Live Website:Delegate Capital | Venture FundLarry Fink’s 2022 capitalism letter
Building venture scalable venture scaling.
Create a better venture capital investment model, that scales and compounds interest faster than the prior model by using 1st principles thinking around the future of company building.
First lets get down to the roots:
Every company structure is a vision for the future created by a human or humans that utilizes capital to give employees comfort in order to do the work required.
Founders taking the risk of becoming a founder has become overvalued because a lack of supply.
Creating Founders College to utilize framing.
Good times create weak men.
We have so many distractions and paths for comfort. We enjoy instant gratification. Not only is this method not optimal for the venture side, its not optimal for founder.
The pros of the co-founder without the cons.
A company that hires talent takes the people are puts them forward to complete the task to hopefully generate more money than that which it cost to set up the venture.
HIRING and putting together base systems is the core.
We are building pre-built engine with code, adding more code minimizes our cost, and we have the cheapest bulk sourcing because of our systems and automation allowing us to build engines cheaper, and faster, with mentorship and connections ready to scale.
Being early is the holy grail in the venture game, and a16z just set its alarm for 4 am. Yesterday, it officially announced its extremely early-stage accelerator program called a16z START. Its website reads “even if you don’t yet have a fully formed idea and haven’t yet quit your day job—we want to hear from you.” That's early.
a16z START will write checks of up to $1 million using capital pulled from a $400 million seed fund closed last year. Pretty standard. But where it gets less Y Combinator-y and more Shark Tank-y is the terms offered to each founder. Namely, there are no set terms.
- While YC locks you in at 7% for $250,000 (or, more recently, $500,000) across the board, START doesn’t offer the same blanket deal, instead negotiating with each founder given their respective needs.
On the application landing page, the fund lists six sectors—American dynamism, consumer, enterprise, fintech, games, and other—that it is looking for founders in. Notably absent from that group is “crypto,” which could represent a conscious attempt to diversify its earliest stage investing away from the sector it already has a chonky $2.2 billion fund devoted towards.
Probably not. For years, a16z has used YC as a place to source deal flow, often jumping into the rounds of the hottest companies that come out of each batch. A16z’s new program could muddy that relationship a bit now that they are competing with each other for the same early stage founders. But lots of other firms, from Sequoia to Accel, have similar programs, so it's unlikely to affect the relationship.
Bottom line: The benefits of launching an early stage accelerator program for a16z are manifold and obvious: less competition, easier to diversify across sectors, more upside, less risk...you get the point. So the real question is, why the heck did it take them so long?
Building venture scalable venture scaling. building. creating to create a better returning fund model, that scales and compounds interest faster than the prior model.
DC is a leaders of leaders venture investing methodology.
Do you bet on the horse or the jockey? We’re here to tell you that the answer is neither. While the horse’s athleticism will be hailed as the fastest and the jockey’s skill and dedication will be lauded for crossing the finish line first, the true bet lies in the trainer who is bringing the horse and the jockey together for the perfect fit. It would seem that there is a correlation between horse betting and startup studios. Some may look for the best jockey — or, the ideal founding team — the athlete that will lead a horse to victory. But this would be a largely unsuccessful betting strategy as the win percentage for top jockeys is around 20%. Others who are focused on finding the “perfect horse” — or, the best idea or biggest problem — to win the race may lose sight of all the other factors. In horse racing, the odds of the favorite horse winning is 33% of total races. Coincidence or not, it’s equally striking that startup ideas only account for 28% of a startup’s success.1 But, if you bet on the trainer who is the expert in bringing together the right jockey for the right horse, then your odds skyrocket. One of the most popular trainers in the world, Bob Baffert, has a career record of finishing in the money in 53% of his races. Seems like the wise choice to bet on the trainer, right? Investors today face much of the same dilemma while investing in startups. As an industry, do we bet on the idea or the team? As investors get more sophisticated and innovative with their portfolio, some are finding that the answer is “none of the above.” Instead, investors are turning to studios — a proven effective and efficient method to build startups.
Create value, produce returns
Barrier to entry to craft a business is lowering.
