the funds build the theater, the operators pay the bill

the vc script arrived in latam late and without the full cast

in a good part of venture-backed startups, operational work exists to sustain a distance: the one that separates what the company says it is from what it actually does. the analytics dashboard gets built, the prds get written, the infrastructure migration gets planned, vendors get negotiated with, funnels get instrumented. all of that is real, competent, sometimes excellent work. and almost all of it is executed so the factory can catch up with the brochure.

when a project like that fails, the comfortable reading is that execution failed. the uncomfortable reading is that the system was misconceived from the origin. the narrative was not a representation of the business. the narrative was the business. and the team spent months or years trying to get operational reality to catch up with a promise the model never had any way of keeping.

it is not an isolated anecdote. it is the mechanics of venture capital, and there are at least three books written from inside the ecosystem that document it with an honesty you will not find in any fund's deck.

the first is chaos monkeys, by antonio garcia martinez, who went through y combinator, raised money from the heaviest names in silicon valley and later was a product manager at facebook. the second is uncanny valley, by anna wiener, who arrived in san francisco from the publishing industry and worked at three venture-backed startups. the third is disrupted, by dan lyons, who joined hubspot at fifty-two after a career in journalism and watched the experiment from the only perspective the ecosystem does not tolerate: that of the adult in the room.

the three describe the same thing from three different angles. what they describe is not corruption or incompetence. it is something more uncomfortable: a system that works exactly as it was designed to, and whose design has almost no relationship with producing viable businesses.

let's start with the pitch, which is the founding ritual.

garcia martinez describes fundraising as "an operatic drama on the order of a latin american telenovela." he does not say it with irony. he says it the way someone explains a rule. y combinator's demo day, where founders present before a room of investors, is not an evaluation of products. it is a performance competition where teams try to outdo each other with ever more developed products, user graphs with an ascending slope, or funding news. the slope of the graph matters more than what the graph measures.

when he gets to sequoia, what he finds is not a meeting room. it is a temple. the framed logos of apple, google, oracle, airbnb hang on every wall. garcia martinez describes them as "a mini-louvre of victorious american capitalism." and he goes further, because he understands the religious nature of what he is looking at: the plaques commemorating successful deals are, he writes, the relics of a faith where "capitalism's miracles simply culminate in nasdaq ticker symbols rather than saintly relics." they parade you past the pantheon to see if you measure up to the legend. not whether your product works. whether you fit the liturgy.

and the liturgy has a rigid grammar. when an investor asks garcia martinez what he would do if microsoft offered to buy him for fifty million, the question rips the prepared script out of his head and leaves him speechless. not because he did not know the business answer. because he stepped off the script. the script says you are there to build something enormous, not to sell yourself. when he fails to recite it properly, the rejection arrives that same night.

the crudest proof that this is not evaluation but ritual: chris sacca, one of silicon valley's most influential investors, hears the adgrok pitch in a cowboy-themed bar for less than thirty minutes, says "i'm in" and leaves before the team can process what just happened. there was no due diligence. there was no verified model. there was a signal accepted on a first date. and garcia martinez explains why that matters beyond the check: sacca's golden name on the cap table works "that essential but elusive miracle: convincing other weak-kneed investors to invest simply due to his presence."

there is the heart of it all. the presence of a status investor convinces the others, who convince the next ones, in a chain where no link is an independent evaluation of the business. it is a signaling system that imitates evaluation without being it. garcia martinez says it without anesthesia: when he advises founders on how to tell who holds real decision-making power, he concludes that everyone else at the fund is "as much an accessory as the hot receptionists." the entire venture capital apparatus, seen from inside by someone who navigated it successfully, is stage scenery with a handful of real decisions hidden behind it.

anna wiener sees it from the opposite side: that of someone who arrives without having internalized the script and realizes everyone is reading from it.

her description of the moment is the best x-ray i know of the euphoria that precedes every cycle: "the optimism of no hurdles, no limits, no bad ideas. the optimism of capital, power, and opportunity." when a famous venture capitalist declares that software is eating the world, wiener observes how the phrase gets quoted in decks and press releases and job ads "as if it were proof of something." not as metaphor. as evidence. the phrase replaces the argument.

the sharpest thing about wiener is that she knows she is performing and performs anyway. sitting across from engineers, product managers and ctos at several companies, she concludes: "we're all just reading from someone else's script." the script did not come out of any result. it came out of a set of other people's experiences, from google and facebook and amazon, distilled into rituals that replicate without anyone asking whether they apply to the case in front of them.

the offices resemble one another because they are aesthetics that exist, she writes, "to insist on their own reality." a software startup for programmers has its waiting room decorated as a replica of the oval office, with the presidential blue carpet and the company mascot embroidered on it. the e-book startup wiener joins raises three million dollars, and the founders, with two years of experience, talk about their work like lifelong veterans. credibility does not come from track record. it comes from having absorbed the posture, the vocabulary, the shirt buttoned up to the collarbone.

and when what the company does needs justifying, the culture provides the mantra. the solutions manager at the analytics startup, every time someone raises a concern about the surveillance the product enables, smiles and says: "don't forget, we're on the right side of things. we're the good guys." the culture is not made to question itself. it is made to reproduce itself. the feature the company launches with the most pride is called, without a shred of irony, "addiction": it measures how often users come back to an app, hour by hour. wiener writes the promotional copy under the ceo's name. nobody at the company, raised entirely on the internet, stops to ask whether fostering addiction is something one should want.

dan lyons documents the limit case, and it is the hardest one to defend: hubspot did its ipo at almost two billion dollars without ever having been profitable. not once.

