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Best of LinkedIn: Venture Capital CW 03/ 04 · Best of LinkedIn: Strategy, M&A & Investments

• 0:00
  Speaker 0: provided by Thomas Allgaier and Frennus, based on the most relevant LinkedIn posts about venture capital from CW three and four.
• 0:07
  Speaker 0: Frennus specializes in BDB market research for venture capital teams, providing landscape screenings and startup segmentations with a strong focus on the tech space.
• 0:16
  Speaker 1: So it's the end of January, twenty twenty six and, you know, When you look at the landscape, there's this really deceptive signal in the market.
• 0:24
  Speaker 1: Well, if you just scan the headlines, you see these massive rounds, huge AI announcements, and you might think, okay, we're back.
• 0:31
  Speaker 1: The bull run is on.
• 0:33
  Speaker 0: But the data we've pulled from the last couple of weeks, it tells a totally different story.
• 0:37
  Speaker 0: It feels like we're looking at a barbell market.
• 0:41
  Speaker 1: That's a perfect way to put it.
• 0:42
  Speaker 0: On one end, you have this massive heavy capital concentration, billion dollar checks just flying into infrastructure.
• 0:48
  Speaker 0: And then on the other end, for, well, for everyone else, it's a disciplined grinding reality.
• 0:53
  Speaker 1: Exactly.
• 0:53
  Speaker 1: It's a story of extreme divergence.
• 0:55
  Speaker 1: Yeah.
• 0:56
  Speaker 1: So our mission for this deep dive is really to unpack that gap.
• 0:59
  Speaker 1: We're going to look at the macro view, the haves and have nots.
• 1:01
  Speaker 1: Right.
• 1:02
  Speaker 1: Then we'll dig into the distortion field that AI is creating.
• 1:06
  Speaker 1: And finally, the new playbook for founders and fund managers.
• 1:10
  Speaker 1: Because the rules of the game have fundamentally changed.
• 1:13
  Speaker 1: Okay,
• 1:13
  Speaker 0: let's start with that macro picture.
• 1:14
  Speaker 0: You mentioned divergence.
• 1:16
  Speaker 0: Thomas Algar had a great analysis of this.
• 1:18
  Speaker 0: He said capital isn't accelerating broadly.
• 1:20
  Speaker 0: It's just concentrating.
• 1:22
  Speaker 1: it is.
• 1:23
  Speaker 1: the whole gravitational pull of the market has shifted and the most brutal illustration of this is the chasm opening up between the US and Europe.
• 1:31
  Speaker 1: Oh,
• 1:32
  Speaker 0: I saw this Greg Batby's number.
• 1:34
  Speaker 1: They're shocking right.
• 1:35
  Speaker 1: for twenty twenty five the US market hit roughly three hundred forty billion dollars in deal value.
• 1:41
  Speaker 0: Which is a healthy number.
• 1:42
  Speaker 1: It is.
• 1:42
  Speaker 1: A very healthy number.
• 1:43
  Speaker 1: But then you look at Europe, about twenty three billion euros.
• 1:46
  Speaker 1: Wait,
• 1:46
  Speaker 0: hold on.
• 1:47
  Speaker 0: Three hundred and forty billion versus twenty three?
• 1:49
  Speaker 0: That's not just a gap.
• 1:50
  Speaker 0: That's a rounding error.
• 1:51
  Speaker 0: It's a whole order of magnitude difference.
• 1:53
  Speaker 0: It is.
• 1:53
  Speaker 1: And we have to ask why.
• 1:55
  Speaker 1: Bappy points out that in volatile markets, LPs, the folks who fund the VCs, they flake to safety.
• 2:01
  Speaker 0: Sure, that makes sense.
• 2:02
  Speaker 1: But in venture, safety isn't bonds.
• 2:05
  Speaker 1: It's liquidity.
• 2:06
  Speaker 1: It's predictability.
• 2:07
  Speaker 1: The U.S.
• 2:08
  Speaker 1: market offers a clear path to an exit M&A, IPOs.
• 2:12
  Speaker 1: Europe is still struggling with that depth.