Redefining online companies. Connecting the global work force, arbitrage on the highest vertical. Building building
It’s an incremental game. Work in derivatives to win. The ultimate B2B SaaS. The Build a B workshop
Empowering Leaders Thoughtfully
The biggest pain points in taking on a project all by oneself is fear of failure, finances, lack of direction, and lack of dopamine.
Delegate Capital believes taking away these pain points, and in return taking large equity stakes in the CEO’s we put onto projects, will yield powerful returns.
Capital is the thing that is used to set up the systems that create value.
Marketing is the act of grabbing attention often through use of capital which turns into capital gained via the system set up.
Good ideas win behind good operators, connect the two, it’s underpriced rn. It finally viable because the rate of information able to be exchanged is so rapid. There’s more available talent and freelancers online as that global economy continues to move forward. When thinking about the internet, think about the global economy, and think about the bigger scale.
Coordination as a Scarce Resource
Let’s start with a few examples of very common real-world coordination problems.
- The marketing department at a car dealership posts ads for specific cars, but the salespeople don’t know which cars were advertised, causing confusion when a customer calls in asking about a specific car. There’s no intentional information-hoarding, it’s just that the marketing and sales people don’t sit next to each other or talk very often. Even if the info were shared, it would need to be translated to a format usable by the salespeople.
- Various hard problems in analysis of large-scale biological data likely have close analogues in econometrics. The econometricians have good methods to solve the problems, and would probably be quite happy to apply those methods to biological data, and the bio experimentalists would love some analytic help. But these people hardly ever talk to each other, and use different language for the same things anyway.
- When the US invaded Grenada in the ‘80’s, the marines occupied one side of the island and the army occupied the other. Their radios were not compatible, so if an army officer needed to contact their counterpart in the marines, they had to walk to the nearest pay phone and get routed through Fort Bragg on commercial telephone lines.
- Various US intelligence agencies had all of the pieces necessary to stop the 9/11 attacks. There were agencies which knew something was planned for that day, and knew who the actors were. There were agencies which knew the terrorists were getting on the planes. There were agencies which could have moved to stop them, but unfortunately the fax(!) from the agencies which knew what was happening wasn’t checked in time.
- There are about 300 million people in the US. If I have a small company producing doilies, chances are there are plenty of people in the US alone who’d love my doilies and be happy to pay for them. But it’s hard to figure out exactly which people those are, and even once that’s done it’s hard to get them a message showing off my product. And even if all that works out, if the customers really want a slightly different pattern, it’s hard for them to communicate back to me what they want - even if I’d be happy to make it.
So coordination problems are a constraint to production of all kinds of economic value. How taut are those constraints?
Well, let’s look at the market price of relaxing coordination constraints. In other words: how much do people/companies get paid for solving coordination problems?
When I think of people whose main job is to solve coordination problems, here are some occupations which spring to mind:
- Entrepreneurs’ main job is to coordinate salespeople, engineers, designers, marketers, investors, customers, regulators, suppliers, shippers, etc…
- Managers’ main job is to coordinate between their bosses, underlings, and across departments
- Investment bankers coordinate between investors, companies, lawyers, and a huge number of people within each of those organizations
- Real estate developers coordinate between builders, landowners, regulators, renters, and investors
Note that all of these are occupations typically associated with very high pay. Even more to the point: within each of these occupations, people who solve more complicated coordination problems (e.g. between more people) tend to make more money. Even at the small end, the main difference between an employee and a freelancer is that the freelancer has to solve their own coordination problem (i.e. find people who want their services); freelancers make lots of money mainly when they are very good at solving this problem.
Similarly with companies. If we go down the list of tech unicorns, most (though not all) of them solve coordination problems as their primary business model:
- Google matches company websites to potentially interested users
- Facebook is a general-purpose coordination platform
- Amazon and Ebay are general-purpose marketplaces: they match buyers to sellers
- Uber/Lyft are more specialized marketplaces
Again: solving coordination problems at scale offers huge amounts of money.
This suggests that coordination problems are very taut constraints in today’s economy.
