Leaders who speak in apocalyptic terms to gain power (e.g., Elon Musk, Sam Altman, Greta Thunberg) are often building world-changing technologies. Investing in this basket of 'doomers' who frame their work in world-consequential stakes has historically been a highly profitable venture capital strategy.
Related Insights
Altman’s prominent role as the face of OpenAI products despite his 0% ownership stake highlights a shift where control over narrative and access to capital is more valuable than direct ownership. This “modern mercantilism” values influence and power over traditional cap table percentages.
The memo argues that the "hysteria of the bubble" compresses the timeline for building out new technologies from decades into just a few years. Patient, value-focused investing would never fund the massive, parallel, and often wasteful experimentation required to jump-start a new technological paradigm at such a rapid pace.
Founders Fund’s early $20 million investment in SpaceX, representing nearly 10% of its $220 million fund, perfectly exemplifies the venture capital power law. This single, high-conviction bet is poised to become one of the greatest VC investments ever, showcasing a strategy where one outlier success can return an entire fund many times over.
Innovation doesn't happen without risk-taking. What we call speculation is the essential fuel that allows groundbreaking ideas, like those of Elon Musk, to get funded and developed. While dangerous, attempting to eliminate speculative bubbles entirely would also stifle world-changing progress.
Top AI leaders are motivated by a competitive, ego-driven desire to create a god-like intelligence, believing it grants them ultimate power and a form of transcendence. This 'winner-takes-all' mindset leads them to rationalize immense risks to humanity, framing it as an inevitable, thrilling endeavor.
Sam Altman's ability to tell a compelling, futuristic story is likened to Steve Jobs' "reality distortion field." This storytelling is not just a personality trait but a necessary skill for founders of moonshot companies to secure capital and talent when their vision is still just a PowerPoint slide and a lot of hand-waving.
Companies like Tesla and Oracle achieve massive valuations not through profits, but by capturing the dominant market story, such as becoming an "AI company." Investors should analyze a company's ability to create and own the next compelling narrative.
Sam Altman is adopting Elon Musk’s playbook of blending visionary rhetoric with bold, near-unbelievable promises to attract capital. However, a key difference is that Musk has a massive base of retail investors who have profited from his ventures and defend him. Altman currently lacks this loyal 'retail army,' making his high-risk strategy potentially more fragile.
Founders Fund invested nearly 10% of its fund into SpaceX immediately following a launch failure, betting on Elon Musk's team despite their lack of aerospace experience. This exemplifies a high-conviction, founder-centric investment thesis that ignores conventional industry wisdom and short-term setbacks.
A founder's credibility acts as a multiplier on the perceived value of their narrative. An entrepreneur like Elon Musk, with a track record of success, receives a "multiple expansion on trust," allowing their futuristic stories to attract capital at valuations and scales that a first-time founder could not achieve.