The Rigged Lottery: Why "Access Alpha" is Dying
- Aki Kakko
- 4 minutes ago
- 3 min read
Tim Sullivan, the legendary head of private equity at Yale, recently retired after 40 years. His tenure defined the "Yale Model," the gold standard of institutional investing. In his exit interview, he gave away the game.
He admitted that Venture Capital is a "Lottery Ticket Business," but with a catch: The winning tickets systematically flow to a small set of firms.
This statement should stop you in your tracks. In a fair market, a "lottery" implies randomness. If the winning tickets are systematically flowing to the same people, it’s not a lottery. It’s a cartel. Sullivan is describing "Access Alpha." For the last 40 years, the primary moat in Venture Capital was not intelligence, data, or foresight. It was Access.
Because Sequoia invested in Apple, they saw Google.
Because they saw Google, they saw WhatsApp.
The "Best Founders" went to the "Best Firms," creating a feedback loop that had nothing to do with the firm's actual ability to analyze a business, and everything to do with the firm’s brand.
This is the "Matthew Effect" (the rich get richer). And for 40 years, it was an impenetrable moat. You could not beat Sequoia because you could not see the deals they saw.
But in 2026, Access is being democratized by Data.
The Death of the "Warm Intro"
Sullivan’s model relies on a world of opacity. It relies on the fact that a great founder in a garage is invisible to the market until they walk into a partner’s office.
But as we established in The Venture Operating System, the modern founder is not invisible.
They are pushing code to GitHub.
They are spending on AWS.
They are registering payment volume on Stripe.
The "Ghost" (the signal of value) is now digital. And because it is digital, it can be detected by an algorithm before it can be detected by a partner at a cocktail party. This breaks the Feedback Loop. If our sensors detect a Tier 0 company with viral compounding growth in Jakarta or Tallinn, we can deploy capital automatically.
We don't need a "Warm Intro." We don't need "Access." The data is the access.
From "Who You Know" to "What You Ship"
Sullivan notes that "missing a cycle matters less than missing relationships." This is the mindset of the Old World. It prizes the Rolodex.
The Self-Service VC model prizes the Repository.
The Yale Model assumes that information travels slowly through human networks. The Self-Service VC Model assumes that information travels instantly through APIs. When capital becomes a utility (Tiered Allocation), the founder no longer cares about the "Prestige" of the dollar. They care about the Speed and the Utility of the dollar.
The "Cost Basis" Trap
Sullivan also noted that "GP reluctance to sell poor assets often stems from anchoring to cost. "This is a human cognitive bias (Loss Aversion). Because the incumbents are run by humans with egos, they hold onto losers too long and sell winners too early to show liquidity (as discussed in The 10-Year Trap).
A quantitative model has no ego.
It does not care what the entry price was.
It ignores the "Sunk Cost."
It re-evaluates the position every second based on the "Ghost Data."
If the data degrades, the model stops funding (Tier 2 is never unlocked). If the data compounds, the model doubles down. There is no "Anchoring." There is only the ruthless efficiency of the current truth.
The New Casino
Sullivan is right about the past. Venture Capital was a rigged lottery where a few firms held all the winning tickets because they controlled the door to the casino. But we are building a new entrance. We are not asking for permission to enter the club. We are building a system that bypasses the club entirely.
The future of Venture Capital isn't about "Access Alpha" (who knows you). It is about "Signal Alpha" (who sees the truth first).
The rigged lottery is over. The era of the Meritocratic Capital has begun.
