an understated occurence right now is the amount of crowded solutions and offerings into every market, industry, and vertical
the market structure shifts each time there’s a new entrant - all these vc-funded startups are just going to compress the margin and split the market share
Cuz there’s so much VC funding
it’s kinda like VC have already written their tombstone
Cuz the incentives were to raise lots of AUM
and now you gotta deploy
and pray to god you can even return your fund
but if there’s 5 other funds who funded competitors in every possible product-market
you’re sitting there hoping (1) your team wins and (2) that the market is power law enough to create power law returns
without new, large markets, VC is fucked
even this is tenuous, because there’s a finite amount of liquidity (consumer spending and financial asset-valuation capital)
so, liquidity that flows from one market to another, means growth sloshing from one area to another is just moving returns from one area to another
the counterargument here is that the clock speed of capital can increase leading to more aggregate gains
the issue here is the tax per transaction by governments
which siphons liquidity into treasuries, most likely government deficits
which then moves efficient capital to high inefficient capital (often cost+ contracting, where the incentives of the producers are to spend as much as time and get as little as done possible, so that more time is logged and therefore more revenues)
the flowthrough analysis here can fall apart when liquidity siphons around to other locations, but net net, the directional analysis seems on point
but if everyone is deploying into the same markets, then returns go down