E377: Midas List VC: Why Most VCs Miss the Biggest Companies

Summary

Podcast Summary: "How I Invest with David Weisburd"

Episode E377: Midas List VC: Why Most VCs Miss the Biggest Companies
May 27, 2026
Guest: Nico (Verdict, ex-General Catalyst)

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Overview

In this episode, host David Weisburd sits down with Nico, a veteran venture capitalist who spent 15 years at General Catalyst before founding his own firm, Verdict. They explore why most VCs miss the biggest opportunities, the nature of early-stage investing, and how industry cycles, founder types, and contrarian thinking shape outsized success in venture capital. The discussion covers the art and pitfalls of early investing, the overhyped and underappreciated sectors, the fundamental flaws in conventional VC, and timeless advice for aspiring investors.

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Key Themes & Discussion Points

1. Timing and Category Formation in Venture Capital

• Insight: Most profits in a vertical are captured before the category is even named.
• Nico uses "Vibe Coding" as a case study: by the time the term exists, most unicorns and profits are already spoken for by founders and early investors.

  "50% of the profits are made in a vertical before it even has a name." (Nico, 00:00)

• Latecomers face compounded risks: betting founders can out-execute and that the category stays relevant for years.

2. The Herd Mentality of Venture Capital (VCs as “Sheep”)

• The majority of seed money rushes in 2-3 years after decacorn outcomes or exits reveal categories—often too late.

  “Most VCs, it’s hard to be an original thinker... That’s really hard.” (Nico, 02:13)

• VC is frequently a mimetic business, with investors following each other rather than conviction or differentiated insight.

3. Early Stage VC: Artisan Craft vs. Asset Class

• Artisan approach: True 100x returns come from original conviction, not a scalable factory model.

  "Early-stage venture is not really an asset class. It's an artisan craft." (David quoting Ian Sigelow, 02:33)

• Average funds underperform; exceptional returns accrue to a small minority with true edge.

4. The Changing Startup Landscape: Impact of AI

• AI augments founder productivity dramatically; small teams do more with less capital and time.

  "Two founders today with one round of funding, all the AI tools in two months... can make so much more progress." (Nico, 03:22)

• The capital intensity of startups is dropping, revolutionizing early-stage investing.

5. Contrarian Investing and Finding "Freak" Founders

• Nico defines his investing edge as backing “freaks” — hyper-learning, rapid-growth founders operating before consensus forms.

  “We are in the business of investing in freaks, also known as learning animals... building companies in markets that have no name yet.” (Nico, 04:57)

• Freaks distinguished by rate of growth/learning, not initial correctness.

  "It's the rate of growth." (David, 06:27)

• Timing is imperfect—claims to get it wrong ~70% of the time (but that 10% right is transformative).

6. Common VC Mistakes and Incentive Traps

• New VCs often play it safe, optimizing for internal promotion, not true risk, leading to average returns.

  "They don’t take enough risk. They try to play it safe and do the doable deal that gets them promoted." (Nico, 07:45)

• Hot sectors often buoy average teams, but overcapitalization can destroy long-term outcomes.

7. The Fetishization of Young Founders

• Current trend of backing extremely young, AI-native founders is mostly herd mentality, not always rooted in unique talent.

  “You’re 18, 19 years old, you check your mailbox, there might be a series A term sheet.” (Nico, 10:28)

• True outliers (“freaks”) are age-independent; exceptions prove the rule, but experience can sometimes be undervalued.

8. Sector Over/Under-valuation

• Overhyped: "American dynamism" sectors, broad “AI” with easy markups for ex-big-co founders.
• Undervalued: Consumer, fintech, crypto.

  "Consumer—undervalued. Fintech—undervalued. Crypto—undervalued." (Nico, 12:08)

9. The Opportunity in Consumer and Gaming

• Experienced a collapse in consumer/gaming VC allocation (from over half of partners to near-zero).
• Predicts next cohort of “freaks” will emerge here, with markups and flocking to follow.

  "If we look back to this very moment in time, five years from today, some of the very best companies will be consumer companies." (Nico, 26:13)

• Contradicts the idea there’s structural disadvantage in these sectors; instead, it's memetic herd behavior post big-wins drought.

10. Founder Attributes: Grit, Neurodiversity, and Nonconformity

• Extreme outliers in perseverance and independent thinking—often immigrants or neurodivergent.

  "50% of founders... were first or second generation immigrants... Another 30%, more controversial, are neurodivergent." (David, 30:10)

• “Freaks” are often not likable in conventional terms, nor are they always polished managers.

  "There's no correlation... In fact, some would argue there's a negative correlation [between likability and being an epic founder]." (David & Nico, 31:47–31:59)

11. Building a Leading Firm: Lessons from General Catalyst

• Relationship orientation, trust, and long-term thinking trump transactional mindset.

  "You deeply care about where somebody is coming from and building a relationship based on trust and not what is the transaction..." (Nico, 35:24)

• Finance influx into VC brings short-term, ladder-climbing culture, contrasting with the rare long-term orientation.

12. Personal Growth, Decision-Making, and Time Management

• The journey to self-awareness is integral to investing success; constantly questioning personal motivators and actions is key.

