Invest in Dungeons

Invest in Dungeons

I read a stat that over 40% of VCs have a Harvard or Stanford degree, and many others come from other great Ivy League schools as well. Naturally, a VC who is in the Stanford network will likely be exposed to more founders who attend Stanford than any other college. Same goes with Harvard or another tier one school. Every founder who goes to one of these schools is already, in many ways, vetted for their intelligence by getting admitted.

For some VCs, this is a filter. And rightfully so. In order to attend one of these schools, it takes an immense amount of work, skill, persistence, dedication, and maybe a little luck. With that said, my experience with most founders from Stanford/Harvard/etc. is that they’ve been on the academic track for a while, optimizing to get into a school like that. No one accidentally gets into Harvard. They work their ass off in classrooms, and outside of them, to earn their spot. Once the spot is earned, they get access to everything. That’s how the American Dream works. Work hard, get the rewards. But maybe one of the rewards shouldn’t be instant access to to capital to start a startup. I’ll explain…

Unlike 97% of VCs, I would argue that going to an Ivy League school is not actually a good predictor of if someone would be a good founder. In fact, it could be a negative predictor. If someone has planned their life to get into one of these schools, their brain is inherently set up to pass the test. They have followed rules to get to where they are. They played the game. And they won. In my head, I picture these people in the castle.

Stanford is the Castle. So is Harvard. Get in and you’ll be surrounded by VCs, smart founders, and entrepreneurial legends to learn from. At a snap of a finger, you can raise a seed round, recruit engineers, or get hyped up on Twitter. It’s positive sum land, full of possibilities. While founders in the castle are usually good people, I don’t think you find the standout founder traits from them.

Paul Graham talks about naughtiness as an indicator for founder success. People who break the rules and bend the world to their will. People who tinker and disrupt the ways things work to propose something better. Troublemakers, in ways. Missionaries. THESE are world class founder traits. In my brain, I don’t see people with these qualities gravitating to the castle. I actually imagine we would find them in the dungeon.

Look To The Dungeon to See The Future

The dungeon is where you find founders that are hacking away on projects or problems, and have been for years. They are uncredentialed, and by academic standards, they are not impressive. They likely are not well networked or versed in traditional business either. And in general, they won’t stand out in a sample of 100 founders pitching on Sand Hill Road. In fact, they may be laughed out of town.

But see, founders in the dungeon have qualities that most don’t. They’ve been ignored for years but have not let their drive seep away. Founders in the dungeon have all the street smarts in the world, because nothing was given to them easily. Founders in the dungeon are the most resourceful type of founders because no VCs would give them a look, but their mission is too strong to stop digging. Founders in the dungeon have a chip on their shoulder and aren’t afraid to share it. This chip is strengthened as they have a crystal clear view of founders in the castle and how easy it is for them to attract talent and capital. Just by knowing someone who knows someone, a founder in the castle could raise a $2M seed round on an idea. It doesn’t seem quite fair or efficient.

Personally, I prefer founders in dungeons than castles. If I think a founder is in the dungeon, I will help them more than any other type of founder. Why? Two reasons. It feels good and it’s really good for business. Normal people will return 0x-3x an investment. Founders in the castle will return 1x-10x an investment. Founders in the dungeon will return 10X - 1000X an investment. When you find a founder in the dungeon, invest.

Picking founders in the dungeon will be unpopular amongst your peers. You may be ridiculed. You may be questioned. You may even be laughed at. But I’ll take this time to remind you of a relevant quote:

“Be fearful when others are greedy, and be greedy when others are fearful.” - Warren Buffett

If you want to be a better investor, don’t go to the ballroom in the castle. Go to the lab in the dungeon. There, you will see the future and meet the people building it.