a16z Podcast – Episode Summary
Is Non-Consensus Investing Overrated?
Released: September 4, 2025

Episode Overview

This episode of the a16z Podcast takes on a perennial debate within venture capital: is non-consensus investing truly the “secret sauce” for outsized returns, or is its importance overblown? Host Eric Newcomer (C) convenes a lively discussion featuring a16z general partner Martin Casado (A) and Leo Polovets (B) of Humba Ventures. Together, they dissect how consensus actually works in venture, why the biggest startup wins often look non-consensus in hindsight, and the risks founders and investors run operating too far from herd mentality. The conversation delves deep into data, psychology, and market mechanics, offering a nuanced and candid look at one of the industry’s most mythologized topics.

Key Discussion Points & Insights

1. The “Non-Consensus” Investing Debate

• Definition Problems:

  • The term “non-consensus” is poorly defined. It’s easy to retroactively label successful companies as non-consensus when their initial rounds were challenging but disregard other efficient market signals.
    • "It's dangerous to do non consensus investing like that's a dangerous idea if you're alone. In your view, you may just be missing something."
      — Martin Casado (A) [00:01]
    • "We don't know what consensus means. Right. And so then everybody picks apart the consensus."
      — Martin Casado (A) [03:43]

• Market Efficiency:

  • Both Martin and Leo agree that capital markets are astonishingly efficient, making lone-wolf non-consensus investing risky because you may just be missing critical information.
    • "Early markets are actually pretty darn efficient, a lot more efficient than people realize."
      — Martin Casado (A) [01:23]

• Eventual Consensus Requirement:

  • Even if a company starts out as non-consensus, survival and scaling require it to eventually become consensus, especially if it’s dependent on follow-on funding.
    • "Eventually you have to get to consensus... if you're dependent on capital markets, it's very hard to keep the company alive if nobody wants to fund it."
      — Leo Polovets (B) [00:13, 02:46]

2. Revisiting VC Folklore and Data

• Looking at “Big Winners”:

  • Many legendary tech companies—Airbnb, Stripe, Anduril—are often cited as non-consensus, but deeper analysis shows they often had MIT founders, YC backgrounds, strong early investor interest, and hot rounds.
    • "I just think it's so easy to come up with these anecdotal, oh, this one company had a tough, tough raise, when that's definitely not within the spirit of what I was trying to say, which is markets are actually quite efficient."
      — Martin Casado (A) [03:43]

• Valuation Escalation:

  • The narrative that the hottest rounds are “too expensive” ignores that rapidly rising valuations often signal real market fit and risk-adjusted value creation.
    • "Peter Thiel once had a line which was like, the faster and higher the up round, the more you should invest because it's working."
      — Eric Newcomer (C) [06:01]
    • "If the majority of returns are in high priced rounds and the market has underpriced it [...] risk adjusted that's not necessarily true [...]."
      — Martin Casado (A) [07:25]

• Correlation Analysis (Forthcoming):

  • The panel is actively analyzing whether the hottest rounds actually correlate with the best outcomes and whether “price arbitrage” is real or just anecdotal.
    • "One of the numbers we're going to look at is... do companies priced above or below median for other companies at a similar stage get the biggest wins?"
      — Martin Casado (A) [48:59]

3. Founders’ Dilemma: Looking Non-Consensus, Raising Consensus

• Founders’ Catch-22:

  • Building genuinely disruptive products often requires thinking and acting non-consensus—but looking consensus to raise capital efficiently.
    • "From a founder perspective, it's like you almost have to be non consensus to have alpha at the actual product market, but you have to look consensus when you're raising. And I think that's actually probably right."
      — Martin Casado (A) [11:35]

• Dangers of Leaning Too Far from Consensus:

  • Founders beyond the consensus pale risk a “bragging” culture about being rejected, which can backfire in future rounds.
    • "If everyone's passing on you... that's not going to be super helpful to you in your next round."
      — Eric Newcomer (C) [10:25]

• Indigestion vs. Starvation:

  • "Most companies fail from indigestion, not starvation"--suggesting that too much money, raised too easily, often leads to bad habits and failure.
    • Martin Casado (A) [13:19]
    • "They don't listen to the actual market, which is the customer base, and as a result they just have a bunch of bad practices and end up running out of money."
      — Martin Casado (A) [13:19]

4. Market Cycles, Sectors, and Social Forces

• Sector Fads and Valuation Swings:

  • Sectors can fall in and out of fashion independently of fundamentals, as seen with e-commerce and current AI/robotics bubbles.
    • "We have like E commerce was hot and then it was dead and then like dollar Shave Club got acquired and it was hot again."
      — Leo Polovets (B) [09:58]
    • "AI companies that clearly are raising, you know, speculative money where nobody even really understands the business model. And there’s great companies that can't get invested."
      — Martin Casado (A) [15:59]

• Market Efficiency Over Time:

  • The group generally agrees that markets have gotten more efficient, particularly for the "median" investment, but inefficiencies and bubbles still exist at the edges.