It’s not hard to imagine why coordination problems would be very taut today. Over the past ~50 years, global travel/transportation has gone from rare to ordinary, and global communication has become cheap and ubiquitous. Geographical constraints have largely been relaxed, and communication/information processing constraints have largely been relaxed. The number of people we could potentially coordinate with has expanded massively as a result - a small doily business can now sell to a national or even global customer base; a phone app can connect any willing driver in a city to any paying rider.
Yet human brains have not changed much, even as the number of people we interact with skyrockets past Dunbar’s number. It’s hard for humans to coordinate with thousands - let alone billions - of other humans. The coordination constraint remains, so as other constraints relax, it becomes more taut.
What Would This Model Predict?
One prediction: suppose I’ve decided to become a freelancer/consultant. I can invest effort in becoming better at my object-level craft, or I can invest effort in becoming better at solving my coordination problem - e.g. by exploring marketing channels or studying my target market. Which of these will make more money? Probably the latter - coordination constraints are very taut, so there’s lots of money to be made by relaxing them.
More generally, when evaluating new business ideas, questions on my short list include:
- How will this business find people who would want to buy the product?
- How will this business make those people aware of the product?
To the extent that coordination is an unusually taut constraint, answers to these questions will be the main determinant of business profitability - even more so than product quality.
Coming from a different direction, when considering a business idea we should ask how many different kinds of people this business needs to coordinate. At one point I worked at a mortgage startup, where the list of internal departments included marketing, sales, underwriting, legal, and capital markets on the mortgage side, plus design, engineering, and ops on the tech side, and on top of that we had to interface to at least a dozen external companies on a regular basis. Coordination is the primary constraint at a company like that.
Yet another direction: if coordination constraints are very taut, then we expect adoption of technology which makes coordination easier. One form of this is outlined in From Personal to Prison Gangs: people make themselves easier to coordinate with, by following standardized patterns of behavior and fitting into standard molds. For instance, in large organizations (where more people need to coordinate) we tend to see group-based identity: rather than understanding what John or Allan does, people understand what lawyers or developers do. Interactions between people become more standardized, and roles more rigid - these are solutions to coordination problems. Such solutions entail large tradeoffs, but coordination constraints are very taut, so large tradeoffs are accepted.
Conversely, if we want a world with less pressure to standardize behavior, then we need some other way to relax coordination constraints - some technology which helps people coordinate at scale without needing to standardize behavior as much. Such technology would probably see wide adoption, and potentially make quite a lot of money as well.
I often hear people they’d like object-level skill/effort to be rewarded more than marketing/sales, or they’d like to see less pressure to standardize behavior, or they’d like the world to be more individualized and identity to be less group-based. To the extent that we buy the picture here, all of these phenomena are solutions to coordination problems. Society rewards marketing over object-level skill, and tries to standardize behavior, because coordination constraints are extremely taut.
If we want the world to look less like that, then we need alternative scalable technologies to solve coordination problems.
If you can delegate profitably, you created economies of scale.
This works so well that companies often referred to as Venture Capital firms, put capital behind people who are proposing their ability to delegate.
Venture Capital firms will give insanely high amounts of capital to people who have already had a proven track record of an ability to delegate
The surge of venture capital is lazy money taking advantage of the untapped vertical of entrepreneurship and paying an overpriced piece of the pie to make it happen for the founders who decide to take the initial risk of spending the first few months figuring it out.
We are moving towards VC providing more value. The further that goes the more it acts like a VC firm. Startup creation software is making it even easier to mange too. https://youtu.be/n39yYSL0z0oBusiness Structure BreakdownDelegate JobsEffective Ownership
The power of thinkers is slowly becoming more and more powerful. The ability to make money based on skill is increasing
(level of ideas + ability to execute)
It’s increasing because the ability to execute is becoming easier and easier.
Therefor the great thinkers will undoubtedly win. Proof of even more business models popping up in this format. (This is an accelerator with a different type of business model which cashes in once they help you raise.)
Learning to scale value and optimize the scaling.
We are the engine manufacturers
One of the amazing parts of the venture studio model is its prestige over time makes capital farming make sense.
Essentially it’s a portfolio with no size limit, that if structured correctly would produce far higher IRR than traditional VC firms. In fact, proof of this concept is the fact that VC firms are investing into these studios. Taking a small piece to get a better return for their fund.
