Kidtech milestones, anti-VC VCs and other musings
I still get a slightly smug sensation when I see a kidtech company raising capital from VCs like k-ID did last week. This is partially some kind of emotional I-told-you-so response relating to the challenges we had in the early days of building SuperAwesome. And while raising money from VC is never really a victory per se, in this case it does highlight an improved investor grasp of the importance (and obviously value) of building kidtech infrastructure1.
There are many issues around kids and the internet to be solved (here is my handy list). As well as the seven bills currently being debated, a belief seems to have emerged among US politicians that yelling at company CEOs in the Senate will somehow hasten an improvement in the situation. I haven’t seen any evidence to support this but it does make for amusing content (and at least the coherence of the yelling is improving over time).
Much like VR, there is a generally-held investor view that in ten years time kids and the internet problem will be magically fixed with much hand-waving over the actual route. I can sort of accept this timeline with two assumptions:
The sector matches capital with rational leaders. Much like food and music, the kids’ space has incredibly well-meaning individuals whose passion blinds them to business realities (this view is probably why I will never be a good, or indeed any kind of, VC).
Well-meaning individuals in large (and large-ish) technology companies are able to drive industry collaboration without hordes of lawyers pinning them to the ground screaming incantations about antitrust, business sensitivities and self-preferencing.
I often think of VC and its power-law outcomes as a bit of a Rorschach test. On one hand you can see VC as a time machine of sorts, fast-forwarding an idea to the point of an outcome, good or bad. On the other hand you can see it as a crack dealer, getting companies hooked on a behavior which doesn’t encourage brilliant life hygiene.
Perhaps investing into a strategy of non-power-law-oriented-but-still-early-stage-tech-companies2 is a better way to deliver results from the same ecosystem? Tyler Tringas’ five year assessment of this question (through his Calm Company Fund) is a thought-provoking read and I highly recommend it for any like-minded types.
It’s possible that a required condition for writing a newsletter is suffering from some degree of Dunning-Kruger Effect. I’ve read this excellent memo from Speedwell Research on the human tendency towards confabulation a couple of times and I’m still pondering it. Highly recommended.
I have (accidentally) developed a habit of reading two books with semi-opposing (or at least related) views at the same time. This is not based on any science and I’m sure Andrew Huberman has a nine-hour podcast explaining why it’s a terrible idea but I still find it quite a useful way of understanding larger themes. In this vein I recently consumed Peter Zeihan’s The End of the World is Just the Beginning and Hannah Ritchie’s Not the End of the World. They both write excellently about near-term existential threats to the current world order (Zeihan on de-globalisation cascade effects and Ritchie on climate change) and while they’re not opposing theories, Ritchie’s focus on rigorous fact-checking and correcting of popular views is a useful foil to contextualize Zeihan’s predictions. Both highly recommended.
A model which made me stop everything and think for a solid hour: “The collateral for a property is not the physical building, it’s the price” (from Alex Pollock on Grant’s Current Yield pod)
It may also correlate with investors getting older and having kids (anecdotal but happened to us many times).
Okay, I guess ‘early-stage value investing’ is slightly less of a mouthful