me to go down the rabbit hole of research to understand the deeper history of these new permissionless forms of leverage - specifically media. 

• 1996: Bill Gates published a short essay called Content Is King, arguing that over a long enough time horizon, the real money on the internet would be made by people who controlled distribution, not people who controlled production. This post was controversial at the time because most attention was still being monetized through ads. 

• 2008: Kevin Kelly's 1,000 True Fans named the unit economics. You don't need a million fans, you need a thousand who care. (Side note: the economics can be much smaller (selling $1m product to 1 person) if your audience construction and offer positioning is done right.)   

• 2019: Li Jin's Passion Economy showed the infrastructure had arrived. Making money on the internet is now a career path. 

• 2020: Nathan Barry's Billion Dollar Creator made the case that most creators are criminally under-monetized. The biggest ones don't sell attention back to brands; they use it to build something that compounds. Multiple billion dollar companies have been built off the back of attention.

It seemed like the pattern was clear: we are all underestimating the opportunity to monetize writing published on the internet. 

This led me to my next major rabbit hole: finding specific pieces of writing responsible for billions of dollars in economic value.

Billion dollar PDFs

To quote Jeremy Giffon, “A charming feature of the late stage information economy is that every few years someone writes a Billion dollar PDF.” In other words, every few years, somebody writes specific artifacts that rewire how the world thinks → rewires what gets built → rewires where capital flows. 

Some pieces that drive this point:

The Nike Manifesto (1977), What Happened to the Future? (2011), Facebook's Little Red Book (2012), Airbnb’s Culture Doc (2013), We Don’t Sell Saddles Here (2014), Tesla’s Master Plans (2006 and 2016), Mission Focused Companies (2020), The Great Online Game (2021), and Endgame (2021) do more of the same. 

Each of these was, and continues to be, a billion dollar PDF. 

The most valuable writers in the world are architects more than they are predictors. They name the future they want to live inside, and then they take the first position inside it.

The first lesson was that writing is a strategic instrument more than it is a marketing function. The second lesson was that in order to capture the most from authoring a billion dollar PDF, you have to position yourself accordingly. 

That brought me to the venture-specific version of the same question: who, inside this asset class, was already operating the model?

Narrative capital

I will never forget the feeling of first discovering some of the original VC bloggers. 

When I discovered the writing of people like Bill Gurley (Benchmark), Fred Wilson (USV), Mark Suster (Upfront), and Tomasz Tunguz (Theory), it felt like I had unlocked the hidden secrets of the startup universe. I became an information sponge.

After a while, I began to realize why each of them was investing so much into building a writing portfolio. Their investing is a byproduct of their writing, and writing flywheel compounds the investing flywheel.

Writing gives poor thinking nowhere to hide, and many of the best investors in the world have given people a first-person view into how their mind works. Writing can be used to build a thesis, explain investment decisions, make predictions about where the world is going, and establish credibility in an industry where the natural disposition is skepticism. Like investing, a writing portfolio compounds with better ideas, higher-quality audiences, and a larger surface area for luck. 

I owe these OG VC bloggers a ton of credit. Without them, I probably would never have started writing myself. 

I figured if they're doing it, I should start doing it too.

Building Confluence

All of the above should set the stage for the belief that the investment firm of the future will be built on the back of a writing portfolio.

I began writing in 2020. At the time, my ideas were not good, I was writing into the void, and it was not clear whether I was building something or wasting time. This piece would not exist if I let any of that stop me from publishing.

Over the past six years, I made the decision to build Confluence in public. The writing flywheel has given thousands a front row seat into how my mind works when it comes to different aspects of investing.

• Personal stories like the viral listicle of takeaways on my time in venture and a collection of lessons learned since becoming a GP

• Frameworks adopted from studying some of the most iconic venture investors of all time

• Proprietary data on things like industry comp and emerging managers that would be very difficult to be recreated

• Red flags and consensus things I disagree with

• Collections of lessons from $5b founders

• A history of the asset class to reasonably predict the next 50 years of venture

• A deep dive on my thesis

• Redacted LP letters 

650+ newsletters later, the writing has attracted a loyal audience of GPs, LPs, venture-backed founders, and operators into our orbit. Today, the newsletter reaches roughly 20,000 weekly readers and generates several million impressions each year. 

This audience is a collection of people who have watched my evolution of thought over time and have chosen to continue tuning in week after week. The best people self-select on worldview, and these stories, along with hundreds of others, gave me a name, a following, and a foot in the door of rooms I otherwise had no business being in. 

In May 2025, I wrote a piece called Narrative Capital. The argument was that media brands are good at the things investment firms are bad at (distribution, idea creation, brand, talent access) and investment firms are good at the one thing media brands cannot do (maximize equity value). Marrying the two is how a lot of wealth will be built this decade.

A month later, I wrote Audiences and AUM where I gave examples of funds built on top of a writing portfolio and made the case that writing flywheels and investing flywheels are interrelated. That was the realization that reframed what I had spent the previous six years building. 

Confluence was not a newsletter. It was the early infrastructure of the firm I had not yet started.

The thesis

Fund I is one core belief, expressed through four investment theses.

The core belief is that out-of-distribution companies are created by out-of-distribution people. 

Contrary to popular belief, we believe the true secrets of scale are rare, they are guarded by those who have experienced them firsthand, and they cannot be prompted. Power laws at the individual level are not (yet) consensus, but that is where we believe the majority of true venture alpha lives. 

The founders in the Fund I portfolio will be a reflection of this belief.

We are naturally drawn to spiky founders, and we believe the best entrepreneurs are able to combine distaste with authority + high commerciality. 

Fund I will back founders building in the categories below.

Artificial labor markets. We see these as the new labor markets, and the TAM is all white-collar work. We think revenue-per-employee is becoming the new North Star metric for most companies, and team construction, fundraising cadence, GTM motion, and comp structure are all downstream of that shift.

The token revolution. Every business is becoming a token factory - supplying, building, or orchestrating the data, identity, money, and expertise that feed agents. Tokens are how the world becomes legible to machines. Once you see tokens as the DNA and feedstock of AI, you stop asking what features does this product have and start asking what streams of tokens does this product control. The companies that win the next decade will be the ones that own the most valuable token streams.

Software 3.0. Natural language is the new programming interface, and agents are the new developers. The entire dev tools stack (IDEs, deployment, observability, testing, debugging) is being rebuilt from first principles, and Agent Experience now matters as much as Developer Experience.

The modernization of the private investment firm. The private markets in 2026 are at the same inflection point traditional finance was at in 1984. The asset class has scaled from cottage to massive over thirty years, and the pressure to perform has translated into a pressure to spend on workflow software. The best funds today operate more like software firms than like financial services businesses, and there is a high correlation between firms that have rebuilt modern workflows and firms that have distributed capital and raised fresh funds.

The flywheel

Newsletter flywheel: ideas → content → audience → trust → opportunities

Fund flywheel: finding (heavily boosted by audience and opportunities created in fund flywheel), picking (improved with ideas strengthened judgement via writing), winning (improved as newsletter asset differentiates from other investors who provide capital only), and helping (talent pipeline, distribution-as-a-service, downstream capital available to portfolio)

$5b businesses are not built without combining forces of leverage (code, media, labor, capital). We think of the firm as a product, and we have architected the firm to build leverage for each company we work with.

Our audience does four things for the fund.

Finding. Confluence is a content magnet for people who see great companies first. The audience is primarily GPs and investors, but it includes founders and quality operators. The newsletter generates several hundred high-quality opportunities per year through the network - investor referrals, founder referrals, content inbound, and curated talent nodes at companies like Ramp, Cursor, and Decagon. 

Picking. Six years and four million words of writing have sharpened a specific kind of pattern recognition. We have met with thousands of founders over the better part of the past decade, and the quality bar continues to reorient up. We do not compete on trying to see more deals than other funds. We compete on being able to move quickly when one of them shows up.

Winning. The best founders (especially at inception) pick their investors based on a) their proof of work and b) their ability to help. Published pieces on worldview help drive alignment before any call. The ability to use the newsletter to creatively help founders post-investment positions well against more commoditized capital that wants a place on the cap table. 

Helping. When a founder takes a check from Outlaw, three things activate immediately:

• Distribution. Company deep-dives, founder interviews, "confidential" memos, and other content forms reach 20,000 high-signal readers. Many of them manage portfolios. Most of them are people the founder would otherwise spend months trying to get a meeting with.

• Talent. A layered recruiting service hits the operator network - thousands of senior people who read the newsletter and trust the source.

