So much to read but only 408 hours left in the year… gulp

Elon Musk Has His Vision. Waymo Chief Tekedra Mawakana Says She’s Got a Better One [Noah Shachtman/Vanity Fair] – Waymo is magical. Reading this profile made me realize how little we hear from their executives versus how much we hear from that other guy. They’ve done over 14 million trips in 2025 alone and are a great example of technology changing the everyday physical world. We’re lucky here in SF – may your city get Waymo next!

Want This Hearing Aid? Well Who Do You Know? [Steven Levy/Wired] – Limited in release and $6,800 to start for an AI-enabled hearing aid. But (a) it’s apparently awesome and (b) this is how you move down the cost curve over time and (c) hearing aids in general are expensive [and not always covered by insurance unfortunately]. The company is named Fortell if you want to learn more.

MCPs: Value Creation, Capture, and Destruction—Lessons from the API Era [Leonis/The Thesis] – Pretty interesting take on where value will accrue once MCPs are mature in the AI stack, using lessons from the proliferations of APIs earlier.

“That era taught us something fundamental: once the connection layer is standardized, value doesn’t live there. It moves upstream to infrastructure providers who power the system, and downstream to vertical specialists who solve hard, domain-specific problems. The middle layer that acts as the glue gets squeezed. The same will happen with MCPs. Standardization creates new opportunities, but it also kills entire categories of shallow integration businesses. Some will mistake protocol adoption for defensibility. They’ll be wrong.”

Everyone is Gambling and No One is Happy [Kyla Scanlon/Kyla’s Newsletter] – Kyla riffs off of a study that pins twentysomething’s dissatisfaction to economic insecurity (one of many that arrive at the same conclusion). Alongside this – or maybe because of this – trust between groups is eroding, AI anxiety is increasing, and degen/YOLO/gambling activities are surging (especially among young men).

Reflections from Our 2025 AGM – $1T Private Companies, AI Fundraising, and Outbound Sourcing [Charles Hudson/Venture Reflections] – Charles runs a venture firm called Precursor and always brings his truth to these discussions. I attended this one and he definitely pulled out the meatiest topics to share here. It’s always interesting to see where he’s continued to evolve his understanding year over year. The $1 Trillion Dollar Private Company is one such area.

One Thing I’ve Currently Using Blackbird, this new local restaurant/bar app which is some combination of loyalty program, crypto payments, etc – it’s curious and I’m trying to make sense of it all. You get free somethings for trying it too. Here you go:

Download Blackbird and earn 2,000 $FLY when you check in for the first time. That’s $20.00 toward any meal!

Use my code bb-o9edk2 https://app.blackbird.xyz/r/bb-o9edk2

Prioritize ownership over valuation on any given deal, but price drives your portfolio construction. This was basically how we managed Homebrew during its first decade, when we were investing out of three institutional funds, all sub $100m. The guiding principle changed in 2022 given our evergreen personal capital model (as I detailed in Why I No Longer Care About Startup Valuation When I Invest (Except for These Four Reasons)), but it served us well when we were deploying in a more typical lifecycle.

Our strategy for Funds I, II, and III were basically to lead/co-lead seed rounds with a 10-15% ownership target. Our third fund averaged 11.6% but it was really more bimodal – a bunch of 8-12% combined with a roughly equal number of 15% – across 31 startups. The concentration of dollars (expressed in ownership) was primarily about being able to also focus our time working with the portfolio and keeping our funds modestly sized where $1b outcomes could make a real difference to returns.

So our thinking was basically something like this in Fund III [2018-2021, $90m, 31 companies]:

• For any given seed investment target 10-15% ownership for what was then usually a $1-2m cost.
• If the pricing drifted north of that and we maintained our conviction, still favor at least minimum ownership target and go over $2m initial check for it if necessary.
• BUT too many of those and it starts to really impact the number of companies we’d be able to back in the fund. Basically, get too far above the $1-2m range per initial investment and you start to effectively say ‘this investment is better than being able to do 1.5 or 2 other investments.’
• We believed we ultimately wanted 28-34 companies in the fund (and *some* reserves, maybe ~25-30%).

Did we ever say ‘no’ to an investment opportunity based on pricing? Sure, but it was more often a function of the overall round size becoming too big for us to write a lead check, rather than the difference between, say, $1.5m and $1.8m to get 15% ownership.

Much like the Mike Tyson quote “everyone has a plan until they get punched in the mouth,” every firm has a model that then gets hit by reality (aka The Market). You can decide what you put in a spreadsheet cell a year ago is gospel, or you can use it as a guidebook, and behave more dynamically given what occurs over your deployment period. But if you make every investment decision without some framework to understand what it means for the fund itself, you might find the whole becomes less than the sum of its parts.

