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It's nice of you to say that, but it's impossible. The portfolio effect means that no investment firm ever ends up as big as the most successful individual startups. Nothing beats putting all your eggs in one basket, and having that basket turn out to be an outlier.

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This argument makes sense, but aren't many large PE shops and Hedge Funds (which either acquire large companies whole, or make many small investments in thousands of companies) a counter example to this? Many have $5B+ valuations, often limited intentionally by a desire not to expand beyond 40-50 investment professionals.

Seems like there is no inherent law preventing a portfolio manager from becoming bigger than any single item in his portfolio.

What about Berkshire Hathaway? Though, it's a pretty focused portfolio.

Perhaps YC will acquire companies in the future?

BH is more like a conglomerate than an investment firm. They're just a super-disciplined conglomerate, unlike the random ones that gave the term such a bad name in the 1970s.

More to the point, Berkshire Hathaway itself had only 19 employees as of the 2006 letter.

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