• Capital. Six years of relationship-building with GPs and partners at 200+ venture firms. When a portfolio company is ready for a Series A, we act as an API to the network and introduce them to the three or four investors most likely to lead the round.

The content flywheel also creates a natural recruiting pipeline for the future investment team beyond fund I. 

As our flywheel matures, we want to become the obvious steward for the types of founders we target throughout different fund cycles.

The fund

The fund objective is to own 1.5% of a $5b business.

The strategy is built around a two-tier structure. 

1. Discovery layer: We will write 40 pre-seed checks into companies that we believe have a realistic trajectory into becoming category-defining businesses by 2036 (ideally sooner). 

2. Concentration layer: We will reserve five checks (20% of the fund) to invest into the highest-conviction names, with the benefit of 12 to 18 months of inside information from being on the cap table before any of the downstream financing signals are public.

If you are a verified accredited investor and would like to review the memo, the deck, the LPA, or the fund's full closing documents, fill out our LP interest form and we can set up a call.

Why now

On one side, the world we grew up in no longer exists. 

Purchasing power will continue to go down. Housing will continue to become more expensive. Most labor will continue to be displaced either by AI, offshoring, or as a short-term cover by management teams touting “AI efficiencies”. The old American Dream of working a decent job, finding loyalty through an employer, paying off a reasonable mortgage, and letting that housing asset compound as your primary source of wealth is no more.The veil has been lifted, and people are being pushed farther out on the risk curve to afford the lives we once had. 

The new American Dream is going digital. The land of opportunity is the internet. The Golden Era for builders is already here. Capital, infrastructure, and distribution barriers are no longer bottlenecks. The entire creative stack is accessible to anyone. There is now status that comes with being a founder. More people are entering the arena, and more will follow.  

On the other side, the feast-or-famine nature of venture capital fundraising is rapidly killing off mid-market firms. The “messy middle” can't compete with the tier one shops on one end, and they are too awkwardly large to compete with solo capitalists and emerging manager crowd on the other. The industry structure has already split with a few very few large generalists and a lot of smaller specialists. Many of these smaller funds have tapped out of existing capital pools, re-up rates have dropped, and the window to build a brand that survives the funds 3–5 mid-market valley of death is closing quarter by quarter.

Legacy platform venture firms are raising record amounts, registering as RIAs, and launching alternative product lines. From my conversations with the founders and architects of these firms, everyone is circling the same idea space.

The industry is cementing, and it feels like the time to build is now or never.

Lessons from the greats

Outlaw is built on the shoulders of giants, and we have spent a decade of research borrowing concepts from notable GPs who came before us.

• Don Valentine taught us about ego death, maintaining common sense in a field of geniuses, and how to build a firm that outlasts you.

• Michael Moritz taught us the value of orthogonal frameworks.

• Doug Leone taught us how to build a culture of winning.

• Josh Kushner taught us about the value of conviction, how to maintain firm DNA through scale, and the alpha of hiring non-obvious investor talent.

• Bill Gurley taught us about asymmetric regret and solving the principal-agent problem.

• Bob Kagle taught us about venture firm flywheels and recruiting as the ultimate multiplier.

• Fred Wilson taught us about the power of writing, how to develop a thesis, and how to say "no" to more capital.

• Marc Andreessen taught us about ambition.

• Peter Thiel taught us what to ignore.

• Jeff Horing taught us the value of investor talent programs.

• John Doerr taught us about execution and hubris.

• Neil Mehta taught us about craftsmanship.

• Micky Malka taught us about adaptability.

• Graham Duncan taught us that talent is the best asset class.

• Orlando Bravo taught us about finding great partners.

• Steve Schwarzman taught us about pursuing financial opportunity.

The guiding question we kept returning to after studying all of these GPs and the firms they built: what would the investment firm of the future look like if it were created from scratch in 2026?

The initial chapters of Outlaw will incorporate a small, thesis-driven strategy pioneered by specialist firms like USV, Mucker, Benchmark, and others. Firm architecture has been designed after capital agglomerators such as Thrive, Sequoia, a16z, and Founders Fund in order to build a partnership that outlasts any one person - myself included.

The LPs

Most fund announcements have a tendency to name drop their LP base. That is not our style, and it isn’t the style of our LPs either.

We are backed by a collection of families and individuals who were able to find independent conviction, believe in the strategy, and have chosen to partner with us for the years to come. A few of them you would recognize. Most of them you wouldn't.

No single LP represents more than 15% of committed capital. Our base is composed of family offices that have spent the last decade backing emerging managers, operators from category-defining technology companies, GPs and partners at multi-stage venture firms, and a handful of founders who built and exited their own companies before deciding to back ours.

How to get involved

We are still closing the fund and we are still building the firm. There are three ways to be part of the next chapter.

One last ask

Fund announcements fall flat when the GP is the only one rallying the troops. We’re trying to make this announcement as big as possible, and we could use your help.

If any part of our story resonates, one of the most impactful things you can do is tell your friends about it.

Everybody shares things differently; here are things we have found that work the best:

• Post / quote on X: Quote tweet our announcement (linked) with your perspective. (We have found that quick personal stories of how you found us, what you have learned from us, why you pay attention to us all work well. If you’re in a rush, even something quick goes a long way.)

• Engage: Like and comment the post to boost visibility.

• Share: Forward / tag the news to any founders, investors, operators, or allocators who you think would resonate with the message we are trying to send.

If you’ve made it all the way to the bottom of this email, thank you. None of this would have been possible without people like you.

Fund | Sponsor

Good morning 👋

Every year, we try to answer that question and get a gauge on how much VCs are getting paid.

We were especially interested in answering that this year given the amount of turnover, automation, and job replacement happening across the venture world right now.

This comp survey breaks down VC pay based on title, location, AUM, education, and number of years worked.

Let’s get into it.

Dataset

More information about this year’s survey responses can be found below. For simplicity, we have grouped roles to normalize the data.

Responses came from 36 unique cities with New York, San Francisco, and Los Angeles having the most responses.

Current Title

Fund AUM

Age

Education

Upgrade to unlock the full VC comp dataset.

Snapshot

*Median figures

Takeaways

• If you care about salary, do NOT work at a first-time / smaller fund. All of the respondents making the minimum / near the minimum for their position are working at smaller funds (below $50 million AUM).

• If you do care about salary and bonus, find a fund with higher AUM. More AUM equals more management fees to go around, and the larger the fund, the more fees can be used on payroll.

• Most associates, senior associates, and principals have MBAs; most partners do not. This could be an anomaly in our dataset, but most partners we surveyed did not have advanced degrees beyond a bachelor’s.

• Most VCs do not receive meaningful carry. This has not changed from last year, and ~75% of respondents receive less than 2% of carried interest. Most of those who receive carry do not start doing so until they reach principal.

• Path to partner takes longer than expected. It took 12.1 years on average for the partners in this survey to work their way to that position.

Fund | Sponsor

Good morning 👋

We started Confluence six years ago, and over that same time we have met with thousands of investors at different venture firms. If you have followed our writing for a while, you know we tend to gravitate towards emerging managers (funds I - III).

After talking and evaluating different GPs as a peer, as a friend of founders, and as an LP, a quality bar emerged over time.

The result is the Confluence 50 - our curated tracker of 50 emerging venture funds that we believe are quietly shaping the next generation of the asset class. These are the managers who are too new to be obvious and too good to ignore.

We spent years curating the list, months collecting data (AUM estimates, check sizes, follow-on rates, thematic focus, GP backgrounds, portfolio companies, and fundraising status), and weeks putting together this report. Much of it required digging well beyond what's publicly available.

Given the depth and exclusivity of this reporting, The Confluence 50 - filterable by GP type, stage, sector, geography, and fund size - is available to subscribers of our premium newsletter. If you work in tech, venture capital, or traditional investing, this product alone should more than justify a year’s subscription.

Before uncovering the full list, here are some things that stood out from collecting this research …

Key themes

The solo GP era

68% of the Confluence 50 is led by a solo GP. 

For most of venture capital's history, the solo GP model carried a quiet stigma. A single-person fund meant no institutional backing, no built-in succession, no one to pressure-test the thesis. The assumption was that serious managers partnered up.

That assumption (at least from our research) has quietly collapsed.

Solo managers in this cohort are on Fund III, Fund IV, actively deploying tens of millions of dollars, and generating liquidity. The infrastructure around them has matured: fund administrators, legal templates, capital allocators who have built dedicated emerging manager programs, and communities of GPs who treat each other as a collective rather than competition. Running a fund alone is no longer a liability.

The 32% with multiple GPs reflect something different.

