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Technology's daily show (formerly the Technology Brothers Podcast). Streaming live on X and YouTube from 11 - 2 PM PST Monday - Friday. Available on X, Apple, Spotify, and YouTube.
You're watching TVPN. Today is Monday, 05/05/2025. We are live from the Temple Of Technology, the fortress Of finance, the capital of capital. We are officially back. Yeah.
Speaker 1:We are so back. It was never over, but we are back. We enjoyed the weekend in Ojai and it gave us some ideas. You know, Ojai is a very idyllic place, very slow paced, not new Country living. Fast paced enough for us.
Speaker 1:Just the entire place is kind of devoid of finance.
Speaker 2:Finance,
Speaker 1:that's Really and so we're launching a Walk in those,
Speaker 2:those calm, tranquil streets Yep. Filled with A of
Speaker 1:farmers and markets. A lot
Speaker 2:of derivative trading. Wine tasting, things like that.
Speaker 3:Exactly.
Speaker 2:You, there was this constant thought of what if we brought finance to Ojai?
Speaker 1:Yeah, so we're launching a campaign. We're calling it Save Ojai from stagnation. We're going to position Goldman Sachs to open an office there.
Speaker 2:That's right.
Speaker 1:That's really the goal. Get Goldman in think
Speaker 2:would massively stimulate the local economy.
Speaker 1:Exactly. Transform it even.
Speaker 2:Transform
Speaker 1:it. And save it. Absolutely save it from being idyllic and stagnant.
Speaker 2:That's right.
Speaker 1:And so
Speaker 2:That's right.
Speaker 1:Yeah. We're we're if if know someone at Goldman, please kick them the idea. Let's transform Ojai into sort of like a Midtown Manhattan vibe.
Speaker 2:Yeah. Really the next midtown is what we want.
Speaker 1:The next midtown. Yeah. Yeah.
Speaker 2:There's so much, you know, Midtown is, you know, Manhattan in general is is so constrained geographically.
Speaker 1:Exactly.
Speaker 2:The the vision for Ojai is what what if there were no bodies of water stopping, you know, tremendous growth and expansion.
Speaker 1:Just parking lots and condominiums and billionaire. We have built a new billionaire's row.
Speaker 2:Yes.
Speaker 1:In Ojai.
Speaker 2:That's right.
Speaker 1:You can save Ojai.
Speaker 2:That's right.
Speaker 1:We can
Speaker 2:save Ojai. Yeah. We did have a fantastic weekend though.
Speaker 1:It was great.
Speaker 2:And, but we are certainly happy to be back today.
Speaker 1:Locked in. Got a great Live
Speaker 2:locked in.
Speaker 1:Yeah. We have a great lineup for you. We'll pull that up.
Speaker 2:TBPN lineup.
Speaker 1:TPPN lineup. Got five guests. We got Molly O'Shea from Sorcery, Augustus D'Rico from Rainmaker, Bucky Moore from Lightspeed, Katherine Boyle from Andreessen Horowitz, and Aditya Agarwal from South Park Commons. Very excited to talk to all of them starting in about forty minutes. But we will go through some breaking news.
Speaker 1:Also, if you're traveling to Ojai, get on Wander. Go to wander.com. Find your
Speaker 2:Your happy place. Find your happy place. Book a wander. There's an inspiring place. Wander opening up in Ojai very soon so you can get on the wait Yeah.
Speaker 2:Go check it out.
Speaker 1:Anyway, the news from the weekend was entirely dominated by Warren Buffett. The Wall Street Journal today is it's just the Warren Buffett edition, basically.
Speaker 2:That's right.
Speaker 1:Two different articles in the main section, two different articles in the business and finance section. Bunch It should have just been wall
Speaker 2:to wall to be honest.
Speaker 1:Yeah. They should call it
Speaker 2:It's kind of offensive that
Speaker 1:Buffet Street Journal today. Yeah. But obviously a fantastic legacy. Sixty years as chairman. This was his sixtieth annual meeting and he kinda teased that maybe he'd stepped down.
Speaker 1:He had already announced that he would be transitioning out. So it wasn't a complete surprise, but 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, why there will never be another Warren Buffett.
Speaker 1:He's been the chief executive of Berkshire Hathaway, of course, the conglomerate he has built into one of the successful investments in history. There are three reasons why he has no equal and never will, the person, the period, and the package. Let's start with the person. He's not only brilliant, but he has spent nearly his entire light long lifetime obsessed with the stock market, especially in his early years as an investor. His unparalleled success depended on unbearable sacrifice forgoing a normal social and family life.
Speaker 1:A later writer called the, great seventeenth century philosopher Spinoza, the god intoxicated man. Buffett is the stock intoxicated man.
Speaker 2:That's right.
Speaker 1:He bought his first stock at age 11, devoured information around about companies, reading corporate reports the way most people listen to music. He read a ton of financial statements while other kids played at amusement parks. Buffett was there physically, but mentally and emotionally. He was off in a world of his own, fixated on tax loss carry forwards and amortization schedules. We love to see it.
Speaker 1:Imagine being that obsessed. Imagine enjoying it. That's how we feel about podcasting. Kind of the Warren Buffet of podcasting. The Munger and Buffet of podcasting ideally.
Speaker 1:That's where we want to That's right. You really should strive to be so driven in your career that when you retire, you announce your retirement in a stadium to just all the adoring fans.
Speaker 2:To applause.
Speaker 1:Yes. Applause.
Speaker 2:Round of it. Standing ovation.
Speaker 1:Yeah. He started when Harry Truman was in the White House. Expertise is rooted in pattern recognition and Buffett has seen every conceivable pattern given what I know about his work habits. I estimate conservatively he he has read more than a hundred thousand financial statements in his more than seven decade career. Years ago, winding up a phone interview, he was talking to the the man who wrote this Wall Street Journal op ed or piece and said, Hey, I'm reading this book.
Speaker 1:And Buffett says, Oh, I also read it. It was about fifty years ago. And then he starts describing a passage and Buffett's like, Wow, yeah, Buffett knows the exact quote from that book and made almost every sentence verbatim. Yeah. Fantastic.
Speaker 2:His parallel exposure to financial information combined with his prodigious memory made Buffett into a human form of artificial intelligence. He could answer almost any query out of his own internal database. That has given him an unparalleled ability to identify the kernel of significance in any new bit of information Yeah. And a durable advantage over other investors. Now that AI is universally available, a person with Buffett's massive command center won't even have an advantage in the future.
Speaker 1:Do you think this is true? You agree with this? Thought this was an interesting take I don't really agree with Yeah,
Speaker 2:I don't want to believe that it's true. Yep. Right? Because that just, that, that sort of would imply that, that Buffett's only advantage is Just knowledge. Access to information.
Speaker 2:Yeah. And in a world where information has already been widely Yep. Accessible and freely available for decades, you know, effectively for free. Yeah. It feels like we would have already, you know, it feels like he would have lost his edge, you know, maybe in the nineties.
Speaker 2:Yep. If that was the case. Yep. So
Speaker 1:yeah, there is a remaining question. I wonder how David Senra and like the modern business historians will see his legacy. Is it purely driven by knowledge? Is it intelligence? Is it contrarian individual independent thinking?
Speaker 1:Is it access to capital and storytelling or is it management? Like, he's also great at putting the right person in the job and giving them the tools to succeed. So there's a lot of other things that go into making profit successful
Speaker 2:that's not Seems like market timing seems to be, you know
Speaker 1:That's really good. Is
Speaker 2:to historical information can certainly give you an advantage maybe in timing but it certainly doesn't seem like it'd be the only thing that gives you an advantage. Otherwise, more people would be better at
Speaker 1:it. Right? Yeah. Yeah. It does seem to I I don't know.
Speaker 1:It's odd with the market timing thing because it does seem like that would be easy to encode into an algorithm, and yet we haven't seen quantitative hedge funds necessarily apply the Buffett philosophy. When they do quantitative investing, they they they usually do it on a much shorter time horizon. So it's kind of interesting. 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. If he'd born in Omaha just fifty years earlier in 1880, he would have had to invest in livestock instead of stocks.
Speaker 1:Had he been born in 1930 Omsk instead of Omaha, a little play on words there, he wouldn't have owned he wouldn't have owned railways. He probably would have worked on the Trans Siberian Railway. And so he lucked out being in Omaha in 1930 when there was a big boom. And then also Benjamin Graham, pioneer of security analysis and one of the greatest investors of the past century, was was developing his career right then, so Buffett was able to study under him. And Buffett also began his career before trillions of dollars had poured into the stock market from index funds and other giant institutional investors.
Speaker 1:He built his phenomenally early track record by his phenomenal early track record by fishing where no one else was even looking to catch anything. He fed on the tiniest plankton on the stock market. He bet big on these small fry. This guy is such a good writer. At various points, his investment partnerships had 21% of their total assets in Dempster Mill Manufacturing, a maker of agriculture equipment based in Beatrice, Nebraska, and 35% in Sanborn Map
Speaker 2:Yeah.
Speaker 1:A New York based cartography company whose investment portfolio alone was worth more than its stock price. Sometimes it took Yeah.
Speaker 2:Mean, it's 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
Speaker 1:Yep.
Speaker 2:Outside of Charlie maybe. Yeah. This was a funny comp. Somebody else shared this
Speaker 1:Yes.
Speaker 2:Online but they said, as Warren Buffett retires, think about this. In 2024, Warren Buffett's stock portfolio performance was 25%. And in 2024, Nancy Pelosi's stock market performance was 71%. So anyway
Speaker 1:say one.