5. Fun Mechanics & Fund Size Constraints

• Larger Outcomes, Larger Funds:

  • With more $100B+ outcomes than ever, fund sizes are growing, and classic seed-level returns are possible even at higher entry prices.
    • "The outcomes are so big, it suggests that high prices, like the prices are too low, that we actually pay."
      — Martin Casado (A) [33:02]

• Structural Barriers:

  • Size of fund dictates strategy—early-stage firms can pursue more non-consensus bets, while multistage funds require bigger checks, often pushing them toward consensus.

• Ownership Models:

  • As outcomes get bigger, traditional rules around ownership and pricing may start to matter less if you just get into the top company.

6. Hot vs. Not: Rethinking Investor Identity

• Consensus as Identity:

  • The “hunt for non-consensus” is a core VC identity but doesn’t always map to portfolio strategy; reframing as “hot vs. not rounds” may be more useful.
    • "I think there's a lot of venture capital venture capitalist identity is tied in being non consensus, in being able to see things that others can't see."
      — Eric Newcomer (C) [41:40]

• Competition and Ecosystem Health:

  • More competition isn’t just good for founders and LPs, but for the broader ecosystem—driving better products and progress.
    • "Competition is what fuels incredible product. It's like the Darwinian process. This is how... we get, you know, a bigger, more, bigger startup outcomes, startup ecosystem having more, more value, incredible products for, for customers and users."
      — Eric Newcomer (C) [47:36]

7. Stage, Strategy, and Specialization

• Stage Matters:

  • Early investors can afford to wait for consensus to develop. Large multistage firms must ensure there’s enough signal at investment time because of check sizes.
    • "If every check you write has to be at least 100 million, I think it's actually very hard to do non consensus because... there’s not a lot of companies that hit a stage where you'd invest 100 million, but it's still not clear if it's a good company or not."
      — Leo Polovets (B) [51:16]

• Seed Firm vs. Multistage Fund Reality:

  • The biggest winners are increasingly captured by multistage funds at seed, but there still exists room for specialist seed funds—especially when early rounds are less competitive.
    • "I think for [repeat founder] segment... multistage hasn't won, but I think it's probably the predominant, like the majority of the time they have a big leg up."
      — Leo Polovets (B) [52:44]

Notable Quotes & Memorable Moments

• On Market Efficiency and Returns:

  • "I really feel the reason that prices don't continue to go up is more just access to LP capital... it's not obvious to me that the reason they had mixed success is because the prices were too high."
    — Martin Casado (A) [33:02-35:44]

• On Founder Signaling:

  • "You almost have to be non consensus to have alpha at the actual product market, but you have to look consensus when you're raising."
    — Martin Casado (A) [11:35]

• On Danger of Overfunding:

  • "Most companies fail from indigestion, not starvation."
    — Martin Casado (A) [13:19]

• On What Venture Should Be:

  • "To me, more dollars going into venture is only a positive for humanity... all of finance needs to change."
    — Martin Casado (A) [45:30-48:15]

• On Sector Hype vs. Fundamentals:

  • "If the market's like $5 trillion of human labor or something, like any price makes sense. Right? But then I think that really just starts of like, how much value is there?"
    — Leo Polovets (B) [29:29]

• On Competition Driving Progress:

  • "Competition is what fuels incredible product. It's like the Darwinian process."
    — Eric Newcomer (C) [47:36]

Timestamps for Key Segments

• [00:01] Is non-consensus investing inherently dangerous?
• [01:23] Martin’s viral tweet and ethos behind non-consensus skepticism
• [03:27] Leo on early-stage investing and outcome multiples
• [05:29] Dissecting “non-consensus” claims about tech’s biggest winners
• [06:01] Valuation, up rounds, and Peter Thiel’s advice
• [10:25] Founders’ perils when perceived as “too non-consensus”
• [13:19] Indigestion versus starvation in company failures
• [17:48] Market efficiency cycles—dotcom vs. post-2010
• [21:53] The transition from non-consensus to consensus as a marker of success
• [24:54] Deep tech and AI cycles, and sector-specific hype
• [29:29] Market TAM fallacies and “infinite” opportunities
• [39:08] Ownership, price, and the “winner takes all” logic
• [41:40] VC identity and consensus
• [47:36] Competition’s role in ecosystem strength
• [48:59] Preview of forthcoming data-driven deep dives
• [51:16] Fund size, stage, and non-consensus opportunity zones
• [52:44] Did multistage funds “win” seed? How does the future look?

Takeaways

• Non-consensus investing is nuanced and highly contextual. While VC mythology celebrates iconoclasts, data and survivorship bias require humility and skepticism.
• Whether consensus or non-consensus, eventual market buy-in is necessary for company survival—but the optimal path and timing can differ by sector, founder profile, and fund size.
• As markets become more efficient and outcomes scale, the line between “too hot” and “truly overvalued” blurs; the real risk often lies not in consensus but in failing to participate in the biggest winners.

The episode closes with a promise: a follow-up once the numbers are truly in. Until then, the panel leaves us with candid reflections, healthy disagreements, and a reminder that in tech’s wild world, theories proliferate—but the data always wins in the end.