Good morning 👋
And Happy New Year!
Some of you have been reading this newsletter since 2020, and you have seen the full arc of starting as a Notion doc → starting a podcast → realizing newsletters are better businesses → creating services on top of the newsletter → launching a fund that sits on top of this ecosystem we have created.
Every year for the past five years, we have shared an annual update. We do this because we believe that building in public is an asymmetric bet. We do this so that all of you can stay on top of what we’re doing, but also so that the experiments we run while building can be useful for others thinking through the same things.
2025 was a difficult year.
The media business continues to compound, but we have had to think creatively of where we want to take it from here.
The old newsletter playbook is not relevant in today’s world, advertising is not nearly as lucrative as it once was, and as a media operator, the bulk of your time is now spent thinking through ways to increase the lifetime value per subscriber. How well you do that is the difference between massive success and closing your doors.
I started Outlaw last winter, and I have spent most of the year fundraising.
Something that you don’t realize until you set out to raise money yourself is that fundraising is hard - mentally, physically, and emotionally. I wouldn’t be doing this if I didn’t think it was worth it in the end, I am now in a much better spot than I was last year, but 2025 was a year of getting my teeth kicked in.
Below the Confluence annual notes, I have shared the annual letter I am sending out to all of my LPs for Outlaw.
Hopefully, you find something valuable in here.
P.S. This is a long one and will get clipped by Gmail.
If you want to read the full letter, click the button above.
Confluence notes
What I’ve been working on
Here are some of the moves we made this year, why we made them, and some thoughts as we head into 2026.
As a media-first business, a lot of revenue up to this point over the past five years has come in the form of sponsorships and advertising. When companies have budgets and you have a dedicated ad sales staff, this model works great. When budgets get scrapped or reallocated elsewhere, things get dicey.
To move away from an advertising-dominant business model, our monetization strategy has changed. Advertising is still a revenue stream, but it is not the revenue stream. Whether it’s through community subscriptions, premium newsletter subscriptions, our investor recruiting business - our goal now is to do a better job of putting the right offer in front the right person at the right time (instead of continuing to be everything for everybody). Building out GTM motions for each of those offers is a work-in-progress, but beehiiv, Clay, Juicebox, and Zapier continue to be irreplaceable pieces of software powering this business.
We moved away away from the “Morning Brew for X” (5x / week free) option. We experimented with this for a few months, and after feedback from our team and readers, decided to change how we structure delivery of this newsletter. Not everybody wants 5x emails / week - according to our data, only ~23% of our readers actually want us in their inbox every morning.
Introduced two new paid options for readers who want more of us in their inbox. We’re big believers in value ladders. The free version of the newsletter is the bottom of the ladder and designed to work as a magnet to find people who resonate with our thinking. The paid versions capture a smaller percentage of the overall readership who want more from us. This also allows us to create directly for our super fans and not be reliant on advertising to fill week-in and week-out.
Speaking of finding super fans … we have a question for you. We’ll follow up with some ideas for those of you who take the two seconds to respond.
Why did you REALLY subscribe to this newsletter?
- "I just want to see deals so I can build my track record"
- "I have good deal flow and want carry as a scout"
- "I want to see trends before they become consensus"
- "I'm good at socials and want to help grow yours"
- "I want to help you build your recruiting business"
- "I want to get paid for setting you up with good sponsors"
- Something else
Audience size has grown but at a lower rate than we aimed for with our update last year. Similar to other media businesses, we’re trying to adapt to the new world of CAC and figure out what works in 2026. The old playbook of burning cash on ad platforms and optimizing a handful of acquisition metrics does not cut it anymore. If you look at the fastest growing media companies today, almost none of them follow the playbook from 10 years ago. We are still hovering ~20k subscribers, but we have turned off paid ads until we find a more repeatable way to lower CAC.
More newsletter competition = higher content quality bar. We think that this type of content has multiple layers. If you cannot speak the language of the reader, they will tune you out. If you have a generic design or over-used layout, audience fatigue will set in. This is partially why we did a full redesign earlier in the fall (shoutout Ricky for doing great work).
