Outsider vs Disruptor

Mark Suster wrote an interesting post on the state of the VC business this weekend.

In it, he makes this comment and puts the blame on the current rabid environment on “outsiders”:

If “the market” is driving up prices beyond intrinsic value the main new entrants to the market that have taken a less rational view of historical prices are a series of “non VCs” including corporate investors, hedge funds, mutual funds and crowdsourcing. Note that I’m not absolving my industry, venture capital, from bad behavior. I’m merely pointing out that price drivers are more strongly correlated with outsiders.

The question I always try to ask myself about new entrants in a market is “are they stupid or do they actually know something we don’t?”

Or said another way, are they outsiders or are they disruptors?

Combine that with Jerry Neumann’s recent post observing this:

Where are we in the cycle? Perez, in a 2013 paper10, says we are now in the deployment period. This has big consequences for how you run your business.

This quote makes a shocking claim I didn’t think the Transition audience would be interested in: financial capital’s job is done.

“Financial Capital” is VCs (and mutual funds and hedge funds). Production capital is corporations investing their capital in the innovation cycle now that it is well understood. Think Alphabet.

So I’m not sure I would go there with Mark. It’s tempting but might be the wrong place.