Limited Partners should resist pressuring VCs for early exits to lock in DPI. The best companies compound value at incredible rates, making it optimal to hold winners. Instead, LPs should manage portfolio duration and liquidity by building a balanced portfolio of early-stage, growth, and secondary fund investments.

Some companies execute a 3-5 year plan and then revert to average returns. Others 'win by winning'—their success creates new opportunities and network effects, turning them into decade-long compounders that investors often sell too early.

Top growth investors deliberately allocate more of their diligence effort to understanding and underwriting massive upside scenarios (10x+ returns) rather than concentrating on mitigating potential downside. The power-law nature of venture returns makes this a rational focus for generating exceptional performance.

Contrary to the instinct to sell a big winner, top fund managers often hold onto their best-performing companies. The initial 10x return is a strong signal of a best-in-class product, team, and market, indicating potential for continued exponential growth rather than a peak.

A strategy for durable company-building is to aim for an enterprise value multiple that is highest in year 20. This long-term perspective focuses on the immense power of late-stage compounding growth and insulates the company from the volatility of short-term capital markets and technology hype.

A successful early-stage strategy involves actively maximizing specific risks—product, market, and timing—to pursue transformative ideas. Conversely, risks related to capital efficiency and team quality should be minimized. This framework pushes a firm to take big, non-obvious swings instead of settling for safer, incremental bets.

The most significant companies are often founded long before their sector becomes a "hot" investment theme. For example, OpenAI was founded in 2015, years before AI became a dominant VC trend. Early-stage investors should actively resist popular memes and cycles, as they are typically trailing indicators of innovation.

Despite perceptions of quick wealth, venture capital is a long-term game. Investors can face periods of 10 years or more without receiving any cash distributions (carry) from their funds. This illiquidity and delayed gratification stand in stark contrast to the more immediate payouts seen in public markets or big tech compensation.

The venture capital business requires consistent investment, not sprinting and pausing based on market conditions. A common mistake is for VCs to stop investing during downturns. For companies with 50-100x growth potential, overpaying slightly on entry price is irrelevant, as the key is capturing the outlier returns, not timing the market.