Seeking excellence

An alternative to pattern matching

Having invested in startups for about a year at this point, I think one of the most unique parts about VC investing, as opposed to most other types of finance, is that we as an industry are typically investing in things that are not really replicable.

A great outcome for a venture capitalist typically involves founders doing something that:

1. nobody’s ever done before

2. if somebody else were to do again after the first great success, wouldn’t have nearly as good economic outcomes for the founders and investors

So why are VCs so interested in pattern matching, both among investment candidates and VCs?

The best answer that I have is that it’s a sort of first-order approximation as to how one might conceivably replicate power law outcomes.

It sounds like a great idea for somebody who’s already found power law success!

But it doesn’t seem like a particularly useful approach for early-career investors like me, because I have no successful investments to pattern-match against.

Even if I made one a year ago, in the first deal I ever looked at, I probably wouldn’t know it for at least 5-6 more years.

Perhaps more problematically, I think it’s the wrong approach to VC — perhaps the most wrong one possible from a philosophical point of view.

Looking at startups from an epistemological perspective, I don’t believe a good way to identify startups doing non-replicable things is to try to pattern match because causality runs in the wrong direction.

If a VC’s goal is to find founders who can do something that’s never been done before, then shouldn’t the heuristic be specifically to NOT match them against something in the investor’s memory?

It seems backwards to me — I’d think the heuristic should be to match them for excellence in a relevant area I’ve never encountered before.

So my approach right now is really to seek out and study excellence in fields where I’m not an expert — and that might not relate directly to the corner of VC that’s piqued my interest, or the adjacent industries.

Excellence is Everywhere

I think one of the reasons I became interested in space as a commercial industry when I was an undergraduate student was that there was such a clear definition of “good enough” versus “not good enough”.

If a system made it to space and worked as designed, that was generally “good enough”.

Moreover, the bar of “good enough” was remarkably close to “excellent”, because at that time (in the mid 2010s) there weren’t all that many people in the industry, and the average engineer was, in fact, excellent.

Nowadays, I look at things more broadly, and I get particularly excited about deep tech startups. But there’s so much excellence and awesomeness out there in the world that has nothing to do with deep tech!

My belief is that it’s all worth studying.

Excellence can be found everywhere.

But it’s not evenly distributed, and that makes structuring a search for it difficult.

Here are a couple examples of excellence I’ve found compelling over the past few months:

Defense

One step away from the space sector is the defense domain. The commanding officer of the USS Dwight D Eisenhower, Captain Chris “Chowdah” Hill, posted prolifically on social media this past year, including during the period when his ship was engaged in combat in the Red Sea.

From where I’m sitting, he’s quite good at both commanding an aircraft carrier and building a social media presence!

What I think is particularly noteworthy about his approach to social media is how he uses it to demonstrate his command philosophy, his public approach to leadership. He put a one-sentence summary of this nearly twenty-page document on X earlier this year:

The key hypothesis of the Way of the Warrior Sailor is that morale leads to success, but you MUST understand what morale is.

Captain Hill seems to be an excellent leader based on the way that the people working for him, and their own networks, responded to his unusually online presence. And he clearly understands his audience. They responded incredibly well to recurring topics like pictures of sailors with cookies, and enthusiasm for Taco Tuesday.

As he’s explained it, this feeds back into his primary role of running an aircraft carrier by driving morale up in a virtuous cycle.

That he seems to have been among the first to act upon this insight about how to use social media not just to share his community’s mission, but to inspire both its people and their own external communities, speaks to the quality of his leadership.

From where I’m sitting, reading his posts on social media, it truly looks excellent. That’s worth studying.

Creators

For a more commercially focused example that’s farther from deep tech, Jimmy Donaldson (MrBeast) is the most successful YouTube content creator to date.

He runs a sizeable production company, and has started branching out into consumer packaged goods. I know nothing about content creation, CPG, or media, but he’s the best in the world the hyper-specific thing that he does, so I want to learn as much as I can find from and about him — both about how he got to be that way, and about how he operates now that he’s there.

Somebody leaked his firm’s onboarding handbook earlier this year, and as soon as I heard that, I went looking for a copy. Here’s the first paragraph:

There’s something particularly interesting going on in this paragraph: MrBeast defines what he is, and isn’t, an expert in.

And he’s right!

Moreover, he is comfortable enough doing things outside of that scope to both engage in them (like writing the handbook himself) and also to acknowledge to his reader that the quality might be lower than they’d expect to encounter in the area where he is excellent.

This candor improves his credibility, and should increase the reader’s trust in him in the field where he is an expert.

MrBeast writes like he talks, which is unsurprising for a social media personality — and it is quite interesting to read an entire “how to succeed here” handbook written in this style. I think it is pretty engaging, and his perspective seems smart enough that it’s started to influence how I structure my posts on this Substack.

He’s objectively excellent at content creation in general, and YouTube in particular. Media can drive business growth to the moon, so how MrBeast thinks about content is absolutely worthy of study.

Why is this worthwhile?

I want to reiterate that the idea here is not to study excellence, and then pattern match against it.

That’d be totally missing the point!

My intention here is to study excellence, and then apply that understanding of what it looks like in different contexts to think critically about founders and what they are working on.

At the end of the day, I am seeking a general understanding of what excellence looks like in fields that are unfamiliar to me — both in the specific space where a person has deep knowledge, and in other domains where they may share opinions.

My thesis is that this will help me identify great founders; more importantly, it will help me help them change society.