The strongest partnerships in this cohort pair complementary judgment: a distribution builder alongside a technical picker, an operator alongside a career investor. The argument for a partner is not headcount. It is the specific kind of perspective your partner carries that you do not.

The fruition of narrative capital

62% of GPs in the Confluence 50 maintain an active writing portfolio.

As we wrote in Narrative Capital and Audiences and AUM, good writing is a flywheel for good early-stage investing. Whether is used for thesis creation, audience expansion, idea distribution, or opportunity generation, content flywheels are being used in more and more creative ways to chase venture alpha.

The 38% who do not write compete on network and track record, both of which compound over time. Writing compresses that timeline. A GP who can articulate a clear thesis in public, consistently, has already demonstrated something that a pitch meeting alone cannot prove.

The rise of the operator-investor archetype

We believe that all investors can be grouped into the following camps:

1. Thematic investors: Intellectually curious thinkers, spend more time reading than talking, responsible for spotting trends and pulling non-obvious ideas into legible theses

2. Operator investors: Earned knowledge from an operating background

3. Career investors: Brought up in the industry, knowledgeable / high drive, responsible for bulk of deals at a given firm

4. Support investors: Lighter on sourcing, higher on execution (aligns more with a smaller portfolio)

Operators are the dominant GP archetype in the Confluence 50, appearing as a primary tag on more than half the funds in the tracker, often layered with other classifications.

This has been directionally true in venture for years. What this dataset clarifies is that the operator-investor model has now survived long enough to compound. The funds in this cohort led by operators are not all on Fund I, making an early bet that operating experience will translate. Many are on Fund II, Fund III, and Fund IV, which means they have already raised a follow-on vehicle, the statistically hardest single leap in emerging fund management.

The tracker also captures three other archetypes in meaningful numbers.

Support Investors, whose differentiation is community and founder services rather than brand or check size, represent 15 funds. Thematic Investors, with deep domain conviction in a specific sector or technology trend, represent 13. Career Investors, GPs who came up through venture or finance rather than through operating, represent 11.

San Francisco leads (but the map is changing)

23 of the 50 funds are headquartered in San Francisco (46%). That concentration reflects proximity to the deepest startup ecosystem in the world, dense co-investment networks, and decades of accumulated institutional knowledge.

The more interesting number is New York. 13 funds are headquartered there (26%), a share that would have been implausible a decade ago for a cohort of this caliber. New York's rise in early-stage venture extends well beyond fintech or consumer. The city's advantage is operator density across financial services, media, healthcare, and enterprise software: experienced builders who are cycling into fund formation and deploying into the markets they understand best.

Austin claims three funds, a direct product of the tech migration that accelerated during COVID and has not reversed. The remaining 14 funds span nine other cities, including Cambridge, Miami, Los Angeles, Boulder, Seattle, Columbia, and Chattanooga.

The current thing

Vertical AI appears as a primary theme in 18 of the 50 funds, more than any other category by a wide margin.

This does not mean 18 funds are making the same bet. The more precise observation is that Vertical AI has become the frame through which many emerging managers are articulating differentiation. One fund applies it to legacy industrial operations. Another applies it to financial services compliance. A third applies it to clinical workflows in healthcare. The theme is consistent. The conviction about where it lands is not, and that variation is where the interesting positions live.

Devtools and Infrastructure ranks second with 11 funds as a primary theme. Every new application layer creates demand for new infrastructure, and the managers who have built or studied developer tooling most closely are positioning to catch that demand early. Generalist strategies claim 10 funds, a valid position for managers who believe stage discipline and founder judgment outweigh sector specificity. Fintech has five dedicated funds. Consumer, SaaS, and Robotics each have meaningful representation.

Beyond these categories, a smaller group of managers is staking claims in territory without consensus names yet: Autonomous Agents, Physical AI, Scientific AI, Applied Artificial Super Intelligence, Software 3.0, The Token Economy. These are theses that will look either prescient or premature, and probably will not look in between. The managers making them are betting that the next category is being defined right now.

The numbers

Curating the data in this list is a labor of love. Making sense of the data is the more interesting part of the assignment.

Some snippets of data from the Confluence 50 are visualized below.

 

Our process

1. We started with the data, not the names. Rather than beginning with funds we already knew and working backward to justify their inclusion, we built from Harmonic to track investor activity across the market. Investment counts, follow-on rates, AUM estimates, portfolio composition, most recent deployment activity: the data came first. Our opinions followed from what it showed.

2. We established inclusion criteria before we started selecting. The Confluence 50 focuses on emerging managers, which required actually defining what that means. We prioritized funds on Fund I through Fund III, with a strong bias toward managers actively deploying in the last 18 months. Funds with significant institutional AUM were reviewed individually rather than automatically included. The goal was managers who still have room to run.

3. We broadened first, then narrowed. Our initial research surfaced well over 100 candidate funds. We filtered on activity signals: recent deployment, a publicly identifiable GP, and a thesis we could articulate clearly in a single sentence. We were not looking for consensus picks. We were looking for the managers who will seem obvious in five years.

4. We studied each fund and each GP individually. Every fund in the Confluence 50 has a profile built from original research: GP background, investment thesis, portfolio highlights, fundraising status, and a full Harmonic data pull. We read pitch decks. We listened to podcasts. We read the newsletters and interviews GPs have published. In a number of cases, we talked directly with the managers themselves.

5. We made judgment calls. Not everything reduces to a spreadsheet. Some funds with small investment counts made this list because their portfolio company quality is exceptional relative to their age. Some with high counts did not make it because the activity looked scattered rather than intentional. One question guided every decision: would an LP or a founder be meaningfully better off knowing this manager exists? If yes, they made the cut.

Brought to you by Harmonic

Market maps, competitive analysis, fundraising, and ARR projections.

All in one conversation.

That’s the power of AI that knows private markets.

Visit harmonic.ai to learn more.

The Confluence 50

Good morning, and happy Holy Week.

Earlier this morning, I sent out the Q1 update for Outlaw to our early backers, and I have clipped the condensed version below.

The TL;DR:

• Closing date. I am closing on the fund on May 31 with the first ~10 investments (25% of the fund) already accounted for. If you are looking to get more involved, next steps are below.

• Thesis unbundling. Our goal is to own 1.5% of a $5b business by first designing the best investment firm in the world for out-of-distribution individuals. Our thinking on this has evolved through conversations over the past several months, and the unpacked thinking can be found below.

• Patterns of $5b founders. To better identify future $5b businesses, we believe there is alpha in studying the current batch. We have created a roster of 71 founders who have built $5b+ software and technology businesses over the past 20 years. For each, we have built a repository of speeches, papers, memos, biographies, and other articles that help us get a sense of their story and frameworks for looking at the world.

• Investment firm of the future. The history of venture, the opportunity today, and useful predictions on how to position the firm for the next 50 years.

• Lessons from the greats. What I have learned from studying Don Valentine, Fred Wilson, Bill Gurley, Steve Schwarzman, Orlando Bravo, and other leaders of the firms I want to emulate.

• Outlaw firm blueprint. Over the past 12 months, I have written ~8k words on the Outlaw blueprint that goes in depth on the current game on the field, barriers to scale, and my plan of attack for the next several decades. This is a live document that I will continue adding to.

P.S. This is a longer email and will probably get clipped by Gmail. Click the button above to read the full version online.

P.S.

I’m nearing the end of fundraising for fund I, and I am relieved to be spending the next several months focused on deployment instead of fundraising.

My next (probably final) close date will be May 31.

I will be sending out more info to a few people who have been closer to the process over the past several months. If you are interested in getting more involved, you can find time with me here or move to next steps through the link below.

Invest → Outlaw Ventures Fund 1, LP - Closing Pack

Thesis Unbundling

For the past ~year, the Outlaw thesis has evolved in our dialogue with the market.

Philosophies → themes → theses → investments

There is a lot that goes into each of those statements, and over the past quarter, we have unpacked our internal thinking to sharpen our own reasoning and better justify our reason to exist as a firm.

Working backwards, this is how we think about narrowing and building the portfolio for fund I.

Theses

I. Artificial labor markets. Dropping inference costs has made it economically irrational to hire most entry-level white collar roles. If the TAM is labor markets, we are still in the early innings of discovering the true SOM for agents and other artificial forms of labor.

II. The token revolution. As the world shifts to become machine legible, every business is becomes a token factory either supplying, building, or orchestrating tokens (data, identity, money, expertise) that feed into different agentic work streams.

