-

The moment big tech started paying seven-figure packages to poach pre-graduation talent, venture capital's entire business model was dead. Not disrupted. Not challenged. Dead.

For fifty years, VCs built wealth on a simple arbitrage: get to talent early, before it was expensive. Find the smart kid at Stanford. Fund their startup pre-YC. Ride the relationship through rounds. 

The economics worked because there was a protected pipeline. A developmental league where VCs could claim talent before the giants arrived.

That pipeline just vanished. There's no draft in tech.

The San Francisco Giants can't offer a seventeen-year-old millions to skip college and go straight to the majors. Rules protect the development system – College eligibility. Draft restrictions. Minor league contracts.

San Francisco’s giant tech companies don’t have to play by the same rules. Meta doesn't wait for graduation. Google doesn't respect your seed round. When OpenAI or Anthropic can offer your star engineer life-changing money mid-startup, there's nothing – no vesting schedule, no loyalty, no "we built this together" – that competes with that check.

The old VC game assumed temporal arbitrage. You'd find talent at Time A (cheap) and profit at Time B (expensive). But when the Yankees can buy at Time A too, your “elite” network is worthless.

Traditional venture ran on relationship alpha. Get in early enough, and when the bigger dogs come in at a much larger valuation, you’ve won. But when Google offers your pre-seed founder millions to shut down and join, your cap table means nothing. When Meta helicopters onto your A-round company with eight-figure packages, your board seat is irrelevant.

The fiction was that being early created lasting advantage. The reality: there's no "early" when the giants can enter at any moment.

Watch what's happening: every VC now fights for the same AI PhDs, the same MIT postdocs, the same OpenAI alumni. They're bidding against not just each other, but every tech giant with unlimited balance sheets.

This is speculating on whether you can flip credentialed talent to a bigger buyer before they get poached. When firms pay billions for teams of five, they're not finding value. They're participating in an auction where Meta and Google set the prices.

Here's the cruel irony: the investors best positioned to find non-pattern talent are those who were non-pattern themselves. Who built careers despite being filtered out. Who developed judgment for potential through necessity, not theory.

You can't learn this in business school. You can't develop it through portfolio theory. It comes from visceral understanding of how talent manifests in unexpected packages. Because you lived it.

The VCs who thrived on networks and credentialed pattern-matching are holding a depreciated asset, like Blockbuster perfecting video store operations while Netflix ships DVDs.

Markets are brutally fair. As big tech destroys the early-access arbitrage, capital must find new inefficiencies. The only remaining inefficiency is judgment. The ability to see value where others don’t.

But this judgment isn't uniformly distributed. It concentrates in those who:

The very backgrounds VCs selected against become the core competency for the only arbitrage left.

The survivors won't be those with better networks or earlier YC access. They'll be those who find the builders that don't compute in Meta's hiring algorithms. Who recognize the founder that no acqui-hire would target. Who see the value that's invisible to credentialed eyes.

This isn't idealism. It's economics. When obvious talent is perfectly priced, only non-obvious talent offers returns.

Sort of. But here's the twist: in this game, everyone gets to field a team of all-stars. The AI talent, the technical infrastructure, the compute: these are the "perfect machines" available to anyone with capital. Every team has the talent to win all 162.

So what determines who actually wins? The GM. The founder who decides which perfect machines to deploy, when, and how. Who reads the market shifts. Who knows when to pivot the entire lineup.

The right founders today won't look like the old ones for the same reason the right GMs today don't look like the old ones. When everyone has access to the same talent pool, pattern-matching on founder credentials becomes worthless. We need to be open-minded to unconventional paths, backgrounds, and skillsets.

The signal is their judgment. Everything else is just noise.

At the end of the day, we're still asking "do they get on base?"

“Can this founder build something that wins?”

But there's no sabermetrics for judgment. Want to know why?

Go ask the most intelligent AI model ever built.

Intern’s Note: You can’t, because it’s subjective!

Author’s Note: That’s the point.

Intern’s Note: I know, I just think you should make it clearer.

Until next week