Casado argues that while VCs preach non-consensus investing, later-stage funding rounds become increasingly consensus-driven as check sizes grow. Startups that are too far off-consensus risk being unable to secure the necessary follow-on capital to survive and scale.

Venture capitalists thrive by adopting one of two distinct personas: the "in the flow" consensus-driver focused on speed and connections, or the "out of the flow" contrarian focused on deep, isolated work. Attempting to straddle both paths leads to failure.

The 'classic' VC model hunts for unproven talent in niche areas. The now-dominant 'super compounder' model argues the biggest market inefficiency is underestimating the best companies. This justifies investing in obvious winners at any price, believing that outlier returns will cover the high entry cost.

The most successful venture investors share two key traits: they originate investments from a first-principles or contrarian standpoint, and they possess the conviction to concentrate significant capital into their winning portfolio companies as they emerge.

VCs are willing to "hold their nose" and pay extremely high multiples for one or two exceptional companies they feel are essential to win. However, unlike in 2021, they are not applying this undisciplined, high-valuation strategy to their entire portfolio, demonstrating a more disciplined approach to portfolio construction.

Unlike Private Equity or public markets, venture is maximally forgiving of high entry valuations. The potential for exponential growth (high variance) means a breakout success can still generate massive returns, even if the initial price was wrong, explaining the industry's tolerance for seemingly irrational valuations.

Contrary to the belief that number two players can be viable, most tech markets are winner-take-all. The market leader captures the vast majority of economic value, making investments in second or third-place companies extremely risky.

Large, contrarian investments feel like career risk to partners in a traditional VC firm, leading to bureaucracy and diluted conviction. Founder-led firms with small, centralized decision-making teams can operate with more decisiveness, enabling them to make the bold, potentially firm-defining bets that consensus-driven partnerships would avoid.

With trillion-dollar IPOs likely, the old model where early VCs win by having later-stage VCs "mark up" their deals is obsolete. The new math dictates that significant ownership in a category winner is immensely valuable at any stage, fundamentally changing investment strategy for the entire industry.