Footnote: One of the fun parts in backing new venture firms via Screendoor, is talking with them about portfolio construction and seeing the different strategies/playbooks they implement to win.

You might be eating Thanksgiving leftovers, but these URLs are fresh off the vine. Enjoy!

Why the New York Bodega is Here to Stay [Anna Kodé/New York Times] – GoPuff will not replace us! Doordash will not replace us! Bodegas provide community, geo specific goods and services, and a pathway for immigrants to work their way into the local economy. They are forever good. And besides, if they disappeared, where would all the Bodega Cats go?

The Production Capital Mosaic: Financing the New Industrial Deployment Age [Brett Bivens/Venture Desktop] – Brett reviews many of the emerging ways we think of providing capital to businesses and creates an important division: is the capital vehicle shaped like a company or a financing entity? Worth reading in full to really understand why he thinks this is a valuable distinction.

It’s the End of the (ARR) World and I Feel Fine [Brett Queener/Tales from the Bonfire] – Brett starts with a banger [“ARR was great for the SaaS age, but it may be as relevant as a Commodore 64 for the AI software era.”] and goes from there. He touches on impact for founders and execs; venture capitalists; and private equity models. If the AI world is about hiring, not buying, software, what else changes?

The Monks in the Casino: A brief theory of young men, “the loneliness crisis,” and life in the 21st century [Derek Thompson] – This is soooo good and starts threading together concerns Derek has about what economic degen as a way of life means for society, especially men.

This shift has moral as well as economic consequences. When a society pushes its citizens to take only financial risks, it hollows out the virtues that once made collective life possible: trust, curiosity, generosity, forgiveness. If you want two people who disagree to actually talk to each other, you build them a space to talk. If you want them to hate each other, you give them a phone.

Do Something Important, Quickly [Yoni Rechtman/99% Desirable] – “All VCs care about is the asymmetry of being right/making money without the risk of losing face.” At least he front stabs us instead of backstabs. He’s not wrong. And it’s a problem that is making our industry boring.

Why every country needs to master the Electric Tech Stack [Noah Smith/Noahpinion] – Most frameworks become overloaded as the creator tries to make everything fit their worldview. TBD whether the ‘Electric Tech Stack’ falls victim to this gravitational pull, but for now I like how it pulls together a set of industrial, economic, and technical capabilities that might define the coming decades. Batteries, Electric Motors and Power Electronics.

Enjoy some reading!

Slinging URLs for your Thanksgiving* Week reading (*where applicable 🙂 )

Strong Capitalism: Playing Entrepreneur on Hard Mode [Philip Rosedale, Entrepreneur] – Philip continues to pull forward the Kapor/LongNow/StewartBrand/HomebrewComputerClub ethos of early SV, here encouraging a host of values that have inspired me. It’s comedy/tragedy that he has to brand this “Hard Mode” but I get where’s he coming from – the shortcuts, shirking of responsibility, getting yours at others’ expense *does* feel like lazy, soft, uninspired building. Philip names a bunch of Operating Principles for Hard Mode – you should read the whole list. But let share his full opening paragraph to give you a sense of where he’s going.

The strong capitalist recognizes that free markets are the best way to create opportunity, innovation, and economic prosperity, while simultaneously acknowledging that in the absence of any other operating principles, capitalism leads to non-meritocratic wealth inequality, monopoly, resource depletion, and extraction. The strong capitalist demonstrates and upholds a set of additional behaviors which maximize the health, prosperity, and longevity of the free markets, even when those behaviors make their own success more difficult – AKA – “hard mode”. The strong capitalist is an honorable competitor, a source of inspiration to others, and deserving of their returns.

I Worked All Over Silicon Valley. This is How it Lost Its Spine [Aaron Zamost/New York Times] –

“For tech companies, courage doesn’t scale.” Gutshot and he’s not wrong. I had the pleasure of working with Aaron at YouTube (he later went on to executive roles at Square and others) – he’s not a cynic by default – Aaron has put his sweat and reputation into these companies. He believes in the empowering potential of technology. But maybe no longer is as confident in the technologists.

For years, Silicon Valley symbolized progress. Its retreat from its core values leaves no clear heir — no other industry fights for the future in the same way. When tech is the villain instead of the hero, the future feels leaderless. And a country that stops believing its innovators can make the world better stops believing in much else, too.

don’t take the bait. vice signaling is eating silicon valley. [Jasmine Sun/@jasmi.news] – Ok so this is the *third* link in a row that notices the gaping fissures in our community. But let me tell you why I’m encouraged, rather than depressed – these are all practitioners, not just pundits. These are people who have done – and continue to do – real work of value. These are people looking to help remodel the house, not just criticize the architecture.

