James Currier warns that venture capital is heading toward the same slowdown that hit hedge funds and mutual funds. The number of venture professionals has exploded from 150 thirty years ago to 40,000 today, eroding the informational advantage that once separated winners from the rest. Founders should focus on consumer marketplaces first, stay aware of industry cycles, and adapt as competitive edges disappear.
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You know, if you could go right back to before you entered the world of marketplaces, you know, what would you tell yourself about them specifically?
I would've told myself focus on consumer because it's only gonna last a certain amount of time and then switch over to B2B. I think we switched over to B2B at the right time, but it wasn't with any foresight. It was literally just by talking to founders and then seeing what was available and saying, huh, that's actually interesting, which I think is why we ended up you know, sort of being on the forefront of all that. But it wasn't through any sort of proceeds. You have to understand the cycle that you're in. I mean, realize guys that the whole venture cycle is sort of coming to an end. Like we've had, you know, hedge funds were good between '90 and 2012 and it's, they've had a really hard time for the last 11 years beating the S&P 500. And mutual funds used to beat the S&P 500 recently, you know, but by the early '90s, after about 20 years, they weren't. They're about 1 out of 5 per year, you know, would beat the S&P 500. And I think the same thing's going to happen to venture capital. So it itself is in a cycle. You know, I think when I started in the venture industry, there was 150 people doing my job. I think there's over about 40,000 now. I think on signal.nfx, there's almost 32,000 just there alone. There's got to be another 8,000 who haven't built their profiles. So call it 40,000 people doing my job. Like, that's unbelievable. From 150 people to 40,000 people doing this job over the last, you know, 30 years. We're at a different part of the cycle. And so you need to understand where you are in the cycle of your industry or in marketplaces in general, of startups in general. And it's all been going up and to the right up until, you know, 2 years ago for the last, you know, 20, 30 years. But it's going to be commoditized. Software's going to be commoditized. The methods, like I'm talking to a lot of people here, I don't know, there's 4 pages of us, right? So a lot of people are learning the secrets. We're, in order for us to get deal flow, we publish all of our secrets. And so the playbooks are becoming more and more known, which means your information advantage is diminishing. So everyone, I mean, You know, it's just at a different part of the cycle. And so I kind of backed into marketplaces because we got acquired by a marketplace in 2004. It was at the right time, but you need to understand where you are in the cycle. I guess that's what I tell my students.
