📶 narrative violations

Searching for alpha through narrative violations

Another way to view “capital markets”

How to manage headcount

Where VC is heading

At its best, technology is powerfully positive sum: By creating new markets, the biggest breakthroughs can generate wealth that spreads throughout society, and offer unprecedented improvements to people’s lives.

At its worst, technology is powerfully negative sum: As other other markets shrink and marketable skills change, many are trapped in negative sum careers with no clear escape.

Just as capital powerfully influences our behavior, so too does narrative. Narrative is an extraordinary force that helps us make sense of the world.

The most popular narratives are often accepted as truths. Yet we forget that narratives are not synonymous with truth.

Advertising business models on the internet tend to elevate narratives that confirm pre-existing biases or polarize — often both — because these narratives drive the greatest engagement. Our sensemaking abilities as individuals simply have not caught up; decoding fact from supercharged narrative flourish is a feat, to put it mildly.

Within the technology industry, narratives are constantly generated on multiple layers: Entrepreneur, company, category, industry, and societal.

At each layer, they tend increasingly toward the extremes. Entrepreneurs are cast as heroes or villains. Companies are rocket ships or death spiraling. A category is the next global megatrend or a house of cards. The industry is creating jobs or destroying them.

Bombarded with conflicting information and in a rush to deploy capital, it’s tempting to look for shortcuts to drive investment decision making. Allowing a popular narrative to decide for you is the most seductive of shortcuts. When everyone takes the same shortcut at the same time, everyone competes to deploy more and more capital into the same set of companies.

It is easy to forget that the extraordinary returns generated by technology have been generated almost entirely by only a few dozen companies globally. Almost none of them fit into an easy to define category with multiple winners. This power law of returns dictates that the vast majority of startups in hyper competitive markets will fail.

Believing in an idea that violates the popular narrative is lonely. Building a company around that idea is doubly lonely for entrepreneurs. It entails all the challenges of building something new from scratch, but offers none of the status game advancement bestowed upon entrepreneurs pursuing “popular” opportunities.

Narrative violations are highly idiosyncratic, so unearthing them is admittedly more art than science. One starting point is to identify categories that were narratively hot for investors in the past but that most have cooled on today. Online media, Virtual Reality, AdTech, Hardware, and Travel are a few current examples.

Vibe coding helps Supabase nab $200M at $2B valuation just seven months after its last raise (TechCrunch)

Map: The geography of US venture deals in Q1 2025 (Pitchbook)

European financial services see surge in PE investment (Pitchbook)

OpenAI Forecasts Revenue Topping $125 Billion in 2029 as Agents, New Products Gain (The Information)

CEOs Choose More AI, Fewer Jobs (The Information)

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