Spending more time on higher ROI activities. As we move our business focus away from low-ticket subscriptions, we have become more mindful of our time. The recruiting business is an outcomes business - that is a good use of our time. The fund is also an outcomes business, and fees subsidize the cost it takes to run a fund.
Realized the best content we create is all original content. Some of the most popular pieces from this past year can be found below.
Related to the above, we are time constrained. Most of my time is going towards getting the fund off the ground. As a result, things are falling through the cracks on the media side. As a reminder, we are constantly looking to meet with people who want to learn and get more involved. Check out some of the roles we are looking to fill here.
Finding ways to pay readers. One of the primary themes of the fund is this idea of narrative capital, converting attention into equity, and leveraging an audience as a curation layer for a larger investment vehicle.There are tons of ways to capture value from an audience, I believe that most of them are played out, and as the fund name suggests, I don’t like following the status quo. Personally, I think the biggest benefit of having an audience is the ability to act as a router of people, and that is how I try to position the real ability of this newsletter in those LP conversations. We started bounty system for some people we have been trying to get in front of for the fund. If you can get us a meeting, you get paid.
Two things that have been reinforced the longer I run this business are the ideas of serendipity and positive-sum games.
I believe that every person creates their own luck through actions.
I believe positive-sum games are the only games worth playing.
If you pay attention to these emails, you should have a good sense of how I think about the world.
If you think there are ways to work together, let me know what you’re thinking - I’m all ears.
Outlaw notes
Below is the note I sent to Outlaw LPs earlier this week.
What I’ve been working on
Many of you work in venture, and this will be one of the many annual emails you receive in the coming days. Those emails will all tell you very different stories about what is going on at the ground floor depending on the source and the incentive of that source.
These are my two cents on what I have seen since switching over to the GP seat.
Outlaw was officially formed in January 2025, and we are coming up on the fund’s one-year anniversary. To say that is was a bad year to start a fund I is an understatement.
The chart above condenses a few larger trends into a single image.
It’s the best time in history to own the GP at an established fund.
If you can prove attachment to any of the top ~50 private companies, you’re golden.
As more money piles into fewer firms, those firms start raking in a fortune in fees.
As the rest of the venture market feels the pain of consolidation, established firms benefit from a larger talent pool of investors to recruit from.
It’s the best period of all time to be a founder.
Tools of creation have never been cheaper.
Despite the drawback in net new funds, the availability of risk capital is still abundant.
The perceived status of running a startup has never been higher.
It is arguably one of the worst times I can remember to work as a non-established GP in venture.
LPs have little incentive to deploy to emerging managers given their jobs are at risk. “You don’t get fired for backing Sequoia” has permeated through the allocator world. If you are an unestablished fund, more often than not you are pitching a risk product to a risk-averse audience.
Momentum and track record as primary proxies for quality. If you have a track record you can point to, you’re golden. If you can run a tight process and get to a first close quickly, you’re golden. If you cannot, you need to have a high pain tolerance, or you need to dust off your resume. At the same time, there is a lot of irony in using momentum as a proxy for quality, and I personally believe this is a lazy heuristic that will light a lot of LP dollars on fire. Mucker’s fund I was notoriously hard to raise. So was USV’s. So was Founders Fund’s (Thiel had to self-fund 1/3 of it). Look at how those turned out.
Managers are now competing more and more against fundless sponsors. For those of you involved in the SPV world, you know what I am talking about. It is the Wild West right now, and the appetite for late-stage, pre-IPO companies is through the roof. Whether those deals are good deals and not multi-layered SPVs is a separate discussion, but it has changed fundraising dynamics and made it harder for GPs pitching a pool of assets vs. allocations on a deal-by-deal basis.
I could go on and one, but you probably get the point. It’s pretty easy to be doom and gloom as somebody in venture not already established at a tier one fund.
At the same time, I’m a believer in downturns creating opportunities.