I also worry that Silicon Valley now punishes outward earnestness or virtue; young technologists have expressed fears of appearing soft—or worse—woke. I don’t want these vice-signalers to represent the industry, giving credence to already budding distrust of tech. If the bubble pops, or if an SBF-style scandal erupts, or if we get evidence mapping social crises directly to AI, the public will not be kind to those who got rich bragging on the way.

New Stack, Same Game. Why the AI Native Era Feels Different Yet Familiar [Ashley Smith/Vermilion Cliffs Ventures] – Author credibility check…. ok, Ashley had marketing leadership roles at Twilio, Parse/Meta, Gitlab, Github. Verdict: Credible. Now she’s full-time on her own venture firm, Vermilion Cliffs. Here she challenges one prevailing take: “There is a common assumption that someone like an OpenAI will simply build everything. The same assumptions appeared about AWS, GitHub, and Atlassian in their key eras. But every time the platform layer stabilizes, specialization accelerates.”

Importantly she’s not just writing her beliefs, she’s funding them.

How Screendoor became a key signal for emerging VC talent [Allie Garfinkle/Fortune – $] – Screendoor backs founders who are building venture firms. It’s often like backing seed stage companies – you need an eye for talent, stay close to the ground, and be willing to commit before others believe. Here Allie takes note that our portfolio is quite remarkable; that we’re often the first institutional LP to sign on to fund; and that when we invest, other LPs fast follow. Lots of work to do but proud of what Lisa and team are building.

Enjoy!

Encountered this ‘use scale’ at a high school for how students are permitted (even sometimes encouraged) to use Artificial Intelligence tools in their work. Struck me as very smart when applied with thought on a per subject, per assignment basis. Wonder what the teacher-facing guidelines are too!

56 investments into Homebrew IV(ever), the pivot we made in 2022 to investing our own personal dollars in an evergreen fashion, we’re in a reflective mood. The almost four years of operating in this new normal represents a ‘fund cycle’ of sorts, so we probably have enough early data to reflect on this style of venture investing versus the more traditional LP-backed deployment of our first decade. One of the most clear differences is how we treat startup valuation in our entry point. And it’s a meaningful change!

Whereas before, as a lead seed VC in a portfolio model structure, the negotiation would be a tradeoff (for us) between ownership target, check size, current fund size and total number of investments we wanted to reach for that vehicle. Now we offer a (mostly) consistently sized supporting check, are stage agnostic (although 90% of the 56 have been pre-seed/seed), possess no ownership requirement, and have an open-ended timeline. Essentially pricing, as a top line absolute concern, is less of modeled variable for us, and more of a signal to inform our decision. Valuation contributes to our conversation around four questions we ask ourselves:

A. What were the founders optimizing for? Maximizing valuation? Minimizing dilution? Enough capital to cleanly execute to next milestones? Or maybe a bit underfunded? All things being equal, we understand the market dictates prices, but just like a startup’s strategy can differ whether their strategic true north KPI is growth or margin or customer count or something else, so will the goals of a round lead you to different results. An initial financing can often be one of the first telling data points on what matters to a founding team, whom if we invest, we hope to be able to support for years to come.

B. Did the founders’ decision around pricing help or hurt the quality of the cap table? ‘Best’ investors or just the auction winners? Were there folks we believe are good partners to early stage companies who walked because of terms? Is there a lead investor and if so, are they underwriting to the same type of outcome, on the same timelines, that we’re seeking? Obviously impossible to fully know unless the founders are super transparent, and potentially subjective, but on our checklist.

C. Will the next financing be made more difficult because of the pricing set now? Good rule of thumb is to imagine what has to be achieved for the company to be worth 3x more the next time they raise. While this is likely overly precise, since startups are power laws so in hindsight the majority of a company’s financings were ridiculously cheap or insanely expensive, early on, in the Seed/A round, it’s at least a useful exercise. Start with too high a seed valuation and the degree of difficulty to get to a clean Series A is just that much harder. Since we’re investing our own capital and not playing the AUM “how much capital can I get into this company” game, our financial interests are more similar to founder/team needs: clean outcomes where everyone makes money at the end. Ahh, alignment is a beautiful thing.

