Kyle Harrison
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interview April 12, 2024

Techno-Optimism, Talent Vortexes, & Writing “Investing 101”

Sourcery · hosted by Molly O'Shea

Watch on YouTube ↗

Summary

Kyle’s first appearance on Sourcery with Molly O’Shea, recorded shortly before it aired on 12 April 2024. Two years and one 300-page book later he came back for 300 Pages on Anduril: Inside Modern Warfare — and much of what is a finished argument in that episode is visible here as a work in progress.

The career, told as a stumble. Film major who wanted to be Christopher Nolan, paying the bills with wedding videos and commercials, who took on more clients than he could shoot and started farming them out at 5% — “very quickly realized that I was a much better salesperson than I ever was a videographer.” That became a one-man creator marketplace on a bad website with a spreadsheet backend, run on and off for four years, which he “called a project because I was too afraid that if I called it a job my mother-in-law would judge me.” He sold it without ever knowing to call it a startup, asked a friend what to do next, and got told that being a resource for passionate creative people is roughly what a venture capitalist does — “I don’t know what those words mean when put together.” Then the Goldilocks tour: a Utah seed fund, TCV (private-equity mindset), Coatue (hedge-fund big-picture arbitrage), Index Ventures (venture classics), two years each, before Contrary — which he joined to “put my fingerprints on something.” He is newly in Utah at the time of recording, with three kids, on the observation that in the Bay Area “the more kids you have the further south you move along the peninsula to try and find more people with kids.”

Contrary and the talent vortex. Eric Tarczynski founded the firm ~six years earlier on the thought that if you could just bet on the smartest people you know, early and relentlessly, you’d do well — find them in undergrad, grad school and PhD programs and build product SKUs for every stage of a career. A few years in, the community bifurcated: some wanted to start companies (write the first check), and some wanted to find an exceptional startup to build inside first. That second group is what produced the talent vortex strategy — five of the first fifty employees at Ramp came out of the Contrary network, likewise Retool and Anduril — and Kyle joined to push the firm later-stage, so it can be either a first-check partner or the investor that plugs a company into that talent pool. The generalist posture is framed as forced rather than chosen: you cannot credibly say you back the sharpest people anywhere and then add “as long as they’re building in fintech or AI.”

Why Contrary Research exists. It came from a question asked enough times to become a product: community members with offers from four or five private companies wanting an investor’s read on the business, not the pitch. At the time of recording it had covered ~300 companies across two dozen categories, deliberately open-access — partly so readers can say where it’s wrong, partly to plant a flag — and deliberately antithetical to content marketing: they don’t only write about portfolio companies, and when they do they work to stay balanced. “Pragmatically optimistic” rather than fluffy. The two projects he says are eating his time are a deep dive into the history of working with the military and how Anduril took advantage of it — the seed of The Anduril Thesis (Book), described here as in-progress — and a second, unannounced project on crystallizing societal and technological trends.

Writing as a consistency exercise. He wanted to write for years and didn’t, blocked on “shouting into the void of content” — until Rex Woodbury reframed it in 2021: if the point is thinking rather than livelihood, readership is beside the point, “because the act of writing is the thing that will get the job done even if it goes out to zero subscribers.” (And he was guaranteed one — his mom had promised to read anything he wrote.) So one goal, no metrics: write once a week and never miss, unbroken since the start of 2022. He’s candid that “they are not all bangers.” His three best-received pieces are also three of his favorites — The Blackstone of Innovation, Institutionalized Belief In The Greater Fool and The Puritans of Venture Capital — and the two he rates well above their reception are Historical Futurism (born from walking past the Institute for the Future in Palo Alto: science fiction as a guide for building reality) and The Renaissance of Rise and Grind.

The reversal at the center of the episode. Kyle opens by naming a change of mind: he began writing convinced that storytelling is powerful but reality wins out, and two years of unpacking other people’s stories moved him to the opposite view — stories shape reality, and what we believe becomes what is actually real. The Glass-Half War — Empty or Full, published six days before this aired, is the argument, and his evidence is April Fools’ Day: the one day the honesty constraint comes off, so what people say reveals what they half-believe — “there is a little truth in every joke.” The corollary is a duty: “we all have a responsibility to bear the burden of the consequences of our beliefs and our stories.” His case study is the reflexive reading of a startup teaching kids math faster as tech oligarchs exploiting children — a story someone wanted to believe. Molly’s counterpoint from the World Economic Forum’s Global Risks Report: mis- and disinformation ranked the top two-year risk heading into an election cycle.

Two frames worth stealing. First, incentives as the missing variable — getting out of the Bay Area and out of large established firms made him notice how much of every narrative, every excitement, every pitch is upstream of someone wanting it to be true. Second, and sharper: “your beliefs should be a leading indicator of the group you belong to, not a lagging indicator.” You shouldn’t believe something because you’re a Republican; you should believe it, then join. When people use in-group membership as shorthand for belief, nuance dies — which is why the San Francisco question can’t be discussed: good companies can be built outside the Bay Area and most important companies will probably still be built in it, and the maximalists on both sides refuse the conjunction.

