Zero to one. That is the number Trish Spurlin gave us, and if you are raising a first fund with endowments anywhere on your target list, it is the only number in this piece you need. Trish is Investments Director at Babson College, where she runs about $300 million of a $910 million endowment, roughly 70% of it in venture. Eighteen manager relationships, thirteen of them active, and she thinks the right number is fifteen or sixteen. She took the job on March 13, 2020, with twenty four hours to decide, and did not pick her own first new manager until January 2023. She takes three to five hundred calls a year.

So do that math before you send the next note.

Her team runs a four pillar framework: team, track record, strategy, and Babson fit. The first three are the ones you have spent a year polishing. The fourth is the one she said “kills half the stuff.” The first three mostly do not separate you, because, in her words, most people have an incredible team. You do not go out and raise a venture fund if people do not like you and you have not done cool stuff. Alexa put it as everybody being a nine out of ten, and Trish agreed.

What separates you is whether you happen to fit the shape of a book you cannot see. She is mapping pre-seed, Series A and a little Series B, asking where the white space is and who is best in it, and she is not looking for a network that fully overlaps hers or one that does not overlap at all. You can be excellent and be the wrong shape this year. When she got to the honest version of how that call actually gets made, that she knows it when she sees it and that GPs hate hearing it, I said on the recording that it is the real answer and that it is not personal. I still think that is true. It is also thin comfort when you are the one who got passed on, and I am not going to pretend otherwise.

Here is the part I did not walk in expecting. Babson does not start from a view of the world. Trish said they are not in the business of deciding the world is going somewhere and then hunting for the best manager there. They do the reverse: find the best manager, then ask where that person thinks the world is going. That is what the 2% is for, she said, and if she were smart enough to know it herself she would just do it.

I said something close to that about my own work in the same conversation, which is probably why it stuck. Almost twelve years in, and the alpha almost never came from the thesis I built or the market map I made. It came from a founder showing me something that seemed obvious the second I saw it and that I had somehow never seen. Sorry, associates, if you still exist. Hearing an LP run that logic one level up changed how I think about what I am selling in a room like hers. She is not buying the thesis. She is buying the judgment.

Then the liquidity question, where I came in skeptical and left more so. Alexa put the GP sentiment on the table directly: with SpaceX and Anthropic, there have to be six or seven new slots now. Trish said the lockup still exists and the money is not back, that she would guess six to eight months at least before anything comes off the table, and that when it does come it goes to the total endowment and gets reallocated to targets. So if four or five names exit and everybody gets paid, plenty of LPs are simply back in line with where they were supposed to be all along. They do not get more allocation. She quoted Chris Dubos on it: the moolah is not in the cooler yet.

I have been saying on this show that LPs do not re-up on a headline, they re-up when there is a wire, so I will take the confirmation from inside an investment committee. She was careful not to be read as bearish, though. She said people should keep putting money in, and that she is not telling anybody to take their foot off the venture pedal.

When I asked how she finds fund ones before everybody else does, I reached for Billy Beane, because in 2009 Babson was running a list nobody wanted and that list became the list everybody wanted. Her answer was deflating in a useful way. You find them by trying to be everywhere, which she admitted is not what people want to hear. Her team is on planes, a month in New York in the fall and San Francisco in the spring. She coaches them that they give more than they get, because she knows she cannot fund most of the people she likes, and so do they.

Alexa closed by saying any GP would be lucky to get that last slot. She is right. It is one slot, it might not open this year, and Trish will have taken four hundred calls by the time it does.

Trish Spurlin joined Alexa Binns and me on Swimming with Allocators, with Shane Goudey of Sidley Austin on what LPs are actually diligencing in a fund team.

Listen here: https://swimmingwithallocators.com/podcast/the-fund-everyone-will-wish-they-backed

With gratitude,
earn

Sometimes life feels like a badly written movie. A Tubi movie. You meet a character who seems like they matter, and they never pay off. Then somebody you weren't even interested in walks into a scene and hands you the insight that moves the whole plot. I said some version of that to a friend who runs a climate fund when we caught up in September, and he took it a step further. Meetings follow a power law too, he said. A small share of them are transformational, and you don't get to those without working through the rest of the tail.

That idea ran counter to what every senior investor I’d worked for believed. My former managing partners always asked me two things: 1) Why are you meeting with so many founders who are way earlier than our preferred Series A stage? 2) Why don’t you just meet with your top five deal sourcers?

My friend called the top-five approach a dangerous strategy. His version is breadth first: meet a lot of people, then go deep with the few where there’s real chemistry, and keep mixing in new blood the whole time. I think he’s right, and the movie is why. You usually don’t know who the important character is until much later. That’s how I think about Series A too. I take a lot of meetings and write very few checks, and the ones I write, I want to lead.

Recently I saw the same idea somewhere that has nothing to do with venture meetings. Peter Walker, head of insights at OpenRouter, posted that LinkedIn is more power law driven than ever. A small share of posts drive most of the impressions, and the middle tier has basically been hollowed out. What I liked was the honesty. He used to think he could tell which posts would land, and now he says he can barely guess. His answer was my friend’s answer in a different arena: the algorithm is going to keep changing, so show up consistently.

Here's the counterargument, and it's coming from the people with the most money. In "On Risk," Jake Gibson at Better Tomorrow Ventures points out that established firms have taken 88.2% of the money US venture funds have raised this year, the highest share PitchBook has ever recorded. Charles Hudson at Precursor picked that up on The Learning Corner and read it through The Unaccountability Machine, a book he says he comes back to all the time. His take was that the system is reflecting what allocators want: fewer decisions and better odds of owning the handful of names that matter. Meeting hundreds of managers and waiting ten years to find out who was right is harder. So they're looking at the same curve the rest of us are, and choosing fewer, bigger swings.

I don’t think they’re wrong, for them. When the perceived outlier is sitting in plain view, like SpaceX or Anthropic, concentrating makes sense. But most of life doesn’t come with the outlier labeled. You don’t know which dinner, which post, or which founder you meet two stages before your stage is going to be the one. When you can’t predict the hit, the person taking the most swings has the edge.

There’s a catch, and Charles named that too. He talked about founders outside SF and New York who show up having done every problem on the old report card, still chasing ARR benchmarks from 2020 and 2021, and he has to tell them, “You were in the wrong chapter.” That’s what reps look like without feedback. They were consistent. They were also playing a game that had already changed.

I’m calling myself out here too. I’ve spent a lot of the last couple of years optimizing for exposure, more rooms and more meetings, when what actually compounds is learning. Take the meeting, figure out what it taught you, use it, then go again. It’s a big part of why I journal most mornings on what I learned the day before.

So yes, life is power law. Take the meeting with the interesting person whose idea you’re not sure about, and post the thing even if the last few went nowhere. Just watch the tape afterward. I still don’t know which meeting this month is going to be the one. That’s kind of the point of taking them.

With gratitude,
Earnest

I’d been talking to a Series A healthcare company the day we recorded. Good growth, and a competitor in their space who has already been king-made. Their question was blunt: should we have two decks, one for a Series B venture investor and one for growth equity? I said absolutely. One story is how you get to profitability and why this is the last check you need before a liquidity event. The other is how we’re going to the moon.

I said it on tape without thinking twice. Then Santosh said the opposite.

“I still tell founders you keep one deck, but you have to qualify.” His version is a sequence instead of a split. A warm-up wave, then three waves of intense structured outreach, and if nobody bites after that, you raise enough to go down a different path. Not the moon path. A path where the founder still gets financial freedom and flexibility, with an entirely different set of players at the end of it.

We weren’t arguing about decks. We were arguing about when a founder is allowed to know which company they have.

That question is live because of something I said earlier in the hour. When I got into this ten years ago at Prologis, the advice was to be non-consensus and right, and buried inside it was an assumption nobody stated: that right arrives in eighteen months, maybe three years, and that capital is still there when it does. The ellipsis between non-consensus and right has gotten long enough to be a death valley now. That’s what pushes founders into double consciousness early. Not just what you think is a great company, but what the next funder will think about it.

Santosh had the LP side of the same problem. There are very few firms, he said, willing to underwrite something they can’t easily get marked up in under twelve months. He is blunt about the large LPs who skip the first close and turn up for the third. “I’ll be real here. Like those are the most annoying people in the world.” Some genuinely need the time. A lot of them, in his read, are looking for social validation.

That last part I didn’t learn on this recording. I walked in believing it, and better to say so than pretend the hour turned me around. My first brush with consensus was in equity research. I’d build a REIT model on my own assumptions, get to NAV and FFO, then bring it to my boss, who told me to go check consensus. Are we within a cent or two? Good, now we can feel good. What’s the point of our job if it isn’t our assumptions? That was public markets, and it arrives earlier and earlier in private ones now. People are buying permission, not information.