• 2:14
  Speaker 1: If you're an LP and you can't sell how you get your money out,
• 2:17
  Speaker 0: you don't put it in in the first place.
• 2:19
  Speaker 0: A liquidity trap.
• 2:20
  Speaker 1: Exactly.
• 2:21
  Speaker 1: But it's not just Europe, right?
• 2:23
  Speaker 1: I saw that post from Steve Torso about the Australian market.
• 2:25
  Speaker 1: He's the word that really stuck with me.
• 2:27
  Speaker 1: Hibernation.
• 2:28
  Speaker 0: Yes, and that context is so important.
• 2:31
  Speaker 0: While San Francisco is partying like it's twenty twenty one, local ecosystems like Australia have seen early stage funding drop by almost fifty percent.
• 2:40
  Speaker 0: Wow.
• 2:40
  Speaker 0: It creates this this total bifurcation.
• 2:42
  Speaker 0: If you're a founder in a regional hub, you just can't look at the global headlines and think they apply to you.
• 2:47
  Speaker 0: You're in a different economic weather system.
• 2:50
  Speaker 1: But there is a third player.
• 2:51
  Speaker 1: Kind of entering the Chad, isn't there?
• 2:53
  Speaker 1: If the U.S.
• 2:53
  Speaker 1: is booming and Europe is freezing, the Middle East seems to be building its own gravity.
• 2:58
  Speaker 0: Right.
• 2:58
  Speaker 0: Said Abdujabbar and Mudit Sharma were talking about record deployment in Saudi Arabia.
• 3:03
  Speaker 1: And this is that fascinating shift all guys are hinted at.
• 3:06
  Speaker 1: Saudi Arabia saw one point seven two billion dollars deployed in twenty twenty five.
• 3:11
  Speaker 1: But the real story isn't just the dollar amount, it's the concentration.
• 3:15
  Speaker 1: Forty-five percent of all VC funding in the entire MENA region is now flowing specifically into Saudi Arabia.
• 3:22
  Speaker 0: Nearly half the capital for a whole region going to one country.
• 3:25
  Speaker 0: That sounds incredibly aggressive, but is it, you know, sustainable?
• 3:30
  Speaker 0: We've seen regions try to buy an ecosystem before.
• 3:33
  Speaker 0: And
• 3:33
  Speaker 1: usually the startups leave when the subsidies dry up.
• 3:35
  Speaker 1: Exactly.
• 3:36
  Speaker 1: Well, that's the skepticism Mudit Sharma addresses.
• 3:38
  Speaker 1: He argues this isn't cyclical, it's It's all driven by vision.
• 3:43
  Speaker 1: It's a sovereign mandate.
• 3:45
  Speaker 1: So unlike a European BC who's nervous about their next fundraise, Saudi capital is policy aligned.
• 3:50
  Speaker 1: They're building an economy, not just a portfolio.
• 3:52
  Speaker 0: So if you're a deep tech founder, starving for capital in Berlin, Riyadh is becoming a primary lifeline.
• 3:57
  Speaker 0: It
• 3:57
  Speaker 1: is.
• 3:57
  Speaker 1: And we should briefly mention China.
• 3:59
  Speaker 1: Dennis Kalinin flagged that they've rebounded in a big way, actually surpassing Europe in deal count now.
• 4:04
  Speaker 0: And that's driven by what?
• 4:05
  Speaker 0: Deep tech?
• 4:06
  Speaker 1: Heavily.
• 4:07
  Speaker 1: Robotics and deep tech.
• 4:09
  Speaker 1: So the map is getting clearer.
• 4:11
  Speaker 1: The US and China are powering ahead.
• 4:13
  Speaker 1: Saudi Arabia is rising as a structural capital hub and everyone else, well, they're fighting for scraps.
• 4:19
  Speaker 0: Let's zoom in on that US surge because obviously the engine room there is AI.
• 4:24
  Speaker 0: But the term AI boom feels a little misleading.
• 4:27
  Speaker 0: It's not broad-based, is it?
• 4:29
  Speaker 1: Not at all.
• 4:30
  Speaker 1: And Peter Walker share a metric that basically defines the entire market right now.