Speaker 2:Strong strong case for the Pelosi act there. I
Speaker 1:do think this is an the the final takeaway in this piece is interesting because Buffett placed his investments in a package like no other, talking about the holding company. Berkshire Berkshire 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. At one point, it was even one of the world's largest holders of silver. Now it holds $330,000,000,000 in cash. Berkshire isn't a hedge fund, mutual fund, exchange traded fund, or any other conventional investment vehicle.
Speaker 1: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. Most investment funds operate under a curse that economists call procyclicality. 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. That hinders future performance. You saw this with Venture, obviously.
Speaker 1:Like, a bunch of people made a bunch of money on mobile, and then they raised huge funds specifically for mobile. We're seeing this in defense tech now. Yeah. You know, the the if you got early in Andoril, now you're raising like a dedicated defense tech fund. Is there are the assets overpriced now?
Speaker 1:Maybe. Like, is risky. Yeah. And so, with Buffett, when returns falter in a falling market, normally, when for when returns falter in a falling market, investors yank their money out, forcing the fund managers to sell as bargains are becoming abundant. This is the problem of procyclicality in normal investment fund structuring.
Speaker 1:The fund's own investors make its performance worse, intensifying the market's ups and downs. Berkshire's only cash flows, however, are internal. Money comes in from or goes out to the assets it owns. 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 in Berkshire by buying shares from someone else in the secondary market. They don't do new Yeah.
Speaker 1:New stock issuances. And this package has given Buffett a structural advantage that has enabled him to pursue opportunities wherever and whenever he has perceived them. That's a luxury almost no other professional investor has or even wants. 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. Pigs will sprout feathers before anyone has the daring to truly emulate Warren Buffett.
Speaker 1:I love it. That's great. Anyway, if you think you're the next Warren Buffett, on public.com. Multi asset investing, industry leading yields, trusted by millions.
Speaker 2:Trusted by millions. They had their first race yesterday sponsoring
Speaker 1:Oh yeah. Aston Martin. F one in Miami.
Speaker 2:F One. And thank you to public for betting on us before you bet on Aston Martin. Yeah. It really shows shows
Speaker 1:that We're in good company.
Speaker 2:And and yes, yeah.
Speaker 1:Yeah. In
Speaker 2:good company. It it is interesting how many people, what, is there a curse to call yourself a baby Berkshire Hathaway? Maybe. A few people have dared
Speaker 1:to call themselves Yes, know exactly what you're talking about.
Speaker 2:Is rough. Building, you know, this whole
Speaker 1:Notably, Josh Kirchner at Thrive has not drawn that comparison.
Speaker 3:Yeah.
Speaker 1:Thinking very differently, maybe building something different. But it is interesting because they're like that pro cyclicality thing does feel like a problem in venture. And if you have the permanent capital vehicle, maybe there's something there that you can grow into over time. But yeah, mean, it's very different. There aren't like, you know, if you're a traditional VC, you don't have deal flow stuffed with cash flowing assets constantly.
Speaker 1:Yeah. Somebody shows up with a lot of cash flow, you're kind of confused.
Speaker 2:Not sure what to do here, bud.
Speaker 1:Yeah. Sure. Anyway, we we should talk a little bit about the CEO in waiting, Greg Abel. He is taking over and at the young age of 60, south of 60 something. Imagine being
Speaker 2:Still ready for a second generational run.
Speaker 1:Yeah, but at the same time, you know, his boss, Warren Buffett is 94 years old. And so he's like, yeah,
Speaker 2:been saying this has
Speaker 1:got to
Speaker 2:get 34.
Speaker 1:Yeah, that's the nature of these things.
Speaker 2:Potentially a lot more.
Speaker 1:And so Abel will inherit the challenge of overseeing that wide ranging empire while living up to Buffett's seemingly impossible to replicate record in stock picking, something even Buffett has struggled to do in recent years. He would make a huge mistake trying to be Warren Buffett, and he knows that, says Will Danoff, the Fidelity manager who counts Berkshire as a top holding. Shareholders want Greg to be the best Greg Able can he can be. Buffett isn't just an investor. His unique stature allows him to conk 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.
Speaker 1:That's, of course, the story of Bank of America during the financial crisis. It was the the definitely the next domino to fall after Lehman and Bear Stearns, but Buffett saw something beautiful in the business. He saw something savable, and he came in, kinda 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. Never let
Speaker 2:the Bank of America fail.
Speaker 1:Never let the Bank of America fail. His reputation as a brilliant investor means that many shareholders are content letting Berkshire amass a huge pile of cash because they expect that Buffett will eventually be able to deploy it well. No one can completely fill those shoes. Warren's so unique, Bill Gates, the Microsoft cofounder, said of his close friend. I hope we have leaders like Warren in the future.
Speaker 1: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. The company's fundamentals remain strong, but Berkshire's investment decisions might no longer carry the same weight. Abel, is 62, will join other successors with tough acts to follow Tim Cook, filled Apple's top spot after Steve Jobs died and has made a lasting imprint. He drew on his supply chain expertise to expand manufacturing in China and built up a services business. At Disney, Bob Jaypek 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.
Speaker 2:Battle of the Bobs.
Speaker 1:Battle of the Bobs. There's a lot of Bobs over at Disney. It's very fun. Greg will have to be Greg, said Mark Oman, a retired Wells Fargo executive and a close friend of Abel's in his adopted Iowa hometown. Berkshire succession plans, one of Wall Street's favorite guessing games were finally revealed in 2021.
Speaker 1:So we've known this for four years now when Buffett said Abel would eventually become the next CEO. Buffett had previously said that his son, Howard Buffett, would someday replace him as chairman, though without an executive role. Interesting. Until this weekend, many shareholders assumed those handoffs wouldn't take place before Buffett's death. But he decided
Speaker 3:to Honestly,
Speaker 2:think it's smart to try to make this a phased approach versus, you know, Buffett, you know, were he to pass away Yeah. Without warning would be probably much worse for shareholders in general and just much more chaotic than saying, hey, I'm gonna I'm gonna take a step back at the end of this year and here's exactly how we're, you know, phasing out my leadership. And knowing both he will be he will be involved. There's no way this guy is gonna stop caring about stocks. There's just no I
Speaker 1:I I do hope he's healthy. It would be very it'd be very unfortunate if this was all like, you know, like how the Pope went out the weekend before he passed away and spoke with the I hope that his health is in good health and can serve as the chairman and non executive director for a number of years
Speaker 2:because he's huge Maybe it's that he wants to really get seriously into weight training.
Speaker 1:Maybe.
Speaker 2:Maybe 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 Yeah. Or studying companies and just put it towards iron. A very good possibility.
Speaker 1:But if you are buying cash flowing assets, trying to squeeze every penny out of the businesses, you gotta put those holdings on ramp.com. Time is money. Save both. Easy use corporate cards, bill payments, accounting, and a whole lot more all in one place. Ramp.
Speaker 1:A ramp powered roll up, it's easy money. You just buy buy a company, put them on ramp, triple the cash flows
Speaker 2:That's right.
Speaker 1:Reinvest it in silver and gold
Speaker 2:It could be
Speaker 3:that easy.
Speaker 1:Dollars. It could be that easy. Not financial advice, of course. Then there's another interesting article in The Wall Street Journal, five wins and losses from Coca Cola to Berkshire. What worked and what didn't for the head of Berkshire Hathaway looking back on his hits and misses.
Speaker 1:Coca Cola was a hit. He invested in the software and company in 1988. He told Berkshire shareholders he wasn't he expected to own the stock for a long time. When we own outstanding businesses with outstanding managements, our favorite holding period is forever.
Speaker 2:Great life.
Speaker 1:True to Buffett's word, Coca Cola remains a holding forty years later. By the end of twenty twenty four, the stake was valued at roughly 25,000,000,000. Coke's dividends, which have increased annually for decades, paid Berkshire some 770,000,000 in 2024 alone.
Speaker 2:So along the way, the stock came to represent something more to Berkshire and its shareholders than just a steady source of income. Buffett was Coke's largest shareholder, a one time board member and an unflinching pitchman. So good. 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
Speaker 1:Omaha. So good.
Speaker 2:For Berkshire's annual shareholder meetings.
Speaker 1:He's a He's
Speaker 2:Yeah, mean, he he really, you know, this has been one area where people have said, oh, you know, tried to poke holes in in Warren Buffet and say, you know, you're promoting, you're making your money Totally. Big soda, basically, right? Yep. Something that can have negative health effects, but he sort of can, has been able to beat those allegations by just drinks
Speaker 1:five a day. How bad could it be? I'm drinking five a day, I'm good. Good performance.
Speaker 2:If you're worried, drink two a day.
Speaker 1:Yeah, exactly.
Speaker 2:Just dial it back. A miss that he had with Solomon Brothers. Berkshire bought preferred shares in Solomon Brothers in 1987 when it was still one of the biggest firms on Wall Street. In 1991 through scandal, though scandal enveloped the investment bank when its traders were accused of rigging a treasury note auction. Buffett was forced to step in as chairman to clean up the mess which ended when the firm settled a series of government investigations.
Speaker 1:This was very interesting because like people don't, I mean in Silicon Valley we don't think about that many opportunities where a company's embroiled in some sort of chaos or scandal, and then like a legend steps in. Yeah. Like it kind of happened with Zenefits and the David Sacks thing, but it didn't go well. Yeah. Can it ever go properly?
