Against the Grain
On contrarianism
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Happy Friday y'all. After a brief absence last week during which I disconnected from tech to spend time IRL with college friends in Mexico, I'm back today to talk about something that's been on my mind recently - contrarianism in the startup and VC world. Each edition of this newsletter is different but a prevailing theme is exploring the role of counterculture in challenging mainstream narratives. Today's piece is no different. These two "C" words both thrive on rejecting the status quo and going against the grain, which in my opinion is the best way to build/invest in something great. For founders and VCs alike, the biggest wins rarely come from following herd mentality, but from seeing the world different and having the courage to bet on that vision when no one else will.
For founders, it's not just about being edgy. It's about looking at the dominant narrative and asking, "what if the opposite is true?" When everyone is chasing the same "hot" businesses - AI copilots, boring vertical software, or tokenized loyalty, there's often more alpha in what is overlooked. Breaking through and building an impactful business is a function of spotting neglected truths and recognizing that startups succeed by changing human behavior, not by making marginal improvements. However, current mindsets and incentives in the Silicon Valley startup factory are structured to favor marginal improvements instead of radical disruption.
For VCs, the same principles apply. The best investment returns come from funding what looks weird, unscalable or not fashionable today, but will be obvious in hindsight. In markets where everyone is chasing the same signals, the most interesting investment opportunities may be the ones with no buzz at all. As fundraising meta becomes more predictable and transparent, contrarian VCs need to look beyond pitch decks and Twitter traction and ask, "is this strange enough to matter?"
This also means betting on founders who aren't playing the status game. Not the ones who will clout post on LinkedIn, "Hi, me and my team of ex-OpenAI researchers just raised a $100 million seed round from Sequoia and a16z to build a AI for ____. Sure, there is and always will be robust capital pools to support those archetypes of founders and companies, but most of them will go to zero. Many of today's VCs say that they want to invest in "weird founders" but still pull back when the product is hard to explain or the vision doesn't fit neatly into an existing sector, category or trend. True contrarianism is not about aesthetic risk, but rather epistemic risk - backing people who believe something fundamentally different about the world, even if it hasn't been proven yet.
This is especially the case in pre-seed and idea-stage investing. To be a good seed investor, VCs must uncover ideas that are both novel and different. In the early days of the internet, one could do that by just being online. But the bar for originality is much higher today than it was in the early internet era, since we are terminally online and drowning in content. The truly novel and different opportunities are hidden in spaces that haven't yet been ranked, liked or indexed. They exist in niche corners of the online and offline worlds.
Contrarian ideas will thrive the most during a time like right now where everything is up for grabs and the world is more malleable than ever. Collective public trust in financial, political and cultural institutions is at an all-time low, not to mention heightened market and geopolitical volatility. We are living through a real-time reshuffling of the global monetary order. In that kind of world, why wouldn't you take the other side of consensus? Why play it safe when the rules are being rewritten?
Some random, contrarian thoughts in no particular.
We should optimize for intimacy and serendipity instead of scale.
AI is not a moat. Neither is being a first mover.
The best founder trait is not resilience and grit, but taste.
Distribution is crucial, but startups don't need more distribution hacks. They just need better ideas.
Better social feeds < better parties. More apps to connect < more excuses to gather IRL. More places to scroll < more reasons to show up.
Tech doesn't need to be more useful. It needs to be more meaningful.
That's all for today. Believe in something weird, and swing for the fences.
Shorting LVMH and longing Cryptopunks might be the move in response to the trade war emerging from china.
23
would benefit a lot of ETH holders to study the Endowment Effect
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1) Input
What I consume fuels what I create. I'm not unique in this, pretty sure this is the same for everyone
When I'm on a streak of reading (or listening) to great books, talking to smart people and watching informative or
1) Input
What I consume fuels what I create. I'm not unique in this, pretty sure this is the same for everyone
When I'm on a streak of reading (or listening) to great books, talking to smart people and watching informative or
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Straight from the @nftnow newsletter, written by @mattmedved
What are your thoughts about this?
Straight from the @nftnow newsletter, written by @mattmedved
What are your thoughts about this?
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