Should investors build an explicit deterministic view of the future from the history of technology, or rely on a metrics-driven 'predict the present' approach?

Vince Hankes · May 3, 2023

Instead of top-down TAM analysis, the better method for a new platform is to study how prior technology waves scaled and ask how the world will look in five to ten years

The iPhone went from a million phones a year to 100 million in five years, AWS went from $100M to $10B of run rate in six or seven years, and Google went from nothing to $10B in its first six years of monetization — precision on TAM is impossible for scaling technologies

Scope: acknowledges this sounds imprecise or 'two fingers in the air' to some; those comparables are rarefied air

17:30 20VC: The OpenAI Memo: Why Invest? Is it too Late to Catch OpenAI? Are OpenAI's Models Truly Defensible? Does the Value in AI Accrue to Incumbemts or Startups - Application Layer/Infrastructure? What Happens with Regulation? with Vince Hankes @ Thrive

Nico Wittenborn · May 22, 2023

Breakthroughs that look overnight are actually deterministic combinations of existing components, so mapping those components lets you anticipate which companies can be built over the next ten years.

Borrowing the 'adjacent possible' from evolutionary biology: transformers developed inside Google, then taken to build OpenAI, then packaged as a $20/month consumer subscription in ChatGPT — specific sequential steps perceived publicly as an overnight event.

Scope: applies to behavioural and social shifts as well as technical ones

39:01 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent

Chris Dixon · Mar 27, 2024

He rejects the now-common 'don't predict the future, predict the present' metrics-driven approach in favor of forming an explicit deterministic view of the future built from studying the history of technology and underlying forces

In a system as complex as economics plus technology plus people, drawing lines through charts is a poor way to see the future; understanding historical dynamics and patterns is better

Scope: not claiming everyone should do it this way; acknowledges the metrics/ARR approach has worked for others

18:37 20VC: a16z's Chris Dixon on Who Will Win the Next Generation of Venture, The Two Ways to Make Great Venture Investments and Find the Best Entrepreneurs & Why AI Will Strengthen the Position of the Incumbents Moving Forward

Brad Gerstner · Oct 10, 2022

The idea that venture works by two people and an idea walking in the front door and getting lucky is false; the strategy has to be deliberately prosecuted toward the biggest trends.

It takes as much emotional and intellectual effort to start a restaurant as to start Google, so investors must choose which trends and markets they spend that effort against.

7:24 Deliberate strategy prosecution toward chosen trends beats luck and passive deal flow