Speaker 1:Like it's just an interesting strategy to try and pick something up. But I think the lesson, you know, is this buy wonderful companies at reasonable prices as opposed to trying to get a discount. This feels like the example of like, oh, they're so beaten up. There's still some business there, let's hop in. But ultimately got, you know, your hand burnt because there was just too too much
Speaker 2:gain Well, this case they invested in 1987 in this ordeal with the treasury note auction didn't happen till four years later. It wasn't necessarily trying to be a turnaround. But yeah, you could imagine, I mean, would have been a scenario where
Speaker 1:Yes, in 'ninety one, Buffett had to step into the chairman role instead of just saying like, hey, I'm wiping my hands of this because, know, have, yes, we have our preferred shares, but like the investment's not going well. So we're going to dip out and sell at a loss as opposed to, I'm going to step into the chairman role. I'm going run the company. That's kind of crazy. Founder mode.
Speaker 1:Buffett said, I can handle bad news, but I don't like to deal with it after it has festered for a while. 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. Yep. Then the next one, the hit, this is kind of interesting, BYD, little known battery maker. Munger went over to China, found BYD, the battery maker, and encouraged Berkshire to buy a 10% stake in the company in 02/2008.
Speaker 1:Within two years, the $230,000,000 investment was valued at nearly 2,000,000,000. And so this is like a series c. Like a series c. 230,000,000 for 10% of $2,300,000,000 post. That's like a venture style investment that they just did kind of randomly.
Speaker 1:Obviously, a little controversial now that BYD is so closely competitive with American industries, but, you know, he secured the bag and made a 10 x. It's pretty pretty, but they have since, since begun to trim their stake. They also missed on US Air, the airline. And this is this is the famous and hilarious quote from Richard Branson, the wealthy owner of Virgin Just
Speaker 2:for context. Where's BYD right now? BYD is still over a hundred billion dollars.
Speaker 1:Hundred billion? Yeah. Wow. They own 10%. That's 10,000,000,000
Speaker 2:on two hundred It's
Speaker 1:a 50 x. We got in at 2,000,000,000.
Speaker 2:No, no, no. Invested way.
Speaker 1:Berkshire invested at a $2,000,000,000 post money essentially.
Speaker 2:Oh, it said Berkshire to buy a 10% stake in 02/2008. Within two years the $230,000,000 investment was So they got a 10x to 2,000,000,000.
Speaker 1:Yeah, and now Another
Speaker 2:10x. Or sorry, 50x. 50x? Yeah, yeah, yeah. Okay.
Speaker 2:So they invested, got like within two years it was a 10x.
Speaker 1:Yeah, yeah.
Speaker 2:And then
Speaker 1:Yeah, yeah, got to a 50x, not bad. But they struggled with US Air. Richard Branson said, Richard Branson was asked how to become a millionaire, and he had a quick answer. There's really nothing to it. Start as a billionaire and then buy an airline.
Speaker 1: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 358,000,000 in a 9.25% preferred stock of US air. Buffett conceded he underestimated just how much havoc the deregulation of The US airline industry would play on US Air's business. From 1990 to 1994, US Air reported total losses of 2,400,000,000.0. US Air eventually became US Airways, which later merged with American Airlines. Not a good outcome.
Speaker 1:But contrarian, interesting outcome, MidAmerican Energy. You think of Mid? It's not Mid.
Speaker 2:It's not Mid.
Speaker 1:Was great.
Speaker 2:It was Goated.
Speaker 1:It was Goated. Buffett bought a 75% stake in the in the Des Moines utility in 1999 at the urging of Walter Scott, a lifelong friend who had joined the Berkshire board in late nineteen eighties. MidAmerican, later renamed Berkshire 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. BHE BHE would become one of Berkshire's four pillars along with its insurance and railroad businesses and its stake in Apple. Annual operating earnings grew to nearly 4,000,000,000 from a hundred and 22,000,000 in February.
Speaker 1:Wow. Wow. Yeah, that's pretty great growth. Deal also added Greg Abel to Berkshire Hathaway's payroll. That's where Greg Abel came from.
Speaker 1:He was working at Mid American Energy and that's how he was able to climb the ranks. Pretty, pretty great. Then actually the last one that's kind of interesting is that Berkshire Hathaway itself apparently was a miss in May of nineteen sixty four. The top executive of a struggling textile manufacturer called Berkshire Hathaway wrote to its investors offering to buy their shares for $11.11 dollars and 37.5¢ apiece. Buffett, a major shareholder, had expected $11.50.
Speaker 1:But when Berkshire's Seabury Stanton responded with the lower offer, I bristled at Stanton's behavior and didn't tender. He's like, it's it's offensive that you didn't want my $11.50. You only want $11.37. What is this? Yeah.
Speaker 1:What what are you trying to sell me? And so that was, Buffett wrote, a monumentally stupid decision. Berkshire continued to wilt along with the rest of the New England textile industry shutting mills and racking up losses. But Buffett peaked by Stanton's actions, ignored the company's grim outlook, and instead kept buying more stock. By May 1965, he took over Berkshire for good.
Speaker 1:It is a move he still regrets, though it did earn him his first mention in the Wall Street Journal. We go.
Speaker 2:There we go.
Speaker 1:Although Seabury's and my childish behavior through Seabury's and my childish behavior after all, what what was an eighth of a point to either of us? He lost his job, and I found myself with more than 25% of Buffett's partnership capital, his original investment vehicles. Capital invested in a terrible business about which I knew very little. I became the dog who caught the car. Buffett kept the textile business going for years, but stubbornness, stupidity has its limits, he wrote.
Speaker 1:Wow. In 1985, I finally threw in the towel and closed the operation. The the a very, very ironic
Speaker 2:Same that the company namesake. That it was named yeah. The namesake ended up being an l. Just goes to show as if you want to be one of the greatest or the greatest investor of all time, you can okay to have some Ls along
Speaker 1:the way. It happens.
Speaker 2:It happens.
Speaker 1:It's the best of them.
Speaker 2:Even to the best
Speaker 3:of them.
Speaker 1:So the market so far does not like the retirement news for Warren Buffett. Berkshire Hathaway stock is down, 6.39% in this post by Ryan Peterson, friend of the show. But he asks, how was this night how was this not priced in? He's 94. I mean, I guess, you know, there's the question of like, what's yes.
Speaker 1:Yes. We know he's going out, but it could be another two years. Yeah. It could be another three years. And and what does that mean?
Speaker 1:Well, is the delta between another year of Buffett an extra 3% the performance of the company?
Speaker 2:Maybe Yeah. In many ways, I mean, I think the interesting dynamic is they're sitting on all this cash that they will have to redeploy at some point. And so it would be fascinating if Buffett's main final act was just accumulating this fortress balance sheet. But then you have to trust Greg Abel and the rest of the team
Speaker 1:To
Speaker 2:deploy. To actually deploy it effectively and be able to live up to, you know, you know, basically fill some of the biggest shoes
Speaker 1:Yeah. Ever. That was an interesting quote by Warren Buffett. I read everything. Annual reports, 10 k's, 10 q's, biographies, histories, five newspapers a day.
Speaker 1:On airplanes, I read the instructions on the back of the seats. Reading is key. Reading has made me rich over time. Warren Buffett. That's that's David Senora to a t.
Speaker 1:It's great. And Jerry Capital had a funny post here. Proof that nobody can actually compound 20% over his entire career from 1995 or 1965 to 2024. The game, 19.9%. Just point one off of 20 k, 20%.
Speaker 1:No one can do it. It's too hard. He has not had that many bad years. Although 02/2008, the financial crisis, that was rough. 31% down, but the S and P went down 37%.
Speaker 1:So it seemed like he didn't
Speaker 2:get back
Speaker 1:in fast enough
Speaker 2:because the next year Yeah. You look at his exposure, he actually was down in 1999, but then as tech, the original .com bubble collapsed, he had a one down year. But most point he
Speaker 1:outperformed
Speaker 2:in
Speaker 1:But
Speaker 2:in general he was outperforming massively. Massive.
Speaker 1:So 5000000% overall gain versus forty k % overall gain in the S and P 500. Anyway, there's some more information here. I like these just like key ideas and takeaways from Buffett. I pulled a bunch of these together. 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.
Speaker 1:But avoiding mistakes is the ultimate goal. Buffett and Munger teach that the best way to prevent trouble is to avoid it altogether by learning what works and what does not. Focus on not doing dumb things. I like that. Learn from folly and remove ignorance.
Speaker 1:Fewer dumb mistakes than other people and fix mistakes quickly. Buffett and Munger stress ignorance removal, systematically eliminating what you don't know or understand. Simplicity and common sense, a core theme, simplest timeless principles win over complexity. Efficiency, simplicity, common sense, hallmark to Buffett and Munger, and tons and tons of lessons in everything from venture capital to startups to building businesses to just living your life.
Speaker 2:Yeah. And they they, I mean, the the these are illustrated by looking at investments like Coca Cola and C's Candy which are So simple. Beloved brands. Yeah. And it's a sense of are people going to love candy in twenty years?
Speaker 2:Probably. Just as much as they do today? Yes. Okay. If can we scale, you know, distribution between now and then?
Speaker 2:Yep. Great. Yeah. It's probably a good investment. So apparently, we
Speaker 1:made the iPhone or the Apple investment, the iPhone was seven years in. I think the iPhone started in 02/2007 and he made the investment like 2014 and he didn't use an iPhone. He had a flip phone, but he was like, my grandson uses one or my granddaughter like loves them. And so he was like, and the retention rate is 95%. And so I think it's a good business.
Speaker 2:That's amazing.