Traditional LPs are falling out of favor of emerging managers? Great - I can target a different class of LPs with less gatekeepers.
Too much competition for the best founders? Great - I’ll find them earlier where I don’t get rinsed on valuation.
Fundraising timelines are getting pushed out, and it’s harder than ever to raise? Good - pain is a moat. The more I have to earn it, the better I can act as a fiduciary of that capital.
I still think early-stage venture is the most lucrative asset class in the world, and I wouldn’t be building Outlaw if I didn’t have full conviction in that belief.
Below is the more on what I’ve been working on in 2025 along with what I’m working towards in 2026.
The new playbook for first-time funds has four key levers:
Hyper-specialization.
This fund lifecycle will last for the next 10-12 years, and we believe it is incredibly hard to predict what the world will look like in that time period. So instead of taking a pointed approach and betting the house on a singular sector, we are taking a more flexible stance where we can make more convicted bets.
What we are betting on is that the new North Star metric for businesses has changed, and with that change has come budget adjustments, increased pressure within different business functions, and a new set of investment opportunities.
The new vanity metric for all businesses (especially venture-backed ones) is growing revenue-per-employee; the days of growth at all costs and scaling headcount are over. At a high-level, that means that all back office functions (customer support, finance, accounting, etc.) are consolidating and allowing more budget to go towards front office functions (GTM tooling, dev tools, etc.) that differentiate the business vs. keep the lights on.
Below are some companies that have pioneered that movement, and we expect plenty of others to follow.
Company | Estimated revenue | FTEs | Revenue-per-employee |
|---|---|---|---|
$500m | 40 | $12.5m | |
$1b | 110 | $9.09m | |
$3.5m | 1 | $3.5m | |
$75m | 30 | $2.5m | |
$100m | 50 | $2m | |
$100m | 52 | $1.92m | |
$75m | 40 | $1.86m | |
$50m | 30 | $1.67m | |
$50m | 40 | $1.25m | |
$220m | 220 | $1m | |
$15m | 35 | $428.57k | |
$10m | 25 | $400k |
**Source
Co-investment lever.
All investors (LPs included) want to go direct.
This fund has low reserve ratios, and we are more focused in being the first check in. We have created a co-investment layer that pairs our LP base to invest alongside our first check and follow on into the breakouts from the portfolio.
Although the fund is relatively small, we see the co-investment program as a capital multiplier.
GP as a brand.
My personality is not geared to be a big “content guy”, but having spent the better part of the past decade writing on the internet, I can say that this type of content works.
I tell everybody that the biggest benefit of the newsletter is that it acts as a surface area generator, and it gives me a reason to talk to people, a right to win, and a front-end to share how my brain works. A lot of this resonates with people, and it gives me an edge vs. monolithic funds where sharing your thinking publicly is discouraged or prohibited.
Below are some pieces that resonated the most our audience this year:
Audiences and AUM: Inside the secret flywheels that are shaping the new venture playbook
Narrative capital (converting attention to equity): ~2,500 words on what I think is the biggest thing going on in venture
Things I've learned since becoming a GP: 37 raw realizations over the past ~12 months
75 big ideas from 2025: The biggest stories and ideas from this year that we think will continue to matter in the years ahead
Some things I currently hate about startup culture: Exiting the echo chamber and sounding the alarm on bad behavior
Skin in the game: Some thoughts on conviction, getting in the game, and bleeding for what you believe
How to 3x a fund: A deep dive on portfolio construction
Full archive: https://confluencevcweekly.beehiiv.com/
High-touch community.
For those of you who have been following along for a while, this was the genesis of the fund, and the flywheel above is a visual on how I describe the competitive advantage of pairing the two businesses. My thinking has changed a bit on this since we first got started.
I think the main benefit of any fund manager that pairs an investment vehicle on top of an existing audience is the ability to act as a router and leverage the community to do the same.
As a GP, I sit between capital (my LP base) and opportunities (the companies in the portfolio). It is my job to find, screen, win, support, and exit positions that align through the lens of this fund and my portfolio construction.
