The analytical era in private markets is over. Five decades of MBAs, Bloomberg terminals, and McKinsey-trained operators built an industry that believed it could think its way to an edge. The belief was always partly a facade, after all the deals that actually closed were the ones where someone in the room had real conditions on the asset, but the analytical layer was expensive enough to look like a moat to LPs, prospective portcos, and competition. AI is making that ‘moat’ look more like a puddle. The market is reverting to what it was for the centuries before the analytical industrial complex arrived: an insider’s game, won on conditions.
Four conditions. Relationships, who picks up your call. Information, what you know that the model doesn’t. Context, the cycles you’ve already lived through. Resources, the time, talent and treasure, you can deploy on the Tuesday after close. Together they constitute position, and the figure who plays from position has an old name. The Gunslinger.
My piece on this closed on a cliffhanger. Three seats sit at this table — the operator, the allocator, the founder — and the four conditions are worth different things depending on which chair you’re in. The operator is defending a niche from people who suddenly want it. The allocator is watching the thing he charged a fee for turn into a commodity. The founder is learning that the pitch isn’t the market anymore, it’s where he’s standing in it. Same table, three different games, and each player is about to discover the other two have changed.
I’ve sat in two of these seats. I left one last year and bet my next decade on another. This is the piece where I tell you which is which, and what the return of the insider’s game means for each side of the table.
Start with the operator. He’s the one the other two are circling.
On the Operator’s Side of the Table
You’ve spent a decade thinking you were the one without a moat. The bigger shops had the dashboards, the BI team, the McKinsey-trained operator-in-residence. You had the supplier’s quirks, the March buyer, the rep about to burn out — intuition, you called it, because it didn’t fit in a model and you’d half-internalized their framing that things which don’t fit in a model are softer than things that do.
Look again. They had a cost structure you couldn't match and an institutional vocabulary that pulled capital toward their firm. The analytical layer wasn't their moat; it was the toll they collected for translating your moat into language the LPs would fund. You had a knowledge structure they couldn't buy; they had a price tag, and a translation business built on top of it. The price tag just fell off, the translation is free, and what's left on the table is the thing you've been quietly accumulating the whole time, mistaking it for the consolation prize.
The allocators you’ve been talking to (or avoiding) are about to start changing rapidly. For thirty years they won on sourcing alpha and ‘creative financial engineering’ (6.5 turns of leverage is the sort of macaroni art creativity that only a finance guy could be proud of). AI and competition are eating it. Every fund has the same sourcing stack now, every deck is being drafted by a model, and the question they’re quietly asking themselves is “what do we do that justifies our fee?” The honest answer they’re arriving at: what we do with a company after we own a piece of it. Which means their underwriting question is shifting from “is this founder pedigreed” to “does this operator know something we’d take five years to learn?” Your call history, your supplier relationships, and your customer intimacy just became the deal.
At the same time, the founders are coming for your market. The $10 million market within your market that was small for venture and just barely solved by your product is suddenly accessible by two people on an AI cost structure. Your TAM doesn't get attacked head-on; it gets segmented underneath you as a two-person shop carves out the slice serving one specific customer type, then another carves out the next, and the addressable market you've been quoting in your own deck quietly compresses from below. The displaced senior analysts with a thesis and $25,000 are now your competitor — not for your whole business, but for many small slices of it. You have ten years of conditions they don't, but the conditions need to be the ones that can't be replicated, not the ones that were defended by an analytical or operational cost barrier that no longer exists.
You are, for the first time in a decade, the scarce piece on the board, but only for the conditions that can't be replicated. The ones that were defended by an analytical or operational cost barrier are about to be tested in public, and some of what you've been calling defensible was just renting space behind a wall that no longer exists.
The move: separate the two before someone does it for you. Map your conditions, document them, articulate them out loud, and be honest about which ones are durable versus which were defended by cost of analysis or operational complexity. The next person across the table from you, allocator or acquirer or competitor, is going to ask in some form: what am I actually buying access to?
On the Allocator’s Side of the Table
Two things are happening to your edge at the same time, and they’re connected.
Origination is commoditizing. Every fund of meaningful size has the same AI sourcing stack now, the same data providers, the same auto-drafted outbound. The proprietary deal-flow advantage that defined private markets for thirty years is closing fast. Private markets are becoming liquid in a way they weren’t before, not in the public-market sense, but in the sense that the same opportunities are visible to an increasingly large set of buyers at roughly the same time.
When markets become liquid, capital itself becomes a commodity. Your fund’s check looks identical to every other fund’s check. The risk-adjusted return on capital alone converges to the median, because nobody is buying anything anyone else couldn’t have bought. What’s left to differentiate on is execution: what you do with a company after the check clears.
This is the elephant in the conference that nobody is saying out loud yet. The value is migrating to execution: what you actually do with a company after you own a piece of it. To the operating insight you carry, the relationships you bring to bear on a specific problem, the time you’re willing to spend embedded inside the business doing the unglamorous work no model can replicate.
This may very well be a different fund than the one you’ve been running. Different skills, different hires, different incentives, different timeline. The funds that get this right will look closer to patient operating companies than to investment shops. The funds that don’t will report a slowly compressing IRR over the next three vintages and blame macro.
The operators you’ve been backing — or trying to back — are about to have most of the leverage at the table. Their conditions, the things they couldn’t articulate on a deck because it lived in their heads, are becoming the only thing worth paying a premium for. The good operators will figure this out before the average GP does. They’ll start bidding up capital partners based on what those partners can contribute to value creation, not on what the check looks like. The check is the commodity now. Your AUM doesn’t impress them, but your operating bench might.
The founders worth backing in the next decade aren’t going to fit the venture mold, and they don’t want venture money. They want capital that fits the asymmetric edge they have — patient, embedded, willing to be small, willing to look weird on a portfolio page. The allocators best positioned to fund them aren’t the ones with the biggest sourcing engine. They’re the ones who can identify a thesis they couldn’t have produced themselves and back it with capital structured to let it work.
I’m not making this case from the cheap seats. I left origination to work hands-on inside a small book of Owner-Operator businesses, on the bet that capital keeps commoditizing through the 2030s.
The move: stop competing on the layer that’s being commodified. Build the bench that actually creates value once you’re in. Define your edge in terms of execution, not access. Access just got cheap. What you do with it is the only thing that didn’t.
On the Founder’s Side of the Table
The deck you built in 2022, the one with the TAM slide, the team slide, the bottoms-up traction model, is a commodity now. Not in the abstract AI-disrupts-everything sense, but in the specific sense that the analyst on the other side of the table has three of the exact same decks sitting in his trash can from founders who reached the same conclusion you did while chatting with AI. He’s already heard about the market sizing, the competitive map, the customer-interview synthesis. What he hasn’t heard is what you experienced in a meeting during your summer internship that changed how you think about acquiring customers in this market.
What’s scarce is that angle of view, and the allocators who matter are getting better at telling the difference between a founder who has one and a founder reciting a framework about one. The signal isn’t in the deck. It’s in the answer to the follow-up question. The founder with conditions gives you the kind of answer that teaches something the investment memo agent couldn’t have incorporated before the conversation and opens up a second question the analyst couldn’t have anticipated. The founder without conditions gives you the kind of answer that puts the deck back in the pile.
The allocators best positioned to back you spent twenty years underwriting TAM, team, and traction. They’re starting to underwrite something different. Not “is this a big market,” but “what are you standing on that I couldn’t replicate by writing a check to someone else next week.” Build the pitch around the standing. Everyone has the market.
The peer set you should be paying attention to isn’t the other founders in the current batch of YC. It’s the 55-year-old operator who’s built a $7 million niche company over fifteen years in a category adjacent to yours. He knows which of his customers will switch on price and which will switch only when they’re treated badly. He knows the supplier who promises six-week lead times and ships in twelve. He knows the conference where the decisions actually get made, which isn’t the one on your calendar.
The line between “founder” and “operator” was always more porous than the venture press wanted it to be — the asset class needed founders to be a different species so the 2x, 2x, 3x, 3x story worked — and AI cost structure is dissolving the barrier the rest of the way. The operator can now build the software himself over a few Saturdays. You can reach his customers without his fifteen years. Some of these operators will be your customers, some your channel, some your acquirers. Some will decide to expand into your category and beat you there, because they have more conditions than you do and they’ll deploy them faster than you expect. Treat them as peers, because they are peers, even when they don’t look like the press’s idea of one.
The move: figure out which of your conditions are durable and which were just defended by the cost of analysis. The market sizing was defended by cost of analysis. The customer mapping was defended by cost of analysis. The competitive matrix was defended by cost of analysis. All of that is free now. What’s left is what you can see that the model can’t, and what you can access that the analyst can’t. Defend that. Pitch that. The framework is free; the standing isn’t.
Three Updates, One Market
Each of the three seats is updating in isolation right now, which is the part the conference circuit isn’t yet pricing in. The operator is reading pieces like this one and starting to map his conditions. The allocator is quietly redirecting hires from sourcing to operating. The founder is rewriting the pitch around standing instead of market. None of them is coordinating with the other two. All three are responding to the same underlying signal.
What happens next is the part worth watching. When all three sides have updated, the table itself changes. The operator who used to sell to whichever PE firm cleared the auction now sorts on which allocator can actually deploy operating capacity beside him. The allocator who used to compete on check size now competes on the bench he brings. The founder who used to pitch venture now pitches the niche operator with fifteen years of category context, because she’d rather have his rolodex than a Sand Hill Road logo on her cap table.
The deals that get done in that market look weird from outside. Smaller than the venture press covers. More patient than the PE press understands. Stranger than the MBA-track playbook can describe. From inside the room they look like arithmetic — three sides of a table, each holding something the model can’t produce, transacting on terms the analytical era didn’t have language for.
The Era That Isn’t New
The gunslinger metaphor is almost right but not exactly right.
The Old West wasn’t a transitional era between two stable equilibria. It was the absence of institutional cover during a moment when geography expanded faster than regulation. When the institutions caught up, the era ended, and the country moved to a different model.
What’s happening now isn’t that. The model isn’t ending an era. It ended the expensive sophistication moat the era was built on. The market is returning to the equilibrium it lived in for the centuries before McKinsey, before Bloomberg, before the analytical industrial complex priced relationships and context as legacy assets to be modernized away. That equilibrium rewarded conditions, position, and the people who knew things other people didn’t and had the standing to act on what they knew.
I sat in two of these seats. I left origination for the operator’s bench, working shoulder to shoulder with operators and allocators, on the bet that capital keeps commoditizing through the 2030s while operator reps compound into the thing that doesn’t. If the thesis is wrong, I’m wrong with it.
If you’re sitting in one of these seats, thinking through how to build the execution bench the next decade rewards, I’d like to talk. duncan@saorsapartners.com.
Subscribe to Conduit of Value for the ongoing thread. Companion pieces: HumanScale, Jobs Are Dead. Long Live the $10 Million Niche, The Age of the Gunslinger.