What did move was Santosh’s answer on what flexibility costs. An LP of his who has been on Swimming with Allocators pushed them on reserves: if you believe you have a non-consensus winner, you need it to become consensus at some point, that’s the part about being right, so keep feeding it. He pushed back, because you need more shots on goal now and LPs still want fund sizes constrained. One LP they both know has asked for pre-seed portfolios as small as fifteen. His conclusion is that maybe reserves give, and you raise discrete capital against a Series A or Series B risk separately, matching risk and reward at capital formation instead of inside one fund.

That’s the first version of a flexible strategy I’ve heard that costs the GP something specific. I keep saying uniformity is going away, and I also know uniformity is what gets you funded. It’s efficient to say my buddy Santosh does pre-seed, this check size, this ownership, here’s his email. It’s much harder to say I’m a market hawk who will use any tool in the private toolkit. His reserves answer is what that harder sentence costs.

Caroline Hale came on for the Citizens Private Bank segment, and the line I wrote down was about the guest list for her annual GP and LP retreat. “I don’t want just the seat filled with an LP, I want them filled with an allocating LP.” Santosh called finding an actively deploying LP the hardest part of fundraising. She does it for a living.

So I came out close to where I went in. Our biggest allocators have become long-only hedge funds, so the craft shops have to borrow from the boutiques: more strategies in the toolkit, more market inputs, real comfort with secondaries and with bootstrapped companies in verticals you know. Market truffle pigs, legible to LPs even in cursive.

with gratitude,
Earnest

I guessed AI. Frank Mihail runs about $9 billion for North Dakota’s trust lands with three people, operations included, and when I asked him how that math works I floated the obvious 2026 answer. Is it AI too? What’s going on?

He waved it off. “I wish we were like more on the front lines of AI than we are.” Then he told me what he actually did. One of the first things he changed after joining in early 2023 was moving the public stocks and bonds out of internally custodied separate accounts into external commingled funds. Keeping them in house buys you maybe a day of liquidity. It also means that every month, before you close the books, somebody reconciles a thousand bonds. His version: “I can’t spend my time doing that.”

That one move is the whole conversation. The efficiency is not a tool he bought. It is a list of things he decided not to own operationally.

What sharpened for me is that an allocator’s headcount screens managers before their strategy ever gets read. Everyone in this business knows that and then pitches like it isn’t true.

The number Frank keeps is 40 line items. His entire portfolio fits on one page and he can recite it, as he put it, “like the back of my hand.” His old shop in New Mexico had ten people with dedicated operations staff and a 200 line item book. He has three generalists. So the minimum check is now around $50 million, and that minimum is what wrote his venture strategy for him. He inherited no venture at all. He wanted it. The question became how to write a $50 million check to one manager and still get a diversified portfolio behind it, which is why the larger platforms made sense as a starting point.

That ordering matters if you are raising. He did not start with the big funds because he believes big funds win. He started with them because the line item was the constraint and they solved it.

Then he did the thing I did not see coming. To get seed exposure he hired a seed fund of funds, wrote them $50 million, and let them write $5 million checks on his behalf to smaller seed managers. The small check exists in that portfolio. He is just not the one signing it. GPs read a pass from a plan like his as a conviction problem. Some of the time it is an accounting problem, and the live question is not whether he will back you. It is who writes the five million for him.

The second thing I took is that his balance sheet sets his risk appetite. The trusts collect revenue from state-owned land, mostly oil royalties and taxes, and Frank called that a natural hedge for the portfolio. He walked us through 2022. Stocks down 20, bonds down 10, the portfolio down 8. Net asset value down two and a half percent, because the royalty side had its best revenue year on the back of the same inflation that was wrecking the marks. No pension liabilities and a perpetual horizon, so the ability to take risk is real and he is spending it slowly. Last summer’s asset allocation review moved a little from credit to equity. It is the difference between a club living on gate receipts and one living on a league TV deal. One has to win this season to make payroll. The other can sit through a bad year and keep drafting.

Where I am still unsettled. Frank needs a track record. He said emerging managers are tougher for them, and the one open door he named is a firm they already work with launching a new product. I pushed early on the thing I actually believe about this asset class, that venture has an inverse relationship between dollars deployed and time spent learning it, and his answer came back structural rather than philosophical. He solved it with an aggregator. I do not know yet whether that aggregator is a bridge for new managers or a wall with a nice door in it. And when I asked what strategies he wishes he saw more of, venture never came up. About 75% of his inbound right now is private credit, where he is overweight and trimming, and the thing he is genuinely curious about is sports.

We have had a lot of guests on the show describe inheriting a blank slate. Frank is the first one who made me look at the size of the slate. Everyone else told me what they wanted to buy. He told me how many things he can hold.

Listen here: https://swimmingwithallocators.com/podcast/the-9b-portfolio-that-fits-on-one-page/

With gratitude,
earn

Something has been bugging me since I left a large GP and LP conference last week. Almost every event I went to with GPs and LPs in the room turned into a conversation about how bad the venture market is right now. Not a hard market, which it is. But bad, as an asset class, said out loud by the people who raise for it and the people who fund it. Then a …

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I walked into this recording thinking measurement was the hard problem in impact. I walked out thinking the hard problem is where you put it.

Alexa asked Thomas Knowles the direct version. How do the Gratitude families square what they do with the formal ESG universe, and are we putting too many limitations on getting good done. He didn’t throw out the rigor and he didn’t defend it either. He moved it. “It’s much more about aligning on the philosophical approach, the ethos of the business, what their why.” Then the line I wrote down: “they’re going to go off and run their business. They’re going to decide who to invest in and how to operate on a day to day, and the metrics are going to be in the rear view.”

That landed for me because it is mechanical. A baseball scout doesn’t draft off last season’s slash line. Last season was a different league against different arms. He drafts off the tools, and the line shows up later as confirmation. Thomas underwrites a founder or a manager the same way. By the time an impact KPI exists, every decision that produced it was made by a person you already chose. The metric is a receipt. You buy the operator.

So where does the scorecard go? Gratitude is a community of 150 family offices, and the obvious number for a business like that is how many. He refuses it. “We’ve never had a KPI on like number growth, right? It’s always been you know who’s the right people we want in the community.” The one he holds hard sits on the members, not the portfolio. “The one that’s critical today is the action orientation. Like we do not want to be a community of people that just sit around and talk about these ideas.” Did you move capital or did you come to talk. That is the whole test, and it is the only number in the building.

That same filter pays for his no. Alexa asked what he’s advising people against, and he named nature based solutions and natural capital, called them incredibly important, then said the quiet part: “the ecosystem around the investment opportunities is still emerging and pretty nascent.” No risk return profile to underwrite yet, so he takes the interest and redirects it into something that can be priced. Most platforms built on member demand can’t tell members no. He built the one filter that lets him.

Where I’m less sure. Underwrite ethos instead of metrics and I don’t know what keeps it from collapsing into taste. Thomas has an answer for his own shop. The co-founders led with their own capital, and the action filter does real screening work. I don’t think it generalizes to a platform without those two things, and I didn’t push on it in the room.

Then the thing the episode is named for. Donor advised funds. Over 100 billion, Thomas figures maybe double that now, no mandatory annual distribution the way a foundation has, mostly parked in money markets and passive ETFs at Fidelity and Vanguard and Schwab. Philanthropic capital, already given away for the tax benefit, clipping coupons for large asset managers. His last word on it: “But it has not happened yet.” Biggest pool, no pipe.

Last month in Assigned But Not Read, after talking with Roy Swan, I argued that calling something non-financial is a labeling decision rather than an economic finding. Reclassify it, then price it right. Thomas is working the same problem from the other side. He isn’t dragging the impact number into the financial column at underwriting. He’s buying the person who will generate it and watching the one behavior he can see. I don’t know which is right. At pre-seed, where I spend most of my time and where the founder is the culture, I suspect his version is the only one that works.

Full episode here: https://swimmingwithallocators.com/podcast/the-biggest-untapped-impact-money-pool-youve-never-heard-of/

With gratitude,
earn

Craig was describing a founder who had just taken Intuit’s money and wanted to be put in front of an Intuit executive the following week. He didn’t soften it. “I guarantee you, you’re not ready. You might think you are, but I’m telling you, you’re not.” Then he said he’d rather wait six months.

I asked that question for selfish reasons. I started my venture career in corporate venture, and the half nobody warns you about is the internal half. Getting trusted by the people who build the product is harder than getting a founder to take a meeting. The episode is named after Shane Goudey’s warning about dumb money. Craig spent the rest of the hour describing what the opposite looks like from inside a corporate, and almost none of it is the check.

Three things I took from the conversation.

First, the fund commitment is how a small team sees what it can’t cover. Craig said virtually every corporate venture fund he knows is resource constrained, and his example was agentic commerce. Too early for them to invest in directly, no clear line from a seed company to an Intuit product, but clearly coming. So they went to the GPs they back as an LP and asked what they were seeing, what had been too early even for them, and which founders were worth an introduction. That became a session for an Intuit leadership team on a market they are not going to write a direct check into this year. He said it surprises him that more corporate programs don’t run that play. He’s right that it’s underused.