Closing on healthy failure. He’s watching an age of acquisition — large-plus-large, large-plus-small, and increasingly startups buying startups — and reads it as a return to health, via a Harry Stebbings tweet he liked so much he saved it after Stebbings deleted it: startups are supposed to fail. Failure is the mechanism that recycles both monetary and human capital back into the system, and in 2021 that mechanism stopped working because nothing could fail. Then the piece he says he has wanted to write for weeks and hasn’t gotten to: hype deflation. Micromobility investors who branded a career on scooters; meal kits; Paradigm saying they were glad the 2017–18 crypto bubble popped because it flushed out the hucksters. Hype isn’t bad — stories and excitement are good — but it attracts parasites, so it has to periodically deflate, and “the more that hype ebbs and flows, the less likely it is that hucksters are going to come in, because they’ve gotten hurt too many times.” The exemplar is Palmer Luckey on Anduril being an AI company and a defense company through every phase of both being taboo and both being hot: “I don’t care about those cycles… the best founders and the best companies will persist through hype inflation and deflation.” He published that piece — Hype Deflation & Inflation — the day after this episode went live.

Transcript

Published 12 April 2024 on the Sourcery YouTube channel; ~46 minutes. ASR errors, names and stutters cleaned and the text paragraphed — nothing reordered, tightened or summarized. Proper nouns the transcription mangled have been corrected (Sourcery, Coatue, Anduril, Replit, Eric Tarczynski, Anna-Sofia Lesiv, Mario Gabriele, Marc Andreessen, Delian Asparouhov, Harry Stebbings, SKUs, talent vortexes, hucksters). Words that remain uncertain are marked [?].

Cold open

Kyle Harrison: I think one of the problems with this increased polarization of people making claims is that they start to see reality their own way. I’ve written about this before — when I started writing I had this really strong perspective that storytelling is really powerful, but at the end of the day reality wins out. And increasingly, over the last two years as I’ve written more and unpacked other people’s stories, I have increasingly become convinced that stories shape reality. What we believe shapes what we believe is actually real.

Intro

Molly O’Shea: Welcome to Sourcery. I’m Molly O’Shea, the founder of Sourcery — a weekly top-VC-deals newsletter and now podcast highlighting the top GPs, founders and deal announcements leading the next innovation cycle.

Today we have Kyle Harrison, general partner at Contrary and writer of the popular Investing 101 Substack, with over 17,000 [?] subscribers. Kyle has had a storied career with experience at top-tier funds like TCV, Coatue and Index Ventures, and he’s an investor in companies such as Ramp, Replit, Anduril, Armada and more. Contrary is a different kind of VC fund, backing companies from seed to scale with an emphasis on talent and research — and as a nerd, I’m a huge fan of their research platform, with company deep dives, reports and now conversations. This is a really fun conversation, so I hope you enjoy.

Hey Kyle, thanks for joining us.

Kyle Harrison: Hey, how’s it going? It’s nice to be here. Long time coming.

Molly O’Shea: And congrats on the move out to Utah. I know you spent a couple of years in the Bay — so what’s that like, how are you doing?

Kyle Harrison: Utah is great. I got out here to be closer to family, and Contrary as a firm is fully remote, so I still end up traveling once or twice a month. But I’ve got three kids, and being able to live in a place where there are more people here with kids — because they can afford to have kids.

In the Bay Area there’s a sort of existential quandary where the more kids you have, the further south you move along the peninsula to try and find more people with kids. And so we just ended up moving further east.

Molly O’Shea: It worked out. Utah is pretty awesome, so you might as well try it.

The stumble into venture

Molly O’Shea: Okay, so I’d love to get into your background and your career a bit more. Could you share how you got into VC, the types of funds you’ve worked at, and what brought you to Contrary?

Kyle Harrison: Totally. I’ve had a very stumbled experience over the course of my career.

When I started in undergrad I was a film major. I had made videos in high school and I wanted to go to Hollywood — I was obsessed with Christopher Nolan and Quentin Tarantino and I wanted to go make movies. And while I was in school, to pay the bills, I was doing wedding videos and commercials and things like that.

Pretty quickly I got to the point where I had too many clients. I couldn’t do all these videos, so I started farming them out to other creatives — “hey, can I take 5%? I got you this job.” And very quickly I realized that I was a much better salesperson than I ever was a videographer. I was never that talented. I like watching movies, but I was never super great at making them.

So pretty quickly I got to the point where I was a one-man marketplace: going out and getting a bunch of contracts and then setting them up with a bunch of creatives. I built a really crappy website and the back end was effectively a spreadsheet — it was very janky. But I grew that to videographers, photographers, graphic designers, whatever. I ran that company on and off for about four years, in and out of school.

Around the time I was about to graduate I ended up selling that business. And I sold it mostly just because — I never even knew to call it a startup, really. I was not in that world. I called it a project, because I was too afraid that if I called it a job my mother-in-law would judge me. I was just shooting from the hip.

When I sold it I was talking to a friend of mine and I said, I have no idea what I’m going to do next. And they said, well, what did you like most about running your company? And I said, I loved being this resource for these passionate creative people. And my friend said, well, that’s sort of what venture capitalists do. And I said, I don’t know what those words mean when put together.

So I kind of stumbled into venture. I ended up working at a seed fund in Utah for a little while, where I’d sold my company and worked at my company. And then I wanted to jump to the other end of the spectrum — I was at a seed fund, and I wanted to invest in companies that had real meat on the bones and see what big businesses look like. Luckily I found a BYU guy who was at TCV, so I jumped over there. That was about eight years ago.

My professional investing career has very much been a Goldilocks experience of very different types and styles. TCV, when I was there, was very private-equity-esque — spent about two years there. Then jumped to Coatue, very hedge fund, big-picture arbitrage — spent two years there. And then jumped to Index Ventures and was a partner there for about two years, much more venture classic. Just very different styles of investing, which I think is one of the reasons why my writing is so focused on unpacking investing — because I’ve seen it in such a juxtaposed world.

And then jumping into Contrary was really a function of wanting to help put my fingerprints on something, and help build in a very interesting direction that I felt was unique from everything else I was seeing out in the world of venture.

Molly O’Shea: Wow. You do have a really remarkable career, and I think that’s also something I admire about your writing — you have so many different dimensions of venture. You’re not just looking at the asset class in the micro aspects that some people with one viewpoint do; because you’ve had experience in multiple different places, multiple different perspectives, it’s really refreshing to read. It’s kind of no-BS, but it’s also a little bit no-bias, because it’s pretty objective.

Contrary and the talent vortex

Molly O’Shea: Going to Contrary — I’d love to learn more about the history of the firm and what you’re focused on there.

Kyle Harrison: Contrary was started about six years ago by Eric Tarczynski, who originally had this idea — he had started his own company, he had worked for a company that was acquired by Lyft, he’d seen a lot of different experiences but was still fairly young in his career. And he looked at all the really sharp people he was rubbing shoulders with and thought: man, if I could just bet on the smartest people I know in their careers, I probably would do pretty well.

So Contrary was born out of this idea that if you can identify the smartest people as early as possible and then support them relentlessly throughout their career, you have an unfair advantage when those people eventually do start companies. That’s how it started — Contrary would go out and find people in undergrad, grad school, PhD programs, whatever, and try and get to know them as early as possible and then just be supportive. Whether that’s helping them get introduced to startups while they’re still fairly young, getting their first job working in tech, finding a startup to go work for and enjoy the journey. If they eventually get to the point where they want to start a company, hopefully they’ve been networked into the Contrary community, where they have co-founders they can work with, or partners, or potential customers or hires.

So it’s been this very holistic framework of: how do we almost create product SKUs for people at various points throughout their career?

That’s how it carried on for the first three or so years, largely investing at pre-seed and seed. And then a few years in — to Eric’s credit — they started to notice a bifurcation in the community. Either you had people who were very soon excited to start their own company, and great, we can write their first check. Or you had other people who said, I really want to focus on finding a really exceptional startup to go join and build my career with them through that journey, and then go start my own business.

And so Contrary became the vessel to help people find what we now think of as talent vortexes. Things like — I think five of the first fifty employees at Ramp came from Contrary. A lot of the people at Retool, a lot of the people at Anduril. So helping build these talent vortexes became another part of the business.

And so I joined to basically help us move further later. Now we’re investing anywhere from pre-seed and seed all the way up to Series B and beyond, with a focus on either being a first-check partner or investing in these future talent vortexes and being able to help them plug into the Contrary talent community.

Molly O’Shea: That is definitely a clear strategic advantage, and it’s communicated very well on your website and through the venture community in general — going after these talent vortexes and trying to find the next generation. Some people love to talk about the PayPal Mafia, but when you’re working with these teams and you’re developed in these cultures and you’re seeing next-gen innovation and technology happening, surely enough some of those people end up being super ambitious and wanting to start things. And so continuing to cultivate and support that talent is awesome, and you have the resources to do that.

Why Contrary Research exists

Molly O’Shea: Another part of Contrary that I’m a huge fan of — I’m a big nerd, I won’t lie about that. I read research reports in my spare time, I read lots of people’s blogs, I write one as a hobby. You guys also have this amazing research arm where you’re putting out reports, memos, deep dives, and now you’re doing conversations. How did you as a team decide to extend that branch of Contrary — and how do you have the time to do that? That’s a lot of work.

Kyle Harrison: It goes back to this vision we have of building effectively these product SKUs that are relevant at different points in people’s careers. Whether it’s early in their career, mid-career, starting a company, running a company, selling a company — we’re constantly trying to think about how we can be this supportive partner.

And it was sort of born out of — like any good opportunity canvassing, when you see an idea for a startup: you get asked the same question enough times and you start to think, man, maybe this should be a product, because enough people have this problem.

We got this question a lot. We’ve worked really hard to keep the community very high quality — these are top-1% people, they’re very ambitious, they’re very thoughtful — and so a lot of the time these people don’t necessarily need our help getting jobs, per se. Sometimes they just want a thought partner to evaluate the opportunities they already have exposure to. So we’d have a lot of people come to us and say: hey, I have job offers to go join these three or four or five private companies, I’ve met the people and I like the people and I think the products are interesting, but what’s the investor’s perspective on this business?

A lot of that came down to me sitting down with them and saying, well, I’ve maybe spent time with this company, or I’ve spent time with competitors, here’s how I think about this space and this market and this valuation. And we realized there’s not really a great resource for people to understand private tech companies. So we should productize that.

And we decided to open-source it — effectively open-access it — for two reasons. Number one, it allows people to tell us where we’re wrong, or where we could do things better, or contribute resources. If we kept it just for our community it would be more limited. And number two, in large part because it is a valuable way to put your flag in the ground: these are the companies we’re thinking about, here’s how we analyze them.

