Extraction vs. Returns

Yes it's a modern architecture book that you can probably eat a pizza on. I did. Also, 4/5 points to get you some f****** great meetings from it.

I don’t read books about modern architecture for your amusement or to sound smart. I don’t even like buildings all that much.

If it were up to me, all I would do is sit around and eat $14 chicken parmesan and listen to the first four Joe Walsh albums.

A GP who only understands their own asset class - VC or PE - is blind.

You cannot understand rock music without understanding blues and jazz.

If you miss that lineage, you miss the entire architecture of the form.

The same applies to capital allocation.

Most GPs pitch “returns”. They say, “Mr or Ms. LP, give me money, I, the beggar/supplicant GP, will give you returns.”

They see capital move and they chase it, arf arf.

But they’re missing what’s actually happening: LPs allocate based on extraction architecture. Not returns, extraction.

Returns = they are the metric. The LP puts in $100M, they get back $150M. That’s a 50x return on paper. Ok cool, nice work. You may hear back from this LP.

Extraction = even beter, the mechanism that created t…