8 Comments
Jul 14, 2022Liked by Packy McCormick

This was so well written that I became a fan immediately.

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Superb, Packy. Guess we don't have to worry about you writing or investing in the next 10 minute grocery delivery startup.

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Jul 13, 2022Liked by Packy McCormick

Fascinating Packy. As a previous employee at a SaaS platform that got sold to a larger tech company and now advising startups, there is plenty of food for thought for both them and, indeed, myself

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Packy, your writing is always so refreshing and enlightening. The mission of distributing optimism is one I think more organisations should take on. You are doing that so well!

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Jul 11, 2022Liked by Packy McCormick

Great read Packy, hard things really are interesting. I'm looking forward to your next essay on crypto

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Jul 11, 2022Liked by Packy McCormick

Fantastic essay.

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I'm late to the party reading this, and also full of the last 6 months' hindsight but this feels incredibly obvious. Which is a testament to your writing!

It seems obvious that venture capital should be funding the 'out-there' start-ups. That's what it's for. But somehow, as VCs, we've all fallen into the same trap - we're gaming the system, finding the optimum level of risk/reward. We've minimised risk by investing in repeatable and expectable playbooks - both in DTC, and now SaaS - but up to a point, so that we still get high enough returns to attract ballooning levels of capital. This has coincided with the last decade of quantitative easing and search for yield.

We've also nailed the time-horizon - we're investing in companies that can give semi-predictable returns at a short time-scale, just in time to start returning capital within 5 to 7 years. I'm surprised you don't talk about timing here, as I think it's one of the major reasons why VCs don't do 'hard' - because sometimes it just takes too damn long to really achieve what they set out to.

But something similar to what's happened in DTC is happening to VCs - everyone's figured out the playbook, we have access to most of the same resources, the playing field is too crowded and returns are diminishing. So it now seems obvious that everyone should seek out the 'hard' start-ups, go back to zero, back to what VC is actually meant to be about.

I feel that my job as a VC has both become incredibly harder and easier - harder because funding hard startups takes a lot of educating - partners and LPs alike. It's not the same time horizons! It's not the same risks! And easier because at least I no longer have to pretend to be interested in incremental SaaS companies..

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Amazing! Best piece I’ve read from an EA grad since Spike Eskin’s embiid monologue.

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