And we have very deliberately set up Contrary Research to be antithetical to content marketing. We actively don’t want this to be pumping our own book, which is why we don’t exclusively write about our portfolio companies — and even when we do write about our portfolio companies, we go out of our way to make sure it’s a very balanced perspective. We’re really trying for it to be a pragmatically optimistic view of tech companies, rather than the very fluffy, inflated view that most content marketing is.

Molly O’Shea: It’s true. A lot of content marketing can’t escape its own bias, which is really hard to read between the lines of sometimes. So with all the research that you have, is there a certain area you’re super excited about, that the team is excited about? Where have you been spending most of your time?

Kyle Harrison: It’s interesting, because we sit at a very interesting place. At this point we’ve covered 300 different companies, maybe two dozen different categories and industries. So we have a broad surface area of stuff, and on top of that we can pay attention to what people are looking at, where they’re paying the most attention.

Unsurprisingly a lot of that correlates to hype — where are people excited. So obviously OpenAI gets a lot of attention, Stripe gets a lot of attention. But one of the things people have been trying to wrap their heads around is the excitement in El Segundo, and defense and aerospace and manufacturing and building in the physical world. There’s a lot of excitement there, but there’s a lot of people who are pragmatic business builders trying to wrap their arms around it — maybe they’re not as caught up in the zeitgeist of the excitement, but even if you abstract away from the hype, you still feel like there is a moment in time where deglobalization is real, increased global conflict is real, and those things create market opportunities. So people want to dig in and understand how these businesses have gotten built.

So right now we have a project in the works — a real deep dive into the history and evolution of working with the military, and how military and defense tech has evolved as a space. How companies like Anduril have taken advantage of that, and the playbook, abstracted. We’ve gone super deep on all the different playbooks and interviews folks have given, and tried to articulate what the core principles are to take away. So that’s been a big space, in addition to covering several companies in that category.

And then the second thing people are really trying to pay attention to is how do we crystallize the trends that are occurring, whether technology or society — what are the most powerful trends driving things forward, and how do we innovate around that? That’s another project that will probably be a few months before we announce. Those are the two things taking up a lot of my time.

Molly O’Shea: That’s so fun. And those are right up the LA-ecosystem alley — topics of investment and content for sure. It’s awesome to educate more people on how this works. It’s naturally a very capital-intensive kind of business, you’re dealing with government, and that comes with a higher learning curve than one might expect.

Staying generalist on purpose

Molly O’Shea: Okay, so to shift gears back to your investing side — at what point do you typically get in, and what are the areas you’re going after?

Kyle Harrison: A lot of venture firms talk about being generalists and open-minded. For us that is sort of by necessity, because there is this core value proposition we’ve created where we say: we want to identify the sharpest people in the world and then support them throughout their career. And it would be pretty on the nose if we said that and then said, ah, as long as they’re building in fintech or AI, and anything else I’m not interested in.

So we actually spend a lot of time trying to understand why people are attracted to solve the problems that attract them. Because of that, it forces us to be very generalist.

A big part of the reason why we win deals — investments at an early stage, or access into companies at a later stage — is plugging into that talent network. Both from the perspective that there are a lot of talented people who can be co-founders or even potentially early customers. We’ve had a number of people now source their initial design partners from people they knew through the Contrary community. So as an early-stage founder, access to that community can be very powerful; and as a later stage, plugging into that talent pool is very valuable.

Because of that we have to keep ourselves very open-minded: okay, if we think highly of these people, or if we see a lot of people going towards this business or this industry, we need to move very quickly to understand what is compelling. Just because we think these people are high quality, we also have to understand the opportunities they’re seeking.

And candidly, research is part of that. It helps us to have a very prepared mind on categories we maybe wouldn’t have spent as much time in proactively, because we’re not seeing a ton of investments — but occasionally something comes up where we’ve not looked at this space, and between what we’re doing in research or what Anna-Sofia is doing in Foundations & Frontiers, we have collectively done a lot of work to go deep into a lot of these different categories. So a lot of it is very generalist, with a little bit of a prepared mind.

Writing Investing 101

Molly O’Shea: Transitioning to your personal writing with Investing 101 — I’m a huge fan, I’ve been reading this for a while. You have around 17,000 subscribers; that’s a lot of people. How did you start writing this, and what was your focus? Were you like, okay, maybe I’ll set an hour each week and talk about a topic that’s really interesting to me or top of mind? How do you organize this and go out and create these pieces?

Kyle Harrison: I definitely would not say that I am in the upper echelons or hall of fame of some of the people I have a ton of respect for. There are people like the Lennys and the Packys and folks like that — I’m a big fan of Mario Gabriele and The Generalist — those types of people have done an incredible job building a real asset. I think of myself very differently.

For a long time I had wanted to write and I had an itch, and I didn’t really have a great way to articulate it until I found a quote — I think it’s the pinned tweet on my Twitter — “I don’t know what I think until I read what I say.” So a lot of it started as: I want to be able to put ideas down, forcing me to confront what I think or don’t think, or how well I understand this thing.

But then for a long time I still didn’t write, even though I had found that quote and kept thinking it to myself. I took a lot of notes and I was fairly prolific in trying to piece together different markets, but I didn’t write because I felt like — man, I’m just shouting into the void of content. There’s already so much content that I don’t read; why should I be producing more content, just adding to the void?