III. Software 3.0. Software 1.0 was built on handcrafted logic but constrained by human effort. Software 2.0 was built on earned systems and networks, trained on data, and scalable through compute instead of humans. Software 3.0 is generative, self-improving, and is able to dynamically solve for bottlenecks of the previous eras.

IV. The modernization of the private investment firm. We think the private markets in 2026 are at a similar inflection point as the traditional finance industry was in 1984. If you look under the hood at different funds today, you will see a massive gap in the sophistication of their workflows. Based on our experience, the best funds today operate more like software firms than traditional financial services businesses, and there is a high correlation between firms who have rebuilt modern workflows funds who have distributed capital + been able to raise fresh funds.

Themes

I. Labor decoupling and K-shaped economies. As the disconnect between asset appreciation and wages widens, we believe all roads lead to buying or building assets.

II. The Golden Age for builders. The lowered cost of starting a business, the tool stack available to non-technical builders, and the status that comes with starting a company has made it the best time in history to be a founder.

III. Everything is computer. Software at the world, and now the world is being rebuilt in software’s image. The value in software is moving up the stack from code → to deployment → to integration → to orchestration.

IV. GTM is the new engineering. As the value chain evolved, the most important hires within a business today became those solving complex problems within GTM.

V. Finance as culture. The financialization of everyday life is accelerating. Finance has become the dominant framework through which people understand value, make decisions, and interpret the world. A few sub-themes we are most interested in include finance as entertainment, independent media and the rise of the kingmaking, labor emulating capital, and the ownership economy.

Philosophies

I. The age of infinite leverage. Modern people can methodically apply, increase, and compound leverage until they stand on a mountain of levers - accomplishing 1,000x their peers, and the gap between the levered and the un-levered is going to keep growing.

II. Pareto, feast or famine, and the cruel mistress of power laws. In this asset class, 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.

III. Out-of-distribution inputs → out-of-distribution outputs. We are in the business of finding out-of-distribution ideas, people, and companies.Understanding the companies that break the bell curve can be best understood by first understanding the DNA of the people who make decisions within the firm.

IV. Black Swan farming, vol of vol, and benefiting from chaos. As the world becomes increasingly extreme, venture as an asset class stands to benefit the most (buying the index becomes riskier, concentrated bets on variance become safer, options beat equity).

More on the actual founders that make up the portfolio can be found here.

We now share the ~30-page version of our thesis on our website for new visitors to understand how we think prior to a first meeting.

$5b Founders

Our goal with fund I is to own 1.5% of a $5b business with the following portfolio construction.

Our approach to finding a $5b business is to spend the bulk of our focus on first finding out-of-distribution individuals. We are extreme advocates of success begetting success and winners keeping on winning, and that is the core of our founder selection philosophy.

We define “out-of-distribution” as founders who have seen extreme success in a transferrable field. If you are looking at a normal distribution curve, we think of these types of founders as the right tail that is 3-4 standard deviations from the mean (exited founders, former Pareto employees at current Pareto companies, etc.).

Given how rare these types of businesses are, we think there is uncaptured opportunity in studying the $5b founders of the current era to to study patterns and find parallels for the next era of $5b founders.

We have created a roster of 71 founders who have built $5b+ software and technology businesses over the past 20 years. For each, we have built a repository of speeches, papers, memos, biographies, and other articles that help us get a sense of their story and frameworks for looking at the world. This will be a 14-part project with ~5 founders covered in each part.

The first two have been created below.

Part I (Henrique Dubugras, Stanley Tang, Alexandr Wang, Vitalik Buterin, and Markus Villig)

Part II (Dylan Field, Evan Spiegel, Palmer Luckey, William Hockey, and Patrick Collison)

Investment Firm of the Future

Last week, we wrote an in-depth piece on building the investment firm of the future. It was was one of the top-performing newsletters we have written over the past six years.

In the piece, we break down down the history and future of venture capital into four eras in order to reasonably predict the future of the asset class.

Institutionalization: 1975-2000

When the VC industry first got started it was 20 people, all connected to Arthur Rock, a lot of whom were related. Investors were gatekeepers, all were monolithic brands, and the power dynamic favored them.

This was a world where seed rounds typically dilute 50%, companies went public within five years of company formation, and founders were regularly fired or pushed out for “professional” CEOs.

Pension funds began to touch the asset class, and the ‘70s were the first decade in which venture capital raised more than $1 billion. David Swensen took over the Yale Endowment in 1985 and pioneered a new form of portfolio management which encouraged an emphasis on alternatives.

Reaganomics created a golden era for private equity. Firms began staffing up and expanding focus and geography. The cottage industry of venture was quickly disappearing and being replaced by something much larger and more complex.

Industrialization: 2000-2025

The dot-com bubble let the genie out of the bottle and created more good than bad for the industry. The gold rush of younger talent minted the next era of founders like Zuck, Elon, and TK.

An infinite stream governance-insensitive growth checks delayed the need for going public. The ‘99 repeal of Glass-Steagall eliminated the Four Horsemen investment banks which made it much harder for young companies to IPO.

Paul Graham and the YC mafia gives rise to our latest cast of emerging elite: the Collison brothers, Chesky, Sam Altman, and a roster of new Millennial founders.

Marc Benioff introduces the world to software-as-a-service, recurring revenue becomes the North star, and the factory model of venture capital solidifies. Cookie-cutter founders built cookie-cutter vertical SaaS companies with cookie-cutter playbooks as software ate the world. Venture sprawl happened vertically and horizontally, and the venture-fication of the world began to be felt by those inside and outside the asset class. 

The monolithic brands of the previous era begin to acknowledge their own inability to be everything so they start to appoint nodes. Traditional celebrities, media heads, ex-operators, and spinoffs started funds, and capital abundance forced firms to compete against the “commoditized” capital label.

PE-fication: 2025-2050

Venture today is where PE was 20 years ago.

The 2030s will be the first decade that sees the slowdown of the historic logarithmic growth in venture-backed outcomes.

• Tandem Computers went public at north of $10m in 1977.

• Compaq broke the $100m barrier when it went public in 1983.

• The ‘90s saw $1 billion IPOs like Netscape.

• The 2000s had the first $10 billion+ IPO in Google.

• Facebook broke the $100 billion IPO mark in the 2010s.

• The 2020s will see a $1 trillion IPO in SpaceX, OpenAI, and / or Anthropic.

While we’ll see hundred-billion IPOs become table stakes, it is highly unlikely we see a flock of $10t+ companies (1/3 size of US GDP) going public over the next decade.

In the grand scheme of things, none of this will matter, capital will continue to flood the venture asset class, underwriting baselines will grow to hundred-billion-dollar outcomes, and IRR compression will accelerate as inflowing capital outpaces exit scale growth.

The industry structure will consolidate to a few incumbent institutions and a long tail of boutiques. Incumbents will adopt a multi-asset model to escape the local return crunch. Surplus dollars will flow into tangent asset classes that traditionally belonged to LBO, credit, or public equities specialists as large-cap venture firms seek to diversify their revenue base by launching venture-relevant financial products.

Financialization: 2050-2075

The existential problem of modern venture capital is that it keeps chasing the finite game of increasingly competitive equity financing at the expense of the grand opportunity in front of it: becoming the main provider of financial products in the innovation economy.

The dominant venture franchise of 2075 will be a financial superstore - selling capital to those building the future, while offering capital products to everyone who wants exposure to that future. Asset class boundaries will continue to dissolve. The most successful firms will look like the best alternative asset managers of today: platforms that started in one product and methodically expanded into every adjacent financial need of their customer base.

The deepest competitive advantage in that future state is investor talent, and the single best indicator of where venture returns will concentrate in any given decade is where the top 1% of young principals and junior partners want to work.

The firm that attracts, develops, and retains the best investors at the earliest stage (not by paying them the most, but by giving them ownership, autonomy, and a platform to run their own book) compounds talent the way the best funds compound capital.

Build

Firms notoriously lose their identity as they scale. The better your ability to define the firm you want to be in the future, the better your ability to make the right decisions in the present.

I have written an ~8k word blueprint that goes into depth on:

• The history of venture across different eras (Institutionalization —> Industrialization —> PE-ification —> Financialization)

• Lessons from capital agglomerators (Sequoia, Thrive, General Catalyst, a16z, Index, Founders Fund, Insight, Bessemer, Kleiner Perkins)

• Lessons from specialists (Mucker, Sutter Hill, Benchmark, Forerunner, USV, Abstract, Haystack, Greenoaks, Ribbit)

• Defining “the investment firm of the future”

• Investment products, timelines, and required org charts

• Solving venture scalability, creating a house of brands, and building the incentive structure for a pod shop model

• Outlaw 1.0 hypothesis and flywheel

If anybody wants to see it, has built something similar, or wants to jam on ideas / help us think through things, let me know.