  "Investing to an extent is a journey to self awareness." (Nico, 39:34)

• Timeless advice from Charlie Munger:

  “Ask yourself: Would your 80-year-old self be happy you put that person in your calendar?” (Nico, 39:57)

• David and Nico share practices around prioritizing high-impact actions and using frameworks for daily self-rating and reflection.

  “What is the one thing that I could do today that'll make everything else completely irrelevant?” (David, 41:04)

13. Actionable Advice for Aspiring VCs and Founders

• Nico’s one piece of advice: "Cold email your way to success."

  "Whoever you look up to at any given moment, reach out to. Like I reached out to Elon Musk when I was a Stanford student." (Nico, 45:27)

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Notable Quotes & Memorable Moments

| Timestamp | Quote | Speaker | |-----------|-------|---------| | 00:00 | "50% of the profits are made in a vertical before it even has a name." | Nico | | 02:13 | "Most VCs, it’s hard to be an original thinker... That’s really hard." | Nico | | 02:33 | "Early-stage venture is not really an asset class. It's an artisan craft." | David (quoting Ian Sigelow) | | 03:22 | "Two founders today with one round of funding, all the AI tools in two months... can make so much more progress." | Nico | | 04:57 | "We are in the business of investing in freaks, also known as learning animals... building companies in markets that have no name yet." | Nico | | 07:45 | "They don’t take enough risk. They try to play it safe and do the doable deal that gets them promoted." | Nico | | 10:28 | "You’re 18, 19 years old, you check your mailbox, there might be a series A term sheet." | Nico | | 12:08 | "Consumer—undervalued. Fintech—undervalued. Crypto—undervalued." | Nico | | 26:13 | "If we look back to this very moment in time, five years from today, some of the very best companies will be consumer companies." | Nico | | 30:10 | "50% of founders... were first or second generation immigrants... Another 30%, more controversial, are neurodivergent." | David | | 31:47 | "There's no correlation... In fact, some would argue there's a negative correlation [between likability and being an epic founder]." | David & Nico | | 35:24 | "You deeply care about where somebody is coming from and building a relationship based on trust and not what is the transaction..." | Nico | | 39:34 | "Investing to an extent is a journey to self awareness." | Nico | | 39:57 | “Ask yourself: Would your 80-year-old self be happy you put that person in your calendar?” | Nico (quoting Munger) | | 45:27 | "Cold email your way to success." | Nico |

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Timestamps for Key Segments

• [00:00–02:10] – Why most VCs miss outsized returns: Timing, "Vibe Coding,” and first-mover advantage.
• [02:10–03:56] – The artisan craft of early-stage VC, sheep mentality, and why most funds underperform.
• [03:56–06:41] – The AI-driven shift in startup capital needs and the contrarian search for “freak” founders.
• [07:39–09:10] – Smart VC mistakes, risk aversion, hot sector overcapitalization.
• [09:22–11:18] – Fetishizing age: Gen Z/Alpha founders, what’s driving the youth trend? Herding and incentives.
• [12:08–14:01] – Consumer, fintech, crypto as undervalued; why VCs have missed the consumer opportunity.
• [16:47–18:56] – Nepo babies, information alpha, structural advantages in privileged backgrounds.
• [24:29–27:01] – Memo-driven markets, boom/bust cycles, and lost memory in sectors like gaming, consumer, semiconductors.
• [28:06–32:45] – Investing in “right” people over “right” ideas; the true degree of founder attributes; neurodiversity and outsider perspectives.
• [33:32–39:02] – Relationship as the VC foundation; lessons from General Catalyst; long-term thinking vs. career climbing.
• [39:32–44:26] – Self-awareness, decision frameworks, and prioritizing high-impact actions.
• [45:27–46:17] – Timeless career advice: Cold-emailing; building relationships from scratch.

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Final Thoughts

This episode is a master class on true early-stage venture capital – eschewing the crowd, understanding where and how profits accrue, and why almost every cycle of VC repeats itself as a memetic, risk-averse herd. Nico’s radical focus on "freak" founders operating before consensus, willingness to be wrong, and relationship orientation provide a rare lens on outsized success in an overcrowded field. Weisburd’s prompts help unpack not only market cycles and founder selection, but also the deeply personal process of self-reflection, learning, and long-term thinking that defines the very best investors.

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Recommended for:
Institutional investors, GPs/LPs, emerging managers, startup founders, and anyone interested in the authentic, unvarnished mechanics of VC and outsized investment returns.

Transcript

[David]

So, Nico, you were at general catalyst for 15 years before you spun out to start your own firm. Last time we chatted, you said something really interesting, which is 50% of the profits are made in a vertical before it even has a name. Talk to me about that.

[Nico]

Oh, yeah. So I'll do it by virtue of giving you an example. So when Vibe coding as a term was coined, Cursor was already sitting at the $10 billion valuation. Not only that, Anthropic had just started copying them through cloud code. Not only that, Lavable and Raplid and adjacent markets were already minted as unicorns. The vast majority of the profits over, you know, half of the profits that will ever be realized in any of these companies have already been spoken by the founders, founding team members, as well as the very early investors in any of the companies mentioned. So for anyone who is thinking of themselves as a very early investor, if they want to invest in Vibe coding today, or they did so last year, they're betting on one the founders themselves out executing any of the incumbents that I mentioned, as well as the category of Vibe coding to continue to be relevant five to seven years from today. I'd rather buy a bunch of lottery tickets instead.

