The Vestless VC

Why I am going vestless on VC and building a HoldCo via M&A. A thread.

@PEoperator Which parks do you recommend?

Last week I visited four national parks and several national forests. I left with three major conclusions: 1) Our National Park Rangers are Chick-fil-a level quality. I never met one who was anything but go-out-of-their-way helpful even on the most mundane topic. 2) Our National Parks are an absolute treasure. You don't need to go out of the country, America contains a million different worthwhile sights to see. 3) National Parks should be free for US Citizens. The "America the Beautiful" pass is $80 for a year of entry into any National Park. Easy decision, but I would take it a step further. National Parks should be free for US Citizens and $1,000 for a one week pass otherwise. Build American pride and generate revenue. National Parks feel like the one thing the government has consistently gotten right.

@realEstateTrent I send letters via USPS. How do reply rates compare to FedEx?

We spent $32,179 on FedEx in the first quarter.

@scottastevenson CARR also doesn't take into account implementation time. If they have a three-month implementation time, not only are they not actually going live with the customer, but they haven't even started recognizing revenue yet.

It’s time to expose a huge scam in AI startups: Contracted ARR The reason many AI startups are crushing revenue records is because they are using a dishonest metric The biggest funds in the world are supporting this and misleading journalists for PR coverage. The setup: Company signs 3-year enterprise deals. Year 1 is discounted (say $1M), Year 2 steps up ($2M), Year 3 is full price ($3M). They report $3M as “ARR” — even though they’re only collecting $1M right now. The worst part: The customer has an opt-out option at 12 months! It’s not actually a 3 year contract. In the chart below, by Q5 the company is trumpeting ~$100M “ARR” to press, while actual cash-generating, in-effect ARR is ~$35M. That’s ~3x inflation. On top of this, enterprise AI companies are bundling full-time “forward deployed engineers” into deals massively reducing margins, sometimes producing Year 1 negative margins. At some point customers are going to start triggering their opt-out clauses or aggressively negotiating down Year 3 pricing. And a wave of enterprise AI companies may collapse.

@PEoperator You’re the 🐐

On X, I have met business owners, CEOs & CFOs, Private Equity MDs VPs & Associates, VC investors, LP investors, and folks in the ETA/search space in the US and around the world. I have hired multiple people I met here, joined a board, invested in 4 ventures, and seen deals I've offered on for my business. Basically I have the highest quality followers I could have imagined. It's been a lot of fun writing and building this with you. Just saying thanks.

@SolutionsCay @realEstateTrent How did you set this up?

@realEstateTrent I took the source code from GnuCash (open source accounting software) and had Claude build an agent-first version on Cloudflare. Now I just drop receipts and bank exports in a folder, and Claude does all the account entries via API. I used to do this manually what a pain.

Holy crap we literally don't need Quickbooks anymore because of what happens when you combine Claude and Excel

@alt_w_v_g @RobertMSterling Still need to sell the product.

Investment banker sent over a software add-on last Tuesday $35M ask. 18x EBITDA. Moat slide had the usual page Proprietary data. Network effects. High switching costs. Asked the analyst to build a competitive analysis He came back 47 minutes later Not with the analysis With the product Fully functional. Built in Claude. During the meeting. No code. No team. No cap table. Told the banker we were passing He asked why Told him our 24 year old analyst just replicated 18x EBITDA when he was supposed to be taking notes He went quiet for about eleven seconds Then asked if we could send him the prompt Went home that night. Wife asked how work was. Told her we almost paid $35 million for something the analyst built in 47 minutes with Claude She didn't look up from her phone "Why would you pay for that." That is the most accurate valuation framework I've heard in three years Plz fix. Thx. Sent from my iPhone

@kejca I dream of having a cost of capital this low.

Some details on Berkshire Hathaway's latest yen-denominated debt sale. • Proceeds will be used to refinance other notes (totaling ¥133.9 billion) maturing in the next few days. • The remaining amount will help finance the acquisition of its 2.49% stake in Tokio Marine.

@paulswaney3 Can I try?

@paulswaney3 RenTech uses single factor analysis, no?

@paulswaney3 Crazy that people don’t understand this

Aren’t you an attorney? This is one of the worst takes I’ve ever seen. Stay in your lane. Let me explain what actually happened at Philz Coffee. 🧵

When I'm governor, we get plastic straws again.

In 2012, Best Buy was getting written off. The stock had dropped 50%. Customers would walk in, open Amazon on their phones, and walk back out. Analysts were giving it two years, maybe three. The board hired a CEO who had never run a retail store in his life.

Mexican Catholic actor Eduardo Verástegui has urged Catholics to pray outside a hospital in Barcelona, where Noelia Castillo Ramos, a Spanish woman who became paraplegic after attempting suicide following sexual assaults, is scheduled to be euthanized on March 26.

@acquisizioni Doing deals with my Catholic brothers and sisters is one of the greatest joys I’ve felt in my adult life

I grew up Catholic, going to church most Sundays. I got my communion and confirmation … but haven’t been to church since. For whatever reason, none of my friends (home or college) are religious (which I define as going to a place of worship regularly). I was in that social bubble for years, not thinking about it, until I started participating on retwit and meeting people through DealNav. I randomly figure out (through a tweet or convo) that the person is religious and I’ve been getting more and more exposure to it. I’m thinking about it more. I don’t really know the point of this tweet, but I’m intrigued by it all.

Carthage must be destroyed.

@Sarawacu I’m like 90% sure this is the pool at my condo complex

Pool at Lake Tahoe, California (1959) Slim Aarons

Me when I meet a niche, simple, predictable free cash flow generative business.

@TheIcahnist Is this publicly available?

AI is going to change PE workflows. A PE associate on Reddit shared how he used Perplexity Computer to build a web app that turns customer cube analysis into automated dashboards. Analysis that used to take a KKR or Blackstone associate several hours can now be done in minutes. This is going to change how PE firms do diligence. Crazy how this industry will evolve.