Lessons From the Greats

Don Valentine taught me about ego death, maintaining common sense in a field of geniuses, and how to build a firm that outlasts you.

Michael Moritz taught me to value of orthogonal frameworks.

Doug Leone taught me to build a culture of winning.

Josh Kushner taught me about the value of conviction, how to maintain firm DNA through scale, and the alpha of hiring non-obvious investor talent.

Bill Gurley taught me about asymmetric regret and solving the principle-agent problem.

Bob Kagle taught me about venture firm flywheels and recruiting as the ultimate multiplier.

Fred Wilson taught me about the power of writing, how to develop a thesis, and the how to say “no” to more capital.

Marc Andreessen taught me about ambition.

Peter Thiel taught me what to ignore.

Brian Singerman gave me the best case for being a generalist.

Jeff Horing taught me the value of investor talent programs.

John Doerr taught me about execution and hubris.

Neil Mehta taught me about craftsmanship.

Micky Malka taught me about adaptability.

Pat Grady taught me to fear irrelevance over failure.

Graham Duncan taught me that talent is the best asset class.

Orlando Bravo taught me about finding great partners.

Steve Schwarzman taught me about pursuing financial opportunity.

Fund updates

I’m nearing the end of fundraising for fund I, and I am relieved to be spending the next several months focused on deployment instead of fundraising.

My next (probably final) close date will be May 31.

I will be sending out more info to a few people who have been closer to the process over the past several months. If you are interested in getting more involved, you can find next steps through the link below.

Invest → Outlaw Ventures Fund 1, LP - Closing Pack

Thanks for reading this far and giving us a little bit of your attention this week. Feel free to unsubscribe whenever this stops becoming valuable to you.

Fund | Recruiting | Sponsor | Community

Good morning 👋

This is the fourth and final essay in a series about how I think about building a thesis-driven fund from the top down.

We started with guiding philosophies, then covered investment themes, then narrowed into investment theses.

Today we bring it all together.

This is the overarching investment thesis for Outlaw 1.0:

There are two parts to that sentence. We'll unpack the second part first, and then cover the first.

Source: Outlaw 1.0 thesis deck

P.S. This is a longer post and will get clipped by Gmail. We recommend clicking ‘Read online’ at the top of this email to get the full, unclipped version.

Investment thesis

Part I: Out-of-distribution individuals

As we covered in the first essay of this series, several guiding philosophies have led to our thesis being centered entirely around the individual before the company, the market, or the technology.

Very few companies are responsible for the bulk of returns in the venture asset class. 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.

Who are out-of-distribution individuals?

Resumes are proxies for execution ability. Prior exits and founding employee status at outlier companies are the strongest signals we've found.

We believe the most talented people in the world were once unknown names. In a world of consensus investors, the most upside belongs to those willing to do the work finding talent before it becomes obvious in hindsight.

Source: Outlaw 1.0 thesis deck

The founding engineer at Cursor operates with different odds than a 24-year-old first-time founder. The founding GTM person at Ramp possesses different capabilities than someone with only junior sales roles. Elite employment or prior exits serve as high-signal proxies for execution capability - not guarantees, but dramatically better odds.

Our pipeline reflects this, and 100% of tracked companies feature founders with either prior successful exits or were elite early performers at companies like Cursor, Decagon, Attio, ElevenLabs, Ramp, Notion, and others.

Part II: Chief capitalist

Identifying out-of-distribution individuals is only half the equation. The other half is being the type of investor they actually want on their cap table.

Being the "chief capitalist" requires an investment product that provides exactly what these types of individuals need at the moment we start to get involved.

From working closely with hundreds of stealth and pre-seed founders over the years, a few patterns have emerged.

Starting a company has never been easier, and the barriers to building product have collapsed. Cursor, Lovable, and Replit write code. AWS provides infrastructure. Stripe handles payments. Decagon handles support. Claude and OpenAI offer intelligence APIs.

Building is no longer the bottleneck. Getting people to care is.

This informed how we designed the firm as an investment product.

We have tried to position the media business as a scalable asset that can be used in parallel to solve for the major bottlenecks we hear from stealth and pre-seed founders:

Part III: The simplified strategy

Here is how I have condensed the goal of Outlaw to new LPs:

Find the most talented founders

Underpriced individuals with a history of out-of-distribution execution ability.

Previously exited businesses, responsible for creating scale at companies reaching $100m ARR, and other signals of elite performance.

Building in the themes we care about

Artificial labor markets, the token revolution, Software 3.0, and the modernization of the private investment firm.

These four theses sit at the intersections of the macro investment themes we've identified. More on each in Part V below.

As early as possible

Average entry valuation of less than $12m.

We believe in the art of finding under-discovered talent. The most upside belongs to those willing to do the work before it becomes obvious.

Develop an investment product that meets their needs

Use the newsletter as scalable infrastructure to help founders build distribution, close hard-to-win talent, and find long-term capital partners. The media business is not separate from the fund; it is the fund's core competitive advantage.

The fund objective is to own 1.5% of a $5b business. Every decision we make (portfolio construction, follow-on strategy, types of founders we pursue, etc.) is in pursuit of that outcome.

Fund I at a glance:

Part IV: How the flywheel works

It is difficult to understand the fund strategy without first understanding the newsletter business, its purpose, who it attracts, and why I continue to write it.

The newsletter is the "front-end" for my thinking. It is a surface area expander that gives me scalable access to people and ideas I otherwise wouldn't come in contact with. Hard-to-meet people are attracted to writing, they proactively choose to give me their attention each week, and I have created unique ways to parlay that trust into deals that match the fund thesis.

The newsletter and the fund are interconnected, and each flywheel compliments the other.

Newsletter flywheel: ideas → content → audience → trust → opportunities

Fund functions: finding (heavily boosted by audience and opportunities created in fund flywheel), picking (improved with ideas strengthened judgement via writing), winning (improved as newsletter asset differentiates from other investors who provide capital only), and helping (talent pipeline, distribution-as-a-service, downstream capital available to portfolio)

Part V: Where we are investing

While the fund invests in founders rather than markets, we maintain active theses in four areas where we believe the next legacy-defining businesses will be built.

These theses are downstream from the broader investment themes I outlined earlier in this series, which themselves flow from a set of guiding philosophies about how the world works.

In the second essay, I laid out five macro themes shaping the world over the next decade. Below is how each thesis maps back to those themes.

1. Artificial labor markets

Source

As I wrote in the themes essay, companies are operating fine with dramatically fewer people. Elon firing 80% of Twitter and the platform continuing to function was the mask-off moment. Every company realized they were carrying corporate bloat. 500,000 white-collar software workers are expected to be laid off over the next 2-3 years.

For artificial labor, the TAM is labor markets.

The pursuit of the 10-person billion-dollar company is no longer theoretical. The only way to reach the scale required for ~$100m ARR without a proportional headcount is by consolidating everything that doesn't differentiate: finance, accounting, support, HR, legal - these become AI + workflow + one person overseeing output.

Revenue-per-employee is becoming the new North Star metric. Companies like Midjourney ($500m revenue, 40 FTEs) and ElevenLabs ($100m revenue, 50 FTEs) are proving the model works today.

2. The token revolution

Source

As more of the world economy transforms around intra-computer coordination, every company will need to answer the question of which part of the token factory they are servicing.

Every business is becoming a token factory - supplying, building, or orchestrating tokens (data, identity, money, expertise) that feed AI agents. Tokens are the DNA and feedstock for AI, encoding who we are, what we own, what we do, and what we want.

Three categories define the space:

1. tokens for value (how machines store and transfer financial resources)

2. tokens for expertise (how machines learn to do what humans do

3. tokens for personalization (how machines learn about individuals).

Every software business can be modeled as supplying, building, or managing token factories, and the companies that control the most valuable token streams will define the next era.

3. Software 3.0 + the dev tool golden era

Source

We are in the middle of a generational re-platforming of the dev tools stack.

• Software 1.0 was handcrafted logic.

• Software 2.0 was earned systems - neural networks trained on data, emergent logic that scales with compute rather than humans.

• Software 3.0 is generative and self-improving - LLMs produce code, design models, and orchestrate systems with minimal human intervention.

The entire dev tools stack is being rebuilt from first principles.

Like Auth0 eliminated months of authentication work and Stripe abstracted payment complexity, Software 3.0 needs equivalent foundational layers for AI-native development. The definition of "developer" is expanding dramatically - from 17m JavaScript developers today to a projected 100m in the next decade.