[David]

50% is 50%. It's not 90%. But what's crazy about that is oftentimes this is one or two years, and then the industry proliferates for another 20 years, and within that one to two years, they're getting 50% of the profits of two decades.

[Nico]

You're so spot on. So I've been a very early investor for over 15 years now. I actually have studied. When does the vast majority of seed money get into a space? And it actually happens that two to three years after a company has already been minted as a Decacorn and or there's a big exit in that space. You can go category after category. VR with Oculus exiting space with SpaceX getting minted as a Decacorn, Autonomous vehicles with Waymo being a Decacorn, and Crews getting sold to gm, you go category after category. Well, guess what, that seed funding doesn't work as well.

[David]

Is this why you call VCs sheep?

[Nico]

Most VCs, it's hard to be an original thinker and somebody who wants to make a decision on the back of your own conviction is the original one. That's really hard. There's a place for everyone. There's plenty of money to be made in the late stage. There is plenty of money to be made at the very early stage.

[David]

We need everyone Ian Sigelow, who's sitting right where you're sitting from Greycroft, he said because of that early stage venture is not really an asset class. It's a artisan craft. It's almost impossible to scale.

[Nico]

I agree with that. Yeah. So if you Want to have 100 Xers from your original like check, it's really hard to scale. In general, the average VC fund doesn't perform. So it's about the very few that really go the distance. Most of them really suck. Especially now how VC looks like today.

[David]

Tell me about that.

[Nico]

You either want to be the original investor, like we at verdict are making this claim that want to be the best first money venture capital firm, or you want to be in the very late stage game taking companies from $10 billion valuation to $1 trillion plus in the private markets and plowing in billions of dollars. Anyone else in between? I think they're going to do very well. Why is that? Because the best founders today are thinking about capitalizing the companies very differently than even a year ago. Why is that? Two founders today with one round of funding, all the AI tools in two months. Oh my God, they can make so much more progress than what a year ago. You needed 10 people, two rounds of funding and a year worth of time. It's changing how companies capitalize themselves.

[David]

Not only that, I think one of the most underappreciated aspects of AI is not just that it's bringing down costs, it's also increasing revenue.

[Nico]

Spot on.

[David]

You're making every single person 10, 15 times more efficient in getting that incremental customer. So if you think about startup, typically you have to spend tens of millions of dollars to get to profitability. Today you don't necessarily have to do that. You could spend, you could wait until you're a series, the equivalent of a series B, series C, series D company and take those large checks.

[Nico]

You are spot on. We're seeing it on the field right now. So your dollar as a first money investor goes so much further. So those founders are going to keep in between rounds and they're going to go from what you would call in the old world, pre C to series B. Basically.

[David]

I've known you now for eight, nine years and you've always been this contrarian thinker, going in early while you're at general catalyst. How do you know exactly when to go before there's consensus? Because if you're truly really early, even if you're right, even if it should exist, it doesn't really help if there's not follow on Captain, that is true.

[Nico]

And actually 70% of the times I get it wrong. So everything I say today assume it's 70% wrong. Look, my partner Michael Furtick and myself, we are maniacs who work founder hours and we're in the business of investing in freaks, also known as learning animals that are working on creating new categories. So we're specialists when it comes to exactly what we're looking for. Freak freaks who are building companies in markets that have no name yet. That's all we do. And 70% of the time our timing will be off because the freaks that we're investing in will go after a market that might actually pan out five, 10 years later. But 10% of the times we're going to be very right. That's how we think about it this term.

[David]

Freaks multiple times.

[Nico]

Multiple times.

[David]

How do you define that? What does a freak look like?

[Nico]

A freak is in the startup context, it's very much like professional sports. Few people break all the records, make all the money. So a freak in the startup context, somebody who is a learning animal and in one day they can learn, they can mature, they can make so much progress. It takes the average fears smart founder a whole week. They treat every meeting, every decision is a learning opportunity. Oh yeah. So if you meet such a person today and then you meet them again in two days and everything they tell you sounds the same, that is not a freak because at a minimum, they're not listening.

[David]

It's the rate of growth.

[Nico]

That's it, rate of growth. So for me, even if the initial idea is wrong, but these guys are freaks, dude. Like in a few weeks at the latest, they will move on to the right idea.

[David]

Looking back at your 15 years at General Catalyst, the 70% times that you were wrong, was it just probabilities and that you didn't necessarily make a mistake, you just got unlucky with the timing or were there specific lessons on timing?

[Nico]

It's not just one thing, but I would say quite a few times we were just so early. Other times we picked the founders who didn't end up becoming the winners in the space. They were good in the zero to one game, they were good as entrepreneurial CEOs, but they didn't become the enduring CEO in the space. Some other times, in the context of a larger venture capital firm, you also do investments in other geos, so you get conflicted out of some of the more amazing ones that go the distance. And Also I'm now 15 years in, but when I, I got started, I was not 15 years in. So I made a number of judgment errors along the way.

[David]

What's a common mistake that smart VCs make early in their career?

[Nico]

They don't take enough risk. They try to play it safe and do the doable deal that gets them promoted. Do the doable deal that will get a quick markup from some other notable people because it's in a hot yout know, space right now, but might not be the one that they're really swinging for the fences.