his diagnosis of the founders has no nuance: they were not heroes but "a pack of sales and marketing charlatans who spun a good story about magical transformational technology and got rich by selling shares in a company that still has never turned a profit." and before that, he defines the word bubble not as a financial phenomenon but as a state of mind: that of the believers and the kool-aid drinkers, "impervious to criticism, immunized against reality, unaware of how ridiculous they appear to the outside world."

hubspot's cultural apparatus is the proof of how culture substitutes for substance. the culture code was, in the founder's own words, "aspirational": it described values the company did not practice yet. when someone was fired, the event was called "graduation." there was an invented word, "delightion." there was a slogan, "1+1=3", used as a criterion for evaluating ideas. lyons looks at it and asks the obvious: what does any of this mean. his answer is that it means nothing, and that the astonishing thing is that hundreds of people repeat it with a straight face.

the language is not decorative. it is functional. it creates a parallel reality where the absence of profitability is an operational detail and not a verdict. and when that parallel reality collides with the real one, the parallel one wins. hubspot sells "inbound marketing" software whose premise is that you will no longer need an army of salespeople cold-calling strangers. at the same time it operates a massive call center where hundreds of twentysomethings repeat a script all day. lyons names it precisely: the real business and the public narrative are two different things that coexist without anyone confronting them.

the sentence that best captures what the whole apparatus exists for is said by a colleague of lyons in a facebook fight. she accuses him of not being a team player because, she tells him, "we're all supposed to be solving for ev." ev is enterprise value. everyone's job, ultimately, is not to build a business: it is to inflate the company's value for the ipo. that is the system's accidental honesty. and when, after the ipo, an executive is fired for trying to obtain the manuscript of lyons's book, the company covers it with a press release that first announces a promotion and hides the firing in the second paragraph. the stock barely moves. the market does not punish the deception because the market reads from the same script.

now then. none of this makes the vc ecosystem a fraud. that would be the easy reading, and the wrong one.

the theater works in silicon valley because there are material conditions sustaining it. there is an acquisitions market so deep that unprofitable companies can be bought at absurd multiples before unit economics catches up with them. there is a density of capital that makes a ninety percent failure rate mathematically sustainable inside a portfolio. there are decades of accumulated history behind every signal, so that a fund's name on the cap table carries imperfect but real information about deal flow quality. the signaling system garcia martinez describes works because there is enough historical weight behind each signal for it to be weakly predictive. the theater is expensive, but the size of the prize in the tail of the distribution pays for it.

it is a system designed for a specific context: abundant capital, a giant exit market, institutional tolerance for failure at scale. where those three things exist, the theater has a defensible financial logic even if it is aesthetically ridiculous.

the problem is that latam imported the theater without importing the cast.

we do not have the acquisitions market that absorbs unprofitable projects before they expire. we do not have the density of capital that makes a massive failure rate sustainable. we do not have the decades of history that give signals their informational value. a regional fund's name on a cap table does not carry the same information as sequoia's, not because the people are worse, but because there is not yet enough accumulated track record for the signal to mean anything.

what we did import, complete and without friction, is the language. we have the pitch deck in english. we have the seed round and the series a denominated in dollars. we have the culture decks and the okrs and the local versions of demo day. we have founders who learned to talk the way garcia martinez talks about sacca, but without the real sacca behind them. we have "we're the good guys" and "solving for ev" translated into a context where the ev is never going to be realized because there is nobody to sell the company to at the multiple the narrative promises.

the result is a second-order theater. a signaling system that imitates a signaling system, without the accumulated history that gave the original its weak predictive value. the performance that in the valley is scenery on top of a real building, in latam is scenery on top of a vacant lot.

and here is the pointed part, the one that matters: the cost of that second-order theater is not paid by the ecosystem, which diversifies and moves on. it is paid by the operating teams. the ones who spend years of their productive lives executing a promise the local market never had the infrastructure to keep. they build the dashboard, write the prds, negotiate with the vendors, and all that competent, real work exists to sustain a distance the market was never going to close.

there is a deeper consequence, and it is one of selection. the vc theater does not select the best operator. it selects the best performer of the vc theater. garcia martinez is explicit about the kind of person the system rewards: not the one who builds, but the one who knows how to read the room, detect the other side's weakness, recite the script without letting the laugh slip out at the wrong moment. wiener confirms it from the other side when she describes how real technical and emotional skill, the things that are hard to fake, were systematically undervalued against the ability to project belonging.

when that selection filter gets exported to an ecosystem without the original's financial backstop, what it rewards is even worse: founders optimized for raising money in a context where raising money is not coupled to building something that works. a generation of operators gets formed, trained in performance and not in substance, in a market that cannot pay for the performance.

this is not an argument against building in the region. it is exactly the opposite. it is an argument in favor of the kind of company the vc ecosystem ignores because it does not speak the right language: the one that puts together a unit economics that closes from day one, that sells to real clients at prices that cover costs, that grows slowly on a solid base. that business has no hockey stick curve. it has no millions of users who do not pay. it does not fit in any deck. but it has the only thing the three books i cited document as genuinely scarce across the whole ecosystem: an honest relationship between what it promised and what it produces.

the vc theater guarantees one thing only, and that is its own reproduction. the outcome of the business, as garcia martinez describes the entire system, is "pseudorandom": it looks deterministic from the outside, but underneath there is pure noise. in the valley, the size of the prize compensates for the noise. in latam, where the prize is smaller, capital scarcer and teams more exposed, importing the theater without the full cast is the most elegant way to burn talent that could have been used to build something that actually exists.

chaos monkeys, antonio garcia martinez (2016). uncanny valley, anna wiener (2020). disrupted, dan lyons (2016).