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Today is Monday, May 5th, 2025.
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We are live from the Temple of Technology, the fortress of finance, the capital of capital.
2:17
We're back officially back. Yeah, we are so back.
2:22
It was never over, but we are back.
2:24
Um, we enjoyed the weekend in Ohigh and it gave us some ideas.
2:26
You know, Ohigh is a very idyllic place, very slow paced, not near fastpaced enough for us.
2:34
Uh, just the entire place is kind of devoid of finance. Finance really.
2:40
And so, uh, we we're launching those calm, tranquil streets filled with lot of farmers markets, not a lot of derivative trading, wine tasting, things like that. Exactly.
2:51
you there was this constant thought of what if we brought finance to Ohhigh. Yeah.
2:58
So, we're launching a campaign.
2:58
We're calling it save Ohhigh uh from from stagnation.
3:03
Uh we're going to uh petition Goldman Sachs to open an office there. That's right.
3:09
Uh that's really the goal. Get Goldman in there.
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I think it would uh massively stimulate the local economy. Exactly.
3:14
Transform it even and save it ultimately save it from from being uh idyllic and stagnant. That's right.
3:22
And so, um, yeah, we we if if you know someone at Goldman, uh, please kick them the idea.
3:26
Let's transform Ohhigh into sort of like a Midtown Manhattan vibe. Yeah.
3:30
Uh, really the next Midtown is what we want. The next Midtown. Yeah.
3:35
There's so much, you know, Midtown is, you know, Manhattan in general is is so constrained geographically. Exactly.
3:41
That the vision for Ohigh is what what if there were no bodies of water stopping, you know, tremendous growth and expansion, right?
3:50
just parking lots and condominiums and uh and billionaire.
3:53
We could build a new billionaires row in Ohhigh. That's right. We could save Ohhigh. That's right. Save our high.
3:58
Uh we did have a fantastic uh weekend though. It was great.
4:03
And uh but we are certainly happy to be back today. Locked in.
4:05
We got a great live locked in.
4:07
Yeah, we have a great lineup for you. We'll pull that up. TVPN lineup. TVPN lineup. We got five guests.
4:14
We got Molly O'Shea from Sorcery, Augustus Dico from Rain Maker, Bucky Moore from Lightseed, Katherine Bole from Andrea Horowitz, and Aditia Agarwal from South Park Commons.
4:21
Very excited to talk to all of them starting in about 40 minutes.
4:25
Uh, but we will go through some breaking news.
4:28
Also, if you're traveling to Ohigh, get on Wander. Go to wander.
4:30
com, find your your happy place. Find your happy place. Book a wander.
4:35
There's a new wander opening up in Ohigh very soon, so you can get on the wait list. Yeah, go check it out.
4:40
Anyway, the news from the weekend uh was entirely dominated by Warren Buffett.
4:43
Uh the Wall Street Journal today is uh it's just the Warren Buffett edition basically.
4:49
Uh two different articles in the main section, two different articles in the business and finance section.
4:54
Uh bunch wallto- wall to be honest.
4:58
It's kind of offensive that the Buffett Street Journal today. Yeah.
5:03
Um but obviously a fantastic legacy, 60 years as chairman.
5:07
this was his 60th um annual meeting and uh he kind of teased that maybe he'd stepped down.
5:13
He had already uh announced that um he would be transitioning out so it wasn't a complete surprise but uh it seemed like no one really knew that today would be the day and so it was very exciting and obviously it triggers a lot of reflections and so this piece in the Wall Street Journal was particularly interesting uh why there will never be another Warren Buffett.
5:34
Um uh he's been the chief executive of Berkshire Hathaway, of course, the conglomerate he has built into one of the most successful investments in history.
5:42
There are three reasons why he has no equal and never will.
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The person, the period, and the package.
5:48
Let's start with the person.
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He's not only brilliant, but he has spent nearly his entire liong lifetime obsessed with the stock market, especially in his early years as an investor.
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His unparalleled success depended on unbearable sacrifice, forgoing a normal social and family life.
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a later writer called the uh great 17th century philosopher Spinosa the god intoxicated man.
6:10
Buffett is the stock intoxicated man. That's right.
6:13
He bought his first stock at age 11, devoured information around about companies, reading corporate reports the way most people listen to music.
6:20
He read a ton of financial statements while other kids played at amusement parks.
6:24
Buffett was there physically but mentally and emotionally.
6:29
He was off in a world of his own, fixated on tax loss, carry forwards, and amortization schedules. We love to see it.
6:35
Imagine being that obsessed. Imagine enjoying it.
6:37
That's how we feel about podcasting.
6:38
Kind of the Warren Buffett of podcasting.
6:40
The the the Munger and Buffett of podcasting.
6:44
Ideally, that's where we want to end.
6:46
You really should strive to be so driven in your career that when you retire, you retire, you announce your retirement in a stadium to just all the adoring fans. Yes. Applause.
6:54
Round of standing ovation. Yeah.
6:57
Um, he started when Harry Truman was in the White House.
7:02
Uh, expertise is rooted in pattern recognition and Buffett has seen every conceivable pattern.
7:06
Given what I know about his work habits, I estimate conservatively he has read more than a 100,000 financial statements in his more than seven decade career.
7:13
Uh, years ago winding up a phone interview, he was talking to the the man who wrote this Wall Street Journal oped or piece and uh and said, "Hey, I'm I'm I'm uh I'm reading this book."
7:26
And Buffett says, "Oh, I also read it.
7:27
It was about 50 years ago."
7:30
And then he starts describing a passage and Buffett's like, "Wow." Uh, yeah.
7:34
Buffett knows the knows the exact quote from that book and almost every sentence repeated. Fantastic.
7:41
His parallel exposure to financial information combined with his prodigious memory made Buffett into a human form of artificial intelligence.
7:49
He could answer almost any query out of his own internal database.
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that has given him an unparalleled ability to identify the kernel of significance in any new bit of information and a durable advantage over other investors.
8:00
Now that AI is universally available, a person with Buffett's massive command center won't even have an advantage in the future.
8:07
Do you think this is true? Do you agree with this?
8:10
I thought this was an interesting take and I don't know I agree with it.
8:13
Uh yeah, I don't I don't want to believe that it's true. Yeah. Right.
8:18
Because that that just that that sort of would imply that that Buffett's only advantage is just knowledge access to information. Yeah.
8:26
And in a world where information has already been widely accessible and freely available for uh decades uh you know effectively for free it feels like we would have already um you know it feels like he would have lost his edge you know maybe in the 90s if that was the case. Yep.
8:42
So yeah there there is there is a remaining question.
8:46
I I wonder how David Senra and like the you know modern business historians will see his legacy.
8:50
Is it purely driven by knowledge? Is it intelligence?
8:55
Is it contrarian individual like independent thinking?
8:56
Is it is it access to capital and storytelling? Or is it management?
9:02
Like he's also great at in in you know putting the right person in the job and and giving the tools to succeed.
9:07
So there's a lot of other things that that go into making Buffett successful.
9:12
seems like market timing seems to be, you know, really good is, you know, access to historical information can certainly give you an advantage maybe in timing markets, but uh it it certainly doesn't seem like you'd be the only thing that gives you an advantage otherwise more people would be better at it, right? Yeah. Yeah.
9:31
It does seem to I don't know.
9:33
It's odd with the market timing thing because it does seem like that would be easy to encode into an algorithm.
9:37
Uh and yet we haven't seen quantitative hedge funds necessarily apply the Buffett philosophy when they do quantitative investing.
9:43
They they they usually do it on a much shorter time horizon. So kind of interesting.
9:47
Uh I did like this that he Buffett has said many times that he won the ovarian lottery by being born when he when and where he was.
9:55
If he born in Omaha uh just 50 years earlier in 1880, he would have had to invest in livestock instead of stocks.
10:02
Had he been born in 1930s instead of Omaha, a little play on words there, he wouldn't have owned he wouldn't have owned railways.
10:10
He probably would have worked on the Trans Siberian Railway.
10:14
And so he lucked out being in Omaha in 1930 when there was a big boom.
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And then also Benjamin Graham, pioneer of security analysis and one of the greatest investors of the past century, uh was uh was developing his career right then.
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So Buffett was able to study under him.
10:30
Um, and Buffett also began his career before trillions of dollars had poured into the stock market from index funds and other giant institutional investors.
10:38
He built his phenomenally early track record by um his phenomenal early track record by fishing where no one else was even looking to catch anything.
10:47
He fed on the tiniest plankton on the stock market.
10:49
He bet big on these small fry.
10:52
This guy's such a good writer.
10:55
At various points, his investment partnerships had 21% of their total assets in dempster mill manufacturing, a maker of agriculture equipment based in Beatatrice, Nebraska, and 35% in Sanborn Map, a New York-based cgraphy company whose investment portfolio alone was worth more than its stock price.
11:11
Sometimes it took such a testament to you can be an extreme generalist and do very well if you have a deep passion for the craft of investing which to date have we seen anybody that seemingly loves investing more than Warren Buffett. Yeah.
11:27
Outside of Charlie maybe. Yeah.
11:29
Um this was a funny comp.
11:32
Uh somebody else uh shared this online, but they said um as Warren Buffett retires, think about this, in 2024, Warren Buffett's stock portfolio performance was 25%.
11:43
And uh in 2024, Nancy Pelos's stock market performance was 71%.
11:47
Uh so anyway, strong strong case uh for the Pelosi act uh there.
11:53
I do think this is an the final takeaway in this piece is interesting um because Buffett placed his investments in a package like no other.
12:01
Talking about the holding company, Bergkshire Bergkshire Hathaway operates as a publicly traded holding company, a receptacle for whatever he thought was worth owning, other publicly traded stocks, treasury bonds, private companies.
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At one point, it was even one of the world's largest holders of silver.
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Now, it holds 330 billion in cash.
12:20
Berkshire isn't a hedge fund, mutual fund, exchange traded fund, or any other conventional investment vehicle.
12:26
By design, it charges no management fees that would subtract from its returns and no performance incentive fees that would encourage excessive risk-taking in pursuit of a big payday.
12:36
Uh, most investment funds operate under a curse that economists call pro-yclicality.
12:41
After a fund racks up racks up a streak of good returns, investors throw money at the fund, forcing its managers to put the new cash to work in a market that is likely becoming overpriced.
12:52
That hinders future performance.
12:54
We saw this with venture obviously like a bunch of people made a bunch of money on mobile and then they raised huge funds specifically for mobile.
13:02
We're seeing this in defense tech now, right?
13:03
You know, the if you got early in Anderal, now you're raising like a dedicated defense tech fund.
13:07
Is there are the assets overpriced now? Maybe like it is risky.
13:11
Uh and so uh with Buffett, when returns falter in a falling market, normally when fir when returns falter in a falling market, investors yank their money out, forcing the fund managers to sell as bargains are becoming abundant.
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This is the problem of pro-yclicality in normal investment fund structuring.
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Uh the fund's own investors make its performance worse, intensifying the market's ups and downs.
13:34
Bergkshire's only cash flows, however, are internal.
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Money comes in from or goes out to the assets it owns.
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Cash can't come pouring in from new investors or get yanked out by fleeing investors at the worst possible times because you can only invest uh in Berkshire by buying shares from someone else in the secondary market.
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they don't do new uh new stock issuances.
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And this package has given Buffett a structural advantage that has enabled him to pursue opportunities wherever and whenever he has perceived them.
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That's a luxury almost no other professional investor has or even wants.
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So long as most fund managers can earn a lavish living from underperforming the market, the real risk for them will be trying anything different.
14:17
Pigs will sprout feathers before anyone has the daring to truly emulate Warren Buffett. I love it. That's great.
14:25
Not uh anyway, if you think you're the next Warren Buffett, get on public. com.
14:29
Multiasset Investing, industryleading yields, trusted by millions. Trusted by millions.
14:34
Uh they had their first race yesterday sponsoring Oh, yeah.
14:37
Uh Aston Martin F1 in Miami. F1.
14:40
Um and uh thank you to public for betting on us before you bet on Aston Martin.
14:47
You know, really shows shows good and yes. Yeah. In good company.
14:53
Um it it is interesting how many people um what is there is there a curse to call yourself a baby Berkshire Hathaway?
15:01
Um a few people have dared to call I know exactly what you're talking about. It is rough.
15:07
Uh building you know this this whole notably Josh Kushner Thrive has not drawn that comparison. Yeah.
15:12
thinking very differently, maybe building something different.
15:15
But it is interesting because there like that proyicality thing does feel like a problem in venture and and if you have the uh uh if you have the permanent capital vehicle, maybe there's something there that you can grow into over time.
15:28
Um but yeah, I mean it's very it's very different.
15:30
There aren't like you know, if you're traditional VC, you don't have deal flow stuffed with cash flowing assets constantly.
15:37
If somebody shows up with a lot of cash flow, you're kind of confused.
15:40
Not sure what to do here, bud. Not sure what to do. Yeah.
15:46
Um, anyway, we we we should talk a little bit about the CEO in waiting, Greg Ael.
15:49
Um, he is uh taking over and at the young age of 60some.
15:56
Uh, imagine being still ready for a generation second generational run. Yeah.
16:01
But at the same time, you know, his boss Warren Buffett is 94 years old and so he's like, "Yeah, I've got a good 34 years." Yeah, probably.
16:09
That's the nature of these these potentially a lot more. Yeah.
16:10
And so, uh, Abel will inherit the challenge of overseeing that wide-ranging empire while living up to Buffett's seemingly impossible to replicate record in stockpicking.
16:21
Something even Buffett has struggled to do in recent years.
16:23
Uh, he would make a huge mistake trying to be Warren Buffett and he knows that, says Will Dana, the Fidelity manager who counts Berkshire as a top holding.
16:33
Shareholders want Greg to be the best Greg Ael can he can be.
16:35
Buffett isn't just an investor.
16:38
His unique stature allows him to conquer uh confer legitimacy on damaged businesses in times of crisis, as he famously did when Wall Street veered toward potential collapse and to extract a good deal for his shareholders in the process.
16:48
That's of course the story of uh Bank of America during the financial crisis.
16:53
Uh it was the the definitely the next domino to fall after Lehman and Bear Sterns.
17:01
Uh but Buffett saw something beautiful in the business.
17:04
he saw something savable and he came in kind of bailed them out in the private markets, injected a bunch of cash and then of course wrote a op-ed on the cover of the Wall Street Journal.
17:12
Never let the Bank of America fail.
17:13
Never let the Bank of America fail.
17:15
Uh his reputation as a brilliant investor means that many shareholders are are content letting Bergkshire amass a huge pile of cash because they expect that Buffett will eventually be able to deploy it well.
17:25
No one can completely fill those shoes.
17:29
Warren's so unique, Bill Gates, the Microsoft co-founder, said of his close friend.
17:32
I hope we have leaders like Warren in the future.
17:34
Buffett's planned departure combined with the death in 2023 of his close friend and investing partner Charlie Munger sets Berkshire on a new path.
17:42
The company's fundamentals remain strong, but Bergkshire's investment decisions might no longer carry the same weight.
17:46
Abel, who is 62, will join other successors with tough acts to follow.
17:51
Tim Cook filled Apple's top spot after Steve Jobs died and has made a lasting imprint.
17:56
He drew on his supply chain expertise to expand manufacturing in China and built up a services business.
18:02
At Disney, Bob Chapek took over as CEO for Bob Iger only to have his uneven tenure cut short by a boardroom coup that resulted in Iger's return. Battle of the Bobs. Battle of the Bobs.
18:13
There's a lot of Bobs over at Disney. It's very fun.
18:14
Um, Greg will have to be Greg, said Mark Omen, a retired Wells Fargo executive and a close friend of Ables in his adopted Iowa hometown.
18:22
Uh, Bergkshire succession plans, one of Wall Street's favorite guessing games, were finally revealed in 2021.
18:29
So, we've known this for four years now when Buffett said Abel would eventually become the next CEO.
18:33
Buffett had previously said that his son Howard Buffett would someday replace him as chairman, though without an executive role.
18:40
Until this weekend, many shareholders assumed those handoffs wouldn't take place before Buffett's death.
18:44
But he honestly I think it's I think it's smart to try to make this a phased approach versus you know Buffett you know were were he to pass away yeah without warning would be uh probably much worse for shareholders in general and just much more chaotic than saying hey I'm gonna I'm going to take a step back at the end of this year and uh here's exactly how we're you know phasing out my leadership.
19:09
So, and knowing Buffy, he will be he will be involved.
19:14
Um, there's no way this guy is going to stop caring about stocks. So, there's just no way.
19:20
I I I do hope he's healthy.
19:22
It would be very it'd be very un unfortunate if this was all like, you know, like how the Pope went out the day uh like the weekend before he passed away and uh, you know, spoke with the people.
19:31
Um, I hope that his health is uh in good.
19:34
I hope he's in good health and can uh serve as the chairman and non non-executive director for a number of years because maybe it's that he wants to really get seriously into weight training.
19:46
He never made a lot of time for the gym and he just wants to be able to, you know, take some of that time he would spend reading or or studying companies and just put it towards iron.
19:55
It's a very good possibility.
19:55
But if you are buying cash flowing assets, trying to squeeze every penny out of the businesses, you got to put those holdings on ramp. com. Time is money. Save both.
20:07
Easy to use corporate cards, bill payments, accounting, and a whole lot more all in one place. A ramp powered rollup. It's easy money.
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You just buy buy a company, put them on ramp, triple the cash flows. That's right.
20:18
Reinvest it in silver and gold. It could be that easy.
20:21
Um, not financial advice, of course.
20:24
Uh then there's another interesting article in the Wall Street Journal uh five wins and losses from Coca-Cola to Bergkshire.
20:30
What worked and what didn't for the head of Berkshire Hathway looking back on his hits and misses. Coca-Cola was a hit.
20:36
He invested in the soft drink and company in 1988.
20:40
He told Berkshire shareholders he wasn't he expected to own the stock for a long time.
20:44
When we own outstanding businesses with outstanding managements, our favorite holding period is forever. Great life.
20:51
Uh, true to Buffett's word, Coca-Cola remains a holding 40 years later.
20:55
By the end of 2024, the stake was valued at roughly 25 billion.
20:57
KO's dividends, which have increased annually for decades, paid Berkshire some 770 million in 2024 alone.
21:05
So along the way, the stock came to represent something more to Birkshshire and its shareholders than just a steady source of income.
21:13
Buffett was KO's largest shareholder, a one-time board member, and an unflinching pitch man. So good.
21:16
He often said he drank five cherry Cokes a day and his devotion to his favorite soda became part of his lore of the lore that drew thousands of fans to Omaha for Birkshshire's annual shareholder meetings. Um junkyard dog. He's a junk dog. Yeah.
21:30
I mean, he he really, you know, uh this has been one area where people have said, "Oh, you know, tried to poke holes in in Warren Buffett and say, you know, you're promoting uh you're making your money on on big soda, basically, right?"
21:47
something that uh can can have uh negative health effects, but he sort of can is has been able to beat those allegations by just he drinks five a day.
21:57
He's like, "How bad could it be? I'm drinking five a day. I'm I'm good." Good performance.
21:59
If you're worried, drink two a day. You know, exactly. You dial it back.
22:03
Um so, a miss that he had was Solomon Brothers.
22:05
Birkshshire bought preferred shares in Solomon Brothers in 1987 when it was still one of the biggest firms on Wall Street.
22:11
In 1991 through scandal uh though scandal enveloped the investment bank when its traders were accused of rigging a treasury note auction.
22:19
Buffett was forced to step in as chairman to clean up the mess which ended when the firm settled a uh series of government investigations investigations.
22:27
This was very interesting because like people don't I mean in Silicon Valley we don't think about that many opportunities where a a a company's embroiled in some sort of chaos or scandal and then like a legend steps in. Yeah.
22:42
Like it kind of happened with Zenits and the David Sax thing but it didn't go well. Yeah.
22:46
Um can it ever go properly?
22:48
Like it's just an interesting uh strategy to try and pick something up.
22:53
But I think the I think the the lesson, you know, is this buy buy wonderful companies at reasonable prices as opposed to trying to get a discount.
23:02
This feels like the example of like, oh, they're so beaten up.
23:05
There's still some business there.
23:07
Let's hop in, but ultimately got, you know, your hand burnt because uh there was just too much uh too much.
23:12
Well, in this case, they invested in 1987 in the in the this ordeal with the Treasury note auction didn't happen till four years later.
23:21
So rough it wasn't necessarily trying to be a turnaround.
23:25
But yeah, you could imagine I mean there there would have been a scenario where Yes.
23:29
But but in in ' 91 Buffett had to step into the chairman role instead of just saying like hey it's I'm wiping my hands of this because you know we we we have yes we have our preferred shares but we like the investment's not going well so we're going to bet we're going to dip out and sell at a loss as opposed to I'm going to step into the chairman role.
23:47
I'm going to run the company. That's kind of crazy. Founder mode.
23:51
Buffett said, "I can handle bad news, but I don't like to deal with it after it has festered for a while."
23:56
A reluctance to face up immediately to bad news is what turned a problem at Solomon from one that could have easily been disposed of into one that almost caused the demise of a firm with 8,000 employees.
24:08
Um, then the next one, the hit, this is kind of interesting, BYD.
24:13
Little known battery maker.
24:13
uh uh Munger went over to China, found BYYD, the battery maker, and uh encouraged Berkshire to buy a 10% stake in the company.
24:24
In 2008, within two years, the $230 million investment was valued at nearly two billion.
24:29
And so, uh this is like a series C.
24:32
230 million for 10% at a $2. 3 billion post.
24:37
Um that's like a venture style investment that they just did kind of randomly.
24:41
Obviously a little controversial now that BYD is so closely competitive with American industries, but um you know he secured the bag and made it 10x pretty pretty uh but they have since uh since begun to trim their stake.
24:55
Uh they also missed on US Air the airline and uh this is this is the famous and hilarious quote from uh Richard Branson, the wealthy owner of just for context. Um where's BY right now?
25:07
BYD is still over hundred billion dollars. Hundred billion. Yeah. So, okay. So, they got 10%.
25:12
That's 10 billion on 200 mil. Uh, it's a 50x.
25:17
They got in at two billion. No, no, no.
25:20
They they invested way uh Bergkshire invested a $2 billion post money essentially.
25:27
Oh, it said Birkshshire to buy a 10% stake in 2008.
25:31
Within two years, the $230 million investment was valued.
25:34
So, they got a 10x to two billion. Yeah.
25:36
And now another 10x basically. Yeah.
25:38
or sorry, another 50x 50x. Yeah. Yeah. Yeah. Okay. So, they invested. Yeah. Yeah. Yeah.
25:43
Got like within two years it was a 10x. Yeah. And then Yeah. Yeah. Got to a 50x. Not bad.
25:50
Um but they struggled with US Air.
25:52
Richard Branson said uh uh Richard Branson was asked how to become a millionaire and he had a quick answer.
26:00
There's really nothing to it.
26:00
Start as a billionaire and then buy an airline.
26:04
Buffett wrote in his 1996 letter to shareholders unwilling to accept Branson's proposition on faith, "Your chairman decided in 1989 to test it by investing 358 million in a 9.
26:13
25% preferred stock of US Air."
26:16
Uh, Buffett conceded he underestimated just how much havoc the deregulation of the US airline industry would play on US Air's business.
26:24
From 1990 to 1994, US Air reported total losses of 2. 4 billion.
26:30
Uh, US Air eventually became US Airways which later merged with American Airlines.
26:33
Not a good outcome, but contrarian interesting outcome. Mid American Energy. You'd think it mid. It's not mid. It was great. It was It was goated.
26:43
Buffett bought a 75% stake in the des in the De Moines utility in 1999 at the urging of Walter Scott, a lifelong friend who had joined the Berkshire board in late 1980s.
26:54
Mid-American later renamed Bergkshire Hathaway Energy thrived under Berkshire by issuing dividends and plowing the company's profit back into the business through acquisitions of capital events capital investments.
27:04
BH BHE would become one of Bergkshire's four pillars along with its insurance and railroad businesses and its stake in Apple.
27:13
Annual operating earnings grew to nearly 4 billion from 122 million in 2000. Wow. Wow.
27:20
Yeah, that's uh pretty pretty great growth.
27:22
The deal also added Greg Ael to Berkshire Hathaway's payroll.
27:24
That's where Greg Ael came from.
27:26
He was working at Mid-American Energy and that's how he was able to climb the ranks. Pretty pretty great.
27:33
And then actually the last one that's kind of interesting is that Berkshire Hathaway itself apparently was a miss.
