36. "The Outlier Firm" (ep. 10 of the series "101 VC Core Principles")

Welcome to episode number ten of our series called “1 O 1 VENTURE CAPITAL CORE PRINCIPLES FOR NEW LPs, WILLING TO UNDERSTAND HOW VENTURE CAPITAL REALLY WORKS”…Let’s dig in.First, number 37.Outliers are typically "spiky" in some direction but must possess a "heart of gold" to collaborate effectively in a team environment.Outlier partners are usually “spiky” in one dimension, technical depth, speed, or taste, but the best ones still have enough humility to work well with founders and teammates. The clearest real-world version of that is Founders Fund: it has repeatedly backed unusually hard, founder-driven companies like SpaceX and Palantir, which require partners who can be intense and opinionated while still collaborating with very atypical founders.Second, number 38.Outlier partners cannot be managed or told what to do.Outlier partners cannot be managed like normal employees; they need trust and wide latitude because the best VC decisions are made quickly, under uncertainty, and often against consensus. GV is a strong example: its decision process has been described as intentionally structured to reduce hierarchy by gathering opinions quietly before discussion, which is exactly what you do when you know seniority can distort judgment.Third, number 39.Influence within the firm should be awarded based on expertise, not on hierarchy or tenure.Influence inside a VC firm should go to the person with the deepest relevant expertise, not the longest tenure or loudest title. At General Catalyst, the power of its AI and software practice has increasingly come from partners with the sharpest category-specific insight, which is why a firm can keep winning in new waves by letting the person closest to the problem lead rather than defaulting to seniority.Finally, fourth, number 40.The VC business adheres to the principle that it is only as good as its next investments.A VC firm is only as good as its next investments because yesterday’s wins do not create tomorrow’s returns. The most vivid example is Tiger Global’s venture platform: it looked unstoppable during the 2021 boom, but the next year’s marks and the 2022 selloff showed how quickly a fund’s reputation can reset when the next portfolio cycle is weaker.Stay tuned for our next episode, and meanwhile, you can reach out to us, Vertices Capital, on our website: vertices.vc.Thank you for listening. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit verticescapital.substack.com