Jay Gatsby and Venture Capital Archetypes
Last week I shared this article about Captain Ahab and how he embodies many of the ideals venture capitalists should embrace. I also mentioned there would be a counterpart literary character. This week, I’m back flexing the English degree yet again to talk about Jay Gatsby, the most common real archetype of founders and venture capitalists that we see in the modern tech ecosystem.
Although separated by 74 years, an industrial revolution, and the first world war, The Great Gatsby and Moby Dick have shocking parallels in the flaws of their characters that still apply to the modern world and the tech ecosystem. And shockingly, Jay Gatsby is almost the perfect counterpart to Captain Ahab, and the perfect representation of the fallacies of the modern venture capital ecosystem.
Even though both characters have a similar singular goal, where Ahab is characterized by a crippling drive to action, Gatsby is categorized by a drive to inaction. Namely, Gatsby is obsessed with image and perception, the past, and an inability to move on, instead of focusing on reality.
It’s not difficult to see where his character finds parallels in venture capital. Arguably some of the best venture capitalists of the modern era are obsessed with image, and that makes them appealing to the masses.
Gatsby’s obsession with history and image are the most similar to the obsession presented by VCs and LPs with history, and how that defines modern investment. It’s not just that VC parties, startup launches, the Midas List, and more are all games of image manipulation. Many funds, Sequoia, Kleiner Perkins, and many others are characterized by an early history of successful investment, but many in the ecosystem now view them as “safe” or “reliable” instead of a way to generate legendary returns. But past performance unfortunately is only anecdotal to future success in this industry.
It’s a common understanding that there are four ways to exist as a venture capitalist:
Smart and Lucky: you become a generational fund and a mainstay of institutional investment.
Dumb and lucky: you perform well, and maybe even generationally well if you play your PR right.
Smart and unlucky: you perform well, raise future funds, but you never quite reach the level of massive wealth that a generational fund does.
Dumb and unlucky: you don’t raise past a fund 3, or you bounce around funds for years.
So, does your history actually matter? Or is it luck and image perception? Gatsby could have changed his ways and focused on creating real relationships and real businesses instead of relying on lies. Too many fall into the trap of the latter and create a highly inefficient VC ecosystem, albeit one that my generation of venture capitalists can profit from massively if we play our cards right.
And although there is a correlation between success and repeat founders, nobody should have ever thought that backing Adam Neumann in anything again was a good idea. Image fallacy.
Gatsby’s obsession with image defines a broader mob mentality in the technology ecosystem. Nobody wants to be perceived as “outcast” and they follow the herd mentality for investment trends, and when it comes to it, will lie, cheat, and manipulate to maintain that. Where Ahab is willing to die on his contrarian opinion, Gatsby stares at a green light and hopes that Daisy will show up at a party she was never invited to.
Speaking of parties, most of fundraising for startups and VCs follows a similar pattern. You’re always just “in someone’s city” and seeing if they’re free, or “catching up and thinking about raising the next round in 6–8 months.” Games, perception, and image manipulation, where if we were direct deals would close faster and the asset class would generate better returns. Accept sunk cost. Invest on acceleration instead of historical speed. Take more risks. Be honest and direct, confront problems and realities where they come up. PR will never be an investible asset class.
Where Gatsby’s story parallels Ahab’s is that both characters demise is precipitated by their inability to accept reality. Startups and funds fail. Things fall apart. Just because something was great, doesn’t mean it wasn’t hollow at its core.
I want to invest in a world of substance, not a world of image and will push to do so.