Second, the governance detail decides everything. Plenty of corporate programs require a business-unit sponsor on every deal. Craig’s view is that you take an already narrow opportunity set and make it narrower, and then you lose on the clock, because a Series A or a fund close won’t wait for internal consensus. His version is to agree with leadership on the big bets up front and then invest inside those lines without per-deal buy-in. He calls it freedom within fences. Same logic on diligence. He can tap an expert network of 10,000 plus Intuit associates and ask what they’d do with a company, how they’d integrate it, what they’d pay for it. His line was that it’s an amazing leg up as an expert network, and that he needs it to stay one rather than a mechanism with approval rights over an investment. That distinction is the whole program.

Third, one champion is not a coalition. Founders lose their internal advocate constantly. The person who believed in you takes a great new role in a business unit that has nothing to do with what you’re building, and you’re back to zero. Craig’s read is that finding the first champion means the work started, not that it’s done, and that you build a coalition past that person. I’ve watched that exact failure kill real partnerships and I’d filed it under bad luck. He plans for it.

I asked how he handles the tension of translating in both directions, including how he figures out what’s true when the startup and the business unit each tell him a different version. He gave me the mechanics, which were good, and not the test. I don’t think there is one you can hand someone. It’s reps.

The other open thing is a disagreement this episode doesn’t settle. Craig says GPs who treat corporates as undesirable hold a very outdated view, and he’s right that the investor class has professionalized. Shane, in the same hour, tells managers to be purposeful about whose capital they onboard, because the high net worth money that fills a fund once rarely comes back fund after fund. Both of them are asking the same question from opposite ends of the wire. Nobody on the recording, me included, said how a first-time manager should weigh it.

Alexa brought up Roy Swan from episode 109 on this one, and his point that mission-focused investing is twice as hard because you’re carrying strategic and financial goals at the same time. She said corporate venture is the same shape. I wrote about Roy a few weeks back and missed that overlap at the time. Two mandates, one check. Craig’s whole north star answer is about writing the second mandate down before you need it.

If you’re pitching a corporate LP, his ask is small and most people skip it. Read their last couple of quarterly releases and their investor day before the meeting, and bring a different deck than the one you showed three family offices this week. And if you’re building vertical-specific wealth management, financial planning that knows a teacher’s income is not an engineer’s, he said he’d love to talk to you.

Listen: https://swimmingwithallocators.com/podcast/stop-taking-dumb-money

With gratitude,
Earn

Alexa asked it straight. Fees on fees feel out of control right now, especially with the top ten names, so what are you doing about the feeding frenzy, and do you need access to those hot names.

I expected Dan Fordyce to answer the access question. He answered a different one.

What came back was a set of numbers. Two new names a year in venture. Two in growth equity. Two in buyout. Roughly equal weight across the three. A ballpark check size. A small, defined slice for directs. Then this: “that also forces us to keep the bar exceptionally high.”

I went in thinking the scarce thing in private markets is access. I came out thinking access got cheap, restraint got expensive, and restraint does not survive a hot market unless somebody writes it down as a number first.

Three things I took from this episode that might interest you:

The first is that the cap is the strategy, not a constraint on it. Dan looks at eight or nine hundred things a year and gets to twenty or thirty he would genuinely want. Six get committed. The gap between thirty good options and six slots is not something he apologized for. It is the mechanism. He traced it to 2021 and 2022. “The number one thing to be a good private equity allocator is don’t miss a vintage year.” Be consistent, and do not overallocate into the years that look hot.

That is a pitch count. A coach does not pull a starter in the seventh because the guy looks tired. He pulls him at a number set before anybody threw a warmup pitch, because in the seventh with the crowd standing, nobody’s read on a tired arm is worth much, his own included. Two a year is the same instrument. Not taste. A number that exists to overrule taste at the moment taste stops working.

The second thing cut against what I assumed. I had the direct co-investments filed as the alpha line. Summation writes alongside its GPs in a handful of deals a year, so I read that as picking. Dan took it apart. “We’re not asset pickers.” The directs are there, in his words, “really at good economics to offset our fee load.” If a manager puts money into a company, they sanity check the thesis and write a small check at better economics than the fund itself pays. The purpose of the line item is the fee math. The valuation call stays with the GP. I have heard a lot of allocators describe co-invest. I had not heard one call it a cost instrument.

The third confirmed something instead of teaching it to me, and I would rather say that than dress it up. I asked Dan why the way people treat others, when there is nothing in it for them, matters more now than it used to. I asked because he has said it to me before. His answer was the one I expected: as knowledge and information get democratized and the other barriers fall, what stays durable is relationships and reputation. What moved was where it sits. I had it as the soft layer on top of the model. I think now it is the only input that never gets commoditized, which makes it the last thing you can actually underwrite. Then he described a family office friend who toured the late stage crossover funds and found “something like the same 10 names were in every single portfolio in different weights.” If ten names are the industry’s portfolio, the portfolio is not the differentiator.

Time will tell if this actually works. Summation is about three years in. Dan, who calls himself a “very wise 31 year old,” says this frenzy reminds him of 2021 and 2022, only broader, with more real businesses underneath it. But a pitch count is easy to hold in the fourth inning. The test comes the first time a name they passed on triples in public with an LP on the phone. I am also chewing on the structure. They chose open ended on purpose, to sit as close to an endowment as they could, and Dan was careful that this is not an evergreen or an interval fund. I did not push on where the redemption mechanics land, and I should have, because an endowment has nobody who can ask for the money back and that is doing a lot of work in the comparison.

Shane Goudey, in the Sidley segment, put a price on the access everybody is chasing. Companies have started extending drag, tag and co-sale rights through an SPV down to the underlying LPs inside it. The first time that happened, he said, it “just sort of blew people’s minds.” Now, “if you want the access, these are the kinds of things you may have to agree to.” That is the other half of Dan’s point. The hot name is available. The terms are what nobody priced.

Last week on Carry On, Santosh and I spent an episode on what still counts as venture. This is the LP side of the same argument. Both land in the same place: the industry has gotten very good at manufacturing access and no better at saying no.

Listen here: https://swimmingwithallocators.com/podcast/lp-destroys-fees-on-fees/

With gratitude,
earn

Santosh was describing what happens when a mega fund shows up, hoovers up most of a round, and prices it somewhere that makes you wince. I cut in. Twelve years in this business and I’ve never made an investment where the price felt comfortable. Either it looked a little pricey, or it looked cheap for a reason and the reason was a lot of “hair” and risk I was signing up to carry. What I said on the tape: “Anything that felt like, I’m getting a great deal on, it was just okay.”

I didn’t learn that in the recording but what the hour did was show me why it holds. If the price never feels right, then price discipline isn’t the discipline, and the mega fund conversation almost never gets around to naming what is.

We opened on the question we both get on every podcast we do. Mega funds: is that real venture? It’s become a purity test, and I said so in the first two minutes. The useful question is how you succeed in an industry that’s always going to have a bigger player in the room.

Santosh brought the history and it’s worse than I remembered. Funds of $500 million and up were already taking 44% of all venture raised in 2018, before anybody had a billion dollar vehicle. By his count 90% now goes to categorically established firms.

The part I keep chewing on is pacing. When I got into this, the craft had a rhythm I compared to musicians in the 1960s and 1970s. No album for three or four years, because some life has to happen in between that you can be inspired by and then actually execute on. That went away. Firms went from $500 million to a billion to two billion and deployed it in about a year, and they were having new funds pop up more than Lil Wayne had mixtapes in the early 2000s.

The mechanics under that are the real story. More AUM means more layers. More GPs, more junior partners, more principals, more VPs. Then you have to pay all those people against something you can measure, and what you pay them for is deployment. I said it plainly on the tape: your performance is determined by how much capital you deploy, not companies you see, not great deals you do. Santosh calls it velocity of capital. It isn’t a style choice, it’s a comp plan, and a correction doesn’t fix a comp plan.

Which brings me back to what the discipline actually is. I tell our team to underwrite for our own interest when a new price shows up, not for the whole cap table. That’s supposed to require conviction about a number. I also just said no number ever felt right. The way I hold both is that the conviction is about the company and the window, not the entry. I’m not fully settled there, and I said as much on air.

The best idea in the hour is Santosh’s, not mine. It’s about something mega funds structurally cannot do and smaller firms can, and it’s the one place in this whole conversation where the asymmetry runs our way. I’d rather you hear him lay it out than read my compression of it. It starts around the 32 minute mark.

I wrote in Blue Cars about liquidity not coming back the way people assume it will. This is the operator version of the same problem.

Also in this one, Javad Mostofizadeh of WilmerHale on what fund formation actually involves, start to finish. Worth your time if you’re standing up a first fund.