27:39
In May of 1964, the top executive of a struggling textile manufacturer called Berkshire Hathaway, wrote to its investors offering to buy their shares for 11 $11. 37. 5 a piece.
27:52
Buffett, a major shareholder, had expected $11.
27:58
50, but when Bergkshire's Sabbury Stanton responded with the lower offer, I bristled at Stan Stanton's behavior and didn't tender.
28:07
He's like, "It's it's offensive that you didn't want my $11.
28:12
50 and you only want $1137. What is this?
28:15
What what are you trying to sell me?"
28:16
Um, and so that was, Buffett wrote, a monumentally stupid decision.
28:22
Berkshire continued to wilt along with the rest of the New England textile industry, shutting mills and racking up losses.
28:27
But Buffett peaked by Stanton's actions, ignored the company's grim outlook, and instead kept buying more stock.
28:32
Um, by May 1965, he took over Berkshire for good.
28:36
It is a move he still regrets though it did earn him his first mention in the Wall Street Journal. There we go. Interesting.
28:43
Although Seabburies and my childish behavior through Sabbury's and my childish behavior after all what was an eighth of a point to either of us.
28:49
He lost his job and I found myself with more than 25% of Buffett's partnership capital uh his original investment vehicles capital invested in a terrible business about which I knew very little.
29:01
Uh I became the dog who caught the car.
29:04
Buffett kept the textile business going for years, but stubbornness stity has its limits.
29:09
He wrote in 1985, I finally threw in the towel and closed the operation.
29:14
So the very very ironic saying that the company that it was yeah the namesake ended up being an L.
29:19
Just goes to show as uh if you want to be one of the greatest or the greatest investor of all time, you can okay to have some L's along the way.
29:29
It happens to the best of them.
29:32
Even to the best of them.
29:33
Uh so the market so far does not like the retirement news for Warren Buffett.
29:38
Bergkshire Hathaway stock is down uh 6.
29:41
39% in this post by Ryan Peterson, friend of the show.
29:44
Uh but he asks how was this night how is this not priced in? He's 94.
29:49
I mean I guess you know there's the question of like what's yes we know he's going out but it could be another two years could be another three years.
29:57
And and what does that mean?
29:59
Well, is the delta between another year of Buffett an extra 3% in this in the performance of the company? Maybe. Yeah, in many ways.
30:06
I mean, I think the the interesting dynamic is they're they're sitting on all this cash that they will have to redeploy at some point.
30:12
And so, it it would be fascinating if Buffett's, you know, main sort of final act was just accumulating this fortress balance sheet.
30:21
But then you have to trust Greg Ael and the rest of the team to actually deploy it uh effectively and be able to live up to um you know you know basically fill uh some of the biggest shoes. Yeah. Uh ever.
30:34
So this is an interesting quote by Warren Buffett.
30:36
I read everything annual reports 10ks 10 Q's biographies histories.
30:40
Five newspapers a day on airplanes.
30:43
I read the instructions on the back of the seats. Reading is key.
30:46
Reading has made me rich over time. Warren Buffett.
30:51
That's uh that's David Senra to a T. It's great.
30:54
Uh and Jerry Capital had a funny post here.
30:56
Proof that nobody can actually compound at 20% over his entire career from 1995 or 1965 to 2024. The gain 19. 9%. Just 0. 1 off of 20k 20%. No one can do it. It's too hard.
31:13
Simply he has not had that many bad years.
31:16
Although 2008 the financial crisis that was rough 31% down but the S&P went down 37%.
31:19
And so it seemed like didn't get back in fast enough because next year if you look at his exposure he actually was down in 1999 but then as tech you know the original dot bubble collapsed he had one down year but most in general he was outperforming massively. Fascinating. Yeah.
31:43
So 5 million% overall gain versus 40k uh percent overall gain in the S&P 500.
31:51
Anyway, um there's some more information here.
31:55
Uh I I like these just like key ideas and takeaways uh from Buffett.
32:00
I pulled a bunch of these together.
32:01
Uh we'll have to get David on the show this week and talk to him about lessons because he's done like seven different episodes about Buffett and the Buffett cinematic universe.
32:08
But uh avoiding mistakes is the ultimate goal.
32:12
Buffett and Munger teach that the best way to prevent trouble is to avoid it altogether by learning what works and what does not.
32:18
Focus on not doing dumb things. I like that.
32:20
Learn from folly and remove ignorance.
32:22
Fewer dumb mistakes than other people and fix mistakes quickly.
32:27
Buffett and Munger stress ignorance removal.
32:28
Systematically eliminating what you don't know or understand.
32:33
Uh simplicity and common sense. A core theme.
32:35
Simplest timeless principles win over complexity.
32:40
efficiency, simplicity, common sense, hallmarks of Buffett and Munger and tons and tons of lessons in everything from venture capital to startups to building businesses to just living your life.
32:49
Um, yeah, and they they I mean the the these are illustrated by looking at investments like CocaCola and Se's Candy, which are beloved brands and it's sense of uh are people going to love candy in 20 years?
33:05
Probably just as much as they do today. Yes. Okay.
33:08
If if can we scale, you know, distribution between now and then, great.
33:13
It's probably a good investment.
33:15
So, he made the iPhone or the Apple investment.
33:18
The iPhone was 7 years in.
33:21
I think the iPhone started in 2007 and he made the investment like 2014.
33:26
And he didn't use an iPhone.
33:26
He had a flip phone, but he was like, "My grandson uses one or my granddaughter like loves them."
33:34
And so, he was like, "And the and the retention rate is 95%."
33:39
And so I think it's a good business. That's that's amazing.
33:41
And and it became a fantastic investment for him.
33:43
And uh and a lot of people were pointing out that if you if you pull out Apple from the Berkshire Hathway investment returns, it then underperforms the S&P 500.
33:55
But that's kind of odd because Apple's in the S&P 500.
33:57
So maybe you should pull it out of that too.
34:00
But it's kind of like, you know, but at a certain point it does raise the interesting question is like people originally if you pull out the power law outcome out of any investor's portfolio.
34:12
It's kind of the nature of these things.
34:13
But I mean to kind of steal man that criticism, the the flip side is um what what service were you paying Warren Buffett for in the 70s or the 80s?
34:21
It was like go find some company that's maybe the stock isn't even publicly traded and operate that company extremely efficiently, reinvest all the cash flows, all these different things and and Apple feels like well anyone could just buy Apple. Yeah.
34:39
And so, um, certainly, you know, I think I think Apple outperformed Burk, but at the same time, I'm happy to pay somebody two and 20 if they just only invest in and in this case, you're not you're not paying 2 and 20.
34:53
There's no there's no fees.
34:56
No, but in general, it's like that that is what somebody is paying a manager to say like, I will pay you uh 2 and 20 to buy public equities because I think you're going to just buy the best ones and not buy the bad ones.
35:07
And that's the And I mean the real the real benefit is like he's been trimming that Apple position going into the crazy year had so far.
35:16
He's not just buying and holding.
35:19
You know, you remember I mean this was was last year the first time that they announced they were selling. Yeah.
35:24
Last year there was there started to be some articles about the growing cash pile at Bergkshire Hathaway.
35:27
Uh which that's closer to $350 billion now in cash which is so insane.
35:32
So, Birkshshire started selling in Q1, Q2, and Q3 of last year with the most significant sell-off happening. Yeah.
35:40
In Q2, which reduced their stake by nearly half.
35:44
So, I mean, I I remember at the time people were somewhat coping and just being like, oh, like the business is just getting complicated.
35:51
They're getting it wrong, you know. Yeah. Yeah. Yeah.
35:54
Of course, the market goes into They've just held it a long time.
35:57
Like they're probably not actually bearish.
36:00
Yeah, they're actually calling the Tom successfully for the seventh time in a row. It's great. Yeah.
36:06
Um, anyway, uh, I like this.
36:09
I like this investment principle.
36:11
The circle of competence.
36:11
Oh, invest only in businesses you truly understand. Buffett and Munger.
36:16
Stay within industries where they have knowledge and insight and they put anything outside the circle in a too tough pile to avoid.
36:23
Venturing beyond your competence or into overly complex ventures is a recipe for for mistakes.
36:27
Knowing your limits and saying no often is just as important as spotting opportunities.
36:31
This idea that like it is okay to grow the circle of competence.
36:35
Become competent in other in other areas but don't step out of the circle of confidence of competence because you will be smacked basically. Yeah.
36:44
Just going back to their uh when they were selling.
36:46
So the stock actually they started selling in Q1. Yeah.
36:48
The stock rose from $165 a share uh in the beginning of Q2.
36:55
the entire period that where they were really selling and actually ripped that quarter up to 230 uh and going all the way to 250 uh by December and then ultimately has just been down since.
37:08
So just shows the um conviction in that, you know, it's not like they FOMOed back in once, you know, once they were like, "Oh, the stock's actually ripping.
37:17
Maybe maybe we sold too early."
37:19
It's like, "No, no, he waited.
37:21
We were we're going to be, you know, right in the fullness of time." I like this.
37:24
Uh there's a bunch of interesting memorable quotes we should go through.
37:28
All I want to know is where I'm going to die so I'll never go there. Iconic line.
37:33
Uh consider how hard it is to change yourself and you'll understand what little chance you have in trying to change others.
37:39
This whole idea of like they meet people where they are.
37:41
A bull market is like sex.
37:43
It feels best just before it ends. Euphoria.
37:47
Honestly, crazy line from from Buff Buffet.
37:51
Yeah, you had a like a few too many Coca-Cas.
37:53
Really getting the really The secret to being successful in any field is getting very interested in it.
37:59
I couldn't excel in anything in which I didn't have an intense interest, passion.
38:04
You excel when you truly love the subject of work. That's 100%. Here's another good one.
38:07
We don't try to change people. It doesn't work well.
38:09
We accept people the way they are. Yeah. Smart.
38:10
Uh and this this is a lesson you only have to, you know, uh learn a couple times.
38:16
I think founders, you know, hiring people or even investors hiring people.
38:20
You mentioned this with some investments where you were like, "Okay, the founder's bad at this one thing, but I'm good at that, so I can change them into being good at the thing that I'm good at."
38:30
And it's like often that's not the case. Yeah.
38:31
Or more so you you hire somebody to do a specific thing and there's only you can help somebody go from my experience, you can help help somebody go from like great to excellent. Yep.
38:44
It's hard to take somebody from okay to great, right?
38:46
And so accepting people the way that they are and then sort of, you know, trying to really be honest about whether they can get where they need to be is important. Yeah, I like this.
38:56
Uh, Wall Street never changes.
38:58
The pockets change, the suckers change, the stocks change, but Wall Street never changes because human nature never changes. It's great.
39:08
Uh there's a kind of interesting um uh overview of his of his career in 25 uh key moments.
39:15
So he reads the intelligent investor in 1949.
39:20
That's so long ago discovers Benjamin Graham's philosophy of of value investing.
39:25
Uh and this and this forms the foundation of his approach in 1951. He visits Yeah. real quick.
39:34
You know, uh the the article in the journal earlier, he's talking about um uh the the author is talking about how uh Buffett's edge is the information that he has.
39:45
information that he has. And I would almost argue that Buffett's edge is the experience that he has because there's one thing to like read about financial turmoil 30 years ago and you can understand like why it happened pretty well but it's a very different thing to
40:00
viscerally feel it and then have that inform your future decision-m and Buffett at this point done 60 plus you know shareholder uh annual AGMs right and uh you know being able to actually have 60 years of experience to draw on where he was viscerally feeling what was happening in the industries that they're in. Uh just gives you an intrinsic
40:21
Uh just gives you an intrinsic advantage, right?
40:24
Sometimes you actually have to experience something to to really learn the lesson and and he certainly has experienced the full spectrum of uh investment, you know, experiences. Yeah, 100%.
40:34
Uh so in 1951 he visits Geico headquarters, learns firsthand about insurance float and lowcost moes, gets gets excited about insurance.
40:44
insurance. 1956 he launches the Buffett partnership limited starts starts managing outside capital using Graham's principles rapidly outperformed the market he begins buying Berkshire Hathaway shares in 1962 he spots this deep value opportunity in a dying
41:00
textile mill and builds this stake ended up being his biggest regret yep uh takes control of Berkshire Hathaway in 1965 buys enough shares to oust management turning it into his investment vehicle uh buys national indemnity entering entering the insurance market in 1967. It's crazy like each one of these is
41:15
It's crazy like each one of these is like a three-year journey, but but because it's a 80-year career or something or 60-year career, we're like condensing it down so quickly, but uh so he enters insurance unlocking the float model that would fund decades of investments.
41:30
He closes his partnership to focus on Berkshire in 1969, returns the capital to investors to avoid speculating an overheated market.
41:36
1972 he acquires C's Candies, learns to pay up for great businesses with pricing power, shifting his investment philosophy instead of just finding, you know, these really, really beaten down stocks.
41:48
He he he's okay paying a reasonable price for a truly great business.
41:52
Invested in the Washington Post in 1973, the Washington Posters.
41:56
The Washington Posters bought a world-class media business at a bargain and became close with Katherine Graham. Yeah.
42:02
And I forget when we were talking about this, wasn't he notorious for really marketing?
42:05
like he would take a position and then he would actually take effectively go on road shows like doing media around around the stock.
42:11
So yeah, he's like I'm gonna own my distribution, right?
42:15
He's like he's like let's talk about Seas Candy.
42:18
Let's talk about Seas Candy retail armies of retail investors on board. Certainly early to that.
42:24
Uh he rescues Geico from collapse in 1976, buy shares and joins the board to help steer his favorite insurance firm back to health.
42:34
He names Charlie Munger vice chairman in 1978 and this was a formalization of his most important partnership and philosophical sounding board.
42:43
Uh he shuts down the textile business in 1985 acknowledging failure but it frees up capital which completes Birkshshire's transformation into this holding company.
42:51
Buys the Coca-Cola stake in 1988.
42:53
Makes a $1 billion bet on a timeless consumer brand that became one of his biggest long-term wins.
43:00
Stepped in to lead Solomon Brothers in 1991.
43:02
takes an emergency control of the scandalridden firm, saving its reputation and stability, but ultimately not a great financial outcome.
43:08
Uh, issues Berkshire class B shares in 1996, created lowcost access for smaller investors and blocked Wall Streets from misusing his name because I think there were probably some sort of like, you know, aggregation SPV essentially on it because the shares were getting so expensive.
43:24
uh acquires General Re uh in 1998, expanded Berkshire's global insurance reach through though later admitted uh early integration challenges. He avoids the.
43:33
com bubble in 1999 uh to 2000.
43:35
Refused to chase fads preserving capital and credibility as other as others crashed.
43:41
Uh pledges $ 31 billion to philanthropy in 2006, history's largest charitable donation primarily to the Gates Foundation.
43:50
his buddy uh backs Goldman Sachs and GE during the crisis in 2008.
43:54
Stabilized markets by investing when fear was highest.
43:57
Bought Burlington Northern Railroad in 2009.
43:59
This is the biggest acquisition of all time for Berkshire.
44:04
Betting on America's long-term economic growth.
44:06
The railroads aren't going anywhere.
44:07
They're not making any more of them. Yep.
44:08
Uh funded Bank of America.
44:11
You had a post yesterday that was fascinating.
44:13
Your your uh city Pasadena was was estimating that it would take 400 years.
44:19
500 years to put all of the electrical power lines underground.
44:22
So they they they said the phase one is 100 years and phase two is 400 years to put them underground. Isn't that crazy?
44:32
That's longer than America's been around. Yeah.
44:34
America is what 250 or 300 years old now going on 1776, right? Yeah.
44:40
It's like a a crazy crazy amount of time to imagine writing that with a I hope they put on clown makeup.
44:45
Oh, you think in decades? We think in centuries.
44:50
plans are measured in centuries.
44:50
Uh so he he funds Bank of America during 2011 slump, injects five billion, gains a massive stake.
44:57
Then he invests in Apple in 2016.
44:59
This is the iconic investment. $36 billion of Apple.
45:01
Now it's Bergkshire's most valuable holding.
45:03
He promotes uh Abel and Jane as vice chairs in 2018 and starts quietly initiating the leadership succession process.
45:10
Uh names and then of course in 2021 he names Greg Ael as the future CEO.
45:15
And then in 2025, he announced retirement as CEO.
45:21
And so that is the legacy of Warren Buffett and we will continue talking about him this week.
45:25
Hopefully we'll get David Center, some other folks on the show.
45:28
But we are joined by our first guest of the show, Molly O'Shea, host of the Sorcery Podcast.
45:33
Welcome to the stream, Molly.
45:35
How are you doing, Molly? It's great to have you. You are live. You are live. Okay, one second.
45:44
We are working to get Molly.
45:46
I wanted to have her on, but we'll talk to you about Linear in the meantime.
45:49
Linear is a purpose-built tool for planning and building products.
45:51
Meet the system for modern software development, streamline issues, projects, and product road maps on linear. Just do it.
45:58
Uh we use linear at TBPN.
46:01
Uh as you know, we treat our media products like regular software products in terms of the way that we build them, in terms of trying to make them uh better every single day.
46:11
Uh the best evidence of that is our live stream overlay which uh we are always rolling out changes to and if you have any feedback for it let us know and we'll get uh those issues slotted into linear so we can ship against them.
46:26
So thank you to Linear for supporting the show and uh did you watch Miami F1? I did not. I had food poisoning.
46:34
I was it was absolutely brutal.
46:37
Um, uh, yeah, yesterday I didn't get a chance to watch either.
46:42
I did throw on a little bit of the, uh, a little bit of an older season of Drive to Survive, and I'm starting to get back into it, but it's hard.
46:49
F1's F1's tricky to follow.
46:51
Bodybuilding is much easier to follow.
46:53
I think it's really the only little space in your brain for anything other than bodybuilding content, right?
46:59
So, it's like anything that you would watch is competing with, you know, uh, reruns of the Arnold and Yes.
47:07
Historically, they really do need to do I mean full full drive to survive level production on the the next Arnold Road to Arnold.
47:14
I mean that is like Sam Sula's like channel basically.
47:18
It's like that it's just drive to survive for bodybuilding basically.
47:22
But we wanted to have Molly on the show because she uh is a is a good friend and has done a bunch of interesting things.
47:27
But she posted over the weekend venture funds as F1 teams.
47:31
Red Bull is founders fund. McLaren is F is Thrive.
47:34
Mercedes is Sequoa and Ferrari is Kla.
47:37
And we're going to debate this with her, see how she breaks it down and if we have any different takes.
47:44
Uh she says Red Bull Racing is Founders Fund. Why?
47:47
High conviction, unapologetically bold, and driven by generational talent. Versappen is Peter Teal.
47:54
Traits relentless, unconventional, and power focused.
47:56
Uh, I feel like for I feel like for Red Bull, you got to go with a venture fund that's not in venture because Red Bull's like not a car company. Yeah.
48:05
You know, so I almost feel like you should go with like Incel or CO2 Crossover for sure. Tiger maybe.
48:11
Uh or or maybe is there is there is there an actually decent uh corporate BC arm? I mean I guess Open AI.
48:22
Yeah, open one of the better performing corporate firms.
48:26
They have a really good corporate as of late.
48:28
Who uh but but I haven't seen much from like I mean I guess Google Ventures has done pretty well GV although they they've kind of spun out now. Yeah.
48:35
But I think Stripe uh Stripe has probably made some good balance sheet investments over the years. I know they're in ramp.
48:42
I've heard Octa randomly does a decent amount of of corporate investing.
48:47
Uh they have some some fund vehicle or they're doing it off the balance sheet as well.
48:55
Um, but uh um if you're looking for a new bed, get an ESLE. Go to eight asleep. com/tvpn. 5-year warranty.
49:04
Actually had such a brutal night, so it really picks up on when you're sick. Free shipping. It does.
49:09
And for me, I got 8 hours and 57 minutes of sleep, but I had a 77, which is well below uh my typical 98. Let's go. There we go, John. Back in the game.
49:20
Been away from it for a week. came back.
49:23
The consistency was terrible, but I slept a ton. Eight hours, 40 minutes. Let's go.
49:27
I was in bed, but nine last night was great. Fantastic. Fantastic.
49:32
Gotta put up some big numbers this week.
49:34
Um anyway, hopefully we can get Molly back in the studio. We will see. How we doing? Just figuring out audio. Okay, she can't hear us. Um let's see.
49:43
We will try and route that in.
49:46
Um let's do some timeline in the meantime. Uh little timeline.
49:48
Did you see uh Mark Zuckerberg went on Theo Vaughn and they kick it out?
49:53
I didn't realize this was the opener to the whole episode, but Theo Von says, "You drink coffee, man, or no?" Zuck goes, "No." Theo says, "Really?
50:02
I mean, you've had it, right?" And Zuck says, "I have.
50:04
I just like hate anything that messes with like I don't like any kind of chemicals or anything.
50:10
My sister gives me such a hard time about that."
50:14
She's like, "You're just sitting there raw dogging reality."
50:18
Theo says, "Wow, that's a great line."
50:20
And then, but it got spicy on the timeline because uh Menon of Rose says, "Let's be real."
50:24
Mark Zuckerberg's sister did not tell him he was raw dogging reality.
50:28
And Mark Zuckerberg's sister, Ariel Zuckerberg, says, "I 100% said this to him."
50:32
Uh, you know, I never deleting this app moment uh by anyway, I think we got Molly.
50:37
Let's bring her back into the studio.
50:39
We'll ask her if she's had coffee or if she is raw dogging reality today. Let's see. Molly, are you there? I'm here.
50:46
Are you raw dogging reality or are you caffeinated today?
50:52
I've had about five matchas and two espressos. Wow.
50:57
Getting up potentially into that 500 milligram range, which is that's that's junkyard dogging reality.
51:02
That's just consuming everything. Maxing cons uh maxing.
51:06
Did you have a rough time uh like with you know going to the East Coast last week?
51:11
I think for for me personally, given my caffeine intake, when I go when I when I go through a time change like that, just everything gets messed up. How how did you do? Horrible.
51:24
I've been up since 4:00 a. m. every morning. That's a good thing.
51:27
That's a good thing, though. That's good. Just cranking content. Yeah. Just Ashton Hall mode. Ashton Hall max thing. Yeah. Get up. No, I think it's time.
51:32
You have to do one of the it I think you need to do the the Ashton Hall for tech video.
51:38
I think you should basically start tomorrow morning when you wake up at four. Y and just do it. Yeah.
51:41
Anyway, I'll I'll try my best.
51:44
It's great to have you on the show finally. Long overdue.
51:48
Um there's a bunch of stuff to run through.
51:50
We have limited time unfortunately, but uh maybe we'll maybe we'll make Augustus wait, you know, a couple minutes extra and just hang out.
51:57
We we already covering your F1 uh firms as uh or sorry F. What inspired it? What was the reaction?
52:04
What do you think you got right?
52:06
What do you think you got wrong?
52:07
and then we'll go into the other less iconic F1 teams. Take some shots.
52:16
Well, uh, so all of this started because I got a nice tip from someone who might be on the inside.
52:21
I can't share much more than that, but I was given a tip because I've done these before where I've compared the VC funds to something like the Coachella stage.
52:29
I did this for sorcery like years ago and it went so well, but this was at like ZERP funding and like Zerp environment.
52:36
So, it was like SoftBank was in it and Tiger and like it was just so much more clear who the stages would be and now now we're dealing with F1 because there's only a couple contenders and we just have to we've got to see who's going to win.
52:52
Uh, going back to the Coachella, which fund was the D lab? I got to ask. It's the D lab.
52:59
Oh my god, that's a good one. I forget.
53:02
I've never been to Coachella.
53:04
You've never been to That's extremely bullish.
53:06
That's extremely bullish that you've never been to be honest.
53:07
I've never been to Coachella. Sweet child. Sweet. Your sweet child.
53:11
It doesn't know what the D lab is.
53:13
Um but but who do you have as a DOLAB? I got to know.
53:18
And then Sahara and then then we'll move on to F1. Okay.
53:19
I mean, let me let me pull this up.
53:21
Well, uh while you're pulling that up, uh there are some midfield teams that someone broke down.
53:28
Uh Williams is Greylock, the fifth most winning team in history.
53:30
didn't keep the top talent uh or scale so fell behind.
53:35
Alpine is BCV capital venture storied brand across racing categories.
53:40
PE consulting strong veteran lineup couple wins and podiums in recent years.
53:46
Decagon Craya younger guys largely untested no clear succession.
53:48
I love Alfatari as as YC battleground for young talent produces some of the best drivers but sees limited return for Stapen Sains.