• 4:34
  Speaker 1: He said AI ate forty-four percent of all invested capital.
• 4:38
  Speaker 1: But here's the kicker.
• 4:39
  Speaker 1: If you look just at software startups, that number jumps to sixty-one percent.
• 4:43
  Speaker 0: Sixty-one percent.
• 4:44
  Speaker 0: So almost two-thirds of every single dollar invested in software is going into AI.
• 4:49
  Speaker 1: Correct.
• 4:50
  Speaker 1: Which means if you're building a traditional SaaS platform, a marketplace, anything else, you are fighting for a shrinking slice of the pie.
• 4:56
  Speaker 1: You're playing on hard mode.
• 4:57
  Speaker 1: And
• 4:57
  Speaker 0: even within AI, the money's not spread out.
• 5:00
  Speaker 0: Chase Aldridge made a really important distinction.
• 5:02
  Speaker 0: The capital isn't chasing the chat GPT rappers anymore.
• 5:05
  Speaker 1: No.
• 5:06
  Speaker 1: That hype cycle is over.
• 5:07
  Speaker 1: It's dead.
• 5:08
  Speaker 1: Aldrich says the capital is chasing picks and shovels.
• 5:11
  Speaker 1: It's infrastructure.
• 5:12
  Speaker 1: It's agents that can actually execute work.
• 5:15
  Speaker 1: I mean, look at XAI raising twenty billion dollars.
• 5:17
  Speaker 1: That wasn't for a better user interface.
• 5:18
  Speaker 0: It was for compute cluster.
• 5:20
  Speaker 0: All
• 5:20
  Speaker 1: for compute.
• 5:22
  Speaker 1: And Herwig Springer connected this to NVIDIA's strategy.
• 5:25
  Speaker 0: Right.
• 5:25
  Speaker 0: They back the companies that consume their product.
• 5:28
  Speaker 1: It's a brilliant self-reinforcing loop.
• 5:30
  Speaker 1: The winners are building the rails.
• 5:31
  Speaker 1: the AI economy runs on.
• 5:34
  Speaker 1: But this creates a massive distortion field.
• 5:37
  Speaker 1: The FOMO.
• 5:38
  Speaker 1: The fear of missing out on this one specific layer is so intense, it's actually breaking the unwritten rules of venture capital.
• 5:44
  Speaker 0: You're talking about the Itamar Novik post about Sequoia.
• 5:47
  Speaker 1: I am.
• 5:48
  Speaker 0: This one really surprised me.
• 5:49
  Speaker 0: Novik appointed out Sequoia capital backed Anthropic.
• 5:52
  Speaker 0: But Sequoia is also a major backer of open AI.
• 5:56
  Speaker 1: A direct head-to-head competitor.
• 5:58
  Speaker 0: I thought that was the golden rule.
• 5:59
  Speaker 0: You pick one horse in the race, you don't bet on the Yankees and the Red Sox, it's a huge conflict of interest.
• 6:04
  Speaker 1: Historically, yes.
• 6:05
  Speaker 1: In the ride-sharing wars, you backed Uber or Lyft.
• 6:09
  Speaker 1: Not both.
• 6:10
  Speaker 1: You're on the board.
• 6:10
  Speaker 1: You have sensitive info.
• 6:12
  Speaker 1: But Novik's analysis is crucial here.
• 6:15
  Speaker 1: The fact that Sequoia is willing to breach that protocol, it signals one thing.
• 6:19
  Speaker 0: What's that?
• 6:20
  Speaker 1: Panic.
• 6:21
  Speaker 0: Panic, really?
• 6:22
  Speaker 1: Panic about vintage risk.
• 6:25
  Speaker 1: The feeling is, the winner-take-all dynamic in AI models is so strong, and the capital needs are so high that if you miss the winner, you miss the entire return for the decade.
• 6:36
  Speaker 1: So if VCs are terrified of having zero exposure, and they're throwing the governance rulebook out the window to make sure they have a seat at every table.
• 6:43
  Speaker 1: So FOMO
• 6:44
  Speaker 0: is overriding governance.
