2025-06-02 20:33:21
Welcome to Episode 010 of Hyperlegible, a Not Boring Radio production.
To find all of the excellent essays we’ve discussed on Hyperlegible, head to Readwise.
Crossing the Cringe Minefield with Cate Hall is live: YouTube | Spotify | Apple Podcasts
Cate Hall is the CEO of Astera, one of my favorite multi-billion dollar private foundations, and one hell of a writer.
If you've noticed the word "agency" popping up all over the place recently, you have Cate to thank. Her 2024 essay, How to be More Agentic took the internet by storm and brought agency into the zeitgeist, where it has remained and grown. Now, she's even writing the Book on Agency, which you can sign up to pre-order here.
On the first episode of Hyperlegible with Tina He, when I asked who people should read more of, Tina recommended Cate.
So I was excited to see Cate drop a new essay that felt like it was written at me (and I think will feel like it was written at you, too) called Crossing the Cringe Minefield:
Like Tina said, Cate is really good at directly saying: this is how this works, and this is how to deal with it. She does that in the essay, and we expand on it in the conversation.
When we want to improve ourselves or our station in life, she argues, we start with the things that come naturally, the easy wins. They don't work. Then, we try things we don't love but don't hate. Those don't work, either.
Finally, we're faced with a choice: give up, or do the thing that feels deeply, incredibly uncomfortable, the thing that makes us cringe. That's where the answer normally is, because the cringe is a sign that we've left that area of ourselves under-developed.
“This means," Cate writes, "that existential cringe is actually a signal pointing you to where you can make the most progress quickly."
We all have something we want to get better at. We all have something that makes us cringe to even think about. And unfortunately for all of us, those two are intimately related.
While people have always felt irrational fear and shied away from doing uncomfortable things, letting cringe dictate our lives is a modern luxury. It’s part of the mechanism behind good times creating weak men. To avoid something because it feels a little scary is something that only a comfortable society can afford.
In her excellent book, Antimemetics: Why Some Ideas Resist Spreading, Nadia Asparouhova writes, “‘Cringe,’ a term that originated in tandem with the rise of social media, is a uniquely modern concept that refers to doing something that you misjudged as socially acceptable, which then evokes embarrassment from others.”
The cringe Cate writes about is an evolved version, an anticipatory cringe, almost drunkenly believing that a thing that won’t actually be cringe to others will be, preventing you from actually doing the thing. In either form, it’s a dangerous emotion.
Societally, Nadia writes, “Before cringe, people just....tried things, some of which landed, and some which did not.” Personally, Cate points out cringe has the same effect: preventing you from trying things and even discovering which will land and which won’t, and learning that even the ones that don’t land don’t hurt as much as you expect.
So, we must kill the cringe. For ourselves, and for society.
At one point, I mentioned that essays like How to be More Agentic and Crossing the Cringe Minefield seemed far afield from her day job running Astera, but she disagreed. Astera is a large, multi-billion dollar private foundation that works on creating technology and science for the public benefit through investing and grant-making. Part of the job is finding talented scientists and convincing them that they can do more than they realize.
“Paul Graham talks about the most important thing you can do is massively raise somebody's ambition,” Cate said, explaining that the Astera residency is, “Kind of like ‘Come here and we will help you think through how to be more effective in the world and how to find the best expression of this thing that you are really passionate about and the way that you want to see the world change.’ And I think that that is also what I'm trying to do with my writing.”
Cate’s writing, then, is a gift that I’m thrilled to share with the Not Boring community, because if all of us become more effective in the world, find the best expression of the thing we’re really passionate about and the way you want to see the world change, a lot of good things will happen.
We talk about how to do that and more, often in the form of a quasi-personal coaching session that I think applies to many of us.
If you're like me and have been avoiding something that makes you cringe, this conversation might be the kick in the ass you need. Or at the very least, it'll help you understand why you've been stuck in the same patterns. Either way, Cate is worth the listen (and the subscribe).
Links to a transcript, YouTube, Spotify, and Apple Podcasts are right down below so you can listen early and often.
[3:37] Cate summarizes "Crossing the Cringe Minefield"
[5:48] Why this essay resonates universally (and why your 30s aren’t too late)
[7:20] My personal cringe around asking for help
[8:15] Why cringe exists - the "hot stove" analogy for psychological patterns
[10:53] How cringe distorts your sense of proportion in normal situations
[12:19] What percentage of people actually overcome their cringe (less than 1%)
[13:40] Whether naming your fear publicly makes it easier to face
[15:54] How to identify your cringe using the Enneagram system
[22:06] Why personal vulnerability in writing creates audience connection
[23:23] How Astera's mission connects to Cate's writing on agency
[25:57] Whether Cate kicked off the "agency trend" before it was cool
[27:38] Coaching session: applying agency principles to Enneagram 7s
[32:49] The "gift of desperation" - how addiction led Cate to higher agency
[34:29] What it feels like to be high agency - seeing constraints as arbitrary
[35:39] The challenge of figuring out what you want once you can do anything
[37:05] Facing cringe is more agony than thrill initially
Final takeaway: [40:31] "The places where you feel existential cringe are where you can make the most progress as a person really quickly"
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If you’re the reading type, I used Claude to turn the messy YouTube transcript into something well-formatted and clean:
TRANSCRIPT: Crossing the Cringe Minefield with Cate Hall (Hyperlegible 010)
As always, you can find the full conversation wherever you like by subscribing to Not Boring Radio:
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While you’re there, give us a like, comment, and subscribe so we can bring great essays to more people.
You can also find links to all of the essays and conversations at readwise.io/hyperlegible. Thanks to our friends and sponsors at Readwise, you can head there for a free trial and get all Hyperlegible articles automatically added to your account.
A recent episode that’s gotten a lot of good feedback is my conversation with Reggie James on his essay, A tale of two Vaticans (or, OpenAI building an unholy spirit), in which we discuss some of the things that have taken up more of my thinking since writing The Return of Magic.
If you want more to read, here are two of Cate’s reading recommendations, two of her own on agency and one on dreams. Save them to Readwise and come back to them:
Cate’s favorite essay she’s written:
Sign up to learn when Cate’s book on Agency is available for pre-order
One essay Cate thinks more people should read:
Dream Mashups by Malcolm Ocean
Big thanks to Cate for joining me, and to Jim Portela for editing!
Thanks for listening,
Packy
2025-05-30 20:32:40
Hi friends 👋,
Happy Friday and welcome back to our 146th Weekly Dose of Optimism. This week we got a lot of Ashlee Vance, flying objects, and gene-edited things. That’s the type of week we’ve come to expect and appreciate here at the Weekly Dose.
Let’s get to it.
ElevenLabs is one of the most magical products I’ve ever used. Backed by a16z, ICONIQ Growth, Sequoia, NFDG, and more, it’s the gold standard in AI voices. I think you’ll love it.
ElevenLabs makes AI voices that don’t sound like AI voices; the one they made for me, using just some old podcast recordings I had lying around, was so good that both of my parents thought it was actually me. Turns out I have a tiny lisp, and ElevenLabs captured it perfectly.
For developers building conversational experiences, that level of voice quality makes all the difference. It’s the difference between Uncanny Valley and a magical experience. Their massive library includes over 5,000 options across 31 languages, giving you creative flexibility.
ElevenLabs is powering human-like voice agents for customer support, scheduling, education and gaming. It saves me hours reading my own pieces to generate audio versions. With server & client side tools, knowledge bases, dynamic agent instantiation and overrides, plus built-in monitoring, it’s the complete developer toolkit.
Seriously, try it on your own voice, then dream up ways to incorporate it into your product. Start chatting with and building your own, unbelievably realistic AI voice agents for free today.
(1) The Pricey, Controversial Science Creating Healthier Babies
From Core Memory
Orchid got the Ashlee Vance Core Memory Treatment. The startup uses full genome sequencing to help IVF parents select embryos with the lowest genetic disease risk. Today, that enables prospective parents to chose embryos with a clean genetic bill of health. In the future, it could allow parents to completely optimize and design embryos for a whole swath of genetic characteristics.
Orchid is complicated: it combines babies and disease prevention and genetic selection and futuristic biotech and what it means to be a loving parent and a whole swath of other complicated topics into one relatively early stage startup. When the company got major press from The New York Times last year, the public reception was mixed. Who wouldn’t cheer for healthier babies? But at the same time, how slippery can this slope get? How much do we want to design our babies? As I said, it’s a complicated and dynamic topic.
But our perspective is that we’d of course rather have the technological capability of doing these things and wrestle with the resulting ethical dilemmas of whether or not we should do these things, than to not have the capability at all.
Bonus: Palmer Luckey and Meta Make Peace to Make War Together
Not baby related, but Ashlee Vance with another big story this week. This time, he has the exclusive interview with Palmer Luckey, founder of Anduril, to cover the news that Anduril and Meta are teaming up to make create a product for the U.S. military dubbed “Eagle Eye.” Think of this as a sci-fi war helmet that combines Meta’s XR technology with Anduril’s weapons expertise.
This partnership is notable not only because the companies are planning on producing some pretty rad technology, but because it reunites Palmer Luckey and Mark Zuckerberg. Famously, Luckey sold Oculus to Zuck for $1B and then was ousted not too long after in response to some controversial stuff around the 2016 election. Palmer has been on a war path (literally) / public comeback path since, building Anduril into one of the most important companies of the 2020s. And Zuck has continued to invest billions into XR and become a lot more machismo. There doesn’t seem to be any bad blood between the two. Zuck + Palmer are not a duo I would bet against (or want to go to war against.)
(2) Xenotransplantation of a Porcine Kidney for End-Stage Kidney Disease
Kawai et al in the New England Journal of Medicine, h/t @cremieuxrecueil
A 62-year-old hemodialysis-dependent man with long-standing diabetes, advanced vasculopathy, and marked dialysis-access challenges received a gene-edited porcine kidney with 69 genomic edits, including deletion of three glycan antigens, inactivation of porcine endogenous retroviruses, and insertion of seven human transgenes. The xenograft functioned immediately. The patient’s creatinine levels decreased promptly and progressively, and dialysis was no longer needed.
Oink Oink! Put down that bacon my friend.
Doctors successfully transplanted a heavily gene-edited pig kidney into a 62 year old man with severe kidney disease. The pig kidney, modified with 69 (nice!) edits to make it compatible with the human immune system, worked immediately and eliminated the patient’s need for dialysis. This marked the most successful case of xenotransplantation yet, showing it’s now possible to use gene-edited pig organs in humans. Tragically, the patient died about 2 months later from an un-related cardiac event but the, importantly, the kidney was still functioning properly at the time of death.