We like the picks-and-shovels approach: the platforms and tooling that enable this new generation of builders to create without writing code.

4. Modernization of the private investment firm

Source

The private markets in 2026 are at a similar inflection point as traditional finance was in 1984, when Bloomberg arrived to provide real-time data, instant calculations, and all bond info in one place.

If you look under the hood at different funds today, you will see a massive gap in the sophistication of their workflows. The best funds operate more like software firms than financial services businesses, and there is a high correlation between firms who have rebuilt modern workflows and firms who have distributed capital and been able to raise fresh funds.

We think the companies building the infrastructure for this transformation - the AI-native tools for deal sourcing, portfolio monitoring, LP reporting, and fund operations — will capture an enormous market.

These theses inform sourcing (content attracts founders building in these areas) and selection (pattern recognition for quality founders in these domains), but they don't constrain opportunistic investing outside these areas when exceptional founders appear.

For a deeper breakdown of each thesis, including the companies we are studying in each category, read the full investment theses essay.

Fund updates

Thanks for following along as I document how I think about early-stage investing and the frameworks that have lead me through firm building.

For those of you curious about Outlaw, I have included more below.

Thesis

• We are pursuing 1.5% of a $5b business. Every decision centers around the pursuit of finding the founders capable of this type of scale, owning as much of their company as we can, and building a scalable investment product that acts as an extension of their business.

• We believe in the art of finding under-discovered talent. The most talented people in the world were once unknown names. We believe the most upside belongs to those willing to do the work identifying talent before it becomes obvious in hindsight.

• We believe in building the infrastructure for pre-seed bottlenecks. The firm is built on top of a larger media business that creates a scalable asset to be used by founders to build distribution, close hard-to-win talent, and find long-term capital partners.

For those of you looking to get more involved, I’m happy to chat.

My calendar is linked.

Thanks for reading this far and giving us a little bit of your attention this week. Feel free to unsubscribe whenever this stops becoming valuable to you.

Fund | Recruiting | Sponsor | Community

Good morning 👋

Welcome back to part three of a four-part series on how I think about designing a thesis-driven investment firm.

We have broken down guiding philosophies and broader investment themes.

To recap:

• Guiding philosophies are overarching frameworks that are fundamental for asset class selection, investment theme selection portfolio construction, positioning, and how a person conducts business.

• Investment themes are based on macro patterns on where the world is heading.

• Investment theses are more granular and are investable sleeves of the broader investment themes considered within scope.

Outlaw maintains active theses in four areas where we believe the next legacy-defining businesses will be built.

I have broken down a deeper look at my thinking on each of those below.

1. Artificial labor markets
2. The token revolution
3. Software 3.0
4. Modernization of the private investment firm

Investment theses

Artificial labor markets

For public companies, the trend of growing revenue-per-employee has been clear for several decades. At the private level, the trend is even more extreme.

Artificial labor markets are here

Dropping inference costs make it economically irrational to hire a $100K/year employee when a $500/month agent can handle the same workload.

The job posting of 2026: "Seeking SDR. Requirements: 99.9% uptime, <200ms response time, fluent in 47 languages, costs $0.003 per conversation."

Human labor markets took decades to build trust infrastructure. We believe artificial labor markets will build better trust infrastructure far faster. Every function that used to require a person now has an agent alternative, and businesses need systems to find, vet, and deploy them.

The pursuit of the 10-person billion-dollar company

Whether or not you agree with that statement is up for debate, but the trend is clear of companies needing less human labor to create more revenue and equity value. Maybe a 1-person-billion-dollar company is not realistic, but let’s play out a scenario for a 10-person target for the same goal.

In our view, the only way to reach the level of scale required for this mark (~$100m ARR) without a proportional amount of FTEs is by consolidating everything that doesn't differentiate. Finance, accounting, support, HR, legal - these become AI + workflow + 1 person overseeing the output.

Massive distribution (1m customers at $100 ARR or 10k customers at $10K ARR) is required, exquisite taste (to build what people want before competitors) is required, and the ability to outsource everything else to AI is required. Every dollar and hour not spent on revenue generation is waste.

ACV x customer count numbers in order to create a $1b business assuming a 10x revenue multiple.

Revenue-per-employee arms race

As the North star for all companies shifts to revenue-per-employee, a new quality benchmark can become established.

This topic has been covered in length my people like Tomasz Tunguz in 2013 (linked), the SaaS Capital guys (linked), the Meritech guys (linked), and the latest lean AI-native company leaderboard (linked).

We think as more companies develop the playbook of scale as an AI-native company, there will become an explosion of other companies who follow the same path.

Companies to study

The token revolution

As the “Everything is computer” theme plays out and more of the world economy transforms around intra-computer coordination, every company will need to answer the question of which part of the token factory they are servicing.

We owe a lot of our thinking here back to the guys at Ribbit. They coined the phrase, pioneered the thinking, and we’re just investing within the category they defined with language.

Here are the high-level thoughts on the growing need to create, orchestrate, organize, and invest in the token revolution taking place:

• Every business is becoming a token factory - supplying, building, or orchestrating tokens (data, identity, money, expertise) that feed AI agents


• Tokens are making the world accessible and legible to machines


• They are both the DNA and feedstock for AI - encoding who we are, what we own, what we do, and what we want


Understanding tokenization

Three categories of tokens:

1. Tokens for value: How machines store/transfer financial resources

   1. Asset tokens: Bitcoin, stablecoins, tokenized real estate

2. Tokens for expertise: How machines learn to do what humans do

   1. Expert tokens: Specialized domain knowledge

   2. Knowledge tokens: Company data, research

   3. Web corpus tokens: General internet knowledge

3. Tokens for personalization: How machines learn about individuals

   • Identity tokens: Who you are (government IDs, biometrics)

   • Context tokens: What you do (shopping history, browsing patterns)

   • Memory tokens: What AI learns about you directly

   • Access tokens: Keys to your confidential information

The token factory framework

Software 3.0 + the dev tool Golden Era

A recent market map from Bessemer shows the different application layers and opportunity zones within dev tools today.

The entire dev tools stack is being re-platformed, and new categories are being created.

1. Complete AI-native dev opportunity: Like Auth0 eliminated months of authentication work, Stripe abstracted payment complexity, Twilio turned SMS into a few lines of code, Software 3.0 needs equivalent foundational layers for AI-native dev.

2. Feedback loops accelerate innovation: AI tools create better AI tools - compounds at unprecedented speed.

3. Billions in VC flowing into AI dev tools: Already seeing blockbuster acquisitions (Cognition/Devin acquired by Windsurf).

4. Definition of "developer" expanding dramatically: 17M JavaScript developers today → 100M in next 10 years (Netlify CEO). Vibe coders creating custom software without writing code. Domain expertise and customer communication now matter more than coding ability.

5. New network effects emerging: Agent-to-agent network effects (AI agents communicate/compose with other agents via MCP). Data network effects amplified (more context = more useful agents, Linear's Product Intelligence example). Integration lock-in weakening (AI makes switching APIs easier). First-mover advantages compound (speed matters more than ever, quality products benefit regardless).

6. Budget sources shifting: AI dev tooling breaking out of traditional budgets, dedicated AI budgets emerging, trade-offs between AI tools vs. hiring engineers.

7. Platform control creates defensibility: Entry point control (GitHub owning repos, VS Code dominating editors), proprietary data advantages, continuous evolution paramount.

The modernization of the private investment firm

Evolution of the asset class

The Bloomberg Terminal moment

The finance industry has a history of participating late in the adoption curve.

Prior to 1984, the work done within traditional finance was mostly analogue. Pen and paper were the standard, workflows were slow, and most of the work was a snooze fest.

Then Bloomberg entered the picture.

• 1984: Bloomberg arrives to provide real-time data, instant calculations, all bond info in one place

• 1986: 10x more terminals sold than 1984

• 1996: 10x more than 1986

• Result: Early-adopter alpha vanished, but market structure fundamentally changed

• Secondary effects: Electronic trading, proprietary data became only edge, relationships shifted

That shift happened suddenly, then all at once.

We think the private markets in 2026 are at a similar inflection point as the traditional finance industry was in 1984.

If you look under the hood at different funds today, you will see a massive gap in the sophistication of their workflows. Based on our experience, the best funds today operate more like software firms than traditional financial services businesses, and there is a high correlation between firms who have rebuilt modern workflows funds who have distributed capital + been able to raise fresh funds.

If you are using / building other tools not on this list, I’d love to talk.