Speaker 1:And it became a fantastic investment for him. And a lot of people were pointing out that if you pull out Apple from the Berkshire Hathaway investment returns, it then underperforms the S and P 500. But that's kind of odd because Apple's in the S and P 500, so maybe you should pull it out of that too. But it's kind of like Interesting. But at a certain point, does raise the interesting question is like people originally went
Speaker 2:pull out the power law outcome out of any investor's portfolio. It's kind of
Speaker 1:the nature of But I mean, just to kind of steel man that criticism, flip side is what service were you paying Warren Buffett for in the 70s or the 80s? 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. Apple feels like, well, anyone could just buy Apple. And so certainly, you know, I think Apple outperformed Berkeley
Speaker 2:the same Yeah but the time I'm happy to pay somebody 2 and 20 if they just only invest in And in this case
Speaker 1:you're not paying two and twenty. I'm There's
Speaker 2:no fees. No, but in general it's like that is what somebody is paying a manager to say like, I will pay you
Speaker 3:Yeah.
Speaker 2:Two and twenty to buy public equities because I think you're gonna just buy the best ones and not buy the bad ones. Yeah, And And I mean, real benefit
Speaker 1:is like, he's been trimming that apple position going into the crazy year we've had so far. It
Speaker 2:is, he's
Speaker 1:not just buying and holding.
Speaker 2:You know, you remember, I mean, was last year the first time that they announced they were selling?
Speaker 1:Yeah, last year there started to be some articles about the growing cash pile at Berkshire Hathaway, which sits closer to $350,000,000,000 now in cash. Yeah.
Speaker 2:So, so Berkshire started selling in Q1, Q2 and Q3 of last year with the most significant sell off happening Yeah. In Q2 which reduced their stake by nearly half. 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
Speaker 1:They're getting it wrong.
Speaker 4:You know,
Speaker 1:yeah, yeah, yeah. Of course the market because of
Speaker 2:You know, they just held it a long time. Yeah. They're probably not actually bearish.
Speaker 1:Yeah, they're not actually calling the Tom
Speaker 2:successfully for
Speaker 1:the seventh time in
Speaker 4:a row.
Speaker 1:Oh. It's great. Yeah. Anyway, I this investment principle, the circle of competence. Invest only in businesses you truly understand.
Speaker 1:Buffett and Munger stay within industries where they have knowledge and insight, and they put anything outside the circle in a too tough pile to avoid. Venturing beyond your competence in or into overly complex ventures is a recipe for for mistakes, knowing your limits, and saying no often is just as important as spotting opportunities. This idea that, like, it is okay to grow the circle of confidence, become competent in other in other areas, but don't step out of the circle of confidence Yeah. Of competence because you will be smacked.
Speaker 2:Yeah. Just going back to their when they were selling. So the stock actually, they started selling in q one. Yeah. The stock rose from a hundred and $65 a share in the beginning of q two, the entire period where they were really selling and actually ripped that quarter up to 230 and going all the way to $2.50 by December.
Speaker 2:And then ultimately has just been down since. So it just shows the conviction in that, you know, it's not like they FOMO'd back in once, you know, once they were like, Oh, the stock's actually ripping. Maybe we sold too early. It's like, no,
Speaker 1:no, he waited.
Speaker 2:We were, we're going to be, you know, right in the fullness of time.
Speaker 1:I like this. There's a bunch of interesting memorable quotes we should go through. All I want to know is where I'm going to die so I'll never go there.
Speaker 2:Iconic Consider
Speaker 1:how hard it is to change yourself and you'll understand what little chance you have in trying to change others. This whole idea of like they meet people where they are. A bull market is like sex. It feels best just before it ends.
Speaker 2:Euphoric. It's honestly crazy line from from Buff Up. Yeah. He had a like a few too many Coca Colas.
Speaker 1:Yeah. He's really getting the He's really getting The secret to being successful in any field is getting very interested in it. I couldn't excel in anything in which I didn't have an intense interest, passion. When you truly love the subject or work. That's a % accurate.
Speaker 2:Here's another good one. We don't try to change people. It doesn't work well. Yes. We accept people the way they are.
Speaker 2:Yes. And this this is a lesson you only have to, you know, learn a couple times. Yeah. Think founders, you know, hiring people or even investors hiring people.
Speaker 1:Yeah, 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. It's like, often that's not
Speaker 2:the case. Yeah, or more so you hire somebody to do a specific thing and there's only, you can help somebody go from, in my experience, you can help somebody go from like great to excellent. Yep. It's hard to take somebody from okay to great. Yep.
Speaker 2:Right? And so accepting people the way that they are and then sort of, you know, to really be honest about whether they can get where they need to be is important.
Speaker 1:Yeah. I like this. Wall Street never changes. The pockets change. The suckers change.
Speaker 1:The stocks change. But Wall Street never changes because human nature never changes. It's great. There's a kind of interesting, overview of his of his career in 25, key moments. So he reads The Intelligent Investor in 1949.
Speaker 1:That's so long ago. This discovers Benjamin Graham's philosophy value investing. And this forms the foundation of his approach. In 1951, he visits
Speaker 2:real quick, you know, the article in the journal earlier, he's talking about, the author's talking about how Buffett's edge is the information that he has. And I would almost argue that Buffett's edge is the experience that he has. Yeah. Because there's one thing to like read about financial turmoil Yep. Thirty years ago.
Speaker 2:Yep. And you can understand like why it happened pretty well. But it's a very different thing to viscerally feel it. Mhmm. And then have that inform your future decision making.
Speaker 2:And Buffett at this point, done 60 plus, you know, shareholder annual AGMs, right? Yeah. And you know, being able to actually have sixty years of experience to draw on where he was viscerally feeling what was happening in the industries that they're in just gives you an intrinsic advantage, right? Sometimes you actually have to experience something to really learn the lesson and he certainly has experienced the full spectrum of investment, you know, experiences.
Speaker 1:Yeah, a %. So in 1951, he visits GEICO headquarters, learns firsthand about insurance float and low cost moats, gets excited about insurance. 1956, he launches the Buffett Partnership Limited, starts starts managing outside capital using Graham's principles, rapidly outperform the market. He begins buying Berkshire Hathaway shares in 1962. He spots this deep value opportunity in a dying textile mill and builds the stake.
Speaker 2:Ended up being his biggest regret.
Speaker 1:Yep. Takes control of Berkshire Hathaway in 1965. Buys enough shares to oust management, turning it into his investment vehicle. Buys national indemnity, enter entering the insurance market in 1967. It's crazy.
Speaker 1:Like, each one of these is like a three year journey, but you but because it's an eighty year career or something or sixty year career, we're, like, condensing it down so quickly. But so he enters insurance, unlocking the float model that would fund decades of investments. He closes his partnership to focus on Berkshire in 1969, returns the capital to investors to avoid speculating in overheated market. 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. He he he's okay paying a reasonable price for Yep.
Speaker 1:Truly great business. Invest in the Washington Post in 1973. The Washington Posters. The Washington Posters. Bought a world class media business at a bargain and became close with Catherine Graham.
Speaker 2:Yeah. And I forget when we were talking about this, wasn't he notorious for really marketing? Like he would take a position and then he would actually effectively go on roadshows like doing media around the Oh yeah. Yeah, he's like, I'm gonna own my distribution. Yeah, that's He's like, retail Let's talk
Speaker 1:about Seas Candy.
Speaker 2:Let's talk about Seas Candy.
Speaker 1:Let's talk about Seas get the retail,
Speaker 2:the armies of retail investors
Speaker 1:on Certainly early to that. He rescues GEICO from collapse in 1976, buys shares and joins the board to help steer his favorite insurance firm back to health. He names Charlie Munger vice chairman in 1978, and this was a formalization of his most important partnership and philosophical sounding board. He shuts down the textile business in 1985, acknowledging failure, but it frees up capital, which completes Berkshire's transformation into this holding company. Buys the Coca Cola stake in 1988, makes a $1,000,000,000 bet on a timeless consumer brand that became one of his biggest long term wins.
Speaker 1:Stepped in to lead Salmon Brothers in 1991, takes an emergency control of the scandal ridden firm, saving its reputation and stability, but ultimately not a great financial outcome. Issues, Berkshire Class B shares in 1996 created low cost access for smaller investors and blocked Wall Streets from misusing his name because I think there were probably some sort of like aggregation SPV essentially on it because the shares were getting so expensive. Acquires General Re in 1998, expands Berkshire's global insurance reach through the later admitted early integration challenges. He avoids the .com bubble in 1999 to February, refused to chase fads, preserving capital and credibility as other as others crashed. Pledges $31,000,000,000 to philanthropy in 02/2006, history's largest charitable donation, primarily to the Gates Foundation, his buddy.
Speaker 1:Backs Goldman Sachs and GE during the crisis in 02/2008, stabilized markets by investing when fear was highest. Bought Burlington Northern Railroad in 02/2009. This was the biggest acquisition of all time for Berkshire, betting on America's long term economic growth. Railroads aren't going anywhere. They're not making any more of them.
Speaker 2:Yep.
Speaker 1:Bundit Bank of America.
Speaker 2:You had a post yesterday that was fascinating. It's crazy. Local city, Pasadena was estimating that it would take four hundred years?
Speaker 1:Five hundred years to put all of the electrical power lines underground. So they said the phase one is one hundred years and phase two is four hundred years to put them underground. Isn't that crazy? That's the longer than America's been around. America is what, two fifty or 300 years old now going on 1776, right?
Speaker 3:Yeah.
Speaker 1:It's like a crazy, crazy amount of time.
Speaker 2:Imagine writing that with a straight. I hope they put on clown makeup.
Speaker 1:Oh, you think in decades? We think in centuries.
Speaker 2:Plans are measured in centuries.
