Opinion | Venture as a 'Strong Link' Game
The future of the industry lies in moving in the opposite direction
Game construction is an interesting thing to study. It allows for analysis from first principles, and offers a unique vantage on the structural rationale behind certain outcomes. To a certain extent, that’s a topic I covered in “30 Minutes or Less,” discussing the sub-optimal effects of the YC ‘game’, the blitz-chess version of venture capital.
For that reason, I was especially intrigued by a digression in a podcast I listened to recently. In an episode of Revisionist History, Malcolm Gladwell steps away from his discussion of the US education system to talk about sports. Specifically, he wants to talk about soccer and basketball, or rather, soccer versus basketball, the fundamental difference between them.
At first blush, I think basketball and soccer are similar. Both are collaborative, involve fluid play (versus the series approach of baseball or American football), and center around goal-based versus territory-based scoring. But citing Sally and Anderson’s book, The Numbers Game, Gladwell goes on to explain that beyond cosmetic differences in playing dimensions, rules, and number of players, these sports exhibit a more essential distinction: one is a ‘weak-link’ game, the other a ‘strong link’ one.
Soccer is a weak-link game, which is to say that a team is improved more by improving upon its worst player than by improving its best Because soccer is such an interconnected sport, relying on multiple players to make it from one end of the pitch to the other (and ultimately score), a single weak-link can undo the work of many stronger players. To put it another way, Barcelona would improve more by replacing their worst player than trying to find one (hypothetically) superior to Lionel Messi. (The GOAT!)
By contrast, basketball is a strong-link game. The field is smaller, player mastery over the ball is greater, and as a consequence a single player relies less on others to score. Give Michael Jordan the ball and a fifth of the time, he might not even need to make a pass. Unlike in soccer, basketball teams are improved not by upgrading the weakest player, but topping their star.
Though a potentially unrefined lens through which to view the world, I’ve found myself returning to this framework to think about different industries, particularly the one in which I’ve chosen to make a career. Venture Capital is a quintessential strong-link game. The biggest firms rely on a small number of players, collaboration is possible but not necessary, power and influence is portable, often accruing to the individual more than to a specific firm. Which is to say that if you wanted to improve upon a partnership, you wouldn’t replace your analyst, you’d drop in Bill Gurley. (At 6”9, he’s even got 3 inches over MJ).
This fact of the game, this assessment of the state of play, depresses me. Not because I am not at (or near) the level of the elite players, but because of what it says about the game I am playing — in which the job is less about building something greater than one’s self, but simply building one’s self. In the opening season of “Billions,” one of Axe’s associates describes the hedge-fund titan as more of a ‘nation-state’ than a man. That is the goal for many - to be a one-strong fiefdom, an autarchic seastead, perfectly independent. Success relies less on interplay than individual brilliance.
The game is changing. Slowly, I believe that venture is becoming less like basketball, more like soccer. In order to compete against the massive platforms of the top firms, insurgents are increasingly turning to alternative methods to gain an edge. In some cases, that manifests in quantitative approaches, while others seek to decentralize the core functionalities of a partnership by calling on a network of ‘scouts,’ ‘VPs’, ‘evangelists’ et al. to aid in sourcing, assessing, and winning deals. By relying on intelligent machines and the wisdom of the collective, these firms reduce their reliance on a singular genius.
We are a long way from venture becoming a weak-link game. In all likelihood, it will always be top-heavy, as are many organizations across industries. But if we are to innovate on the staid model of small, closed groups accumulating individual influence, we must change the way the game is played. In short, we must try to play a little more soccer.
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*For those interested, the best books I’ve read on the subject of game construction/development are James Carse’s, Finite and Infinite Games, and Inverting the Pyramid, by Jonathan Wilson.