And then my good friend Rex Woodbury, who I worked with at Index, was really my inspiration for reframing how I thought about writing. He and I had a conversation, probably in 2021, where it was: it actually doesn’t matter, because of what I’m trying to do. If I was trying to make this my livelihood, it definitely matters if people read it. But if I’m doing it because I want to put down what I’m thinking and articulate it, it doesn’t matter if anybody reads it, because the act of writing is the thing that will get the job done — even if it goes out to zero subscribers. Plus I always knew I would have at least one subscriber, because my mom has promised that she would read anything that I wrote. So I’ve got something going for me.

So the way I framed it was: I’m going to have one goal, and my goal is not going to be the number of subscribers, the number of reads, the number of shares, the number of words, whatever. It’s I’m going to write once a week and never miss a week. And that’s it. All I have to do is write.

And anybody who reads all my stuff knows that they are not all bangers. There’s many of them that are like, hey, I’m struggling this week, here’s some things I’m thinking about. But since the beginning of 2022 I have not missed a week, and I feel like that has been the most powerful thing. And then it turns out some people agree with the stuff I’m thinking about and want to subscribe, and that’s great — but I continue to stay focused on: I am not building this to be a business or an income stream. I’m building it because I need to put out my thoughts and force myself to confront my own thinking.

Molly O’Shea: What are some of your favorite pieces, looking back in hindsight? Like, wow, I didn’t realize that that actually was true — or that was so prolific of me — or, all this happened, or actually none of that happened and I was crazy at the time.

Kyle Harrison: I would say there are two of my pieces that did not get — I’ll say, I actually am glad that my three pieces that have done the best are probably three of my favorite pieces. So I’m glad that I put a fair bit of thinking and work into them and then those resonated with people.

The Blackstone of Innovation is one, talking about big capital agglomerators. Institutionalized Belief In The Greater Fool is the second one — this idea of handing down the bag, and bag holders. And then my most popular one is The Puritans of Venture Capital, which contrasts these small firms versus these massive firms. Those pieces I’m proud of, and I’m glad that they were well received.

There are probably two pieces I wrote that did not get a ton of attention that I really liked — not everybody liked them. One is called Historical Futurism. It’s basically this idea I’ve thought about for a long time ever since I was at TCV and used to walk past the Institute for the Future in Palo Alto, across from the old Creamery. It was literally set up like a museum of future predictions that had been made in the past — how did people in the ’60s think about the 2020s? I thought about that idea all the time, because that is kind of how we invent the future: by dreaming of it. Science fiction should be a guide for how we think about building reality. So that was one piece I’ve thought about a lot and put a lot into, and it wasn’t necessarily super highly received.

And then the second one is The Renaissance of Rise and Grind. It was about working hard, and Twitter being a hotbed of people making this argument of — is it a toxic work culture, is it an ambitious environment? I really like that piece and I still think about it a lot, because there is a rapidly evolving conversation around: is hard work virtuous, or is it exploitation?

Molly O’Shea: Well, we’re going to share both of those pieces, because they’re super interesting. I’ve read them too and I’m sorry that they didn’t pick up as much steam, but sometimes it happens — they can’t all be winners.

Kyle Harrison: They can’t all be winners.

Molly O’Shea: But because you have the mindset of “I just need to write every week,” it does kind of take that out. Though I’m not going to lie, sometimes I’ll post something and I’m like, damn, why didn’t anybody think that was as interesting as I thought it was? You just never know what happens.

Hard work, polarization, and the trenches

Molly O’Shea: So to go further into those topics — have you started to see any of those trends shift in terms of hard work within your own social circles, with younger people? What would be your outlook on that now?

Kyle Harrison: I get caught off guard sometimes by the philosophical divide that people have. A lot of people that work in tech and in startups are somewhat siloed, because the vast majority of people who work in startups — whether investing in startups or building startups — are already naturally very ambitious, because they wouldn’t have taken on the risk of working at a startup if they weren’t ambitious. So most people see the world fairly similarly: I want to work hard, I believe in this outcome, there’s more to it than just a job.

But the vast majority of people in the world who don’t work in startups have a much less defined relationship with what it means to be ambitious and hardworking. So you see a lot of stuff on TikTok or Instagram of people saying, hey, I work from nine to five and those are my explicit hours, and if you want to email me after that, I will address it tomorrow. They’re trying to set a very healthy work-life-balance boundary, and I think that’s totally okay. If you want to work at a large company and work nine to five and then have a life after that and do your own thing — I don’t think people should be able to victimize their employees in unfair ways. But I think there are people who are more ambitiously driven towards helping to build something, as opposed to just plugging in and out of a machine.

The biggest change for me has been — it’s one thing to have a dichotomy. You want to plug in nine to five and then be done, that’s great; I want to work hard and build a thing and pour my blood, sweat and tears into something, that’s my business. But now there has become this combative divide, where people who work hard think less of “lazy snowflakes” who don’t want to work hard, and people who have a healthy work-life balance look at people who are ambitious at working and think, you are an exploited machine that other people are taking advantage of.

That intellectual combat, I think, is not healthy — but it forces both parties to reflect on why they think what they think. The only thing I’ve seen is that it feels like people are doubling down. It’s like, nope, we need to work even harder and be even more ambitious and work ninety-plus hours a week; and other people are like, no, work is the devil. So I feel like people are just digging into their trenches of how convinced they are that they’re right.

