Despite those reservations, I’m still personally bullish on an EA VC fund… if the managers are people I trust or trusted by people I trust, or have other strong evidence of potential success.
I think the most interesting point has been mentioned by Stefan Schubert here 1, 2.
Expanding on this, there is a strong niche for an EA fund that helps EAs build EA companies. I feel like I’m writing a discount hacker news comment, but maybe there’s key advantages an EA fund can use:
Startups often fail from implosion due to drama like founder splits. The strongest teams have great trust and unity (e.g. come from the same school cohort). It’s plausible EA culture provides an alternate source of unity. Many EAs have great communication skills and can credibly show that they can commit to altruistic purposes.
It’s plausible EAs could commit to much lower salary/equity (which could still be enormous in non-profit terms) and put the large majority into EA causes. This compensation doesn’t hurt EA motivation while reducing a source of tension and maybe adding enormous credibility (this might be impractical on a cap table, I don’t know.)
I think EAs are more able to grind and do heads down operational work, which I think is important (see SBF anecdotes about waiting at banks).
I think the tech narratives about changing the world are attractive and why funding, grind exist. I can see EAs getting a consistent edge at all stages of a business because they can plausibly change the world (or at least have a convincing meme).
These seem like structural things that a VC fund can be built on.
Startups often fail from implosion due to drama like founder splits. The strongest teams have great trust and unity (e.g. come from the same school cohort). It’s plausible EA culture provides an alternate source of unity
For what it’s worth, I think this appears empirically false in terms of pretty much every EA for-profit startup of a fairly large size (say >10 employees) that I’m aware of, including the successful(!) ones.
Founder or near-founder level drama that has ex ante very negative consequences (“red flags” is maybe my current preferred term) appears to be the norm rather than the exception. (Incidentally this was also true during my own brief stint as an intern in an mission-oriented non-EA startup, which is now valued at 10 or 11 figures)
Different people can learn different things from these anecdata, but hypotheses I’ve generated include:
1. Base rates of founder conflict (to a pretty extreme level, like >50% of management quitting) is just really high, and my naive impressions/prior that founder conflict should only be pretty common in failed startups is wrong.
2. Wittgenstein’s ruler: I shouldn’t trust my own instincts of what are red flags for startup success (like founder conflict) in the face of pretty strong empirical data. Maybe I’m quite bad at causal assignment here.
3. The world is just crazy/easy. There’s so much money laying on the table that you can screw up in many important ways and still come out ahead as long as you do a few other (more?) important things right.
4. There’s just too much randomness/heterogeneity in the world to say much of anything when it comes to startup success.
I’ve gone up on my belief in 1. personally updated somewhat downwards on 4, and up on both 2 and 3.
I think the most interesting point (or at least fun to write about on an internet forum) hasn’t been made, and it’s not that EAs can perform better running a general fund, but that there is strong niche for an EA fund that helps EAs build EA companies.
I related to this niche issue in two comments; 1, 2.
I think the most interesting point has been mentioned by Stefan Schubert here 1, 2.
Expanding on this, there is a strong niche for an EA fund that helps EAs build EA companies. I feel like I’m writing a discount hacker news comment, but maybe there’s key advantages an EA fund can use:
Startups often fail from implosion due to drama like founder splits. The strongest teams have great trust and unity (e.g. come from the same school cohort). It’s plausible EA culture provides an alternate source of unity. Many EAs have great communication skills and can credibly show that they can commit to altruistic purposes.
It’s plausible EAs could commit to much lower salary/equity (which could still be enormous in non-profit terms) and put the large majority into EA causes. This compensation doesn’t hurt EA motivation while reducing a source of tension and maybe adding enormous credibility (this might be impractical on a cap table, I don’t know.)
I think EAs are more able to grind and do heads down operational work, which I think is important (see SBF anecdotes about waiting at banks).
I think the tech narratives about changing the world are attractive and why funding, grind exist. I can see EAs getting a consistent edge at all stages of a business because they can plausibly change the world (or at least have a convincing meme).
These seem like structural things that a VC fund can be built on.
For what it’s worth, I think this appears empirically false in terms of pretty much every EA for-profit startup of a fairly large size (say >10 employees) that I’m aware of, including the successful(!) ones.
Founder or near-founder level drama that has ex ante very negative consequences (“red flags” is maybe my current preferred term) appears to be the norm rather than the exception. (Incidentally this was also true during my own brief stint as an intern in an mission-oriented non-EA startup, which is now valued at 10 or 11 figures)
Different people can learn different things from these anecdata, but hypotheses I’ve generated include:
1. Base rates of founder conflict (to a pretty extreme level, like >50% of management quitting) is just really high, and my naive impressions/prior that founder conflict should only be pretty common in failed startups is wrong.
2. Wittgenstein’s ruler: I shouldn’t trust my own instincts of what are red flags for startup success (like founder conflict) in the face of pretty strong empirical data. Maybe I’m quite bad at causal assignment here.
3. The world is just crazy/easy. There’s so much money laying on the table that you can screw up in many important ways and still come out ahead as long as you do a few other (more?) important things right.
4. There’s just too much randomness/heterogeneity in the world to say much of anything when it comes to startup success.
I’ve gone up on my belief in 1. personally updated somewhat downwards on 4, and up on both 2 and 3.
I related to this niche issue in two comments; 1, 2.
Yes, thank you. I think this was useful but I neglected to mention it.