The organ waitlist problem is pretty severe with over 100,000 people in the U.S. alone waiting for transplants, with 17 dying each day. Globally, the issue is much worse with demand for organs way outpacing supply. If we’re ultimately able to successfully use pig organs in transplants at scale, those issues all but go away.
Gene editing has been on a roll recently. We are learning to program our (and pigs’) bodies. If we covered nothing else in the Weekly Dose, that should make you optimistic. Our future is going to be longer.
(3) Nuclear Startup Radiant Raises $165 Million for Micro-Reactor
Will Wade for Bloomberg
Radiant Industries Inc., a US nuclear startup, lined up $165 million in funding to complete its small reactor design.
BOOM goes the micro-reactor!
Back in August of 2024, Packy wrote a Deep Dive on Radiant, a company with the goal of building a nuclear reactor from scratch on Earth so that one day we can use it to power a civilization on Mars. Pretty epic ambitions for a relatively early stage startup, but progress was real and the team was (is) a perfect fit. If you’re interested in the most detailed breakdown of Radiant, why we need nuclear energy for Mars colonization, and Radiant’s strategy you should drop what you’re doing and read the deep dive.
Otherwise, the important thing to note here is that Radiant raised $165M to execute on that strategy, and that’s up from from only about $55M in all-time funding ($100M of this round was announced in November 2024). The new funding will be used to continue to develop Radiant’s Kaleidos 1 MW micro-reactor, which is aimed at replacing diesel generators at military sites, remote villages or disaster relief efforts…oh yeah, an eventually the colonization of Mars.
On the back of Trump’s recent nuclear EOs, this money is rocket fuel for Radiant’s Race to the Dome, where it plans to test Kaleidos in 2026, en route to mass-producing nuclear reactors. The ELECTRONAISSANCE marches on.
(4) Hermeus Flies Quarterhorse MK 1 at Edwards Air Force Base
From Hermeus
EDWARDS AIR FORCE BASE, CA – Hermeus, a venture capital-backed aerospace and defense technology company specializing in high-speed aircraft, announced today the flight of its Quarterhorse Mk 1 aircraft. This milestone is a significant step in Hermeus’ development of high-Mach and hypersonic aircraft. With this flight, Hermeus demonstrated a rapid development pace, advancing Hermeus’ mission to operationalize hypersonic technologies.
The new breed of defense and aerospace company moves fast. That is, in some sense, their key differentiator against legacy primes and aerospace companies that spend decades and billions of dollars on bringing new products to market. But Hermeus, a startup that is focused on making fast airplanes, is redefining what it means for aerospace companies to move fast.
This past week, Hermeus successfully flew its Quarterhorse Mk 1, an uncrewed high-speed jet, just over a year after starting from scratch. This type of milestone would take a legacy company like Boeing at least 5-10 years. The flight validated critical systems and demonstrated the viability of their rapid, iterative hardware approach. Hermeus builds and flies full-scale prototypes yearly which lets them test, learn, and improve in real-world conditions far faster than traditional paper-heavy aerospace cycles.
If Hermeus is successful, it will give the Department of Defense faster-than-Mach-5 capabilities. And perhaps even more importantly, it will prove to the defense and aerospace industries that the U.S. is capable of building things quickly again.
As the company wrote, “Hermeus’ high-Mach and hypersonic aircraft aim to deliver capabilities at a pace not seen in the U.S. since the 1950s.” Golden Age.
(5) Starship's Ninth Flight Test
From SpaceX
Starship’s ninth flight test lifted off at 6:36 p.m. CT on Tuesday, May 27 from Starbase, Texas. The Super Heavy booster supporting the mission made the first ever reflight in the Starship program, having previously launched on Starship’s seventh flight test in January 2025. The booster performed a full-duration ascent burn with all 33 of its Raptor engines and separated from Starship’s upper stage in a hot-staging maneuver. During separation, Super Heavy performed the first deterministic flip followed by its boostback burn.
You’ll see headlines on the internet about SpaceX’s latest launch like “SpaceX Loses Control of Starship, Adding to Spacecraft’s Mixed Record” (NYT) and “Spaceflight SpaceX's Starship Flight 9 ends in failure after booster loss” (Fox). This is entirely par for the course: any time SpaceX does something absolutely miraculous, the media will spin it and catastrophizes it for clicks. So here’s what really happened earlier this week with SpaceX ninth launch in its Starship program.
SpaceX successfully launched its ninth Starship flight (which, by the way, holy shit…we can now launch skyscrapers into space) aiming to demonstrate key reusability and performance upgrades. The mission achieved full-duration burns for both Super Heavy and Starship, successful stage separation, and valuable test data on aerodynamic descent. While the Super Heavy booster performed its first reflight — it was flown before, refurbished, and sent back up — and tested a new descent angle, it was lost during the landing burn due to a rapid unscheduled disassembly. This “unscheduled disassembly” is, of course, what the media latched onto because…media. Despite this “unscheduled disassembly,” the mission met most objectives and marked progress toward rapid reusability and orbital refueling.
Instead of focusing on the supposed “failure” here, take this as a reminder that we can now launch super massive, almost reusable rockets into space and that our ability to do so will certainly blanket our planet with fast, reliable telecommunications and space drug factories and such, and most likely enable the eventual colonization of Mars and make civilization multi-planetary.
SpaceX just put out a video with an update on the Road to Making Life Multiplanetary for those interested in that kind of thing. And we gotta say, it’s nice to see Elon out of DC and back in the saddle at his rocket, AI, EV/robotics, tunneling, and brain-computer interface companies.
Have a great weekend y’all.
Thanks to ElevenLabs for sponsoring. We’ll be back in your inbox next week.
Thanks for reading,
Packy + Dan
2025-05-28 23:55:00
Welcome to the 1,000 newly Not Boring people who have joined us since our last essay! Join 244,199 smart, curious folks by subscribing here:
Hi friends 👋,
Happy Wednesday! Sending this one a little later than usual because we’re timing it with an announcement about a portfolio company and previous Deep Dive subject:
Wander raised $50+ million in a Series B led QED and Fifth Wall
The fun part is, Wander did it by throwing out a lot of what we discussed in the first Wander Deep Dive — which, at the time, I said was the absolute right way to do things — and growing insanely fast while maintaining its high quality bar.
I started doing these Deeper Dives, following up on companies I’d written Deep Dives on in the past to understand what I got right, what I got wrong, and what we could learn from both, in March, with a Deeper Dive on Primer. I gotta admit, I was a little smug: Primer was doing great, in large part because it had gone more vertically integrated, which is exactly my thesis on how these things should be built. “And if you want to fix K-12 education,” I wrote, “you need to build schools.”
Welp… over the past two years, Wander shut down the REIT I praised, went asset-light, grew from 13 to more than 1,000 locations, grew GMV 6x over the past 18 months, and is onboarding over $1 billion worth of real estate monthly. And while growing, its NPS has actually ticked up to 85.
Being wrong and learning is why I do the Deeper Dives! If companies could be built as cleanly as I can write an essay, I’d be a billionaire. You’ve got to play the game; the lessons emerge from the messiness, and from following the best companies as they evolve.
Read the essay below, watch on YouTube, listen on Spotify, and read the transcript.
Let’s get to it.
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I first wrote about Wander over two years ago, in January 2023. The theme of the piece was that Wander was the fulfillment of a couple of ideas I’ve had over the years: Natively Integrated Companies, which I wrote about in June 2019, and Zillbnb (combining short-term rentals and iBuying), which I wrote about in June 2020.
Wander had brought the dream to life and cleverly cheated the laws of marketplace physics. By launching a REIT, Wander Atlas, it had engineered a business that had the product control of a vertically integrated company without the balance sheet intensity. I wrote, “Simply put, Atlas gives Wander a vehicle through which to scale its portfolio in a capital efficient manner while retaining the full control of the experience it believes is required to generate hospitality yields.”
This, I argued, is how a startup should compete with a giant marketplace like Airbnb: vertically integrate to create a more consistent product experience and to capture more of the dollars in each transaction. Ownership, I believed, was a necessary precondition of consistent quality.
John Andrew Entwistle , Wander’s founder and CEO, believed that too. In our conversation, he admitted, “To be clear, that was also my thesis. My thesis was that the actual ownership was totally critical.”
And it might have been! The product was delightful. I invested in the REIT and got a 22% return over a couple of years. There was something magical about owning a piece of the vacation properties you stay in.
“I think that's something I'm really proud of—that the thesis was correct,” John Andrew told me, reflecting on what turned out to be an experiment. “The institutionalization of vacation rentals as an asset class, the idea of guests owning a piece of the portfolio, it was all correct. It was just a question of how quickly it could scale in a really turbulent macro.”
See, when John Andrew and the team conceived of the REIT, interest rates were still near historic lows.
That meant two things: the REIT’s mortgage payments were lower, and the 8% yield it aimed for was more attractive. By the time the REIT launched in October 2022, the 10-year US Treasury yield had jumped up to about 4%. When I wrote the piece in January 2023, it had come back down to 3.5%. Over the next nine months, it marched all the way up to a high right under 5%. Mortgage rates are some spread over treasuries, and investors in a REIT expect some yield over treasuries for the risk they were taking, and so, Wander was squeezed on each side.
As markets crumbled in early 2023 and yields rose, Wander had a choice: grow more slowly with the existing product, or take a risk on a new one. By May, less than four months after the Deep Dive, it had both made its decision and executed against it. Wander launched Wander Managed (which would become Wander Operated).
What Wander Operated hoped to do is the real Holy Grail for real estate startups: maintain consistent quality and control without actually owning the asset. The benefits are obvious: faster scale and software-like margins. The drawbacks… you have to learn those by doing.
It’s what we tried to do at Breather many, many times. Practically each time a new senior person joined the company, we ran it back. They would say, “Instead of signing leases, we should do an asset-light model, like Airbnb!” Genius. We’d have meetings about it. We’d talk to landlords, who would invariably be uninterested in taking risk on a space instead of the certainty of a lease, particularly when they had mortgages to service. We’d talk to people who already had spaces that they were renting out on other platforms and convince them to put the space on Breather, too, which they would, because why not, but inevitably, they would not keep the space up to the standards we set and our customer support team would get frequent calls from our customers who were incensed that the space they had booked with us had been double-booked by someone else. So we’d kill the asset light plan, until the next new person came in with the genius idea to do asset-light, but right this time, and the cycle started over.
That’s why I thought the REIT was brilliant. Assuming a managed asset-light model was impossible, for the reasons listed above and others, then synthetically creating something that looked asset-light but was fully controlled was the best possible option.
And owning homes worked. Although the number of homes was small – 13 at the time of writing in 2023, when Wander financed the homes off its own balance sheet and through a $100 million credit facility with Credit Suisse - occupancy was an absurd 80-90% (compare to ~40% for Airbnbs) and Net Promoter Scores (NPS) were in the 80-90 range, too. Homes were profitable and loved. The plan was, with the REIT, to scale up that profitability and love without scaling up the demands on Wander’s balance sheet, one home at a time.
Necessity, however, is the mother of experimentation.
Rates shot up, making home buying at least temporarily untenable. To add insult to injury, Credit Suisse, with which Wander had the $100 million credit facility, blew up and had to sell itself to UBS.
Wander had a choice: grow more slowly or adapt.
To John Andrew, the choice was obvious: “Can you imagine how lame I would have been if it was just like, ‘Yeah guys, interest rates shot up, so we're just going to not grow for the next three years?’ That's not cool.”
So instead, Wander decided to grow, and to grow fast.
It wound down its credit facility with Credit Suisse. It worked to wind down the REIT, which it had spent a year and $1 million spinning up, ultimately returning 22% to investors in two years. And it put the infrastructure it had built to the test by launching Wander Operated, and then Wander Branded.
Under Wander Operated, Wander takes complete control of a property on behalf of its owner, upgrades the home with standard Wander amenities, and coordinates all property management, including cleaning, repairs, and guest services. Wander takes a percentage of each booking’s revenue, while the owner pays the mortgage and fees associated with property management.
Under Wander Branded, Wander lists homes on its website and handles distribution, booking, and concierge service, while owners, many of whom are professional short-term rental (STR) operators, handle the property management leveraging Wander’s agentic WanderOS software. Branded owners may list their homes on other booking sites like Airbnb, or their own, but Wander integrates its calendar with theirs to avoid overlap.
In both cases, the model is asset-light. Wander doesn’t own homes, and it doesn’t employ local property management employees. Instead, everything is Wander-curated and orchestrated through Wander software.
The question would be: would curation and software be enough to maintain Wander’s standards?
The answer, so far, is: surprisingly, yes.
In short, I was wrong about the degree to which Wander needed to vertically integrate. Going asset-light has been a boon to nearly every aspect of the business.
First, it has unlocked scale.
Instead of buying homes, doing light construction, and fully furnishing them, Wander filters for the best 1% of available vacation rentals, signs management agreements with owners, checks the properties, creates photo and video content, incorporates standard Wander amenities, and lists the location on wander.com. That is a much easier process, and it means Wander can add a lot more locations.
At the beginning of 2024, Wander had 35 locations. By the end of last year, they had 400. Just last month, in April alone, they added 350 locations.
Today, there are over 1,000 Wander locations, a goal achieved three quarters ahead of plan, including non-US locations in Mexico, Colombia, Ibiza, Antigua, and Trinidad, places where it would have been trickier to buy.
John Andrew told me that under this model, Wander could launch 5,000 homes per month – there are, he says, about 300,000 Wander-worthy homes in the world representing $35B in GMV - but that it’s scaling up in a controlled way because “ a lot of companies can go too fast and end up screwing up on NPS or whatever else.” Wander’s CMO, Kyle Tibbitts, tweeted earlier this week that “On average, Wander is launching more homes per day than it had total on the platform January 1st, 2022.”
With more locations come more bookings and more GMV (Gross Merchandise Value, or the total cost of the booking, from which Wander takes a take rate for its revenue). Kyle also tweeted that, “The record we set on Tuesday Wander for the most bookings in a single day held less than 48 hours… today we broke it again.”
Over the 18 months ending in January 2025, Wander grew GMV 6x, and it continues to grow. It set a new record in April 2025, 250% higher than GMV in April 2024.
That is exceptional growth, especially considering that while Wander doesn’t own the homes anymore, these are still physical homes in the physical world with all sorts of physical coordination challenges. Still, although the pace has been surprising, it’s unsurprising that Wander would be able to scale faster with an asset-light model. That’s half the point.
Second, it has unlocked margins.
The trade-off you make going from Owned to Operated and Branded is that you make a higher gross margin percentage but lower gross margin dollars on each home. In the Owned model, Wander takes all of GMV as its revenue, and then pays all of its costs – mortgage payments or rental payments to the REIT, property management costs, etc… – out of that number. In the Branded or Managed model, it takes a take rate on the GMV – something around 30% – and the owner keeps 70% to cover their costs plus a profit.
On that ~30% take rate, John Andrew said, “We're operating around 70% gross margins for the Operated homes. Pretty high software margins as you'd expect, because it is software.”
So with the asset-light model, the formula is something like: higher gross margins on a smaller revenue number per location across many, many more locations. To John Andrew’s point, you end up with a model that looks a lot more like software, because it is.
So far, so good, but still unsurprising. More scale and better margins is why you go asset-light.
The surprising part is that Wander’s NPS has actually ticked up to 85, compared to a 24 for Airbnb, a 6 for VRBO, and a 17 for Marriott, despite giving up the full control over the property that comes with ownership.
Even John Andrew didn’t expect this. “Again, my assumption was that ownership of the homes was an actual requirement,” he told me. “I did not think we'd be able to exact our brand standards onto third-party inventory.” The reason the company exists is that John Andrew thought that the existing vacation rental platforms couldn’t exact standards because they didn’t have enough control over their third-party inventory.
Given the environment, though, he didn’t have a choice, and by testing, he learned that his assumption was incorrect. “I was wrong, but because I tested it, I was also right.”
My assumption was also wrong, which is why I wanted to write this Deeper Dive. I thought that more vertical integration would be better. I viewed the Wander REIT model as almost a platonic ideal. And I was wrong, but because I invested in John Andrew, who tested it, I was also right.
Understanding why both of us were wrong/right adds richness to our ongoing study of vertical integration, so it’s worth unpacking how Wander has been able to maintain its brand standards without owning the underlying assets.
There are two main reasons:
Going asset-light actually improved the quality of the homes it could offer.
Wander’s software has been able to maintain quality without owning the home.
When Wander was purchasing homes itself, it had certain requirements the home had to meet, a “buy box.” As John Andrew explained:
When we were buying assets, we were looking anywhere between $1 million to $3.5 million, generally trying to target an 8% cap, fully optimized. That was really where we were looking. Then there were certain target markets, revenue potentials, et cetera.
Maintaining financial discipline is good business when you are buying expensive assets, whether off your own balance sheet, through a credit facility, or through a REIT. It made sense for Wander not to overreach on really expensive homes that it hadn’t yet proved it could generate a return on. The plan was to buy homes that cost between $1 million to $3.5 million, generate a return on them, and slowly expand outwards as it did. And there were certainly amazing homes to be had in that price range.
But many of the world’s best vacation properties cost more than $3.5 million, often much more. By going asset-light, Wander was able to change its “buy box” and bring on more expensive properties. “What we're really focused on is what is the gross revenue potential of the asset to ensure that Wander is operating at the margin profile that we think is healthy and in line with our unit economics,” John Andrew said. The buy box expands from every nice property in the US that costs between $1 million to $3.5 million, to “every quality house in the world”:
So a focus on breadth of locations, being in new markets that we don't already have some type of density in. You'll also see us push even harder for those crazy trophy assets. When you go to Wander, obviously all the homes are beautiful, but I think that there are some that just truly inspire, and we will absolutely chase down every quality house in the world. We want it to be a livable version of Architectural Digest.
Now, Wander can offer an entire island:
And it has a house with room for 20 in Cartagena:
Those are just two I picked while scrolling the site, but to get a sense for the properties Wander offers, I highly recommend just scrolling for yourself.
While it might have been irresponsible for Wander to buy these homes themselves, someone already owns all of the world’s nicest homes, and many of them want to make as much money on them as they can when they rent them out. If Wander can offer that to owners, and handle the headache of managing the properties with software, the people who own the world’s nicest vacation homes will be happy to offer them to guests through Wander.
The vertical integration lesson: Vertically integrate when doing so means that you can offer a better product than you could without vertically integrating. Vertically integrate up to the point that it means you can offer a better product more profitably, and no further.
In Better Tools, Bigger Companies, I wrote, “The right set of tools for the problem depends on the type of problem being solved. Certain problems are best solved with software, and others are best solved with hardware.”
What about the problems Wander is solving?
Wander operates in the physical world – homes are physical, the furniture in them is physical, people physically inhabit the homes during their booking – but Wander doesn’t build homes. The problem statement for Wander was not, “There are not enough nice vacation properties in the world.” If it were, Wander would have needed to vertically integrate so far that it bought land and built homes itself.
The problem statement that John Andrew set out to solve was: “People have bad vacation rental experiences and bad travel experiences.”
Why?
Airbnb believed that people wanted more choice beyond hotels - to stay in homes and “live like locals” - and that people who owned homes wanted a way to make money off of booking them. In his classic Netflix and the Conservation of Attractive Profits, Ben Thompson wrote that Airbnb “commoditized trust, divorcing it from the underlying physical property. That freed Airbnb to integrate trust into a worldwide network of hosts and guests:”
It integrated trust and reservations – with software – modularizing the underlying physical properties. Seeing a home with a 4.9 star review on Airbnb gave people the comfort to book a place to stay that didn’t have to fly under a hotel flag. Booking a vacation rental was a problem that was best solved with software.
Airbnb has been an enormous success. In Chaos is a Ladder, I pointed out that “Hotels still exist, but by market cap, Airbnb is larger than any of them.” It is a $78 billion software company.
But as we discussed in the original Wander Deep Dive, some of the shine has come off of Airbnb as guests encountered surprising inconsistencies in the properties, high cleaning fees, lockouts, and even the demand that guests clean up after themselves. While Airbnb solved booking, it hadn’t necessarily solved what happens once you’ve booked. It hasn't solved property management. Mutual ratings, while powerful, don’t clean homes. They only get you so far.
This was the problem that John Andrew set out to solve with Wander. At first, he believed that the way to solve it was by owning the homes and controlling everything. But because Wander was responsible for doing everything itself, across a growing number of far-flung properties, it had to build software to help itself.
It built its own internal property management software, Wander OS, which “handles everything—vendor management, guest communication, vetting, task management, intelligent pricing, you name it.” And, John Andrew said, it turns out that that software could solve the property management problem, even when Wander didn’t own and manage the homes:
As that scaled, by the time we hit year three, it was actually pretty strong. It was able to orchestrate vendors 100% through the software. We didn't have any local property managers. Everything was just third-party vendors orchestrated through the software. When we started to add third-party inventory, the question was: would that be enough to basically exact quality standards from a curation perspective, to coordinate the vendors to a certain standard, and then to have really wonderful customer support? It turned out that it was.
Today, a growing number of customer requests are handled through Wander’s Concierge software, powered by AI of course. And 100% of vendor orchestration is managed through software, which contains a lot of checks and balances to ensure quality:
For example, a cleaning crew will go through the house. They'll click off certain things in their checklist. They'll also upload photos and videos. Those photos and videos will be analyzed by an AI agent. Then you also have a property inspector who will come through the house afterwards to make sure everything's good. All those vendors, to be clear, are paid for by the owner.
