THE MAP IS NOT THE TERRITORY

Summary from the TLDR Founders newsletter

VCs treat the power law like a selection tool when it's actually just a description of what happens after the dust settles. They look at seed-stage startups and ask, "Is this a power law company?" - but that's a category error. Uber looked like a black car service for rich people. Airbnb was for travelers who couldn't afford hotels. Both got passed because investors couldn't model a $10B outcome. The irony is that power law returns almost always come from market creation, not capturing predictable share of existing markets.