Listen here: https://carryonpodcast.com/podcast/thats-not-venture/

with gratitude,
Earn Sweat

SpaceX priced at $135 on June 11, started trading the 12th, raised about $75 billion, closed its first day at $2.1 trillion. Largest IPO ever. And LPs still aren’t writing checks.

GPs read that as LPs being slow. It isn’t slowness. LPs aren’t re-upping on a headline. They’re not going to re-up until there’s a wire.

Alexa reminded me of something a future guest, Trish at Babson, told us: When that capital flows back in, it flows back into the full pot. It isn’t an LP’s to redeploy. And we were in the red as an asset class, so venture doesn’t walk into that room with a credit. It walks in with ten or fifteen years to explain.

That’s the part we skip as GPs. We raised an enormous amount against very few liquidity events. It takes time for that to shake back out into the ecosystem. One listing doesn’t do it. Multiple might.

Three things to look out for in this DDQ conversation:

The exit that funds the middle of the book is being structured out of existence. Early stage GPs keep telling me the $300 to $500 million outcome has gotten rare enough to be its own kind of unicorn. Acquirers got smart. A carve out of fifteen or twenty or fifty million to the founders is cheaper than a purchase price for the company. So the top of the book got better this summer and the middle got worse. Different companies, different funds. One doesn’t pay for the other.

Nobody has a signal for future potential, including me. Alexa shared that Aaron at 50 South made the point that every GP shows up impressive on past success, and his job is finding the subset with real future potential. I don’t think this market is digging into what that actually looks like. My best answer is the founder magnet, and it works like the blue car thing. Somebody says blue car and then you see blue cars all day. Some people become a node in an ecosystem that fast, and I think the better allocators are going to start noticing who does. That’s a hunch about where they’ll look. It isn’t a signal yet.

Legible has become its own trap. Break your differentiation down far enough to be legible to an LP and it starts to sound like everything on every VC website. I said that on air and I haven’t solved it. The least bad move is the one Giada at SFERS gave Alexa: ask a friend why they invested in you, instead of reverse engineering what you think LPs want to hear.

Where I’m not settled. I took a victory lap on episode 82, where we called that LPs who went direct would drift back to fund of funds, but only the ones offering more than a basket. It’s happening. Foundations, endowments, family offices, now public pensions. Then the LP who told me that asked whether a fund of funds rush is itself a peak signal, since it was one in 2020 and 2021. I said maybe. That’s why you don’t time the market, and if it helps emerging managers, I’ll take it. Alexa’s read is cleaner than mine. She thinks it’s the barbell going consensus, that venture is multiple asset classes now, and the early stage sliver gets outsourced to people who do it for a living.

Listen to the full DDQ with Alexa here: https://swimmingwithallocators.com/podcast/why-lps-still-arent-buying-the-venture-comeback/

with gratitude,
Earn Sweat

In February 2010, a seventh grader named David Sills V gave a verbal commitment to play quarterback at USC. He was 13. Lane Kiffin offered him a scholarship after watching video sent over by Sills’ private quarterback coach. I was in my twenties when stories like this started making the rounds, and I remember thinking what everybody thought. What are we doing? He hadn’t played a down of high school football. He hadn’t hit his growth spurt, or maybe he had, which is somehow worse, because now you’re projecting a kid who might already be done growing. Nobody knew. That was the point. The offer wasn’t a bet on what Sills was. It was a claim on what he might become, staked before anybody else could stake it.

Here’s how it went. Kiffin was fired in September 2013, before Sills ever got to campus. The next coach honored the offer and then recruited other quarterbacks anyway. Sills decommitted in 2014, went to West Virginia, and got moved to wide receiver. He spent a season at a junior college trying to stay a quarterback, came back to West Virginia as a receiver, and in 2017 he was an All-American who tied for the national lead in touchdown catches. He went undrafted and has spent the years since fighting for NFL roster spots. The talent was real. The position was wrong. And the coach who made the offer was gone before the kid showed up.

I’ve been thinking about Sills since a call this week with a friend who runs a community for emerging managers and founders. I was telling her how desperate this market has gotten to find founders before they even know they’re founders. She’d been hearing it too. In the last month alone, she’d heard three times from groups thinking about starting an academy, and one of them was looking at refurbishing an old university campus, dorms and all. Then she said the line I haven’t been able to shake: “I almost feel like they’re scouting the womb now.” I asked if she remembered when middle schoolers started getting football offers from Alabama. She said, “And he’s 14.” I said sometimes 12. Then I told her I was going to have to write about it, so here we are.

Nothing is proprietary

In my essay, The Souls of Seed Folk, I mentioned a founding partner at one of the large platform firms told me maybe 90% of venture dollars now chase momentum, and maybe 10% of the business still does the old craft of finding and building companies. This essay is about the 10%. I used to think of the craft as the quiet corner of the business, the place where patience and relationships did the work. It isn’t quiet anymore. It’s a knife fight, and the biggest firms in the world walked into it carrying the biggest knives.

The reason is simple. Proprietary deal flow, at almost every stage, isn’t a thing anymore. Nothing is proprietary. Like, literally nothing. You can find people very easily. The only question left is whether you can find your exceptional people, judge them well, and get them to take your money.

The tools did this. Harmonic says it tracks more than 195 million people and covers companies from the moment founders file for incorporation. Its own blog walks through how to spot a stealth founder: somebody leaves an AI lab or another high-signal employer with no announced next role, changes their LinkedIn title to “stealth” or “building something new,” registers a domain, files the paperwork, or waits out an earn-out after an acquisition. Specter sells more than a thousand talent signals a day to over 400 firms. Evertrace watches incorporations, domains, GitHub, and patents. Harmonic even named its AI agent Scout. The scouts didn’t get to keep the job title.

When everybody has the same radar, the radar stops being an edge. Konvoy said it plainly in a January piece titled “Deal Flow is Now Table Stakes.” In a meeting with an LP and I landed in the same place: the edge now is finding founders before they’re visible to the AI sourcing systems. Which means before they leave. Which means before they decide. Which means, if you follow the logic all the way down, before they know they want to be founders at all. We used to play Who Wants to Be a Millionaire. The new game show is Who Wants to Be a Founder, and the host is hoping you don’t know the answer yet.

The recruiting board

Here’s what the recruiting looks like right now. I’m going to use sports analogies, because that’s what it feels like.

The academy. On September 22, Andreessen Horowitz announced the Horowitz Andreessen Academy, a private, full-time, in-person school in San Francisco for young people coming out of high school. Admission runs on proof of work, meaning what you’ve built, shipped, or earned, not your grades. It’s unaccredited, so no degree and no transferable credits. The founding class is about 50 students, free, starting in fall 2027, with $50,000 in compute credits each and co-ops at companies like Anduril, Anthropic, Nvidia, OpenAI, and Stripe. The school raised $42 million in a round led by a16z, and the announcement promises that Jensen Huang, Satya Nadella, and Patrick Collison will come by to lecture.

I have to be honest about my first reaction. It reminded me of the Osborn Academy. If you missed the 2017 Spider-Man cartoon on Disney XD, here’s the plot. Norman Osborn’s son gets suspended from the genius high school in town, so Norman opens his own genius school at the top of Oscorp Tower, holds auditions, and sets it up as the rival. I’m not saying anybody in this story is the Green Goblin. I’m saying I’ve seen this episode. And to be fair to a16z, they called their shot. Their Big Ideas list last December predicted an AI-native university. Most firms predict things. They’re opening one.

The camp. My friend Aditi Maliwal, a GP at Upfront, posted a few days ago that applications are open again for the Upfront Founder Fellows. It’s eight weeks for technical students, recent grads, and dropouts. Fellows get one-on-one mentorship with an Upfront partner, a seat at the Upfront Summit, fireside chats with portfolio founders, a standing invite to dinners in LA, New York, San Francisco, and Boston, and $75,000 or more if they incorporate a venture-backable startup. Her post opens with the idea every recruiter eventually lands on, that the best ones don’t wait for permission. She’s right, by the way. That’s the problem. Everybody is right about that, so everybody is standing outside the same gym.

The camp circuit runs deep. The Thiel Fellowship pays $250,000 over two years to people 22 and under who leave school. Z Fellows gives $10,000 for a single week and takes high schoolers. Neo will give a college student $40,000, no equity, to take a semester off and spend it in San Francisco. South Park Commons writes $400,000 for 7% into people at what it calls the “-1 to 0” stage, before there’s an idea. Kevin Hartz said last fall that close to 20% of his bets over the prior year went to teenagers, up from about 5% two years earlier.

The early decision. This one made me laugh, because it’s the verbal commitment with better branding. Y Combinator’s Early Decision tells students to apply now and do YC after they graduate, and they get funded the moment they’re accepted. That’s a high school junior telling Kentucky basketball he’s coming after senior year. The difference is YC actually wires the money.