• 6:45
  Speaker 0: That's honestly a little terrifying.
• 6:47
  Speaker 0: It shows how desperate the smart money is to get into that infrastructure layer.
• 6:50
  Speaker 0: Okay,
• 6:50
  Speaker 1: so let's bring this down to Earth.
• 6:51
  Speaker 1: If you're not Sam Altman raising twenty billion, how do you survive?
• 6:54
  Speaker 0: You need a new playbook.
• 6:55
  Speaker 0: And we actually had some very tactical advice on this.
• 6:58
  Speaker 0: Matan Hasanov had a great post about the anti-sales
• 7:01
  Speaker 1: pitch.
• 7:01
  Speaker 1: I love this.
• 7:02
  Speaker 1: He basically said, stop trying to sell me.
• 7:04
  Speaker 1: It sounds so counterintuitive, right?
• 7:06
  Speaker 1: Founders are trained to be hype men.
• 7:08
  Speaker 1: But Hasanov's point is that VCs see hundreds of pitches.
• 7:12
  Speaker 1: They have incredibly sensitive BS detectors.
• 7:15
  Speaker 1: When a founder comes in acting like they don't need the money or creating artificial scarcity, it just feels performative.
• 7:22
  Speaker 0: So what's the alternative?
• 7:23
  Speaker 1: Transparency.
• 7:25
  Speaker 1: Hasanov says, admitting, here's where we're stuck, and here's how this capital unlocks the next stage.
• 7:31
  Speaker 1: That's far more compelling.
• 7:32
  Speaker 1: It builds trust.
• 7:33
  Speaker 1: And in a tight market, trust is the only currency that matters.
• 7:37
  Speaker 0: Speaking of trust, Harry Stebbings dropped a list of killers for seed rounds.
• 7:41
  Speaker 0: And these are painfully specific.
• 7:43
  Speaker 0: His first one, don't bring more than one founder to the first call.
• 7:47
  Speaker 1: This one creates so much debate, but he's right.
• 7:49
  Speaker 1: The first call is about building a psychological hook.
• 7:52
  Speaker 1: A rapport.
• 7:53
  Speaker 1: If you have three co-founders on a Zoom, the energy is just diluted.
• 7:57
  Speaker 1: You can't fall in love with the committee.
• 7:59
  Speaker 0: That makes sense.
• 7:59
  Speaker 0: It's about intimacy.
• 8:00
  Speaker 0: But his second point, this is the one that really stood out.
• 8:03
  Speaker 0: He said, do not bring a financial model to a seed pitch.
• 8:07
  Speaker 1: Yeah.
• 8:07
  Speaker 1: This is the one that gives every NBA a heart attack.
• 8:10
  Speaker 0: Right.
• 8:10
  Speaker 0: Don't you want to show you have a plan?
• 8:12
  Speaker 0: You've thought about the numbers.
• 8:13
  Speaker 1: You want to show you have a vision, not a fantasy.
• 8:16
  Speaker 1: Stebbings is brutal here.
• 8:17
  Speaker 1: He says projecting revenue for twenty thirty is total BS.
• 8:21
  Speaker 1: And he's right.
• 8:22
  Speaker 1: At the seed stage, you don't know if your product will even exist in twenty twenty eight.
• 8:26
  Speaker 1: Let alone
• 8:27
  Speaker 0: what your churn rate will be.
• 8:29
  Speaker 1: Exactly.
• 8:30
  Speaker 1: So bringing the spreadsheet actually hurts you.
• 8:32
  Speaker 1: It signals you're focused on the wrong things.
• 8:34
  Speaker 1: It destroys credibility because the investor knows you're just making it up.
• 8:38
  Speaker 1: When you present it with confidence, you just look delusional.
• 8:41
  Speaker 0: It's a trust test.
• 8:42
  Speaker 0: He also said, don't talk about an exit strategy.
• 8:44
  Speaker 0: Same
• 8:44
  Speaker 1: logic.
• 8:45
  Speaker 1: If you're already talking about who buys you, you're not thinking big enough.
• 8:48
  Speaker 1: You're a flipper, not a builder.