The fund basically becomes the building machine.
This is happening naturally as the costs of time and capital for company formation and growth is decreasing.
Furthermore, it opens up the possibility for having enough attention on the eyes of the studio which creates an internal shark tank effect.
Each business gets customer validation via presale / crowdfunding. Who also become agents of the greater cause.
This not only allows outside capital to fund every great idea, it allows the tracking of the necessary team members, and it allows immediate customer feedback and validation.
This completely changes the economic model of the business.
Ask how fast someone has already moved, and asking deep what has held them back. What you are trying to estimate is the rate of change at which someone operates if you believe them to be someone who creates more value than they destroy.
We believe the highest ROI on funds that’s scalable is creating a founder school and maximizing leverage by building a business building system.
Our venture studio provides services that make building a company more fun, and inviting.
We derisk the path of entrepreneurship by providing stability to hopeful founders, and a path to success.
We created software for the digital age to not only take the load off of positions, but to completely replace the need for founders to hire / bankroll a position entirely.
Automated Chief of Staff > Chief of Staff
Very business is a range of different moving parts to turn attention into value.
We like to think of it as lego sets.
We have automated lego bots to take on multiple departments and allow your time, energy, and resources to be saved to spend on further growth.
Scaling to funding is the way to win.
Owning a Crowdfunding platform, the main value is in featuring your own ventures and getting that investment capital.
Delegate capital is a direct approach of fund investment into value creation. Rather than the approach taken in Venture capital where a premium is placed by the Entrepreneur who takes the risk of becoming an Entrepreneur. A substantial amount of wealth is captured as the proponent of the idea which we at Delegate Capital take a new approach. By claiming the frame in the business structure and having the Entrepreneur hired as an employee of the business, you keep equity in exchange for staking a salary claim on the critical thinking and growth abilities of the Entrepreneur. To still claim the positive effect of the Entrepreneur having full dedication into the idea, basis points will be given as well as the connection to our larger business structure and mentors, with the promise of them taking on the main stake of their future startup, by proving their business acumen in a no-risk, less stress structure for them.
As entrepreneurs, when something needs to be done, there’s a temptation to just roll up our sleeves and do it.
If you want something done right, you need to do it yourself. Right? WRONG. Very wrong.
Trust me, I learned this lesson the hard way and it put a cap on my business scalability (and hence income) for a long time.
You need to understand that business is a team sport. And like any team sport you need different skills within the team. Here are the three roles you need to make your business to succeed.
The first is the Entrepreneur. They’re the ideas person or visionary. They’ll see a problem or gap in the market and think, Hey, I can solve that problem for a profit. I can bring value to the market, and so they do.
Entrepreneurs aren’t afraid to take risks. They drive the vision and the ideas. They inspire people, they create products, and love creating the future. They’re absolutely critical.
This is likely who you are and it’s certainly who I am. So it’s likely you have the entrepreneur role in your business well covered.
The next role you need is the Specialist. They take the entrepreneur’s vision and help make it a reality. They could be an engineer, or a venture capitalist, or a web developer, or anything else with a unique skill. They essentially take your idea and help make it a reality. Sometimes the entrepreneur and the specialist can be the same person.
The last role you need to create a successful business is the Manager. They make sure that work gets delivered and that the vision is on track. They ensure that staff are doing what they should be doing and that customers are being taken care of.
This is the stuff that entrepreneurs typically hate and get bored with quickly (and hence don’t do) and then the wheels start to fall off.
Do you enjoy creating and following checklists, handling HR, dealing with support issues?
I didn’t think so…
But guess what, manager types love this kind of work.
If you don’t have this role in your business, it’s going to put a very firm lid on your scalability.
Conversely, a good operations manager will change your life.
Your manager allows you to become the rock star who shows up on stage to do the show. You get all the applause and then leave the crowd cheering.
However, it’s your manager who is there with the whole crew before the show setting up and after the show packing everything up.
Managers are a crucial element in your people strategy.
If you want rapid business growth I’d recommend auditing your business and ensuring all these three roles are well covered: the entrepreneur, the specialist, and the manager.