53:56
Gastley plays an important role in the startup driver ecosystem and Aston Martin is SoftBank.
54:01
One mind, one man behind it all.
54:03
Lawrence Stroll, Masayoshi Sone.
54:04
Tons of money and big deals.
54:07
Uh, no significant results to speak of. Brutal. Brutal. It's great.
54:12
Anyway, uh yeah, break us down the uh the uh uh the the Coachella uh landscape and then uh I thought I'd put in terms that uh folks that are more familiar with bodybuilding could uh could key off of.
54:26
Okay, so for DLAB, okay, yeah, this this one was just scrappy bootstrapped companies or people in stealth for the main stage we had is Tiger Edition, CO2, A16Z, and crossovers.
54:38
Oh, so it's basically the lineup crossing over. Okay, I got it.
54:43
It's uh the big show headliners, hard to compete, expensive rounds. Got it.
54:47
And then for for outdoor theater, which is just as experienced, arguably more fun, artist friendly, we had first round benchmark, pair and index. Okay.
54:59
Yeah, that track sound Sahara.
55:02
Sahara, which is also like amazing, very large, loud, and a little bit more out there.
55:08
Founders Fund, Soft Bank, General Catalyst, Lust, Lux, Craft. Mhm. Um, let's see. Go.
55:14
Delian playing uh the Sahara stage right around like 6:00 just really, you know, peaking basically. Peeking.
55:25
Um um well, yeah, I mean I never been to Coachella.
55:30
I barely get to watch F1.
55:32
I'm I really only follow the only sport I follow is bodybuilding.
55:35
So I did my own kind of version of this mapping the top venture capital firms to professional bodybuilders.
55:41
So, I'll I'll give you a rundown and I'm sure you're familiar with bodybuilding, so you'll be able to give some feedback and tell me how I did.
55:47
So, for Sequoia Capital, I have Arnold Schwarzenegger.
55:49
They I mean, this one obviously it should be obviously sports uh the industry's gold standard early.
55:56
Sequoia, Apple to Airbnb hit list and Arnold's seventime Mr. Olympias.
56:01
It became the blueprint that everyone studies, right?
56:02
Uh Andrea and Horowitz, this one should be obvious.
56:06
Dorian Yates, of course, each burst in with radical mass, you know, software eats the world media blitz, six straight Olympias.
56:14
They kind of reset what scale and intensity could look like.
56:17
Uh, for founders fun, I mean, this is a no-brainer.
56:20
Phil Heath, uh, precision obsessed moonshotters, Teal's Contrarian Bats, Heath's near flawless symmetry, both racked up seven crowns while defi dividing the crowd.
56:30
Little controversial, Heath, uh, Kleiner Perkins, Ronnie Coleman.
56:33
Obviously, I mean, everyone's going to guess that one course.
56:38
Um, course, you know, they're 1990s Titans that went maximalist.
56:39
KP's do era supremacy, Mirs Coleman's eight title. Yeah, buddy. Yeah, buddy.
56:46
That per that pushed sheer size and later paid for it in surgery and turnover.
56:51
Uh, Excel, you got Lou Farero.
56:54
Lux Capital, you got Jay Cutler, course probably makes sense.
56:59
You know, he's a he's a methodical grinder just like Lux.
57:02
They've been at it for a long time.
57:04
Lux's deep tech persistence and Cutler's dogged prep.
57:06
Finally dethrone the champ uh showing steady focus beats flash.
57:11
Lastly, we got Natt Freriedman. He's the upandcomer.
57:13
He's the Sam Sulk of Sam.
57:16
People have been saying that for a long time.
57:17
Many people have been saying that. Yep.
57:19
So I I think that will put, you know, the venture funds in terms that really anyone could understand because a lot of the F1 analogies, they just don't really land with like our audience at least.
57:28
Bodybuilding is very American whereas F1 is very European, right?
57:33
Um, what what else is on your mind, Molly?
57:34
How how was uh what was your reaction to last week?
57:36
We obviously uh were uh in DC as well.
57:39
Did you have any major takeaways?
57:42
Any anything you know that you're following uh after the event?
57:46
You got some Palunteer merch.
57:46
I got some Palunteer merch.
57:48
Um became friends with Iliano there. Got introduced to Sham.
57:53
Got a private tour of the office on Friday or the next day.
57:58
Um some amazing work they got there.
57:58
But I think like the biggest takeaways and I'm still seeing this, but the the biggest theme from the event was the US vers China and we're seeing that because Delian's still posting about it.
58:14
He's posting through it for sure. He is. He is. Um, yeah. An interesting one.
58:15
I I we'd heard some light chatter about uh the Tik Tok deal potentially getting closer to a resolution, but there being uh general uh unhappiness with how it was getting sort of resolved.
58:30
So, not sure how much we can share, but that was one takeaway for me.
58:33
It's like in the midst of this like massive trade war y uh and and all this talk about USChina uh one of the sort of key issues that should be completely bipartisan and and uh we should be acting uh extremely intensely around it seems like we're going to miss the mark on.
58:50
So I think consensus is that there will be a group of financial investors that come into the company and own a stake and then Oracle will do the data management and kind of the the cloud infrastructure but it won't fully leave control of the CCP which is maybe not the best outcome.
59:09
I've been advocating for just giving all of Tik Tok to Truth Social.
59:11
Um I think that would be something that everyone could really rally around. Yeah. Might destroy it. Might but.
59:17
is definitely going to get approval from the from the top dog in Washington.
59:21
He'll be happy to have an asset. Yeah.
59:23
Um what what else what what what can you tell us about uh working at a family office?
59:28
How it differs from working at a VC firm?
59:33
You've obviously worked at in in both places.
59:34
Um what's different and and how how are family offices like positioning themselves these days in venture?
59:39
Is it just like tagalong rounds or are they trying to lead rounds?
59:43
Like what are you seeing in the family office landscape? Good questions. many questions.
59:47
Um I think the biggest difference is the time horizon on deals and the thinking. So instead of capital.
59:55
Yeah, it's permanent capital.
59:57
You're thinking evergreen.
59:57
It's not you're not confined to four years um for investing.
1:00:03
It's not like you have to stop investing after two and a half years and start raising and going out to fund raise.
1:00:08
Instead, you're thinking long term.
1:00:10
You can actually like be like a little bit more thoughtful instead of playing the rat race of competitive rounds.
1:00:16
you can pick companies and go deeper with them, have longerterm relationships.
1:00:21
It's it's just like it's a much different game because it seems much more rational.
1:00:27
You I think my biggest um my biggest thought and reflection after leaving institutional VC was just like how much it's thwarted by fast decision making.
1:00:38
If if you have to consistently confine to, oh, I've got to do this many deals a year, you have to do this many per fund and allocate x amount of capital, then it really constrains like your judgment and how you think about what you want to do. So, the Yeah.
1:00:57
I mean, it's great because like you can operate with clarity.
1:00:58
You don't have to waste your time with tons and tons of meetings.
1:01:02
You can actually just focus on the power law winners. Yeah. Yeah.
1:01:07
And that that means, you know, effectively, you know, identifying a company early, not necessarily being able to invest in that moment for some particular reason, but just saying like, hey, it doesn't really matter.
1:01:16
We want to get in at some point.
1:01:18
Let's, you know, continue to build a relationship.
1:01:21
Whereas, I think oftentimes VCs, you know, have a specific window unless you're a big platform fund.
1:01:26
You have a window where you can make uh an investment work, but then you can't even do an SPV into the company necessarily if you weren't in the, you know, in one of the earlier rounds.
1:01:36
And so having that timeline flexibility to be like, okay, you know, we can have 10 plus billion dollar outcomes now.
1:01:42
It really doesn't matter if we get in at $und00 million or we get in at $500 million, you know, post.
1:01:48
So it's also just it's much more flexible capital.
1:01:50
It's not like you're confined to an X amount of percentage that you need in equity or check size.
1:01:56
Like you can get in whenever and whatever makes sense.
1:01:59
And then you can also put in your own capital and then raise the rest through SPVS and make a larger round.
1:02:04
So there's many different dynamics.
1:02:06
It's it's much more friendly.
1:02:09
Uh you you dropped an interview with Bucky Moore.
1:02:10
He's going over to Lightseed.
1:02:12
We're having him on the show later.
1:02:14
Uh what was the question that you know you were too afraid to ask because it doesn't meet Sorcery's brand standard, but you know, it's anything goes here when we're live.
1:02:24
So we can put him on the spot.
1:02:26
What did he ask you to like edit out and then we'll ask him that live.
1:02:29
I will say I I passed all compliance.
1:02:32
My biggest question that I wanted to ask him was what was the deal?
1:02:37
Like did you get your carry bought out? I asked this.
1:02:38
You got to listen to the interview so you get the answer. I'm telling you. I'm prepping my show. Yeah.
1:02:45
But I asked him like how does it work transitioning um large partner from another fund going to another, right?
1:02:51
Like there's a lot of tied up carry. There's board positions. It's very complex.
1:02:55
Like what was that process like?
1:02:57
And we walked through it. I mean he was very open. I was quite surprised.
1:03:01
It was an awesome interview. That's very cool.
1:03:02
Um, what what else did you talk to him about?
1:03:05
Um, uh, that we could maybe dig in deeper when he hops on the stream in an hour.
1:03:09
Um, ask him about his view on ASI.
1:03:13
Ask him about pricing dynamics for tier ones and tier twos.
1:03:16
He doesn't like that branding, but um, you think more as like tier three.
1:03:25
He wants that he wants to be labeled as a tier three so he can have that dog.
1:03:28
Yeah, that dog inspiration to grind harder.
1:03:30
As soon as you're labeled a tier one, you just you're like I have reached I've peaked.
1:03:38
Anyway, um and then I would I would also I would ask about global pools of funding. He was open about that.
1:03:41
Um and he's big on raising money from Pyongyang, right?
1:03:49
North Korean money is is usually in his funds, right?
1:03:52
He does a lot of SPVS with uh somebody out there is not gonna not gonna understand with the North Korean sovereign wealth fund.
1:04:01
Yeah, we'll have some fun with him.
1:04:01
Uh last question before you go.
1:04:03
What should they do with Alcatraz?
1:04:05
Everyone's been debating it in tech.
1:04:07
We I want to get everyone's take on it today.
1:04:09
Should they become Y Combinator? Put a monument on it.
1:04:14
Put it bring back the jail.
1:04:14
Keep it as a tourist destination. What's your pick? I want to keep it. Uh, no.
1:04:19
I want to bring it back as a jail, but I want to keep it open for tours. Okay.
1:04:23
So, you can tour the prisoners. Crazy. Crazy.
1:04:28
That would be very chaotic.
1:04:28
That would be extremely chaotic.
1:04:29
Somebody was running for it. I forgot who it was.
1:04:31
I think it was Shiel was saying that like the reason that it was shut down initially was that uh uh there there you could only have like 300 prisoners and like due to being on an island that was like extremely expensive, 3x the cost to actually house them.
1:04:46
So, it was just like doesn't really actually make sense. Um, but uh I liked it.
1:04:50
If I was in jail, I'd probably choose the island jail, right?
1:04:56
I mean, that that doesn't seem like a bad place to be. I don't know.
1:04:59
Have you been Have you done actually bleak? It's so bleak.
1:05:02
It's always super kind of see everything, but I don't know. Yeah, pretty terrifying.
1:05:09
Anyway, we'll see what happens with it. We'll be tracking it.
1:05:10
I'm I'm in favor of putting, you know, letting Y Combinator set up shop strategy. It's PMF or die 2. 0. Yeah. Yeah. Yeah.
1:05:16
Y cominator is the Y cominator of Y cominator as many people have said but put it on an island.
1:05:25
That's a great place to be.
1:05:25
Thanks so much for stopping by Molly.
1:05:26
Well yeah this was great Molly have you back on soon.
1:05:29
Congrats on all the progress. Bye guys. Back to you.
1:05:32
Let's bring in Augustus to Rico from Rain Maker. I got the gong ready. Got the gong ready.
1:05:37
I think we got some breaking news from Augustus. go.
1:05:44
Um, yeah, we we we we had a chance to sit down with Augustus in DC, get the update from him.
1:05:50
I loved that, you know, his business is cloud seeding, making it rain, and he somehow tied it into the AI race to develop more data centers and it wasn't complete nonsense.
1:06:01
Like, it actually made sense.
1:06:03
Where's the water gonna come from? Yeah. Yeah. It's a big question.
1:06:06
Anyway, um uh we're always excited to have him on the show.
1:06:09
In the meantime, um he is.
1:06:15
Yeah, let's bring him in. Let's do it. How you doing, man? What's up? Boom. Look at that contact.
1:06:24
It's a It's a a size gong occasion.
1:06:24
Rain Maker just raised or just announced its raise of $25 million for our series A. Fantastic. Congratulations. 25 million.
1:06:35
uh uh give us the breakdown on the deal. Who who who in? Okay. Yeah.
1:06:40
So, it was led by Lower Carbon.
1:06:40
So, that was uh Ryan Orbuk and uh Clay Clay Duma um Chris Saka founded the fund.
1:06:46
They're really interested in adaptation tech now, right?
1:06:52
Like in the face of severe weather uh and change of climate, how do we build technologies that can um uh make us more resilient, right?
1:07:00
Um so more resilient to drought um more resilient agriculture more from cloud seating is one way to facilitate that.
1:07:08
Um and so they were stoked.
1:07:08
Uh Naval Ravocant um sage philosopher king of tech bros everywhere.
1:07:14
Uh he was in I think just cuz we went for like a really long romantic walk in Manhattan Beach one time.
1:07:19
Um and then uh Greg Bernstein from ACEP, Sovereigns Cap, some uh really great uh Christian mentors and leaders for me.
1:07:26
And then um Drover Ventures as well.
1:07:28
Drover Ventures, William Clark, great dudes.
1:07:30
Um, so that was the deal there.
1:07:32
Talk about uh talk about what the process was for the raise because from from what I know, this this is being announced now, but but got done a while back, it was uh from everything I heard extremely uh competitive process.
1:07:48
What What were you really looking for in that lead check?
1:07:54
Um, yeah, I'll tell you that and then I'll show you all of the crazy that we've been working on with the money since we actually did raise it because that's the more exciting part.
1:08:01
Um, what we were interested in then was uh technical sophistication.
1:08:05
Um, cloud seating unlike even a lot of deep tech is an inordinately complicated business.
1:08:12
You need to be really good at weather modeling, at aerosol chemistry, at radar, um, at a bunch of other electronics.
1:08:18
Um, meteorological radar is crazy unto itself.
1:08:20
the avionics of the drone, boutique anti-icing systems, new chemistries, uh, for new cloud seating agents.
1:08:26
And so, um, here is some of the stuff that, uh, we had to diligence our investors on whether they'd be able to understand what went into building novel meteorological radar.
1:08:36
Um, to be clear, this is all behind you is all renders, right?
1:08:40
Like this is this is Yeah, this is on a green screen. A great great cat model.
1:08:45
Um, so anyway, in 6,000 square feet, which is nuts, um, we've started high rate production of our drones, um, which are anti-icing capable drones.
1:08:58
They're the only class one UAS in NATO, uh, that can fly in severe icing.
1:09:02
And so this is one uh, of our Elizas right here.
1:09:07
Um, so it has thermal anti-icing systems.
1:09:10
Uh, ridiculously difficult to engineer aerosol dispersion system.
1:09:13
Um, that tunes the particle size that you're emitting into the cloud exactly as you wish.
1:09:18
Um, and then over over here, I can't even begin to show you this.
1:09:25
Actually, that's probably proprietary.
1:09:25
I won't show you our boards, but here's some more material going into some more drones.
1:09:29
Here's the next unit of our radar that's going to Argentina.
1:09:31
Uh, our second international deployment.
1:09:34
Um, so I'm pretty stoked about that.
1:09:35
Here is all the proprietary uh radar stuff because we had to design our own boards.
1:09:42
Um and then on the other side of the house is like our novel chemistry work.
1:09:46
Um that uh by the way I'm taking this out of Aaron Sloff's playbook just like walking around a factory.
1:09:53
That's the fun stuff that's going on. Yeah.
1:09:55
So uh I mean talk about the use of funds.
1:09:58
It seems like you're buying a lot of stuff, hiring some people. What's the breakdown?
1:10:02
probably doing mostly like founder le growth and sales but um where is the money going um generally? Yeah.
1:10:14
So I would say it was probably something to the effect of um like 30 30 2020.
1:10:21
Um so 30% of all the money that we raised uh is dedicated to designing our own meteorological radar and atmospheric sensing platform.
1:10:30
Um so that platform is called Eden.
1:10:32
Um that is radar, LAR, uh longwave infrared, aerosol probes, pressure, temperature, humidity probes, and animometers.
1:10:40
Um it's one of the more, if not the most sophisticated and low price point atmospheric sensing systems on the market in the world right now.
1:10:48
And the lead time is only 5 weeks instead of nine months. Yeah.
1:10:50
And out of curiosity, did you try to buy that off the shelf initially and then realize that you had to build it yourself? What did that look like?
1:10:59
because that feels like its own that feels like a bit like its own uh product line although it doesn't sound like you're selling it to uh individually yet. Yeah.
1:11:08
So basically everything at Rain Maker you know I am grateful and happy to be making money and eventually returning capital for our preede investors but like our thesis initially was like well we're going to use off-the-shelf radar off-the-shelf drones offtheshelf chemicals offtheshelf weather models and just be like a really good systems integrator.
1:11:27
And then we got punched in the face like a hundred times and decided we had to vertically integrate everything.
1:11:32
So tried to buy that radar CS, but there's one guy in Germany that makes them for 51 grand and they take 9 months if not 12 months to get there.
1:11:42
Uh our system is about five times more cost uh cost effective, more affordable, and um the lead time is five weeks. So we did that.
1:11:50
About 30% of the funds went to designing Elijah, our class one UAS um that's capable of anti-icing.
1:11:56
Um that was a big thing that about 10% uh 20% was for novel research so fancy probes so that we could detect the right conditions in cloud validate our effect uh and then the remainder went to um GA you know fighting Florida fighting for bigger budgets that sort of thing.
1:12:14
uh talk about acquisitions going forward.
1:12:18
I mean we've seen I mean Ander will just announced another acquisition.
1:12:22
It seems like in in defense tech and hard tech um there are assets that can be you know you can create more value if you roll them into a larger more agile more founder organization. Are you looking at that? Have you done it?
1:12:36
Are you thinking about it in the future?
1:12:37
Uh how do you how do you think about um building versus buying everything? Yeah.
1:12:44
So, so one of the really strategically important things that Rainmaker planned to do from the outset was roll up the existing cloud seating market.
1:12:50
Um, if you look at the market as it stands, it is it ostensibly doesn't exist.
1:12:54
There's like a few legacy operators that are kind of cowboys that blast clouds randomly and states or municipalities or even like Saudi will pay for it because they're so desperate for water.
1:13:04
They're willing to try anything even it's even if it's technically unsophisticated.
1:13:07
Um, we uh bought North American Weather Consultants, which was a old school cloud seating company out of Utah, out of Salt Lake City.
1:13:15
Um, did so with Project Finance, uh, which was great.
1:13:20
Shout out to my finance director, John Madigan. Killer.
1:13:22
Um, and then, uh, we injected our tech into it.
1:13:26
The organization was extraordinarily wellrun there.
1:13:29
We've retained everybody because they're great operators.
1:13:30
Um but we injected our tech, upsold that, have been getting better yields because of it, more transparent reporting to our customers.
1:13:39
Um I think that we'll continue to uh roll up the existing market.
1:13:43
I also think that um there's a lot of novel probe and uh material science companies that Rain Maker's targeting as well.
1:13:50
Um so anywhere where we can inject our tech or just accelerate growth by deploying stuff faster and at a better margin is part of the plan.
1:13:57
How much push back did you get initially around people that were like, I I love I love the idea of what you're doing, but I don't see but like I'm trying to find comps in the market and I can't find any. Is this a market?
1:14:08
And I'm assuming your answer was like, well, the tech didn't exist and we're actually creating the market, but but what was your you know, was that was that your you know, kind of primary answer there?
1:14:20
It seems kind of obvious in hindsight that um there could be a uh a technological sort of um barrier between the the a demand for something like cloud seating and the ability to actually deliver on it. Yeah, absolutely.
1:14:38
Got push back um on that.
1:14:40
Like a lot of what we had to say was like well this is actually deep tech and frontier tech. Sorry there's no comp.
1:14:44
Um like do you want to participate in something net new or not?
1:14:48
And so our investors were were really solid about that.
1:14:52
Um but the thing that I did say which has pros and cons looking back is you know SpaceX uh is like a launch services provider for now.
1:15:00
We're a cloud seating services provider.
1:15:02
Um we rather than get stuff to orbit as a as a function of our service.
1:15:08
We build all of the hardware we operate all the hardware and then get precipitation down on the ground.
1:15:13
Um, I think over time we'll probably trend more towards um an exorbitantly high margin utility just because cloud seeding water is the cheapest water that you can produce.
1:15:23
Um, but also we'll start buying up land too and then look very strange, maybe more like Monsanto or a hedge fund.
1:15:30
Uh, Alcatraz is in the news.
1:15:32
Uh, what's the coolest thing we could possibly do with Alcatraz?
1:15:37
What's your pick for the next move with Alcatraz?
1:15:40
I think uh to to catalyze more conspiracy theories putting heat on us, we should put a huge EMF array like HARP there to flood the San Francisco Bay. What would that do? We don't know. We don't know yet. We're going to find out.
1:15:57
Um I uh maybe last question uh but like what's the revenue mix look like right now?
1:16:03
because I I I only uh know uh last investor update I saw from from Rain Maker, I was pretty blown away by the traction.
1:16:13
But what you know, talking generally, you know, where where does the revenue come from?
1:16:17
Is it is it you know, individ like local governments, states, countries, private, you know, industry, etc. Yeah.
1:16:24
So, first of all, Jordy, you'll find out soon, but uh we've doubled our realized revenue since our last investor update. Wow. Oh, there we go. Yeah.
1:16:33
And um so I would say about what's the math? 85% 86% is domestic.
1:16:42
The rest is international.
1:16:42
Um and then another about 75% of all the domestic revenue comes from state governments.
1:16:48
So um departments of natural resources, departments of agriculture, uh the remaining 25 is small municipal or ski resorts that need more snow. Makes sense. Yeah. Very cool. Very cool. Very cool.
1:17:01
And when you when you uh last last question, when you talk to these end customers, I I imag do are you feeling like I'm assuming you're feeling the product market fit where they're like, "Please do this." Like, "We need this."
1:17:13
And and and I'm I'm assuming at no point were they like, "Oh, I don't you know, why why would we why would we want more precipitation?"
1:17:20
Um but maybe talk about how those conversations go.
1:17:22
Someone made a really salient quote tweet of u Gary Tan's uh post of like the gif of the whatever bouncy ball game where like when you hit PMF everything like runs away. Yeah.
1:17:34
Um like deep tech is not like that at all.
1:17:37
DTEK the demand is like so obvious from the jump.
1:17:39
People have been desperate from the very beginning when we like didn't even have a drone to fly saying like hey if you can figure this out we would love to buy more rain and buy more snow.
1:17:47
Um, it was just a matter of getting to the point where we actually had an operable system.
1:17:51
And everything changed for us in October 2024 because we picked up the entire company, moved it to a rural hamlet in Oregon um to do more intensive testing and then everything really accelerated and we got the the system ready and to a point where we could sell it and um people people are desperate for more water.
1:18:08
So that's been straightforward. Amazing. Cool.
1:18:09
Well, great having you on.
1:18:12
Congrats to you and the whole team on the milestone and I can't wait for the next investor update. We'll see you soon. Godspeed, guys. Thanks. Godspeed.
1:18:21
Uh, up next we have Bucky Moore moving over to Lightseed, shaking up the industry.
1:18:27
Many people have been saying this was a maxed out maxed out contract for sure.
1:18:32
I texted him as soon as he told me.
1:18:34
You've been going absolutely maxed out.
1:18:36
I'm super excited to chat with him.
1:18:38
He has been on a podcasting road show. Yep. Uh, road show for sure.
1:18:44
He's been making the rounds. Making the rounds. That's great. What else do we say?
1:18:51
Anyway, let's bring him in to the studio and talk to Bucky more. How you doing, Bucky? There he is. Oh, man.
1:18:56
Great to be here with you both. Fantastic.
1:18:59
The Temple of Technology. Uh, yeah. Give us a break.
1:19:04
We're stopped today and then I I promise I'm done going on podcasts. Oh, yeah.
1:19:07
You've been on quite the tour. Honestly, road show.
