Investing for Exposure

Capital buys stories first. Unit economics second. Cash flow a distant third.

Let’s start with a boat. Most tech legends do. A man wants a bigger one; capital markets oblige.

It’s August 1995. Bill Clinton is “fixing” a marriage with sorties over Bosnia. Steve Ballmer is sweating through the Windows 95 launch. Netscape is about to become the first company in market history to go public without four consecutive quarters of profitability. 

Why? CEO Jim Clark needs cash to finish his under construction yacht in the Netherlands. BUT the partners at Kleiner Perkins have shot down his plans for a secondary (bastards). Good fortune, the IPO rips 100% on day one. The birth cry of the dot‑com bubble. Did investors worry about the sustainability of the business? Sure. They still needed a live bet.

Investors boast “we’re disciplined pickers” then whisper “we need exposure”. Netscape gave the public a pure‑play on the internet. They loaded up. This psychology is primal.

Fast‑forward to today: Circle, the cleanest pure‑play stablecoin exposure you can get. Fuckin’ ripper.

Stripe acquires Bridge. Tether runs Washington. You think the market isn’t wondering “how do we get in on this?” Same with quantum: D‑Wave, IonQ, Rigetti. Are they the future? Ehh, unlikely. Are they tickets to “I own some quantum & will secure maybe a hella cyclical bag”? Absolutely.

It’s not just public markets. LPs & GPs run exposure math, too. An endowment recently told me about how they’re modelling look‑through exposure to foundation models. i.e how many dollars, through layers of VC funds and SPVs, actually touch xAI, Anthropic, OpenAI, SSI, Thinking Machines etc... Company execution? Important, but not the exercise. First: “Do we have enough dollars in the ground?”

Some firms industrialize this. DST shows up across multiple major model companies. Same playbook they had for neobanks & social. Lightspeed & a16z: 4 apiece! CoinFund doing it across decentralized compute. Conflicts? Of course. But if you bring the capital and the track record, founders rationalize. Surely; Yuri Milner’s ice cold reply to founders querying his multiple bets? “You know, Zuck didn’t complain when I invested in Twitter.” 

Why does exposure sell? It smoothes the burn of FOMO. You see the tide rising better float with it than drown. Does it work? Depends where you are in the cycle. Remember grocery delivery and scooters? No way out. Autonomous driving? Lots of bodies, but a few survivors. Cruise exits early to GM; Waymo and Wayve roll on. 

Even people cohorts cycle. Ex–AI‑lab researchers? Your Uncapped MFN is in the mail. Palantirians? The new ‘forward deployed’ is a seed round secondary. Thiel Fellows? HOOK IT UP TO MY VEINS. Prod? Came and went, my brother. They expect one of us in the wreckage.

So, as a founder, how do you turn this to your favour? Simple, steer your story to be a clear bet on a trend people are clamoring after. It’s easier to hook someone on something they already believe than to convince them of something they just quite don’t think is so. Sprinkle some RL Environments, Code Review & a Lutnick connection in there if you’re out in the streets today and oh boy you are cooking.

Here’s the catch: exposure crowds trades, compresses forward returns, and loads your portfolio with correlation & your end markets with competition. Exposure money is also fickle: today’s must‑own becomes tomorrow’s no‑takers (hola at the lending/fintech homies). The who’s‑who cap table will move on. They have to find new bags to make up for your deflating ones.

But there’s always a new wave coming, the current one is littered with get-of-jail free pivots from vibe-coding to data labeling to fast‑inference APIs—if you timed and executed, the gods smiled. But it’s hard. You really have to be shameless. 

Because being on the right exposure wave is how you buy that new boat. Miss it, and you’re quacking with the ducks. Almost no one rides exposure all the way to permanence. There’s no $NSCP on Robinhood today. But that boat got finished - cause Jim Clark sold into the flow.