In the words of the late, great Jim Rohn, “Getting the right people in your business to work together is a lot like herding cats. But when you get them to all work together, it’s magic!”
Now, as a new founder you may be thinking, well I simply cannot afford to pay these people. Which is why we should zoom out a step and talk about what the main role of the Entreprenuer is.
Focusing, as a venture studio on bringing our founders into the hands of capital. minimum viable raise. Focusing on what needs to be done to get capital to start out with.
We believe the most valuable decision a person can make is a commitment to being an Entrepenuer. We are investing wholeheartedly into making that decision possible for those who havnt yet made the choice but have an inkling in their heart.
Fear is the greatest thing which holds someone back from making the decision to become someone who is far more valuable to the world and society. We focus on eliminating the fear, taking away the feeling of risk, and capturing a portion of the value by partnering with the founder.
We believe focusing on creating more founders is the place where the greatest value exists.
of the world by giving them a type of system which re-risks the concept of becoming an Entrepenuer
Our businesses are time machines that deterministically pulls the future forward. We see the inevitable and help to bring it into reality.
We view successful building as a function of broadminded curiosity and deterministic alignment, leavened by constructive skepticism and capital discipline. Agnostic to sector, geography, and conventional credentials, this approach finds us partnered with founders who use technology to build valuable and lasting businesses, often in industries long overdue for change.
Our best portfolio companies function as time machines that deterministically pull the future forward.
https://twitter.com/singareddynm/status/1545138479075672066?s=21&t=pmd9dUL62WXHolTiw0UWTg Venture capital being so wasteful
Y combinator is like a degree for founders, and it’s worth quite a lot. Normally around 10m off the bat.
What men really want is sustainability and scale.
Sustainability is on the same degree as security except has more to it. Sustainability is a life that while it’s being lived, can be forecasted forward as a way to live long term, that which brings good emotions and happy vibes.
Unsustainable habits include most hard drugs, excessive drinking, lack of excessive, lack of close relationships and so on.
Many men and women who go through the process of relinquishing the side of security on the sustainability side, find out that it was a sham all along, that the options to find means of security as a level headed individual is countless when needed. Especially when one has secured their own level-headedness and peace of mind.
This is an awakening moment for many, the ability to let go, and have faith in yourself and whatever the future holds called Amor Fati. The love of one’s faith.
Scalability is the other piece of the equation necessary in a man’s pursuit of an exciting life.
This is a necessary piece for those who wish to dream.
As the future comes of easily replaceable code, it will be the ones with bulk of the processes already understood and optimized that will most benefit from their replacement en masse.
It will be the org who can open up these bottlenecks of automation and instantly convert it into capital to reflow into endeavors.
Same idea as delegate Capital
https://join.launchpeer.com/ Copy This....
The macro investor more closely resembles a detective, who must piece together indirect clues that point to nocturnal events in faraway places-Peter Thiel
During the last quarter century, the world has seen more asset booms or bubbles than all previous times put together.-Peter Thiel
Clarium’s mission is to find another way, the straight and narrow path between the Scylla of outdated wisdom and the Charybdis of nihilistic cleverness.—Peter Thiel
Being between Scylla and Charybdis is an idiom deriving from Greek mythology, which has been associated with the proverbial advice "to choose the lesser of two evils".
As Sergey and I wrote in the original founders letter 11 years ago, “Google is not a conventional company. We do not intend to become one.” As part of that, we also said that you could expect us to make “smaller bets in areas that might seem very speculative or even strange when compared to our current businesses.” From the start, we’ve always strived to do more, and to do important and meaningful things with the resources we have.
We did a lot of things that seemed crazy at the time. Many of those crazy things now have over a billion users, like Google Maps, YouTube, Chrome, and Android. And we haven’t stopped there. We are still trying to do things other people think are crazy but we are super excited about.
We’ve long believed that over time companies tend to get comfortable doing the same thing, just making incremental changes. But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant.
Our company is operating well today, but we think we can make it cleaner and more accountable. So we are creating a new company, called Alphabet. I am really excited to be running Alphabet as CEO with help from my capable partner, Sergey, as President.
