Real World Businesses

Building, buying, growing, running serving real businesses in the real economy.

In reflecting back over the past year of investing, I’ve done a ton within a broad Venn diagram of what I’ll call “real world businesses” or the real economy.

There’s a number of disparate ideas here but it’s worth trying to drill down on what I mean and why I care about/believe in this approach.

The next high status career is real world entrepreneurship. Building, buying, growing, running serving real businesses in the real economy.

There are two simultaneous forces catalyzing a new kind of entrepreneurship:

• Entrepreneurial culture: just like tech replaced big law and finance as the high status job for the 2000s, the real world businesses will replace big tech.

• The end of SaaS: as software LTVs go down and CACs go up , the world is moving beyond software as its favorite business model. 

Entrepreneurship is the cornerstone of American culture. Every time there’s an economic shock the response is “more entrepreneurship.” In 2008 it was “be your own boss” but really that meant being indentured to faceless, extractive gig platforms for low skill workers. 

But in the pandemic, when people became unmoored from their jobs, entrepreneurship found a new higher floor across the economy; new business starts went up and haven’t come back down. People want to get paid (own a business) not get laid (have a sexy job at a brand name company). 

This is concurrent with the biggest untapped opportunities for software and technology: powering the real economy and transforming the earning potential of long tail industries. 

Giving those would-be entrepreneurs the tools and systems to be successful is a massive opportunity that we see across 5 categories

1. Powering and serving: software, tools, and demand-gen can make small companies more profitable and easier to run independently.

2. Orchestrating and coordinating: small businesses can ally together to compete beyond their individual means and benefit from shared resources in an otherwise decentralized system.

3. Catalyzing and scaling: systems and platforms that lower barriers to entry for new entrepreneurs to get started, grow, and succeed.

4. Buying and transforming: software and IP companies can bend the economics of stagnant industries and own all the upside (our GBO thesis)

5. Building and running: vertically integrated tech-and-services companies can increase the ceiling on terminal size and profitability by building around enduring advantages and products. From big tech to mainstreet cash flow, independence, and real businesses are in. Everyone wants to be a real entrepreneur. We want to help.

What I read

• I’m Running Out of Ways to Explain How Bad This Is - The Atlantic

• The Crackdown on Compounded GLP-1 Meds Has Begun - Wired

• Masayoshi Son is back in Silicon Valley—and late to the AI race - The Economist

• The Secretive Dynasty That Controls the Boar’s Head Brand - New York Times

• The Silmarillion - Tolkien

What I watched

• The finale of Slow Horses. Electric as always, even if increasingly action heavy.

• The two towers extended edition. Never misses.

• The Franchise (Armando Ianucci). Meh.