Fund updates

Thanks for following along as I document how I think about early-stage investing and the frameworks that have lead me through firm building. I will share more on the full thesis and founder selection next week.

For those of you curious about Outlaw, I have included more below.

Thesis

Outlaw is a thesis-driven investment product designed for out-of-distribution individuals.

• We are seeking 1.5% of a $5b business. Every decision centers around the pursuit of finding the founders capable of this type of scale, owning as much of their company as we can, and building a scalable investment product that acts as an extension of their business.

• The fund invests in individuals, not companies. We do not fish in the same ponds as multi-stage investors, we generally avoid live rounds, and we tune out everything except the founders in our underwriting.

• We believe in the art of finding under-discovered talent. The most talented people in the world were once unknown names. In a world of consensus investors, we believe the most upside belongs to those willing to do the work finding talent before it becomes obvious in hindsight.

For those of you looking to get more involved, I’m happy to chat.

My calendar is linked.

Thanks for reading this far and giving us a little bit of your attention this week. Feel free to unsubscribe whenever this stops becoming valuable to you.

Fund | Recruiting | Sponsor | Community

Good morning 👋

And welcome back to the grind.

This is part two of a four-part series on how I think about designing a thesis-driven investment firm.

If you choose to be a thesis-driven, you are subscribing to the belief that investments are downstream from other parts of your thinking.

Guiding philosophies are most useful for choosing which asset class to play in. I believe that early-stage venture has, is, and will continue to be the most interesting asset class, and I have shared some of my reasons for why here.

After philosophies are established, it becomes time to be an observer and look through macro patterns on the world is heading. As somebody who regularly talks to people smarter than myself and has written about these types of things for the past ~six years, I am pretty opinionated on themes.

After a lot of narrowing and with the help of hours worth of Claude refinement, these are the five major themes that have created the category for our investment zone.

Investment themes

Labor decoupling and K-shaped economies

K-shaped consumer spending:

• The top 10% of Americans now account for 49% of all consumer spending.

• The wealthiest 10% hold over two-thirds of the nation's total wealth, while the bottom 50% collectively hold just a fraction.

• Middle class shrunk from 61% in 1971 to 51% in 2023.

K-shaped labor split:

• Companies are operating fine with dramatically fewer people. Elon firing 80% of Twitter staff and platform continuing to function was the mask-off moment, and every company realized they were carrying corporate bloat.

• 500,000 white-collar software workers expected to be laid off over next 2-3 years (70% with 4-12 years experience).

• The result: fewer workers, same or better output, higher margins.


K-shaped wage split:

• Automation has replaced the need for many entry-level and back office roles. It is no longer feasible to hire most junior roles - software has already replaced them. It is now moving up chain of command, and no role is safe anymore.

• Offshoring and visa programs have reduced the supply of “jobs worth pursuing”. There is always somebody cheaper who wants your role. The farther away your role is from creating revenue, the easier you are to replace.

• Inflation and suppressed wages has already (and will continue to) lowered quality of living. The life that was afforded to the previous generation on a single W2 salary now requires two W2 salaries. Pretty soon, even that will not be enough.

The Golden Age for builders

Twitter tweet

The infrastructure tax of starting a business has disappeared. 

Over the past two decades, the fixed costs of running a basic internet company has reduced from $150k / month to ~$1k / month. In today’s world, you can build, ship, and scale to thousands of users before needing outside capital. At the same time, audiences can be built for free to validate demand before building. All of the traditional barriers - capital, infrastructure, distribution - are gone.


Superhuman tools for us mortals. 

Cursor autocompletes entire features. Lovable ships production apps from prompts. Replit goes from idea to deployment in one conversation. V0 generates React components on demand. Claude writes documentation. Midjourney creates marketing assets. The entire creative stack is now accessible to anyone.


Status comes with building. 

~20 years ago, there was no status to being a founder; it was a “profession” for the misfits and unemployable. Fast forward to today, and everybody wants to be a founder. The private markets have ballooned, Harvard teaches entrepreneurship classes, the Hollywood-ification of startups has attracted a new audience, and younger generations see entrepreneurship as the only way out of the W2 rat race and a declining lifestyle. As more smart people are steered towards startups (many of whom would never consider them in a previous generation), the influx of talent creates is a new generation of builders.

Everything is computer

Software creation became free, and the value moved elsewhere. 

When everyone can build software (Cursor, Lovable, Replit), building software is no longer the moat. Distribution, adoption, and integration are now worth more than the software itself. The value in software is moving up the stack: from code → to deployment → to integration → to orchestration.

The long tail of software exploded.

If anyone can build software, then every company becomes a software company, and every niche gets its own custom tools. Platforms will continue to emerge that let non-technical domain experts build software businesses (Shopify for e-commerce, Webflow for websites, Airtable for databases, Retool for internal tools). The next decade belongs to platforms that abstract away software creation entirely and let people focus on their actual expertise while the platform handles the code.

Software stops becoming a product and starts becoming an ingredient. 

APIs won. Every company is now building on top of Stripe, Twilio, Plaid, Segment, and hundreds of other API-first services. The new software stack is composable building blocks > monolithic applications. This explains why AI companies are racing to become infrastructure; OpenAI, Anthropic, and others know that being the underlying API is worth more than being the end product. The opportunity today has shifted away from building another standalone SaaS app and towards building the foundation that 10,000 other apps depend on.

Agents became the new users. 

When your customers are increasingly agents, not humans, the UX paradigm breaks. Agents don't need pretty dashboards or intuitive navigation, but they do need APIs, structured data, and clear schemas. This is why "AI-native" software looks nothing like traditional SaaS. No UI (just endpoints), no onboarding flows (just documentation), no customer success (just reliability). The companies rebuilding their products for AI consumption (machine-readable data, agent-friendly APIs, programmatic access) will eat the companies still optimizing for human dashboards. Software is becoming infrastructure that agents orchestrate, not products that humans operate.

GTM is the new engineering

Building good software is now table stakes.

Winning the attention war, solving GTM, and building repeatable sales systems are the new bottlenecks.

Companies are dying on GTM, not product.

Five years ago, failed startups usually had product problems - they built something nobody wanted. Today, most failed startups have great products. They die because nobody knows they exist. The Product Hunt launch gets 500 upvotes, then traffic dies. The blog gets no readers. The outbound gets ignored. The paid ads are too expensive. They raised $2M, built an amazing product, and ran out of money before achieving distribution. Product-market fit without distribution-market fit = death.

Distribution is distributed (aka multi-channel). 

The traditional SaaS playbooks was simple: "Build great product, add sales team, scale ARR." That worked when there were fewer products and buyers had time to evaluate. Now buyers are overwhelmed. Inbound is dead for most companies. Outbound is saturated (cold email agencies and AI SDRs have made all of our inboxes noisy and crowded). Organic content takes forever to see results. Paid ads are expensive. Events are expensive with unknown ROI. Affiliate programs are hard to manage. There is no one-size-fits-all solution to scaling in today’s world. The companies winning are the ones diversifying distribution across multiple channels simultaneously.


GTM engineering became hottest new role in tech.

GTM used to be "hire sales reps, give them a script, measure conversions." That approach is dead. Modern GTM requires technical sophistication approaching engineering: data pipelines, attribution modeling, A/B testing infrastructure, programmatic SEO, AI-powered outbound, multi-touch attribution, predictive lead scoring, conversion optimization, funnel analytics. The "GTM engineer" emerged as a distinct role, and it is quickly becoming one of the most sought-after positions in a company.

Finance as culture

Over the past ~five years, finance has become entertainment.

Not very long ago, finance was a boring industry.

• Buying stocks was boring.

• Personal finance was boring.

• Pursuing home ownership was viewed as the primary pursuit for wealth.

• Alternative assets were largely ignored and reserved for the “experts”.

That has all changed thanks to a variety of reasons, and we believe there is no putting the genie back into the bottle. As finance permeates more into our daily lives, there are a handful of second-order effects that we believe create opportunities for the well-positioned.

Independent media has given rise to the individual kingmaker.

As established media lost trust, the next generation looked for places where they could find truth. Many of them found it from many different sources.

The attention economy exploded, everybody is pursuing eyeballs, distribution became the bottleneck, and a handful of names emerged in every different industry. In finance along, you have small media companies like Exec Sum, High Yield Harry, Short Squeeze, Confluence.VC, and Not Boring collectively winning mindshare from a bulk of the finance industry every morning. This is a small sample of from one industry, and there are dozens of others within every niche imaginable.

The newly established media names hold real influence, and in the age of infinite leverage, the best ones have already layered on complementary products and services designed specifically for their unique audiences.