If property management comes down to orchestration and coordination, then it is an information problem that is best solved with software.
Instead of vertically integrating up to home ownership, then, the way to view Wander is that it’s actually building two aggregators and fusing them together.
On the one side, it’s aggregating homes and guests, like Airbnb does. On the other, it’s aggregating local vendors and owners, which Airbnb does not do.
Vendors are discovered, hired, and managed by Wander and its software, and paid for by owners. Vendors have both the tools and the incentive to do a good job. Wander, as it expands in an area, will be a larger and larger source of demand for their services, so vendors who do a good job can expect to get more business from them. And owners are incentivized to pay for quality vendors if Wander can make them more money than they could make otherwise, even net of fees.
Wander’s high brand standards, including inventory quality and property management, are the reason that it can charge higher prices and fill inventory at higher rates. Higher prices (the average booking is over $5,000) and fill rates mean that owners earn more money. And owners earning more money means that they can afford to pay for quality vendors to maintain Wander’s quality standards.
Importantly, this wouldn’t work for Airbnb because of its lower revenue per booking. A $300 cleaning eats a lot more of a $1,000 booking than it does of a $5,000 booking, so with Airbnb, cleaning fees are passed to guests as an additional charge. And because cleaning costs have a lower bound – one or more people need to travel to a location and spend time cleaning it, no matter how small or cheap it is – Airbnb cleaning fees often seem exorbitantly high relative to booking price, annoying guests and resulting in a lower NPS.
Structurally, Airbnb can’t match Wander here, so it’s not even trying to. Instead, it’s On the Road to becoming “a platform, a community,” whatever that means.
Of course, this is a trade-off, too. Airbnb has more scale than Wander: its 8 million active listings worldwide are 27x higher than the total 300,000 homes that Wander is even targeting. There will be room for both: Wander at the high-end of the market, and Airbnb for everything else.
So far, though, it looks like Wander will be able to capture the high-end, and meet the expectations that come with it, with an asset-light, software-powered model and without needing to purchase and fully control homes. I was wrong about that, but being wrong might turn out to make my investment look more right.
The vertical integration lesson: Understand the problem that you are trying to solve and whether it can be solved with software or needs to be solved with hardware. If you’re building supersonic planes, you need to make your own engines. If you’re building better schools, you need to run your schools. If you’re coordinating around existing supply, you need to build better software.
Actually, I went back and re-read that Airbnb Wired article and I need to write a little bit on it. Reading the last few paragraphs, I wouldn’t blame you for thinking, “Wander won’t actually capture the high-end. Airbnb will be the high-end Airbnb.”
And it could! It would mean building property management software, which is hard but doable, and coordinating local vendors, which it’s kind of trying to do anyway with its new/old Experiences product, and Airbnb already has Luxe, higher-end properties that go through a 300-point checklist.
But it won’t, because of what Airbnb CEO Brian Chesky said in that Wired article, but actually, first, I just clicked on the Luxe website and even that alone shows you why Airbnb won’t be the high-end Airbnb.
For one thing, look at how they describe it, themselves:
“Luxe: One of over 50 Airbnb categories.” You can taste the taste.
For another thing, look what happens when you click on “Explore Luxe homes”:
You get kicked over to a page of homes and rooms that don’t look very Luxe, which would suggest that they’ve deprecated the product. In 2023, they shut down the similar “Plus” program “in an effort to protect our core service.” It doesn’t seem like this is a focus.
So what is? OK, back to the original digression.
Wired, once the internet’s first home for techno-optimists, has become fairly antagonistic towards tech companies, so normally I don’t give it much credence, but the most damning things in the article are things that Chesky said himself. I don’t need to go into all of it here, but it’s bad. You should read it. It’s incredibly cringe. (“He brings up Apple again, saying that both companies embody the idea that a business relationship can generate emotion. ‘My ambition is kind of like the ambition of an artist and designer,’ he says.”) Apparently he’s also working with Sam Altman and Jony Ive on OpenAI’s new device.
But the line I want to focus on is this:
“There's a scenario where I'm basically done. Airbnb is very profitable. We've kind of, mostly, nailed vacation rentals. But we can do more.”
Airbnb is starting to lose guests back to hotels. NerdWallet travel writer Sally French recently explained, “What started as a quirky, affordable, community-driven alternative to hotels has, in many cities, become more expensive than hotels, with added cleaning fees, long checkout lists and inconsistent quality,” she said.
Nailing vacation rentals would require fixing all of that. Fixing all of that is really hard, though, and it’s not that much fun. So instead, Chesky told the audience at the Experiences launch event, “Hotels do have one thing that we don’t have, and those are services.”
Hence, the new Services and Experiences categories. Hence, the partnerships on those experiences with people like Conan O’Brien, Sabrina Carpenter, and Patrick Mahomes. Hence, the new icons “drawn by a former Apple designer whose name Chesky would not divulge. ‘He’s a bit of a secret weapon,’ he says.”
I can’t believe I’m writing this, but all of this makes Airbnb sound like exactly the type of company you’d want to compete with: a company that believes it’s made it, is bored, and is distracted by shiny new things.
All of which is to say, if Wander stays focused, it has a real shot.
And now it has the resources, too.
Today, Wander is announcing that it’s raised a fresh $50 million+ in a Series B led by QED and Fifth Wall along with participation from Redpoint, Uncork, Starwood Capital, Authentic, Breyer Capital, and others.
The name of the game now, John Andrew told me, is “thoughtful scale”: focusing on unit economics, what’s working, what’s not, activating existing customers, building software to handle more and more operations, and spending marketing dollars well. It’s not the sexiest phase of the business – John Andrew calls it the “chicken and broccoli” phase – but it’s where Wander will begin to compound into something that is working and durable.
When I asked him what the thing is that Wander is trying to compound, John Andrew said it’s about capturing more of those 300,000 Wander-worthy homes.
“There are network effects in this marketplace and we're starting to see those show up. Every new location we add makes the platform more valuable to more users,” he said “If we have a house in Aspen, now people who go to Aspen can stay at a Wander. That extends across the entire globe.”
From that compounding base, it can experiment thoughtfully, in ways that enhance the guest experience:
You'll see some other cool things around the guest experience that I'm just personally really passionate about. Concierge being able to book your flights and rental cars and dinners and experiences—I think it's really beautiful. So you'll certainly see those capabilities. But at the end of the day, we're just going to keep delivering on that core promise: you go to wander.com, you book a house, you're going to have a great trip. And in the very, very low odds that something does go wrong, you're going to have a team that cares more about you than your own parents.
It’s also starting to test offering WanderOS to people in their primary residences, a product it calls Wander Living, which a few people are already using: “The reaction's off the charts, as you would expect. Full property management for your single-family home. Plus you can go and stay across the portfolio.”
Finally, he says, “You'll also see WanderOS end up being productized more broadly across the industry. I'd say those will be the three things. You'll see a bunch of other things around embedded finance, insurance products, mortgage products.”
Ultimately, the goal is “to build the infrastructure for people to experience the world,” to help more people Find Their Happy Place™.
To build the “Apple of travel.”
If Airbnb is Android, the open platform, then Wander is trying to be Apple, the premium user experience within a controlled ecosystem. For Apple, which makes hardware, that means vertical integration all the way down to the chips. For Wander, the company is betting, it means orchestrating the world’s best travel experiences with software on top of its best existing hardware, the kind of homes you see in Architectural Digest.
That’s the plan, at least, and scaling from Series B to Series C is all about improving against the existing plan.
But things change. As they do, I’ll be right back here telling you what I got wrong and right.
The meta-lesson from these Deeper Dives is that the vision remains unchanged, but in order to achieve it, you will almost certainly need to change your tactics along the way. The game is to invest in the people who can make that complexity look easy.
John Andrew shared a whole lot more in our conversation. To learn from the man himself, watch our conversation on YouTube:
Listen on Spotify (or wherever you listen to podcasts):
Or read the transcript here.
Thanks to John Andrew, Kyle, and the Wander team for your input and letting me be a part of the Wander journey, and to Jordi & John for the jingle!
That’s all for today. We’ll be back in your inboxes Friday with a Weekly Dose.
Thanks for reading, listening, and watching,
Packy
2025-05-23 20:50:16
Hi friends 👋,
Happy Friday and welcome back to our 145th Weekly Dose of Optimism. This week we got lots of AI launches, a nuclear investment thesis, very promising creatine x Alzheimer’s research, an overview of the Abundance Institute, and the lastest epsiode of Hyperlegible with Reggie James. Intelligence, Energy, Health, Abundance, and God. That’s a lineup about as “Weekly Dose” as a Weekly Dose gets.
Let’s get to it.
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From OpenAI
The io team, focused on developing products that inspire, empower and enable, will now merge with OpenAI to work more intimately with the research, engineering and product teams in San Francisco.
As io merges with OpenAI, Jony and LoveFrom will assume deep design and creative responsibilities across OpenAI and io.
We could not possibly be more excited.
Sam & Jony
OpenAI is merging with Jony Ive’s stealthy device company io, and the joint launch video is so well done that you can’t watch it without feeling optimistic about what Sam and Jony are going to build together.
The $6.5B all-stock move brings Ive and a team of ex-Apple designers into OpenAI to lead hardware and design efforts, marking OpenAI’s major push into AI-powered consumer devices. LoveFrom, Ive’s design firm, will oversee creative direction across OpenAI’s product ecosystem.
There’s ton of speculation around what this new collab’s first product will be and Altman and Ive fueled the hype in the video, claiming the early prototype is the best work of Jonny’s career. Famously, Jony led design for the iPhone and MacBook Air and basically every iconic Apple product over the last 30 years. So “best work” sets a very high standard.
OpenAI is generally setting an extremely high standard right now. They’re building an absolute killer leadership team (Jony and Fidji are two recent examples), they’re making ambitious, massive bets into hardware and compute, there’s a very non-zero chance they can disrupt search in the next couple of years, and are probably pretty close to what could reasonably be considered AGI.
As Packy wrote in Everything is Technology, new companies can topple seemingly untouchable incumbents with surprising speed. We’re not sure if that’s what’s happening here yet, but it’s really fun to watch.
(2) Google I/O
From Google
But then there’s Google. The $2T+ company isn’t going to take OpenAI lying down. Search, today, is still a cash cow. Its cloud business is massive and growing. Waymo looks like it’ll be a $100B+ business unit in the not so distant future. It’s pushing the envelope on quantum computing. And oh yeah, it basically invented AI as we know it today, has the best (by many standards) AI models, and hundreds of places to inject AI into already useful products.