The foundry. Afore has an open position for its foundry program right now. Its Founders-in-Residence page doesn’t bury the lede: People Before Ideas. It runs two months, typically invests $250,000 to $750,000 with a floor of $100,000, and takes about ten teams per cohort, with cohorts starting in July, October, and February. Afore isn’t alone. Eclipse just raised $1.3 billion and plans to use part of it to build physical AI companies in-house. General Catalyst has a whole creation practice. Greylock Edge takes founders before they have an idea. The foundry is the prep school. Bring the kid in early, house him, coach him, and make sure he’s wearing your jersey when it counts.

The beacon. Then there are the firms posting their position needs. Pear publishes Requests for Startups, and its August edition came from operators instead of partners. Ali Ghodsi at Databricks wants an agent that interviews employees to capture what a company knows. Tomer London at Gusto wants an AI app builder for kids. Y Combinator’s fall list has 13 ideas, including one on the future of American defense written by the Secretary of the Army. In The Souls of Seed Folk, I told the story of a friend who put a beacon out on a problem he’d been chewing on since his operating days, and a few operators from a big marketplace company answered and came to hang out at his firm for a month. Same move, smaller megaphone. A request for startups is a coach telling every high school in the state, we need a left tackle.

The radar, hand-built. The friend from that March lunch has his own version of the radar, and his is smarter than most. He goes back to last cycle’s hot companies, the ones that were rocket ships and then kind of stalled. The people there are still great. They were in the building for the inflection, and they learned from other people’s mistakes on somebody else’s dime. Nobody’s looking at them, because everybody is poking around trying to get anyone from the two or three hottest companies. He also told me most firms do references so poorly they can’t tell who was the reason a company inflected and who just picked a good rocket. Then he said the line I wrote down twice: “You’ve gotta find people who don’t know they’re pretty.”

The same friend who said “targeting the womb” told me about a firm that has built what sounds like a heat map of founders coming out of universities. She also told me about a GP who runs his fund in two buckets, core checks and talent checks. The talent checks go to university kids. He loves the dropout, and not just the kid building apps in his dorm room, the one in the engineering program. He’s in a handful of companies where, as my friend put it, 21-year-olds are running $3 billion businesses.

The street agent. Every recruiting system has a shadow version. My friend told me about an investor, she knows who bought memberships to all the major coworking spaces. He’d go on Saturday nights to see who was still working, tell everybody he was a scout for one of the big-name firms, and befriend the people grinding around the clock. Then he’d coyly switch it up. Oh, I was scouting for a friend over there. I’m actually with this other fund. That’s how he found the hottest deals. It’s shady. It also worked, which is the part that should scare you.

The scout used to be the respectable version of all this. Sequoia started its program around 2009 and gave operators and founders money to write small checks into companies they found, which is how scouts ended up early in companies like Uber and Stripe. The idea was to have other people out there doing our jobs for us, getting our name around, keeping our tentacles in rooms we weren’t in. That was proprietary deal flow back when it existed. Now the scouting report is a SaaS subscription, the tentacles are an API, and some of the people still doing it in person are lying about who they work for.

Does the analogy hold?

Mostly. And the places where it breaks are the interesting part, so stay with me.

It holds on commitments. A verbal doesn’t bind anybody. Sports Illustrated tracked 500 top-100 recruits from the 2007 to 2011 classes and found that 14.6% decommitted. In the 2024 class, it was roughly 19% of Power Four (the top football programs) commits. Nobody publishes the decommit rate for fellowships and residencies, but I promise you it isn’t zero. A fellow is eligible for a check. A founder in residence is invited to stay. The only thing anybody signed was paperwork for a company that doesn’t exist yet.

It holds on the coach leaving. Sills lost the coach who recruited him. Tate Martell committed to Washington at 14, watched Steve Sarkisian leave for USC, and bounced from a Texas A&M commitment to Ohio State, Miami, and UNLV before retiring in 2022. Michael Avery committed to Kentucky basketball as an eighth grader in 2008, Billy Gillispie got fired, the new staff pulled the scholarship, and Avery played Division II at Sonoma State. None of that is on them. They were kids. If you’ve raised money in this business, you know the story from the other side: the partner who championed your deal leaves eighteen months later and you’re the orphan on the portfolio page. Now imagine the partner who recruited you at 18 into an academy leaves before you ever start the company.

It holds on the target. Being the best 12-year-old is hard. Staying the best 13-, 14-, 15-, 16-, and 17-year-old while everybody knows your name is much harder, because every camp you walk into has somebody trying to prove he’s better than the kid with the offer. Founders are going to feel this. The kid who gets into the academy at 18 is going to have a scouting report on her before she has a customer.

It even holds on the data, and the data cuts both ways. On3 looked at more than 16,000 recruits across five NFL drafts. Five-stars got drafted 63% of the time, four-stars 22% of the time, and three-stars about 5% of the time. So the early rankings aren’t nonsense. Pedigree predicts. But three-stars still made up 40% of everybody who got drafted, because there are so many more of them. The hit rate lives at the top. The volume lives in the middle. If you’re a Series A investor, you should read that twice.

The all-star games tell the same story. ESPN looked at McDonald’s All-Americans from 1993 to 2012 and found that 42% played fewer than 25 NBA games and only about 8% made more than one All-Star team. So when people ask whether tech should have its own McDonald’s All American game, I have news. We have one. It’s called Forbes 30 Under 30, and its alumni include Martin Shkreli, Sam Bankman-Fried, and Charlie Javice. Forbes had to publish its own Hall of Shame. Demo day is the dunk contest.

Here’s where it breaks. When Alabama offers a 14-year-old, everybody knows what sport he’s going to play. Football exists. The field is 100 yards. There’s a depth chart. When a firm recruits a pre-founder, there’s no sport yet. The market the kid is going to build in might not exist on the day she signs. That’s why the requests for startups exist. They’re an attempt to hand the recruit a position before the season starts. But Sills is the warning. The talent was real and the offer was for the wrong position. Most of the programs on the recruiting board are recruiting quarterbacks. A lot of those kids are going to turn out to be receivers, and some of them are going to turn out to be the best offensive coordinator you’ve ever met.

It breaks on the calendar, too. An athlete has a clock. You’re a high school senior, then a freshman, then draft eligible, and then it’s over. Founders don’t have a signing day, and nobody ages out of starting a company. The best founder I back in the next five years might be a 42-year-old who’s been an early employee three times.

And it breaks on the referee. College sports got so crazy that the NCAA eventually stepped in and pushed the contact date back. In 2017, Division I lacrosse banned recruiting contact before September 1 of junior year, because eighth and ninth graders were committing. By 2019, most Division I sports couldn’t start recruiting conversations until the summer after sophomore year. Venture has no NCAA. Nobody is pushing the contact date back. a16z just moved it to the day after high school graduation.

NIL and the portal

The part I didn’t expect to find is what happened after the scholarship offers. The analogy doesn’t stop at the eighth grader. It keeps going, and the next two chapters might be the most useful ones for us.

The first chapter is NIL. In June 2021, the Supreme Court ruled 9-0 against the NCAA in Alston, and on July 1 the NCAA let athletes get paid for their name, image, and likeness. Within a year, boosters had pooled their money into collectives, and the collectives became pay-for-play with extra paperwork. In the 2023-24 school year, collectives accounted for roughly 82% of all NIL pay. Last year the House settlement let schools pay athletes directly, up to $20.5 million a school, and the whole market is now estimated at around $4.5 billion a year. And yes, it went younger. Nike signed a 13-year-old soccer player in 2024. A 14-year-old football player in D.C. hired an NIL agent the summer after eighth grade.

I wanted to know whether the early offers led to NIL. Not directly. State legislatures, antitrust lawyers, and the Supreme Court did that. But the early-offer era proved how much the talent was worth to everybody except the talent. The money was already moving. It was just moving under the table. When the FBI arrested ten people in the college basketball case in September 2017, including four assistant coaches and an apparel executive, one scheme routed money through middlemen to recruits’ families in exchange for commitments, and the other paid coaches to steer players toward advisers. The NCAA’s own commission said the rot started in youth basketball. NIL didn’t create the market. It moved the market above the table.

Venture already has NIL. We call it grants, stipends, and compute credits. Paying the name before there’s a product is exactly what $50,000 in compute, a $40,000 equity-free semester, or $250,000 to leave school is. You can see the pricing in the terms, too. Z Fellows’ $10,000 can go in at a $1 billion cap. That isn’t an investment so much as a recruiting pitch. The lesson from sports is who wins once you can pay the name directly, and the answer is the biggest collective. In venture, the biggest collective is the platform firm with a balance sheet big enough to fund a school. My friend’s advice to the smaller firms thinking about academies was the right one: combine forces, pair up with the other ten groups, and do it together. That’s a collective. I’d be surprised if we don’t see one by next year.

Am I too old for an NIL deal? I checked. Texas only allows high school NIL starting at 17, and nobody has written the rules for a guy with two podcasts and a third on the way.

