Generalist Capital: In Search of Epics

To create an epic, you need two things. 

First, a hero. Someone audacious enough to take on a great task despite the risks entailed. Often, that means traversing perilous terrain, confronting enemies, scorning death itself: Gilgamesh wading through the flood, Arjuna facing off against an entire army, Odysseus slinking through the underworld. 

Second, you need someone to tell the tale. 

One of the reasons I first started The Generalist was because I believe that the great epics of our era will occur in the tech sector. No other field asks – and tests – so many consequential philosophical, psychological, and societal questions so frequently. What is money? What makes something valuable? Will nations exist in the cloud? Can we hack our bodies? Must we die? Every year, startups emerge to explore these questions and others, setting out on ambitious adventures.

Today, I’m pleased to introduce Generalist Capital, a $12.25 million fund in search of epics. We exist to support a small number of dauntless entrepreneurs on their most daring quests. As these extraordinary people undertake extraordinary deeds, we will be there to tell their stories. Though we have a generalist mandate (naturally), I will be spending much of my time on crypto, fintech, and emerging markets – and the places those three worlds collide. 

Generalist Capital is backed by some of the great investors and entrepreneurs of our generation. Limited partners include Marc Andreessen, Chris Dixon, Kyle Samani, Tushar Jain, Fred Ehrsam, Matt Huang, Digital Currency Group, and the founders of exceptional global businesses and projects like Nubank, Polygon, Brex, Gojek, Rappi, Public, LayerZero, Decentraland, Chipper Cash, and others.

Though the fund is oversubscribed from its $10 million target, I am opening up a few spots to readers and supporters. Members of The Generalist community will receive preference, time-stamped as of yesterday. (If you want to be a part of future funds and potential syndicates, I encourage you to jump aboard.) I will also prioritize LPs that add to the diversity of our investor base. Only accredited investors are eligible, and all prospective LPs should know that investing in venture capital funds is inherently risky and illiquid. Finally, we are adhering to a traditional fee structure, taking 2% management fees for four years and 20% carry.

Follow this link to apply to join Generalist Capital.

In today’s piece, I’ll discuss Generalist Capital’s origins, why I’m so excited, and where we’re headed. We’ll cover: 

• A venture journey. Generalist Capital has grown out of an increasing obsession with different venture models and the energy of working with exceptional founders. 
• The power of narrative. Stories are a form of magic. They have the ability to align capital and talent around common goals. Generalist Capital is built to manifest this magic. 
• A concentrated approach. We plan to invest in approximately 20 companies. This smaller portfolio size allows us to work with founders more closely and have a better chance of driving outsized returns.  
• Our LP coalition. We have built an investor base with particular strength in our focus areas. The group we’ve assembled includes some of the exceptional founders and investors we’ve covered in this publication. 
• Building a network. Over the past eighteen months, we have attracted a curated community of impressive founders, operators, and investors. One of my goals is to build bridges between Generalist Capital and this group, creating benefits for both. 

Let’s get started. 

Narrative power

You might have noticed my fascination with venture capital. Indeed, it has been a steady theme in The Generalist over the past year. We’ve covered a range of strategies and models, including crossover funds like Tiger Global and Coatue, business model investors like DST Global, accelerators like Y Combinator, company builders like Rocket Internet, crypto disruptors like Multicoin Capital, and purists like Union Square Ventures. We also dug into trends like the Solo Capitalists revolution. 

As I learned about these different firms and studied what makes them great, I began to feel increasingly excited by the idea of starting a fund of my own. This impulse was sharpened by the work I started doing through our partner program. Spending time with exceptional startup CEOs like Christina Cacioppo from Vanta, Sam Corcos from Levels, Andrew Brown from Check, Nico Simko from Clair, Zach Oschin from Elenas, Michael Grinich from WorkOS, and Fredrik Haga from Dune gave me a different kind of energy. These were founders very much in the arena – fighting to survive, grow, and build something profound. 

Creating a partner piece is an involved process. Beyond conducting deep research and reviewing internal decks and documents, much of the meat occurs through conversation. I spend hours talking to founders, executives, and team members to understand the company’s vision and how it operates. I talk with existing investors, unpacking how a deal came together, what the competitive landscape looks like, what they hope a startup will become. And I interview customers to hear how a product has changed their business or life. These talks can be philosophical, tactical, and even personal. In the same conversation that you ask a founder to outline their sales motion, you might delve into their most significant failures and wildest dreams. 

When you do that work, you start to feel like you’re on a team – on the inside rather than the outside. Even after a piece goes out, that sensation remains. I want all the companies and founders I mentioned above to win and build something great. The more I worked with companies in this way, the more I wanted to stay on their side, to keep collaborating, to play a small role in helping them succeed over the long-term. 