[David]

Have you seen average teams get pulled up by momentum in hot sectors? And if so, what does that look like?

[Nico]

I've seen it again and again and sometimes I paid the price for that. So it happens in particular when the times are good. Actually today, no joke, I met a 19 year old who is a founder that I've known since he was 16. He raised venture funding. Now he is an angel investor and venture partner at another firm. In the last four months he's made six angel investments. All six of them already have received a markup. I asked him, do you think that's normal? He said no. I was like, I'm glad you said that. So if you remember, I'll just use an example from the past. Once upon a time softpunk showed up and they started over capitalizing companies. So a lot of the earlier stage VCs started organizing themselves around what a softpunk wants to invest. Lets, you know, make some early investments and serve it to them. And sometimes over capitalizing a company before they're really ready could really destroy them. But if you're the early investor in that company, you can benefit temporarily, career wise.

[David]

You mentioned this 19 year old now venture partner and angel investor who was 16 when you when you met him as an entrepreneur. It seems like today VCs are fetishizing age. Why is that?

[Nico]

This happened big time right now? I think the primary reason is because some of the most successful later stage companies in the private tech markets today were founded by very young founders who are 18, 19, 20, 21 years old, three, four, five years ago. So when Michael Furtick and I were investing exclusively in Gen z founders in 2021, 22, 23, there were probably 10 other VCs in the US who were investing in them. But now some of those founders are the founders of Cursor, Mercur, many others, YC also in the meantime back in 2021, average age was like 30 plus years old. Now after Garrett Tan came back, he brought it back down to very, very young founders and VCs want to invest in what other VCs are investing because you feel more secure, you feel that that founder is going to raise more easily the next round. That's what's happening today. So you're 22 years old today. You're in San Francisco, you're building your tech startup. Oh my God. You check your mailbox, there's a seed term seat. You're 18, 19 years old, you check your mailbox, there might be a series A term seat.

[David]

Second saying let's play devil's advocate. I think the thesis there is that these are AI native founders. They don't have the scar tissue of having to manage some of the legacy software, legacy processes. They're obviously young enough to work. The 996 are none of these good reasons to invest into young founders.

[Nico]

It's an exception based business. Sure, if you come across a freak and you're sure that they're a freak, you should invest no matter what they do. Even if the price is super high. Invest. But a lot of the young founders are not doing the stuff that you talked about. They might be trying to build a nuclear submarine. That's less likely that they're going to be successful than somebody who is more experienced than them.

[David]

In general, you take this contrarian view on the market and you invest into underappreciated sectors of the startup ecosystem and you sell or avoid the overbought and the overhyped parts of the startup ecosystem. What today is most overhyped?

[Nico]

Anything that has to do with American dynamism. Overhyped Today, Anything that has to do with AI broadly overhyped. So like you're two, three founders. Leaving cursor Merkor OpenAI anthropic boom. You can raise 15 to 25 million dollars if you do something in AI without having anything to show for. You're somebody who's leaving SpaceX. You want to do something in American dynamism, great. You are going to raise a very large CD round. Could be a straight Series A.

[David]

What about on the other side? What's undervalued?

[Nico]

What are you bullish on Consumer? Undervalued. Fintech Undervalued. Crypto Undervalued can keep going up.

[David]

Let's start with consumer. Why are you bullish on consumer?

[Nico]

I'm bullish on consumer because you have a next generation of founders, young gen zers who want to build stuff for themselves. They're tired of the existing set of brands or like online regimes. They're really tired. They don't speak to them and their generation and also Nobody really today has managed to build something for Gen Alpha. Like if you want to hire today the most amazing designer who has built legendary products for Gen Alpha, there's no company that you can go and hire from. In addition to that, thanks to AI, new hardware that's going to come out. We're going to be interacting with technology in ways that we can't even imagine. Young brains have an advantage when it comes to having unhinged imagination about designing new experiences for new markets. So I'm pretty bullish.

[David]

And what about other VCs? Aren't they also investing in the space? Why do you think that's undervalued?

[Nico]

It's what Charlie Munger used to say. Show me the incentives, I'll tell you the outcome. The venture capital industry now has a lot more firms and a lot more people than ever before. So it's almost like a factory where it's like I'm investing in you and your company. What are you going to do for me in the next six to nine months? You need to deliver me a markup and show me a 2, 3x markup. It's just harder to do that if you're the original versus you showing up at a demo day picking what is the theme that is in vogue and then three months later you have a markup. So I think it's only a matter of time when you have enough of the awesome freaks who are building in consumer that one year from today you will start seeing the markups and everyone else will start flocking in.

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[David]

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[David]

there something fundamentally different? You look in founders that are in an industry that's not sexy, do they have to have some special skill or some special characteristics that allow them to push through?

[Nico]

That's the whole game. So my partner Michael and I have a shared vocabulary about our pre leading indicators of future promise and success to really make sure that the founders we're investing in are freaks. So we don't take any risk on the founders we're investing in, but we're very comfortable, as you said before, to take a lot of risk on the markets we're investing in. So what is the common trait of the founders we're investing in? Basically in one day they can learn, mature, make the progress that is takes the average founder a whole week. And why is that very important? Because when you're building for a new new market, a market that doesn't have a name yet, and you have that kind of ability to learn and make progress, it's almost guaranteed that in two years from today, you will be the world expert in that new market.