1:19:09
Like four podcasts a day for the next 40 days. Just run it up. Do them all.
1:19:15
just wind up on like Hawkua and like Yeah.
1:19:16
Why is Bucky on Bill Maher today?
1:19:19
That doesn't make any sense.
1:19:21
Yeah, you shouldn't be able to listen to pod a podcast in the month of May without having Bucky join at least for five minutes.
1:19:26
I want to get confused with the politics.
1:19:28
Do Tucker, but then do Pod Save America and no one knows where your politics align.
1:19:31
Just talk about early stage venture, right? Yeah.
1:19:35
But I'm I'm particularly excited to be here today because I think you guys have been hitting on some really big ideas in this podcast just in the past couple weeks alone.
1:19:43
I'd love to just kind of riff on those a little bit with you because I think they're so important and I want to encourage you guys.
1:19:47
And so I think that comes to the first one that comes to mind for me is this this sort of make hotel gyms great again uh moment you guys are having.
1:19:56
This is this is a really important discussion.
1:19:58
It's not being had anywhere but here.
1:19:59
There's clearly a hole in the market where someone needs to build an insurance product that allows for those folks hitting leg day on Friday to max out at above 500 lb. Yep.
1:20:08
It's just not happening out there.
1:20:10
So this is a big problem.
1:20:11
I'm glad you're talking about it.
1:20:13
It's a big market failure.
1:20:13
It's the kind of thing that maybe it's not a venture, it's not a place that venture dollars should go, but maybe a group of investors like should say like, hey, for the good of America, we need to there needs to be a company.
1:20:25
I think everything's venture now.
1:20:26
There will never be enough venture dollars.
1:20:27
I think we need to put this firmly in the venture bucket and then do I think it could be a fit in one of these uh, you know, sort of AI turnaround funds that are being spun up by a lot of the big platforms.
1:20:37
Like it's it's just got to happen, right?
1:20:38
It's It's gone on for way too long and all of us travel a lot and and we need to uh we need to be dialed in, especially as professional yappers like BCs and podcasters. Yeah.
1:20:45
I mean, maybe maybe we just boycott all travel until the dumbbells get up to 100.
1:20:49
The economy will collapse.
1:20:51
We'll we'll start to have a conversation at 100 and then go from there.
1:20:56
We'll start the We'll start the negotiation at 100. Yeah. Yeah.
1:21:00
Like like a trade war, a real standoff between the capital allocators and the luxury hotels.
1:21:04
This is exactly so I think it's our cross to bear and I just wanted to say I'm glad you guys are talking about it.
1:21:10
Yeah, I feel like there's an early stage bet here.
1:21:11
You AI powered, you put cameras in the gyms and then and then the underwriting is based on the form of the of the average gym goer.
1:21:21
And so if you just have like mass monsters in there all day, they're just throwing around the 100.
1:21:25
No one's getting injured.
1:21:26
Take those insurance rates down.
1:21:27
Hardware offtheshelf AI models. It's doable. It's doable.
1:21:32
There's an infamous list VCs for Kamla. Yes.
1:21:34
What if we had VCs for dumbbells?
1:21:36
We could throw that up today potentially.
1:21:38
I think we could get a 100 signatures in in 24 hours.
1:21:39
And unclear how much overlap there is between those two lists, but it's a good idea. It's a big tent. It's a big tent. The mass monsters. It's a big tent. It's a big tent. Yeah.
1:21:49
Get get them all in there. Why not?
1:21:51
And look, I think before before we talk shop, I also just have to make sure I I uh really reinforce the what you guys are doing here.
1:21:57
Really trying to turn LA and more broadly Southern California into the Silicon Valley of media.
1:22:02
like this is a this is a gargantuan effort but a very important one.
1:22:05
And I think you have this foundation emerging over in Malibu where you have these esteemed podcasters like the Rick Rubins, the Andrew Hubman's, the Jordy Hazes kind of settling in.
1:22:13
So it feels like you're well on your way.
1:22:17
And the last thing I'd say on this Yeah. No, go ahead.
1:22:20
I I just think it's important that we dream a little bigger than that, right?
1:22:24
In the sense that that Southern California is the the closest thing to the Amalfi coast that we have in America. Yeah.
1:22:29
you look across to Catalina, it's our Capri. There's no super yachts. There's no super yacht.
1:22:36
There's no luxury experience.
1:22:36
Like, we got to fix this.
1:22:38
And so, I just I just want to encourage you guys to keep going on that and and keep pushing.
1:22:41
And I think it'll lead it'll lead to some really great things for what I think is all three of our our hometown of Southern California. Yeah.
1:22:48
I mean, the natural evolution is, you know, potenti we had 100% tariffs on foreign films get potentially announced yesterday.
1:22:54
I don't know how real it is, but I mean a natural next step would be, you know, 200 300% tariffs on foreign podcasts. Yeah.
1:23:01
Um and to really kind of like, you know, generally I'm a free trade guy, but when it comes to podcasting, you know, I want to support we were in Ohhigh this weekend and we noticed that it was just devoid of high finance and there wasn't a single Goldman Sachs office or high frequency trading operation there.
1:23:17
Uh so we announced our campaign to save Ohhigh and bring finance to Ohhigh and really uh get the cubicles there, get the stimulants flowing, get these folks to work hard and really save Ohigh.
1:23:28
But we need we should do that for uh Catalina.
1:23:32
We should save Catalina from the problem of boats under 50 ft. Yeah. Yeah.
1:23:37
Because it's a big problem out there.
1:23:38
Most of the fishing fishing small notoriously unreliable.
1:23:40
You might have a good year have a you know a lot of lot of yield and then you might have a down year.
1:23:46
Whereas hedge funds, you know, figure out a way to to to generate, you know, alpha in any market condition, stock the ocean with new fish to to hunt.
1:23:55
And related to this, Augustus was talking a little bit about what to do with Alcatra, right?
1:23:58
I mean, who isn't a mega yacht owner in San Francisco that wouldn't want to bring their boat into the San Francisco Bay and enjoy what Alcatra has to offer.
1:24:05
So, I think there's another dimension we can kind of take the Alcatraz conversation that uh sort of aligns with what Catalina has in terms of its potential.
1:24:12
So, there's a lot of good work to do here and I just want to say I appreciate you spearheading this effort.
1:24:15
Yeah, there was kind of a controversial post uh from uh was it Christina uh over at Bane Capital, right?
1:24:23
She was saying that uh Alcatra should be a Four Seasons resort where you pull up in a fancy water taxi to White Lotus style, not a federal prison, but I mean a lot of people were firing back being like this would obviously be better as like an Aman and instead of a water taxi pulling up in a super yacht.
1:24:39
I haven't heard of a VC going to a Ford season in about decade. Yeah.
1:24:45
Uh but both these places have a lot of potential. Yeah. Yeah.
1:24:47
What what is your top pick for for Alcatraz uh re revitalization?
1:24:56
I'm not sold on the idea of reopening the prison.
1:24:58
Anyone who's taken a tour of Alcatraz realizes it doesn't look like The Rock uh the movie that is, which is which is very disappointing if you're a fan of The Rock in that shower scene where it all starts.
1:25:06
But uh I I think this I think this fivestar destination in the making idea that Christina floated again upleveling the Four Seasons to the Aman uping water taxis to super yachts like I think this might be the best idea at least floating out there right now.
1:25:19
I like the idea of turning it into um what are the what are the regions in the Mediterranean that like don't or not not Mediterranean Caribbean that don't really have any financial sort of rules like like tax haven. Yeah. Yeah. Yeah.
1:25:30
So if we turned it into a place that VCs could generally solicit, you know, it should be the Puerto Rico of the Bay. Yeah. Yeah.
1:25:35
You should and if you go there, but you have to spend six months in a day on the island. Yeah.
1:25:42
If you we're trying to insure the crypto industry, so you know, all those folks living their life in Puerto Rico right now, this might be the answer.
1:25:49
So yeah, it really should.
1:25:49
Keep pushing these big ideas. Somebody's got to do it.
1:25:53
And I think you guys are doing a really good job. Yeah. I love it. Amazing.
1:25:57
Uh how's your how's your first uh real day on the job today, right?
1:26:04
Yeah, change doesn't happen often in this industry.
1:26:06
So, it's been really exciting.
1:26:07
It kind of feels like the first day of school or something where I'm just meeting a bunch of people I've never met before, getting up to speed on how we do things here.
1:26:13
And there's, you know, a lot of similarities in how the firm operates relative to where I was at Kleiner Perkins.
1:26:18
But given the the global footprint and just the the scale of the firm, there's there's a a bit more process that we that we use to run run our operations here that I'm kind of getting used to.
1:26:27
But super excited about this opportunity.
1:26:29
I mean, I think it's just such an incredible time to be investing right now.
1:26:31
And uh given we're kind of in the midst of this super cycle, I'm just really really excited to kind of hit the ground running here at Lightseed and and uh make the most of the opportunity in front of us.
1:26:40
And and it's a pretty big change in terms of like your actual focus because I always thought of you as like the growth guy at KP and now you're early stage. Is that right?
1:26:48
Is that a correct characterization?
1:26:49
So Everett would be the growth guy at KP.
1:26:52
But I think what's unique about KP is we all we preside over the growth and venture funds together, right?
1:26:57
So every every investor makes growth investments, every investor makes venture investments.
1:27:01
And for me, my roots have always been early stage.
1:27:03
I love, you know, pounding the pavement, going to Stanford, figuring out who that next postoc is that's going to start a company, figuring out who those amazing people inside of these juggernaut companies like OpenAI and Anthropic are kind of those next great founders.
1:27:15
And I think the tension for me has always been like how do you put your best foot forward on early stage while also running running growth stuff down.
1:27:21
And so here what I'm really excited about is we've got a dedicated growth team and I can really go back to focusing on those early stage roots of where I started and that was a big big driver for me about why I was so excited about this opportunity.
1:27:32
Is there some sort of like how would you how would you define the delineation between growth and early stage at light speeded specifically?
1:27:38
Is it like certain round size, certain valuation, certain just like you're getting out an Excel model for the first time, so the growth guys have Excel installed and the the the early stage team hasn't touched it in years. Yeah.
1:27:50
I mean, I think that's a fair depiction of it in the sense that if there's real venture risk to a company's standing in terms of like a total loss of capital is a possibility.
1:27:59
There isn't a ton of repeatability in revenue generation or how they put product in customers hands.
1:28:05
I think that feels a lot more like like a venture type of investment.
1:28:06
Whereas if there is that sort of repeatability which for certain companies especially in AI can come very early in their life given just the market pull that we're seeing setting aside quality of revenue and that whole debate uh you're you're you're starting to see more and more that uh these companies become growthstage companies very quickly.
1:28:21
So I think what I'm really excited to focus on here at Lightseed is like how do we get into those companies as early as possible because you know they can be six seven months old and suddenly it's a growth stage opportunity.
1:28:30
You've kind of missed the opportunity to get that venture exposure that really does at the end of the day drive a lot of the returns for this industry at least historically. Yeah.
1:28:37
What what what is the shape of like these AI companies and where they fit between growth and venture?
1:28:41
Because I saw some some firms were putting open AI at 27 billion in venture which wound up being like a venture style bet like it, you know, it could have kind of zeroed with, you know, all the all the complexities around you're investing in a nonprofit at that point.
1:28:55
Like it it does have binary risk, but again, it's like almost 10xed or something.
1:28:59
It's been like a venture style return very quickly.
1:29:01
Uh on the same time, you have a lot of these very hyped uh AI companies that are maybe rappers would be the the negative critique.
1:29:10
They're generating a lot of revenue, but everyone's worried about churn and durability of that revenue.
1:29:12
It reads like a growth stage company, but maybe it's more of a venture bet.
1:29:15
How are you seeing the AI landscape kind of break down? Yeah.
1:29:19
So, so to the question about OpenAI and that being a venture bet, I think it's even more clear today that the investors that participated in that round, again, there's a lot of dilution that comes along the way, but if you look at it just on like a multiple evaluation basis, there is absolutely a venture-like return to be made at that round.
1:29:34
And, you know, that's going to make a lot of funds that that went in big there. Yep.
1:29:36
that went in big there. Yep. Uh I think with respect to your to your second question about just like how these uh these rapper companies sort of fit into this box, the first thing I'd say is I think it's becoming clear when you look
1:29:47
at the mature companies that were once referred to as rappers like the Harveys, the Cursors of the world, they're getting a lot fatter in terms of like how much of the tech stack they own themselves and how much differentiation you can argue that they build in. So an
1:29:56
So an example in Kurser's case is like they've been very publicly public about like the people they want to hire are people that can help them train models. Why is that?
1:30:04
Well, um the the cost that they have to pay to the model providers, as we all know, is non-trivial.
1:30:08
Hence, this rapper distinction being a bit peorative in nature. Yeah, of course.
1:30:11
And so, what I think you're going to start to see happen is that these breakaway companies that were once AI rappers, once riding on top of the existing frontier model companies are going to get a lot fatter in that sense and start routing as much of the queries that their users have to models that they can that they can control and own and customize for that use case.
1:30:27
So, that's like one trend that I'm seeing.
1:30:29
But I think to your point about the quality of revenue there, the the the capabilities that these products bring, especially those that kind of have a proumer adoption motion, are just so alluring and magical that everybody's going to try it, right?
1:30:39
And I and not everybody's going to stick around.
1:30:40
Not everybody's going to stay with that product and they might go to another.
1:30:44
But from my perspective, I don't think as much about that because I just think the poll for these is so extraordinary that uh over time, you can think of that as a bit of a marketing cost and and and the quality of the revenue at steady state, especially as these products get brought into to larger companies uh go from kind of credit card swipes to invoicing customers.
1:30:59
You're going to see that these companies look a lot like traditional enterprise software businesses, but in theory, they're going to grow and compound at much much larger scales. Yeah.
1:31:06
scales. Yeah. How do you uh how do you think about the the competitive dynamics and differences between B2B sort of enterprise focused agents and consumer agents from from my point of view and evaluating a lot of consumer agent businesses lately a lot of my thinking comes down to okay this is not
1:31:26
necessarily explicitly on enthropics or openai's roadmap but I can imagine you know six months from now they just sort of like immediately enable something like this where on the enterprise side when you look businesses like for example like Harvey something like that it's like okay there's a a ton of
1:31:42
functionality and features that that to me feel like there's much more of a of a long-term kind of like value proposition and moat here but I'm curious to to to hear how you think about the differences so I I agree directly with everything that you said and with the caveat that I'm not a consumer investor it just it
1:32:00
intuitively looks to me as though a consumer agent is only useful when it can do everything from planning my kids' birthday party to booking the flight, everyone's favorite example, to really just like automating away all these tedious tasks that I would otherwise be clicking through websites to accomplish. And I just haven't seen a consumer agent
1:32:14
And I just haven't seen a consumer agent that can really do that in a holistic sense yet.
1:32:17
And I think someone will figure it out.
1:32:19
And I think that someone will most likely be one of the frontier model providers because this is just such a an important use case for them to get right to kind of maintain that core consumer mind share that they have today.
1:32:28
So on the consumer side, I my bet is on the the model providers, but I just haven't seen anything that that really lives up to the product that I would be compelled to use.
1:32:35
And I think like one distillation of that is like the moment you ask it to do something and it can't do it, you just get a little frustrated and and and it breeds distrust and you kind of move on and go back to doing it your way.
1:32:44
So that's sort of where I see consumer today and where I see it going.
1:32:47
The enterprise side on the other hand is much much more interesting to me because I think you can create a tremendous amount of customer value by going narrow.
1:32:53
So you mentioned Harvey, there are companies obviously doing this in in codegen and trying to abstract away parts of the software engineering process.
1:33:00
There are some really interesting companies that are kind of going after like the people that use data dog for example and helping automate the human intuition that goes into munching through all that data when your software breaks.
1:33:09
Uh there's obviously a ton of stuff happening kind of more on like the process automation side of the back office that like a financial institution or large enterprise would have.
1:33:17
So I think we're already seeing those products like hit runaway trajectories and the reason for that is because like the products work and they do a simple job really really well and I just think that's a lot harder to to deliver on the consumer side in a way that's compelling.
1:33:30
So my sense is the inflows that we see into like agent investing will be very heavily concentrated on the enterprise side.
1:33:35
And I think that those companies are going to get very very big for the obvious reason that they're starting to chip away at human labor budgets rather than tool budgets.
1:33:41
Um and I'm seeing that with my own eyes today.
1:33:45
Like I feel like I'm seeing the future every day when I meet these new companies that uh can can just they just have superhuman capabilities in terms of some of these enterprise tasks they're automating. Yeah. Uh yeah.
1:33:52
What is your take on like the rapper meme?
1:33:56
It felt very it felt like a VC scop basically to me in the sense that like a lot of VCs were like hey maybe there's some rappers out there that um they might get steamrolled but they're going to be fantastic lifestyle businesses for a few years.
1:34:10
And then and then we had the wind surf rumor about, you know, kind of a a pretty fund returning uh result uh if that deal goes through.
1:34:19
Uh, and so it feels like is the wind surf acquisition potentially like a uh an Instagram moment where it kind of unlocks like a new mindset around the ability to go and build businesses in AI and it won't be totally winner take all or like the the uh the category as a whole will be there will be monopolies but not just one there will be pockets of value all over the place. Credit to Bucky too.
1:34:43
Windsurf angel investor really very nice proud angel investor before it was Windsurf and I have to give credit to my former partner Lee Marie for for leading that investment at Kleiner Perkins and she's uh amazing and uh you know it's it's a really special company.
1:34:56
So what I'd say about the Windsurf rumors if true to me what it foreshadows is this notion that there will be probably more chips to fall not just in codegen but also just more broadly in these like core categories of agentic work that the model providers are going to want to get into.
1:35:10
Um, OpenAI famously uh said anyone who's an investor in a company called Glean is not allowed to invest in OpenAI anymore.
1:35:16
Um, Glean is an enterprise search product that kind of does retrieval over all of your business data and incorporates it into the model so you can gain intelligence from that.
1:35:22
U to me that's indicative of, you know, them looking at that piece of turf as something that they want to occupy.
1:35:27
So to the rapper SCOP question, like I would completely agree and you need to look no further than all the top funds voraciously trying to invest in as many of these companies as possible to know that that's a scop.
1:35:37
Um that said, I think that the scaffolding of why these companies are very very interesting to me is that ultimately the way you do retrieval of all this enterprise kind of first-party data is what makes these products like good versus great, right?
1:35:50
And so in a sense, if you look at Windsurf versus Cursor, Windsurf has figured out some tricks as to how to essentially pass the model better context and in doing so generate better outputs for their users.
1:35:58
And what that to me says is that like really the IP of these companies is going to largely be around how they do that retrieval and how they bring that data into the model at the right time and in the most efficient way.
1:36:08
So I think and given cogen is the most mature category you're kind of getting to see how that plays out.
1:36:13
So I think what you're going to start to see is like a the winning companies like be it illegal or cogen or you know any of these other categories that we've been talking about are going to be the ones that that figure out the best set of retrieval steps to give the models optimal context.
1:36:24
And then coming back to what I said earlier, I think these companies are going to look a lot fatter than the rapper uh name might indicate over time.
1:36:32
And again, you're seeing this with Cursor Windsurf.
1:36:33
These companies are, you know, really out there trying to take more and more of a stack on versus just being like, you know, dependent entirely on a frontier model provider.
1:36:41
I think it's safe to say the same about Harvey.
1:36:43
They recently published a a really interesting blog post that kind of shows the architecture of their of their app in terms of how it interacts with the AI models.
1:36:49
And what you see very quickly is it's a lot more than just a wrapper.
1:36:52
And so I think that trend is only going to continue and it's why I think uh you know we at Lightseed are very bullish on this this form factor of company and I think you're going to see a lot of uh activity from us there over time from uh how have you personally evaluated you know businesses that are looking to eat into effectively uh labor spend through rolling up businesses versus companies that are looking to get into that on a groundup basis.
1:37:19
And I don't have a ton of context on Harvey's business, but from what I would guess right now, it maybe looks more like a SAS business today, but over time it could look like more like it, you know, it's sort of eating more of the of the value chain like what Salesforce did where they where you they get comped on per ticket closure as opposed to just pure sales. Yeah.
1:37:40
Results results basically output. Um, but I'm curious. Go ahead. Yeah. Yeah.
1:37:46
just just this nature of you know groundup you know new software businesses that are leveraging AI versus this sort of buy and and build on top of strategy. Yeah.
1:37:57
So I think this question is sort of being answered collectively by the industry like as we speak as in like there's a lot of chips on the table around this notion of like hey what if we go and buy the BO in India and inject AI into it or what if we go and you know buy the homeowners association administrative businesses all over the world and inject AI into those.
1:38:12
Yeah, just just an idea off the cuff I have and uh uh and then on the other end you're seeing companies like Harvey that are saying no the right way to do this is kind of to deliver like AI native value in the form of a co-pilot like product and then over time you start to chip away at the labor spend and and bring more automation to there.
1:38:28
Um the first thing I'd say is that uh I think one of the mistakes that a lot of investors have made looking at these companies early is seeing the product as it was like then and not imagining how fast it was going to get better.
1:38:39
Part of that is obviously just the models getting better and I think just like when you have like logarithmic rates of improvement, it's just really hard for the human mind to like intuitit that and look forward and actually feel like confident in okay this is what it's going to look like a year from now.
1:38:52
So for example, I think it's fair to say that uh if you met Harvey at, you know, C or series A and you saw the product, you'd say I don't know if there's like a lot here.
1:38:58
It's hard for me to see how this is going to be like a daily active use for the average lawyer.
1:39:02
But what's happened is that product has gotten so much thicker and and more capable to some degree because of better models to another degree because of the in-house engineering work they're doing around how the information is retrieved and delivered to the end user.
1:39:13
And so that product is just a totally different beast than it was, you know, a year or two ago.
1:39:18
And I think you're starting to see that reflected in the growth rate and more importantly the the product engagement of these of these products.
1:39:24
So that's kind of one point on on that end.
1:39:26
And then I think with these turnarounds like I I haven't spent a ton of time digging into these.
1:39:29
I think my my high level concern would be uh one do the people that know how to bring the AI into these products know how to run the uh you know the BO or the call center operation or the community association administrator.
1:39:42
I just think these are these are uh kind of oil and water like DNAs and it feels a little bit like you know Doge coming into the US government and telling all these people what to do.
1:39:50
I think there's going to be some friction like that.
1:39:51
Uh but on the other hand um you know having that existing distribution and scale is really really powerful.
1:39:56
So I can see how there'll be a lot of enterprise value created by these if they can kind of manage that DNA mismatch that I foresee being being an issue. Yeah.
1:40:03
Uh so if you're asking me I'd much rather invest in the AI native company.
1:40:07
Uh one and the other thing I'd say is that uh if you're the AI native company uh say competing with the company that's transforming itself around AI.
1:40:13
around AI. What I see out there right now is that there's sort of a board and CIO level mandate to just adopt as much AI as possible and and they look at it almost as existential as if like their business is going to perish if they don't do this right and more immediately
1:40:25
they're going to get fired if they don't do this right and I think if you can and what I see with the best companies like you could you could say this about Windsurf you could say this about Glean and some of the other companies that
1:40:33
that I've been somewhat close to is that if you can get mind share with the CIOS there's this mimisis that plays out where then the next one has to buy it and the next one has to buy it so I think really being first and being looked at more as like a true pioneer of
1:40:45
the space rather than like a company that's being competent about how they bring AI into their existing products is just a much uh let's just say sexier position to be in when you're going and talking to CIOS and CEOs of these really large corporations. And so uh that's the
1:40:55
And so uh that's the side of the fence that I'm I'm more inclined to to bet on as an investor.
1:40:59
Uh makes makes a ton of sense.
1:41:02
Let's talk about outcomes.
1:41:04
I think in 2021 2022 or you know especially early 2022 everyone was writing of like writing to lots of 10 billion dollar outcomes that was like maybe the general sentiment.
1:41:15
You shared recently that you're thinking about you know trillion dollar outcomes.
1:41:19
Now, is that is the is the right framing as sort of a scaled platform fund to be thinking about making sure that you're in the handful of companies that that over time can be trillion dollar businesses versus just expecting tons and tons of you know these these uh uh you know 10 10 billion plus companies. Yeah.
1:41:41
So just to reiterate my position there that you mentioned like what I see happening right now is that there are companies that seem to be scaling into market opportunities at a rate and scale that we just really haven't seen before that can they can actually convince me that there will be companies that cross trillion dollar valuations in the private markets.