At its 2025 I/O (big week for IOs!), Google predictably dedicated most of its time and hype towards AI. Gemini, took center stage with advancements across all products. "AI Mode" in Search and Project Astra, a universal AI assistant, promise more natural and proactive interactions. New AI models like Veo 3 (video with audio) and Imagen 4 (higher clarity images) were unveiled, alongside Flow, an AI filmmaking tool. SynthID Detector was also announced to help identify AI-generated content.
Google might not be as craftful in how it brings things to market or as splashy as OpenAI today, but it’s got unlimited resources, multiple big ($100B-$1T) bets current in play, and is using its distribution to get AI into the hands of more users than any other company in the world. Don’t sleep on Google.
Mini-Bonus: Anthropic releases Claude Opus 4 and Claude Sonnet 4
Not to be forgotten, Anthropic released its newest family of models yesterday. We’re big fans of Claude’s personality and style, and excited to play with the new toys. Our friend Dan Shipper at Every got early access, and his review is overall very positive.
Big week for AI. With so much competition, the only guaranteed winner is the consumer (good news, folks: that’s us).
(3) Trump Nuclear Power Update as New Order May Bring Back Cold War-Era Act
Gabe Whisnant for Newsweek
A Cold War-era statute could soon return to the forefront of American energy policy, as President Donald Trump prepares to sign a series of executive orders…to jumpstart the domestic nuclear energy industry…the forthcoming orders aim to simplify the regulatory process for approving new nuclear reactors and to strengthen nuclear fuel supply chains amid mounting concerns over U.S. dependence on foreign suppliers.
They don’t call him Donny Nukes for nothing! Nuke baby nuke!
President Trump is set to sign executive orders to revive U.S. nuclear energy, declaring a national energy emergency to address rising power demand from AI and data centers. The orders aim to simplify reactor approvals, boost domestic uranium supply chains, and identify federal lands for nuclear development.
The Trump Administration’s view on energy needs aligns pretty closely with our own: we need more of it. We’re going to need more energy whether its from LNG, drilling, nuclear, solar & batteries, etc. And sometimes you gotta crack a few government regulations to make an energy omelette, right?
Packy note: In speaking with a bunch of nuclear founders, this EO would be a massive accelerant for the development of new nuclear in the USA. One I spoke to said it meant their company could have a reactor live and operational next year. This is a big, big win.
And as the government makes it easier for nuclear build out, the private industry is looking at ways to play the opportunity.
Kelly Greer of Crucible Capital published Understanding the Nuclear Value Chain, a detailed report, on the value chain of nuclear energy, with a particular focus on uranium enrichment and TRISO fuel fabrication. Greer’s thesis is that there’s been a decades long under-investment in nuclear fuel infrastructure, and that this infrastructure will need to be built and financed in order to unlock the promise of next-gen nuclear power.
At the center of this thesis is TRISO fuel. TRISO fuel is a type of advanced nuclear fuel made of tiny uranium particles coated in ceramic layers, designed to withstand extreme heat and prevent radioactive leaks. It’s safer and more efficient than traditional nuclear fuel. Right now the U.S. relies heavily on foreign adversaries like Russia and China for enrichment and fabrication, which poses obvious national security and supply chain risks. TRISO is the linchpin technology for nuclear, yet the infrastructure to support it domestically is nearly nonexistent.
Crucible isn’t alone in seeing that value in nuclear over the coming decades. The U.S. is trailing behind in a big way and will need to build out capaicty to keep up. But rather than betting on reactor builders, Crucible is betting in TRISO fuel production via their investment in Standard Nuclear. (We’re betting on the same thing and the same company through Not Boring Capital.) The idea is to own a portion of the most valuable but uninvested into area of the nuclear value chain. Let’s hope Crucible, and frankly all of the investors making nuclear bets, are eventually proven right.
(4) Creatine monohydrate pilot in Alzheimer's: Feasibility, brain creatine, and cognition
Smith et al for The Alzheimer’s Association
Our data suggest that CrM supplementation is feasible in AD and provides preliminary evidence for future efficacy and mechanism studies.
OK, this one is personal for me on two fronts.
Personally, my grandmother suffered from a very advanced case of Alzheimer’s the entire time I knew her. She couldn’t talk. She couldn’t walk. She barely responded to stimulus. For me, as a young child, it was just kind of foreign and scary. But for my mom, watching the deterioration of her mother over the course of 10-20 years was pretty shattering. For the last 20 years or so, I’ve had a deep fear that either my mom or one of my siblings would eventually suffer from the genetic mutation that causes Alzheimer’s. And because of that, I’ve kept my ear very close to the ground on Alzheimer’s research and new therapeutics.
Professionally, I run a creatine company. I didn’t get into creatine because of its potential as a therapeutic for Alzheimer’s. I got into creatine because I generally thought building strength and having high levels of energy was a good thing and that creatine could help people achieve that. But once I got into the world of creatine, I discovered there was a small, but growing body of research around creatine as a potential therapeutic for neurodegenerative diseases. Most of this research was pretty theoretical: this is how creatine works in the body, this is how neurodegenerative diseases work, and you could connect some logic and hypothesize that creatine could play a role in treating these diseases.
Now, we have a first-of-its-kind human trial that measured creatine supplementation’s impact on patients with Alzheimer’s Disease and the results we’re pretty compelling. The study, which was admittedly small, took 20 patients with Alzheimer’s and gave them 20g of creatine monohydrate per day for 8 weeks. These were the findings:
Adherence: 19/20 participants were 80% compliant with the intervention, meaning the patients could feasibly take 20g of creatine per day of an extended period of time.
Brain Creatine: Total brain creatine increased 11%. Total brain creatine reflects the brain’s energy reserves, and showing that creatine supplementation can increase it proves the brain is absorbing and storing more fuel, an essential step for improving energy metabolism and potentially slowing cognitive decline in Alzheimer’s.
Cognitive Function: Creatine supplementation led to modest but significant (5-12%) improvements in overall cognition, especially in working memory, fluid intelligence, and reading ability.
The study was an early but promising proof point that creatine supplementation is a safe, feasible, and potentially effective intervention for treating some of the symptoms of AD. Of course consult a doctor, but if you or someone you know are suffering from these symptoms, creatine seems like a low-risk/high-reward intervention. Creatine certainly isn’t a cure and it’s not a silver bullet for symptoms, but these results demand further investigation into creatine’s potential as a potential therapeutic for a whole swath of neurodegenerative diseases.
(5) World first: ultra-powerful CRISPR treatment trialled in a person
Heidi Ledford for Nature
The CRISPR family’s most versatile member has made its medical debut: a cutting-edge gene-editing technique known as prime editing has been used to treat a person for the first time. The recipient is a teenager with a rare immune disorder.
On the heels of last week’s heartwarming personalized gene-editing story, a biotech company called Prime Research has used a CRISPR prime editing treatment to treat a patient for the first time, a teenager with a rare immune disorder.
From Nature: “Researchers designed the treatment to correct a mutation that causes chronic granulomatous disease, a dangerous condition that disables a variety of immune cells, including those called neutrophils. A month after the teenager received the treatment, he had experienced no serious side effects. And the therapy seemed to have restored the function of a crucial enzyme in two-thirds of his neutrophils — more than enough to provide a significant boost to his immune system.”
According to the researchers, prime editing is an upgrade to the CRISPR-Cas9 treatments we’ve covered in the Dose previously.
It will take six months to a year to understand whether this treatment was a full success, but it’s another example of gene therapies being used to treat people who would otherwise have no real hope for a cure. What a time to be alive (for longer and healthier
BONUS: Abundance Institute Policy Summit and Gala
Packy here. On Monday, I spent the day in Washington, DC for the Abundance Institute’s Policy Summit + Gala celebrating the group’s one year birthday.
Abundance Institute’s twitter has a full rundown of the talks and panels here and here, so I won’t rehash everything, but I wanted to share some thoughts on why I got so much out of the day, some of which I shared on stage at the Gala.
A year and a half ago, The New Yorker published an article titled The Morality of Having Kids in a Burning, Drowning World. The thrust was: how could you possibly bring a child into this terrible world?! I wrote my response in The Morality of Having Kids in a Magical, Maybe Simulated World. The thrust was: I am incredibly jealous of everything that my kids are going to experience. They’ll get autonomous cars and flying cars and supersonic flights and AI tutors, and I think there’s a good shot they’ll get to go to space. Hopefully, we get a longevity take-off, and we all get to experience all of this and more, but in either case, there’s a good chance that they live to see the eradication of cancer and a number of other deadly diseases. Already, obesity is getting shot to pieces, and just last week, we talked about the baby who was cured with the first personalized gene-editing treatment. What a wonderful world.
If you’ve been reading Not Boring, you can probably tell that I think the solutions to so many of the challenges humanity faces can be found at the intersection of new technologies and the business models that support their spread.
But I’ve come to learn that technology and business model alone aren’t enough. I’ve spent enough time in crypto to see what happens when regulators try to choke a new technology before it gets a chance to mature (that, luckily, has failed; Bitcoin is at all-time highs and stablecoin adoption is spreading like wildfire). I did the first season of Age of Miracles on nuclear because I wanted to understand how we could have discovered a miracle technology, an energy source orders of magnitude more energy dense than alternatives that was also cleaner and safer, and then, after an initial boom, made it practically illegal to build. We now have self-driving cars on the streets of San Francisco and Austin, and crowds set them on fire.
Technology and business models are crucially important, but it turns out that to get the future we want for ourselves and for our kids, you need good culture and you need good policy. Policy, in particular, is a world I knew very little about, but that I’ve come to realize is critical to everything else that we want.
Throughout the day Monday, I got to watch and talk to people in the policy trenches — wonks, politicians, entrepreneurs, and funders — who are working the intricate process it takes to make good policy happen in energy, telecommunications, AI, crypto, manufacturing, and beyond.
Each has their personal angle on the future, but all share a vision for an America that builds, for a future that is better than the present, and for a present that’s pretty great. As importantly, they’re translating that vision into specific legislation that makes it all possible.
I particularly like the tag line they’ve been using: Optimism Always Wins.
DOUBLE BONUS: Hyperlegible: A tale of two Vaticans (or, OpenAI building an unholy spirit) with Reggie James
Packy again with a little bonus treat. Of course, as technology, business models, and policy take care of our material needs, there’s still the spiritual needs to think about.
Reggie James is one of my favorite people writing about tech, culture, and religion, and on the heels of the election of an American Pope, he wrote an essay on the relationship between technology and spirituality, between Silicon Valley and Rome, and between Sam Altman and Pope Leo VIX.
No one but Reggie could have written this piece, which is the highest praise I can give to a writer. It combines his deep knowledge of the history of Silicon Valley, his Christianity, and his willingness to "critique the gods." And it gave me an excuse to cover a topic I've been wanting to talk about for a while -- the rise of Christianity and the search for meaning -- with the best person I know to have that conversation with.