The second chapter is the transfer portal, and it’s the twist. The portal launched in October 2018, and in 2021 the NCAA let first-time transfers play right away. Men’s basketball went from 957 portal entries in 2019 to 2,320 in 2025, more than 40% of all players. More than 10,500 college football players entered during a single two-week window this January. Then something happened that nobody in the scholarship-for-seventh-graders era saw coming. Once schools could pay players and players could move freely, a lot of the money moved later, not earlier. College basketball coaches started saying freshmen were a worse investment than proven transfers. Going into July 2025, only nine players in the ESPN 100 for the class of 2026 had committed, down from 17 a year earlier.

Look at that from a venture seat. When the money got real and the movement got free, the smart money went to proven production. Not to the eighth grader. To the player who already did it somewhere else and was ready for a new jersey. That’s what my friend’s hand-built radar is. It’s the transfer portal. It’s also the part of the market I’m built for. I’m a Series A investor. I don’t get to take the 14-year-old to dinner, and by the time a company gets to me it’s already been recruited three times. My whole job is to know who was actually on the floor when the thing worked.

Who coached them?

Here’s the question I keep coming back to. If everybody is chasing the phenomenal amateur, who’s getting left behind?

Go back to Sills one more time. Lane Kiffin didn’t discover him at a camp. He saw video from Sills’ private quarterback coach. The coach was the node. In basketball it’s the AAU coach. In football it’s the trainer, the seven-on-seven coach, the high school coach who’s sent 30 kids to Division I. It’s the parents, the uncle who drove to every tournament, the teacher who gave him a key to the gym. Recruiting has always run through the people around the athlete, and once real money showed up, a lot of the power moved to them. The FBI case proves that more than I’d like it to. The influence was real enough that people broke the law to buy it.

In venture, the people around the founder are the early employees. The first 50 or 100 people at great companies are the coaches, the teammates, and a lot of the future founders. They sat next to the person who became the CEO. They know who was the reason the company scaled and who just picked a good rocket, which is exactly the reference my friend says nobody does well. They’re who founders call when they need a head of sales who’s done it before, an advisor who’s lived through a down round, or a board member who’s actually shipped something. And a lot of them, to borrow the line, don’t know they’re pretty. Some of them should start companies. Many of them shouldn’t, are exceptional at what they do, and have never had a place in the founder story. Everybody wants to call their firm a founder magnet. Magnets work on what’s close. The early employees are what’s close.

That’s Exceptions, and I want to be explicit about it here. Exceptions is the third podcast show I’m building, after Swimming with Allocators and Carry On, and it comes with a dinner series. The podcast is about the early employees of historically great venture-backed companies, the people who rarely get interviewed, in a handful of deep, researched episodes a year. The dinners are small, eight to twelve people, half pre-seed and seed founders and half standout early employees. The founders get a room with the people who could be their advisors, board members, and first great hires. The early employees get a room with the founders worth betting on. And I get what every recruiter wants and nobody can buy from a database: signal on where the best operators land next, who’s about to spin out, and a back channel on who was actually on the floor.

If everyone else is handing out scholarships to fifth graders, I want to know the AAU coaches. That’s not a playbook. It’s where I think things are going, and it’s the one part of this knife fight where being the most analog person in the room is an advantage. I’m looking for people to co-produce and build it with: operators who want to host, studios and producers who care about this story, and companies and firms that want to be around this community early. If that’s you, reply to this or find me.

What are we building?

I don’t want to pretend I have this figured out. I have more questions than answers, so I’ll leave you with the ones I can’t stop asking.

If a firm finds you at 18, puts you in its school, places you in a co-op at a company in its network, hands you its list of ideas, and funds your first company, whose company is it? I don’t mean the cap table. I mean the ideas. When every academy reads the same requests for startups, we might get a generation of founders who are very good at building what they were recruited to build. That’s not the same as building what only they could see. A request for startups list asks for an AI app builder for kids. There’s a version of the future where the kid who grows up on it is sitting in an academy in 2035, building the next thing on somebody’s list.

What happens to the kid who says no? In sports, the kid who decommits gets called disloyal. In venture, the pre-founder who turns down the fellowship, joins a startup as employee number twelve, and learns the job might be the best founder of the decade in 2032. Are we going to recognize her then, or is she a three-star forever because she didn’t take the offer at 19?

And what did we give up on the way here? For a decade this business said founders first and founder friendly. That was a promise about how we’d behave after the check. Commit early is a promise about how fast we’ll find you before it. One is about the relationship. The other is about the claim.

Commit early, commit often is good advice for code. You save your work in small pieces so you can roll it back when something breaks. I’m not sure it’s good advice for people, because you can’t roll back a 19-year-old. So I’ll keep doing the thing I’m good at. I’ll keep asking who coached them.

With gratitude,
earn

Sources

1. The Souls of Seed Folk

2. Incubating the Horowitz Andreessen Academy (a16z)

3. a16z launches a school (TechCrunch)

4. Horowitz Andreessen Academy terms (Fortune)

5. a16z Big Ideas 2026

6. Marvel’s Spider-Man (2017 series)

7. Upfront Founder Fellows

8. Thiel Fellowship FAQ

9. Z Fellows

10. Neo’s low-dilution terms (TechCrunch)

11. South Park Commons Founder Fellowship

12. Kevin Hartz on teenagers (TechCrunch)

13. YC Early Decision

14. YC Requests for Startups

15. Afore Founders-in-Residence

16. Eclipse raises $1.3B (The Next Web)

17. General Catalyst, Our Creation of Crescendo

18. Greylock Edge

19. Pear Request for Startups, August 2026

20. Harmonic, How to Find and Track Stealth Startup Founders

21. Harmonic, About

22. Specter

23. Evertrace

24. Konvoy, Deal Flow is Now Table Stakes

25. Inside Sequoia’s scout program (TechCrunch)

26. David Sills V’s recruitment (Sports Illustrated)

27. David Sills V (Wikipedia)

28. Tate Martell (Wikipedia)

29. Michael Avery has a home (On3)

30. The Commitment Project (Sports Illustrated)

31. Verbal commits and the 2024 class (Deseret News)

32. On3 draft rates by star rating

33. McDonald’s All Americans and the NBA (ESPN)

34. Forbes 30 Under 30 Hall of Shame

35. NCAA ends early lacrosse recruiting (Daily Pennsylvanian)

36. NCAA DI recruiting rule changes, May 2019 (Informed Athlete)

37. NCAA v. Alston (Wikipedia)

38. NIL at three: collectives and football (Front Office Sports)

39. House v. NCAA settlement approved (CBS Sports)

40. Opendorse NIL market estimate (FootballScoop)

41. 13-year-old soccer player signs with Nike (Yahoo Sports)

42. 14-year-old D.C. football player hires NIL agent (Yahoo Sports)

43. High school NIL by state (Sports Illustrated)

44. SDNY on the college basketball arrests (DOJ)

45. Rice Commission key points (Star Tribune)

46. Transfer portal record numbers (Front Office Sports)

47. 2026 football transfer portal by the numbers (NCAA.com)

48. Portal and NIL lower the value of high school prospects (CBS Sports)

49. Revenue sharing and the 2026 recruiting class (ESPN)

Alexa brought up 996. Nine to nine, six days a week. Roy asked her what it meant, she explained it, and he said that was light work as far as he was concerned. I jumped in and said we were doing that on Wall Street, that's nothing. Two guys with banking in their past, agreeing on instinct.

Then Roy turned it himself. He said wealth gets measured in different ways. If you want to be wealthy in Elon Musk's image, that is typically what it takes. If you want to coach your daughter's soccer team, that is also wealth. He left an investment banking career when his oldest daughter reached a certain age. He said he has zero regrets.

I have heard plenty of people make the case for better jobs. Few of them admit they picked the grind themselves for years and knew exactly why. That is the register of the whole conversation. Roy is not asking our industry to feel differently. He is asking it to check its work.

I walked in already believing impact and returns are not opposed. What I lacked was a clean account of why that is still an argument. Roy's answer is that the obstacle was never the math.

Start with the number. Ford runs a $1 billion notional impact endowment, plus roughly $450 million of catalytic capital where impact is the primary purpose and financial return is secondary. Roy put their cost of capital at about nine and a half percent: a five percent legal spend rate they exceed, plus inflation. Miss it and they erode the corpus. He pointed out that hurdle is higher than many public pension funds and some sovereign wealth funds. So the portfolio most people file under concessionary is underwriting to a harder number than the portfolios people file under serious. That is worth sitting with before the next time someone says impact capital is patient.

Then the reading. Roy has a line about "a category of reading assignments that are in fact assigned but not read on the syllabus." He put Milton Friedman's famous essay in that category. He went back and read it, close to ten times, because he could not believe what was on the page. His read is that it is a stakeholder capitalism essay: businesses should follow the rules and invest in workers and communities for the purpose of increasing enterprise value. He added that Friedman also wanted a basic income for everyone. I am not going to referee that interpretation in a podcast recap. What I took was the method. He went and read it.

