Table Stakes Economy

Investing in the future of Money, Health, and Work

Having been in venture capital for the last dozen years, and in tech for close to 25, I’ve seen a few cycles. One of the harder things we all face is recognizing when experience has given us an advantage in pattern recognition, and when experience has given us the illusion of confidence in a rapidly changing world. In developing any “thesis” or framework for the world, the most important thing is recognizing that rules are written in pencil, and paradigms guide, but are also meant to be deconstructed.

I’m always dubious of inductive theories of the world, statements of truth seemingly pulled from nothing. For five years at The Fund we refused to box ourselves in. Prior to that, in setting up Two Culture Capital with my best friend Simon Wagner, I told him, “let’s quietly invest in great founders and companies and not talk about it.” But over time, over a dozen years and close to 400 investments into 300+ companies, there comes a time when the noise of what you like, and where you find value, starts to show some signal, and you can deduce a pattern, or a taxonomy to describe it.

This was the articulation of the “Table Stakes” thesis. Based on an investment a week over close to six years, seeing what we actually find interesting and where we see the world consolidating was around three themes of Money, Health, and Work.

I wouldn’t claim that we’re “data driven,” because that’s far too boring and pedestrian, but I would say that we’ve listened to our own interests, value statements, and to some small degree success, to design a thesis that is both broad yet informative.

What’s most interesting about a thesis is that it creates lines beyond which the burden of proof is higher to break your proposed rules. Interestingly, while we’ll mostly adhere to this thesis, when you do deviate it’s perhaps because you have greater conviction. Interestingly these deviations often lead to outsized returns. I was speaking to my friend Carl, a partner at Swedish firm Creandum recently, and he mentioned how they do not invest in LatAm, yet the few times they had were into unicorn startups. They “didn’t do it,” yet when they had it proved wildly successful. The reason, I believe, is because the burden of proof for deviation, or drawing outside the lines, is higher. As such you probably do more homework, get more comfort, and have higher belief when you do break the rules that it’s all worth doing. As such, we have a thesis almost insofar as we can break it to find the irreverent parts of ourselves.

For us at Everywhere Ventures, Jenny and I “don’t do consumer,” yet some of our best performing companies like Pair Eyewear are in this category. And for me personally, the consumer super app of the Philippines, Kumu, which has raised over $100 million from General Atlantic, started on my couch in Brooklyn. One might point to luck, or randomness, but as any thesis is by definition a lowest common denominator descriptor, the only way you generate alpha is by being contrarian, and correct. So having rules is most useful to litmus test your own conviction in when to break them.

Thanks to Ian Hathaway at FarOut Ventures for jamming on this idea with me. Check out more coverage around our Table Stakes Economy thesis at South Summit.