🌁 I Know There Is Alpha Somewhere
The search for differentiated ideas, opportunities, and outcomes in an increasingly competitive world
Simply put, alpha is excess return: performance above what the market, a benchmark, or a peer group would suggest you should earn for the risk you are taking.
Alpha is not merely doing well. It is doing better than expected.
So how do you find it?
You have to discover something that is not obvious, not fully priced in, or not easily acted upon by everyone else. Once an opportunity is widely known, broadly accessible, and simple to execute, it usually stops being alpha. At that point, it becomes beta: exposure that anyone can buy, copy, or compete away.
The search for alpha is really the search for edge.
Sources of inspiration
People
One of the most valuable things you can do is surround yourself with interesting, diverse people, individuals who come from different places, have taken different professional paths, and inspire you to think differently.
These people can be found everywhere, but in certain places it is especially important to move beyond the obvious circles. Otherwise, you risk becoming a carbon copy of the peers inside your echo chamber.
I’m looking at you, San Francisco and New York.
The best ideas often emerge from conversations between people who do not share the same assumptions, incentives, or reference points. A network becomes more valuable when it expands how you think, not merely how many people you know.
Location
Location shapes your network and your lived experience. It influences your peer group, the industries you encounter, the problems you observe, your ability to travel, and the opportunities that feel visible or possible.
The internet has weakened some of these constraints, but it has not eliminated them.
There is a reason certain manufacturing giants emerged in the middle of the United States. There is a reason Portland, Maine, became a major hub for veterinary technology and innovation. Expertise attracts talent. Talent attracts capital. Success begets more success.
But location can also create blind spots. The places that receive the least attention may contain the most overlooked problems, industries, and people.
Lived experience
Throughout your life, you collect secrets.
Most appear unrelated when you first encounter them: an obscure industry insight, an unusual job, a difficult customer, a hobby taken too seriously, a place few people visit, or a relationship with someone outside your normal world.
Over time, those secrets can assemble into a mosaic that is uniquely yours.
The more high-quality, tangentially related experiences you collect, the more opportunities you create for unexpected connections. Solving for a high volume of meaningful life experiences may be one of the most worthwhile uses of time.
What looks inefficient in the moment may later become the source of your edge.
Sources of noise
If something is commonly known, accepted, and understood, it cannot, by definition, be alpha.
If you are reading it repeatedly on social media, it is not unique. It is already part of the consensus. If a venture deal is broadly available to the public, you should at least consider the possibility that the most informed people have already seen it and passed.
Published venture capital perspectives and low-level analyst talk tracks are usually consensus dressed up as insight. If something were truly proprietary, it probably would not be published. If it were a valuable secret, it would not be broadcast to thousands of people.
The larger a fund becomes, the more consensus-driven it often must become. At scale, firms are rewarded less for making strange, idiosyncratic bets and more for producing predictable returns within an accepted framework. See “Where are the customers yachts” for more on how and why this happens.
This does not mean consensus is always wrong. It means consensus is rarely where differentiated returns begin.
So what do I do?
The mistake is believing alpha must arrive as one brilliant, contrarian insight.
More often, it is built gradually from a collection of small advantages: an unusual network, a neglected geography, deep knowledge of an unglamorous industry, a willingness to act, or a combination of experiences that few other people share.
The goal is not to be different for the sake of being different. Contrarianism without insight is simply another form of conformity.
The goal is to develop a perspective that is both distinct and correct, and then possess the conviction, access, and ability to act on it before everyone else does.
That is why the search for alpha cannot be outsourced. It is unlikely to be found in the same newsletters, neighborhoods, conferences, and conversations everyone else is consuming. It comes from paying closer attention to the world immediately around you, following curiosities further than is practical, and spending time with people whose lives look nothing like yours.
Alpha is somewhere.
It is probably hiding inside something that currently seems too small, too strange, too difficult, too local, or too boring for everyone else to care about.