Molly O’Shea: People are getting a little bit more polarized, and media is not helping with that. I recently revisited the World Economic Forum’s piece on global risks, and misinformation and disinformation was number one for the next two years. Given we’re going into an election cycle that makes sense; given the rise of TikTok and short-form content that makes sense. And you never really know what more of these content creators are going to put out, because their influence is really strong and it’s being heard by people.

Stories shape reality

Molly O’Shea: I want to go to your recent piece, because I think this taps into it a bit. The main theme in Silicon Valley and tech recently that Marc Andreessen has been putting out — and I think is creating a lot of great positivity and momentum around these hard workers, these ambitious types, because someone’s got to do it, someone’s got to build the company, someone’s got to motivate people and go after the ambitious goal — is techno-optimism.

And in your latest piece, The Glass-Half War — is it empty or is it full — you state a couple of different examples. What I pulled out of this was the way you framed it, like a recipe for encouraging positive narratives: one, tell new stories; two, reframe existing stories; and three, fix the stories that no one wants to tell. I think this was a really fun piece, because it’s right in the marks of April Fools’, there’s Twitter drama, there’s a lot of things going on. I really liked it. So I’d love to talk about that a little bit more — your thinking on how you wrote the piece, and if you have any different reflections after posting it.

Kyle Harrison: The piece is a continuous evolution of similar threads we’ve been pulling on. When I wrote about the renaissance of rise and grind — thinking about hard work and the relationship people have with what that means, and how that translates into optimism and what people want to build.

I think one of the problems with this increased polarization of people making claims is that they start to see reality their own way. I talk about this — I think I wrote this in the piece, and I’ve written about it before — where when I started writing I had this really strong perspective that storytelling is really powerful, but at the end of the day reality wins out. And increasingly, over the last two years as I’ve written more and unpacked other people’s stories, I have increasingly become convinced that stories shape reality. What we believe shapes what is actually real.

For The Glass-Half War, what was really interesting is I had not noticed this before, but April Fools’ Day this year was very telling for me. There were probably a dozen examples that I saved, and I only included a few in the piece.

Think about it — most people don’t want to be a liar on the internet. So if you are perpetuating stories, it’s probably because you believe them. April Fools’ Day is the one day where those limits are thrown off and anybody can say whatever they want. And the point I make in the piece is that there is a little truth in every joke. There’s something about that thing you said that is kind of true — it’s what makes it funny, or what makes it a compelling lie or joke or prank.

So as I think about the piece having written it: people don’t appreciate the power that their own stories have. People talk about the placebo effect, and there are a lot of things where just psychologically willing something to be can actually have biological implications. I think that’s true in the world writ large — the power of your stories is pretty compelling.

And even being willing to confront other people’s stories, which is another piece I talked about. There was a woman that took a startup trying to teach kids math more quickly, and the story that was immediately told about it was: this is a way for tech oligarchs to exploit children. That’s a crazy story that you want to believe. And so we all have a responsibility to bear the burden of the consequences of our beliefs and our stories.

Molly O’Shea: Certainly. I hope kids can learn algebra and mathematics much sooner and more advanced — why not? I would love to have been so much smarter as a child, but didn’t have the resources. Now kids do, so instead of watching videos all day, why not learn math?

Kyle Harrison: That’s a spicy take, Molly. In this day and age, that’s a spicy take.

Molly O’Shea: It should not be. Education should not be a spicy take. That’s ridiculous.

Kyle Harrison: That’s right.

Molly O’Shea: Other countries tweak their algorithms to make sure that STEM is at the top of people’s minds — but not for us, unfortunately.

I do think, though, that within this piece you shed light on a lot of really important cultural things that are happening with content and with creators, and people that are trying to tell stories. Because to your point, the stories that we tell ourselves are ultimately the stories we end up believing, and how we see the world. Whatever you choose to believe creates a perspective and a narrative around everything.

And there is in effect a disconnection between communication and these narratives people are coming up with. We’re more online, we’re more disconnected from people in real life. A lot of people like to make judgments on people, or think that they can connect the dots, but we can’t — and we’re just kind of fed more and more information over time. That’s why I love your research, I love your writing. I think more people should be writing from these kinds of objective points of view, fueled with data and a little bit of perspective.

I think it was Pirate Wires — I was listening to their podcast, and I’m not as energetic in my opinions, but they pull really good points on this. It’s like: what’s wrong with algebra for kids? Why is that a bad thing? Why is working a bad thing? Ultimately you’re an adult, you kind of have to choose your life and how you want to surround your content consumption. And then sometimes things are out of our control and some people don’t know that — which does make it important to encourage education, and some more goodness in the world, and techno-optimism.

Incentives, in-groups, and the San Francisco question

Molly O’Shea: Okay, so you were in the Valley for a while — you were in the Silicon Valley scene. Now you’re out in Utah, working remotely with your team. How has that perspective changed since you’ve been a little bit removed from the hub of culture?

Kyle Harrison: It’s funny, because first of all, most of the people in SF wouldn’t call it a hub of culture. It’s much more a hub of hard work, maybe a hub of technological innovation — not necessarily culture. There’s not a lot of fun to be had in SF a lot of the time.

Getting out of the Bay Area and out of that silo, there are two things I take away. Number one — and this is true of getting away from large established venture firms too — for the most part, people do not appreciate how much incentives play a role in everything that happens. Every narrative that we believe, every company that we’re excited about, every pitch that we hear — there’s so much that goes into the incentives of wanting that thing to be true, or to not be true. And people don’t spend enough time unpacking what their incentives are, what they’re incentivized to do. Getting outside of doing the normal thing that everybody’s doing has helped me appreciate that.

And the second thing is this idea that people will use in-group beliefs as a proxy for their own beliefs. I’ve written this before too — I have this line about how your beliefs should be a leading indicator of the group you belong to, not a lagging indicator. I shouldn’t believe something because I’m a Republican; I should believe something because I believe it and I think it’s true, and then I should be a Republican, or a Democrat, or a Costco member. I should pursue my memberships as a result of my beliefs.

People who use this in-group shorthand automatically just decide they believe things — and the first thing that happens when you decide “I’m just going to believe what people in tech believe” is that nuance dies. It makes it harder for people to address topics like, for example, the centricity of San Francisco as a tech hub.

There’s important nuance in that. Yes, good companies can be built outside the Bay Area — that is true. And statistically there are more people in the Bay Area building companies within a specific playbook, with specific expectations and shorthands and heuristics, that are more likely to lead to success for a company. So I can simultaneously believe that good companies can be built outside the Bay Area, and that the vast majority of important companies will still probably be built in the Bay Area.

Other people who are either San Francisco maxis or remote-work maxis refuse to believe that nuance, because they’re all in on one or the other. The reality is that both can be true, and then you just have to do with that information what you will. You don’t have to believe one thing or the other just because you belong to a group that happens to feel really strongly about that thing.

Molly O’Shea: I get that. We had Delian on not too long ago and he said something similar — he was in the Bay Area for a while, then broke out and went to Miami, and he was surprised by the clarity of thought he had, and how much groupthink there was. You can be open-minded and creative and have your own opinions and beliefs and still hold the similar values of highly ambitious work and wanting to do things, but in different areas. I don’t think that should be a big argument at all. Anybody should work anywhere — we have access to the internet, it’s not hard to DM you or talk to someone. It’s kind of a close-minded thought. But again, people love prescribing themselves to different groups and identities. And it is an amazing place to grow a career, so I’m not talking down to the Bay at all — I love visiting, I think it’s great. But yeah, maybe to your point, there’s not much culture.

The age of acquisition, and hype deflation

Molly O’Shea: So to wrap up, I just want to end on a positive note. What are you most looking forward to this year, and what kind of ideas do you have for writing, cooking up?

Kyle Harrison: I’m seeing a lot more of — and I’ve written about this a few times before, I’ve called it the age of acquisition — companies that are really interesting as a product but maybe don’t make as much sense as a standalone company. You’re seeing a ton more acquisitions. I talked in that piece about large plus large — a Microsoft buying an Activision — a large and a small, and then even small and small, startups acquiring other startups. I’m starting to see a lot more of that.

There’s a tweet I talk about a lot that Harry Stebbings deleted — I saw it and kept it and have told him that I really liked it, I wish he hadn’t deleted it. He talked about this idea that there is a natural selection in startups. Startups are supposed to fail. It is literally a mechanism of iteration and experimentation: startups are supposed to go out, try something, experiment, and if it fails then the capital — both the human capital and the monetary capital — is supposed to get recycled back into the system, to be redistributed to other, maybe more deserving companies and experiments and startups.

As sad as it is when companies don’t work out, or people go elsewhere, it needs to be a healthy thing that we buy into. And in a world of massive plentiful capital, nothing failed. It was really difficult for a company to fail in 2021, when everything and their mother could raise something. Maybe not everybody’s raising at massive multi-billion-dollar valuations, but the vast majority of companies were raising, and so failing in 2021 was fairly difficult.

It’s increasingly getting more and more difficult — which might not feel like the most optimistic note, but I think it’s a sign of some modicum of returning health to the startup ecosystem. Because it’s valuable when companies acknowledge, hey, we built something really cool but we would do a better job as part of this thing, as opposed to trying to go at it ourselves. Instead of having ten companies building in the same direction, you have maybe one or two. They can still compete, they can still drive better and better results, but they have all the different resources of different people.

So as I look forward over the course of the next year — one of the pieces I have wanted to write for the last couple of weeks and haven’t gotten to, but I hope will be an important framework for people, I may be wrong — I’ve wanted to write about hype deflation for a long time.

The reason is that there’s something really interesting in looking back at previous hype cycles. I remember when there were investors who were branding themselves micromobility investors — that was going to be their career, built on various forms of investing in micromobility, because all the scooter companies were the rage. And man, that did not happen. Those companies have not worked out super well. Or food delivery, or meal kits back in the day.

And even some of these cycles I think are not truly dead — they are simply like a phoenix, rising and falling into the ashes. Crypto goes through these waves, and you see even the guys at Paradigm: they said they were excited when the 2017–2018 bubble popped and crypto prices came back down to earth. It’s like, good — this is a time to rebuild. Same thing in ‘21. There was some element of, I’m glad that happens, because it flushes out a lot of the negative stuff.

My hope is that we are starting to learn these healthy cycles of hype inflation and deflation. Because I don’t think hype is bad — it’s good to tell stories and be excited about something. But hype also attracts a lot of parasites and hucksters. So every once in a while that hype needs to deflate and flush out the hucksters. And candidly, the more that hype ebbs and flows, the less likely it is that hucksters are going to come in, because they’ve gotten hurt too many times.