At pre-seed and seed, I am convinced that nobody is consistently great at picking winners. Even the best investors in the world are wrong a lot more than they are right, and the most self-aware GPs are more than happy to split up some of the risk with a small group of co-investors.
The way to solve the coverage problem as an investor in this stage of company is to:
Curate a small group of high-quality co-investors who also write collaborative checks looking at the same types of companies as you.
Schedule recurring calls / touch points with these people where there is mutual value exchange and you share the deals you like in exchange for the deals they like.
Continue to play this game over a long time horizon without getting greedy.
Venture capital has become increasingly transactional, and the longer you wait, the more zero-sum the game becomes.
If you want to play positive-sum games, you have to position yourself as collaborative capital and win the ability to co-invest alongside others where you can rely on their judgement.
Companies
What I’ve been looking at
Outlaw believes the new vanity metric for all companies is growing revenue-per-employee, and we invest in companies powering that change.
At a high-level, that means that we think that over a long enough time horizon, all back office functions of a business (customer support, finance, accounting, etc.) will consolidate with fewer people responsible for more output. This allows for business to reallocate more towards front office functions like GTM tooling, dev tools, and other functions that differentiate the core offering.
All of that said, at the stages we invest, you are betting more on founder execution ability and less on metrics. These are the three founder personas we are spending most of our time with:
Exited founders. This is an obvious one. I have a hard time backing first-time founders; I believe there is too much you don’t know. I have a much easier time backing somebody who has started something, scaled it, and navigated through an exit (ideally for lower than life-changing amounts of money). As you can see from the breakdown graph below, this is the founder persona I spent the most time with in 2025.
Pareto employees. At every firm, a Pareto distribution plays out where a small amount of team members are responsible for an overwhelming majority of the company’s equity value. Excluding founders, this typically consists of founding engineers, founder GTM people, or other early employees who worked their way up solving complex problems at multiple stages of the business. Typically these people are fully vested, many of them realize they created more equity value than they were compensated for, and a handful of them want to parlay that experience into founding a company and owning more of the equity stack. I started tracking ~700 of these profiles in LinkedIn Sales Nav earlier this year, and I have alerts set for whenever any of them jump jobs or put “founder”, “building”, “something new”, or “stealth” in their bio. I expect to spend more time with this persona of founder in 2026.
Founders with unique distribution. One of the first founders we will back matches this persona. I believe all businesses can be simplified down LTV:CAC. LTV shows you how efficiently you can capture value from a customer which can then be broken down a hundred times by assessing usage patterns, retention, upsell ratio, etc.). CAC shows you how efficiently you are acquiring new customers. This can then be broken down into different sales channels (cold outbound, organic content, paid ads, affiliates, referrals, etc.). Good businesses aim for at least a 3-to-1 LTV:CAC ratio. Founders with unique distribution are able to hack the second part of that equation, sell to an owned audience, and reinvest more back into the growth of their business.
Breakdown of founder persona from 2025 pipeline
As you can see from the chart above, most of my time in 2025 was spent with previously-exited founders. Going into 2026, I plan to spend more time with Pareto employees from a handful of companies like Anysphere, Attio, beehiiv, Clay, Cognition, Cursor, Decagon, ElevenLabs, Framer, Granola, Harvey, Linear, Lovable, Mercor, Mercury, Notion, Owner.com, Polymarket, Ramp, Replit, Rogo, and Vercel to better understand the talent and alumni networks from these places.
Here are some pipeline stats from the past quarter:
Companies screened | 274 |
|---|---|
Second calls | 54 |
Diligence | 13 |
Negotiation | 5 |
I’m not announcing new investments until the next close, but here are some more on the companies at the bottom of my funnel:
Stealth: Simplified bookkeeping for solopreneurs
Stealth: Dynamic websites that match content with visitor intent
Stealth: Effortlessly embedded SMB accounting
Stealth: AI-powered co-pilot for investment bankers and private equity professionals
Stealth: The AI video editing company
All of these perfectly capture the types of deals we love:
Selling to enterprise clients with budget ✅
Powering the theme of growing revenue-per-employee ✅
Hovering between $400k - $1m in ARR ✅
Valuations at or below $12m post / cap ✅
Founding team has at least one prior exit under their belt ✅
Thoughts
What I’ve been thinking through
Good writing is a winner-take-all market.
There is no demand for “average” media.
Something that the “every company is a media company” argument misses.
The appetite for truly great writers and storytellers grows exponentially as the slop-ification of the timeline continues to play out across every major feed.
The issue with all media-led investment firms: prioritizing the inputs (followers, impressions, attendees, etc.) over the outputs (good investments).
When a venture clown says something controversial, the result may be more views, more conversation, more discourse, but it’s certainly not great founders taking them seriously as long term capital partners.
Power law is consensus → loss ratio is ignored → zero attachment to money → bad fiduciary decisions
“If you lose my money I’m going to kill you.”
One of the things that made Sequoia great was that they simply HATED losing money, and they believed that if you take care of the downside the upside takes of itself. That’s certainly not the motto at any major VC firm these days.
I understand that obsessing over loss ratios is not the correct framework to apply to an asset class that rewards outlier outcomes. I also understand that losing other people’s money should not be rewarded.
There has never been a better time to hire investor talent.
Contrary to popular belief, venture firms are not stable institutions.
GPs, partners, and everything below are changing roles more than ever with no signs of slowing down.
After having hundreds of conversations with of these investors over the past several months, it is fair to assume that ~75% of venture investors are open to new roles, and the second-order effects of this are interesting to think through.
Venture is an attribution business, and once an investor leaves a firm, most of his / her deals become adopted companies of the portfolio. Founders typically haven’t had to worry about scenarios where their point of contact leaves the firm; now they do.
Decision-making velocity favors the solo GP
General Catalyst, Thrive, Greenoaks (even Lightspeed to a degree) seem more single threaded with one leader driving a lot of investments. This seems to be winning vs the partnership model which requires buy-in from multiple people.
I am biased, but this is one of the many reasons I like solo GP models.
People who value making money over being right tend to run towards bubbles, whereas the latter take sitting them out as a point of pride.
Would you rather be right, or would you rather make money? This is a tough question that I’ve been battling with recently.
We’re obviously in a bubble.
Narrative has taken over
Companies are raising at 100x+ multiples again
Financial engineering has turned into flat out fraud with false revenue claims
“These numbers look off” allegations are, in fact, true
We have been here before and not very long ago. Have we not learned anything?
In hindsight, sitting on the sidelines and acting rationally in a time or irrational behavior is the right move. In the moment, sitting on your hands is a great way to miss out on momentum, marks up, and the fun periods of venture (during the run up of a bubble).
All of the desirable people - the ones that you actually want to work with, spend time with, or date - won’t apply for the job. They have to be identified from afar and hunted down.
I still believe in serendipity, but I believe more in brute force. You have to put yourselves in positions to get lucky.
Venture teaches you to prioritize power law outcomes, and power law outcomes come in all shapes and sizes.
The best founders build companies that return the entire fund and erase all of the other losses in the portfolio.
The best employees aren’t just marginally better than the alternative; they are often 10x better (sometimes higher) and responsible for creating millions in equity value.
The best LPs put their stamp of approval on your fund, they make a few calls, and you don’t have to worry about fundraising anymore.
None of these people are easy sells - they have to be hunted down and won over, sometimes over many years.
If you are still reading this far down … thank you.
As I mentioned, I’m still talking to LPs for Outlaw to figure out who wants to participate in this fund.
If you are accredited and want to talk more, I’m happy to run you through how I’m thinking about everything in more detail.
I have linked my calendar here.
Thanks for reading this far and giving us a little bit of your attention this week. Feel free to unsubscribe whenever this stops becoming valuable to you.
