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🌲 Stanford's reign on venture capital is ending
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🌲 Stanford's reign on venture capital is ending

✨How rolling funds are upending the venture industry, 💀Why SF really dead, and 😂Oracle is buying TikTok

Brett Goldstein
Sep 15, 2020
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🌲 Stanford's reign on venture capital is ending
socialstudies.substack.com

Yo! ✌️ I’m Brett! I am a founder and former Cognitive Science researcher. Social Studies is a semi-weekly newsletter for people building great products for humans. It includes recaps of what happened on Tech Twitter every week plus deep analysis using frameworks from Psychology, Economics, and the other Social Sciences.


✨ TLDR

The biggest story was about how rolling funds are shifting the venture landscape

👴 How to become a VC, the old way - go to Stanford - 40% of VCs went to Harvard or Stanford. That’s it. That’s the tweet.

💰Rolling funds are eating venture - Now (almost) anyone can raise a fund, bring on investors, and deploy capital thanks to Angellist’s new rolling funds.

🎥 How to become a VC, the new way - become a celebrity - This will drive so much competition in venture that the only investors to survive will be those commanding large audiences and those that provide a truly value-add service.

🤔 Where does this leave Stanford? - Prestigious universities will always be breeding grounds for incredible talent, but attending one will no longer hold the weight it used to.

And speaking of change…

💀 SF is ded. D. E. D. - As skies turned bright orange this past week, many more are predicting doomsday for SF as the tech hub of the future. And they’re not wrong.

😂Oracle is buying TikTok - yep.


👴 How to become a VC, the old way - go to Stanford

Venture capital has been one of the most sought after carer paths but breaking into it is incredibly challenging. That said, there is one formula that has worked over the years: go to Sanford GSB or Harvard Business School and maybe spend some time at a big tech company.

Twitter avatar for @sarthakghSar Haribhakti @sarthakgh
We have hit a point where GPs proudly talk how their new teammates have had an unconventional path to VC *checks resume Went to GSB or HBS, had coveted summer internships & spent time at a Tech Giant or on Wall Street. Bravo sir, you are fooling no one but yourself 👏

February 8th 2020

12 Retweets397 Likes
Twitter avatar for @kimmytaylorKim Taylor @kimmytaylor
@thatguyBG 40% of venture capitalists went to Harvard or Stanford and like to fund their own. Also Stanford is literally next to Sand Hill Rd.
Most VCs are (still) white men, and 40% went to Harvard or StanfordMeanwhile, the percentage of women VCs increased from 11% to 18%. But it’s primarily white women who have made gains.fastcompany.com

August 19th 2020

22 Likes

To be fair, Stanford and Harvard are incredible breeding grounds for some of the brightest people. But this formula has become so predictable that the venture capital industry has become somewhat of a caricature of itself. Sequoia Capital added 4 new partners in Februrary and all of them went to Stanford.

As the importance of diversity reaches the industry zeitgeist, this formula has been an increasing point of concern.

Twitter avatar for @anothercohenAlex Cohen @anothercohen
When I went to fundraise for my first startup, almost every venture partner I talked to was a Harvard, Stanford, or MIT grad. I experienced a ton of of classism and was likely ‘disqualified’ from funding even before taking the meeting

July 6th 2020

13 Likes
Twitter avatar for @HipCityReg🌀 @HipCityReg
The minute someone ends a question like this with “how do we fix the system” — you’re offloading the problem Everything is about your direct locus of control Hire a black associate at Sequoia Start there

Amy ☀️ @amysundae

Race is an awkward topic in Silicon Valley. We desperately want to believe that we are a meritocracy, that the best ideas win. But when pause to look at founders and funders, blacks and latinx are glaringly absent. How can we work together to correct this systemic failure?

May 30th 2020

92 Retweets837 Likes

Even comparable schools like Berkeley are dramatically underrepresented in venture.

Twitter avatar for @thatguyBGBrett Goldstein 🚀🏠🌴 @thatguyBG
Stanford grads outnumber Berkeley grads in building successful tech companies but: - Berkeley has a better engineering department - Berkeley class sizes are much larger - Berkeley students have to fight harder to survive (larger classes, grade deflation, less support) Why?