• 8:51
  Speaker 1: VCs need those hundred X returns, and flippers don't generate that.
• 8:54
  Speaker 0: Okay, so you nail the pitch.
• 8:56
  Speaker 0: Authentic, came alone, no spreadsheets.
• 8:59
  Speaker 0: Then, silence.
• 9:01
  Speaker 0: The ghosting.
• 9:02
  Speaker 0: Yasmin Morrison had some brilliant tactical advice here.
• 9:05
  Speaker 1: The network push.
• 9:06
  Speaker 1: It's so clever.
• 9:07
  Speaker 1: We all know that just checking in email is the most pathetic email in business.
• 9:11
  Speaker 1: It just never works.
• 9:12
  Speaker 0: It reeks of desperation.
• 9:14
  Speaker 1: Totally.
• 9:14
  Speaker 1: So Morrison says you never send that email.
• 9:17
  Speaker 1: Instead, you orchestrate a ping from the side.
• 9:19
  Speaker 1: You have a mutual contact dimension to the VC that your deal is moving fast.
• 9:24
  Speaker 0: So the VC hears it from a peer, not from you.
• 9:26
  Speaker 1: Correct.
• 9:27
  Speaker 1: It triggers their competitive instinct.
• 9:29
  Speaker 1: Suddenly, they find time to reply.
• 9:31
  Speaker 1: It's social engineering one-on-one, but it works.
• 9:34
  Speaker 1: Or, she says, just ask for the no.
• 9:36
  Speaker 0: Demand the rejection.
• 9:37
  Speaker 1: After ten days.
• 9:38
  Speaker 1: Yes.
• 9:39
  Speaker 1: I assume this isn't the fit, so I'm closing the file.
• 9:41
  Speaker 1: It shows confidence, and it often gets them to respond because they respect the time management.
• 9:45
  Speaker 0: Let's talk about the deal itself.
• 9:47
  Speaker 0: Nathan Beckord looked at the data and it seems the safe fee is now the undisputed king.
• 9:52
  Speaker 1: It's the default.
• 9:53
  Speaker 1: Something like sixty-four percent of rounds are on safes.
• 9:55
  Speaker 1: It's fast.
• 9:56
  Speaker 1: It's cheap.
• 9:57
  Speaker 1: It kicks the valuation can down the road.
• 9:59
  Speaker 1: But Beckord also noted that while valuations are holding up, median pre-money seed is still around sixteen million dollars.
• 10:04
  Speaker 1: The
• 10:04
  Speaker 0: funnel to get there is much tighter.
• 10:06
  Speaker 1: Much tighter.
• 10:07
  Speaker 1: But there's a darker side to this, especially for employees.
• 10:11
  Speaker 1: Peter Walker pointed out a stat that every job seeker needs to hear.
• 10:14
  Speaker 1: The average new hire is getting fifty percent less equity today than in twenty twenty two.
• 10:19
  Speaker 0: Fifty percent less.
• 10:21
  Speaker 0: That's a massive pay cut, effectively.
• 10:23
  Speaker 1: It's a huge shift in leverage.
• 10:25
  Speaker 1: In twenty twenty one, talent was scarce.
• 10:28
  Speaker 1: Founders threw equity at people.
• 10:29
  Speaker 1: Now the capital is scarce.
• 10:31
  Speaker 1: There have been layoffs.
• 10:32
  Speaker 1: The employer holds the cards.
• 10:34
  Speaker 1: The gold rush packages of the pandemic are gone.
• 10:37
  Speaker 0: Unless you're an AI researcher, I assume.
• 10:39
  Speaker 1: Well, yes.
• 10:40
  Speaker 1: If you know how to train an LLM, you can name your price.
• 10:43
  Speaker 1: But for a VP of marketing, the market has corrected.
• 10:47
  Speaker 0: There's one last trap for founders we need to cover.
• 10:49
  Speaker 0: Branislav Zagorsek made a distinction I think causes so much pain.
• 10:53
  Speaker 0: The difference between a good business and a venture-backable business.
• 10:56
  Speaker 0: This
• 10:57
  Speaker 1: is the hardest conversation.
