Will VC produce fewer home runs in the future?

A Noah Smith Noahpinion essay (noahpinion.substack.com) that anchors part of Kyle’s What Is An Investor. Smith starts from the Facebook IPO in 2012 and the question “what will be the next Facebook?” — and observes that the honest answer is something like “ServiceNow, sort of.” Outside of a handful of cases, very few truly massive companies have been created in the last ~10 years; the typical outcomes have compressed toward ~$10–20B companies rather than the giant grand-slam exits of the prior era. As Kyle reads it in What Is An Investor - Research, Smith argues this “lack of a fresh grand slam represents a permanent structural change in the venture industry.”

Smith’s mechanism is Frank Knight’s Knightian Uncertainty: “truly outsized business profits come from taking on true uncertainty… If the probability of success is known, a bunch of gamblers will flood into the space, willing to roll the dice.” As the VC/startup ecosystem becomes established, standardized, and data-rich, increased competition floods the space, the market shifts out of high-barrier-to-entry domains (chip manufacturing) into lower-barrier ones (software), and the unmeasurable uncertainty that produces grand slams collapses into priceable, diversifiable risk. The result, per Smith: fewer opportunities for the huge first-mover advantages that lock in giant network effects — and so fewer home runs.

Where this appears

• Knightian Uncertainty — the risk-vs-uncertainty engine behind the essay; Smith restates Knight’s thesis to explain the decline in outsized returns.
• What Is An Investor — Kyle cites the piece directly in “The Venture Capital Success Equation,” using it to frame why the next $100B venture-backed company has gotten scarce.
• What Is An Investor - Research — the research notes where the essay’s argument (competition, information, market-barrier shifts) is captured.