I've been thinking for a while about something that many in the VC industry prefer not to admit: the "specialized store" model is no longer the only valid path. In fact, I believe we are in the midst of a fundamental transformation in how venture capital works.

A decade ago, I saw something interesting when studying how Y Combinator operated versus other funds. YC played a completely different game. While other VCs sat around choosing between startups passing through the conveyor belt, YC was building a machine. It had networks, services, infrastructure. And most importantly: it consistently won the best deals.

That made me realize that selection was no longer the most critical factor. The ability to access the best companies had become as important, or even more so, than choosing correctly. When thousands of funds compete for the same opportunities, you need more than good judgment.

The reality is that software ate the world, and now AI is accelerating everything exponentially. The startups winning today are capital-intensive. OpenAI needs billions in GPUs. Anduril builds next-generation defense. These companies require institutional partners who truly get involved in the work, not just write checks.

Someone at a16z put it well: your fund size is your strategy. It’s your bet on the future. Large funds are not arrogance; they are conviction about the scale modern companies will reach.

I see many critics saying that large funds lose their soul. But that’s nostalgia. The game has changed. The best companies today need access to global talent, relationships with Fortune 500s, go-to-market strategies, legal and financial infrastructure. The institutions that can truly offer this win the deals. And when you win the deals, you attract the best analysts, the best operators, and your selection capacity improves.

I look at the numbers, and it’s clear. Years ago, there were 15 companies generating $100 million in annual revenue. Now there are 150. The winners are bigger than ever. The ceiling has moved from a billion to trillions of dollars. The private market is mature enough for leading companies to reach unprecedented sizes.

LPs with access to scaled institutions like a16z see the returns. Eight of the ten largest companies in the world are based on the West Coast and backed by venture capital. The fastest-growing private companies are also mainly VC-backed companies. The numbers speak for themselves.

But I believe the future isn’t just giant funds. We’ll probably see a pattern: a few massive players on one end, and a long tail of ultra-differentiated specialized funds on the other. Middle-sized funds will have trouble, honestly. They’re too big to lose to the giants but too small to compete with institutions offering full platforms.

The irony is that VCs criticize big VCs for not respecting the game, but ignore that the game has always been in service of founders. And the startups they support do exactly the same: scale, disrupt, change the rules. It’s the same logic.

When technology transforms an industry, something is always lost. But much more is gained. VCs understand this better than anyone because they see it all the time in the companies they fund. Software ate the world. And it’s definitely not going to stop at venture capital.