Working on these pieces also taught me to better appreciate something I thought I already understood: the power of stories.

Steve Jobs once said, “The most powerful person in the world is the storyteller. The storyteller sets the vision, values, and agenda of an entire generation that is to come.”

If you had asked me last year, I would have said I was sure I understood the truth of this sentiment. Indeed, it was a subject I had considered for some time, from many angles. As a callow grad school entrepreneur bumbling through his first pitches, as a venture capitalist reviewing hundreds of decks, as a hopeful novelist spending a decade on the same book, as a business owner wooing prospective partners, I learned that the difference between success and failure, yes and no, could be the matter of the story one told. 

Because of this, I thought I had adequately accounted for the power of stories – particularly as they related to the private sector. Indeed, the topic of corporate soft power has been another common theme in this publication, discussed most thoroughly in “Whose Story Wins?” and “Stripe: Thinking Like a Civilization.” My obsession with the subject caused me to wonder, at times, if I had overestimated its importance. 

In studying more partner companies and other great organizations, I have come to believe the opposite. Epic stories are, in truth, a kind of magic, capable of changing minds, forming relationships, and creating believers. They bestow superpowers on companies: attracting capital, talent, and customers. 

Rather than overestimating their importance, I think I actually underestimated it. This brings to mind one of my favorite internet mandates, Patio11’s Law. As defined by Mark McGranaghan, Patio11’s Law states: “The software economy is bigger than you think, even when you take into account Patio11’s Law.” If you will forgive me the wide-eyed hubris of coining my own variation, Mario’s Law would say: “Storytelling is more important than you think, even when you take into account Mario’s Law.”

The more I thought about this dynamic, the more I began to believe there was the chance to build something interesting and unique: a concentrated fund designed to work with a small number of builders to help them maximize the power of narrative. 

Generalist Capital

There are many ways to make the venture model work (and even more to fail.) Some funds deploy extremely quickly while others move at a more conservative pace. Some spread their bets liberally, while others prefer to concentrate investments. 

On the spectrum of speed and concentration, Generalist Capital sits left of center. We plan to invest in approximately 20 companies over the next 18 months. There are a few reasons I believe this is the right approach: 

1. Meaningful ownership. The grand slam nature of venture means that winners are few and far between. When you are lucky or shrewd enough to back a unicorn, you want to ensure you own a significant percentage. Otherwise, you might end up with a massive winner in your portfolio that doesn't actually move the needle that much. Concentrating your investments allows you to own larger stakes in the companies you back.
2. Maintain an extremely high bar. I had my first experience in venture capital in 2016. I remember being especially surprised by how many seemingly viable startups there were. On a given day, you might meet half a dozen founders that you could credibly back. The goal for a venture investor, then, is not to find a plausible company but one you cannot stop thinking about. This is the bar I want to hold myself to for Generalist Capital – work with founders and businesses worth obsessing over. 
3. Close relationships. When founders agree to partner with an investor, they add someone to their team. I believe that teams work best when there is mutual trust and understanding. A smaller portfolio gives me more time to build sincere relationships with founders we back. I will never pester, but I hope founders will feel comfortable asking for help in times of doubt or crisis. 
4. More proactive help. As a founder, I recognize my bandwidth is limited. With that in mind, I would prefer to divide my time between a smaller number so that I can be more useful. Attempting to provide proactive help and meaningful support for 20 companies differs from doing so with 100. 
5. Allow valuations to settle. It has been a rough year for both the public and private markets. While venture valuations have somewhat corrected, I expect we’ll see a further shakeout over the coming months. Though there are rare times to be valuation insensitive, by and large, I care about entry price.
6. Protect against impulse. A word of warning one institutional investor gave me was that emerging managers often deploy too quickly. I can imagine falling into this pattern. Committing to a longer expected timeline encourages me to counteract this impulse and move more deliberately. 

This strategy has clear trade-offs. For one thing, fewer bets mean fewer chances to find an outlier. It’s possible I pick twenty unsuccessful companies – a meaningful percentage of $0 is still $0. It’s also possible that I adhere to these guidelines too rigidly, choosing to pass on a company I love because I’ve made an investment that month or can’t secure sufficient allocation. I will need to respect the strategy I have laid out without adoring the rules unthinkingly. Despite these risks, I nevertheless believe this approach offers the best chance of delivering outsized returns. 

From a stage perspective, Generalist Capital is focused on backing early startups, with some flexibility. Approximately 75% of the portfolio is expected to be Series A or below, with most being true seeds. We will invest ~$300,000 into these startups, following on into those that grow. The remaining 25% of the fund is reserved for later-stage investments that are too exceptional to ignore.

