Twitter is like Venture Capital

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For the last 9 months, I've been writing content for startups and venture capital firms. I've learned a lot hanging out and chatting with founders and VCs and I think I figured out why Twitter is such a big part of Silicon Valley culture. 

Speaking of Silicon Valley... 

Today's Cyber Patterns is brought to you by Homescreen

Many of you probably don't realize I also write Homescreen, a newsletter to 20,000+ founders, VCs, and startup junkies. 

Our team at Launch House sends out emails Monday, Wednesday, and Friday with startup news, resources for builders, and dank memes.

Venture capitalists love Twitter because Twitter is a lot like venture capital.

Every VC is searching for the next unicorn ($1B market cap) just like we're all trying to post bangers. But as anyone in VC knows, most investments aren’t unicorns and often fail. And as anyone on Twitter knows, most tweets aren't absolute bangers.

In a typical VC fund, there may be just 1 unicorn, 3 exits, and 10 failures.

How do they make money then?

The unicorns make up for all the rest. 

The win from the unicorn is so much larger that it covers their losses on the 10 failures. Combine that with 3 other exits and the fund will profit.

This concept is referred to the Power Law, meaning that a small percentage of your investments will return exponentially greater value than the rest. Think of the 80/20 rule where 80% of the outputs come from 20% of the inputs.

Well this is just like social media.

Catching Unicorns

In a portfolio of bets (tweets), all you need are a couple unicorns (bangers).

"In a power law world, the only thing that matters is the presence of a home run investment in the portfolio," wrote the AngelList team.

I wrote 1 unicorn thread that brought me 5,000+ followers. Combine that with 50+ other threads and literally thousands of tweets and I’m sitting at 13,000 followers.

My friend Jack Raines wrote a satirical thread about his favorite letters of the alphabet. It got 400,000 likes. He gained 10,000 followers overnight. Banger.

VCs only need a few bangers before they grow a large account.

Similarly, they only need a unicorn investment or 2 to get rich. It's the same mentality.

If I could implore you to do one thing, it’d be to take more shots on goal. Tweet more, post more TikToks, write more posts. Fail, learn, iterate, and repeat. By taking more shots, you increase your chance of publishing a unicorn (banger). 

“Investing is, at its core, a game for learners.” writes Kyle Harrison, General Partner at Contrary Capital. Social media, at its core as well, is a game for learners. It’s a game of iteration and improvement. 

The same goes for social media. I failed online for 10+ years.

With each failure though, I learned something new. 

Even now, I fail every fucking day.

This week, I launched the pre-order of my book on Twitter. Success! Then I tried editing the book's bio on Amazon and clicked the wrong button. This blocked my book and refunded the pre-orders. Failure! 

Everyday, I swear there's successes and failures like that when social media is your job. Sometimes tweets flop, you have to delete something, whatever. It doesn't matter. Fail fast, fail often. If you're not failing online, you're not trying cool enough shit.

The same mentality goes for venture capital. VCs aren't investing in blue-chip stocks, they're investing in 19-year-old nerds with ideas and a laptop. After all, venture capital started out as Adventure Capital.

Every time you invest in writing a post or making a video is equivalent to investing your money somewhere. Time is money, so is your energy. Now I'm not saying go crazy on Twitter, but make some moonshots every now and then.

Write a killer thread, drop a funny shitpost, send a DM to a celeb, go have an adventure.

Friends in High Places

Another similarity to venture: you need powerful backers. 

VCs need big-time LPs (Limited Partners) like institutions, endowments, and high net-worth individuals to give them money to invest. 

You need people like that on Twitter: friends with big accounts who are supportive of your work and down to retweet or even just throw a comment. 

For every post of mine that blew up, I sent it off to a few friends with big accounts. They're usually cool throwing a comment or even a retweet because they know that's how the game is played; when they were smaller, they sent it off to bigger accounts too.

Think of these friends like your investors. Yes, they're helping you out, but they're also betting on that fact that you'll help them too as your account grows. It's Twitter Game Theory 101.

Coalitions > Competition

You'd think VC culture would be sharks fighting against each other, but it's not true. It's actually very collaborative.

VCs rely on each other to pass each other deals. Sometimes, an investment opportunity isn't right at Firm X so they pass it off to a friend at Firm Y. VC is a very positive-sum game. When Investor X wins, it doesn't mean investor Y necessarily loses.

Well, the same goes with being a creator on Twitter (and any social media).

Don't think of everyone else as your competition. There's enough likes and retweets to go around. Social media is a positive-sum game where you winning doesn't mean someone else is losing. 

With collaboration in mind, you should form a coalition. Every big creator is in at least a couple group chats with other creators where they talk shop and send content around for engagement. Sahil Bloom and Greg Isenberg were in one. Even MrBeast has a groupchat with creators.  Coalitions will give you leverage to grow.

Career Capital

The biggest challenge for a startup is finding users.

If your startup's lead investor has 1 million Twitter followers like Marc Andreessen and he tweets about your product, that'd be pretty valuable, right?

A hot startup can get investments easily, but 1 million eyeballs is hard. This is why every VC is growing their Twitter and why I get paid to ghostwrite for VCs.  

A Twitter following is a personal moat. Named after a moat that protects medieval castles, it's a unique competitive advantage that compounds over time.

For VCs, a Twitter following can translate to better dealflow because they can provide social capital and distribution on top of their financial capital. For freelance writers like me, it means we can set higher rates and pull bigger clients. 

"Ideally you want this personal moat to help you build career capital in your sleep," writes Erik Torenberg, founder of On Deck and Village Global. 

That's what Twitter is. Same with any social media if you us it right. Twitter, TikTok, whatever are career accelerants pretending to be apps for viral dances and memes.

Creators Corner

3 resources that helped me be a better creator this week: 

📘 I switched all my newsletter reading over to Readwise Reader. I now save any page on the internet I'm reading there. It's my personal library and I love it.

🎥 I started using Descript for video editing. WOW. You can edit videos by editing the transcript. I already had a TikTok blow up.

🤝 Lex Fridman interviews MrBeast. s/o Danny Miranda for clipping this epic quote: