Mid BusinessCulture
The Price of the Future
What are we being asked to believe when we put a price on something that does not exist yet?
In 2013, venture capitalist Aileen Lee needed a name for something she considered extraordinarily rare.
She identified thirty-nine young American software companies valued at more than $1 billion. Lee called them unicorns because, as she put it at the time, they were supposed to be both rare and a little magical. By her estimate, roughly 0.07 percent of venture-backed consumer and enterprise software startups belonged to the group.
The metaphor survived better than the rarity.
By the first quarter of 2026, five venture deals accounted for 73 percent of $267 billion in U.S. deal value tracked by PitchBook and the National Venture Capital Association. $243 billion of that total came from financings of $100 million or more, many of them in artificial intelligence.
That is enough capital to write 2,430 checks, each for $100 million.
Capital isn't simply flowing toward startups. It is concentrating around a relatively small number of companies investors believe might become extraordinarily large.
In Fantasyland, Kurt Andersen traces a recurring American attraction to wishful thinking, spectacle, reinvention and the people capable of making improbable stories persuasive. The America he’s investigating is full of P.T. Barnums, revivalists, confidence men, advertisers, entertainers and political figures who understand that a sufficiently compelling version of reality can change how people behave.
Venture capital is not the same thing. But the resemblance is startling: it too has built an elaborate system around judging which improbable accounts of the future deserve belief in the present.
The economics explain why.
Venture returns are highly uneven. A small number of companies can create a disproportionate share of a fund’s return. Lee made the point in her original unicorn essay: as venture funds became larger, investors needed larger exits for a small number of investments to have meaningful effects on the fund. Finding a company capable of becoming enormous can matter more than assembling a collection of companies that are merely good.
That changes what an investor needs to evaluate.
A mature business can be assessed through a substantial record of what already exists: revenue, margins, assets, customers and cash flow. An early company cannot. Some portion of its value has to come from a judgment about what might exist later.
How large could the market become? How much of it could this company capture? What happens if the technology works? What happens if millions of people use it?
Those are financial questions. They are also narrative questions.
Economist Robert Shiller calls this relationship narrative economics. His research examines how stories spread through societies and change economic behavior by altering what people believe, spend, save and invest in. A story does not have to be false to have economic consequences. It has to become persuasive enough to change what people do.
A founder describes a future. Investors decide what probability and value to assign to it. If they believe the story, the company receives money. That money hires engineers, buys equipment and computing capacity, recruits executives, acquires customers and creates the conditions for the company to make the original story true.
The narrative begins producing some of the conditions necessary for its realization.
The hiccup is that human beings are not especially neutral evaluators of improbable stories.
Daniel Kahneman and Amos Tversky spent decades studying how people make judgments under uncertainty. Their work on representativeness and base rates showed that people can become overly influenced by how closely a story resembles what they expect a successful outcome to look like while giving insufficient weight to the underlying probability of that outcome. Their work on availability showed how examples that come readily to mind can affect how likely we think something is.
Kahneman later worked with Dan Lovallo on the same problem inside organizations. When people evaluate a project from the inside, they tend to build a detailed account of how this particular project will succeed. The corrective perspective is an outside view: before deciding how likely this project is to work, look at what happened to the class of similar projects that came before it.
Venture investing produces an unusual tension between those two ways of thinking.
The base rate says that extraordinary companies are rare.
The executive team and investment thesis say that this particular company may be the exception.
And the entire system only works because occasionally it is.
A convincing narrative cannot simply describe a plausible company. It often has to describe a company capable of escaping the ordinary distribution of outcomes.
If enough investors agree, the company enters another category altogether. A billion-dollar valuation changes more than a spreadsheet. Employees, reporters, customers, competitors and other investors notice it and potentially adjust their expectations and decisions. The category becomes evidence. Each successful unicorn makes the possibility of the next one easier to imagine.
The search begins reinforcing itself.
Venture capital has a reason to look for exceptions. Its economics reward them.
The stranger thing is how easily that logic escapes the category and permeates our thinking. Importance is measured in scale. Acceleration is a measure of health and usefulness. Extraordinary growth starts to look like the clearest evidence of ambition, impact, potential, and validated assumptions.
The base rate says unicorns are rare.
Yet, we have built an enormous system around finding the next one anyway.