1:42:00
Like of course many companies have done this well I shouldn't say many but some of the great household name companies have done this as public companies and a lot of the value has been created there.
1:42:07
Obviously now these companies are staying private longer.
1:42:10
they're growing faster and therefore I think it's not unfathomable to think of an open AI or a SpaceX, you know, getting to this place where we're talking about trillion dollar companies in the private markets.
1:42:18
So what does that mean for the venture business?
1:42:20
What it means is there's even more headroom in this later stage investing part of the business that the mega platforms operate in that uh to generate alpha there that I think just wasn't there before.
1:42:30
So that's hard for me to ignore personally and I think why these mega platforms like Lightseed are are in a really unique position to to capitalize on that.
1:42:37
I think there's an obvious question as to, you know, are these the are these companies a point in time thing or are they more foreshadowing of more of these to come.
1:42:44
I think that's something that we're kind of figuring out as an industry and watching.
1:42:46
But my instinct will be that just the the problems and the ambition of the problems that founders are going after these days are just so like fundamentally massive that I think we will just see much much bigger outcomes uh aligned with those companies that succeed at going after these like really fundamental problems like space travel uh like intelligence for example.
1:43:04
Uh and then I think with respect to the $10 billion outcomes, I mean, look, you're uh you're still going to see a tremendous number of those, right?
1:43:12
I think that these these AI app companies are like the the large platforms are going to be very inquisitive of these companies.
1:43:18
I think you're going to see things like move works, which you know, Service Now announced or uh or you know, the Windsurf rumors that OpenAI and Windsurf are having conversations around.
1:43:27
Like I think there's a lot more of this to come.
1:43:28
And so I think the the the venture business will still be driven by those outcomes.
1:43:31
But I think when we have these trillion dollar outcomes, even if they're few and far between, it just completely distorts and and changes the shape of the industry.
1:43:38
And I think that the mega platforms are well aware of that and and and and architecting their setups with that in mind.
1:43:44
Yeah, in many ways, you know, these these bigger companies uh would prefer to avoid, you know, four or five rounds in a row that are predominantly random SPVS with hundreds of underlying shareholders, you know, that are then all trading those positions over time. And it's very chaotic.
1:44:01
If you could just have, you know, if you could uh get the majority of your cap table around a single dinner table uh for a few more rounds, you might be more inclined to to stay uh to stay. Sure. Uh last question.
1:44:15
Any lessons from Warren Buffett?
1:44:15
He's uh transitioning out uh out of Berkshire Hathaway.
1:44:20
Obviously a very different style investing from early stage venture, but at the same time uh if Lightseed keeps scaling aumum, who knows? Anything's possible. Yeah.
1:44:31
So I guess the the thing whenever I think about Warren Buffett and I think technically Charlie Munger said this but I sort of think of them as one and the same for all the lessons that they share.
1:44:39
U the one that I always come back to is this notion of the too hard pile, right?
1:44:43
And so what the two hard pile refers to is when they see a business that someone is trying to pitch them um on being a really compelling investment.
1:44:50
If it doesn't necessarily fit in the box of like their circle of competence and their ability to underwrite that business like with an unfair advantage, it goes in the too hard pile.
1:44:57
even if it ends up being a great investment.
1:44:59
And look, I think venture is all about exceptions.
1:45:02
But at the same time, I think knowing your strengths in terms of how like the type of people that you can read and work with, the types of markets that you can understand, the type of companies that you can start to really like dream with and and and kind of look out forward and have a sense and intuition of what they can be.
1:45:15
There's this notion of a two hard pile in venture there where I think sometimes the mistake that venture investors will make is they'll run after things that they don't actually understand either at the personal level or the market level.
1:45:26
And what I think I've really learned in the 11 or so years I've been doing this is like there is a notion of a too hard pile and venture and just like sticking to your strengths and really being open-minded but at the same time like understanding your core strengths that you can anchor on as a picker.
1:45:36
Um and so that that would be my answer. That's great. Great answer.
1:45:40
Well, thanks so much for stopping by.
1:45:41
Congratulations on your job. Come back on again.
1:45:43
We love personalities here.
1:45:45
We really appreciate you hopping on. We'll talk to you soon. Thank you for having me. Bye. Cheers.
1:45:51
And next up we have Katherryn Bole from Andre and Horowitz, the uh the pioneer of American dynamism.
1:45:55
Uh what one of the top coinages of the last few years. Yeah, for sure.
1:46:02
And uh and more relevant than ever.
1:46:04
Um in some ways uh mission mission accomplished.
1:46:08
I mean uh last week in DC um it was American dynamism on display, right?
1:46:14
Everyone everyone is a believer and the question is where do we go from here?
1:46:18
And that's what I'm excited to dig in with her today.
1:46:22
Katherine, welcome to the stream. How are you doing? Thanks for having me. It's about time. I'm so happy to be here.
1:46:28
Long time listener, first time caller.
1:46:30
Great to have you with the flag in the background. Yes. Fantastic.
1:46:35
Um, where should we start?
1:46:35
Uh, I I'm curious about just a state of affairs with the American Dynamism movement.
1:46:39
The project uh feels like uh it's maybe time to rest on our laurels. Uh what do you think?
1:46:48
We we've achieved American dynamism. It feels like it. Yeah.
1:46:50
Uh but I mean seriously, it feels like like it's broken through. It's mainream.
1:46:57
Cultural victory may be coming before actual victory. Sure.
1:46:59
Um in that in that American dynamism is is almost mainstream now at least in the venture world. Yes. But jobs not finished. Job's not finished.
1:47:09
So what are the key uh asks in DC from uh from Silicon Valley right now?
1:47:16
What are the top projects?
1:47:18
Where should uh tech be focused in terms of the American Dynamism project broadly right now? Totally.
1:47:23
So, it's nowhere near finished.
1:47:24
I mean, this is like three or four years into a 30-year project, which is always good when you have those sorts of aims.
1:47:30
And I'd say it's even longer than that when you think of defense 1. 0.
1:47:32
It started around 2015, 2016.
1:47:34
You know, it sort of has b it's become this this very large movement.
1:47:40
But I'll tell you like last week was a huge huge week for American dynamism inside of the DoD and the news sort of got buried in in techland but it was just it's probably one of the biggest things to happen in the first 100 days of of the Trump administration.
1:47:54
The Army announced what's what they're calling their army transformation initiative and it was with Secretary Driscoll, General George.
1:47:59
They actually went on Fox and Friends which was like a huge deal that they actually went public with it and they said it's been way too long.
1:48:07
Like we we have so many platforms we want to modernize.
1:48:09
We want to divest from technologies that are no longer useful.
1:48:13
We want to to modernize the force.
1:48:16
We want to make sure that we get rid of civilian jobs that are not important anymore.
1:48:19
We want to make sure we are not having wasteful spending.
1:48:21
I mean it was sort of like you know what I I had read in um NBC after it came out they said like the army is doing itself. Yeah.
1:48:30
I think the the real story of what the army is doing and and kudos to them because they truly are the first mover is there are people inside of the DoD who have been saying these things for years pounding their head against the wall saying they want acquisition reform saying they want to work with startups saying they have to have new platforms that come in and actually support the needs of the war fighter.
1:48:50
and they've been pounding their head against the wall with little results.
1:48:53
And so when you have a Doge effort going on in Washington and an administration that really wants to see, you know, the the waste disappear, it allows for those people who are really forward thinking like General George and like um Secretary Driscoll to come forward and say, "Hey, we're going to do this ourselves.
1:49:08
We're going to pick out the the new technologies that we need.
1:49:10
We're going to get rid of things like Humvees that we haven't needed in 20 years.
1:49:14
We're we're going to figure out what is actually useful useful for the army and we're going to do it ourselves." So it was a huge week.
1:49:19
I think it was probably one of the most um it was reported but it didn't get sort of the the praise from from technology that it should have.
1:49:27
Like this is an extraordinary movement that that I think has really been a long time coming and it's something that a lot of the the early American dynamism companies have been pushing for for a long long time.
1:49:36
So congratulations to the army. Yeah.
1:49:37
So can you give me it's better to doge yourself than get then get dogeed. Always doge yourself. Doge yourself. Yeah.
1:49:44
Can you give me a little bit of a a tour of the market map of the beneficiaries of this transformation?
1:49:50
Obviously, everyone knows the palunteers and the Anderles, but I imagine that there are tons of pockets of value and projects that need to be overhauled.
1:49:57
Um, is it mostly drones, weapon systems, vehicles first, or are there other areas that companies that you talk to are focused on in this transformation process? Totally.
1:50:08
So, I mean, in the in the early days, that's what's been called out.
1:50:11
So, it's, you know, it's it's early UAVs that were developed 20 years ago.
1:50:15
They're not relevant post Ukraine war.
1:50:17
I mean, it's it's it's actually sort of um I don't want to say comical because it's not funny.
1:50:21
But when you think about the fact that the Humvey was developed in in 1980, it went into production in 1985 and that the army said in 2004, this actually isn't useful for us anymore because there's this new type of warfare called IEDs and we're not going to use it.
1:50:34
And these and these are still in production in 2025.
1:50:36
And and so that's a perfect example.
1:50:39
And I think they're sort of, you know, they're showing certain programs that are are so long overdue that they're to be changed.
1:50:47
But I think it's also smaller things like, you know, the program of record was developed when you had to build out these very very large platforms and you and you had to plan years and decades in advance and when someone won a program, it was understood that they were going to to run that program for for decades.
1:51:03
and and now the army has ways to acquire things where technology is changing at a pace and at a speed um that that really needs to have a genuine competition every year every couple years and so that really benefits all startups that that benefits all you know uh incoming emerging technologies that are going to serve sort of the fight of the future so
1:51:22
some ways I think it it's you know they have specific callouts that they're that they're pointing to now but there there's definitely um this is sort of a a this is great news for startups because what it's showing is that there is actual actually the will inside the DoD to change things bigger than just okay we're going to give you a uh is there any movement on uh procurement reform? I remember I watched
1:51:43
procurement reform? I remember I watched this uh hilarious movie Pentagon Wars all about the development of the Bradley fighting vehicle and it's a very funny movie but it kind of uh you know everyone has a different requirement they all get put together and becomes this kind of platypus of a vehicle that is part tank part troop transport all
1:52:02
these different problems uh part of the benefit of modern technology is that we do develop platforms and things like and ghost can do ISR and also do uh munitions and a whole bunch of There there are projects that do need flexibility, but um is is is there a cultural shift around um moving away from exquisite systems or just when when folks in defense tech say we need procurement reform? What are they really
1:52:29
What are they really talking about in 2025? Yeah.
1:52:31
Well, I think they're talking about different things because I think what what this initiative is going to do is it's going to allow the army and I think there'll be a lot of, you know, replicas of this as well.
1:52:41
I think other branches will look at this and say this is a great idea.
1:52:43
Instead of being locked into a program for decades, they're going to be able to say actually we would love to use that capital for something new.
1:52:50
We would love to recompete that that program.
1:52:53
We would like to be able to be better capital allocators.
1:52:55
Um because now their their hands are tied and and I think when you when you talk to people who are just in normal business, not in defense world, and you say, "Hey, if you had to make a decision about a purchase that's going to last for 10 years and get no updates and you would not be allowed to change it, what would you do?"
1:53:13
We would say that's insane.
1:53:13
Like, how is a CEO going to say they're going to acquire technology for their company that they're going to use for 10 years and there's going to be no software, no updates, no nothing.
1:53:21
And if it's not working, you can't get rid of it. Yeah.
1:53:25
uh because you're told you can't get rid of it.
1:53:26
I mean, that that is that is literally what the the DoD has to deal with. Yeah.
1:53:30
Um and so I think what what's great about this initiative, again, it's it's one the fact that the army is going public says that they mean business and that they have air cover to do this, but I think the the meta story that we're going to tell ourselves is, you know, Doge has been very public in the last week of what they're doing.
1:53:45
Um there's been some push back on, you know, why are you working on IT systems?
1:53:50
You know, everyone has sort of their their favorite Doge meme of why it's not working, but the story of Doge, I think, when we look back even in a year is going to be that it gave extraordinary air cover to reform in every department.
1:54:02
And the first example inside the DoD, this is the biggest example in the last 100 days.
1:54:06
To see General George out there saying like this is what we need to do and we are committed and we're going public because we are so committed, which doesn't usually happen.
1:54:14
I just think it speaks volumes and and tech should be celebrating.
1:54:16
This is a big big day for everyone in the American Dynam dynamism ecosystem, for every defense company that's been fighting for this for a long time. Yeah. Yeah.
1:54:23
And for for all of this to be to actually achieve those sort of 30-year goals or execute against that 30-year plan, things need to be bipartisan.
1:54:31
People need to realize we want efficiency and innovation across every branch.
1:54:35
Um, I'm curious on the on the investing side.
1:54:41
Uh, I'm sure you have this painful experience all the time where you meet companies that probably are going to be great businesses, are good for America, but maybe aren't a fit uh for venture.
1:54:52
What What's your sort of updated thinking on understanding if something can be a great important business versus something that can truly be, you know, a generational outcome? Yeah.
1:55:02
Well, one of the one of the biggest mistakes I see investors make is trying to predict TAM.
1:55:08
Um so so you know early early days of Andreal a lot of people you know didn't want to look at and because of ethical reasons or because they were worried about being involved in defense but there was another meme that was going around which is almost comical now which
1:55:21
is well it's kind of a small town right like a border security company like oh they're selling to DHS Department of Homeland Security doesn't really have that big of a but like like these were real things that people said um that are hilarious now um as you guys can imagine. So it's like like I I think it
1:55:37
So it's like like I I think it is very difficult to predict a growing markets eventually what some of these incredibly important technologies are going to be worth.
1:55:44
Um but I but I agree with you there are some examples of companies that might not be you know standalone businesses but will ultimately you know end's done a very good job of acquiring businesses that aren't going to be these venture outcomes but work you know very well within their platform.
1:55:58
Um, but I think in in some ways, uh, there's always surprises, um, with with companies that were initially passed on or or people were very skeptical of their TAM in the early days and and then you look back and you see just how how much they've grown or how much the product has shifted or how how important the platform actually is. Yeah.
1:56:15
How do you uh how have you been kind of reacting to uh you know ignoring the politics of it all but reacting to you know the trade war in many ways like when you have these like big um geopolitical uh you know events playing out that that doesn't necessarily mean start to make a lot of venture investments because venture investments take a long time to play out and and it's very hard to predict the future.
1:56:41
predict the future. uh are you are you seeing new opportunities related you know to the events of the last month or are you still just you know continuing like I I imagine when you guys invested in Hrien you weren't like betting on a trade war in two years or something like
1:56:56
that right but how how do you um how do you think about timelines and and is American dynam and is the benefit of sort of thinking in that 30-year timeline that you're kind of able to broadly you know uh ignore or not place too much focus on the headlines of today and just think about what America needs in the long run. Yeah. No, I mean I I Yeah.
1:57:16
No, I mean I I would say my my bias as a very early stage investor is to not think about the immediate time frames.
1:57:22
Um these are very long cycles.
1:57:24
Um you know you you can sort of you can sort of see trend lines but it's hard to know what actual events are going to happen obviously.
1:57:30
are going to happen obviously. So I think even when we made the investment as in Hadrien as you called out there was a movement towards re-industrialization and towards investing in manufacturing that was early and nent but if you were hearing the signs or spending a lot of time in DC or even you know both sides were very focused in Washington on how do we think
1:57:47
about um you know in investing in America re-industrialization how do we bring back manufacturing so it it it didn't feel like it was you know it felt like it was a message that was being heard then it's just of course be been accelerated and I think truly if you if think about kind of the next 10 20 years, re-industrialization is going to be a very important theme. Um, so so you
1:58:05
Um, so so you know, it can feel like uh like everything is is hot right now or or feel like we're in the middle of of something, but ultimately I think we're again in this like very very early, you know, three or four years into a 30-year journey of this this sort of um you know, it took it took decades for globalization to really hit its peak and and now we're sort of seeing the pendulum swing again.
1:58:26
And so you're going to see a lot of companies that are built in the next few years that become generational companies. Yeah.
1:58:31
H how do you think about the kind of broader market map of American dynamism?
1:58:37
Obviously Anderl is like a just a great case study in the American dynamism thesis.
1:58:43
But uh at the same time as you go through the American dynamism website you can go back to like the moon landing and uh that the development of the iPhone as like examples.
1:58:51
Um, at the same time, there's this question about like the anderol of X is Anderoll potentially, but then that doesn't always come true if you're talking about something that's truly outside of their purview in Consumer or in um, you know, Flock Safety or Hadrien.
1:59:07
These companies are not competitive, but maybe fit in the thesis.
1:59:10
Um, what uh h how are you seeing the the investing landscape of American Dynamism kind of evolve as more people come into the to the category?
1:59:22
but then think outside the box and address different issues.
1:59:24
I mean, I've seen even like some education stuff kind of fit the uh the the broader thesis.
1:59:31
So, how has that evolved over the last couple years?
1:59:32
Yeah, we define it as companies that are actively supporting the national interest. Sure.
1:59:35
the national interest. Sure. So it's it is a very simple definition and founders have you know different interpretations of what it means but there's there's common themes and actually this goes into why we decided to to have a separate fund why we decided to build
1:59:47
out the platform uh is because these companies need something entirely different than a true enterprise or a true consumer company and when we looked back at our our early portfolio of Shield AI and Android you know these astron that were sort of what I would call space and defense 1.0 know, y we'd
2:00:01
0 know, y we'd sort of like put them in the enterprise category as though they're like no different than a company that's selling business software to to the Fortune 500, right?
2:00:10
It doesn't make any sense.
2:00:10
They have totally different needs.
2:00:12
Um, you know, Andrew's famously said that they had a lobbyist on staff on on week one.
2:00:18
There's things that companies need that our view is that we could build a platform to help support these companies, namely in Washington, understanding who their buyers are on the BD side, which is a very difficult kind of role to hire for inside of um early stage startups.
2:00:31
but then also understanding kind of the the Washington game which is very important for for companies to understand if they're going to be selling directly to the federal government.
2:00:39
Now you mentioned education and there's a lot of companies in our portfolio too that are selling to state and local and that is a totally different sales motion.
2:00:45
different sales motion. You know, that's that is something where, you know, company like Flock Safety has has sort of rewritten the rules of how you sell directly to a police force or or how you how you even follow what I would call
2:00:57
kind of like a second city strategy of not going to the biggest cities but going to these smaller municipalities and getting a lot of, you know, almost circling a big city with the the suburbs around it and kind of getting a lot of momentum from the citizens. But all
2:01:07
But all these companies have very similar uh needs and sort of things that they have to think about early rather than later.
2:01:15
And we've now seen enough of sort of the early success stories in public safety and uh and you know aerospace defense like sort of these these sort of generational companies that came up in the last several years that the boom that's happening in these categories many of them want to replicate those playbooks and and and have I think with with a lot of success. Yeah.
2:01:32
Can you talk a little bit about uh almost like lobbying as value ad for venture capital?
2:01:39
I remember I was running an Andrees back company a decade ago and there were I met the CEO of McDonald's through Andre at some happy hour and there were trainings on B2B sales and PR and all this stuff but there was no concept of uh regulatory or lobbying but I imagine that's a piece of it but it's at the same time you need to eventually staff your own government affairs team.
2:02:03
Um how are you working with early stage founders to get them up and running in Washington? Yeah.
2:02:07
Well, I mean there a lot I would say a lot of the founders that we backed are very I would say sophisticated in their knowledge of who they need to be meeting with or the types of company or the types of uh people they should be meeting with in the DoD.
2:02:19
But the thing that I think we're we're actually I would say even more successful in doing that's really important is making all that knowledge public.
2:02:27
You know, we make our playbooks public.
2:02:29
You know, my my partner Leila, who who runs runs our go to market in DC, she wrote this incredible glossery of things you need to know if you're even going to approach a venture capital firm about, you know, about a defense tech company.
2:02:41
Like these are the acronyms.
2:02:42
These are all the acronyms you could possibly hear in a conversation with the DoD.
2:02:45
And it's it's things like that where we we do want to make that public and we want to help educate the ecosystem.
2:02:51
And I can tell you like you know five or six years ago the number of venture capitalists who understood the difference between contracting you know the different types of contracting vehicles u that understood the names of you know of different um you know people on the appropriations committee.
2:03:05
I mean these these things that are now sort of I I'd say taken for granted um were were not well known.
2:03:10
Um and so I think that's a huge part of it too is really helping the ecosystem get up to speed.
2:03:14
Um helping companies sort of speedrun that early stage process of like you can ask any dumb question and we're going to help you with it.
2:03:20
But then there is also something to be said of it is much easier to get a meeting with certain people if you are at a dinner that's sponsored by a group of people who are always in Washington.
2:03:29
I mean we have a Washington office now.
2:03:31
We are fully staffed in terms of both Republicans and Democrats and people who work um on both sides of the aisle.
2:03:37
People who specialize in DoD's people who specialize in certain types of the DoD.
2:03:42
Um, and I think that is like a very important thing to be able to say, okay, you're you need to meet with X, Y, and Z people or you need to understand the glossery before you can even begin to have those conversations.
2:03:51
Do you think uh defense tech is now mature? It's oversaturated.
2:03:55
I was joking with Jordy that I think uh world peace is like maybe six months away and then I'm going to start poaching top defense tech talent to build the next generation of advertising optimization because I think that we just got to get them back in next company. You know it. Yeah. Yeah. Yeah. Yeah.
2:04:15
Uh but I mean uh but but I mean seriously like it does seem that would be the most you know the the open AI you know AGI is always six months away defense tech founders need to just go like yeah just two more two billion more and like worldace world peace. Yeah.
2:04:29
Um, but I mean there is a serious question here like uh there I I know some people who are like just so excited that they're jumping into things but but you know being even I'm not even in the industry but I'm a little bit more tapped in and I'm like there are already seven companies working on that exact thing.
2:04:44
I don't know if this is the best time.
2:04:46
Um, is it is it worthwhile to steer you know these incredible hackers, these great entrepreneurs like maybe towards the the more like uh the more tangential hard tech problems like what I see with like what base power is doing is like it's hard tech it has defense roots but it's not directly something that's on anderol's road map.
2:05:06
What advice are you giving to kind of the entrepreneurs that are like in between things thinking about serving the national interest but not necessarily putting themselves on a collision course with a you know multi-billion dollar founder mode company.
2:05:19
So, so I'll say deterrence is a constant project, right?
2:05:23
So, like your whole like the meme of maybe six months away from world peace, course like I I actually think that was was part of the problem in the '9s, right?
2:05:31
Like like seriously over Yeah.
2:05:33
democracy, the end of end of history. Yeah. End of history.
2:05:35
We flourished and we don't need to be working on these things.
2:05:38
So the the the kind of it is very important that we've gone back almost to the roots of the DoD saying like hey actually we remember what it's like to be a country at war and we need to be constantly focused on the next technologies.
2:05:50
We need to be focused on deterrence thinking of it as deterrence because we want to prevent war but we have to be continuously building.
2:05:55
So from from that perspective I think we're again we're we're only a few years into this this real movement of Silicon Valley caring about working with the DoD and I hope that it's a 30-year project.
2:06:06
I think that's what we all really should be should be focused on is making sure it's a 30-year project.
2:06:09
Um, and even longer than that.
2:06:11
But to your point, what what I think is so interesting about companies that, you know, are founded out of Andre or out of SpaceX, you know, we've done an analysis where we looked at all of the founders who've left SpaceX um since, you know, in in the last say 10 years.
2:06:23
And there's hundreds of companies that have been formed in just wildly different sectors, whether it's, you know, radiant nuclear working on nuclear energy.
2:06:31
Um, you know, Castellian, which is in our portfolio, and they're building hypersonic weapons.
2:06:36
I mean, some of the best founders are trained.
2:06:38
I always say they go to the school of Elon Musk.
2:06:39
They learn manufacturing, they learn production, and then they want to take that to something that, you know, is pretty lowhanging fruit.
2:06:45
like they they they want to make sure that they're competing against the incumbents of of of yesterday who who have not modernized their production um who've not modernized a lot of the technology that they're working on.
2:06:55
And so, you know, I think you see that with a lot of the you know, yes, there are some extremely crowded fields, but then there are also areas of defense that are really just boring and completely untouched.
2:07:04
And you're seeing founders realize that too, that it's it's not something that that's, you know, interesting to to any of the existing companies and it's a lowhanging you know, it's low hanging fruit.
2:07:14
it would be interesting to work on that.
