Sam Lessin on Venture Capital & Investing

Essays

From the Podcast

I mean, I think, look, I was talking to one of our founders earlier who works on, uh, our MeritFirst testing platform. And, like, it is interesting how that, like, let's just drive hard on meritocracy, and, like, the best people should have it, open competition, et cetera, went from being kind of fringy to, like, completely mainstream. As part... I think we just have this, like, separation. We have, like, Mondami, nihilism, socialism, and then we have, like, a bunch of people that are in the minority numerically, but maybe not in terms of wealth and power, who are just like, "No, like, we want freedom, and capitalism, and meritocracy." Like, that's the trifecta. And so I just think that the world's very split, um, and that's what's making it super interesting. History says we're all about to get guillotined, but we'll, we'll find out.

— Sam Lessin, More or Less Ep 157

Any capitalist enterprise that claims to be doing good or have a double bottom line is, like, always gonna be deeply suspect, right? Like, that's, like, the biggest trick the devil ever pulled.

— Sam Lessin, More or Less Ep 157

Here's the deal. It's super simple. It's like America loves capitalism. Why does it love capitalism? Well, we basically had this amazing immigrant punt for 200 years. We said, "Hey, come hang out over here, your most driven, most interesting people who wanna, like, make lives for themselves. And good news, we did the Louisiana Purchase. We got all this new land for you. Don't worry about the Indians. As long as you have a shovel and can work pretty hard, you can go west and make- do really well." You know, 20 acres and a mule style, right? And so that was great for a super long time. Then we got industrialized, and it worked again. Then in our generation, you wanna fast-forward, like, the internet was a huge boon for us because it was digital terra nova, right? That we could col- colonize, become important, get rich on, et cetera. And the problem is with each successive wave, the number of people, the number of humans you need to dig shit who can- and share the wealth goes down. It's like when you have- when you build a railroad, you need a fuckload of people. All those people get paid. When you build internet companies, you don't need as many people. Fewer people get paid. AI, you have even smaller teams. So the, the reality is, is like you have more wealth, but fewer humans who are dealt into it, right? And that is just, like, what is happening with technological leverage. And so there is... Like, I'm quite sympathetic to the fact, as much as I love capitalism and I'm hyper pro-capitalist, these proposals where it's like, oh, if only we change the tax code, there's, like, some massively... I don't think so. I think the only thing you can do is have a real meritocracy and say, "Look, it's not all gonna work out for everyone, but if you work really hard, you're gonna have a shot," right, is, like, the upshot. And, like, that is why I'm so obsessed with meritocracy and its combination to capitalism and, like, what, and freedom. It's like freedom, meritocracy, capitalism. Like, is- that's the trifecta, right, that we have to protect because the world is otherwise gonna get more unequal and more fucked. And the reality is when you start chipping at capitalism, you chip at freedom. And people are gonna do that if they feel like the, if the game is rigged or unfair, which is why Sam Altman trying to give 5% of the government, to the government for regulatory capture and all this politics is so bad, right? Because all of a sudden it makes the game not a fair and open game that at least you can play with rules. It becomes a game of politics where people feel gated out or gated in, and that is, like, the worst scenario for the long-term success of the country.

— Sam Lessin, More or Less Ep 157

Look, she can do whatever she wants. Capitalism says she can do whatever she wants.

— Sam Lessin, More or Less Ep 157

My kind of personal take on it is, like, it's a complete fuck you to capitalism in a way that's awful. But here's the interesting thing. What I said is, "You can't hate the game..." Uh, I'm sorry, "Don't hate the player, hate the game." 'Cause here's the thing. The real story of this-

— Sam Lessin, More or Less Ep 157

Clout was f- no, but clout, clout was so fucking stupid. Like, clout always annoyed me. It was, like, such a, like, misunderstanding of how social capital works, like, so fundamentally. But people liked it 'cause people liked scores.

— Sam Lessin, More or Less Ep 158

I do think it's funny. Like, I actually think this whole thing is, like, pretty interesting because I do think, like, look, Sam Altman is an incredible storyteller, an aspiring Elon level storyteller I would say, in terms of, you know, narrative capitalism and using that for cheap capital. The Jony Ive acquisition thing, especially if it just turns out to be an Alexa, is, like, particularly interesting for this 'cause it was one step along that line of like, "Oh, I'm buying, I'm gonna pay a ton of money for Jony Ive because it will make- Raising more capital cheaper, not more expensive. So it actually, even if it costs a billion dollars on paper, is free to negative cost acquisition just on the brand of Jony Ive, which is an interesting thing.