What is Alphabet? Alphabet is mostly a collection of companies. The largest of which, of course, is Google. This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main internet products contained in Alphabet instead. What do we mean by far afield? Good examples are our health efforts: Life Sciences (that works on the glucose-sensing contact lens), and Calico (focused on longevity). Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related.
Alphabet is about businesses prospering through strong leaders and independence. In general, our model is to have a strong CEO who runs each business, with Sergey and me in service to them as needed. We will rigorously handle capital allocation and work to make sure each business is executing well. We’ll also make sure we have a great CEO for each business, and we’ll determine their compensation. In addition, with this new structure we plan to implement segment reporting for our Q4 results, where Google financials will be provided separately than those for the rest of Alphabet businesses as a whole.
This new structure will allow us to keep tremendous focus on the extraordinary opportunities we have inside of Google. A key part of this is Sundar Pichai. Sundar has been saying the things I would have said (and sometimes better!) for quite some time now, and I’ve been tremendously enjoying our work together. He has really stepped up since October of last year, when he took on product and engineering responsibility for our internet businesses. Sergey and I have been super excited about his progress and dedication to the company. And it is clear to us and our board that it is time for Sundar to be CEO of Google. I feel very fortunate to have someone as talented as he is to run the slightly slimmed down Google and this frees up time for me to continue to scale our aspirations. I have been spending quite a bit of time with Sundar, helping him and the company in any way I can, and I will of course continue to do that. Google itself is also making all sorts of new products, and I know Sundar will always be focused on innovation—continuing to stretch boundaries. I know he deeply cares that we can continue to make big strides on our core mission to organize the world’s information. Recent launches like Google Photos and Google Now using machine learning are amazing progress. Google also has some services that are run with their own identity, like YouTube. Susan is doing a great job as CEO, running a strong brand and driving incredible growth.
Sergey and I are seriously in the business of starting new things. Alphabet will also include our X lab, which incubates new efforts like Wing, our drone delivery effort. We are also stoked about growing our investment arms, Ventures and Capital, as part of this new structure.
Alphabet Inc. will replace Google Inc. as the publicly-traded entity and all shares of Google will automatically convert into the same number of shares of Alphabet, with all of the same rights. Google will become a wholly-owned subsidiary of Alphabet. Our two classes of shares will continue to trade on Nasdaq as GOOGL and GOOG.
For Sergey and me this is a very exciting new chapter in the life of Google—the birth of Alphabet. We liked the name Alphabet because it means a collection of letters that represent language, one of humanity’s most important innovations, and is the core of how we index with Google search! We also like that it means alpha‑bet (Alpha is investment return above benchmark), which we strive for! I should add that we are not intending for this to be a big consumer brand with related products—the whole point is that Alphabet companies should have independence and develop their own brands.
We are excited about…
- Getting more ambitious things done.
- Taking the long-term view.
- Empowering great entrepreneurs and companies to flourish.
- Investing at the scale of the opportunities and resources we see.
- Improving the transparency and oversight of what we’re doing.
- Making Google even better through greater focus.
- And hopefully… as a result of all this, improving the lives of as many people as we can.
What could be better? No wonder we are excited to get to work with everyone in the Alphabet family. Don’t worry, we’re still getting used to the name too!
Because of this
Venture studios are more capable
False digital identities are worth more
VC’s are basically recruiting Founder’s but taking bad deals, and predicating their investments on if the founder can play the game of salesman.
Imagine a company who waits to get pitched by the potential employees. The employees say what they are going to do for the company, they tell them what they want in salary, and they tell them what they are going to do for the company.
When investing in Founder’s early on too many people treat it like scouting a quarterback.
Rather than looking for the guy with the skills, the best investment lies in finding the guy with the biggest ability to train their skills. That’s where you turn the undervalued potential star quarterback, create them, and profit from all the other firms who invest into that person.
This is my fund's thesis, but using the automation of human labor to enable penetration of the fragmented market.
The autists who are completely off putting are potentially the great finds. They are a roundabout method overlooked by norms. The antithesis of if it sounds to good to be true it is and often times their legit capable ideas smell like bullshit to some VC’s
They can make gold smell like shit to people but the worst salesmen sometimes have the best product.
These people just need a co-founder.