You can find our conversation wherever you get podcasts, like YouTube and Spotify:
While you’re there, if you could like and subscribe, it would go a long way in spreading the best things written on the internet each week and it costs you $0.
And you can find Reggie’s essay, and all of the essays we’ve discussed on Hyperlegible, thanks to our sponsor Readwise, at readwise.io/hyperlegible.
Have a great weekend y’all.
Thanks to INBOUND 2025 for sponsoring. We’ll be back in your inbox next week.
Thanks for reading,
Packy + Dan
2025-05-16 20:33:09
Hi friends 👋,
Happy Friday and welcome back to our 144th Weekly Dose of Optimism. We got baby-saving treatments, a new class of Ozempic-level-impressive drugs, two of the world’s largest companies open sourcing AI science tools, alchemy (sort of), and the first good news in overdoses I’ve read in…forever? These are the types of weeks we live for here at Not Boring.
Let’s get to it.
BONUS: Baby is Healed With World’s First Personalized Gene Editing Treatment
By Gina Kolata at The New York Times
Instead, KJ has made medical history. The baby, now 9 ½ months old, became the first patient of any age to have a custom gene-editing treatment, according to his doctors. He received an infusion made just for him and designed to fix his precise mutation.
A BONUS?!? At the beginning of the Weekly Dose?! Oh baby, it must be important.
Just after we wrapped writing yesterday, the New York Times dropped the mother of all whitepills: a baby became the first human to receive a personalized gene edit.
Baby KJ was born with CPS1 deficiency, a rare, often fatal genetic disorder. In a race against time, Dr. Kiran Musunuru and his team designed a custom CRISPR base-editing treatment tailored to KJ’s exact mutation. Delivered via lipid nanoparticles to his liver and administered in three escalating doses, the therapy slashed his need for medication and let him eat protein like any healthy baby, thereby saving his life.
Why this matters:
Gene-editing therapies can now be personalized and deployed fast, bypassing the traditional years-long drug development cycle.
The same method could be adapted for thousands of other rare, and even common, genetic diseases.
Most importantly, Baby KJ is hopefully going to live a long and happy life. Look at that smile!
Packy note: Nowhere near as cool as the treatment itself but still cool is where it happened: the Children’s Hospital of Philadelphia (CHOP), our hometown, home to the Super Bowl Champion Philadelphia Eagles, and most importantly, where a baby Dan McCormick got the open heart surgery that, almost thirty years later, means that he’s alive to bring you stories like the one about KJ. Go CHOP.
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(1) Everything drugs
From The Works in Progress Newsletter
Sodium-glucose cotransporter-2 (SGLT2) inhibitors, also called flozins, began as diabetes drugs. Surprisingly, they turned out to also be very effective at improving heart health. Then they were discovered to slow the progression of chronic kidney disease, one of the leading causes of death and disability worldwide. Preliminary evidence indicates that they show promise in helping several other conditions, but no one knows exactly how they achieve this yet. Could SGLT2 inhibitors be a new medical Swiss Army knife?
First GLP-1s, now flozins. We’re living in an extremely transformative period of modern medicines.
Originally developed to lower blood sugar in type 2 diabetes, SGLT2 inhibitors, or flozins, turn out to have far broader effects. Does this story sound familiar to you…?
SGLT2 inhibitors work by blocking a kidney protein that reabsorbs glucose, leading to more sugar being excreted in urine. After proving effective in lowering blood sugar, they unexpectedly showed major benefits for heart health and kidney disease, significantly reducing hospitalizations, cardiovascular deaths, and progression to end-stage kidney failure, even in non-diabetics. We’re living the GLP-1 story all over again.
The exact mechanism behind the the rangy drugs is unclear, but theories include improved kidney cell function and heart metabolism. The early trial results are promising: flozins lowered blood sugar and restored insulin sensitivity, while cutting heart failure hospitalizations by 35%, cardiovascular deaths by 38%, and reducing progression to end-stage kidney disease by 36%. Those are some crazy results and if you apply those rates to the number of people with each condition, the potential impact of these drugs becomes very obvious. About 18 million people die each year from cardiovascular disease and nearly 1 million people have chronic kidney disease. These drugs could potentially help millions of people each year from otherwise very serious conditions.
I have a feeling we’re going to start hearing a lot more about flozins over the next couple of months and years.
(2) AlphaEvolve: A coding agent for scientific and algorithmic discovery
From Google’s DeepMind
In this white paper, we present AlphaEvolve, an evolutionary coding agent that substantially enhances capabilities of state-of-the-art LLMs on highly challenging tasks such as tackling open scientific problems or optimizing critical pieces of computational infrastructure. AlphaEvolve orchestrates an autonomous pipeline of LLMs, whose task is to improve an algorithm by making direct changes to the code.
Google’s DeepMind introduced AlphaEvolve, an evolutionary coding agent that uses LLMs to improve algorithms by modifying code. The coding agent refines algorithms iteratively, similar to biological evolution, by repeatedly modifying and testing them. It uses feedback from evaluators, which score the algorithm's performance, to guide the modification process.
And AlphaEvolve works: it achieved state-of-the-art results in matrix multiplication, even surpassing a 56-year-old record, and discovered novel algorithms that outperform existing solutions in mathematics and computer science. Importantly, Google is already using AlphaEvolve to optimize real-world systems, such as data center scheduling.
AI is going to automate the AI that drives new AI research and discovery. The feedback loops will be tight and will drive accelerated returns in science and R&D. AlphaEvolve is a relatively early example of what that could look like.
Google DeepMind is quietly cooking. Beyond pure LLMs, they’ve released some of the most interesting models, from AlphaGo to AlphaFold to AlphaEvolve. In LLMs, its Gemini is largely believed to be the best model.
What’s wild is that it seems easier for the company to develop world-class AI models than the products that make people want to actually use them, despite its vast resources, distribution advantage, and decades of experience making consumer products.
We here at Not Boring love that. Nothing makes us more optimistic than incumbents fumbling the bag and giving new startups the chance to win.
From Meta
Meta FAIR is sharing new research artifacts that highlight our commitment to achieving advanced machine intelligence (AMI) through focused scientific and academic progress. The work we’re sharing includes Open Molecules 2025, a dataset for advancing molecular discovery, and Meta’s Universal Model for Atoms.
OK class, everyone say it with me: “Thank you Mr. Zuckerbeeeerrrgg”
Meta FAIR (Fundamental AI Research) released a suite of groundbreaking AI research tools and findings aimed at advancing machine intelligence through open science. Key among them are Open Molecules 2025 (OMol25), the largest quantum chemistry dataset to date, and the Universal Model for Atoms (UMA), a powerful ML model trained on 30B+ atoms, both of which drastically accelerate atomic-scale discovery in healthcare, energy, and materials science. The lab also introduced Adjoint Sampling, which can train generative models without any data, using only reward signals which is a breakthrough for low-data domains like chemistry and physics. The best part: all of this will be open sourced.
Additionally, in a neuroscience first, Meta and the Rothschild Foundation Hospital mapped how language develops in children’s brains, revealing parallels with LLMs. They conducted the first large-scale study using brain implants in children with epilepsy to record how language understanding evolves in the brain. By analyzing neural activity as the children listened to stories, researchers found that the brain’s language representations develop over time in patterns that mirror how large language models learn.
Packy note: Dan’s kind of obsessed with Zuck, but this is cool.
(4) CERN scientists turn lead into gold (briefly)
From Swiss Info
Physicists at the CERN nuclear research centre in Geneva have turned lead into gold. During the collision of lead nuclei at almost the speed of light, the conversion of lead into gold was measured using a new mechanism, the organisation said.
Alchemy! Or at least brief alchemy! Or least atomic alchemy!
CERN physicists have (kinda) successfully turned lead into gold by smashing lead nuclei together at near light speed in the Large Hadron Collider (LHC). This transformation occurs when three protons are knocked off a lead nucleus (which has 82 protons), creating gold (79 protons). Unfortunately, the quantities are vanishingly small and fleeting, far from forming any usable material. Womp womp. But perhaps more importantly, the collisions also create quark-gluon plasma, the primordial soup believed to have existed just after the Big Bang, offering insights into the fundamental makeup of matter.
CERN has been running this experiment for over a decade. Although the nuclear research lab was quick to emphasize that they had not achieved alchemy, it was a nice symbolic moment where science achieved what ancient dreamers only imagined.
Maybe Sir Isaac Newton wasn’t as dumb as he looked…
Some more good news elsewhere in the nuclear research lab world: the National Ignition Facility in Livermore, California, has demonstrated a record fusion gain (also known as Q) of 4—a 300% improvement over the initial breakthrough gain achieved just two years ago. This achievement has not been widely reported, but the former head of the NIF posted about it on Linkedin (h/t Owen Lewis for the find), which is at once kind of awesome and weirdly unexpected. 7 Things Achieving Q=4 Taught Me About B2B Sales.
(5) Overdose Deaths Plummeted in 2024
Jan Hoffman for The New York Times
Overdose deaths in the United States fell by nearly 30,000 last year, the government reported on Wednesday, the strongest sign yet that the country is making progress against one of its deadliest, most intractable public health crises.
This is one of those “good news from a terrible situation” stories. Drug overdoses in the U.S. fell last year from nearly 110,000 in 2023 to 83,000 in 2024. Obviously that’s 83,000 deaths too many, but the good news is that overdose rates started to plummet in 2023 after experiencing steady growth for the past decade.
2024 was the first year of meaningful decline in over a decade and it’s due to a combination of factors: wider access to treatment programs and services, Naloxone (Narcan) is now sold over-the-counter, and a suspected drop of fentanyl in the drug supply. There are obviously very foundational issues we need to fix in this country to curb the use of dangerous drugs: treating mental health properly, addressing economic despair, reducing isolation and loneliness, and of course reducing the availability of dangerous drugs on the market. But our hope is that while we, as a nation, work to improve the underlying causes, we can also put in place the programs, increase availability to potentially life saving treatments, and otherwise support the communities and individuals that are so prone to the life crushing effects of dangerous drug use. It looks like we’re finally starting to make some progress.
Plus, it looks like murder is falling across the country. I can’t imagine the two stats (overdoses and murder) are completely uncorrelated. Shout out to Philly, for seeing the largest drop in homicides of any major city. Anecdotally, you can actually feel this when visiting Philadelphia: it feels safer and less chaotic.
Great work across the board. Fewer overdoses. Fewer murders. Let’s keep driving these to 0. The future’s going to be too good for all these people to miss.
Have a great weekend y’all.
Thanks to INBOUND 2025 for sponsoring. We’ll be back in your inbox next week.