2:07:15
Um, or they're interested in being a tier one supplier.
2:07:17
We have a number of companies that are really focused on the supply chain aspect of defense and and they're partners to Andreal and their partners to SpaceX and and other companies in the ecosystem.
2:07:27
So, so you really are seeing founders like understand that question in a very sophisticated way and saying, "Okay, we're going to go after the parts of the supply chain or or the things that DoD needs that no one is focusing on."
2:07:36
Um, and that's been exciting to see, too.
2:07:40
Can you can you talk about M&A in defense tech broadly?
2:07:43
Andol's done this very well.
2:07:46
Seronic announced a deal last week uh acquiring Gulf Craft.
2:07:48
Um that feels super significant.
2:07:52
I'm I'm curious, you know, how you advise founders kind of broadly when when thinking about that.
2:07:59
We actually had Augustus on from Rain Maker earlier who had acquired a company in his space.
2:08:02
But when's when's the right time to be, you know, thinking about that as as somebody in defense tech?
2:08:09
And um yeah, what what kind of opportunities do you think make the most sense? Totally.
2:08:14
Well, I think I mean both Anderl and Seronic, I mean, they they have incredibly unique stories in terms of where they're operating and and sort of what they need to do in order to grow and scale, and they've done it um at at a speed that is just incredible, right?
2:08:28
like they they they they have very sophisticated teams that know a lot about acquisition.
2:08:31
Um I'd say for earlier stage companies like it's you know we're seeing more companies that are that are potentially interested in doing that and it can speed up um it can speed up innovation.
2:08:40
Um it can speed up being able to to work with certain customers. That's for sure.
2:08:44
If you're acquiring a certain um capability so that you can sell to a to a a major prime that's something we've seen more of too which is which is interesting and exciting.
2:08:53
Like I don't think we were seeing that several years ago and now we're certainly seeing companies experiment with that.
2:08:56
But when you when you said actually M&A um I actually thought you were going towards something that I that I think is actually more likely to happen in the future that hasn't happened in a long time.
2:09:04
When you look at these existing prime prime companies, the big five say they've really only acquired um companies that have not raised any venture dollars, right?
2:09:13
Like they they don't acquire companies that are kind of seen as these bleeding edge companies to to shore up their capabilities.
2:09:18
And my instinct, you know, we're talking about Army Transformation Initiative.
2:09:21
We're talking about a government that's becoming far more sophisticated and a DoD that's becoming far more competitive, right?
2:09:27
It hasn't been competitive for decades and now you're seeing all of these startups come in.
2:09:32
My my like prediction if we're looking 5 10 years out is that the companies that have not been inquisitive for the best engineers and the best technologists and and these these capabilities that they need are going to find that as their only solution.
2:09:43
And I think we could potentially even see uh another last supper situation which of course in the 90s was the famous case where the government came to all these primes and said you have to merge you have to have um kind of forced mergers and acquisitions because the budget's going to decrease.
2:09:59
And of course that was that was probably the wrong strategy given sort of the results that came out of that.
2:10:03
But I do think it is something that I would not be surprised if in five or 10 years you're seeing the existing primes that have been around in many cases for a hundred years saying we have to to work with these startups in a in a much more tangible way and you could see a highly inquisitive ecosystem that that people don't necessarily kind of write into their their their kind of thesis today.
2:10:23
today. How would you uh uh h how do you think about leadership at the individual primes and you know people over the last few years I mean Boeing has been dragged through the dirt uh by pretty much everyone but I think of it as a great uh
2:10:39
in in the fullness of time it's a great Boeing I ain't going yeah John is John so lo excitement he'll never fly as a white collar worker you know there's you don't risk your life very often when I go on a business trip and I step on a 737 Max, I'm lost. No, and I mean I I just look
2:10:54
No, and I mean I I just look at it as as as as China would love to uh have a company that was actually competitive with Boeing, right?
2:11:01
It's it's hugely strategic asset, but I'm curious uh do you think that, you know, any of the primes, you know, and every now and then you'll see a Prime release a video that's like clearly like they hired a marketing agency and said like make us like an Anderl movie, you know, and then they they they put it out.
2:11:17
Uh but but how do you think about um do you do you see that the the leadership at at the primes?
2:11:24
Well, Lockheed Martin invented artificial intelligence, remember?
2:11:27
Yeah, they came out last week and claimed that they invented artificial intelligence.
2:11:30
They basically just said, "You're welcome.
2:11:31
You're welcome, by the way. You're welcome."
2:11:35
But I'm curious for transformation. Yeah.
2:11:37
Yeah. Do you have conversations with them or is it uh is it I mean even though it's not an opportunity for you know venture capitalists necessarily like it would be great if they were highly functioning in the American interest like as Americans and then you have the you have the the program that was spun out of you know was it Microsoft Microsoft and yeah the hollow lens yeah sorry so I think there's
2:11:58
probably more kind of even spinout opportunities where new companies collaboration totally you know value on top of existing programs yeah I think you know Palmer and Brian Shy has has done an incredible podcast on this where he talks about sort of what happened at these primes and why things sort of went by the wayside and it's partially because they really stopped focusing on research and development. They sort of
2:12:16
They sort of they didn't really need to.
2:12:19
There was no real competition and and they kind of recognized that that you know they they would always get paid by the government to do new things.
2:12:25
You know again like it's it's sort of this confluence of factors that led us to be I don't know really complacent.
2:12:30
Um, and I went back actually last night and was reading the first few pages of The Killchain by Christian Bros, which again, it's like it's reading it.
2:12:37
It was written, I believe, in 2019.
2:12:39
Things have changed so dramatically in terms of the conversation.
2:12:42
But it's like going back in a time warp and saying, "Wow, like in 2019, people really didn't care that Boeing was collapsing or that there were these private or these public companies that were doing no research and development because it didn't matter, right?
2:12:53
That was pre-war in Ukraine.
2:12:53
It was sort of, you know, in some ways it was uh security theater, right?
2:12:56
Like we don't actually have to remain secure.
2:12:58
we just have to pretend we're secure.
2:13:00
And so I think there is this new sort of wakeup call where a lot of these companies are going to say one, if we if we can't recruit the engineers and do the research and development in-house, we're going to have to acquire it.
2:13:10
So again, that's why I think you're going to see a lot more acquisitions over the next several years because I think a lot of these companies are really going to have to change.
2:13:18
But two, like these initiatives inside the DoD that are now getting real steam, that is going to force incredible competition that has not existed uh even in the last 10 years when we've all been investing in American dynamism.
2:13:29
So, I'm I'm actually much more like hopeful and excited about where I think the world is world is going because I I I genuinely believe that a lot of these players have sort of woken up and are looking for solutions because now they know they have to. Yeah. Yeah.
2:13:41
Um, I I was a while ago I was talking to Trey about just the lack of the deeper supply chain specifically in drone motors.
2:13:49
Like there are no small drone motor manufacturers in the United States.
2:13:53
They're almost all made in China.
2:13:54
Um, and that feels like, oh, there's almost a startup idea there, but I don't know if it's a venture idea.
2:14:00
There's actually a drone motor company in Washington.
2:14:02
Uh, they outsourced some of their supply chain recently.
2:14:05
that feels like almost like we need an American dynamism private equity fund to just turn those companies around.
2:14:14
They're not going to be these power law hundred billion dollar companies, but they might produce 20% returns more reliably and there's maybe no venture style zero uh you know loss of capital risk.
2:14:24
Uh do you think we need a uh American dynamism for private equity?
2:14:27
Is that something Andre would do at some point?
2:14:30
Uh I mean you're kind of in every asset class now so anything's possible but uh is there is there a flip side to the venture model within invest investing in the national interest?
2:14:40
Well I certainly think we we've we've invested in some companies that are focused on component parts.
2:14:44
Uh so we're you know we're invested in AMA.
2:14:46
I know that Jay was on recently.
2:14:48
So like there are more and more companies that are figuring out ways to do this.
2:14:51
Um and again those are the examples of companies that are that are you know much more focused on how do we you know how do we acquire companies?
2:14:57
how do we how do we how do we make it you know make them I would say tech forward but also think about like how quickly we can get into the supply chain and some of these larger primes.
2:15:05
Um but I think you're you know you're seeing a lot of innovation around the edges on this and you're you're probably going to see u more and more founders who recognize that if that's where the real problem is they're they're going to build there and they're going to build in the best way that that suits them.
2:15:19
So yeah, it does seem like there's almost like a way to turn something like uh MP materials we were talking about like you wouldn't think like oh yeah venture is suitable for like mining at all but like now there's a couple mining companies that are figuring out how to in inject enough technology to make it potentially a venture scale opportunity which is interesting.
2:15:37
Um do you have anything else? I have a couple more.
2:15:38
I got a I got a totally switching gears but uh you had a post recently that I that I liked.
2:15:45
It was I'm committed to doing whatever the opposite of gentle parenting is.
2:15:46
And I wanted to ask you if you found any Lindy uh books on parenting, anything that's sort of resonated that you're implementing.
2:15:58
John and I uh have both have similar aged uh children.
2:16:00
have similar aged uh children. And I always have this, you know, sort of concern around, you know, you want to experiment, you know, with with par parenting and try new things and maybe not just take exactly what the mainstream media says is the right way to do parenting, but then, you know,
2:16:17
your your children have one life, you know, you want to to not uh run, you're not trying to run AB tests, you know, on their I have three boys, so I employ what I call the snake pit strategy, which is you lock them all in a room and then they it's just a snake pit and they just like wrestle and, you If there's damage, they'll heal and that's fine. The right way to do it. Well, I followed The right way to do it.
2:16:36
Well, I followed up that tweet with the tried and trueue Irish Irish strategy, which is the hey method.
2:16:42
You just shout, "Hey, allowed." Yeah. Hey. Hey. Hey. You know, it works.
2:16:48
Like there's something about where where your sons actually turn around and listen to you.
2:16:52
But uh but sadly I you know there there aren't like any books like oldtimey books that I found that that actually teach I would say uh the best way to to you know to to train children or to to child rear.
2:17:04
But you know it's it's it's interesting.
2:17:06
I always think that grandmothers kind of know best.
2:17:08
So if there's a grandmother in your life anywhere um they remember how it used to be done and how effective it was and it was you know probably harder in the olden days too.
2:17:16
So it's like basically just ask grandma like grandma.
2:17:19
plug uh I would plug Free-Range Kids um all about this that like our society has moved towards like don't let the kids just run around in the neighborhood.
2:17:27
They could get kidnapped.
2:17:28
There's so many bad things that could happen.
2:17:29
There's been a lot of fear-mongering from the media and so that's kind of led to kids turning in in inside becoming inside kids staying on the iPads or whatever.
2:17:38
Um, but there's this movement in the freerange kids to just be like, "Yeah, actually like you're six, you can ride a bike like ride your bike to the park like and and that will enforce the society to maintain safety."
2:17:49
I need to find the rate the rate of parenting.
2:17:51
That's that's the next alpha.
2:17:53
But yeah, my my problem with the grandma method is that uh my uh my mother and mother-in-law just want to let the kids do exactly what they want to do.
2:18:03
You wanted two cookies, great. You want three cookies.
2:18:06
So maybe they're maybe they're right. Maybe that is Lindy. Who knows?
2:18:07
Maybe it is Lindy and the great grandmother, right?
2:18:11
Like the the one who remembers how tough it was. Yeah, that's right.
2:18:13
Uh I I want to get your reaction to Warren Buffett.
2:18:17
Uh obviously he stepped down over the or or announced his transition at uh Berkshire Hathaway this uh weekend.
2:18:22
What do you take away from Buffett's legacy as an investor?
2:18:27
It's obviously a very different type of investing, but there's so many interesting lessons there from company building to investing to everything else.
2:18:36
uh what was your reaction?
2:18:38
Yeah, you know, I I'll I'll take a little bit of a different take because I was watching the the you know, the annual meeting last year and there was this moment that happened and I actually wrote about it in a piece on friendship and founder friendship where he was doing his usual, you know, going through company analysis and then he just kind of forgets where he is and says Charlie and everyone stopped.
2:18:56
It was like, you know, I think I I think I teared up seeing it because it was like he he was so in his zone after so many years of working together.
2:19:04
He had forgotten that that Charlie had passed. Yeah.
2:19:07
And he was almost embarrassed about it, but I thought it was the most beautiful moment because one of the things I don't think we talk enough about in venture world is founder friendship.
2:19:14
And I mean like deep deep friendship.
2:19:16
Not like, oh, we went to college together and we were friends or whatever.
2:19:19
We're going to start a startup together.
2:19:20
I mean those people who like work together decades and decades out.
2:19:22
work together decades and decades out. I actually think this is why family businesses often work better where you even if you look at like the Collison brothers it's like they've sharing resources you know for for since since childhood since they can remember and like there's something about just the going through life with someone
2:19:39
suffering with someone understanding how to like you know end someone's sentences that leads to these just incredibly rich and beautiful companies um and I think if you know if we did an analysis in Andrea Horowitz and just looked at the companies that were true outliers I think there would be stories of these
2:19:55
people are like brothers brothers and sisters and and Andrew is certainly this right like it's you know the the founders there were DARPA challenged together like their first day of college right so it's in some ways there's something about just having these deep relationships that that span the test of time where you're you're on a journey
2:20:10
with someone and it's real like arisatilian friendship not like faux friendship but true love um and and clearly you saw that with them um it's it's just a remarkable thing how they were able to to kind of be true brothers and and kind you know, each other's better half throughout their business career for as long as they were. It's It's amazing. Last question.
2:20:28
What should we do with Alcatraz?
2:20:31
Oh, you know, I I love all I love all the ideas of turning it into a casino, but I I haven't seen that one. I like that.
2:20:37
I was saying I was saying tax haven and and and general solicitation rules so you can like go out there, no quiet periods, sell your angel, lock up periods, just unfettered libertarian capitalism out there. That sounds good.
2:20:50
But I but there is something about bringing it back in its original form.
2:20:53
You know, it's like there is something about these buildings that that the the president likes to restore into their former glory.
2:20:58
And so if Alcatraz is the case, like keep the historical details accurate. Sure.
2:21:02
Um you can kind of see where it's coming from.
2:21:04
He's he's definitely a historicist in that in that regard. Okay.
2:21:08
Well, thank you so much for joining us. This was fantastic. This was great.
2:21:11
Come back on and thanks for having me. Have a good one. We'll talk to you soon. Bye. Cheers. Um that was fantastic.
2:21:17
Um, I hadn't heard the casino idea.
2:21:19
She's clearly on a different part of X than I am.
2:21:25
No, I saw I think I saw a little bit of that, but I was thinking if you made it a tax haven, you could just put casinos. True, true, true. Yeah. Yeah.
2:21:31
It should be completely riverboat gambling.
2:21:33
It needs to be either more lawful and become a prison or more lawless and become a gambling haven.
2:21:40
It does have like that riverboat vibe of like, you know, being in the bayou, hanging out on the river boat, gambling.
2:21:46
It's kind of like international waters. Anything goes.
2:21:49
Anyway, our next guest is here. Welcome to the stream. How are you doing? Do we have you? Hi. How are you guys? Good to see you. We're doing great. Uh, welcome to the show.
2:21:57
Uh, would you mind kicking it off a little introduction for yourself? Your yourself? Yeah, for sure. Hey, hey everyone. Adita Agraal here.
2:22:03
Uh, I'm the managing partner here at Southspark Commons.
2:22:07
I've been in the tech industry for about 20 years now.
2:22:10
Um, kind of started off by meeting a very young 19-year-old Mark Zuckerberg in like early 2005 when I just moved out here.
2:22:19
Facebook was still working out of the famous house.
2:22:21
Uh, and you know, so kind of meeting a 19-year-old Zuck at that point was pretty obvious that dude was special.
2:22:27
Uh, and then kind of How old were you at that time? I was uh 22. Wow. Okay. Okay.
2:22:34
So, you were like, uh, three years younger than me, but generational founder, I should probably join the company. That's great. You know, it's funny.
2:22:43
It's like I I kind of joke that I love working for founders younger than myself, cuz I went for working for Zuck to I then did my own company after Facebook, which then got acquired by Dropbox.
2:22:53
I was Dropbox's first acquisition and then I was the CTO there working for a young Drew Hston and a young Arashi.
2:22:59
Wait, so did you recruit Guido Van Rossam person?
2:23:02
IC personally recruited GVR to come join Dropbox Python. Wow. Absolutely legend.
2:23:09
And it's interesting the benev the benevolent dictator for life of Python.
2:23:14
Probably the most important programming language in modern history.
2:23:18
in modern history. Yeah, it's interesting you say that because you know Python at that point Dropbox was probably the most used I would say consumer app maybe actually the most used kind of app in general written mostly in Python because most of our a bunch of our back end and front end was
2:23:34
actually kind of like codegen using Python and Guido is a legend I mean like I think that the way he has crafted Python you know both by himself and at Google and under kind of the Dropbox opices was just legendary and it's kind of amazing it's kind of becoming the uh the programming language of choice for AI as well, right? Kind of like most of
2:23:50
Kind of like most of the AI programming is actually done all in Python, which is pretty which is pretty crazy. Wild.
2:23:55
Yeah, he's best to ever do it.
2:23:59
Let's talk about let's talk about the news uh because it was hitting the timeline. I think it was Friday. Uh new fund three.
2:24:05
Maybe talk about the genesis of the fund uh and you know the the series of funds to get where you guys are today. For sure.
2:24:12
Um you know, happy to tell you about SPC fund 3.
2:24:17
That's alpha common fund 3.
2:24:17
But maybe I, you know, instead of kind of uh telling you about the fund sequence, let's talk about why SPC exists, right?
2:24:22
Um SPC was started in 2016 with the simple premise that um if you are a talented technologist, do not waste your life kind of tackling small ideas, right?
2:24:34
Um I'd say that there are two big mythologies that we've been trying to bust, if you will.
2:24:41
bust, if you will. So the first big mythology is that you know we all have this mental model of kind of like founders essentially getting a stroke of inspiration going up at the top of a mountain and then coming back to us with kind of the promised product right it's a very it's framed as this like solitary
2:24:56
hero kind of or heroine kind of act but our strong premise is that great companies basically come out of insanely high talent density right they come out of places like PayPal which kind of like kind of show like you know what greatness looks like and then people go out and build things they come out of
2:25:12
like places like um you know obviously Facebook then we have had a bunch of companies out of Google uh Derog Spark obviously um you know and we also see this greatness kind of occurring in clusters all across us like we see it in like elite sports teams we see it in elite kind of like musicians we kind of
2:25:28
see it in like essentially academia so our take was that if you want to start a company why would you want to go and kind of like ideulate by yourself right instead be surrounded by super high talent density people who challenge you like you know where interesting collisions of ideas can happen. Um, and it's kind of a
2:25:45
Um, and it's kind of a semicompetitive collaborative setting, right?
2:25:48
You want to be surrounded by the best people who are kind of challenging and pushing on your ideas, but then you also have a little bit of like, you know, you're looking over your shoulder being like, I want to aspire to the greatness that I see around me, right?
2:25:59
Um, so that's our first mythology, which is that in order to start a company, you should be surrounded by great people.
2:26:05
And the second one which is maybe it's you know it's it's more than a pet peeve for me which is that there's a generation of founders that argue over the last decade in Silicon Valley who basically because of the availability frankly of early stage seed capital kind
2:26:21
of latch on to the first idea that they think of right because they have some idea somebody gives them like a seat check and then they think that the idea is good right and our take is that actually like you know instead of just focusing on the first idea that you have. Take some time to wander. Let your
2:26:35
Take some time to wander.
2:26:35
Let your mind kind of like go lateral.
2:26:37
Figure out like it's unlikely that the first idea that you have is the best one, right?
2:26:41
If you kind of just think about it from a probabilistic perspective.
2:26:44
So our take at SPC is that come spend 6 9 12 months with us wandering, ideulating, exploring, tinkering, letting interesting ideas come about.
2:26:54
Um and in some ways everybody is so focused on scaling the mountain.
2:26:59
We talk about hypers scaling.
2:27:01
We talk about scaling the mountain that nobody stops to ask like is this the right mountain?
2:27:06
Like is this the best mountain that you want to go climb?
2:27:08
Everest has like you know 16 peaks over eight sorry the uh the Everest range has like 16 peaks over 8,000 meters.
2:27:15
Like which one are you going to pick, right?
2:27:16
Like that's a pretty good one, right?
2:27:18
Um so K2 because it's the hardest.
2:27:21
K2 is the hardest in the winter.
2:27:23
Highest fatality rate by Yeah.
2:27:27
Some founders just want the pain and so they go okay K2 North Face during the winter. Oh yeah.
2:27:31
What uh really quickly what uh the the name uh not South Park Capital, not South Park Ventures, South Park Commons.
2:27:39
What's what does that mean?
2:27:42
It it was a name that was actually chosen by our early members, right?
2:27:48
So our early members in circa 2016 2017.
2:27:50
The idea is that it is a meeting place of ideas, right?
2:27:53
a meeting place of ideas, right? like it's kind of formed by the commons obviously very famously out of London but a place where a the intellectual public can gather to kind of like you know uh introduce ideas kind of essentially um debate ideas some of you know some of the folks that we were
2:28:09
inspired by back in the day were Benjamin Franklin's Hunto club right we actually remain deeply inspired by that which is it exists as a society to better each other to kind of like to towards greatness um so the idea was that SBC I mean sure we have 20 people on staff here we a bunch of investors. I I think we're awesome.
2:28:26
But ultimately, a lot of like the value of SBC is being surrounded by great talent that can all kind of like push each other.
2:28:32
So when you come back to the genesis of the fund, right guys?
2:28:36
Like in the early days, there was no fund.
2:28:37
We framed ourselves as a learning community.
2:28:39
We framed ourselves essentially as like an exploration society, kind of the royal exploration society in the 1800s in the UK with the idea being that like being a founder is kind of being like an explorer in the early days, right?
2:28:54
you're trying to navigate the idea maze, uh you should be able to like you know throw away like the bad ideas in pursuit the great ones.
2:29:00
the great ones. Um and then over time what we realized is that this is actually an interesting model for early stage kind of like company exploration right so we would basically provide a place where people would come in and essentially it was very hard to get in right it's you know we do maintain super rigorous standards for essentially getting in we put people through
2:29:19
multiple interviews reference checks so for instance this people this year 20,000 people plus will apply uh to be part of SPC uh across 250 spots across SF New York and Bangalore Um so it very rigorous to get in but once people essentially got in we would kind of like have like a very vibrant intellectual environment where we would invite like really interesting people at the frontier of their fields. Uh you
2:29:41
Uh you know so for instance I remember back in 2016 and 2017 a young Vitalik would be like walking through kind of like STC just talking to people about some of his ideas around distributed systems.
2:29:51
We would have GDB and Ilia walking around telling people about kind of what was happening in deep learning.
2:29:56
And I know that today these guys are like world famous, but back in 2016 they were still trying to pioneer something that felt a little bit heretical, right?
2:30:03
Which is this idea that we were about to enter kind of a kind of like a Cambrian explosion of machine learning away from the deep learning winter.
2:30:10
So you know we have always welcomed the people who are kind of in some ways pushing the boundary.
2:30:16
Um any so it was framed as a learning society but as people kind of came and spent time in SPC we realized that they were actually converging on more interesting ideas for you know by way of their exploration.
2:30:29
So as they started essentially starting companies uh Ruchi and I Ruchi is one of the founders of like SPC would basically write you know you know angel checks and introduce them to our uh investor network.
2:30:41
network. But over time we decided that like hey why don't we start a fund to invest in SPC companies uh and the fund would also the for instance the fees coming in from the fund would be used to essentially like provide for staff and also provide for the building that we
2:30:54
have in South Park right um and that fund one was a $55 million fund in 2018 that fund uh has done phenomenally well it's kind of going to be in the top 5% of its vintage of that year um on the back of on the backs of that there you go boom boom boom boom Um is that the money bell? Okay, there we go. The size Okay, there we go. The size gone.
2:31:16
Um and then on the backs of that, you know, we raised another fund in uh 2000 in late 2021, which was $135 million fund.
2:31:23
That fund is actually outpacing fund uh fund two is outpacing fund one.
2:31:28
Um and on the backs of that, we have just raised fund three, which is the $275 million fund to invest across uh across the globe, but also specifically the USA and India.
2:31:36
the USA and India. uh and the model scaling well you know like we I'm curious so so I want to get into uh potentially some of the learnings uh the broader learnings for companies uh you talked a little bit about the sort of uh the unicorn factory you know companies
2:31:54
come they get you know2 to5 million they announce their fund raise maybe they launch and that's sort of like this like you know they get then they're on this sort of treadmill right and it just speeds up and speeds up and and you know, hopefully you don't get thrown off of it at some point. You can keep the
2:32:09
You can keep the pace up.
