Valuation

Alice is a bright 18-year-old living in San Francisco. She makes content for a startup. She has a natural curiosity and drive to tell great stories that move people. She uses AI to amplify her storytelling. She is cheerful, optimistic, yet grounded. How would you determine Alice's valuation?

Your first instinct might be to look at what Alice has today – her current work, her current holdings. This is her present potential, and it sets her minimum valuation: what we believe her current holdings are worth, minus her floor.

But Alice's real valuation lies in what she hasn't yet discovered – the ideas and collaborations that will emerge over the course of her life. Her future potential is what determines her valuation.

How do we value future potential?

It's tempting to answer this question in the context of our present world. For example, you may try to gauge the chance of Alice going on to start or work at startups vs. becoming a feature filmmaker. These paths, in our present world, have drastically different business models. Without exposure to startup economics, a person's valuation won't be that high.

But, if you believe the world is about to change drastically, then it makes sense to first think about how the world will change, and then work backwards to see how Alice may do in the future. How you value a person reflects your beliefs about how the world will change.

My beliefs:

1. Leverage. AI will drastically amplify an individual's judgment. We will see an explosion in the number of ideas a person brings to the world.
2. Extreme outcomes. With greater leverage, the gap between the best and the average will increase sharply. Startup economics (extreme upside, power-law distributions) will emerge in everything we do¹.
3. Convergence. AI strips away the operational complexities that keep domains separate, leaving the transferable core: judgment, taste, understanding people, etc. Someone with a strong core can operate across domains as barriers to entry collapse. Labels become useless.
4. Tokenization. As extreme outcomes emerge across more activities, we will securitize them to share risk and reward more broadly. Startup-like instruments – tokens – will eat the world.
5. Exponential. This decade will bring more change than the past century.

As extreme outcomes emerge everywhere, Alice will be exposed to extreme upside opportunities regardless of whether she joins a startup. Her ability to move people through stories will transfer across domains as AI strips away the operational barriers between them, expanding her opportunity surface area. Through tokenization, Alice will be able to capture the value she creates. And she has decades of exponential growth ahead of her.

But there's still great risk. In a world with great leverage and convergence, Alice has to be special to stand out. If she doesn't embrace what makes her unique, the person(s) she is mimicking will make her work irrelevant very quickly. Such courage isn't easy. And Alice may quit entirely for whatever reason.

Even so, if I notice a hint of something special in Alice's work, something that reflects what makes her unique, something that moves me – I would value Alice at $1B at the least. We already value promising pre-revenue startups at $1B or more. Alice has a transferable core skill, an exploding number of ideas to apply it across, and decades ahead of her in an exponentially accelerating world. Why would her potential be worth any less?

But there's a critical factor that we haven't taken into account yet.

Behind every great individual success, there are many supporters who made it possible. Being able to hold equity in people enables supporters to capture the value they help create².

If Alice surrounds herself with bright people, and has genuine skill in supporting their success, she will earn equity in them and gain access to their circles, compounding her exposure to extreme upside.

Therefore, we can't view Alice's potential in isolation. She is a node in a network. Her skill in choosing who she spends time with, and how well she can support them, is the greatest factor in her valuation – contributing orders of magnitude more than her individual potential alone³.

It will take time for people to be valued what they're worth, but the market always catches up.⁴.