The part I actually wanted was the mechanic. I asked him what asset managers and venture capitalists specifically can do with any of this. He said the fastest thing you can do at any moment is also the hardest, which is to question conventional wisdom, then he made it concrete. He pulled the term "non-financial factors" out of fiduciary legal vocabulary. Empathy and culture sit in that bucket. Attrition is the easiest thing in the world to measure, and some sectors run two hundred percent annual attrition. Empathy and good culture reduce it, and the savings go straight to the bottom line. So "non-financial" turns out to be a labeling decision rather than an economic finding. His framing of the cost, in his own words: accepting things without questioning them means "you can lose out on alpha."

The psychology sits underneath all of it. Roy pointed at loss aversion, that when people are comfortable they will pay to stay comfortable and give up upside to do it. Narrow, affinity-based allocation, he said, may not be economically rational, but it is psychologically rational. Anyone raising a first fund from people who only write checks into what they already recognize should read that sentence twice.

Where I am still unsettled: I asked for what allocators do and I got a method, not a checklist. Attrition math is clean in a sector running two hundred percent turnover. It is not clean at a fourteen-person seed company where the founder is the culture and everyone is mid-vest. I do not know yet how to price that at pre-seed, and Roy was not claiming to. He also offered Anthropic as the example, saying Ford was offered the chance to invest in March 2024, that there were real questions then about whether the company would make it, and that the public interest focus which initially slowed its growth became a big asset. I believe the mechanism. I would still want to hear that argument made without the outcome already attached to it.

Earlier this year I wrote about the wrong kind of urgency, the kind you borrow from someone else's scoreboard. Roy opened this episode with urgency too, running the other direction. Ford has not taken outside money since 1947. The grants are the largest bill they pay. Purpose can create urgency, he said. That is the version I was reaching for and did not have a name for.

Listen to the full episode here: https://www.google.com/url?q=https://swimmingwithallocators.com/podcast/doing-good-is-not-the-trade-off/&source=gmail&ust=1790324065329000&sa=E

See you later allocator,
Earnest

“It is a peculiar sensation, this double-consciousness, this sense of always looking at one’s self through the eyes of others, of measuring one’s soul by the tape of a world that looks on in amused contempt and pity. One ever feels his twoness,—an American, a Black person; two souls, two thoughts, two unreconciled strivings; two warring ideals in one dark body, whose dogged strength alone keeps it from being torn asunder.”

Of course, parts of the Black American experience are far heavier than anything else I mention in this essay but it is hard for me not to see the similarities when other people have to live with a professional version of double consciousness. I caught myself using the phrase twice this month with other investors, so I figured I should write it down.

Here’s the version I keep hearing and interpreting. Seed and early-stage investors now carry two souls in one fund.

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I opened the recording by asking Santosh whether I was crazy for wanting to start a Series A fund. Half joke. He did not treat it as one.

He came back with a field report. He has spent months catching up with partners at household name firms, the kind you would have called a Sand Hill Road Series A fund. One told him his partnership is taking far more interest in growth and late stage. Santosh pushed on Series A. They had not done one in months. He asked what they were doing instead. The answer was seed. Not out of love for seed. Out of fund size. In Santosh’s relay of it: “we’re not getting ownership at these late stages, so we’re doing seed rounds of five to $10 million, and we get 15% ownership, 20% ownership.” Sitting on a billion or two, a firm can absorb those losses. So it buys the option instead.

That is the gap, described by the people who opened it.

I did not walk in undecided. I have been building toward that stage for a while, and I have read messy middle enough times to know what conventional wisdom says. What this conversation did was replace my instinct with mechanics.

Three things I took.

The labels stopped doing work, and that is the opening. Santosh put it plainly: “increasingly I find like the nomenclature of pre-seed seed A probably doesn’t matter as much.” His illustration is the cleanest version of the problem I have heard. You can raise a large seed. You can raise a small Series A. He does not know what to call the thing between them, and it lands between five and twenty million depending on what you are building. His conclusion is structural, not semantic. A franchise in the middle may need to write a five million dollar round and also something closer to a forty or fifty million dollar Series B, out of one pool.

The job is general manager, not card counter. You are not playing poker, running percentages against rigid rules. You are the general manager of the Pittsburgh Pirates or the Cowboys or the Knicks, assessing talent all the time. A free agent. A one and done phenom. A guy who spent six years in college with NIL money behind him. Each archetype carries its own diligence, and the portfolio follows from that instead of the other way around. One SKU does not work. Some of these are high priced luxury at the start and some are a fixer upper. Santosh added the discipline that keeps this from becoming drift: an opinion that is data informed, and a clear read on where you want to enter. In some situations he would rather come in at seed. In others there is enough risk that he will leave return on the table and wait for the B.

The mega funds may be building demand for the thing they displaced. This is the one I did not have. Santosh thinks the ascension of mega funds “might actually be priming the pump for this type of a strategy.” The mechanism is the good part. A billion dollar vehicle does not invest at one stage or one profile. The LP writing that check is already underwriting a blend, some late stage, some early growth, some seed and Series A, and does not get to price the pieces separately. So the muscle for a flexible single pool already exists in the LP base. It got built by the firms that made the gap.

Where I am not settled.

Scope creep. I have spent years telling LPs to ask whether prior success at one stage predicts anything at another, then spent this episode arguing for flexibility across three of them. I put that question back to the industry on air. Santosh answered with what is actually happening: “all the rules have been thrown out the window. If you see where LP dollars have been flowing.” That is a description of behavior, not a defense of it. I do not have the resolution.

Reversion, too. He asked me straight what the risk is that the market goes back to clean lines. I said I am not sure we ever return to rigid ones, but I expect more blurred ones. That is a hedge, and it should stay one.

The thing nagging at me came from the last Swimming with Allocators episode. Rachel Kloepfer read the same barbell from the LP chair on Swimming with Allocators and inverted it. Her view is that SaaS and consumer belong with a big fund, because distribution is the moat. We keep landing on this show at your why, and the deeper version is your worldview. Mine is that technology should make for a more connected society, and the practical form of that is being the person who finds a founder their customers. So her argument makes distribution the thing scale supplies, and mine makes it the thing I supply. I have not worked out which of us is describing my market.

The closing thing I said is the part I believe most. Building a firm right now is an essay test, not a standardized test. Standards are being broken every day. The answer sheet is not coming. We have to create it.

Listen here: https://carryonpodcast.com/podcast/mind-the-gap-who-actually-does-series-a-anymore/

With gratitude,
earn

I asked Rachel Kloepfer what she actually asks fund managers. Not the scripted portfolio construction question. The one that gets her an answer she would not otherwise get.

She started with what does not work. A manager says sourcing, then says events, then says a network from whatever large company they worked at. “That’s an obvious give,” she said. Then community building, which she flagged as a buzzword before I could. Then the question itself: “pull up your calendar and let’s talk about what you’ve done this week, last week, whatever.”

That request is good because it cannot be answered with a narrative. Everything above it can.

Rachel spent her first career in investigative and crime reporting before landing at Lenora Capital, the private investments arm of Brighton Jones. Most of what I took traces back to that.

Three things.

First, the edge is the records, not the questions. I expected the journalism answer to be about asking hard things of people who do not want to talk. She said that, and it is real. The sharper piece was procedural. She filed a lot of public records requests, and the skill that transferred was knowing how the request process blocks access to information that is already public by law. Mess up the form and you lose a month. Know it and you get in. She described knowing “who you needed to get on the phone and yell at” at day thirty. She now uses FOIA to pull endowment and pension investing strategies and watch how they shifted over time, since all of that has to be publicly filed. I have been around this seat for years and had not thought of that as an LP tool.

Second, my own analogy came back to me changed. I put the barbell to her as an NFL team against a tennis pro. The big firm has a brand that moves on its own. The emerging manager is one person walking into tournaments on their own merits (and own money, look up how a professional tennis player operates!!!). She took the framing, then put the advantage somewhere I did not expect.

The standard pitch runs the other way. The emerging manager claims the fast categories and the mega fund is the safe institutional choice. Rachel’s read: if you are underwriting SaaS or consumer, distribution is the moat, and in her personal opinion you want to be with a big fund. Where a smaller GP is genuinely strong is niche knowledge in a hard industry. She listed life sciences and bio, hardware, anything selling to the government, anything tied to blue collar logistics. In those, the knowledge is the moat.

Her reasoning is what makes it hold. Nobody can forecast this market, GPs included. “There is no all seeing eye that’s going to have the right answers.” So the riskier and faster the area, the more she wants it sitting with a firm that has enough manpower and brand power that “they can will their way through it.” That is not a quality judgment on the manager. It is a judgment about what survives being wrong.

