Some things to consider this week

There are a few ideas packed into this post but I wanted to start with something both serious and personal. I’ve known Eamonn Carey as a friend, co-investor and eating partner for decades. He is one of the most loved under-the-radar investors across the European early stage scene and recently suffered an unexpected critical medical emergency. Recovery will be slow and require intensive medical care so his friends are running a Gofundme to help his young family. If you can, please consider contributing alongside myself and much of the European startup community.

I know Eamonn would certainly approve of me using this moment as a reminder for builders of companies and funds to do two things right now:

1. Get a will in place. As a founder, would you want very specific things done (or not done) with your company by your estate if you were to suddenly pass? You should think carefully about this.

2. Get an In Case of Incapacitation (ICI) plan in place. Too many of us think about only the binary conditions (alive and dead) but there is a wide distribution of other scenarios which can be surprisingly common. Make sure your loved ones and your co-founders know how to access information which might be essential to them.

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By far the most interesting writing I have devoured recently has been Doug Shapiro’s newsletter. His discussion of media and attention fragmentation is essential reading:

“New entrants don't only compete on the traditional measures of performance, they introduce new attributes. If those attributes or features take hold with consumers, then they change the consumer definition of quality.”

A thing I occasionally say is that even when you know what the future looks like, it can be surprisingly hard to invest in it. While the overall Gen Z/Alpha addressable market of stuff is getting bigger, the atomic unit of business activity seems to be getting smaller (this is basically the underpinning of our LFG Holdings thesis). I don’t think that investors (or indeed operators) in this space can continue to run the same playbooks which worked five years ago.

Mike Shields highlights the messiness of this transition from an advertising point of view in a recent newsletter:

“Reaching younger generations is going to require a heavy dosage of creator media if brands want to remain relevant and grow…But it’s hard to see spending reach that threshold unless things get easier, and less complicated.”

This fragmentation moves more value and power to the networks, which in turn amplifies popularity. So the barbell effect of giant hits and lots of long-tail niche weirdness will continue. My simplified version of this shift used to be a chart I would show to our management teams which basically said that your strategy can either be absolute scale or absolute expertise but anything in between was a death vector. Doug describes this about nine million times more elegantly:

“One is that the middle is going away. The middle is getting hollowed out and it's historically been a very lucrative part of the business. Another problem is that the business is getting riskier because the distribution of returns is becoming more extreme.”

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Levellr (which regular readers might know as an LFG Holdings investment) is building community management and sentiment analysis tools for Discord. Now used by a wide range of games and music companies, they are hiring a dedicated VP Business Development for gaming. Levellr is one of the most interesting companies operating in one of the most fascinating ecosystems so if this sounds interesting you should ping Tom or Ben (or me).

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I have sat on boards as a founder for twenty years and as various kind of non-exec for over ten. And let me tell you that the average quality of both board meetings and director competence is somewhere between mediocre and bad. I lack data to know whether performance is declining but certainly watching older directors in action versus younger directors, there is often a gulf between them in terms of rigour and structure. I had a chance encounter with Chris Morton outside an event in London last week and I think his Starboard initiative is a very good idea. Make Boards Great Again is definitely not what it should be called but it is definitely the sentiment.

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This is your bi-weekly reminder that almost all AI investment (and GPU capex) is paid for by advertising profits. On that note, it’s interesting to see more AI companies discussing rolling out ad models (which implies human viewing) while also talking about agentic futures (which implies non-human viewing). I’m not clear whether this is a binary outcome, a series of stages or indeed we end up with an AI tools landscape that is both free and subscription (similar to today’s content world). But I’m quite confident that most of the main personalities driving this don’t know either.

Intuitively I expect marketing dollars to continue to creep up against an unrelenting wave of AI-generated content. Interestingly, ad spending in the US was up almost double digits in Q3, well ahead of most projections.