> The world desperately needs better consumer products
Prove this assertion. The world need affordable and accessible housing, childcare, healthcare, and basic nutritional needs met (ie groceries). The world needs low carbon energy manufactured and deployed as fast and inexpensive as possible. There is no evidence consumer products are lacking.
What it turns out is that in a forward looking macro where there is little to no growth, profit seeking ventures are either skimming off the economy in some fashion or speculation.
(venture capital is a poor performing asset class, based on the evidence)
"There is no evidence consumer products are lacking" .... silence ..... Really?
I think my assertion is self evident.
Despite having powerful computers in everyone's pockets, we have rising rates of depression, financial illiteracy, social isolation, and civic disengagement. That's not a hardware problem, it's a software problem. That's not a B2B problem, that's a consumer problem. The consumer products we have are actively making people's lives worse instead of empowering them with education, genuine connection, and practical tools for building wealth and community.
When these apps are designed to maximize engagement through addiction rather than education, we get outcomes like people spending hours doom scrolling instead of learning everything you addressed, not limited to financial literacy, community organizing, and other practical life skill. We don;'t need handouts, we need people to get smart on their terms, or they will become your headache in the streets.
On climate carbon, the "official" climate data has been repeatedly adjusted and manipulated by those who grant the research funds. Lets not act like corruption and blackmail isn't at the core of our political and financial systems (Epstein anybody?). A deep dive on climate change points that there is no "climate change". You might be young, but I remember Al Gore saying we'd be underwater by now, and this warning was parroted repeatedly almost 100 years before he even said it, with old newspaper clips proving this claim. Raw temperature data from weather stations shows we're actually in a cooling period. The carbon hysteria is largely a political and financial construct designed, similar to the covid scam (which the vaccine was planned and patented a decade before launching), to justify massive wealth transfers and control mechanisms. Real environmental issues like soil depletion, water pollution, and biodiversity loss gets ignored while everyone obsesses over a trace gas that plants need to survive. This is the problem with a lof of "smart" tech people, they aren't street smart, the trust the systems, and they challenge very little if anything. That was the early valley, intelligent punks, cyberpunks if you will.
Nonetheless, venture capital has historically delivered the highest returns of any asset class when it actually funds breakthrough innovation rather than incremental B2B tools. The "poor performance" comes from the risk averse era of funding acquisition plays instead of category creators. The garage startups that VCs used to fund, the Apples, Microsofts, Googles, Facebooks, generated the highest returns in financial history. The problem isn't venture capital as a model; it's that VCs stopped being venture capitalists and became glorified investment bankers. And lets not ignore the fact that VCs are buddy buddy with these company executives, and I'm sure they have actively stifled 1 or 2 startups coming for them in their tenure, which is why AI that they're building, ironically puts their dominance at risk.
80% of YC's next investments should be consumer apps. They can dedicate a few semesters to consumer apps. The reality is the B2B game is cooked. Enterprise will build those tools themselves now, accept it. So when there's nothing left to invest in after the B2BAAS religion dies, the only logical conclusion is to return to the roots, and fund big, bold ideas that challenge the status quo, or VCs need to admit they had a good run and live off revenue from their legacy goliaths.
Yes, evolution and disruption will happen. Investing into "better" products is relative, but depends upon how much enshittification has occured in said market/markets versus expectation of the market. Monopolistic/oligopolistic market players have lower incentive to provide quality as their customers are captives. Just look at the kidney dialysis market or health markets where customers are often worse off after "consuming" the product than before. Appetite for disruption is present in markets with some form of equilibrium that is not aligned with expectations of the customer.
The VC industry will evolve, but many individual firms will not be given a chance by LP's. There is a tension between marketing TVPI and DPI to LP's. In up markets, LP's are less concerned about returns and get excited about markups, probably because there is likely to be a buyer later on. In down markets, LP's feel overexposed and DPI means everything.
Later stage VC's seem to be more susceptible to cyclical disruption in the market. Earlier stage VC's are also impacted, but there is a longer delay and portfolio companies have more headroom. Earlier stage VC's are less susceptible on the porfolio side, but exit periods will lengthen. Cyclical disruption rears its ugly head in several forms: LP funding and portfolio company success. Approaches in portfolio structure in a zero interest rate environment is different from what happens in a more "normal" environment. "Better" well known funds are more likely to see funds, but with a lower expectation returns. Emerging managers who may be closer to the opportunities in a new wave of tech often realize better returns on average, but they are unknown by LP's and seen as riskier.
Exit hypotheses and odds help build an idea of how the math works in a portfolio. Smaller/earlier stage VC's have more exit options: acquisitions, 2ndaries, and IPO's. Few companies can scale to a point where established/larger VC's will be happy with the returns. But, we're entering an environment where economics of the entrepreneur side are changing and this will also apply to VC's. With the new generation of tools, VC's don't really need to buy up a bunch of tools to manage their funds if they have the means to build it themselves. Small VC's don't have a budget to pay for tools.
But VC funded companies form a small slice of innovation in economies. There are bootstrapped and angel funded deals. There are companies that start on public grants, in garages, and in university settings. The environment we are going into has lower barriers to entry in all kinds of crazy ideas, so there are many opportunities that are more possible now than they were before.