Thanks for reading,
Packy + Dan
2025-05-13 20:43:35
Welcome to the 583 newly Not Boring people who have joined us since our last essay! Join 243,199 smart, curious folks by subscribing here:
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Hi friends 👋 ,
Happy Tuesday! If you’ve been reading Not Boring for a while, you know that I think the most important shift happening in business is that modern technology companies are displacing sclerotic incumbents.
I keep yelling the idea as loudly as I can, but I don’t think it’s quite sunk in. If it had, people would, for example, understand why VC megafunds actually make a lot of sense. I believe that tens of trillions of dollars of value is being created as we speak.
Here’s a quick TL;DR:
The world changes faster than we expect, and the resulting outcomes are bigger than we expect.
There are two ways tech eats the world:
Direct displacement (e.g. Tesla vs legacy autos)
Market aggregation/creation (e.g. Uber vs taxis)
$1B exits are now ~85th percentile, not 99th. $1B outcomes shouldn’t be expected to return funds, and VC megafunds aren’t dumb.
Asset managers who saw regime shifts early (Blackstone, Vanguard, etc.) scaled to $1T+. Megafunds are doing the same.
A wave of $1B+ exits and $5B+ raises in 2025 is the appetizer. The next 20 years will see trillions in VC Addressable Value emerge.
Everything is technology.
This is my most succinct attempt to make the case to date, using numbers and a little history.
Let’s get to it.
The world can flip more quickly than you expect. Things we take for granted today can disappear in a decade, replaced by things we didn’t even know we wanted.
There’s this famous pair of images, both taken of the Easter Parade on New York City’s Fifth Avenue, one in 1900, the other in 1913.
The one on the left shows a street roughly the way it may have looked for millennia: full of horse drawn carriages, with just one motor-car (circled in red). The one on the right shows the same street on the same day thirteen years later, full of motor-cars, with just one horse-drawn carriage (circled in red).
Ford introduced the Model T in 1908. If he’d asked customers what they wanted, he quipped, they would have asked for faster horses. Just five years later, the deequinization of New York City was practically complete. The Model T was both faster and cheaper than horses, and it didn’t shit all over the street.
By 1919, a Census year, the Census showed that all 2,544 establishments across the entire Carriages and Wagons and Materials industry generated $118.2 million in “Value of products.” That same year, Ford sold over 900,000 Model T’s at $360 a pop, for $324 million, or more than twice the total product value of the industry it had displaced.
Technology had won the day.
Over time, if a new technology is successful enough, it stops being lumped in with “technology” and earns its very own industry. In the internal combustion engine’s (ICE) case, that was the automotive industry.
After an initial period of experimentation, the “Big Three” – Ford, GM, and Chrysler – came to dominate America’s automotive industry.
In 2020’s The Beginning of the End, Ben Thompson wrote that by the 1920’s, aside from a brief challenge from AMC, “The ‘Big Three’ mostly had the market to themselves, at least until imports started showing up in the 1970s.”
The imports did show up in the 70s, and the automotive industry became global. By the end of 2003, the world’s twelve largest automakers sported a combined market cap of ~$450 billion.
Because these were automotive companies, and relatively old ones at that, that $450 billion was not considered tech market cap. It was not VC Addressable Value (VCAV), defined as something like the total value of the companies VCs can invest in.
If Elon Musk had asked customers what they’d wanted in 2003, they probably would have told him “faster ICE SUVs.” Like Henry Ford, Elon did not ask customers. He made electric vehicles (EVs).
Today, Tesla alone is worth nearly $1 trillion, more than twice what all of the big automakers were worth, combined, when it entered the market.
Technology wins again.
This time, it both pulled that value back into tech market cap and VCAV, and grew it. While most of the gains have come in the public markets – Tesla IPO’d with a market cap of ~$1.5 billion and grew to $2.2 billion on the first day of trading – the other company Elon started around that time, SpaceX, is still private, and is valued at $350 billion. VCAV is a loose metric that doesn’t care for details like who went public when.
One of Not Boring’s core theses, maybe the core thesis, is that everything is technology.
I’ve made this argument before, in various ways1. I will make it again. I don’t think people have fully grokked it, and I think it is the most important thing to understand if you’re building or investing in technology companies.
It explains, for example, why VC megafunds aren’t simply greedy fee-grabs, as the general sentiment seems to agree they are.
So I’m going to try to lay out the argument as clearly as possible. Here’s the simple version:
The addressable market for venture-backed tech companies will grow by at least an order of magnitude as they battle incumbents in industries not traditionally considered tech, and as they turn previously fragmented and unaddressable markets into addressable markets.
In other words, software alone is not eating the world, technology – software, hardware, bio (for simplicity’s sake, pretty much anything that a VC can invest in) – is eating the world, and it’s doing so in two main ways: by eating someone else’s lunch or cooking up its own.
Tesla is an example of the former, of eating the automotive industry’s lunch. Using technology to build a better product (and to promise future products like robots and self-driving taxis using its core technology), it’s grown to be larger than the entire automotive industry was by market cap the year it was founded.
Ford is an example of the latter, of turning a fragmented horse and carriage market into a unified addressable market. By using a new technology (ICE) and assembly line manufacturing, it created a new company that filled an existing need better, and at greater volume, than that entire industry could.
Sticking with cars, a modern example of cooking up its own, of turning previously fragmented and unaddressable markets into addressable markets is Uber.
In a now-famous 2014 blog post, How to Miss By a Mile: An Alternative Look at Uber’s Potential Market Size, Benchmark’s Bill Gurley tore apart NYU Stern professor and valuation-modeling superstar Aswath Damodaran’s analysis of Uber. The company had recently been valued at $17 billion. Damodaran reasoned that Uber was only worth $5.9 billion, based on two assumptions: the historical TAM of the “global taxi and car-service market” is something like $100 billion, and that Uber would, at most, capture 10% of that market. Gurley thought that both were terrible assumptions.
The real TAM, he argued, was something like a piece of the $6 trillion annual car ownership cost market – that piece plus the expanded car-for-hire market was something like $450B - $1.35T.
And by offering a much better product, and one that got better as it got bigger, Uber could capture much more than 10% of the market.
Long story short: Uber is worth $175 billion today, 75% larger than Damodaran’s entire TAM. And whereas VCs didn’t invest in taxis or cars-for-hire, they did invest in Uber. That’s around $0.2 trillion in VCAV out of thin air. We could do something similar with Airbnb and hotels/short-term-rentals, but you get the point.
As we’ve discussed at length, it’s not just software that is eating the world, but technology in general. Joseph Schumpeter wrote that “Constant, relentless change is the hallmark of capitalism.” My contention is that as this capitalist churn happens, technology companies will replace non-technology companies.
Sense-check this. Assume that churn continues; new companies replace old. Can you imagine new companies not built with modern technology being the replacers?
There are two ways technology companies eat old industries:
Direct Displacement (eating someone else’s lunch): Competing directly in large existing addressable markets with a better, cheaper, faster product, a la Tesla.
Market Creation and Aggregation(cooking up its own): Creating new addressable markets out of previously fragmented ones with a better, cheaper, faster technology product in place of an analog one, a la Ford and Uber.
History is chock full of examples of both, even if the once new technology companies don’t seem like technology companies today. I gave ChatGPT’s Deep Research the framework and asked for examples of each type. Here’s the report, with case studies, and here’s a table summarizing them:
Technology companies frequently eat incumbents and create new industries. These transitions happen more quickly than you would expect, typically within a decade or two (and the two most recent, at something like the modern speed of change, took only six and eight years). And the new companies created on the backs of new technologies typically end up being larger than the entire industry they replace.
Maybe this time it’s different.
I am writing a different version of the same argument I’ve been trying to make for a few years once again because it feels like it’s still not sinking in for most people, even those in VC.
What set my fingers flying on this specific instantiation is the recent (ongoing, but louder recently?) conversation about venture fund math. Specifically, two questions: whether a $1 billion outcome can even return a fund anymore and whether the multi-billion dollar megafunds are just doing it for the fees.
This feels like inside baseball, and megafunds certainly don’t need me to defend them, but it’s hard to find something that better illustrates the delta between where I think the world is heading and where a lot of people in venture think the world is heading than this debate, so bear with me.
A few weeks ago, Harry Stebbings tagged me in a tweet discussing whether a $1 billion outcome can even return the fund for seed managers anymore. It came from his conversation with SaaS investor Jason Lemkin, who observed that the old rule of thumb that a $1 billion outcome should return your fund probably doesn’t work anymore. Most of the discussion in the replies centered around fund size and ownership, and decided that it was really hard to return a seed fund with a $1 billion outcome.
My reply focused on the $1 billion: that’s just not that big an outcome anymore.
$1 billion is a round number. But that doesn’t make it meaningful. What matters in venture, what has always mattered in venture, is backing the top x% of companies, the ones that drive the power law. And $1 billion outcomes are just less extraordinary than they used to be.
In the early 2000s, a $1 billion outcome was a 99th percentile outcome. By the 2010s, it was a 90th percentile outcome. Today, it’s roughly an 85th percentile outcome.
Put another way, a 99th percentile outcome in the early 2000s was $1 billion. By the 2010s, it was $5 billion. Today, it’s roughly $20 billion.
These are rough numbers that I pulled using Deep Research on Pitchbook and Crunchbase data, so grain of salt (another Deep Research run says that 99th percentile in the 2010s was $3B and in the 2020s was $8B), and they don’t include the impact of crypto tokens, which would bring the numbers up. But they’re good enough to make the point: VCs don’t get paid for 85th percentile outcomes.
There is a similar logic at play when people talk about how the megafunds are becoming too mega to generate returns.
Recently, for example, people called out that Greenoaks’ seed investment in Windsurf, while incredibly impressive at a return north of 100x if the rumors of OpenAI’s $3 billion acquisition are true, wouldn’t even come close to returning the fund. If you haven’t read Jeremy Stern’s excellent profile of Greenoaks’ Neil Mehta (first, what are you doing? bookmark it and read it as soon as you’re done reading this), one takeaway is that Neil Mehta is very smart and is not in this to generate management fees. According to the profile, he’s Greenoaks’ largest LP, personally.
Thrive launched Thrive Holdings in addition to its recent $5 billion venture Fund IX. Founders Fund raised $4.6 billion for a late stage fund. a16z is rumored to be raising $20 billion. The list goes on, and the commentary that goes along with it goes something like: good luck generating meaningful multiples on all that money!
In a great interview with Jack Altman, First Round’s Josh Koppelman, who has kept his funds relatively small and generated excellent returns by doing so, talked about what he calls the Venture Arrogance Score: how much of the total value created by startups does your fund need to capture to 3 or 4x the fund? For a $7 billion fund, that’s something like half of the past decade’s average annual startup value created, when no fund has consistently captured more than 10%.