From a sector perspective, we will have a wide aperture, fitting the range of interests and curiosities we pursue in this publication. However, there are three areas we are focusing on in particular: crypto, fintech, and emerging markets. I expect roughly 50% of investments to be crypto-related. 

Readers will know that these are sectors I am especially obsessed with – and that I believe represent fertile ground. In raising Generalist Capital, I sought to assemble a superteam of limited partners in those areas to support our work. I am very proud of the coalition that has come together and grateful for the trust given to me. A selection of LPs: 

• Investors. Marc Andreessen and Chris Dixon (a16z), Kyle Samani and Tushar Jain (Multicoin), Fred Ehrsam and Matt Huang (Paradigm), Fabrice Grinda (FJ Labs), Annie Case (KPCB), Nick Grossman (USV), Iyinoluwa Aboyeji (Future Africa), Nathan Lustig (Magma Partners), Tom Schmidt (Dragonfly), Nikhil Basu-Trivedi (Footwork), Matt Turck (FirstMark), Anil Lulla (Delphi Digital), Courtney Buie Lipkin (Susa), Shu Nyatta, Invus' partnership, and Digital Currency Group.
• Creators. David Rosenthal (Acquired), Packy McCormick (Not Boring), Gmoney (Admit One).
• Founders and operators. David Vélez (Nubank), Henrique Dubugras (Brex), Jaynti Kanani (Polygon), Bryan Pellegrino (LayerZero), Kevin Aluwi (Gojek), Jorge Izquierdo (Aragon), Sebastian Meijia (Rappi), Leif Abraham (Public), Josh Buckley (Prologue), Ham Serunjogi and Maijid Moujaled (Chipper Cash), Josh Elman, Issam Freiha and Vinay Mehta (Blank Street), Esteban Ordano (Decentraland), Cem Kent (Even), Justin Mares (Kettle & Fire), Sean Summers (Mercado Libre), and Peter Kellner (Endeavor). 

There are remarkable funds, individual investors, and founders not mentioned here. I am so grateful to all of them. This investor base has built or backed some of the most consequential technologies, businesses, and networks in the world, around the world. From São Paulo to San Francisco, Indonesia to India, New York to Nigeria, these individuals have made a meaningful impact on how we think, transact, invest, talk, move, work, and play. If you would like to join this group, apply here.

I’m incredibly proud of both the caliber and diversity of the group. There is nevertheless room for improvement, particularly regarding gender representation. During the fundraising process, I made special efforts to pitch female investors and ask for introductions to more women in tech. I plan to keep doing so and am hopeful it will make a difference for future raises.

So far, Generalist Capital has adhered to the plan we set out. We have invested in two businesses since starting to deploy in late April, one early-stage crypto company and one more mature enterprise software firm. In total, we’ve invested ~$750,000, meaning we are less than 7% deployed. It’s too early to share more about our portfolio companies, but I feel very excited to work with both for a long time. 

As an angel investor and scout, I’ve backed 17 startups, of which I can share 14 publicly: Alongside, AngelList, Blank Street, Levels, Mirror, Notch, Phantom, Pluto, Rabbithole, Satellite, Station, Stir, Sweetgreen (via SPV), and Workweek. I made my first investment in 2016, but most have been made over the past couple of years.

I feel lucky to be a small part of the stories of these businesses too, and look forward to the many great deeds they will achieve.

Stay one step ahead of the most important trends shaping the future. Our work is designed to help you think better and capitalize on change.

There is a final element needed for an epic: a listener. Tales like The Iliad or The Odyssey were not meant to be read in isolation but manifested within a group. Together, a community created the space and energy for another world to open, a story to form. 

When I think about my long-term ambitions for Generalist Capital, this is what I hope for: the creation of something bigger than one person, a community aligned. As an initial goal, I hope to give members of The Generalist community opportunities to invest in the companies we back, likely through later-stage SPVs. If done well, this can be a force multiplier for founders – giving them access to a large, curated group of impressive fellow founders, builders, and investors – and valuable access for those wishing to invest more in the private markets. This is just one example. In time, I believe we’ll find many more ways to collaborate.

One more thing I would like to say: thank you. Thank you for reading this newsletter and allowing me to make a living from the joy of writing. Thank you for sharing and helping it grow. And thank you for giving me the ability to begin this new chapter. It is no exaggeration to say that Generalist Capital would not exist without you. 

Lastly, if you are a founder undertaking a great adventure that believes in the power of stories, I would love to meet you. Together, let’s make an epic.