August 19th 2020

1 Retweet54 Likes

Why has this been the case? Ask Tech Twitter this question like I did and you get a lot of passionate answers, some cynical and some realistic:

  • Like attracts like. People hire people who are similar to them.

  • Stanford is literally next to Sand Hill Road. Harvard is next to the biotech investing hub.

  • Generational wealth. H & S grads come from wealthier families.

  • Highest bar for entry, stronger programs, etc.

Times are changing though. Venture has been getting more and more competitive over the years and the introduction of rolling funds has dramatically shifted the balance further.

💰Rolling funds are eating venture

Dickie Bush has a great thread explaining rolling funds:

Twitter avatar for @dickiebushDickie Bush 📊 @dickiebush
1/ First, let's understand regular venture funds. • They're dominated by legacy Silicon Valley. • They raise funds over multiple months. • They cannot be publicly marketed. • All capital must be raised before the fund is launched. TLDR: hard to raise, manage, and access.

September 11th 2020

1 Retweet11 Likes
Twitter avatar for @dickiebushDickie Bush 📊 @dickiebush
2/ What is a rolling fund? Think of them as a SaaS-like venture fund subscription. • They can be marketed publicly. • They can raise capital at any time. • GPs can deploy capital on a quarterly basis. • LPs can redeem capital on a quarterly basis. • Fees are flexible.

September 11th 2020

2 Retweets11 Likes

Simple enough right? The implications are massive.

🎥 How to become a VC, the new way - become a celebrity

The future of venture lies in the hands of influencers and true value-add investors.

Twitter avatar for @dickiebushDickie Bush 📊 @dickiebush
4/ What's the impact on the venture landscape? 1. Democratized access to launching a micro-VC fund. 2. More angel rounds mean more competitive Series-A rounds. 3. A new industry: advertising of your venture fund. 4. A new marketplace: relative value / reputation of GPs.

September 11th 2020

1 Retweet9 Likes
Twitter avatar for @andreasklingerAndreas Klinger ✌️ @andreasklinger
3) Audience = Fund Every large newsletter host, every podcast host about startups (or related - eg gaming) will have a fund Influencers and investors roles will merge early-stage I expect the first VC fund by a livestreamer by November.

September 11th 2020

10 Retweets85 Likes

We’re seeing tons of examples of this popping up already. In a few short weeks, Anthony Pompliano raised one of the largest seed funds in venture from his following.

Twitter avatar for @APomplianoPomp 🌪 @APompliano
🔥 Pomp Investments Rolling Fund Update #2 🔥 There has been just under $700,000 committed per quarter by 53 investors. Average quarterly commitment is now over $13,000. We are a little over 72 hours since initial announcement. Building an army!

September 14th 2020

21 Retweets385 Likes

This leads us to one really interesting conclusion:

Twitter avatar for @thatguyBGBrett Goldstein 🚀🏠🌴 @thatguyBG
Venture, media, community, and celebrity are all merging: - Media cos are celebrity factories - Celebrities are community factories - Communities are startup factories This may be the biggest change in hands in venture over the last 10 years.

September 14th 2020

4 Retweets16 Likes

🤔 Where does this leave Stanford?

Stanford will still attract some of the best and brightest minds for a long time. And smart people will always find a way to win in any market.

That said, the game is changing. Mere connections and prestigious degrees are no longer sufficient for winning deals.

Over the next five years, I believe we’ll see venture capital start getting eaten away (starting with seed) by influencers like Anthony Pompliano and systematized value-add investors like Pipe.


💀 SF is ded. D. E. D.

The “Why I’m leaving SF” essays have been so commonplace over the years that they’ve become somewhat of a meme. That said, over the last month, it feels like everyone is writing them.

There are plenty of great reasons to leave SF these days

  • Homeless encampments slowly taking over the city

  • Absurd real estate market prevents even the nations most wealthy from buying homes

  • Remote work opportunities now bountiful

… Oh, also the unbreathable apocalyptic atmosphere that may be a permanent thing every summer thanks to climate change.

Twitter avatar for @ricburtonRichard Burton @ricburton
I will never take clean air for granted ever again The sky in San Francisco is a dark orange from the fires’ smoke
Image

September 9th 2020

25 Retweets170 Likes

The end of the physical Silicon Valley is nigh.