• 10:58
  Speaker 1: You can build a company that does ten million dollars in revenue, makes two million dollars in profit, grows fifteen percent a year.
• 11:04
  Speaker 1: That is a wonderful business.
• 11:05
  Speaker 1: It will make you rich.
• 11:07
  Speaker 1: But Zagorsek points out it's uninvestable for a VC.
• 11:10
  Speaker 0: because it doesn't have the rocket fuel.
• 11:12
  Speaker 1: Because VC math needs decoupled growth.
• 11:14
  Speaker 1: They need revenue to grow exponentially while costs grow linearly.
• 11:18
  Speaker 1: If your growth is tied to headcount like a consulting firm, you can't generate the fifty X or a hundred X return they need.
• 11:24
  Speaker 1: So founders waste months pitching VCs who will never invest.
• 11:27
  Speaker 0: Revenue alone doesn't guarantee a check.
• 11:30
  Speaker 0: That's a tough pill to swallow.
• 11:31
  Speaker 0: It
• 11:31
  Speaker 1: is.
• 11:32
  Speaker 1: But realizing you're a good business might save you a year of your life.
• 11:36
  Speaker 1: Go to a bank, go to PE, bootstrap it.
• 11:39
  Speaker 1: Just don't pitch Sequoia.
• 11:41
  Speaker 0: We've talked a lot about founders, but let's flip the table.
• 11:43
  Speaker 0: What about the GPs, the people writing the checks?
• 11:46
  Speaker 0: Because from what I'm reading, they're sweating just as much as the founders.
• 11:49
  Speaker 0: Oh,
• 11:49
  Speaker 1: absolutely.
• 11:50
  Speaker 1: The fundraising environment for VCs is brutal.
• 11:54
  Speaker 1: Adeo Resi shared a story that is, frankly, a cautionary tale.
• 11:58
  Speaker 1: He knows a manager who returned twenty two X on their first fund.
• 12:02
  Speaker 0: Twenty two X. That's Hall of Fame.
• 12:03
  Speaker 0: That's that's retire on a yacht numbers.
• 12:06
  Speaker 0: They should be able to get a check for fun to from anywhere.
• 12:08
  Speaker 1: You'd think.
• 12:10
  Speaker 1: But they are struggling to raise fund too.
• 12:12
  Speaker 0: How does that even make sense?
• 12:13
  Speaker 0: If the product, the return is that good, why aren't LPs buying?
• 12:18
  Speaker 1: Because LPs don't just buy the result, they buy the process and the person.
• 12:22
  Speaker 1: Bresci's point is that institutional relationships have to be built before you have the returns.
• 12:27
  Speaker 1: It's a three to four year game of dinners, updates and invites.
• 12:31
  Speaker 0: So you can't just show up at the finish line with a winning ticket?
• 12:34
  Speaker 1: No.
• 12:34
  Speaker 1: If they don't know you, and you show them a twenty-two X return, they don't think genius.
• 12:40
  Speaker 1: They think lucky.
• 12:41
  Speaker 1: They think one hit wonder.
• 12:43
  Speaker 1: Without relationship equity, the financial equity just isn't enough.
• 12:47
  Speaker 0: That's fascinating.
• 12:48
  Speaker 0: It's not a transaction.
• 12:49
  Speaker 0: It's a marriage.
• 12:51
  Speaker 0: And speaking of marriage, LPs are asking for a much more detailed prenup now.
• 12:55
  Speaker 0: Myrtle Lollacos and Nicole DiTomasso were talking about the new ILPA due diligence questionnaire.
• 13:01
  Speaker 1: This sounds dry, but it's the new reality.
• 13:03
  Speaker 1: The era of move fast and break things is over for the fund managers themselves.
• 13:09
  Speaker 1: LPs are looking under the hood.
• 13:10
  Speaker 1: They're not just reading your thesis.
• 13:11
  Speaker 1: They're auditing your back office, your compliance, your tax filings.
• 13:14
  Speaker 0: Because one operational screw up can just blow up the whole fund.
• 13:17
  Speaker 0: Exactly.
• 13:18
  Speaker 1: One botched K-one tax form can ruin your reputation.