[David]

At the stock experiment of the Nepo baby, second generation wealthy kid, goes to Silicon Valley with the worst idea in the world, meets with every VC and the VC wants a check from him in the future, from his family, so they give him actually good advice. By the end of a couple months, he has a good business. Do you think that's true?

[Nico]

I'm very pleased you asked me that question. And especially now being in the best city in the country, in the world, New York City. I do think that at the moment, in May 2026, nepo babies or a founder demo that is underappreciated.

[David]

I'm intrigued. Why?

[Nico]

For many of the reasons you articulated, you need to pick the right Napo baby, the one who has huge chips on the shoulders because they're not the ones that are in line to take over the family business, the one that is really curious to do things differently. They're independent thinkers, but oh my God, you know, they have managed to be fluent and comfortable in rooms that another very young founder might take decades if ever to even get access to if things are going to go faster. And you can have the beginnings of a business that has momentum being an EPO baby, you can even further accelerate all that stuff. And in certain categories where you need to be able to converse with the government or large enterprise contracts with non tech companies, those individuals can have a significant unfair advantage over others.

[David]

I think in general people underestimate Information Alpha and overestimate iq. You could obviously argue the the opposite. There's well known cases where people with just exceptionally high IQs, like a Vitalik from Ethereum. Yeah, have have went on to be very successful. But Information Alpha, the way that I think about it is if somebody feeds you the information, you don't need to use the mental compute of a high IQ person to get to the same exact outcome that that high IQ person from first principles would probably still take years and years to get to.

[Nico]

Well said. And especially now that intelligence is becoming a commodity and the cost of tokens is coming down. You just have to have agency, you need to have great taste and access. Some Nepo babies have all three. So right now, if you find the right one, invest.

[David]

Speaking of Nepo babies, as you mentioned, you're one of the only VCs in the world investing to Gen Z in 2020, 2021. Today you're really doubling down on Generation Alpha, the next generation. What differentiates Generation Alpha from Generation Z? And maybe millennials?

[Nico]

Look, we're all finding out as we go, right? And as you know, most of the genophyte today, they're not even of like working aids. So who are the Gen Z folks? The Gen Z folks are the ones who were born from 1997 until 20, roughly 13. So afterwards we have the Gen Alpha. So the Gen Alpha folks, we have not invested in anyone yet. Okay, but we're investing in the young Gen Z years.

[David]

The youngest one is. The oldest one is nine years old.

[Nico]

Anyone who was born after 2014. Yeah, let's say 1012 years old. Right, 1012 years old. But we're investing in young Gen zers who are building for Gen Alpha. Every generation has their own beliefs and we're all products of the times and the markets we operate in and these conditions shape us. So what Michael and I are open minded is to update at all times our priors and find the singular individuals. The freaks will be able to navigate and build something for their own generation with authenticity and and credibility. We love to invest of course in very young people, but that's not the only demo we're investing in. I would actually say to you now you're somebody who is a very commercial but unfortunately for you non AI researcher who is in your early 40s, tough luck.

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[Nico]

Nobody wants to meet you. Even if you're a tenured professor at Stanford, you won't get a meeting with

[David]

a VC because it doesn't match the pattern of the last couple of years.

[Nico]

Yeah, it's like standing, you know, or you're a gaming founder. Like, I went to GDC, the game developer conference in SF, a month and a half ago. 50% fewer attendees than two years ago. Not only that, the founders who had raised pre seed and seed rounds, they were willing to reopen the pre seed round. And these are companies that have product market fit. Why is that? Because no one in the VC industry wants to do gaming, which is a head scratcher to me because gaming is larger than film, music, sports combined. And now with AI, the cost of content production for gaming is coming down. So like, what the hell?

[David]

It's hard for me to believe that all these reasons are purely mimetic and just VCs. Following VCs, there should be some structural disadvantages to consumer, to gaming, to crypto. Today that's keeping the next generation of founders from building these large companies. But you would say, no, it's purely mimetic. There hasn't been any big wins, so people aren't building.

[Nico]

You got exactly right.

[David]

How could that be?

[Nico]

It always is. It always is. Because all of us as humans are looking for the quick, easy wins. And you probably have seen that online there is that chart that shows 2016. What was the hottest category? Autonomous vehicles. Which was the most successful viable company from that era. Company that had nothing to do with autonomous vehicles. For every year the most valuable company that was founded that year was not the one that was in the hottest theme. So when I started in the venture capital industry in 2010 11, over half of the GPs in every venture capital firm were only doing consumer investing. Just think about that.

[David]

And today, today very different.

[Nico]

So like from all the major venture capital firms, they might have half to 1% in consumer investing.

[David]

The large platforms.

[Nico]

Yeah. Others, you know, who are legendary venture capital consumer investors, they completely got out of consumer. It's wild. Even Excel back in the day, they had that awesome growth team that they were calling bootstrap companies anywhere in the country to invest in them. In the outreach emails they were saying where the first, the early investor in Facebook and all the consumer companies.

[David]

And you would explain this in that the reason they got out of consumer is not because there's not opportunities there, it's because they couldn't get the quick markups or why did they get.