Third, succession planning is a live reason she says no. Not a governance checkbox. She described firms she would have said yes to at first touch, among the best she can think of, that got a no on succession alone. The mechanism is specific. A GP who was senior at Google pulls founders out of that orbit because those founders respect the relationship. When the GP goes, the pull goes. The commitment does not. A ten year fund with extensions, re-upped to hold an allocation, means in her words “we’re looking at a 20 year relationship.” The line that stuck with me was about opening a deck years in and not recognizing a single name on it.

Where I am not settled is what that does to the media argument. Rachel thinks owned media decides the next decade. Streaming wars, entertainmentification of the whole economy, an A16Z documentary she would not be surprised to see. Eyes bring LPs, founders, talent, and deals at more disciplined prices. I co-host a podcast about LPs, so I did not need convincing. This conversation confirmed what I already believed rather than changing it, and I would rather say that than manufacture a turn.

But she also said the underinvestment in succession happens partly because so much focus goes to the media presence of the firm. Those two sit uneasily next to each other. The same build that wins attention now may be the one starving the bench that has to carry the brand in year fifteen. I did not push on it in the room. I do not know how she would resolve it.

Kelli Fontaine came at this from the other end on episode 105. Her team runs 78 dashboards and she is the most data-forward allocator we have had on. Rachel came in from crime reporting. They land in the same place. There is tactical benchmarking, Rachel said, and then there is the person to person work that sits “outside of what you can put on a spreadsheet,” and she called that second part a finger to the wind. Two unrelated careers, same conclusion about where the numbers stop.

The calendar question is what that conclusion looks like once it is operational. Not more data. One question a story cannot survive.

Listen here: https://swimmingwithallocators.com/podcast/what-lps-really-want-from-venture-funds/

With gratitude,
earn

I read a line off Henrik Reimavuo's own website and asked him to defend it. Firm Capital backs next-gen managers who operate at the esoteric edge. I wanted to know what that meant and how he underwrites it. He laughed. His colleagues had asked him the same thing when he wrote it, he said, and they kept the phrase because "we like the sound of it." Then he gave the real answer, which was better than the line.

The real answer is that he is not shopping for agreement. "Everybody talks about consensus," he said. He wants managers who can teach him something he cannot read from the outside. That is only a strategy if the market really does have parts nobody can read.

I brought Henrik the consensus framing on Europe, the one that comes up on this show constantly: the gap with the US is a capital shortage, so put more euros in. He does not buy it. He calls it a quality problem and a misallocation problem, and he puts the shortage at the wrong end of the pipe. By his numbers, angel capital in Europe runs roughly 20x below the US and pre-seed runs 10x to 13x below. The gap does not start at growth. It starts at the top of the funnel.

Then the mechanism. He puts governments at around 40 percent of the capital backing European venture funds. Government money carries government objectives: policy, employment, regional development. None of those is performance.

The detail that made it land was not a number. Henrik said managers who used to be sustainability investors are now investing in weapons. Same people, same funds. The narrative moved from decarbonization to European resilience and defense, and the money moved with it, because it was following the narrative and not the edge.

Three things I took.

First, the unmarked manager. Henrik sorts first-time GPs into archetypes, blunt about the cost of each. The spinout competes forever against the brand they left. The operator wears the tattoo of the company they built. The community catalyst has neither. He calls that being "unmarked." In soccer, unmarked is not a skill. It is a fact about where the defenders chose to stand. LP coverage is built to scout spinouts and operators, so the person who spent four years convening a group nobody scored as a market is standing free. The run only counts if somebody passes. That is the gap Henrik wants Firm inside: those managers usually get their day-one check from a US GP or from angels in their own network, and almost never from a European institution.

Second, the sequencing test. I pushed on community, because being a node in the ecosystem is not new and half this industry has a podcast now (this guy!!!). His filter is order of operations. Did the community come first and the fund arrive as a consequence, or was the community assembled to justify a raise? His examples were specific enough to check. One person built for the non-executive operator layer inside European startups, a layer with no room of its own while founders, juniors and investors all had theirs. Another convened post-Soviet founders across cities worldwide. Both are raising funds on top of networks they did not build in order to raise a fund.

Third, fragmentation as an asset. Henrik argues Europe's cultural fragmentation is "a feature, not a bug," that you can be the Swiss German investor to a Swiss German founder permanently and hold your seat because you understand each other. I believe that at entry. I have watched local relationships hold cap table position through rounds where nothing else would. I am less sure it survives scale, because the fragmentation that protects you at entry also caps how many companies you can serve. He would say that is why he writes into sub-$100M funds and keeps the portfolio concentrated. I want to see a vintage.

I asked Senia Rapisarda of HarbourVest a near-identical question about Canada in episode 103. She refused the capital answer too. She called ecosystem building agriculture rather than geology: a bigger drill does not find the nugget. What is unresolved for me is that Senia helped design VCAP, a government program, and credits it with catalyzing Canada, while Henrik points at state capital as the source of the misallocation. I cannot draw that line cleanly yet. My working guess is that the state is good at planting and bad at picking.

Where I did not move: I walked in believing "more capital" is almost never the real diagnosis for an ecosystem, and nothing here changed that. It sharpened it. The question is not how much capital. It is who the capital answers to.

He closed on something I did not expect. I asked what he wished more LPs would say out loud. Answer your emails, he said, and say no clearly, face to face, with the actual reason, which he says is usually a human issue rather than a portfolio one. He described himself as a notorious people pleaser who has worked through some of it. In a business that hides behind portfolio construction language, that is harder than it sounds.

Listen to the full conversation here:

With gratitude,
earn

I said something on the record I have mostly kept to private conversations. When I moved to San Francisco after business school and started interviewing for associate and principal VC roles, I was grateful that nobody could tell how old I was. My genes bought me cover. I needed it, because I heard over and over something I called the rule of 27. If you had not done something exceptional by 27, why would a top tier firm take you.

I do not think I was wrong that the rule existed. I was wrong about what it measures.

Santosh opened by asking whether there is a sweet spot age for a high functioning VC. I swapped the word almost immediately. Not age. Lifestyle. This work feels a lot like life. You meet people and nothing comes of it. You back people and it goes to hell or heaven. What the job asks for is room to think and the willingness to keep showing up, and both of those track with age without being caused by it.

Then he brought numbers that cut against the folklore. Across roughly three million U.S. founders the mean age is 42. Among the highest growth one in a thousand it is 45. Founders at 50 and over are twice as likely to deliver a top tier outcome. The industry that invented the rule of 27 writes its checks to people who are, on average, fifteen years past it.

An aging curve is a population object and we keep using it to price a person. Basketball solved this a while ago. The curve says a wing declines after 30. LeBron at 40 does not refute the curve. He is the residual, and the residual is the whole business. I said on air that the goal is to be an exception that invests in exceptions. You are trying to be the weird dot on the chart, the one that should not be there. If that is the job, a hiring band is a strange instrument to run it through.

Three things I took.

Risk tolerance may be inherited rather than aged into. Santosh gave the standard version. You will never be more risk seeking than right out of school, because responsibility becomes liability. I pushed on where that belief comes from. We were raised by boomers, personally and professionally, and that generation was handed a world that mostly went up and to the right. Some of what they taught us was true then and is not true now. I am not sure the risk curve is a fact about human beings. It may be a fact about one fifty year run.

Staying too long is a franchise cost before it is a personal one. Santosh is the youngest of four partners at Dynamo and the firm is coming up on eleven years. He looks at other professions carrying partners at 65 and 75 and 85 and sees damage. "It doesn't matter if your name's on the door," he said. "That's still net negative for you and your legacy if you're a founder of a firm." He raised Jordan going to the Wizards and was honest that ego sits underneath the whole question. LPs ask him how many funds he has left in him. It is a rude question and it is the right one, asked badly.

Experience might be the depreciating asset. I did not walk in with this one, and it went against me. NVCA data shows the share of partners at their current firm ten years or more has risen over the last four or five years. I offered the flattering read. Founders want expertise, pattern recognition compounds, the market is finally paying for people who have seen a few cycles. Santosh agreed that every firm benefits from someone who has seen multiple cycles, because history rhymes. Then he kept going. "Experience alone, I don't think, will be valuable because in the age of intelligence, you can tap into experience in a non-humanistic way that's still sufficient."

I have been sitting with it since. If experience is retrievable, the ten year tenure number stops being evidence of compounding and becomes a question about what those ten years still buy.

Where I am not settled. I still believe pattern recognition compounds. What I can no longer defend is the assumption that it compounds faster than it commoditizes. That is the same clock Santosh put on every other venture advantage on episode four, and I did not notice he had turned it on us.

I wrote in Everyone Shoots Threes Now that a weakness is a hiring problem and not a prompting problem. The other half of that showed up here. Knowing precisely what you spike at beats being adequate at three things. When you are young you try to spike at all of them and dilute the one you are actually good at.

There is no perfect age. There is a weird dot, and the work is getting yourself onto it.

Listen here.

with gratitude,
earn

Some of my favorite teams ever never won anything. Hell, my Cowboys have not won a Super Bowl since I was eleven.

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