Speaker 1:So he funds Bank of America during 2011 slump, injects 5,000,000,000, gains a massive stake. Then he invested in Apple in 2016. This is the iconic investment. $36,000,000,000 of Apple. Now it's Berkshire's most valuable holding.
Speaker 1:He promotes Abel and Jane as vice chairs in 2018 and starts quietly initiating the leadership succession process. Names and then, of course, in 2021, he names Greg Abel as the future CEO. And then in 2025, he announced retirement as CEO. And so that is the legacy of Warren Buffett, and we will continue talking about him this week. Hopefully, we'll get David Senero and some other folks on the show.
Speaker 1:But we are joined by our first guest of the show, Molly O'Shea, host of the Sorcery podcast. Welcome to the stream, Molly. How are you doing?
Speaker 2:Molly, it's great to have you. Are live.
Speaker 1:You are live. Okay. One second. We are working together, Molly. I wanna have her on, but we'll talk to you about Linear in the meantime.
Speaker 1:Linear is a purpose built tool for planning and building products. Meet the system for modern software development, streamline issues, projects, and product road maps on Linear.
Speaker 2:Just do it. We use Linear at TBPN. 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 better every single day. The best evidence of that is our livestream overlay, which we are always rolling out changes to. And if you have any feedback for it, let us know and we'll get those issues slotted into Linear.
Speaker 2:For sure. Thank you to Linear for supporting the show and
Speaker 1:Did you watch Miami F1?
Speaker 2:I did not. I had food poisoning. Was Brutal. It was absolutely brutal. Yeah, yesterday
Speaker 1:was didn't get chest watch either. Yesterday was a sleep did throw on a little of an older season of Drive to Survive. And I'm starting to get back into it, but it's hard. Yeah. F1's tricky to follow.
Speaker 1:Bodybuilding's much easier
Speaker 2:to follow.
Speaker 1:Yeah. I think it's really the
Speaker 2:only Well, there's very little space in your brain for anything other than bodybuilding. Yes, exactly. So it's like anything that you would watch is competing with, you know, reruns of the Arnold Yeah. Historically.
Speaker 1:Really do need to do, I mean, full full Drive to Survive level production on the the next Arnold.
Speaker 2:Maybe that could be us.
Speaker 1:That I mean, that is like Sam Soulek's channel basically. Like that. It's just Drive to Survive for bodybuilding basically. But we wanted to have Molly on the show because she, is a is a good friend and has done a bunch of interesting things. But she posted over the weekend venture funds as f one teams.
Speaker 1:Red Bull is Founders Fund. McLaren is is Thrive. Mercedes is Sequoia, and Ferrari is Cosla. And we're gonna debate this with her, see how she breaks it down and if we have any different takes. She says Red Bull Racing is Founders Fund.
Speaker 1:Why? High conviction, unapologetically bold, and driven by generational talent. Verstappen is Peter Thiel. Traits relentless, unconventional and power focused. I feel like for Red Bull, you gotta go with a venture fund that's not in venture because Red Bull's like not a car company.
Speaker 2:Yeah, that's So
Speaker 1:I almost feel like you should go with like In Q Tel or Cotu, crossover for sure, Tiger.
Speaker 2:Cotu, yeah.
Speaker 1:Maybe. Maybe, is there an actually decent corporate VC arm? I mean, I guess OpenAI. Yeah. Is probably have one of the better performing corporate They have a really good corporate fund.
Speaker 2:As of late.
Speaker 1:But I haven't seen much from like, I mean, I guess Google Ventures has done pretty well, GV, although they've kind of spun out now.
Speaker 2:Yeah. But I think Stripe has probably made some good balance sheet investments over the years. They have. They're in ramp. I've heard Okta randomly does a decent amount of corporate investing.
Speaker 2:They have some fund vehicle or they're doing it off the balance sheet as well.
Speaker 1:But If you're looking for a new bed, get an Eight Sleep. Go to eightsleep.com.
Speaker 2:Slash cvpn.
Speaker 1:Five year warranty,
Speaker 2:thirty three actually had such brutal night. It really picks up on when you're sick. Free shipping, it does. And for me, I got eight hours and fifty seven minutes of sleep, but I had a 77, which is well below my typical 98,
Speaker 1:let's go.
Speaker 2:There we go, John.
Speaker 1:Back in the game. Back away from it for a week, came back, the consistency was terrible but I slept a ton. Eight hours, forty minutes,
Speaker 2:let's Wow. I was in bed by nine last night. Wow. Fantastic. Fantastic.
Speaker 1:Got to put up some big numbers this week. Anyway, hopefully we can get Molly back in the studio. We will see. How are doing? Just figuring out audio.
Speaker 1:Okay. She can't hear us. Let's see. We will try and route that in. Let's do some timeline in the meantime.
Speaker 2:Little timeline.
Speaker 1:Did you see, Mark Zuckerberg went on Theo Vaughn, and they kick it out? 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 Von says, really?
Speaker 1:I mean, you've had it. Right? And Zuck says, I have. I just, like, hate anything that messes with, like I don't like any kind of chemicals or anything. My sister gives me such a hard time about that.
Speaker 1:She's like, you're just sitting there, raw dogging reality. Theo Vaz says, wow.
Speaker 2:That's a great line.
Speaker 1:And then but it got spicy on the timeline because Memnon of Rose says, let's be real. Mark Zuckerberg's sister did not tell him he was raw dogging reality. And Mark Zuckerberg's sister Ariel Zuckerberg says, I 100% said this to him. You you know, I never deleting this app moment by Shweta. Anyway, I think we got Molly.
Speaker 1:Let's bring her back into the studio. We'll ask her if she's had coffee or if she is raw dogging reality today. Let's see. Molly, are you there?
Speaker 5:I'm here.
Speaker 1:Are you raw dogging reality or are you caffeinated today?
Speaker 5:I've had about five matchas and two espressos. Wow.
Speaker 2:Getting up potentially into that five hundred milligram range. Yep. Which is
Speaker 1:That's junkyard dogging reality.
Speaker 2:Yeah.
Speaker 1:Yeah. That's just consuming everything. Maxing. Did
Speaker 2:you have a rough time like with, you know, going to the East Coast last week, I think for for me personally, given my caffeine intake when
Speaker 1:I It was good.
Speaker 2:When I when I go through a time change like that, just everything gets messed up. How how did you do?
Speaker 5:Horrible. I've been up since 4AM every morning.
Speaker 2:That's a good thing. That's a good thing, though.
Speaker 1:Yeah. Good.
Speaker 5:Just cranking content.
Speaker 1:Yeah. Just Ashton Hall mode. Ashton Hall maxing.
Speaker 2:Yeah. Get up. No. I think it's time you have to do one of the I think you need to do the the Ashton Hall for tech video. Think you should basically start tomorrow morning when you wake up at four.
Speaker 2:Yep. And just do it. Yep. Anyway. I'll
Speaker 5:try my best.
Speaker 2:It's great to have you on the show finally. Yep. Long overdue. There's a bunch of stuff to run through. We have limited time unfortunately.
Speaker 2:But maybe we'll maybe we'll make Augustus wait, you know, a couple minutes extra and just hang He's been We're we're already covering your f one firms as, sorry, f f one teams as,
Speaker 1:what was the reaction? What do you think you got right? What do you think you got wrong? And then we'll go into the other less iconic f one teams. Take some shots.
Speaker 5:Well, so all this started because I got a nice tip from someone who might be on the inside. 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. Did this for Sorcery like years ago and it went so well, but this was at like ZERP funding and like ZERP environment. So it was like SoftBank was in it and Tiger and like it was just so much more clear who the stages would be.
Speaker 5:And now we're dealing with F1 because there's only a couple of contenders and we just have to we've got to see who's going to win.
Speaker 2:Going back to the Coachella, which fund was the Doo Lab? Got to ask.
Speaker 1:Who's the Doo Lab?
Speaker 2:But who do you have as a Doo Lab? I got to know. And then Sahara, and then we'll move on to F1.
Speaker 5:I mean, let me pull this up.
Speaker 1:Well, while you're pulling that up, there are some midfield teams that someone broke down. Williams is Greylock, the fifth most winning team in history, didn't keep the top talent or scale, so fell behind. Alpene is BCV at Bain Capital Ventures. Storied brand across racing categories, PE consulting, strong veteran lineup, couple wins in podiums in recent years, Decagon, Kreia, younger guys largely untested, no clear succession. I love Alphatari as as YC, battleground for young talent, produces some of the best drivers, but sees limited return.
Speaker 1:Verstappen, Sainz, Gastly, plays an important role in the startup driver ecosystem. And Aston Martin is SoftBank. One man behind it all, Lawrence Stroll, Masayoshi Son, tons of money and big deals. No significant results to speak of. Brutal.
Speaker 2:Brutal.
Speaker 1:It's great. Anyway, yeah, break us down the Coachella landscape. And then I thought I'd put it in terms that folks that are more familiar with bodybuilding could key off of.
Speaker 5:Okay. So for Doo Lab okay. Yeah. This this one was just scrappy bootstrapped companies
Speaker 1:Mhmm.
Speaker 5:For people in stealth. Oh, For the the main stage, we had is Tiger Edition, Code two, A16z, and Sequoia. Crossovers?
Speaker 2:Oh, so it's basically the lineup crossing over. Sure.
Speaker 5:It's the big show, headliners, hard to compete, expensive rounds.
Speaker 4:Got it. And then for
Speaker 5:outdoor theater, which is experienced, arguably more fun, artist friendly, we had first round, benchmark, pair and index. Okay.
Speaker 3:That tracks on a page.