[Nico]

For quite some time this was not where the next generation of amazing companies got started. That's why. But like I'm arguing that today, if we look back to this very moment in time, five years from today, some of the very best companies will be consumer companies. If anything. OpenAI is a consumer company, man. Just think about that. Or like Cerebras, you know Cerebras, one

[David]

of our portfolio companies.

[Nico]

Congratulations. So you're like the mind of the hour. It's been a phenomenal week, right? Yeah. So when these guys got started in 2014, 15, 16. Around that time, right?

[David]

Yeah.

[Nico]

How many people were investing in semiconductors in Silicon Valley?

[David]

Not many.

[Nico]

Practically no one. Like every firm. But in previous generations like a lot of the partners were only doing semiconductors. They had all been retired or like had moved on to new fields.

[David]

Let's say that I accept your premise that it's memetic and it's momentum driven. Yes. You could also argue that it becomes self fulfilling. What do I mean? SpaceX builds its rocket. Now there are suppliers supplying space companies. Now there's actually a company that could take different things into orbit. So now you have literally companies like Varda. Another portfolio company that does biology in space would have been impossible without SpaceX. Does not, does that not start to build on itself and become its own self fulfilling prophecy. In other words, it could have been started, it could have become popular and become popular. Maybe for the quote unquote wrong reasons. But now it's a situation where you could actually build that business. And that's where the net new opportunities are.

[Nico]

This could happen too. Like. But Varda is trying to create a new market, right? Your portfolio company, Varda, is creating a new market on its own. So they could very well be super successful. And it's cheaper. It was cheaper to start Varda when they got started because they could put stuff in orbit before they would have to be even more vertically integrated and could have been impossible, right?

[David]

Absolutely. So when I look at probably the most interesting mistake that I see a lot of smart VCs make, Joe Lonsdale's talked about this is investing into the right founders with a clearly wrong business, expecting them to pivot. What do you think about the strategy? And do you ever invest into a company where you think there's no way this could ever work?

[Nico]

Look, there's a lot of path to success and Joel Lonsdale is a legendary founder and investor. And there's very strong survivor bias in our industry. And sometimes when you're older and you've been around for long enough, you can also rewrite history. Right? So what I would say to you, and from at least, you know, my humble experience, it's all about the people, like, what I think about their idea, what I think about their initial market. Actually, I don't care much because, sure, you know, if I know more about that initial, you know, market than what they do, if those founders are freaks, within like two weeks, they will know more than me.

[David]

I have this thesis on founders that I think founder attributes. I think pretty much everybody knows what makes the best founders. What people do not know, unless they've been at a top firm for several decades is the degree to those traits. And I have two examples for that. One is grit. Let's say there's 10 points of grit the average person has. And a founder might be thinking, man, I have two and a half times more grit than anybody, anybody that I've ever met. I'm two and a half times. I'm just unlucky not knowing that founder actually needs 100 points or 300 points of grit. They're off by an order of magnitude of 10x. That's something that you can't. Something that needs to be observed from the inside. Almost impossible to observe from the outside. The second thing is independent thinking. First principles thinking. It's almost. It's first principles thinking has now become such a tried and overused term. But a lot of people Think, well, I'm smart, I'm extremely smart. I see a bunch of dumb people on tv. Clearly I'm a great first principles thinker. And then when you look at the data, 50% of founders, last time I checked, were first or second generation immigrants. Meaning they're thinking so differently that they grew up from outside the system. Both of us are immigrants. And then another, call it 20, 30%, more controversial, are neurodivergent. So 80% of the top founders, they're not thinking differently, they're not smart, they're not the smartest in the class. 50% of them have been like essentially socially shunned from society from a young age. Another 30% literally have a neurodivergency and just their brain is literally wired differently. And then obviously there's the other 20%. But one of the things I think about on these founder attributes is people just can't internalize the scale of these attributes that are needed.

[Nico]

Here's spot on. One of the things I love about my partner, Michael Furtick, is that he's a freak himself. And growing up here in New York City, he played chess competitively as a kid. Who were his friends back then playing chess with him? Kids that they were described back then as the shy kids. How do we talk about that today? Neurodivergent, autistic on the spectrum. He said it really well. At least 20% of the mega outcomes in tech come from those people. What is my partner Michael Furtick's reputation with them? You need to talk to Michael because he knows how to talk to people. As you know, those neurodivergent people, if they were to be having a conversation like us now, they might not be able to establish eye contact for 30 minutes straight, or they might stare in your eyes and not say anything for like 20 minutes. This would make the average person feel uncomfortable with them. Michael. It's pretty chill.

[David]

That's the other misconception I think people have about founders, is they think you would call a freak or an EPIC founder the same as a great person or a likable person. There's no correlation.

[Nico]

No correlation.

[David]

In fact, some would argue there's a negative correlation.

[Nico]

There's that concept, right? What makes a great founder is not necessarily what's going to make a great founder. Politician, second, third generation, you know, like later stage company CEO. Because like, if you're a founder, you need to have beliefs that at least in the beginning, nobody else agrees with you. You see the future very clearly and you want to bring to the world Your version of the future. Whereas if you're a manager, executive, CEO, in the making, leader, you might want to be a people pleaser and you're a glorified HR manager, and that's much harder. And it's a different way you train yourself about how you think of success day to day, every week, every year.

[David]

When you talk about these freaks, are they all idiosyncratic? They're just freaks in one thing, or do they have some patterns in the things that make them freaks?

