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Ben - [C/x]
@benersing
What's one question you have about venture capital?
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notdevin
@notdevin.eth
Why don’t VCs learn how to get rich off revenue and dividends instead of equity which would better align their interests with that of the project mission so long as founders build smaller hyper efficient teams to maximize quality revenue per person?
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↑langchain 🎩
@langchain
no outsized winners in this model, right? it’s all about IRR, and although dividends would be long term sustainable - they aren’t attractive as an asset class
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notdevin
@notdevin.eth
Let’s say you had a claim on 10% of the profit from a small team doing $10m a year in revenue at a 70-80% net margin, your take is $700-$800k per year or about 30% of what you’d get from fees in a $100m fund from one position. Now let’s assume you’re a normal fund and deploy 30-40% into companies that all look like this. Pretty sure this model would fuck. Fuck it, I want to do this now. Someone stake me up. I’ll run this model experiment based entirely on small teams of savage operators where the portfolio yields outsized returns based entirely on revenue share
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Drew Volpe
@drew
First rule of running a fund, any kind of a fund, is to pick a strategy and stick with it. What you’re describing is a version of PE and it would only make sense to build a fund and just do that, rather than putting 1/3 of a VC fund towards it.
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Drew Volpe
@drew
Not an expert in PE, but I bet it’s hard to buy these stakes for reasonable prices and you’ll likely often get screwed if you only have a claim on profits. Hint: Return of the Jedi has grossed >$600m and has yet to return a profit because of “Hollywood Accounting”.
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notdevin
@notdevin.eth
It’s not terribly dissimilar but fundamentally it would end up being different. They both care about efficiency but in my approach team efficiency would be on another level of expectation. No room for a CEO that’s good at CEO, he better be able to drive and deliver on the product service side as well. It’s mandatory that the teams be only made up of multiplier humans and, at least right now, you can pick them out pretty easily because the tools required to get that require skill to put together. And again, this exists in manufacturing as well, a business operator that can run the 3d software, un-jam the CNC machine, and fire up the plasma torch when necessary in between customer support
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