Twitter avatar for @balajisbalajis.com @balajis
San Francisco as the de facto capital of tech is done. That time and place is over. There’s no point in moving there for tech, the businesses are shut down and people aren’t meeting up. It’s all internet now, for a while. And relocation to towns and cities around the world.

August 27th 2020

613 Retweets2,978 Likes

It may sound preposterous, but it’s actually happening:

Twitter avatar for @raboisKeith Rabois @rabois
@pt @jmj it is very real. i serve on 16 boards and at least half of the companies are seriously evaluating or planning to move.

September 10th 2020

27 Retweets216 Likes
Twitter avatar for @kimmaicutlerKim-Mai Cutler @kimmaicutler
Wow. “Pinterest terminated its massive 490,000-square-foot lease, ...citing a shift towards more remote work amid the coronavirus pandemic. The company will... pay a one-time fee of $89.5 million to cancel the Bluxome lease.”

Roland Li @rolandlisf

Pinterest cancels massive Central SoMa lease at 88 Bluxome, citing remote work shift from coronavirus. https://t.co/IU7MONITsE Biggest sign of reduced tech office demand yet and a blow to a giant project with community benefits, including land for affordable housing, public pool https://t.co/WNKjUawKbx

August 28th 2020

523 Retweets1,699 Likes

😂 Oracle is officially buying TikTok

But they won’t get the famous TikTok algorithm as part of it. So…

Twitter avatar for @AustenAusten Allred @Austen
Oracle. Hahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahhahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahaha

September 14th 2020

66 Retweets1,220 Likes

💉 Dopamine Hits

Twitter avatar for @webWeb Smith @web
The most consistent and consequential cpg category of the last 500 years. 1520: "Enjoy your coffee." 1620: "Enjoy your coffee." 1720: "Enjoy your coffee." 1820: "Enjoy your coffee." 1920: "Enjoy your coffee." 2020: "Enjoy your coffee." Coffee is forever.

September 10th 2020

34 Retweets411 Likes
Twitter avatar for @gregisenbergGreg Isenberg @gregisenberg
Observation: if you turn a boring product into a fun product in a big market, you'll win big Example: Robinhood transformed stock trading into a video game Prediction: many boring industries are about to get Robinhood-ified Question: what industries are ready to be more fun?

September 9th 2020

97 Retweets784 Likes
Twitter avatar for @zckZak Kukoff @zck
Two mental models of power: Military and Startup In the military, power is 𝙚𝙭𝙥𝙡𝙞𝙘𝙞𝙩: rank governs behavior At startups, power is 𝙞𝙢𝙥𝙡𝙞𝙘𝙞𝙩: roles are poorly-defined and shift As a result, startups can be harder to navigate — but also create more opportunity

September 6th 2020

36 Retweets267 Likes
Twitter avatar for @J__CubJacob Peters🚀🏠🌴 @J__Cub
'Exit-to-community' is a term you'll want to keep an eye on 👀 In next decade, more startups will explore ways to transition from investor/founder-owned to community-owned. Allows users, customers, & other stakeholders in a company's network to participate in equity upside.

September 11th 2020

3 Retweets19 Likes

📚 Long Reads

Twitter avatar for @nbtNikhil Basu Trivedi @nbt
Hard to think or write about anything today given the state of the sky. I’m reposting my last 𝙣𝙚𝙭𝙩 𝙗𝙞𝙜 𝙩𝙝𝙞𝙣𝙜 essay, which is the one that feels (unfortunately) appropriate.
nbt.substack.com/p/the-climate-…The Climate CrisisDecarbonization is the next big thing.nbt.substack.com

September 9th 2020

4 Retweets49 Likes
Twitter avatar for @AlexAndBooks_Alex and Books 📚 @AlexAndBooks_
Reading advice & thoughts on books from @naval. (thread) 🧵

September 7th 2020

568 Retweets2,701 Likes

🙏 Thanks

Have a great week!

Twitter avatar for @kaneKane @kane
Put some Hans Zimmer on the helmet speakers and pretended I was in Villeneuve’s Blade Runner
Image

September 10th 2020

436 Retweets4,108 Likes
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🌲 Stanford's reign on venture capital is ending
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