[Nico]

The rate of learning for each one of them is astounding. But then there's idiosyncratic. The attributes that you mentioned, I did like and I agree with, like perseverance. Like, any idea at some point in the future will be a timely idea. But you just need to be around long enough and be in the dominant position when the right time comes. So you need to have perseverance and greed in spades.

[David]

You came from General Catalyst where you were there for 15 years. You saw one of the greatest firms in the world. Now you're building your own firm. What first principles do you bring to building? Verdict?

[Nico]

I had the privilege of a lifetime to having been part of GC from year 10 to year 25.

[David]

What was the AUM growth during those years?

[Nico]

So when I joined GC in total had a billion seven. GC was 10 years old. I was one of the founding team members of the Palo Alto office. GC back then had 35 people in total, 31 in Boston where the firm got started, four of us in Palo Alto. And GC back then was only doing incubation series A and some series B investing. Chris Farmer and myself, who were two out of the original four, were tasked with bringing GC into the magical world of seed investing, which was a new idea back then. So since then, yeah, GC has emerged as one of the top five global franchises. And the motto there now is that we ventured beyond. GC is a global investment and transformation company today. So investing is part of what they do. They own a hospital, they took a public asset manager private, they own an AI transformation company, they fully own a wealth management platform, they fully own a public policy institute and a lot of other wonderful things. So I do love the differentiation over there. Aum, I don't know what the latest is. Yeah, it depends on the public markets, but I think probably you're right.

[David]

So going back to Verdict, what lessons do you bring from GC to building your own firm?

[Nico]

Ambition, entrepreneurial DNA, the power of relationships. GC was founded by two non tech Founders David Fialko and Joel Cutler, who are incredible at building relationships with people from all different walks of life.

[David]

What does that mean exactly?

[Nico]

It means that you deeply care about where somebody is coming from and building a relationship based on trust and not what is the transaction that we can, you know, facilitate right now and move

[David]

on, especially in finance. So I look at everything on a macro level. If you understand the macro, you could predict kind of the micro. And this wasn't the case in VC before, but a lot of VCs now come from traditional finance, from investment banking and all these things. The second order effects of that, unfortunately, I think investment banking is a great training ground for people. I know a lot of people in Silicon Valley disagree, but I think it's actually more intense than most tech cultures, probably more than 99%. But the incentives there, the people that make it to second, third year, there's a very zero sum nature to it and it does not breed relationship or long term oriented people. And that's very positive for people that are relationship and oriented, that make it through. Because I think when people talk about long term greedy and being long term thinking in venture capital, in pretty much any asset class, the bar for that is actually very low. The short term greedy greediness is so dominant that if you could think two to three years in terms of relationship, you're going to be top decile. It's almost the opposite of these founder attributes. The bar is so extremely low and paradoxically something that I have found and people will of course try to game this. But the more long term greedy you act, the closer, the faster you close business.

[Nico]

Now venture capital has become a career for so many people. The biggest issue in VC today in May 2026 is that if you have a portfolio and you want those founders to raise capital from another vc, how can you make sure that that other individual will be in the role in their seat for two more years to separate them for the next round? It's one of the hardest problems today. So many people are treating their VC career day to day. Which deals can I do in order to move to another firm, start my own? Very few people want to be where they are because they have the long term thinking attributes that you mentioned and they also understand the power of relationships for like a decade plus.

[David]

They're doing the corporate ladder.

[Nico]

The corporate ladder. I'm in Seattle, I'm at Microsoft. How can I become an executive vice president? I need to do a couple of things in between Amazon, back to Microsoft, then Amazon, then back to Microsoft.

[David]

It's Goodhart's law, which is at some point the metric becomes the driver. There's no long term view. It's just, well, what could I measure? Well, I'm associate vp. How do I become vp? Clearly that's the next step. That's the next step in the level. Therefore, I'm going to optimize on this metric because that's the only thing that I could think of.

[Nico]

Yeah. And that's actually easier to see. Right. Because it's almost in front of you. You can grab it. It's linear.

[David]

How did the founders of gc, how did that help them build the firm? So what does it mean to be relationship oriented in the context of vc and what are the second order effects

[Nico]

of that it get started in Boston. They had a very high trust in this whole team because all of them were friends since they were in high school and they had started several companies together. One of the second order effects was that they turn out to be amazing at fundraising. I'm sure when the times are good, everyone is amazing at fundraising, but when the times are rough, like in the financial crisis, that's when certain VC firms manage to elevate and separate from the rest. And GC was one of them.

[David]

And do you think that was a fundraising skill or was that a relationship building skill?

[Nico]

Relationship building skill.

[David]

I find it's very difficult to game very large checks. Not that I've tried. Just observing. I think the best bluff is no bluff. The best way to show that you'll have a good relationship with someone is to treat them well through different time periods. There's no shortcut.

[Nico]

There's no shortcut. That's why you need to understand where they're coming from, how they think and what really motivates them. Sometimes, you know, we as human beings, we say one thing, but we do something else. Right. So you need to really understand what motivates us.

[David]

You have to first understand yourself.

[Nico]

Yeah. Self awareness is one of the hardest things to muster. Yeah. And investing to an extent is a journey to self awareness.