You look at a company like Anduril — Palmer talks all the time about how when they got started six, seven years ago, they were both a defense company and an AI company, and neither were exciting. Then for a little while AI was really exciting but defense was still very taboo. And then for a while, with Ukraine and stuff, defense became exciting and AI is exciting, and — oh great, now we’re benefiting. But he’s like, I don’t care about those cycles. Those cycles will ebb and flow; sometimes they’ll make my life easier, sometimes they’ll make my life harder, but I will continue on my North Star — and the best founders and the best companies will persist through hype inflation and deflation.

I think that’s a healthy dynamic that we need to appreciate and acknowledge comes and goes. So hopefully that’s optimistic enough.

Molly O’Shea: No, I think that’s totally optimistic — and also that it’s just a natural part of the tech industry and what we’ve all prescribed to in general. It’s highly ambitious people going after very risky things, hoping, praying that it works. Most of the time it doesn’t work, but you learn along the way and then you apply those learnings to the next time.

I don’t know if this will make the mark, but one thing I was talking to my boss about the other day was the big scaling tech giants and their work in AI and LLMs. You have DeepMind, you have Meta, you have OpenAI — and a lot of talent left those companies to go start their own companies. And now we’re seeing that start to deflate and those companies get gobbled up back by the parent company. Microsoft just kind of ingested Inflection. It’s like every other day you hear — now Meta is making crazy offers to talent, and talent is just becoming more and more valuable. But I would say that talent is even more valuable because they were building companies in a highly variable environment, and this is frontier technology.

The phoenix analogy, and how the whole tech ecosystem works, is certainly not for the faint of heart. That’s just how it is. But the optimistic view is that we just keep on doing it because it’s fun.

Kyle Harrison: That’s right. Totally. It’s very fun.

Molly O’Shea: Well, thank you so much for coming on, Kyle. I’m really excited for that piece, and I enjoy all of your writing — so if you haven’t checked it out yet, go check out Investing 101. Kyle has some really thoughtful deep dives on the tech world and the VC ecosystem. Thank you, Kyle.

Kyle Harrison: Yeah, thanks for having me.

Connections

The show and the pair of episodes

  • Sourcery · Molly O’Shea — Kyle’s first of two appearances. The second, 300 Pages on Anduril: Inside Modern Warfare (April 2026), is the sequel to the defense project he describes here as “in the works.”
  • 300 Pages on Anduril: Inside Modern Warfare — read the two together. The Contrary Research military deep dive that is one project among several in this episode becomes a 314-page book, and the “Goldilocks career” and “writing forces me to confront my thinking” bits recur nearly verbatim two years later.

Essays this episode is about

The firm

  • Contrary — Eric Tarczynski’s founding bet: identify the smartest people as early as possible and support them relentlessly, with product SKUs for each stage of a career. Kyle joined to build the later-stage practice.
  • Talent Vortex — the strategy that came out of the community bifurcating between people who want to found and people who want to join something exceptional first. Five of the first fifty at Ramp; also Retool and Anduril.
  • Contrary Research — born from one repeated question (“what’s the investor’s read on this company?”), open-access by design, ~300 companies at the time of recording, and deliberately antithetical to content marketing. Foundations & Frontiers (Anna-Sofia Lesiv) is the sibling surface.
  • TCV · Coatue · Index Ventures — the Goldilocks tour: private equity, hedge fund, venture classics. He credits the juxtaposition for why his writing unpacks the mechanics of investing rather than defending one style.
  • Rex Woodbury — the 2021 conversation at Index that unblocked the writing by removing readership as a goal.

Ideas

  • Storytelling — the reversal at the heart of the episode: he started out believing reality beats narrative and now believes stories shape reality. April Fools’ Day as the natural experiment; “there is a little truth in every joke”; the responsibility to bear the consequences of your own stories.
  • Incentives — what leaving both the Bay Area and large established firms made visible: almost every narrative is downstream of someone wanting it to be true.
  • Beliefs as a leading, not lagging, indicator of group membership — the line worth keeping. Believe first, then join; when in-group shorthand replaces belief, nuance dies. See Counter Positioning for its strategic cousin.
  • San Francisco · Remote Work — the nuance both maximalisms refuse: good companies can be built elsewhere and most important ones probably still won’t be.
  • Techno-Optimism · Marc Andreessen — the ambient debate the Glass-Half War piece is answering.
  • Misinformation — Molly on the World Economic Forum Global Risks Report ranking mis/disinformation the top two-year risk.
  • Natural selection in startups — the deleted Harry Stebbings tweet Kyle saved: failure is the mechanism that recycles human and financial capital, and 2021 broke it because nothing could fail.

People and companies referenced

  • Palmer Luckey / Anduril — the North Star argument against caring about hype cycles.
  • Christopher Nolan · Quentin Tarantino — the film-school ambition that preceded all of it.
  • Lenny Rachitsky · Packy McCormick · Mario Gabriele (The Generalist) — the writers he places above himself.
  • Delian Asparouhov — Molly’s parallel: leaving the Bay for Miami and finding clarity of thought.
  • Pirate Wires — Molly’s reference on the education argument.
  • Ramp · Retool · Replit · Armada — portfolio companies named in the intro and the talent-vortex discussion.
  • Microsoft · Meta (Company) — the acquisition and AI-talent dynamics Molly closes on.
  • Lyft — acquirer of the company Eric Tarczynski worked at before founding Contrary.

Referenced in