Everyone started thinking + acting like owners.

When finance was still considered “boring”, nobody talked about it, and when nobody talked about it, nobody knew what they didn’t know.

Fast forward to today, and the explosion of media has given us access to the minds of people who have built real wealth. Their message has been heard and repeated: you cannot build real wealth without pursuing equity.

Labor began emulating capital - side hustles, solopreneurship, "owner mindset" became corporate gospel. SMBs (not just startups) started offering equity compensation. Harvard started teaching acquisition entrepreneurship classes. The creator economy embraced equity structures (splits, revenue shares). "Invest in yourself" replaced traditional investment advice. Portfolio composition became as important as job title.

Fund updates

Thanks for following along as I document how I think about early-stage investing and the frameworks that have lead me through firm building. I will share more on the theses and categories for investment next week.

For those of you curious about Outlaw, I have included more below.

Thesis

Outlaw is a thesis-driven fund that narrows down opportunities based on theses, themes, and investment philosophy.

• We believe that out-of-distribution companies are created by out-of-distribution people. A founder with a successful exit has vastly different odds than a 24-year-old first-time founder. The founding engineer at Cursor has different odds than someone who's only held junior engineering roles. The founding GTM person at Ramp has different odds than someone who's only held generic sales jobs.

• The fund invests in individuals, not companies. We do not fish in the same ponds as multi-stage investors, we generally avoid live rounds, and we tune out everything except the founders in our underwriting.

• We believe in the art of finding under-discovered talent. The most talented people in the world were once unknown names. In a world of consensus investors, we believe the most upside belongs to those willing to do the work finding talent before it becomes obvious in hindsight.

I have attached my latest thesis deck to the right that breaks down my overall approach and more on how I think about curation. For those of you looking to get more involved, I’m happy to chat. My calendar is linked.

Outlaw 1.0 Thesis

Thanks for reading this far and giving us a little bit of your attention this week. Feel free to unsubscribe whenever this stops becoming valuable to you.

Fund | Community | Sponsor | Recruiting | Careers

Good morning 👋

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.

As a thesis-driven investor, your investments are a byproduct of the following lines of thinking:

Philosophies → Themes → Theses → Investments

It is easier to understand investments when you have a thesis. It is easier to have a thesis when you understand broader themes. And it is easier to pick themes when you have a guiding philosophy and set of beliefs on where the world is trending.

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

Together with Carta

Funds of funds (FoFs) spend one-third of their time manually processing and standardizing GP data

Carta surveyed 100 industry leaders to uncover how fragmented reporting is straining operating margins (spoiler alert: it’s not good).

This report breaks down the consequences of these inefficiencies and identifies the automation strategies firms are adopting to remain competitive.

Guiding philosophies

The age of infinite leverage

Jack Butcher has been one of the most influential people I have learned under, and he gave me a cleaner way to think about leverage, compounding, and why individuals have never held more power than they do today.

We used to have to trade our time directly for output – a 1:1 relationship, but now we have leverage.

For the majority of human history we did NOT have leverage. Humans evolved in societies where there was no leverage. If I was chopping wood or carrying water for you, you knew eight hours put in would be equal to about eight hours of output.

That is no longer true.

We live in an age of leverage where you can maximize the output of your work to a ridiculous, exponential degree. As a worker, you want to be as leveraged as possible so you have a huge impact without as much time or physical effort.

Old school leverage (capital + labor) are expensive and require permission. New school leverage (code + media) have no marginal cost of replication and are permission-less.

A leveraged worker can out-produce a non-leveraged worker by a factor of one thousand or ten thousand. With a leveraged worker, judgment is far more important than how much time they put in or how hard they work.

Pareto, feast or famine, and the cruel mistress of power laws

As power law has become consensus, every opinion about power laws has already been stated. For a quick refresher on the game we’re all playing now …

If this math holds true and you have a deployment period over the next five years, that means there will be roughly 75 companies (15 × 5) worth pursuing if your portfolio construction incentivizes you to pursue these types of outcomes.

You will need to spot, pick, and win an allocation into (at least) one of those ~75 companies in a sea of 20,000 (4,000 × 5) other venture-backed opportunities that surface over the same time period.

Which is a good transition to my next two beliefs …

Out-of-distribution inputs —> out-of-distribution outputs

Nothing about venture capital follows a normal distribution, and thinking within a normal bell curve is a recipe for underperforming the S&P.

We are in the business of finding out-of-distribution ideas, people, and companies.

• Extreme returns require extreme GPs

• Extreme GPs require extreme execution

• Extreme execution require extreme investments

• Extreme investments require extreme founders

• Extreme founders require extreme inputs

Investing in extreme individuals

I believe the most underpriced people in venture are:

1. Founders who have started, scaled, and exited companie

2. Founding employees at outlier companies who were responsible for the bulk of that company's scale

3. Founders with unique audiences and distribution angles

Resumes are proxies for execution ability, but psychological traits predict outlier outcomes. Some traits from people I like working with:

• High pain tolerance: Pain is a moat. Success is a byproduct of failing a lot more than winning. Extreme success requires extreme suffering first.

• Observable obsession: You will be able to get a sense of a person’s level of obsession based on how well they know their industry inside and out. They know the rules, they know the players, they know the incentives, and they know what is exploitable today (and in the future). Kobe Bryant would study the rule book given to referees so he would know where to stand to be in their blind spots so he could get away with more fouls on defense.

• Range: There are exceptions to this, but I have found that many of my most talented friends are talented in multiple domains. Whether that is in skill, areas of interest, or fluency across subject, I have found myself more interested in working with skilled generalists.

• Consciousness: I have found that a lot of people don’t actually know what they want out of life. Without understanding your “why”, you naturally become reactive to the world. I believe it is incredibly difficult to make money for yourself and for others without being a proactive person who enforces your will on your environment.

Positioning and building your own “yacht”

Positioning is the most important skill in the world, and nobody will teach you how to best position yourself.

Without disclosing my source, here are some laws of positioning that have become ingrained into my subconscious:

• No apex man has ever existed without unapologetically wielding an unfair advantage from an unfair position. Trump, MJ, Ken Griffin, Elon, Bezos, Steve Jobs - all of them yielded an unfair advantage from an unfair position. You simply cannot exist at the top of any skill, endeavor, sport, industry, or government without the UA/UP combination.

• Unfair advantage and unfair position are laws of nature. Lions, orcas, crocodiles, and hawks are all apex predators, but if pitted up against each other, they would fare differently based on the environment. Apex predators are at the top of the food chain because they have built skills / attributes that position them at the top of their given environment.

• Everyone on the planet has an unfair advantage and an unfair position. Born rich? Connections, money, access. Born poor? Tenacity, street smarts, survival instincts, willingness to do whatever it takes.

• You should only take high ROI action. The majority of your results come from a very small sample of the actions you take.

• Always play for position. Do you know where you want to be in 1 year? 5 years? 10 years? How can you put yourself in an unfair position today to conquer the next territory?

• You should always be leveraging your current UA/UP to achieve an even more powerful and effective UA/UP. There is always another level.

• You may need to abandon your current UA/UP in order to achieve a better UA/UP combination. Risk and embracing change is part of the game.

• Your game + your rules + arena of your choosing. The orca will always win in freezing cold salt water. The lion will always win on the open African plain.

• People are your greatest resource. Understanding and creating effective win/win relationships with people puts them in an unfair position to succeed.

Betting in chaos: options > equity

I want to give credit to Jordan Nel (Hummingbird) for shifting my thinking here.

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.

Vol-of-vol chart over the past 20 years

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

• Buying the index becomes riskier. The S&P is full of companies optimized for continuous predictability. When discontinuous change hits, they're poorly positioned.

• Ironically, concentrated bets on variance become safer. Venture portfolios are designed to capture extreme outliers. When tails get fatter, they benefit automatically.

• Options beat equity. If you believe the trend of high-volatility continuing, you want to own asymmetric payoffs (venture, out-of-the-money calls) rather than linear exposures (stocks, bonds). You're essentially buying insurance that pays off when the world gets weird.

When outcomes become more extreme (fatter tails), these asymmetric bets become more valuable, even if the average outcome stays the same.

• 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.

• 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.

• 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.

Fund updates

Outlaw aims to be the chief capitalist to future world-defining individuals. 

For people who want to learn more about the strategy and my philosophy, thesis, and approach, I have shared more in the links below.

Thanks for reading this far and giving us a little bit of your attention this week. Feel free to unsubscribe whenever this stops becoming valuable to you.