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First decision you have to make as a founder is whether you are playing as an insider or an outsider. It's a fundamental "Who am I?" question. https://twitter.com/philbak1/status/1289185361780977664
Insiders work well within the ecosystem, build networks and form partnerships. Outsiders disrupt, in an authentic way. If you haven’t pissed off some important people in your industry, you can’t call yourself a disruptor. You can be an innovator, but not a disruptor.
The term disruptor is obscenely over-used by people who don't have the guts to pay the price to earn it. https://twitter.com/philbak1/status/1087383950811631616
I changed from insider to outsider not when Blackrock knocked off my research and fund methodology, but when they sold it to a Barrons reporter to write up their knock-off as "innovative".
You can be WalMart and commodify other people’s IP, but you aren’t going to steal the innovator label from me at the same time. Not without me getting my swings in there too.
Remember, I need to respect myself as a man long after we’ve all forgotten about my ETF company.
Remember, I need to respect myself as a man long after we’ve all forgotten about my ETF company.
Anyway, hedge funds are the ultimate insider business model. You aren’t going to make it as a hedge fund unless you can get the right allocators and even the right providers behind you. It only works inside the network.
Startups are well suited for outsiders, but increasingly less so. As "startup" becomes synonymous with "technology", we see VCs using their networks as a competitive edge.
Come up through Stanford or MIT, do your early years at a premier VC-funded tech company, and succeed in those efforts (no easy task), and doors will be open.
Those open doors were hard earned and well deserved.
Those open doors were hard earned and well deserved.
Outsiders can bootstrap or choose less capital intensive business models and can still succeed. Plenty of examples of that in startup land, but the more typical path are businesses like restaurants, retail shops and franchises.
Hard working outsiders - typically immigrants, blue collar backgrounds, late bloomers who didn't fit the school structure - they dominate the suits in the arena of main street storefronts.
When we replace those businesses with platform tech companies we are taking opportunity from outsiders and giving it to insiders.
Your kid better get an MBA from a top school if he is going to have a shot at being a Senior VP at Amazon in ten years.
Your kid better get an MBA from a top school if he is going to have a shot at being a Senior VP at Amazon in ten years.
The insider path is so much easier. Take a look at the benefits package at a Fortune 500 company. Then ask an independent contractor what the cost and process was the get health insurance for their family. It is a whole different world.
When the Goldman Sachs cap intro team insisted we needed to move from Detroit to NY to have a shot at getting capital, that was all she wrote for me in the HF space. I chose the outsider path.
It’s a choice entrepreneurs need to make, whether they are conscious of it or not. Insider is the easier path. And if you want to be a disruptor, be an outsider, and pay the cost.
As an outsider you will be bad-mouthed and you'll lose safety net options, but if you can win as an outsider the rewards are immense.
Do you think Bezos was loved by the book-selling industry three years into Amazon?
Steve Jobs was fired (fired!) by Apple's board of directors.
And we revere them now bc they won.
Steve Jobs was fired (fired!) by Apple's board of directors.
And we revere them now bc they won.
Choose to be an insider, or choose to be an outsider. Just choose it all the way.
