And this is, of course, why 80% of VC investments go straight down the toilet. For the last couple of decades the VC business has relied on the stock markets to be fixated on the same sometime-in-the-future-we’ll-actually-make-money fantasy. Ironically most VC funds could create the same returns with far less volatility if they looked consistently for companies that could hit 30% net margins on sustainable annual revenues of $1b — $2b instead of hoping for a home run from a single company in the portfolio. Then they’d have a 70% hit rate and a better beta. But they’re so bought into the standard model that there’s just no way for them to break out.

Which means in theory there’s a very interesting opportunity for investors who aren’t obsessed with yesterday’s model, but so far we’ve not seen anyone or any firm smart enough to break away from the herd.

Anyone who enjoys my articles here on Medium may be interested in my books Why Democracy Failed and The Praying Ape, both available from Amazon.

Anyone who enjoys my articles here on Medium may be interested in my books Why Democracy Failed and The Praying Ape, both available from Amazon.