Anyone else wonder how college grads can raise $2M on a napkin idea in SF, and nowhere else? Anyone confused why it seems like every 20-something in tech in SF is writing $5k angel checks? I have a thought. SF has a massive blindspot that only outsiders can see.

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I want to make very clear, this is not a jab at any individual. I have hundreds of founder and investor friends in SF, and I respect and like every one of them. Right now, I am pondering the macro. The overarching themes that make SF...SF. Not the individual players one by one.

My credentials:

- Started a co, 0-24k MRR in 7 months, got 100k from Jason Calacanis.
- Started podcast where I've interviewed 230 prominent founders/investors
- Have newsletter that dozens of tier one investors read

And I'm based in Phoenix. So i'm an outsider..Kinda.

I've lived in Phoenix my whole life. I went to ASU and studied Communications. I don't even code. I didn't get into tech until late 2015, and I was truly starting from zero. There are millions of people like me. They want to get into startups, and they just start where they are.

They start where they are because there's no other option. There's no clear path into SF. In fact, they couldn't find the inner circle if they tried. So, they just build where they are, and cold email investors and see if something sticks. These are company builders.

And because the stone wall to break into SF is so strong, there comes a point where they stop trying to break in. The get to good revenue and profitability, and they think "i don't need them". So they stop trying to get investment. Yet, THIS is when investors would be interested.

So you got 49 states that care about the fundamentals of building a company. Then they learn that company building is a better path 99% of the time than startup building. Startup building is a game with its own rules. No one tells you these rules. So they stop playing.

But then you got stubborn Mat. If you haven't met me, I'm a force. I can't explain to you WHY I was like this, but for my first company, we NEEDED to be venture backed. I NEEDed to break in. It was personal. I had no other options, in my own head. VC or bust.

For me, my plan was to get into Y Combinator. That was it. That was my way in. I applied 6 times over two ideas, and got rejected all 6 times. No interview. So i thought, if they won't let me in, i'll let myself in. So what did I do? I spun up an RSS feed.

And I emailed 20 YC backed founders asking them to come onto my podcast. @danielgross @Austen @leahculver @CatchKristen @StaceyFerreira @shaanh @LauraBehrensWu, and SO MANY MORE. And I asked them to come onto my podcast. The ones mentioned said yes.

240 episodes later, an investment later, and 100+ newsletter articles later, I finally understand how the system works. IT TOOK ME ALL THAT TO FIGURE IT OUT. SO MUCH WORK TO BREAK IN. And you know what? SF makes it hard for a reason. They only want the best in the inner circle.

So here I am. I am in. And the wall in between where I was 3 years ago and was THICK. Outsiders try to get in rarely can. Well guess what!!! It's thick both ways!!! SF inner circle people can't understand what it's like to be an outsider. Or they forgot what it was like!

SF is in an extreme bubble. Because the walls are so thick, the way they live their life like this is the norm. Someone asked me to put in $5k to their syndicate and assumed it was pennies. I have a -$0 net worth!!! I have little!! I started PubLoft on DEBT, not angel checks!

In SF inner circle, everyone shares deals. Everyone invests in everyone. Everyone talks about everyone. It's this little club. YC founder? Welcome in!! Tech stars...errrr. It's fucked up! The reason is because as @naval would say, the inner circle plays STATUS games.

Everyone raises a fund not because they have differentiated deal flow. It's because they CAN! Oh why not raise $5M, you know? $5M??!?!?! Dude, I would beg for a 250k fund to prove myself. It's just SUCH A DIFFERENT WORLD. But the worst part about it? They assume they are better.

THIS my friends is the blind spot. You have SF who has ruled the startup land for 60 years. They will always be the supreme right? Errrr I actually think you let 100 people like me into the inner circle, and things change.

What changes?

You get founders coming to you with $10,000 MRR a solid team, and a good market raising on a $6M valuation. Doesn't that sound nice? Vs. trying to invest in hype? OR imagine if you actually had the top deal flow from Iowa. IT EXISTS. You just cant find it.

I think because the walls are so thick, the inner circle thinks all people like me are just noise.

"Ohh, we don't have time to get to know you., sorry."

They ASSUME the best break in. Look at what it took for me! I'm still an outsider! Maybe the BEST break in, sure

What I am proposing is that SF has gotten lazy. They have their network effects. They mainly only do warm intros. Many play status games. It's built on a strong foundation but it's growing in a fickle way. They are smirking while reading this I bet. They cant see the blind spot.

But YOU. Founder who is hustling your ass off with $15,000 MRR see it clear as day. I see it clear as day. Millions of us see it clear as day. Yet in 50 square miles can't think they can be beat. They think they have the best deal flow, the best founders, the best investors.

The blind spot is SF isn't actually as strong as people think. The belief is strong but so is the status. So is the fame. So are the incentives. And when you got people optimizing their startup to get into YC, we have a problem. So my message to the outsiders is this.

@peterthiel talks about secrets. THE SECRET here is that the inner circle doesn't want anyone else to know this truth. And few people do. Look what I had to do to break in? and I'm still in Phoenix. I see both sides. outside and in. A very rare view.

And SF thrives on hype, not fundamentals. There are few original thinkers. And everyone is making it up.

"What other investors do you have in this round"?
"What companies have you worked for before"?
"Where did you got to school"?

Weak.

MANY cannot think for themselves.

So you are in a stronger position that you think. SF is high on their own supply most of the time. Work harder than them. You'll need to. Assume you're in a better position than you think. They do. And maybe learn a thing or two from SF...Hype works.

And for the VCs in SF (this thread is mainly targeted towards VCs), don't get too comfortable. Warm intro elite network's returns might be in jeopardy. Be like
@dunkhippo33, @TurnerNovak, @lolitataub, or @MacConwell.

They are the future of VC. Do you want to be?

I'm hacking on some solutions for this. Follow @growthmeter for occasional updates