Speaker 5:Sahara Sahara, which is also amazing, very large, loud, and a little bit more out there, Founders Fund, SoftBank, General Catalyst, Lust, Lux, Craft. Let's see. Gobi,
Speaker 2:go be pretty I can see Deli playing the Sahara Stage right around like 06:00 just really, you know, peaking Peaking.
Speaker 1:Well, yeah. I mean, I'd never been to Coachella. I barely get to watch f one. I'm I really only follow the only sport I follow is bodybuilding. So I did my own kind of version of this mapping the top venture capital firms to professional bodybuilders.
Speaker 1:So I'll I'll give you a rundown and and I'm sure you're familiar with bodybuilding, so you'll be able to give some feedback and tell me how I did. So for Sequoia Capital, have Arnold Schwarzenegger. Mean, this one obviously it should
Speaker 2:be. Obviously.
Speaker 5:Great Sports,
Speaker 1:the industry's gold standard early. Sequoia, Apple to Airbnb hit list and Arnold's seven time Mr. Olympias. It became the blueprint that everyone studies, right? Yeah.
Speaker 1:Andrews and Horowitz, this one should be obvious. Dorian Yates, of course. Yep. Each burst in with radical mass, you know, software eats the world media blitz, six straight Olympias. They kind of reset what scale and intensity could look like.
Speaker 1:For Founders Fund, I mean, this is a no brainer. Phil Heath, precision obsessed moonshotters, Teal's contrarian bets, Heath's near flawless symmetry, both racked up seven crowns while dividing the crowd. A little controversial, Heath. Kliner Perkins, Ronnie Coleman, obviously. I mean, everyone is gonna guess that one.
Speaker 1:Of course.
Speaker 2:Of course.
Speaker 1:You know, they're nineteen nineties titans that went maximalist. Yep. Kp's.com era supremacy, Mears Coleman's eight title, Yeah Buddy. Yeah Buddy. That pushed sheer size and later paid for it in surgery and turnover.
Speaker 1:Excel, you got Lou Ferrigno. Lux Capital, you got Jay Cutler. Of course. Probably makes sense, you know.
Speaker 6:Of
Speaker 1:course. He's a he's a methodical grinder just like Lux. They've been at it for a long time. Lux deep tech persistence and Cutler's dogged prep finally dethroned the champ showing steady focus beats Flash. Lastly, we got Nat Friedman.
Speaker 1:He's the up and comer. He's the Sam Sulak of the Sam Sulak. Yep. People have been saying that for a long time.
Speaker 2:Many people have been saying that.
Speaker 1:Yep. So I I think that will put, you know, the venture funds in terms that really anyone could understand because a lot of the f one analogies, they just don't really land with like our audience at least.
Speaker 2:Bodybuilding's very American whereas f one is very European, It is. What what else is on your mind, Molly? How how was, what was your reaction to last week? We obviously were in DC as well. Did you have any major takeaways?
Speaker 2:Any anything, you know, that you're following after the event? You
Speaker 1:got some Palantir merch.
Speaker 5:I got some Palantir merch. Became friends with Iliano there. Introduced to Shyam. Got a private tour of the office on Friday or the next Some amazing work they got there. But I think like the biggest takeaways, and I'm still seeing this, but the biggest theme from the event was The US versus China.
Speaker 5:And we're seeing that because Deleon's still posting about it.
Speaker 2:He's posting through it for sure.
Speaker 1:He is, he is.
Speaker 2:Yeah, an interesting one, had heard some light chatter about the TikTok deal potentially getting closer to a resolution, but there being general unhappiness with how it was getting sort of resolved. So not sure how much we can share but that was one takeaway for me. It's like in the midst of this like massive trade war Yep. And and all this talk about US China, One of the sort of key issues that should be completely bipartisan and and we should be acting extremely intensely around. It seems like we're going to miss the mark on.
Speaker 1: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 cloud infrastructure, but it won't fully leave control of the CCP, which is maybe not the best outcome. I've been advocating for just giving all of TikTok to Truth Social. I think that would be something that everyone could really rally around. Yep.
Speaker 1:Might destroy it, might, but it's definitely going to get approval from the top dog in Washington. He'll be happy to
Speaker 2:have a new Yeah.
Speaker 1:What else can can you tell us about working at a family office, how it differs from working at a VC firm? You've obviously worked at in in both places. What's different? And and how how are family offices, like, positioning themselves these days in venture? Is it just, like, tag along rounds or are they trying to lead rounds?
Speaker 1:Like what are you seeing in the family office landscape?
Speaker 5:Good questions, many questions. I think the biggest difference is the time horizon on deals and the thinking.
Speaker 4:So instead of So permanent capital?
Speaker 5:Yeah, it's permanent capital. You're thinking evergreen. You're not confined to four years for investing. It's not like you have to stop investing after two and a half years and start raising and going out to fundraise. Instead, you're thinking long term.
Speaker 5:You can actually be like a little bit more thoughtful instead of playing the rat race of competitive rounds. You can pick companies and go deeper with them, have longer term relationships. It's it's just like it's a much different game because it seems much more rational. You I think my biggest my biggest thought and reflection after leaving institutional VC was just like how much it's thwarted by fast decision making. 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.
Speaker 5:So yeah I mean it's great because you can operate with clarity, you don't have to waste your time with tons and tons of meetings. You can actually just focus on the power law winners.
Speaker 2:Yeah. And that means effectively identifying a company early, not necessarily being able to invest in that moment for some particular reason, but just saying like, hey, doesn't really matter. We wanna get in at some point. Let's, you know, continue to build a relationship. Whereas I think oftentimes VCs, you know, have a specific window.
Speaker 2:Unless you're a big platform fund, you have a window where you can make 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. And so having that timeline flexibility to be like, okay, you know, we can have 10 plus billion dollar outcomes now. It really doesn't matter if we get in at $100,000,000 or we get in at $500,000,000 Yeah. You know, post.
Speaker 5:It's also just it's much more flexible capital. It's not like you're confined to x amount of percentage that you need in equity or check size. Like you can get in whenever and whatever makes sense. Then you can also put in your own capital and then raise the rest through SPVs and make a larger round. So there's many different dynamics.
Speaker 5:It's much more friendly.
Speaker 1:You you dropped an interview with Bucky Moore. He's going over to Lightspeed. We're having him on the show later. 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 so we can put him on the spot.
Speaker 1:What did he ask you to, like, edit it out? And then we'll ask him that live.
Speaker 5:I will say I I passed all compliance. My biggest question that I wanted to ask him was what was the deal? Like, did you get your carry bought out? I asked You gotta listen to the interview so you get the answer.
Speaker 1:Just tell him. I'm prepping my show. But
Speaker 5:I asked him, how does it work transitioning? Large partner from another fund going to another, right? Like, there's a lot of tied up carry, there's board positions. It's very complex. Like what was that process like?
Speaker 5:And we walked through it, mean, was very open.
Speaker 4:Was quite
Speaker 5:surprised. Was an awesome interview.
Speaker 1:That's very cool. What else did you talk to him about that we could maybe dig in deeper when he hops on the stream in an hour?
Speaker 5:Ask him about his view on ASI. Ask him about pricing dynamics for tier ones and tier twos. He doesn't like that branding, but
Speaker 1:You think he's more as like tier three?
Speaker 2:He wants to be labeled as a tier three so he can have that dog
Speaker 1:in it. Yeah, that dog in it. Inspiration to grind harder.
Speaker 2:As soon as you're labeled a tier one, you you're like, I have reached
Speaker 1:I've peaked. I've peaked. Anyway.
Speaker 5:And then I would I would also, I would ask about global pools of funding. Was open about that. And
Speaker 1:yeah, yeah, he's big into raising money from Pyongyang, right? North Korean money is usually in his funds, right? He does a of SPVs with
Speaker 2:out there is not to understand the Sovereign World Yeah,
Speaker 1:We'll have some fun with them. Last question before you go. What should they do with Alcatraz? Everyone's been debating it in tech. I want to get everyone's take on it today.
Speaker 1:Should they become Y Combinator, put a monument on it, put it, bring back the jail, keep it as a tourist destination. What's your pick?
Speaker 5:I wanna keep it. I know, I wanna bring it back as a jail, but I wanna keep it open for tours.
Speaker 1:Okay. So you can tour the prisoners. Interesting.
Speaker 2:Yeah. Crazy. That'd be very chaotic. That'd be extremely chaotic. Somebody was running, I forgot who it I forgot who it was.
Speaker 2:Think it was, she was saying that like the reason that it was shut down initially was that there, there you could only have like 300 prisoners and like due to being on an island. Yeah. It was like three x the cost to actually house them. So it was just like, doesn't really actually make sense. But
Speaker 3:I like some of things putting it
Speaker 5:into white If I was in jail I'd probably choose the island jail, right? I mean that doesn't seem like a bad place to be.
Speaker 2:I don't know. Have you been, have you done the It's pretty miserable actually. It's so bleak. It's always
Speaker 1:so foggy You can kind of see everything, but I don't know. Yeah, pretty terrifying. Anyway, we'll see what happens with it. We'll be tracking
Speaker 3:it.
Speaker 2:I'm in favor of putting, letting Y Combinator set up shop.
Speaker 1:I like
Speaker 2:the Y Combinator strategy. It's Combinator
Speaker 1:two point zero.
Speaker 2:Yeah, yeah, yeah. Y Combinator is the Y Combinator of Y Combinator.
Speaker 7:It's
Speaker 2:true. As many people have said, but
Speaker 3:put it
Speaker 2:on an island. That's a good place to Anyway,
Speaker 1:thanks so much for stopping by Molly.