[David]

I love this whole practice of looking at how I behave and then questioning why I behave that way and then starting to bridge the gap between what I think drives me and what actually drives me.

[Nico]

That's right. I had the privilege of meeting Charlie Munger several times and Charlie Munger's Warren Buffett's long time business partner who unfortunately passed away recently. So one of the pieces of advice he had given me when we're discussing about managing your calendar, managing your time, and I explained to him, I'm in the business of meeting so many people in hopes that I can find a freak. It's like you're out of your mind. That's not going to work. It's about the 10 big decisions that you can make in your life. So try to ask yourself the following question. Would the 80 year old self, would your 80 year old self be happy that you put that person in your calendar before you actually do that with anyone?

[David]

So taking a 50 year perspective.

[Nico]

Correct. Because when you're older you don't have the benefit of like having a lot of time and you also don't have a lot of energy.

[David]

Similar to that. The best framework I got from a previous two time guest, Alex Hermosi. He said big on YouTube and I think one of the most underrated minds in private equity and finance in general. And he uses this thought experiment that it's etched in my brain which every day I wake up and I say what is the one thing that I could do today that'll make everything else completely irrelevant? What is that next thing? Obviously that doesn't mean you don't, you don't. That doesn't mean that you skip all your calls but just constantly re asking is this the one thing? And you get to some really interesting takeaways. So I actually had just sitting where you had sitting where you're sitting. I had James Montgomery, also close friends with Charlie Munger. He had breakfast with him for 10 years every, every weekend. And he started this Montgomery sauna and Montgomery Summit. And through this question of what is the one thing that we could do that's 10x me and my business partner Curtis, we decided we're going to do a conference. One day we woke up and we realized so many of our friends were doing conferences. Whether it's Ron Biscardi from Iconnections or Jamie or Max Greenstein from GP Stakes or even our friend Brent that was doing a tax Alpha summit and then you basically execute on that one thing. But it goes back to this whole career ladder and incremental thinking. Sometimes it's very non obvious what is that one big thing that's going to take you to the next level?

[Nico]

Agreed. And that's why I think there are some pre leading indicators to that. So what if you start asking yourself every day what did I learn today? Or what if every, every morning that you get up you write down the two things you need to do and you actually do them? These are the small things that if you actually accomplish every day, oh my God. It's inevitable that you will become successful.

[David]

I have a Google sheet, it's very tech sophisticated where I write the two the most important things every day.

[Nico]

Excellent.

[David]

The other thing that I've learned that's very counterintuitive is that working in the business distracts you from working on the business. Said another way, small thinking competes for the same brain space as large thinking. Yeah. So what does that mean? How do you actually operationalize that? Because I started reflecting. Why do I always get the best ideas on the weekend? Is it because I'm going biking? Is it because I'm outside? And I realized it's because I don't have the day to day tasks that are basically taking all my compute. So now I try to recreate that during the week. I go to the sauna and I try to completely wipe my brain free of busy work. And lo and behold, I start getting ideas during the week as well.

[Nico]

Great practice. Have you thought about starting rating yourself?

[David]

Rating or.

[Nico]

Yeah, it's just like writing down. So for example, you know, if one of the key things you care about tracking is big idea thinking versus ordinary way of doing business every day you can rate yourself at the end of the day, did I do that or not?

[David]

I think we actually, we actually do the opposite. So we celebrate shitty first versions. It's one of our cultural norms because the hit rate is so low, but the upside is so big. Just to give you an example, and this is a dumb example, but it is telling. We do five episodes a week. We do five LinkedIn posts about the episode. I had an idea to embed the YouTube directly in the episode to basically help with the algorithm in the YouTube. We did that. It was a long shot. You're not supposed to do that. There's all these algorithm reasons. We just said, hey, screw it, we'll try it for one episode that's been a huge success, and this is a success that compounds every single episode. If I held myself to the standard of did it work or not? Or if I held myself to this like 50% of the time, I should be right. There's no way I would do anything like that.

[Nico]

Look, many of the good ideas that turn out to be brilliant start in the beginning as a toy, something stupid, something controversial. So like I have that as part of my thesis for Investing in consumer. So yes, what I like to do is every day to rate myself for the key dimensions of what I want to do. Because that's how I, at the minimum, hold myself accountable if I'm making progress or not. My partner Michael is even more extreme. He's like, today I made a decision, I wrote something, I exercised. He has four dimensions. Every day he's tracking.

[David]

You're training your LLM without the backwards looking bias.

[Nico]

That's right.

[David]

If you could go back 15 years ago when you had just started at General Catalyst, what is one piece of advice, timeless advice you give yourself that would have either accelerated your career or helped you avoid costly mistakes.

[Nico]

Cold email your way to success. That's the one piece of advice I would give Any examples, whoever you look up to at any given moment in time, reach out to Like I reached out to Elon Musk when I was a Stanford student. I cold emailed pretty much all of the most awesome founders that I've ever invested in in my early years. Like the founders of Discord, the founders of Snapchat. This is something that anyone on the planet can do, especially in the world of business. If you live and work at a place like New York City or San Francisco, you have no excuse.

[David]

Speaking of cold emails, I think I cold emailed you about eight years ago, so it's been great to build a relationship with you. Congrats on the spin out and looking forward to doing this many times more.

[Nico]

Thank you so much David. Appreciate you.