Venture Socialism
How "New Power" and the internet is changing Venture Capital
Hey folks!
This week, I’m sharing a Twitter thread I wrote about how social influence is a new form of capital.
I don’t think this trend is going anywhere. If you are a new VC and you aren’t building a platform / community, you’re likely to struggle in the long term, because you need to think about how to channel power through networks like current, not hoard power like currency…
1/ The pace of this transformation is accelerating
2007: 50 Cent earns between $60m and $100m after the Coca-Cola Company acquires Vitamin Water
2019: @TheNotoriousMMA 's whiskey brand Proper Twelve generates $1 BILLION in retail sales (3.3 million bottles) in its first full year of operations.
4/ Meanwhile in China, Ruhnn, an influencer factory, raises $125m in IPO on @Nasdaq @ $600m valuation
5/ 2020: @shl , @gumroad founder, raises a $5 million VC fund with 1 tweet, a Notion memo and a zoom call with 1,800 participants (not a huge fund, but bear with me…)
6/ New Power is taking over from Old Power.
“New power models are enabled by peer coordination and the agency of the crowd.”
7/ “Old power works like a currency. It is held by few. Once gained, it is jealously guarded and the powerful have a substantial store of it to spend. It is closed, inaccessible, and leader-driven. It downloads, and it captures.”
8/ “New power operates differently, like a current. It is made by many. It is open, participatory, and peer-driven. It uploads, and it distributes. Like water or electricity, it’s most forceful when it surges. The goal with new power is not to hoard it but to channel it.”
@BrewDog , the fastest-growing beer brand in history (founded 2007, worth approx $2 billion), has a crowd (army) of over 50,000 shareholders. It has made many of them wealthy.
9/ Prediction for VC over next 20 years: unbundling and fragmentation, @AngelList’s rolling funds become increasingly influential, some of most successful GP’s are social media influencers backed by thousands of people. Platforms like @Crowdcube also mature.
10/ The first billion dollar equity crowdfunding platform will emerge, as predicted by @kevin2kelly in “The Inevitable”.
Probably @AngelList . @naval be chillin’ 😎
11/ Long term potential: collective intelligence systems take over as LP’s finally realise they deliver superior returns.
(See "Superforecasters" by @PTetlock and "the wisdom of crowds" by @JamesSurowiecki )
13/
Essential reading:
hbr.org/2014/12/unders…
Superforecasters by @PTetlock
The wisdom of crowds by @JamesSurowiecki
See you next week 😊❤️