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.