• 13:21
  Speaker 1: The bar for operational excellence has just risen dramatically.
• 13:24
  Speaker 1: You can't run a fifty million dollar fund on a spreadsheet anymore.
• 13:27
  Speaker 0: So operations matter.
• 13:28
  Speaker 0: And so does team size.
• 13:30
  Speaker 0: Reuben Dominguez Ibar cited a Ben Horowitz rule that I think applies everywhere.
• 13:34
  Speaker 0: Keep your investment team the size of a basketball starting five.
• 13:38
  Speaker 1: Five people.
• 13:38
  Speaker 0: Why five?
• 13:39
  Speaker 0: Why not ten?
• 13:40
  Speaker 1: Because of the politics of consensus.
• 13:43
  Speaker 1: Horowitz's theory is that once you hit ten or more people, decision quality just drops off a cliff.
• 13:48
  Speaker 1: You start trading favors.
• 13:50
  Speaker 1: I'll vote for your sauce deal if you vote for my crypto deal.
• 13:53
  Speaker 1: Ah, the log rolling.
• 13:55
  Speaker 1: Exactly.
• 13:56
  Speaker 1: Or you just regress to the mean.
• 13:59
  Speaker 1: Large groups kill the weird controversial ideas that usually become the biggest winners.
• 14:04
  Speaker 1: They vote for the safe consensus bet.
• 14:07
  Speaker 1: Small teams fight, they debate, and they decide with conviction.
• 14:11
  Speaker 0: And in this market, conviction is the only thing that generates alpha.
• 14:15
  Speaker 0: Okay, let's bring this all together.
• 14:17
  Speaker 0: We started with the barbell, massive concentration at the top
• 14:20
  Speaker 0: U.S.,
• 14:20
  Speaker 0: AI infrastructure, Saudi mandates, and extreme discipline everywhere else.
• 14:25
  Speaker 1: The market has matured.
• 14:26
  Speaker 1: That's the headline.
• 14:27
  Speaker 1: The tourists are gone.
• 14:28
  Speaker 1: Policy noted this about crypto, but it applies everywhere.
• 14:30
  Speaker 1: The easy money has left the building.
• 14:33
  Speaker 0: So whether you're a founder in Riyadh, a fund manager in London, or an AI engineer in San Francisco, the bar for quality has effectively been moved into the clouds.
• 14:40
  Speaker 0: It
• 14:41
  Speaker 1: has.
• 14:41
  Speaker 1: It's data-driven, it's concentrated, and it is ruthless.
• 14:45
  Speaker 0: Which brings us to a final question.
• 14:47
  Speaker 0: We see sixty-one percent of software capital going to AI, specifically AI infrastructure.
• 14:54
  Speaker 0: the chips, the data centers, the foundation models.
• 14:57
  Speaker 1: Right.
• 14:57
  Speaker 1: And here's the provocative thought I want to leave you with.
• 15:00
  Speaker 1: We are pouring billions into the roads and bridges of AI, the infrastructure.
• 15:07
  Speaker 1: But are we funding the cars?
• 15:09
  Speaker 0: Meaning what?
• 15:10
  Speaker 1: If everyone is chasing the picks and shovels, are we creating a massive innovation void in the application layer?
• 15:15
  Speaker 0: Meaning we get to twenty-twenty-eight, we have all this incredible compute power, but nobody has survived long enough to build the tools that actually use it.
• 15:23
  Speaker 1: Exactly.
• 15:24
  Speaker 1: We might be starving the very ecosystem that makes all this infrastructure valuable in the first place.
• 15:29
  Speaker 1: It's a risk that I don't think the market has fully priced in yet.
• 15:32
  Speaker 0: That's a scary thought, but definitely something to watch.
• 15:35
  Speaker 0: We are going to wrap it up there.
• 15:36
  Speaker 0: If you enjoyed this episode, new episodes drop every two weeks.
• 15:39
  Speaker 0: Also, check out our other editions on private equity, M&A, and strategy and consulting.
• 15:43
  Speaker 1: Thanks for listening.
• 15:44
  Speaker 1: Don't forget to subscribe.