D. What do we have to believe to imagine we can return 20x, 50x, 100x on this investment? Tied to the above, which is more about the pit stops along the way, we think of each dollar we invest as opportunity cost – it could have gone into a different startup. Homebrew IV hasn’t changed its return benchmarks and so while it’s still very much taking the risks involved to find generational startups early, the higher the entry cost the more we need to be convinced there’s a Large, Urgent, and Valuable problem to be solved, with a margin structure and outcome multiple.

We still firmly believe that if you are running an institutional capital firm you should err towards concentration – owning enough of your winners in order to move the needle on returns is the “easiest” way to outperform. But for our current playbook, Satya and I are hypothesizing that these four considerations will matter more to Homebrew IV’s financial performance than trying to hit an ownership target. Just need to wait 10 more years to be sure 😉

“My first three ventures funds were all high net worth individuals and founders/tech folks. How should I decide if institutional LPs are right for my next fund?”

This was a question put to me earlier this week from someone I’d met via Screendoor, the fund of funds we cofounded to back new firms (sometimes called ’emerging managers’ in the industry). Of note, and to the credit of this investor, it wasn’t the typical ‘what do I need to prove/show to raise from LPs’ but rather, is this class of financial partner right for me or not?

Before answering I reformatted it to “Even if I could raise the amount of capital for the next fund from my current individual investors, or write the check myself, what conditions or benefits would cause me to consider institutional LPs of any sort [FOs, FoFs, endowments, and so on]?”

Three Reasons to ‘Transition’ to Institutional LPs

A. You Are Building a Firm, Not Just Raising a Fund (AND Know You Want to Raise at Least 2-3 More Funds After this One)

Institutional LPs are most likely signing up for longer relationships with you than any one individual LP and are able to scale with potential increases in fund size. Once you are confident – in trajectory, in strategy, in joy – that venture will be your career ongoing, it’s worth it to consolidate your capital base in this manner.

B. You Want to Take on Performance Risk Instead of Fundraising Risk

Related to the above, the tradeoff in having partners who are there to support you ongoing so long as you do your job is, well, you have to do your job. HNWs, individuals, CVCs, other VCs, etc all might invest in your fund for reasons besides absolute returns; institutional LPs shouldn’t (although even some of them have adjacent motivations such as secondary/direct investment access). Basically if you are the type of person who ultimately wants to be judged by results (and live with standard VC fund LPAs), then being in business with professional institutional LPs – especially those with evergreen pools of capital – essentially takes your fundraising risk down to zero.

C. You Are Willing to Spend the Time to Find Neutral to Positive LPs, Including Passing Up on LPs Who Aren’t a Good Fit for You

Like any group, ‘Institutional LPs’ aren’t homogenous. Based upon their institutional needs, their organizational culture, their familiarity with venture, their personalities and team construction, etc you will find folks who are more or less suited to how you want to run your business. Even in our first Homebrew fund, we focused very much on ‘mutual fit’ and turned down some opportunities to work with LPs where it didn’t feel right.

And Two Reasons to Avoid Institutional LPs That I Think Are Overblown

A. If You Take Institutional Capital They Become Your Customer and Managing Them is a Ton of Headaches

I find this to be a sign of poor LP selection by the GP or inability to run their business well. There’s nothing about the relationship with high quality, evergreen, professional, VC-savvy LPs that adds overhead disproportionate to the value they can bring (sole caveat would be it is kind of annoying when the people in the seats at an LP change – and they do change more than you would expect). LPs are our partners, founders are our customers. That’s always been clear to us and our LPs.

Most of the other overhead questions come into play when you take outside capital versus your own, not who that capital is from. Fund structures have their own encumbrances.

B. Taking on Institutional LPs Reduces Your Flexibility as an Investor

This is the old “they are going to hold me accountable to what I put in the slide deck/portfolio model” complaint. In my experience the only true constraint is what’s in our LPA around vice clauses, etc and even those just require approval (for example, in our historic LP-backed funds we couldn’t invest in cannabis businesses that touch the plants themselves since it’s not Federally legal). These were all nothing burgers for us – our LPAC has given great feedback/approved everything we’ve asked about.

When an LP backs you they are doing so because of a strategy you presented within a specific asset class they want exposure to. I can imagine that if you deviated from that wholesale without communication it would lead to mistrust. But the idea that you have to march down a specific path because of a four year old spreadsheet just isn’t true. Our LPs have always said that what they’re outsourcing to us is judgment – we should focus on being great investors and they expect us to adjust to the market, take appropriate risks, earn the opportunity (with founders, co-investors) to find some ‘off model’ investments. If you followed your strategy 100% you were probably too rigid. If you followed your strategy 0% then you didn’t have a strategy.

If you are raising and want to investigate bringing on institutional partners -> Screendoor!