Speaker 2:Yeah, is great Molly. Have you back on soon. Congrats on all the progress.
Speaker 5:Guys. See Thanks.
Speaker 2:Bye to you.
Speaker 1:Let's bring in Augustus Dorico from Rainmaker. Got the gong ready. We got some breaking news from Augustus. Sunscreen. Yeah.
Speaker 1:We had a chance to sit down with Augustus in DC, get the update from him. 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 And it wasn't complete nonsense. Like it actually
Speaker 2:made Where's the water going come Yeah,
Speaker 1:yeah, it's a big question. Anyway, we're always excited to have him on the show. In the meantime,
Speaker 2:tech
Speaker 1:Here he Oh, yeah. Let's bring him in.
Speaker 2:Let's do it. Hey, dude.
Speaker 1:How you doing, man? What's up?
Speaker 2:Boom. Look at that contact.
Speaker 6:I'm glad. It's a it's a a size gong occasion. Rainmaker just raised or just announced its raise of $25,000,000 for a series a.
Speaker 1:Fantastic. Congratulations.
Speaker 2:Let's go.
Speaker 1:25,000,000. Give us the breakdown on the deal. Who who who's in?
Speaker 6:Okay. Yeah. So it was led by Lower Carbon. That was Ryan Orbuch and Clay Clay Dumas. Chris Saka founded the fund.
Speaker 6:They're really interested in adaptation tech now. Right? Like, in the face of severe weather and change of climate, how do we build technologies that can make us more resilient, right? So more resilient to drought, more resilient agriculture, more from cloud seeding is one way to facilitate that. And so they were stoked.
Speaker 6:Naval Ravikant, sage, philosopher king of tech bros everywhere. He was in, I think, just because we went for, like, a really long romantic walk in Manhattan Beach 1 time. And then Greg Bernstein from Ace Kaps, Sovereign's Kaps, some really great Christian mentors and leaders for me. And then, Grover Ventures as well. Grover Ventures, William Clark, great dudes.
Speaker 6:So that was the deal there.
Speaker 2:Talk about, 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, from everything I heard, an extremely, competitive process. What what were you really looking for in that lead check?
Speaker 6:Yeah. I'll tell you that, and then I'll show you all of the crazy shit that we've been working on with the money since we actually did raise it, because that's the more exciting part. What we were interested in then was, technical sophistication. Cloud seeding, unlike even a lot of deep tech, is an inordinately complicated business. You need to be really good at weather modeling, at aerosol chemistry, at radar, at a bunch of other electronics.
Speaker 6:Meteorological radar is crazy unto itself. The avionics of the drone, boutique anti icing systems, new chemistries four new cloud seeding agents. And so here is some of the stuff that we had the diligence our investors on, whether they'd be able to understand what went into building novel meteorological radar.
Speaker 2:Right. To be clear, this is all behind you is all renders. Right? Like, this is Yeah. This is Yeah.
Speaker 1:This not a green screen. It's a green Great
Speaker 2:cat
Speaker 6:model. So, anyway, in 6,000 square feet, which is nuts, we started high rate production of our drones, which are anti icing capable drones. They're the only class one UAS in NATO that can fly in severe icing. And so this is one of our ELISAs right here. So it has thermal anti icing systems, ridiculously difficult to engineer aerosol dispersion system that tunes the particle size that you're emitting into the cloud exactly as you wish.
Speaker 6:And then over over here, I can't even begin to show you this. Actually, that's probably proprietary. I won't show you our boards, but here's some more material going into some more drones. Here's the next unit of our radar that's going to Argentina. Our second international deployment, so I'm pretty stoked about that.
Speaker 6:Here is all the proprietary radar stuff because we had to design our own boards. And then on the other side of the house is, like, our novel chemistry work that by the way, I'm taking this out of Aaron Slodov's playbook just like walking around
Speaker 1:the factory.
Speaker 6:Love it. Yeah. I love
Speaker 1:I love tour.
Speaker 6:That's the fun stuff that's going on.
Speaker 1:Yeah. So, mean, talk about the use of funds. It seems like you're buying a lot of stuff, hiring some people. What's the breakdown? Probably doing mostly, like, founder led growth and sales, but, where is the money going, generally?
Speaker 6:Yeah. So I would say it was probably something to the effect of, like 3030, '20 '20. Mhmm. So 30% of all the money that we raised is dedicated to designing our own meteorological radar and atmospheric sensing platform. So that platform is called Eden.
Speaker 6:That is radar, lidar, long wave infrared, aerosol probes, pressure temperature humidity probes, and anemometers. 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, and the lead time is only five weeks instead of nine months.
Speaker 2:Yeah, 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? Because that feels like its own product line, although it doesn't sound like you're selling it to individually yet.
Speaker 6:Yeah. So basically everything at Rainmaker, you know, I am grateful and happy to be making money and eventually returning capital for our pre seed investors. But like our thesis initially was like, well, we're gonna use off the shelf radar, off the shelf drones, off the shelf chemicals, off the shelf weather models, and just be like a really good systems integrator. And then we got punched in the face, like, a hundred times and decided we had to vertically integrate everything. So tried to buy that radar COTS, but there's one guy in Germany that makes them for $51, and they take nine months, if not twelve months to get there.
Speaker 6:Our system is about five times more cost, cost effective, more affordable, and, and the lead time is five weeks. So we did that. About 30% of the funds went to designing, Elijah, our class one UAS, that's capable of anti icing. That was the big thing that about 10%, 20% was for novel research, the fancy probes so that we could detect the right conditions in cloud, validate our effect. And then the remainder went to, GA, you know, fighting Florida, fighting for bigger budgets, that sort of thing.
Speaker 1:Talk about acquisitions going forward. I mean, we've seen I mean, Anderol just announced another acquisition. It seems like in in defense tech and hard tech, there are assets that can be, you know, you can create more value if you roll them into a larger, more agile, more founder led organization. Are you looking at that? Have you done it?
Speaker 1:Are you thinking about it in the future? How do you how do you think about building versus buying everything?
Speaker 6:Yeah. So so one of the really strategically important things that Rainmaker planned to do from the outset was roll up the existing cloud seeding market. If you look at the market as it stands, it is it ostensibly doesn't exist. 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. They're willing to try anything even it's even if it's technically unsophisticated.
Speaker 6:We bought North American Weather Consultants, which was a old school cloud seeding company out of Utah, out of Salt Lake City. Did so with project finance, which was great. Shout out to my finance director, John Madigan, killer. And then we injected our tech into it. The organization was extraordinarily well run there.
Speaker 6:We've retained everybody because they're great operators. But we injected our tech, upsold that, have been getting better yields because of it, more transparent reporting to our customers. I think it will continue to, roll up the existing market. I also think that, there's a lot of novel probe and material science companies that Rainmaker's targeting as well. 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.
Speaker 2:How much pushback 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? And I'm assuming your answer was like, well, the tech didn't exist and we're actually creating the market, but but what what was your, you know, was that was that your, you know, kind of primary answer there? It seems kind of obvious in hindsight that there could be a a technological sort of barrier between the the demand for something like cloud seeding and the ability to actually deliver on it?
Speaker 6:Yeah. Absolutely got pushed back on that. 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.
Speaker 6:Like, do you wanna participate in something net new or not? And so our investors were were really solid about that. But the thing that I did say, which has pros and cons looking back is, you know, SpaceX, is like a launch services provider for now. We're a cloud seeding services provider. We rather than get stuff to orbit as a as a function of our service, we build all of the hardware.
Speaker 6:We operate all of the hardware and then get precipitation down on the ground. I think over time, we'll probably trend more towards, an exorbitantly high margin utility just because cloud seeding water is the cheapest water that you can produce. But also we'll start buying up land too and then look very strange, maybe more like Monsanto or a hedge fund.
Speaker 1:Alcatraz is in the What's the coolest thing we could possibly do with Alcatraz? What's your pick for the next move with Alcatraz?
Speaker 4:I
Speaker 6:think 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.
Speaker 1:What would that do?
Speaker 2:We don't know. We don't know yet.
Speaker 1:We're gonna find out.
Speaker 2:I Maybe last question, but like, what's the revenue mix look like right now? Because I I I only know last investor update I saw from from Rainmaker, I was pretty blown away by the traction. But what, you know, talking generally, you know, where where does the revenue come from? Is it is it, you know, individual, like, governments, states, countries, private, you know, industry, etcetera?
Speaker 6:Yeah. So first of all, Jordy, you'll find out soon, but, we've doubled our realized revenue since our last investor update.
Speaker 1:Wow. Wow.
Speaker 6:There we go. Yeah. And, so I would say about what's the math? 85%, eighty six % is domestic. The rest is international.
Speaker 6:Mhmm. And then another about 75% of all the domestic revenue comes from state governments. So, departments of natural resources, departments of agriculture. The remaining 25 is small municipal or ski resorts that need more snow.
Speaker 1:Yeah. Very cool. Very cool. Very
Speaker 2:cool. And when you when you, last last When you talk to these end customers, I I'm at do you are you feeling yeah. Like, I'm assuming you're feeling the product market fit where they're like, please do this. Like, we need this. And and and I'm assuming at no point were they like, oh, don't, you know, why why would we why would we want more precipitation?
Speaker 2:But maybe talk about how those conversations go.
Speaker 6:Someone made a really salient quote tweet of Gary Tan's post of like the GIF of the whatever bouncy ball game where like when you hit PMF everything
Speaker 1:Oh yeah.
Speaker 6:Runs away. Yeah. Like a deep tech is not like that at all. Deep tech, the demand is like so obvious from the jump. People have been desperate from the very beginning when we, like, didn't even have a drone to fly saying, like, hey.
