Auren Hoffman has a great Quora post here, in which he points out that few venture capital firms follow the advice they give to their own portfolio companies. More broadly, VCs do very little to build long term equity value in their own firms. This is puzzling. Auren notes that the top private equity firms do do this, which seems like a hint that it’s not impossible. 

Traditionally VC has been a business that requires superstar partners to attract and pick the best investments. And superstars, understandably, want to capture most of the upside from what they do - which doesn’t leave firms much room to invest in the future. That’s why firms that are exploring ways to do VC systematically are so interesting. Social Capital’s recent “capital as a service” experiment is fascinating - and Y Combinator and Angel List are arguably two of the most important disruptions to VC over the last ten years. And, of course, that’s exactly what we’re trying to do at EF and why we raised venture capital ourselves.

Jack Clark’s must-read ImportAI newsletter flags an important development this week: that computational power - and not data - is now the most important driver of AI research. This is something I’m hearing more and more from smart people in the field. It’s strongly linked to a idea that’s also becoming more prominent: “AI nationalism” or AI as a national security issue. Nation states ought to be able to build big advantages in computational power compared to almost all non-state actors, which opens the door to a new kind of geopolitical competition. Axios has a good short summary of some of the key issues. I’m sure it’s a topic we’ll be revisiting.

There’s a lot of talk about the importance of place in politics at the moment (e.g. the idea of “Somewheres” and “Anywheres” in Brexit). What’s astonishing is how long place persists, despite large-scale migration over the last few centuries. I read last week that the presence of Protestant Huguenots in the 16th century is still a strong predictor of a French region’s Socialist vote today (Robert Tombs shows something similar about Anglicanism and the UK Conservative Party in his excellent History of the English). 

But then I was listening to this excellent podcast with the anthropologist Joseph Henrich and it turns out that a few hundred years is small fry. This research came up in the conversation - and it suggests that economic development even in 1000 BC is a strong predictor of economic development in the same place today. Intuitively, it’s hard to imagine this persisting another few centuries… but then intuitively it shouldn’t have survived the last few either.

Thanks for all your comments last week. Feedback always welcome. If you like this, please tell a friend or share the subscribe link: https://www.getrevue.co/profile/mattclifford

Until next week,

Matt