The frontier should be paced,... by clear and obvious liability. stop pretending this is special or complicated

High ARR multiples won't save an AI startup with runaway burn rates. Gokul Rajaram @gokulr, Founding Partner at Marathon Management Partners, explains why evaluating companies on revenue alone is a major risk: "The ARR multiple in isolation without looking at the burn is basically irrelevant…What I want is a company that when the markets turn, they can still keep growing efficiently and they can raise a round even in a bad market."

For most of history, corporate communications has been about taking whatever a company has to say and turning it into a nice, smooth surface. That era is over. The best comms teams have already moved on to spiky comms, meaning rough edges, personality, opinion, and perspective.

Remote work is exceptionally hard for startups, which by definition need to innovate and learn / invent / build new things together. It’s well suited for companies that are maintaining or sustaining existing products, but not for disruptive innovation where in-person can 10x the speed of iteration and learning.

For any real-world application of enterprise AI, cost, reliability, and safety are becoming far more important than frontier-level performance. If you are trying to build a bio-weapon maybe you need frontier-level performance - but not if you are trying to automate procurement workflows. This is going to be a big problem for the capex guzzlers.

Shots fired! "Palantir's Alex Karp says AI's biggest names may never IPO — the real play is telling Washington 'nationalize us, please'" buff.ly/YFBG9WP

"Speaking at the investment committee meeting of the $225.3 billion Teacher Retirement System of Texas, CIO Jase Auby drew a historical comparison with five prior US infrastructure booms: canals, railroads, electrification, highways, and the telecom and fiber buildout of the early 2000s. In many of these cases, companies overbuilt and had to wait years for demand to catch up, with many going bankrupt in the meantime, Auby said. “It’s a cautionary tale for the period that we’re in now, where you have some very large companies, some of the largest companies in the S&P 500, that are very much engaged in the build out of artificial intelligence,” Auby said, adding that at around 3.5% of US annual GDP, the amount of capital poured into AI dwarfs all five previous booms." buff.ly/kRNaGZb

If you as a VC who missed Jev....let's talk. Ping me.

A few thoughts on the current state of venture capital. When the Music Is Playing In July 2007, a few weeks before the credit markets seized up, Chuck Prince, then the CEO of Citigroup, gave an interview to the Financial Times. The line everyone remembers is this one: "As long as the music is playing, you've got to get up and dance." He was mocked for it for years afterward, and he lost his job a few months later. But I have come to think he was saying something honest. He wasn't claiming the music would play forever. He was admitting that he couldn't sit down while it was still going, and neither could anyone else in his seat. I've been thinking about that quote a lot lately, because right now is the most disorienting period in venture capital I can remember, and I have been doing this for a while. Here is what makes it disorienting. It's not that things are bad. Some things are spectacular. We have companies in our portfolio growing faster than anything I have seen in my career, and I don't say that lightly. At the same time, we have companies with no revenue, no product, and a founding team you could fit in a conference room raising billions of dollars at valuations of $10 to $50 billion. Both of these things are true at once, and if you try to reason about them with the same framework you will drive yourself crazy. Two ideas have helped me make sense of it. Neither is mine. The first is reflexivity, which George Soros has been writing about since the 1980s. In most of life, perception follows reality: the weather is what it is, and your opinion of it changes nothing. In markets, it runs the other way too. Prices change what participants believe, and what participants believe changes the prices. The feedback loop can run for a long time, and while it's running it looks exactly like progress. Here is how reflexivity is playing out in AI. Full disclosure: Menlo is an investor in Anthropic, so read the following with that in mind. People watched a frontier lab go from a $4 billion valuation to $18 billion, then $60 billion, then $180 billion, then $380 billion, and now something close to a trillion. They drew the obvious conclusion: that is what a neo lab looks like. So the next neo lab gets priced off that path, not off anything it has built. Then it gets marked up in a subsequent round, and the markup itself becomes the proof. Look at Thinking Machines. Look at Reflection. At that point valuation has stopped being an output of the metrics and has become the metric. Nobody is discounting cash flows. They are discounting the last round. Soros is very clear about one thing, and it's the part people skip: you cannot know when or how a reflexive process ends. You only know that it does. Every one of them has. The second idea is Chuck Prince's, and it explains why smart people keep dancing even when they can see the loop for what it is. As far as I can tell, there are two groups on the dance floor. The first group got in early. Firms like ours were in some of these AI companies before the numbers got silly, and the paper gains are enormous. When you are sitting on gains like that, you start to feel like you're playing with house money. I have been around long enough to know that house money is the most dangerous kind, because you don't respect it the way you respect money you had to earn. The second group missed the early rounds and knows it. Their LPs know it too. So they are trying to make up for lost time by writing very large checks very late, which is the one strategy almost guaranteed to turn a missed opportunity into a real loss. House money on one side, FOMO on the other, and reflexivity feeding both. That's the whole story. Everyone has a reason to keep dancing, and the reasons are different, which is why nobody can talk anyone else off the floor. So what do you do? The instinct in our business is to answer with company identification: just pick the right neo lab and you'll be fine. I think that's the trap. When price has become the signal, being right about the company is not enough, because you can be right about the company and still be wrong about the price by a factor of ten. The public-market investors I admire figured this out a long time ago. They spend as much time on how much to own as on what to own. The winners in venture over the next decade will be the firms that treat portfolio composition and position sizing as seriously as they treat sourcing. How much of the fund is in companies whose valuation rests on the last round rather than on revenue? What happens to the portfolio if the reflexive loop breaks next year instead of in five? Those are not exciting questions. They are the ones that will matter. The music will stop. It always does. Dance if you must, but know where the chairs are.