2:32:11
But um uh one of the things I've been talking about recently on the show is kind of the how that that timeline can actually end up hurting your business if you pick an idea.
2:32:22
You have a super high-profile launch and then everybody knows you as this company that does this one thing, but maybe in that process you discover a totally different idea or it makes sense to to pivot.
2:32:35
And I'm curious, you know, seeing so many of these companies go from zero to one and then I'm sure ultimately oftent times, you know, pivot into other areas, what is the what is the what is what is the core advice that you're giving to founders that are joining at the earliest stages SPC, maybe pre- idea or maybe they only have ideas of an idea to help them avoid that.
2:32:57
You know, we saw um we had the founder of of H Cly on a couple weeks ago and he's had, you know, two maybe three, four, five super viral moments around what he's doing.
2:33:10
And my my uh advice to him was, you know, don't be afraid to basically reinvent yourself just because, you know, in three months if it's not working as well as it should, right?
2:33:19
And I've gone through this in in in the past myself, which is, you know, going viral before you have product market fit is not always gift and a curse.
2:33:28
It's a gift and a curse, right? Yeah.
2:33:33
I mean, honestly, I mean, it's it's I think it's a wellred question and I think in in so far as the question also contains some of the answer, right?
2:33:39
My take is that honestly uh the cheapest time the easiest time uh to kind of do path finding and to do pivots is in the earliest days.
2:33:48
earliest days. And in some ways like obviously my point of view is that you shouldn't raise a ton of money right like the first two three $5 million should be easy to raise right like that should be your easiest raise right in the sense of like you have you have you're kind of converging on an idea
2:34:02
that is making people excited uh what you really want in the earliest days is to have a lightness of being in terms of like making sure that you can actually objectively examine the idea from all sides right like if it's not working put another way here's Something I often tell founders, your first $2 million of sales should be damn easy, right? Like I
2:34:21
Like I think that people often conflate that like I'm going to go and do hand-to-hand combat to kind of go and get my first $2 million of sales.
2:34:28
It's like what are you talking about?
2:34:30
Like if you have a great idea that first two five should be easy, right?
2:34:34
People should be taking a product that is halfbaked because it's so resonant.
2:34:37
So my take is that like wait around and kind of like keep on kind of like doing big pivots or small pivots until that idea comes into focus. Right.
2:34:47
Yeah, entrepreneurship like any founder that you talk to that has gone on kind of a unicorn or a decagon journey, it is long.
2:34:54
It is super painful, right?
2:34:54
Like if you are going to sign up for a super long kind of like game, take the time in the beginning to make sure that it's actually like the right mountain, the right game to play.
2:35:04
right game to play. Um and I think that I mean if you kind of think about it guys it makes sense that a lot of trends I think at least in our industry make sense to me when viewed from the lens of like we are trying to push founders to start things as soon as possible right
2:35:20
like you know software kind of enables that like you know super low cloud computing costs kind of like enable that but I think the flip side is something what we have seen is that I actually would argue that over the last 10 years founders have shied away from a problem that doesn't immediately come into focus Right? If you can't code like V1 in like
2:35:36
If you can't code like V1 in like a month or if it requires like physical atoms, if it requires kind of like talking to anybody that is not over the internet, people tend to shy away from it, right?
2:35:46
And my take is that there are actually tons of super interesting kind of problems to tackle if you widen your aperture in the early days.
2:35:52
And again, you know, whether you raise like a million dollars or $5 million, I I would urge raising less, but ultimately it's kind of about having that mindset of being light in the beginning because none of your early investors actually care that much if you pivot like five times because the alignment around like biggest sorry the biggest outcome is always is just there. Yeah.
2:36:12
How did you think about fund construction uh with the new fund?
2:36:17
Uh just the nature of venture means that you know a handful of companies in the fund will end up you know being you know maybe an order of magnitude larger than than the rest.
2:36:26
Uh and I imagine you've learned a lot of lessons from the first couple funds around you know making sure that you're you're able to participate in in in multiple rounds um and and that kind of thing. Yeah, for sure.
2:36:41
I mean, I'd say that the the first thing that we often talk about is that fund size is an in uh is an output, not an input variable, right?
2:36:50
I think there's a lot of managers in our industry that basically raise a a big fund and then come up with a strategy to deploy the fund.
2:36:55
For us, kind of the the methodology always has been like fund size is an output of the number of founders that we can serve, the number of people we can have in our community.
2:37:05
We strongly believe in that our community is best facilitated when things feel intimate, right?
2:37:09
So this is why like you know none of our spaces in SF New York and Bangalore are more than like 150 people.
2:37:14
Um and then we kind of have a sense of like how many of these members can each of our kind of like investors support such that we can actually provide them with an amazing frankly white glove experience.
2:37:24
Like I personally work closely with like 30 40 50 founders per year.
2:37:28
50 founders per year. Um and that's the fun part of the job right so a lot of it is just like what is the maximum number of people we can support both in the community but also in a per investor basis and then we kind of back our way into a fund size from that um frankly you know I think that right now um we
2:37:46
are not constrained uh the big the big thing that we're constrained by is simply our ability to support these founders not from demand for the product if you will right like I think that just looking at the numbers in terms of how many people want to be part of SPC I I think we are humbled I think by the interest. It also kind of makes sense
2:38:01
interest. It also kind of makes sense guys in the sense that I think a lot of one of the really interesting trends for us is that how many second-time founders join us right or how many like essentially people who have been early employees at like a stripe or a scale
2:38:16
join us and I think it's because they see the I I think we're kind of spreading a philosophy which is that if you want to play this repeated game of startups right and you want to start companies like it's better to be surrounded in the early days by super high talent density. I think one of our
2:38:29
I think one of our goals at SPC has always been that startups are hard but startups create a lot of value.
2:38:37
Let us figure out a way to kind of like actually make them more net productive for everyone.
2:38:42
So I think that the minus1 philosophy is resonate is resonating.
2:38:46
We obviously want to serve as many founders as we can ourselves, but I also hope that like other people start up minus one things, you know.
2:38:52
Uh and we're starting to see a bunch of uh I would say um folks who have similar philosophy like minus one I think has entered the vernacular now which makes me really proud.
2:39:03
Um so yeah, one side is an output.
2:39:06
I actually think we can serve a lot more people as we figure out ourselves how to scale.
2:39:10
But more than that, you know, like minus one is kind of a big thing.
2:39:13
It's kind of a big philosophy that makes me proud to be able to share with the world. Totally. Uh you co-ounded Bezel. Uh sorry, not not Bezel. Bevel. Bevel. Bezel.
2:39:22
Bezels were part of the motivation for kind of talking about Bevel, but yes, I did co-ound Bevel last year. Yeah.
2:39:30
Uh I I would love for you to talk about that and and how it's been.
2:39:34
Um it makes a lot of sense.
2:39:37
I think one of the biggest complaints people have about different fitness trackers is uh uh the the the data is not always consistent, right?
2:39:46
You know, your your Whoop might tell you a different uh tell you you're walking more than your aura ring or or uh or whatnot.
2:39:54
And you know, having a platform that can pull all that data into a single place and help you understand different trends makes a lot of sense.
2:40:01
um and uh you know just just the nature of um you know bundling and and unbundling but talk about uh maybe the genesis there and and how it's been going for sure you know um I think probably like a bunch of us six years ago uh kind of when COVID first kind of
2:40:19
like the lockdowns and stuff started decided to channel a lot of my pentup energy into kind of just like going full beast mode on my health you know like basically analyzing everything like sleep uh fitness fitness, nutrition, uh body metrics, everything. And I started
2:40:32
And I started to maintain these super detailed spreadsheets and these spreadsheets were basic like I have all of the data collected on a daily basis going back six years.
2:40:41
It's kind of stored in a combination of Excel, sorry, like Google Sheets and Air Table. Yeah.
2:40:44
Um and I think everything that you said like you know I would collect data from three different sources, right?
2:40:49
I would collect data from my Aura ring.
2:40:51
Um I also had an early Fitbit.
2:40:54
Uh and obviously when Apple watch came out and some of the data would be like a little bit different and I would basically normalize it.
2:41:00
I would also collect a bunch of qualitative data about my own kind of like I would say experience. Yeah.
2:41:05
Um so when I was talking to Ben and Gray who were at SPC, you know, they were also essentially going through similar journeys.
2:41:11
They kind of been through a little bit of the ringer in terms of their first startup and we were talking about what we wanted out of essentially like a health app.
2:41:17
A lot of what we were saying is that essentially number one um all of these health devices at this point were kind of like offering you like a dashboard of your data but nothing was really tying it together.
2:41:30
I mean Apple health is fine right like it's not a bad product but it's a little busy um and it's kind of like very specific to that ecosystem.
2:41:37
like very specific to that ecosystem. So our take was that how do we kind of create as step one the best place to ingest all of your kind of health data because at this stage it's not just your rings your watches it's also your eight sleep mattress it's also like you know
2:41:52
everything basically is kind of like creating this health data which is awesome right it's beautiful because I think it's indicating that consumers care about this so our take was step one how do we get all of this into the into a one place that essentially uh oh is that a there we go amazing Yeah, that that's a great product, right? Like
2:42:09
Like eight sleep, but eight sleep gives you a nightly sleep score as does your aura ring maybe if you wear your watch.
2:42:15
So like how do we make sense of all of this data into a clean consistent place, right?
2:42:22
Um and it's I mean it was a simple proposition.
2:42:24
It was one of those classic things.
2:42:26
Let's just build what we want.
2:42:28
Um and Ben and Gray are just worldclass kind of builders and designers.
2:42:32
So they just built something that was beautiful.
2:42:33
it was easy to use and we put it out there and it's just been all kind of like crazy organic demand.
2:42:40
Um, you know, we're not diverging too many numbers, but you know, we are definitely kind of the uh the number of users and kind of paid subs, it just kind of blown us away.
2:42:49
We've kind of been on a tear for the last four, you know, last like six months.
2:42:52
Um, well, there's there's this I there's this idea that uh once you get to a certain obsession level in health, the amount of money that you'll spend on an incremental 1%, you know, gain in your health is like, you know, you get to a point where you're, you know, I did this like NAD treatment last year. Oh, yeah.
2:43:11
yeah. that in hindsight was like I think a terrible use of funds, but it was like it was like a series of I think it was like six grand over like multiple treatments and I was like I didn't feel anything at the end but at the time I was like yeah if this is going to make me performance yeah if I'm going to feel
2:43:26
like you know 5% more energized during the day it's totally worth it but um it's a great market that's cool I'm curious uh la last thing because I I know we have a cut off here and there's probably a founder you need to chat to uh chat with um what are you seeing being uh today at a high level. You guys
2:43:41
You guys have a unique insight into the the sort of trends and categories that will be probably hot in a year.
2:43:49
Um and you're probably making those investments now.
2:43:55
um you know I'm sure a lot of the obvious stuff you know agents um MPC that that kind of thing but what what what's um what's getting a lot of your probably two probably two areas that I would highlight and m maybe this is I think some both of these are somewhat well understood now the first one is the amount of I would say enthusiasm and excitement for stuff around robotics is very real this is both kind of like
2:44:22
building actual robotics like hardware to kind of building robotics kind of I would say middleware kind of like think like you know end toend stacks for coding on robots then obviously robotics foundation models um it's it's it's hard
2:44:34
to say whether it will all translate into usable products over the next three or four years but over a 10 year horizon I think that the energy is just substantial much more so than I've ever seen in my career. Um, and the second
2:44:43
Um, and the second one I'd point out is that, you know, a lot of the times the conversation around foundation models has really centered around essentially like take what we have and kind of like throw more compute at it, throw more data at it.
2:44:56
But it's surprising to me that a lot of people don't actually take a step back and realize there lots of smart researchers out there who are building the next generation of algorithmic changes to these models.
2:45:07
these models. So there are lots of really interesting both uh I would say variants but also novel takes on for instance what would a pure RLbased kind of like model look like right if you had to ingest reinforcement learning from day one so I'm seeing a lot of energy
2:45:23
around building the next generation of foundation models it's a little bit I would say still hazy but it's very exciting because I think that I still think we're at the tip of essentially the innovation we're going to see on top of these core LLM capabilities Yeah, it makes total sense. I mean, uh,
2:45:37
I mean, uh, assume we're at the end of history and all the future algorithmic progress. It's so crazy, right?
2:45:43
Like everybody assumes that like it's just going to pause and then we're going to scale it up and I'm just like, no, no, no.
2:45:49
There's a ton of like energy around core innovation around the algorithms. That's very interesting.
2:45:53
Yeah, makes a lot of sense. All right.
2:45:55
Well, I know we've already had uh some of your founders on, but let's make sure to get more on and uh thank you for coming on and telling the story and congrats on the new fund. Amazing. Thank you. Thank you guys. Appreciate it. Cheers. Congrats. Have a good one.
2:46:06
Uh, should we rip through through some timeline? Get out of here. Let's do it.
2:46:09
Started a little bit late.
2:46:11
Uh, we'll get timeline hours. It's timeline. Play some sound effects.
2:46:14
I have been missing that sound effect. It's so good.
2:46:18
I mean, last week was That's not even the main one.
2:46:20
That's the different one. I want the Ashton Hall. No, not that one. The Ashton Hall. The Ashton Hall.
2:46:27
You know the one I'm talking about. This is the one.
2:46:28
This gets me so fired up. I love this one.
2:46:33
Anyway, uh Morgan Howell, friend of the show, uh put a random thread boy in the truth zone.
2:46:38
Aaron Richards writes, uh, "In 2020, Morgan How published his bestselling book, The Psychology of Money.
2:46:46
It sold four million copies and changed the way we think about money.
2:46:50
Now, he's predicting the collapse of America.
2:46:52
Here's everything you need to know."
2:46:54
Beautiful photos from Diary of a CEO.
2:46:56
And Morgan Hel comes in and says, "Lol, I am 1,000% not predicting the collapse of America."
2:47:02
Double kill community note and the actual author of the book telling you that you're wrong. Um, yes. Absolutely wild.
2:47:09
Uh, for step it up on X Aaron Richards. You're on notice.
2:47:16
Uh, the next slop thread you post better be factual.
2:47:18
What's uh Morgan Hel's latest the art of spending money uh is his next book. I like that.
2:47:25
So excited about it because it's very interesting.
2:47:29
Yeah, we got to have him on more regular.
2:47:30
That was such a fun conversation when we had him on.
2:47:32
Yeah, absolutely brilliant. That'll be great. Thinker.
2:47:36
Um anyway, we want to take a second to tell you about Vanta.
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2:47:56
I've used them across multiple companies and I am excited to be uh working with them now at TVPN.
2:48:03
We got to get Whimo on Vanta.
2:48:06
I'm sure that there's a lot of compliance with a business like that.
2:48:07
Uh and I'm sure they're already on Vanta probably.
2:48:12
Uh yeah, we'll have to fact check that one.
2:48:14
But next post is from Jane Wong.
2:48:15
She says, "This Whimo almost t-boned a cyclist blowing through a red light at an intersection in San Francisco. Who's in the wrong here?
2:48:22
Why isn't the robo taxing yielding to some yielding to someone who always has the right of way anywhere and everywhere at all times?"
2:48:31
But what's interesting is that a lot of people were looking at this and being like, "This is incredible performance by the way."
2:48:35
Like it it stopped and and the and the biker kind of came out of nowhere.
2:48:39
Um, but Christian Kyle is putting uh his, you know, bet his dollars on the gambling table.
2:48:47
I don't know what what analogy I'm using here, but he uh he says, "Prediction in 2040 it will be illegal for humans to drive cars." What do you think?
2:48:56
I think it's going to come.
2:49:00
Illegal though, that's going to be hard.
2:49:02
I think it will be frowned upon. frowned upon.
2:49:06
Uh yeah, I mean I do it is it is funny as a as a legal to ride horses. Yeah, true.
2:49:12
But it's frowned upon to it's one of those things, right?
2:49:15
So So it's technically I think legal on most roadways to just ride a bike, right?
2:49:20
Maybe maybe not on a free but it's frowned upon if you're in like you know a 45 like if you're like expressing your right to cycle in like a highway, right?
2:49:31
Like a onelane highway and you're like riding in the middle. Yeah.
2:49:32
It's kind of I could see it being like that.
2:49:35
I mean, I do think it will become at some point just so objectively clear that it is dangerous for humans to drive that there could be plenty of pressure at least in some in some areas.
2:49:47
I think I think uh Whimos very underrated horses also underrated.
2:49:54
First off, let's go through the stats. One horsepower, not bad. It's pretty good.
2:50:01
And horsepower the most jacked horse probably two horsepower. Yeah. Yeah.
2:50:06
I was going to say, how do you rank?
2:50:08
Uh there was journalism was racing on Saturday uh against big horse weekend.
2:50:12
Who who were they racing against? Sovereignty. Sovereignty one.
2:50:16
Sovereignty mogs journalism again.
2:50:18
Um but uh but yeah, I was thinking about does is is journalism really one horsepower?
2:50:24
Is that the right way to think about it?
2:50:26
Or or is journalism getting up into the three or three or four range? Totally possible.
2:50:32
Also, Henry Ford famously said, "If I asked people, they would have said, "A faster horse."
2:50:35
What's wrong with a faster horse?
2:50:37
If we've been spending the last, if instead of the Ford Motor Company, it was the Ford horse performance-enhancing drug company, we could have horses up in the 20 horsepower, 200 horsepower. Who knows? The right cocktail gear.
2:50:50
Here's this should be our investment strategy for the day that it get uh humans get banned from driving cars on roads.
2:50:57
go and buy all these legacy racetracks that haven't really been as po, you know, you can go and do a track day all over America.
2:51:08
It's it's some it's popular in some circles, but I think if car if humans were banned from driving, for sure they're going to hit the track a lot more.
2:51:14
They're going to hit the track way more.
2:51:15
It's going to become the new round of golf.
2:51:17
There's actually a uh some track in California that just got bought out by a new investment firm and they're going to modernize it, build like a hotel on it and uh build like a paddic so you can store your cars there, do all these different things more of a was it button willow or I think it might be that might be right.
2:51:34
Um it was up for sale and it wasn't that expensive.
2:51:36
You know about thermal club in uh loosely but tell the audience.
2:51:40
I mean I don't think it's been an amazing business. Uh not yet.
2:51:46
It didn't work for them, but maybe it would work for us.
2:51:48
But uh but yeah, no, it's basically they they built a track and then they built a lot of houses that are specifically designed for car enthusiasts.
2:51:56
So they have transparent drive in and out.
2:51:58
Yeah, they have transparent uh flooring so you can look down and see. That's great. Uh yeah, I love it.
2:52:06
Also hackathon project self-driving horse. Totally doable. Think about it.
2:52:11
Horse, you just need to put in compass, GPS.
2:52:16
You literally strap a phone to the horse and then in one tiny servo motor moves the res to the left or the right.
2:52:20
You can steer to the horse and little little motors goes kick and the horse goes and all of the tough parts about like the horse. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah.
2:52:29
The crop the riding crop.
2:52:29
You could easily automate that.
2:52:31
But the hardest part about you know Whimo is like the fine motor like oh slight object detection. You want to scrape. You want to look out.
2:52:40
A horse isn't just going to run into a a bicyclist.
2:52:42
horse is going to see that and you know stop immediately.
2:52:46
Yeah, you do a horse in the loop, you know, the sort of interim stage where it's not fully autonomous and the horse the horse can take over, you know, you basically have an end toend neural network running in the horse's brain already.
2:52:57
It's probably like GPT3 level. So, give it some credit.
2:53:02
Could he could could could be frontier. Could be frontier.
2:53:04
Horses were often on the frontier.
2:53:06
Horses have been on the frontier.
2:53:08
They remain on the frontier.
2:53:10
They are frontier models.
2:53:11
They're frontier models in the in the horses.
2:53:12
I think we're getting somewhere. We're getting somewhere.
2:53:14
I really do think you could train your horse to just learn your commute and just say, "Hey, take me to work.
2:53:20
I'm going to take phone calls."
2:53:21
I mean, people were doing that for thousands of years. It's so Lindy. Let's bring it back. Let's bring it back.
2:53:27
I'm going to daily a horse.
2:53:27
I'm going to daily a horse. One horsepower, maybe. One horse. One horsepower. Oh, it's so good.
2:53:34
Anyway, uh what should we do, Sam? Less than data is oil.
2:53:37
We should just have him on the show at some point. Talk about it.
2:53:40
Yeah, let's let's have him on the show.
2:53:41
He's He's yapping too much on here.
2:53:44
I want him to just read it to me.
2:53:45
I don't Yeah, just come on and read it to me.
2:53:46
I want to read your post.
2:53:48
I want you to read it to me. Uh well, you know what? Uh Sam Lesson loves ads. Ads. He likes billboards. He loves billboards.
2:53:54
And and to be honest, Lesson is going to love when people pivot from American dynamism back to ad optimization. It's going to happen.
2:54:00
And he's going to be ready to fund. Yep. Fund them all. Yes.
2:54:04
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2:54:22
Uh Gary Tan had a funny early Palunteer story.
2:54:28
He said they were doing some of their first sales meetings for Palunteer and team was all under 25 years old at the time.
2:54:33
They were staying at the Mandarin Oriental.
2:54:34
We said, "Hey, this is a startup.
2:54:36
Why are we wasting money on this?"
2:54:38
Alex Karp said, "The people you're selling to will ask where you are staying, and we aren't selling Motel 6 software.
2:54:44
We are selling Mandarin Oriental Software." That's a great line. It's great.
2:54:48
Apparently Joe Moel said he was responsible for this.
2:54:50
A lot of people are going to take this the wrong way and go and stay at the Aman.
2:54:53
But um there's also, you know, probably other ways to accomplish accomplish this.
2:54:59
But we we we're we're selling Ammon and Giri sports betting podcast.
2:55:07
Microtransaction riddle riddled mobile app games. Yes. Something like that. Mobile games.
2:55:11
Uh I love this post from Salana.
2:55:14
If we can't do trains, we should at least do a big autonomous pod network on a special guardrailed 150 mph lane with cars the size of gorgeous sleeper carriages which link up in giant chains with elegant bars and restaurants on long haul drives across the country.
2:55:29
This is so doable and so beautiful. I love it.
2:55:33
Uh I've been big on the tear down the speed limits.
2:55:35
Uh I I firmly believe this is much easier than building new highspeed rail is just take down the speed limit signs and just have an American autobond and then put it in it's incumbent on the individual to drive safely.
2:55:48
Cars are getting way safer.
2:55:49
They have autopilot now and lane keep assist.
2:55:52
So if you're on a long drive and you can you can get a car that goes 150 miles an hour for like 50 50k, right?
2:55:59
Like plenty of cars have like they go way up there. Yeah. Going super fast.
2:56:05
get like an '05 AMG and you're good and you're just cruising and it will actually cut the time the travel time in half.
2:56:12
You can drive twice as fast.
2:56:13
Have to get better brakes though. Yeah, they do.
2:56:16
But uh I think anytime AMGs are where it's at these days, anytime you see a car driving double the speed limit in traffic, it's always a Model 3.
2:56:26
You're like, "Bro, I know the brakes aren't that good, but but going to Mammoth from LA and an E63, like a S63 just bombing. Can't beat it.
2:56:36
160, you get there twice as fast.
2:56:38
That's a drive that doesn't require people that's a drive that people have been known to to get there in in, you know, 60% of the time that Apple Maps, you know, says.
2:56:46
I mean, it takes it takes uh it takes a lot to build something new in America.
2:56:51
a lot of permits, a lot of eminent domain, a lot of regulations, a lot of different consultants and legal battles, but just having a bounty for, hey, take down all the speed limit signs. It's now an autobond. Pretty easy. So good. Pretty easy.
2:57:07
Uh here was the the post you were referencing earlier.
2:57:09
Wasteland Capital says, "It's still amazing that Buffett's crowning achievement was simple simply buying Apple in 2016 when Apple was already the largest company in the world by market cap." Wow.
2:57:19
And just adding and holding on to it. So good. Uh amazing.
2:57:24
So Berkshire with Apple 174% the S&P did 168% but without Apple they would have been at 142 versus the S&P is 168.
2:57:31
But again people were saying like is it really fair to consider that because you know Apple's in the S&P so the S&P would be lower as well.
2:57:40
But anyway still just like a good pick.