Josh’s argument is harder to dismiss than the “$1 billion should return a fund!” argument, because if you look backwards, the math doesn’t seem to math. It requires a dangerous leap of faith, the belief that “this time will be different.”
Actually, though, arguing either side requires making that argument.
If you believe that megafunds will generate 3-4x returns, you need to argue that the value of venture outcomes will be much larger in the next decade than it was in the past.
If you believe that megafunds won’t generate 3-4x returns, you need to argue that the VCs that have been among the best at predicting the future over the past decade no longer are, or that they’re just good at seeing the future for the companies they back but not the industry they work in, or that they’re just milking that past success to generate fees. All of them, all at once.
AND you need to argue that the thing that’s been happening for centuries, where new technology companies displace, create, and outgrow existing industries will not happen anymore, at a time when the number and power of new technologies that entrepreneurs have at their disposal is higher than ever before.
You might be thinking, “Yeah, but those were horse-and-buggies. We’re talking about giant, modern conglomerates in defense, energy, and aerospace. We’re talking about government-funded education. We’re talking about Too Big to Fail financial institutions.” To which I will remind you that at the time, horses and buggies seemed so permanent that customers could only imagine faster ones.
I, perhaps unsurprisingly at this point in the essay, am on the side of the megafunds. I think they understand that everything is technology, and are the first to position themselves accordingly. My bet is that the current vintage of eye-poppingly large funds will seem quaint in a few years, as everything becomes technology.
This isn’t a piece about megafunds, but something hit me while writing this that I want to share: what megafunds are doing today mirrors what Vanguard, Blackstone, BlackRock, and Brookfield did in earlier capital regime shifts: seeing something early, building relevant muscle, and flexing that muscle across vehicles and larger AUMs.
Just as companies like Ford, Tesla, and Uber rode new technology waves to become bigger than the incumbents in the industries that they displaced or aggregated, asset managers have ridden their own shifts to accumulate trillion dollar AUMs.
I’m going to oversimplify here, but:
Vanguard launched in 1975, right after “May Day” deregulated brokerage commissions and ERISA (Employee Retirement Income Security Act) spawned defined-contribution plans, Vanguard used its mutual-ownership, ultra-low-fee indexing model to satisfy sponsors’ demand for cheap market exposure. It turned its core strength in cost-discipline into ETFs, target-date funds, and global asset-allocation products as fee sensitivity intensified. Today, it manages $9.3 trillion.
Blackstone, founded in 1985 just as ERISA clarifications opened the door for U.S. pensions to back private-equity partnerships, used its deal-structuring and leverage expertise to deliver outsized returns in corporate buyouts. Beginning with its 1991–92 real-estate vehicles and accelerating in the early-2000s low-rate, yield-starved environment, it redeployed the same underwriting muscle and LP network into real estate, credit, secondaries, and other alternative asset classes. Today, it manages $1 trillion.
BlackRock, founded in 1988 amid the post-S&L-crisis appetite for sophisticated fixed-income risk management, leveraged its Aladdin analytics engine to give institutions transparency and low-cost beta. Then, just as the post-2008, yield-scarce world embraced passive investing, scaled that same quant platform into ETFs, multi-asset mandates, and eventually alternatives. Today, it manages $11.6 trillion.
Brookfield was reborn in the late 1990s from the Brascan conglomerate just as governments worldwide were privatizing power, property, and infrastructure. The real estate investor applied its operator expertise in long-duration hard assets to offer pensions inflation-protected yield, then recycled the same playbook across global real estate, renewables, infrastructure, credit, and insurance platforms. Today, it manages $900 billion.
Each firm spotted a big shift early, built a differentiated edge around the shift, and parlayed that edge (and LP relationships) into adjacent vehicles to compound into a multi-strategy, trillion-dollar-scale asset manager.
If the current shift is “everything is technology,” then it makes sense that funds are sizing up and expanding out.
If you believe that some of the companies being built today will be larger than the incumbents they displace (i.e. Anduril in defense), and if you believe that others will create markets that were previously unaddressable (i.e. OpenAI in knowledge work), and if you see that they are staying private longer (and enable them to stay private longer through fresh funding and tender offers), then it makes perfect sense to raise larger core funds.
If you believe that tools like AI will bring economies of scale and even light network effects to large, previously fragmented industries like accounting, then this line from the April 29, 2025 DealBook article on Thrive Holdings – “Now the venture capital firm is taking a different approach: creating and buying companies that it believes can benefit from A.I. – including in industries that seem far more humdrum, such as accounting – and holding on to them for a long time.” – makes perfect sense.
It also makes perfect sense, as the article points out, that firms like General Catalyst and 8VC are investing in AI-powered roll-ups. If access to a lower cost of capital was the prime advantage in the early days of private equity, then the firms that could access a lower cost of capital had a structural advantage. If AI is an even bigger lever on returns, then the firms that have expertise in AI (and relationships with companies like OpenAI) have a structural advantage.
I suspect that we’ll see megafunds expand into more new product offerings beyond traditional early stage and growth venture capital as technology eats the world, and as VCAV expands.
The bet is: everything is technology, and that technology people can get finance (perhaps with the help of AI), before finance people can get technology.
But remember, this isn’t a piece about megafunds.
It’s just that these particular investors have historically been very good at predicting the future, and because of that, they have access to the very best companies, who can show them a little more clearly where the future is going to go from here, and I guess my point is that what if we assume they’re not greedy idiots and instead notice the moves that all of them seem to be making at the same time?
Remember, the thesis is that every industry currently dominated by large, sclerotic incumbents will come to be dominated by tech companies (typically Vertical Integrators). Studying historical examples of similar transitions, we see that these transitions can happen surprisingly fast (within a decade or two) and that the new companies become larger than the incumbents they replace, often larger than the entire industry. TAM expands when you offer customers a cheaper, better, faster product, and valuations expand when you do so at higher margins and faster growth.
There’s a key difference, though. The previous transitions we discussed and listed in the displacer/creator table were financed in a hodgepodge of ways. The Liverpool-Manchester Railway was essentially a public-private partnership. JP Morgan funded Thomas Edison; George Westinghouse bootstrapped, brought in some outside capital, and used profits from his airbrake business to power his electric business. Richard Sears bootstrapped before bringing in capital from Julius Rosenwald. Henry Ford raised $28k from a small syndicate, including the Dodge brothers, and got profitable fast. Malcolm McLean largely funded his Sea-Land shipping business with profits from his trucking business. Boeing used government contracts and retained earnings to fund the development of the 707.
While those businesses were built on the modern technology of the day, they were not VCAV, because there was no VC. For a quick check on how much value was created, I asked ChatGPT what these displacers and aggregators would be worth if they had been founded and met similar success today.
That’s a total of $15.7 trillion, nearly 10x more value than VC-backed exits created over the past decade. It is obviously illustrative and inaccurate, and plus, these companies were built and went public across many decades.
But the point I’m trying to make is that I think we’re going to see something similar (but bigger) happen on a compressed timeline over the next two decades, and this time, all of the winners will be backed by venture capitalists. All of the value will be VCAV.
Billion-dollar exits are still big wins, but a unicorn isn’t what it used to be. In the past week or so alone, Coinbase acquired Deribit for $2.9 billion, OpenAI acquired Windsurf for $3 billion, and DoorDash acquired Deliveroo for $3.9 billion and SevenRooms for $1.2 billion. Those follow Google’s $32 billion acquisition of Wiz, SoftBank’s $6.5 billion acquisition of Ampere Computing, Ser Eli Lilly’s $2.5 billion acquisition of Scorpion Therapeutics, Kraken’s $1.5 billion acquisition of NinjaTrader, CoreWeave’s $1.7 billion acquisition of Weights & Biases, PepsiCo’s $1.65 billion acquisition of Poppi, and Ripple’s acquisition of Hidden Road for $1.25 billion. We may get the Figma IPO (and others) soon.
The private markets have been hot in 2025, too, with 67 venture rounds valuing companies at $2 billion or more thus far in 2025. Those companies have a combined valuation of $743 billion, although much of that comes from OpenAI’s $300 billion valuation.
I am sure this list is missing a bunch. Follow Arfur Rock to see deals announced in real-time.
$1B+ exits and $5B+ valuations have become relatively frequent occurrences, and I think they’re appetizers.
There are startups operating today, or soon to be built, that will come to displace incumbents in energy, healthcare, defense, manufacturing, education, housing, finance, and aerospace, and create addressable markets out of fragmented industries like accounting, law, consulting, and labor more broadly. Coinbase joined the S&P 500 yesterday. I’ve written about many of the companies that I think will lead the charge, and will continue to.
If you believe that, you must believe that there will be tens of trillions of dollars of value both transferred from incumbents and created, all of it VC-addressable (even if it means VCs expanding what they can address).
If you don’t believe that, then what are we even doing here?
There is a ton of value currently locked in private markets. One way to view this is that many of the unicorns are actually zombiecorns, companies who raised at high valuations that they’ll never grow into in the froth of 2021. But I just shared a list of fresh $5B valuations with you. Another is that these are just paper marks - you can’t eat DPI! - and that these companies need to get acquired or go public to unlock value and get the wheels spinning. Maybe! I certainly hope so.
But I think another reason VC megafunds make sense is that these companies, companies like Stripe and SpaceX, are staying private longer and compounding in the private markets. Whether this is good for the general public or not (and if you think not, if you would like to invest in these companies, Coatue now has a fund to sell you) is another story, but if you believe that everything is technology, and if I’ve made you start to believe that these companies are going to get bigger than any we’ve seen before, it’s certainly good for the megafunds.
They can continue to buy ownership in companies that they believe will be bigger and more valuable than most people realize, and continue to offer them new financing products. Secondaries are an obvious and commonly used product. I like Brett Bivens’ and William Godfrey’s concept of Production Capital, a mix of venture and credit that provides the most efficient financing as CapEx-heavy companies grow.
Whatever the financing mechanism, historical case studies, modern technological capabilities, and some of the smartest capital allocators in venture are all saying the same thing:
Everything is technology.
Who am I to disagree?
Thanks to ChatGPT and Claude for research and editing help.
That’s all for today. We’ll be back in your inbox Friday with the Weekly Dose.
Thanks for reading,
Packy
I wrote Tech is Going to Get Much Bigger, The Techno-Industrial Revolution, Better Tools, Bigger Companies, and the Vertical Integrators Series (Parts I, II, III, IV, V), not to mention Deep Dives on specific companies that illustrate the general thesis, like Base Power Company (Chapter I & Chapter II), Meter, Astro Mechanica, Cuby, Earth AI, Primer (Deeper Dive), Fuse, Anduril, Varda, Wander, and many more. My last essay, Chaos is a Ladder, argues that market turbulence accelerates the transition from incumbents to startups.