> The world desperately needs better consumer products
Prove this assertion. The world need affordable and accessible housing, childcare, healthcare, and basic nutritional needs met (ie groceries). The world needs low carbon energy manufactured and deployed as fast and inexpensive as possible. There is no evidence consumer products are lacking.
What it turns out is that in a forward looking macro where there is little to no growth, profit seeking ventures are either skimming off the economy in some fashion or speculation.
(venture capital is a poor performing asset class, based on the evidence)
"There is no evidence consumer products are lacking" .... silence ..... Really?
I think my assertion is self evident.
Despite having powerful computers in everyone's pockets, we have rising rates of depression, financial illiteracy, social isolation, and civic disengagement. That's not a hardware problem, it's a software problem. That's not a B2B problem, that's a consumer problem. The consumer products we have are actively making people's lives worse instead of empowering them with education, genuine connection, and practical tools for building wealth and community.
When these apps are designed to maximize engagement through addiction rather than education, we get outcomes like people spending hours doom scrolling instead of learning everything you addressed, not limited to financial literacy, community organizing, and other practical life skill. We don;'t need handouts, we need people to get smart on their terms, or they will become your headache in the streets.
On climate carbon, the "official" climate data has been repeatedly adjusted and manipulated by those who grant the research funds. Lets not act like corruption and blackmail isn't at the core of our political and financial systems (Epstein anybody?). A deep dive on climate change points that there is no "climate change". You might be young, but I remember Al Gore saying we'd be underwater by now, and this warning was parroted repeatedly almost 100 years before he even said it, with old newspaper clips proving this claim. Raw temperature data from weather stations shows we're actually in a cooling period. The carbon hysteria is largely a political and financial construct designed, similar to the covid scam (which the vaccine was planned and patented a decade before launching), to justify massive wealth transfers and control mechanisms. Real environmental issues like soil depletion, water pollution, and biodiversity loss gets ignored while everyone obsesses over a trace gas that plants need to survive. This is the problem with a lof of "smart" tech people, they aren't street smart, the trust the systems, and they challenge very little if anything. That was the early valley, intelligent punks, cyberpunks if you will.
Nonetheless, venture capital has historically delivered the highest returns of any asset class when it actually funds breakthrough innovation rather than incremental B2B tools. The "poor performance" comes from the risk averse era of funding acquisition plays instead of category creators. The garage startups that VCs used to fund, the Apples, Microsofts, Googles, Facebooks, generated the highest returns in financial history. The problem isn't venture capital as a model; it's that VCs stopped being venture capitalists and became glorified investment bankers. And lets not ignore the fact that VCs are buddy buddy with these company executives, and I'm sure they have actively stifled 1 or 2 startups coming for them in their tenure, which is why AI that they're building, ironically puts their dominance at risk.
80% of YC's next investments should be consumer apps. They can dedicate a few semesters to consumer apps. The reality is the B2B game is cooked. Enterprise will build those tools themselves now, accept it. So when there's nothing left to invest in after the B2BAAS religion dies, the only logical conclusion is to return to the roots, and fund big, bold ideas that challenge the status quo, or VCs need to admit they had a good run and live off revenue from their legacy goliaths.
It hasn't been profitable to make real products since the 1980s, just services: https://en.wikipedia.org/wiki/Financialization
This is why VCs don't spend money investing in "real products" anymore. It's just not profitable enough.
Honestly, in the long term the world would be a better place without Microsoft, Google and Facebook.
Yes, evolution and disruption will happen. Investing into "better" products is relative, but depends upon how much enshittification has occured in said market/markets versus expectation of the market. Monopolistic/oligopolistic market players have lower incentive to provide quality as their customers are captives. Just look at the kidney dialysis market or health markets where customers are often worse off after "consuming" the product than before. Appetite for disruption is present in markets with some form of equilibrium that is not aligned with expectations of the customer.
The VC industry will evolve, but many individual firms will not be given a chance by LP's. There is a tension between marketing TVPI and DPI to LP's. In up markets, LP's are less concerned about returns and get excited about markups, probably because there is likely to be a buyer later on. In down markets, LP's feel overexposed and DPI means everything.
Later stage VC's seem to be more susceptible to cyclical disruption in the market. Earlier stage VC's are also impacted, but there is a longer delay and portfolio companies have more headroom. Earlier stage VC's are less susceptible on the porfolio side, but exit periods will lengthen. Cyclical disruption rears its ugly head in several forms: LP funding and portfolio company success. Approaches in portfolio structure in a zero interest rate environment is different from what happens in a more "normal" environment. "Better" well known funds are more likely to see funds, but with a lower expectation returns. Emerging managers who may be closer to the opportunities in a new wave of tech often realize better returns on average, but they are unknown by LP's and seen as riskier.
Exit hypotheses and odds help build an idea of how the math works in a portfolio. Smaller/earlier stage VC's have more exit options: acquisitions, 2ndaries, and IPO's. Few companies can scale to a point where established/larger VC's will be happy with the returns. But, we're entering an environment where economics of the entrepreneur side are changing and this will also apply to VC's. With the new generation of tools, VC's don't really need to buy up a bunch of tools to manage their funds if they have the means to build it themselves. Small VC's don't have a budget to pay for tools.
But VC funded companies form a small slice of innovation in economies. There are bootstrapped and angel funded deals. There are companies that start on public grants, in garages, and in university settings. The environment we are going into has lower barriers to entry in all kinds of crazy ideas, so there are many opportunities that are more possible now than they were before.