2:57:43
You know he didn't he didn't he wasn't too dogmatic about like oh I'm just a silver investor like I'm just a you know I mean for a long time he he was not anti-tech, but he just didn't fully understand it and then realized figured it out.
2:57:56
They're selling candy in hardware form. I like this. I like it. Candy Crush device.
2:58:00
Candy Crush, the seas candy of mobile devices. Yeah, it's great. Uh this is funny.
2:58:06
This is a funny uh post for a few reasons.
2:58:08
It is by Unemployed Capital Allocator. Yeah, it is funny. And it's a screenshot.
2:58:15
Uh, unemployed capital allocator says from a friend, a capable analyst, the chasm has been crossed.
2:58:20
03 is significantly better than I at my job in almost every aspect.
2:58:25
Uh, brutal, but not surprised.
2:58:30
Uh, so your job is to just analyze a thousand times more companies. Yeah. And then you'll be fine. Scale it up. Scale it up.
2:58:37
Just do more queries than everyone else. Yeah, I guess. I don't know.
2:58:41
Uh, I mean, this was interesting.
2:58:43
I I had this up earlier and it didn't get into the stack, but I'll pull it up now.
2:58:47
Is it really that much different than just being like, "Yeah, Google is is like I mean there were people that were cells in individual spreadsheets calculating all day long.
2:58:57
Excel is, you know, significantly better than, you know, somebody whose job was just to crunch numbers all day long." And we moved forward.
2:59:05
We did more work, found more capital to allocate, more things to analyze. Yeah. Yeah.
2:59:09
That's funny being like Excel is so much better at multiplication.
2:59:13
I kept trying to put this to the to the AI people that would say like yeah, there's going to be serious unemployment because of AI.
2:59:17
Like okay, let's actually quantize this.
2:59:21
Let's say over under American unemployment by 2030 is you think it'll be over or under 10%.
2:59:25
Like we've been at above 10% before.
2:59:28
It's not that crazy that high like 20%. Yeah.
2:59:30
But America's always been at like routinely at like three and four.
2:59:35
And so the the question of, you know, will we actually see unemployment?
2:59:39
Uh, still an open question in my opinion.
2:59:42
Um, lots of people talking about, oh, I'm going to stop hiring, but we're not really seeing it in the data.
2:59:48
Yeah, China still has urban youth unemployment at 16 and a half%.
2:59:53
Who knows how accurate that is.
2:59:53
Pull this post up, Michael.
2:59:55
I thought it was relevant to the last one.
2:59:56
This is from the CEO of Fiverr. Okay. Yeah.
2:59:58
You know, you have to imagine he knew this was going to leak.
3:00:03
I think anytime a CEO sends a companywide email that's dramatic, they're probably expecting it to leak.
3:00:10
He says, "Hey team, I've always believed in radical cander and despise those who sugarcoat reality to avoid stating the unpleasant truth.
3:00:16
The very basis for radical cander is care.
3:00:18
You care enough about your friends and colleagues to tell them the truth because you want them to be able to understand it, grow, and succeed."
3:00:24
So, here is the unpleasant truth.
3:00:26
AI is coming for your job.
3:00:28
Heck, it's coming for my job, too. This is a wakeup call.
3:00:32
It does not matter if you are a programmer, designer, product manager, data scientist, lawyer, customer support rep, salesperson, or a finance person. AI is coming for you.
3:00:39
Didn't didn't mention podcast here.
3:00:43
So, um, you must talking about people that work at Fiverr or the Fiverr.
3:00:49
No, he's talking to corporate at Fiverr.
3:00:51
You must understand that what was once considered easy tasks will, this is the part that's interesting.
3:00:56
What was once considered easy tasks will no longer exist.
3:00:58
What was considered hard tasks will be the new easy and what was considered impossible tasks will be the new hard.
3:01:06
If you do not become an exceptional talent at what you do, a master, you will face the need for a career change in a matter of months.
3:01:11
I'm not trying to scare you.
3:01:13
I'm not I'm not talking about your job at Fiverr.
3:01:15
I'm talking about your ability to stay in your profession in the industry.
3:01:18
And everyone's been saying this.
3:01:21
We've seen like three C's at this point.
3:01:23
The part that's interesting is AI first organization.
3:01:27
The part that's interesting here is uh digging into easy tasks will no longer exist.
3:01:33
So if you're a marketing manager and the CMO is like, "Hey, we should put up a blog post about this regulation."
3:01:40
That can now be done instantly. Five minutes. Yeah. Instantly.
3:01:42
It It's not sort of a painful research and writing process.
3:01:46
It's just sort of done for you.
3:01:49
Hard task will be the new easy in that, hey, why don't you generate 20 new ads?
3:01:56
Yeah, what should our strategy be?
3:01:56
Um, and then impossible tasks, I think, are these more agentic sort of mile, you know, complex uh sort of milestone based tasks.
3:02:06
Um, but overall, it's interesting.
3:02:08
Um, I'm going to pull up the Fiverr uh Fiverr Fiverr is one of those companies that people identify as as a a company in trouble just given that a lot of their work is uh lower skilled uh sort of services.
3:02:21
little illustration, little cartoon or little blog post and that type of record a sound bite, you know, record a size gong.
3:02:30
So you go size hilariously human in the loop for that one.
3:02:35
I think that's Ben's voice, right? Yeah. Yeah. Ben is our Fiverr. That's Ben.
3:02:40
He's like, "No, no, no, no.
3:02:40
It's not even a Fiverr job. It's not an AI job. It's not a Fiverr job.
3:02:43
It's a full-time employee job." Yeah, I know.
3:02:47
But Ben's like Ben's like, "Ai, you're not taking my job.
3:02:49
I'm making every sound bite."
3:02:51
We we tried to use AI for it and his voice was way better.
3:02:53
Still, Ben's built different. We built different. Yeah.
3:02:57
Um advice I always give to founders, be present.
3:02:59
Building a startup is very hard.
3:03:00
Sometimes you just want to hide.
3:03:02
But it's also an incredible ride working with and meeting great people.
3:03:06
Constant growth, endless creativity, and working with this new technology that is changing the universe. Life goes by so quickly. Don't run away from it.
3:03:12
We only get to do this once. Take pictures. Take pictures. Look around. Yeah.
3:03:20
Once if we're lucky, twice if we're good. Interesting. Be present.
3:03:25
I don't know what the what is the opposite of that. Like how are you?
3:03:30
I I guess sometimes you want you just want to hide. What does that mean?
3:03:36
Hiding from the organization, hiding from the world while you're building something. I don't know.
3:03:43
I think I think it's one of those I'm not very into like meditation or anything like that.
3:03:49
That's just because you uh always on. You're always on.
3:03:54
Somehow you don't follow any eastern, you know, sort of practices and yet you're one of the most present, you know, people I know.
3:04:01
So, you're just built different.
3:04:04
Uh but but I think this this is one of those things founders, you know, go through these periods of of excitement and euphoria and then pain.
3:04:14
And that pain is usually like the the classic is you know you have an idea you raise some money you launch it's euphoric and then and then you realize uh oh yeah it you know the reward for hard work is more hard work and uh even if you're you know even if you're you know Jensen Wong the the job is only getting harder every single day she met Jensen asked what brand his jacket is told meo. There we go. I'm not surprised.
3:04:46
Uh, but you know what's equally exciting and what was the word? Euphoric. Euphoric. Buying a watch on bezel.
3:04:53
Oh, I was going to say I was going to say we missed Bezel. Go to getbzel. com. Buy a watch.
3:05:00
Anyway, uh uh we we can move on because we can also talk about numeral which is also euphoric. Sales tax on autopilot. Sales tax on autopilot.
3:05:07
Many people I mean it really will allow you to have more time to be present as a founder. Yeah.
3:05:12
If you're if you're getting sucked into sales tax compliance, you're not going to be present growing. Yeah. Experiencing.
3:05:18
If you're spending less than five minutes per month on sales tax compliance, I mean, that's that's plenty of time hours back that you can be present and just in the moment. Exactly. Full Rick Rubin mode. Just vibe vibing. Vibing. Vibe entrepreneurship.
3:05:36
Uh what what else is there?
3:05:36
Some uh some deep analysis of Grock 3. Did you see this?
3:05:42
It's like uh they're doing deep deeper search in Gro 3 and one of the one of the steps that it takes is searching posts by Elon Musk.
3:05:48
The information I am looking for just seeing like, hey, has Elon said anything about this?
3:05:54
Let's throw that in the results.
3:05:54
I mean, he does post a lot.
3:05:57
I mean, whatever he's posting is probably relevant.
3:06:00
It's a good way to find fine tune the model. Yeah.
3:06:02
On your CEO, not even hiding it. Very silly.
3:06:06
Um anyway, what what else should we talk about?
3:06:09
Uh I thought this this post from Kari uh was uh quoting Dee uh founder of linear.
3:06:19
DD says every single one of these companies was started uh by people from one part of the world and it's CLA, Cursor, Datab Bricks, Zenesk, Spotify, Linear, Public. com also. Oh yeah, that's right.
3:06:35
Scandinavia, Unity, the Nordics built different. Very interesting. And of course, linear.
3:06:40
You think it's the weather because it's similar government as the southern states, you know, Italy and and Spain and Greece, but once you're on the French Riviera, no time to grind. You're chilling. Yeah, it's tough. You're chilling.
3:06:56
If you're in the Greek islands, you're not you're not putting in 20our days coding.
3:06:59
That's the That's why SF just stays on top.
3:07:02
It's not because OpenAI, you know, created the next trillion dollar company.
3:07:07
It's it's so Yeah, it's at times like the fog makes it so hard to want to be outdoors that you just want to create shareholder value.
3:07:16
Yeah, people were predicting that because of global warming it would lead to the downfall of San Francisco because it would get warmer, balmier, more people would just be hanging out in Dolores Park all day and Portland would become the new Imagine if imagine if AI was being built in Portland primarily.
3:07:32
the the the AI safety people just Oh, are you talking about the artificial intelligence company of Portland, the huge alpha there?
3:07:42
Huge, safest AGI on earth.
3:07:46
Um, this post, uh, praying for exits, uh, friend of the show, we should meet him. We should meet him.
3:07:54
We should have him on the show sometime.
3:07:55
Uh uh actually honestly I feel like we can we can go out on enough of a limb and say it's possible.
3:08:03
Praying for exits has been on the show.
3:08:05
We've had so many guests it'd still be very hard to nail down.
3:08:09
Um it's entirely possible.
3:08:09
Uh this email from Steve Jobs to Bruce uh who is uh Chisen who was the CEO of Adobe at the time.
3:08:18
Uh Bruce, Adobe is recruiting from Apple.
3:08:20
They have hired one person already and are calling lots more.
3:08:22
I have a standing policy with our recruiters that we don't recruit from Adobe.
3:08:26
It seems you have a different policy.
3:08:28
One of us must change our policy. Let me know who. Steve. That's so good. So hard. 64,000 likes. Prank for exits. Let's get it. Gigab banger. Gigab banger. No.
3:08:43
So, apparently there was a whole lawsuit surrounding this around how Yeah, tech companies do this.
3:08:46
It's like anti-competitive.
3:08:48
It's totally anti-competitive. Um, yeah.
3:08:50
you're not supposed to do that.
3:08:52
Uh and uh yeah, it's it's good for employees, I guess, if um market uh and say, "Hey, you're making, you know, a million dollars at Apple.
3:09:04
How would you like to make $2 million at Adobe?"
3:09:06
And then it's a bidding process. Yeah.
3:09:08
But, oh well, we have this we have this policy with other with other podcasts. So, we do. Yeah. So, sue us or don't.
3:09:15
Um Alex Stap has a story about universal telling you about this.
3:09:22
I didn't understand this to break it down.
3:09:24
So, um, universal antivenenom may grow out of man who let snakes bite him 200 times. I hate snakes. I'm Indian.
3:09:31
You had a you had a you had a truly hate snakes.
3:09:34
You had a snake interaction uh recently that we won't go into. Gross.
3:09:39
Um, scientists identified antibodies that neutralize the poison in whole or in part from the bites of cobras, mambas, and other deadly species. He's 57.
3:09:47
Over 18 years, he injected himself with more than 650 carefully calibrated escalating doses of venom. Oh, okay.
3:09:56
So, he didn't actually let them. Wait, no.
3:09:58
He also allowed the snakes, mostly one at a time, but sometimes two, as in video, to sink their sharp fangs into him 200 times. Wow.
3:10:06
It's Yeah, he built the tolerance. This is poison resist. Yeah.
3:10:08
This is what This is what did you in this weekend? Yeah. Everyone Yeah.
3:10:12
You just too much of a thoroughbred.
3:10:15
You're on the thoroughbred diet.
3:10:18
If you're on the junkyard dog diet, nothing could I have poison resistance for everything.
3:10:23
Microplastics unaffected.
3:10:23
I really I really it it really you're you're John's had this running joke on the show for those that haven't heard that like a single inorganic blueberry uh would would cause you to be sick and you know throw up and and all this stuff.
3:10:37
And then over this weekend I got food poisoning and no one else did. Yeah.
3:10:43
Except Sarah who's also on the thoroughbread diet.
3:10:46
On the thoroughbread diet. So awesome.
3:10:47
There's something there's something there.
3:10:49
You need to you need to build your poison resist, man.
3:10:53
Yeah, yesterday was so And like we were eating like lovely food, but there's probably something there that you weren't used to. Got me ridiculous. Gnarly.
3:11:01
This bit of dare devilry, one name for it, may now help solve a global dire health problem.
3:11:06
More than 600 species of venomous snakes roam the earth, biting as many 2.
3:11:10
7 million people, killing about 120,000 people, and maming 400,000 others.
3:11:14
the numbers thought to be vast underestimates. Brutal. Yeah. Yeah.
3:11:19
So anyways, this guy's blood.
3:11:21
Scientists have discovered antibodies that are capable of neutralizing the venom of multiple snake species.
3:11:26
So anyways, major sacrifice uh still kicking.
3:11:30
And he says, "I'm really proud that I can do something in life for humanity to make a difference for people that are 8,000 miles away that I'm never going to meet, never going to talk to, never going to see probably."
3:11:40
And uh I hope he's monetizing this. That's all.
3:11:43
He went he really went through the ringer.
3:11:45
But it sounds like he enjoyed it. Bit of a massochist.
3:11:46
Um well, let's go on to Harvard.
3:11:49
Their tax exempt status is to be revoked, says Trump.
3:11:53
And uh Sheil, uh good friend of the show says, "Wild impact on our world.
3:11:58
Hearing from multiple funds currently raising that universities have paused allocations.
3:12:01
Uh I had some ideas for how Harvard could get back in the good graces of the Trump administration. Do you have any takes?"
3:12:08
I think step one is Harvard needs to prove that they're on the side of Trump.
3:12:13
They need to add division one bodybuilding. Absolutely.
3:12:17
You know, they're known for they have a football team. They have crew. Oh, everyone knows.
3:12:21
Oh, the the the um the you know, Harvard crew team, the the what's it called?
3:12:27
The something on the Charles head of the Charles. It's really fancy. Uh crew race.
3:12:31
Uh but if they get into bodybuilding, I think that would be a big step forward.
3:12:36
They should also get into pro- wrestling at the collegiate level.
3:12:41
NCAA pro wrestling but you know Trump has been in many Wrestlemania and if you could go full scholarship to Harvard as a wrestler junior wrestling not not the typical wrestling but the pro wrestling specifically.
3:12:57
Um I think that'd be I think that'd be a big step up. Yeah.
3:13:01
Anything else that they could do?
3:13:01
I think if they go for a profit, it might actually wind up maybe they don't allocate.
3:13:07
Maybe they become build a high frequency trading option like start prop trading their own endowment.
3:13:12
Why are they outsourcing?
3:13:14
I'm sure they're pretty close to that already.
3:13:15
They should just start leading series A's. Yeah. Just direct. Just go direct, right? Yeah. Yeah.
3:13:21
I mean, this this is interesting. One um Bucky uh Yeah.
3:13:28
shared something recently about how one of the dynamics here is in many ways this will negatively impact net new funds or funds that are getting off the ground because Harvard would have already committed for the the major
3:13:41
platforms the funds they're in it with for the long haul they're they're making commitments multiple funds out and so this is primarily I I doubt they're reneggging on existing commitments so uh don't worry light speeded A16Z general catalyst will will be okay. You don't You don't have to worry.
3:14:00
We're going to make it through this.
3:14:02
Mark German had some news.
3:14:05
Apple is teaming up with Anthropic on a new AI powered vibe coding platform and is rolling it out internally to employees.
3:14:10
It could come to third party developers in the future.
3:14:12
Details and what this means. Um, interesting. Makes a ton of sense.
3:14:15
Uh, I don't know how familiar you are with iOS development, but it most of it happens within Xcode, which is not as it's not open source, so it's not forkable like VS Code.
3:14:23
And so it like you can't really I think most iOS developers if they're really serious they have to use Xcode or they get good at Xcode.
3:14:32
And so uh to just not have a cursor competitor or a vibe coding option in that software is like really antiquated.
3:14:41
It's always been a harder harder IDE to use, but it makes a ton of sense they would team up with someone for this.
3:14:47
Anthropic probably a good pick. So we'll see.
3:14:48
No, it makes a lot of sense.
3:14:50
Uh and there was other news.
3:14:52
Claude is known as one of the best when it comes to programming.
3:14:54
Daria one says, "Nick, Apple is partnering with Anthropic." Uh, very interesting.
3:14:58
I wonder what the structure of that deal will be because most of like you don't think of Xcode as having like a consumption based pricing.
3:15:06
It's something that just comes pre-installed with a Mac.
3:15:09
Look, Apple's Golden Goose the App Store is getting cooked right now.
3:15:14
And uh I would not uh you know I I can imagine that Apple will find a make uh and Anthropic will find a way to make uh plenty of money on.
3:15:23
I mean in the similar vibe coding world the CEO of Windsurf uh went on the podcast if you think about it though like I'm sure that I don't believe that Apple anthropic vibe coding you know Xcode platform can make up for that what what may end up being a massive drop in app store revenue.
3:15:41
But it it is pretty funny to think about, you know, it's like, okay, like, hey developers, you're not going to give us our, you know, uh, 30% cut.
3:15:49
Oh, we're going to handicap.
3:15:49
We're going to charge you, you know, you can use regular X code, but if you want to use AI to code, uh, it's going to cost $100,000 a month. That's great.
3:15:56
Uh, well, Windsurf CEO uh, went on the white spotted in two polos.
3:16:03
Sam uh, enjoyed the the fashion.
3:16:06
I thought that was a fun little uh, Easter egg in his podcast. I don't know.
3:16:10
I don't know any any details, but I have to imagine that's the kind of move you make when uh you're very close to closing or or or a done deal.
3:16:23
That doesn't it doesn't seem like a yolo move.
3:16:25
You know, if if a deal were to not go through, I don't think the double polo is going to save it, right?
3:16:31
We're talking about billions.
3:16:33
Although, he was very muted.
3:16:33
I don't know if we should read into the shades and hues of the double polo choice, but it was nowhere near as as vibrant as Sam Alman's original double polo.
3:16:41
Maybe maybe it's more like a jobs not finished double polo versus he's like I'm I'm open to the really bright uh colorways, but we're gonna have to let's get to a billion ARR first on Yeah.
3:16:53
Uh we have some personnel news.
3:16:56
Will Brown uh he came on the show what last week, the week before, told us that everything was great at Morgan Stanley.
3:17:03
Then he completely rugpulled them and dipped immediately. No.
3:17:06
Uh Will had actually known he was going to take off for a while.
3:17:13
Um and we got to have him back on when he joins the new company, which should be he's been just teasing it out.
3:17:19
I don't think he's announced it yet.
3:17:19
Let me let me double check.
3:17:20
It's time for a new adventure.
3:17:22
The ML research team there has been a wonderful home for the past two years.
3:17:25
I've learned more than I ever could have imagined about LLM's markets responsibility and how things work in the real world.
3:17:29
I mean, he's a very very interesting poster and and always brought a very interesting um unique perspective because he wasn't fully aligned with one of the labs um and and kind of had more 30,000 foot view at Morgan Stanley and I really enjoyed his takes and uh excited to continue following him on his career.
3:17:46
Total narrative violation that the finance guy wasn't extremely conflicted, but it was it was fun while it lasted basically. Yeah. Yeah.
3:17:53
Um anyway, I think that's a good place to end. Thank you for watching.
3:17:58
Uh, this is a great show. We really enjoyed it.
3:18:00
Wait, I got one last post because it is uh I'm gonna throw it in here.
3:18:05
Michael, if you can pull it up.
3:18:06
Uh, I think it's pretty funny. What is this post?
3:18:10
Uh, VC's trying to figure out who Arurer Rock, who they are trying to figure out who he is.
3:18:18
I invited him on the show anonymously.
3:18:20
Thought he might uh do it.
3:18:23
We're not sure exactly when he will be able to, but I'd love to get him on the show anonymously. I would not dox him.
3:18:28
I respect his from my friend Anish.
3:18:30
Um, yeah, the the funny thing here is he kind of mis uh so Arford Rock sort of like misreported. Oh, he did. Replet's revenue. Okay.
3:18:42
He he called him at 40 million of ARR raising it two and a half to three billion which felt expensive. Yep.
3:18:49
But then he had to show a followup uh graph showing that they added roughly 30 million AR in a month. Oh, okay. Okay. That's pretty good.
3:18:58
So he had he he basically Yeah.
3:19:00
I mean that's the problem with those leaks is that a lot of times they're they're super out of date.
3:19:05
Uh because you're getting you're getting docs that like oh yeah I they did send me a deck last year.
3:19:09
I passed it to somebody then that day pass it to somebody and then pretty soon it's like 8 10 months later when when that leak is happening and founders always get frustrated with that because they don't want to share any financials let alone old financials and so usually some horse trading but yeah what what is this image citizens?
3:19:28
I I don't get the reference. Do you?
3:19:30
I don't get the reference either but you should because you're you're a big movie guy. Yeah, but not this time. I don't know.
3:19:35
Yeah, but it it is interesting. Uh I've DM'd with uh Mr. Arthur.
3:19:40
And uh I we we also talked him about him coming on the show.
3:19:44
It's just so hard because there's so much incentive for people to try to triangulate Sure. who he actually is.
3:19:51
And eventually some skitso is going to do it, but for now it's it's very fun.
3:19:56
Maybe there should be a poly market for it. Who is are for rock. Yes.
3:19:57
You can list out a couple top candidates. Yes, that'd be fun. Yes.
3:20:02
Um I had a fun poly market.
3:20:05
I'm tracking the trade war.
3:20:05
I'm tracking the trade war and uh it's at a 19% chance that there's a US China trade deal before June and I said I honestly believe I could hammer out a trade deal in a weekend if I was in charge.
3:20:16
What do you think Tori think?
3:20:18
You're you're good at at you know finding win-wins you know and uh that's kind of really what it takes.
3:20:26
Step one, Cin Ping, let's get it lifted. Let's get it. See you at six. See you at six. Yeah, let's do it.
3:20:32
I mean, that's really the chance uh the the the the right strategy.
3:20:36
The other one that's interesting um what else you tracking?
3:20:40
I don't know when when did this uh screenshots ever ever since uh the double polo the chance of will OpenAI acquire Windsurf before August has just been steadily going up. So, the market Oh, okay.
3:20:53
The market reacting very positively to the double polo into it.
3:20:57
Um it does feel like if the deal was falling apart, you would be like I'm not in a real like joking mood, right?
3:21:01
So I feel like the read on the double polo is probably positive 68%.
3:21:07
But again August like the question that like the date is so important there because that could slip because a lot of people you know a lot of the open eye employees are very are very wealthy now and so they're probably getting ready to go on summer vacation pro usually starts like miday and they don't come back until what like August September October sometimes.
3:21:28
A lot of venture capitalists will be out for four or five months.
3:21:31
It's actually going to be a big challenge for us at TBPN because most of our best yappers are going to be at the Amalfi Coast for five, six, summer vacation.
3:21:40
We might have to set up uh you know a remote studio in the south of France. Yeah.
3:21:45
Just to make sure that we have some coverage, a dedicated helicopter to sort of take people between the boats to um or or potentially a water-based studio.
3:21:52
Water based studio would be good.
3:21:54
A boat would be uh would be very helpful.
3:21:56
Well, anyway, uh it is fantastic to be back in the studio. It's great, John.
3:22:01
And we got to get out of here.
3:22:04
It's going to be a big week for technology. It will be.
3:22:08
Anyway, thanks for watching. Cheers. We'll talk to you soon. Bye.