Carter Rehm of M13 reframes career risk by analyzing probability-adjusted outcomes. He argued that starting a company, even if it failed, would make him a more unique and desirable candidate for business school than the traditional private equity path. This asymmetric upside made entrepreneurship the safer choice.
M13's Carter Rehm uses the baseball statistic "Wins Above Replacement" (WAR) to assess founder-market fit. A founder who is great for one idea (e.g., a disruptive tech startup) might be terrible for another (e.g., a regulated financial company). The key is their unique ability to create value for a specific opportunity.
Unlike private equity investors who refine a single skill, venture capitalists must be like hockey players, constantly anticipating and moving towards the next major innovation. This requires a "prepared mind" to shift focus from one sector to another as risk/reward dynamics change over time.
Founders must ruthlessly execute day-to-day tasks (the microscope) while simultaneously looking ahead to understand market shifts and future competition (the telescope). The telescope is especially crucial today, as the rapid pace of change means competition can emerge from unexpected places.
A successful investment doesn't automatically mean the decision was right, and a failure doesn't mean it was wrong. Carter Rehm advocates for focusing on the quality of the decision-making process, like a blackjack player following optimal strategy, to ensure long-term success despite short-term outlier outcomes.
The perception of a startup's smooth, "up and to the right" growth is a myth. The reality is like a swan: appearing to glide effortlessly while its feet are kicking and fighting the current beneath the water. The journey is messy, chaotic, and far from linear, more like an EKG than a straight line.
Today's capital concentration in AI giants is not a new phenomenon; it echoes the rise of Uber and Airbnb. Carter Rehm argues the fundamental dynamic is the same, but the outcomes are now bigger (trillion-dollar companies vs. hundred-billion) and happen much faster, like going from an Indy 500 to an F1 race.
Instead of hiring for cultural fit and consensus, build a team with different prejudices, biases, and experiences. This creates a "positive tension" where diverse viewpoints push the discussion, challenge assumptions, and ultimately lead to better, more robust investment decisions. The ideal answer is often found in the middle.
M13 was built to be a different kind of VC by operating like a tech company. With a team of mostly former operators, they focus on building an institutionalized platform with KPIs and vision statements. The primary job is seen as building the firm, with investing as the secondary function.
In a market where the pace of change is accelerating, having a rigid vision is dangerous. The optimal approach is to have "strongly held beliefs, but very loosely." This allows you to maintain a clear direction while remaining agile enough to adapt your thesis as the world changes quickly around you.