Venture Capital Seizing the Intellectual High Ground
Something I have been noticing lately is how Venture Capital/Tech investing seems to have seized the intellectual high ground from other Private Equity/consulting and business industries. Historically I feel like PE/Consulting was the place that extremely smart people went to. But now reading the news and blogs like Stratechery, Exponential View etc. and looking at people like Ben Horowitz & Peter Thiel I feel like there are more smart people in this space than any other field at the moment, even if it is markedly similar to PE/Growth Equity.
I realize this may just be great PR and the media frenzy around Silicon Valley and just big buzzwords such as "Aggregation Theory" and "Abundance", but has anyone else noticed this? Also are there any parallel "Great Thinkers" on the PE and consulting side?
Both investment strategies have smart people and top performers in both are whip sharp.
I think tech investing is perceived today as having the "intellectual high ground" because of the amount of media attention it commands and the willingness of the industry's participants to write so much (stratechery, avc, first round's blog, above the crowd, etc). In fact, content marketing and brand building is a key driver of deal flow in early stage investing so incumbents have an economic interest in blogging and tweeting. Contrast that with PE where the top shops almost uniformly stay quiet about their strategies, deals, etc.
Also, m_1 alluded that he's met much more impressive PE investors than VC. I think that's a function of "VC" having much lower barriers to entry than PE. Anyone can become an angel investor, and if they're good at networking, muscle their way into a city's startup ecosystem. There's also been a proliferation of micro seed funds the past 5 years. Many of these folks aren't particularly impressive, but there's a lot of them so you're more likely to run into someone like that (if you're playing in the seed / series A stage) than a GP at Sequoia who's a made man.
Coming back to flesh out my answer a little more, but in my opinion a lot of VCs are led by one-hit wonders and not people capable of delivering consistent results. Their valuation methodology makes little to no sense as well (I don't give a fuck how "binary" your outcomes are), and almost everyone I've met in the VC space, even at well known funds, isn't very impressive.
This has worked out well for me because I've been investing in startups, showing the founders how to rephrase everything to make it easy to sell to VCs, and then flipping stock to VCs at a 10x+ valuation off what we bought. I literally inserted like 10 buzzwords into a deck the other day with a founder then made a few intros to VCs I know and it's looking like another 10x+ lol. Stole this idea from the cuckbois at all these "incubators" you see. Y-Combinator is famous for dressing up and teaching "sales" to technical founders then flipping out to VCs at a stupid high valuation.
If you try that on PE guys though, they'll laugh you out of the room because they understand how valuation really works.
The most telling give for this is the Kauffman Foundation's report on VC returns. That says all you need to know really.
On the PE end, I've been really impressed by everyone's overall ability to learn quickly, their ridiculous work ethic that's ingrained in the industry, and how stupid granular some guys can get even when they have no business knowing certain things. One of the best conversations I've had about eComm was with a higher up at a small LMM PE fund...and he hadn't touched eComm in 5+ years yet was stupid tactical. Really impressive given his day to day has nothing to do with digital marketing.
Also...VCs and their belittling attitude and moral high ground bullshit. They always act like they're saving the world when they are no different from anyone else in finance. Not all VCs are like that of course, but I think most of you know what I mean. The guy in private equity doing distressed/turnaround deals and saving companies is doing work that's just important as investing in an app that makes cats on blockchain.