Very well said by @venkyganesan “The music will stop. It always does. Dance if you must, but know where the chairs are.” It’s impossible to know when the music will stop but blindly underwriting to the current environment (rather than historical heuristics) is a potential trap

You can think of early-stage VC as "money for experiments"; finding and funding ideas which feed the downstream pipeline of opportunities. On top of that, the larger funds provide "money for winners"; targeting the hottest companies. This is the "tech beta" strategy of megafunds, providing scalable allocation to private market growth. Over the last four years a liquidity crunch tipped the market further toward the megafunds, and the two strategies fell out of their previous equilibrium. Essentially, there's still tens of billions of dollars earmarked for "winners", but the investors who actually find those winners are in decline. This is why the AI labs can keep raising endless private rounds, and why startups like Instinct can raise $1B on $10B without any moats or generating any revenue. It's why today's startups are either "legible to capital" or dead in the water. There is simply too much capital relative to the bandwidth to invest it appropriately. So, the market grows narrower, hotter and more fragile — and it's a completely rational response to current incentives. More here: blog.joinodin.com/p/setting-…

Dario wants to slow AI down. Ask yourself: when has a winner ever asked for a speed limit? Dave's take this week: Anthropic isn't slowing down out of principle — Astra is objectively crushing them, and DeepSeek is shipping fable-level models at 100x less cost. Twin vectors, both pointing down. My take: there is no compounding advantage in these models. OpenRouter lets you hot-swap dynamically whenever the fuck you want. That makes these bad businesses — which is exactly why the labs are sprinting toward regulatory capture before everyone notices the emperor has no clothes. Brit thinks normies want ONE agent, maybe two. Dave and I think that's like saying people wanted one app. The polyagentomerous future is already here — the switching is free. And Instinct raising at $10B, two weeks after launch, on ~100k users? Everyone's trading, no one's investing. This makes the dot-com bubble look quaint. New More or Less is up. Come argue with us.

Lift vs Runway Well said. @rabois is dead on here. Every founder needs to understand and internalize the concept of lift vs runway. Most investors and founders over focus on runway.

New technology created a new theft vector. Inevitable. Hard to criticize in hindsight. But still negative. "Microsoft exec called AI scraping ‘the largest theft of labor in human history,' new unredacted filings reveal." buff.ly/wdm7zns

The jobs apocalypse is postponed. An AI jobs boom is here economist.com/finance-and-ec…

Whoa... "AI hallucination nearly triggers US military operation" techcrunch.com/2026/09/18/ai…

the call with bad news that the founder makes without hesitation is the only real measure of whether the VC relationship is working.

I inaverdently learned this during the dotcom bubble. Our companies were getting marked up by top tier VCs (who we were targeting so that we can establish relationships and learn from them). That led to a positive feedback loop with LPs who seemed impressed by mark ups and it took us down the path of becoming a feeder fund which works well until the crash. In the end we learned what matters is controlling our own destiny. Not needing someone else’s funding or validation and just creating good businesses, some of which turned out to be great. And avoiding the smoking craters that will result from over funding untested, undisciplined companies that think they’re hot shit because of superficial interim markers of success. It’s what I called Cargo Cult Capitalism in a blog post from decades ago.

there are two completely opposite signals i like in founders: - you’ve already had a successful exit and made your investors money. chances are, you can do it again - you’ve failed a few times but somehow keep raising. first, make sure you didn’t fake the metrics or lie to investors. if everything checks out, i actually like it. you’ve already burned a lot of money (not mine), made a ton of mistakes, and hopefully learned from all of them. at some point, it becomes a numbers game. every failure should make your odds of getting the next one right a little better