— Sam Lessin, More or Less Ep 158

Yeah, yeah. It plays out capitalist, but I think, I think it's very cynical for these companies to even try to switch the field of play from business to politics, right? Like, I think that's a very cynical, anti-American thing to do, to be like, "Okay, we're not gonna play and compete in capitalism in a fair and open system. Instead, we're gonna, like, switch our venue to regulatory capture because it's the only play we have." And I get why they do it, and, like, to some degree as businesses, I don't grudge them the play they need to make. It's, like, the classic you can't win the game, so change the game. Um, but it's also just a bummer, right? 'Cause you're just like, man, like, politics sucks, and, like, business and economics are awesome. And, like-

— Sam Lessin, More or Less Ep 158

And like, so to me, like, and weirdly enough, I mean, there's even like a weird argument about, oh, would you stop American open source models 'cause that's technically our domain for me to develop, but not the Chinese one 'cause that'll cause a trade war. Like that's insane, right? Like all this shit's just insane and doesn't map to how like capitalism or like the internet works, right? And that's what I object to.

— Sam Lessin, More or Less Ep 158

That's what it comes down to. This is what I don't like about our moment in history, is I don't think we're playing capitalism anymore. Like, I think we're playing some like, like political capture game that is way less interesting than capitalism, right? And so that sucks, right? And like we should compete in fair and open markets as much as possible, and the best team should win and whatever. And, and like now we're just in this game of like people, which is again, it's, it's sto- it's been stories for a while. AI is scary, blah, blah, like all these types of things. But now we've kind of moved to a new version of the game, which feels much more desperate, right? Which is like, man, we better like get some regulatory capture going, 'cause otherwise we're in trouble.

— Sam Lessin, More or Less Ep 158

'Cause it's so hard and expensive to deal with getting public, right? And, like, the, the standards to it as well as just the, uh, like, where you need to be scale-wise, the attention is so high. That's why you're seeing the SPACs. That's the closest thing you have to that type of asymmetry. Like, Teamshares being public is obviously much bigger than Dell going public, but it's not many orders of magnitude more. It's, like, one order of magnitude more, not two, not 10, right? And so, like, that is... You say, like, let things be public earlier. Teamshares, which just went out and I'm really proud of, is a great example of something that goes out at a really low price where there should be 100X ahead of it, in theory. Like, that's not advice, but, like, it's got the dynamics where it's not a quadrillion dollars, right, if it works. But it's really, really hard for companies to get out that way right now, and expensive, and you just have to either accept much lower standards and totally change the dynamics and, like... Or, but then you have to accept the fact there's gonna be a lot more fraudulent companies that are public, and people are gonna lose more money. And, you know, like, it even relates to the indices, right? Which is like, to the extent that everyone's gotten into passive investing and, like, auto-clicking on the whole market, well, then it really matters what's in the market, right? Like, versus it being individual stock picking. So I don't know. It's a complicated set of issues. I, it's easy to agree with it intellectually, but when you get into the details-

— Sam Lessin, More or Less Ep 155

... but here's the flip side, is I don't know how you can believe that but then also be anti-prediction market because the whole point of all these regulations and accounting standards and why things aren't public and the cost, blah, blah, blah, blah, blah, all the reasons it's expensive to be public, is effectively if, in theory, if not practice, consumer protection, so that you're investing in real companies at real prices, right? And so it's a really hard one, right? Because I, I think y- I'm more in your camp of, like, fuck it. Like, there should be much lighter regulation. Everything is effectively gambling, right? Like, don't worry about accounting standards. Don't worry about what's real and what's not real. Have at it. But I don't think you can simultaneously be against the prediction markets and pro earlier companies going public with lighter standards.

— Sam Lessin, More or Less Ep 155

I'm not usually someone who's, uh, I'm usually able to figure out how to spend the maximum amount of money on something, and I've tried, and I'm just like, I can't do it. Like, I wanna be the type of venture capitalist like, "Oh, I spent $20,000 yesterday." Like, how? How? I'm trying. I'm like, I go to the thing, I'm like, "Spend up to $1,000 completing this task," and it comes back, it's like I spent $14.95. I'm like, that's not really-

— Sam Lessin, More or Less Ep 155

Yeah. I think there's a lot of truth to that, and also, I mean, that's the flip side of being private for so long. Like, we talk about, you know, all these companies staying private for so long, but they do amass, not sizable in terms of the whole TAM of investing, but in terms of the private markets, a lot of investors. Couple weeks before the IPO, when I was talking to the world's largest asset managers about the SpaceX IPO, they said, "Look, you know, we're gonna get as much as we can," because there just aren't that many 20X stories in the market now.

— Sam Lessin, More or Less Ep 154

Where like venture capitalists are like fat assholes sitting at a movie theater- ... and like eating popcorn, and they're like picking the companies to invest in based on the trailers.

— Sam Lessin, More or Less Ep 151

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