Speaker 6:If you can figure this out, we would love to buy more rain and buy more snow. It was just a matter of getting to the point where we actually had an operable system. And everything changed for us in October 2024 because we picked up the entire company, moved it to a rural hamlet in Oregon, 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, people people are desperate for more water. So that's been straightforward.
Speaker 2:Amazing. Cool. Cool. Great having you on. Congrats to you and the whole team on the milestones and I can't wait for the next investor update.
Speaker 1:We'll see
Speaker 2:you soon.
Speaker 6:Godspeed, guys. Thanks.
Speaker 2:Godspeed. Up
Speaker 1:next we have Bucky Moore moving over to Lightspeed shaking up the industry. He's been
Speaker 2:asking He's this was a maxed out
Speaker 1:Maxed out contract. Sure. I texted him that as soon as he told me.
Speaker 2:Absolutely maxed out. I'm super excited to chat with him. He has been on a podcasting roadshow. Yep.
Speaker 1:Roadshow for sure. He's been making the rounds.
Speaker 2:Making the rounds. That's great.
Speaker 1:What else do we say? Anyway, let's bring him in to the studio and talk to Bucky more. How you doing, Bucky?
Speaker 2:There he is.
Speaker 4:Oh, man. Great to be here with you both.
Speaker 1:To have you
Speaker 2:on of technology.
Speaker 1:Yeah. Give us a little
Speaker 4:break stop today, and then I I promise I'm done going on podcast.
Speaker 1:Oh, yeah. You you've been on quite the tour.
Speaker 2:Honestly, roadshow. Roadshow Four podcasts a day for the next forty days.
Speaker 1:Yeah. You should
Speaker 2:just do them
Speaker 1:all. Just wind up on, like, Haktua. Yeah. Why is Bucky on Bill Maher today? That doesn't make any
Speaker 2:You shouldn't be able to listen to a podcast in the month of May without having Bucky join, at least for five minutes.
Speaker 1:I wanna get confusing with the politics. Do Tucker, but then do Pod Save America, and no one knows where your politics align. Just talk about early stage venture. Right? Yeah.
Speaker 1:But but I'm
Speaker 4: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. I'd I'd love to just kinda riff on those a little bit with you because I think they're so important, and I wanna encourage you guys. And so I think the first one that comes to the first one that comes to mind for me is this this sort of make hotel gyms great again That's right. Moment you guys are having. This is this is a really important discussion.
Speaker 4:It's not being had anywhere but here. 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 pounds.
Speaker 1:Yep.
Speaker 4:Yeah. It's just not happening out there. So this is a big problem. Glad you're talking about it.
Speaker 3:It's a
Speaker 2:big market failure. 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
Speaker 1:company I think everything's venture now. There will never be enough venture dollars. Yeah. I think we need to put this firmly in the venture bucket and
Speaker 3:then do
Speaker 4:I think it could be a fit in one of these, you know, sort of AI turnaround funds that are being spun up by a lot of the big platforms. Like, it's it's just gotta happen. Right? It's it's gone on for way too long and all of us travel a lot and and we need to, we need to be dialed in, especially as professional yappers like VCs and podcasters. Yeah.
Speaker 2:I mean, maybe maybe we just boycott all travel until the dumbbells get up to a hundred.
Speaker 1:The economy will We'll
Speaker 2:we'll start to have a conversation at a hundred
Speaker 4:Yeah. And then go from there. We'll start
Speaker 2:the we'll start the negotiation at a hundred.
Speaker 1:Yeah. Yeah. Like a trade war.
Speaker 2:A real
Speaker 1:between the capital allocators and the luxury hotels.
Speaker 2:Exactly.
Speaker 1:Exactly. So I think it's
Speaker 4:our cross to bear and I just wanted to say, glad you guys are talking about
Speaker 1:it. Feel like there's an early stage bet here.
Speaker 2:You get something out there.
Speaker 1:Something You put cameras in the gyms and then and then the underwriting is based on the form of the of the average gym goer. And so if you just have like mass monsters in there all day, they're just throwing around the 100 no one's getting injured. Take those insurance rates down.
Speaker 2:Was an
Speaker 4:infamous A lot people wear off the shelf AI models. It's doable.
Speaker 2:It's There's an infamous list VCs for Kamala. Yes. What if we had VCs for dumbbells? We could throw that up today. Yep.
Speaker 2:Potentially, I think we could get a hundred signatures in in twenty four hours.
Speaker 4:Unclear how much overlap there is between those two lists, but it's a good idea.
Speaker 1:Yeah. A It's a big tent. The mass monster It's a big tent.
Speaker 2:Yeah. It's a big tent.
Speaker 1:Yeah. Get them all in there. Why not?
Speaker 4:And look, I think before before we talk shop, I also just have to make sure I I, really reinforce the what you guys are doing here, really trying to turn LA and more broadly Southern California into the Silicon Valley of media. Like, this is a this is a gargantuan effort, but a very important one. And I think you have this foundation emerging over in Malibu where you have these esteemed podcasters like the Rick Rubins, the Andrew Hubermans, Jordy Hayses.
Speaker 1:Yes. Kinda
Speaker 4:settling in. So it feels like you're well on your way.
Speaker 1:The last
Speaker 2:thing I'd
Speaker 1:say on this Yeah.
Speaker 4:Go ahead.
Speaker 2:No.
Speaker 1:Go go ahead.
Speaker 4:I I just think it's important that we dream a little bigger than that, right, in in the sense that the Southern California is the the closest thing to the Amalfi Coast that we have in America.
Speaker 2:Yep.
Speaker 4:You look across to Catalina, it's our Capri.
Speaker 3:Yeah. There's no superyachts.
Speaker 4:There's no superyachts. There's no luxury experience. Like, we gotta fix this. And so I just
Speaker 2:You're so
Speaker 1:I just wanna encourage
Speaker 4:you guys to keep going on that and and keep pushing, and I think it'll lead it'll lead to some really great things for what I think is all three of our our home, hometown of Southern California.
Speaker 2:Yeah. I mean, the natural evolution is, you know, potential we had a % tariffs on foreign films Yes. Get potentially announced yesterday. I don't know how real it is, but I mean, a natural next step would be, you know, 200, 3 hundred percent tariffs on foreign podcasts. Yeah.
Speaker 2:And to really kind of like, you know, generally, I'm a free trade guy. Yeah. But when it comes to podcasting, you know, I wanna support
Speaker 1:the best podcasting We were in Ojai 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. So we announced our campaign to save Ojai and bring finance to Ojai and really get the cubicles there, get the stimulants flowing, get these folks to work hard and really save Ojai. But we need we should do that for Catalina. We should save Catalina from the problem of boats under 50 feet. Yeah.
Speaker 1:Yeah. Because it's a big problem out there. Most of Fishing fishing
Speaker 2:Notoriously unreliable. You might have a good year, have a lot of yield. Yep. And then you might have a down year whereas hedge funds, you know, figure out a way to generate alpha in any market conditions.
Speaker 1:The ocean with new fish to hunt. And related to this,
Speaker 4:Augustus was talking a little bit about what to do with Alcatraz. Right? I mean, who isn't a mega yacht owner in San Francisco that wouldn't wanna bring their boat into the San Francisco Bay
Speaker 1:Yeah.
Speaker 4:And enjoy what Alcatraz has to offer? So I think there's another dimension we can kinda take the Alcatraz conversation that of aligns with what Catalina has in terms of its potential. So there's a lot of good work to do here, and I just wanna say I appreciate you spearheading this effort.
Speaker 1:Yeah. There was kind of a controversial post, from, what what was it? Christina, over at Bain Capital. Right? She was saying that Alcatraz should be a Four Seasons resort where you pull up in a fancy water taxi to White Lotus style, not a federal prison.
Speaker 1:But I mean, lot of people were firing back being like, this would obviously be that better as like an Amman and instead of a water taxi, should be pulling up in a super yacht.
Speaker 2:I haven't heard of a VC going to a four season in about
Speaker 3:fifteen In a
Speaker 4:decade, yeah. What is your Both of these places have a lot of potential.
Speaker 1:Yeah, yeah. What is your top pick for Alcatraz revitalization?
Speaker 4:I'm not sold on the idea of reopening the prison. Anyone who's taken a tour of Alcatraz realizes it doesn't look like The Rock, the movie that is, which is which is very disappointing if you're a fan of The Rock and that shower scene where it all starts. But I think this I think this five star destination in the making idea that Christina floated, again, up leveling the Four Seasons to the Avalon, up leveling water taxis to super yachts. Like, I think this might be the best idea at least floating out there right now.
Speaker 2:I like the idea of turning it into, what are the regions in the Mediterranean that like don't, or not Mediterranean, Caribbean that don't really have any financial sort of rules like
Speaker 1:Like tax haven.
Speaker 2:Yeah, yeah. So if we turn it into a place that VCs could generally solicit
Speaker 1:It should be the Puerto Rico Of The Bay. But
Speaker 2:Yeah. Yeah.
Speaker 1:Yeah. You should and and if you go there but you have to spend six months in a day on the island.
Speaker 4:Yeah. If you leave Yeah. I we're we're trying to ensure the crypto industry. So, you know, all those folks living their life in Puerto Rico right now, this might be the answer.
Speaker 1:So Yeah. Yeah. It should should be.
Speaker 4:Keep pushing these big ideas. Somebody's gotta do it, I think you guys are doing a really good job.
Speaker 1:Yeah. I love it.
Speaker 2:Amazing. How's your how's your first real day on the job today?
Speaker 4:Right? Yeah. Change doesn't happen often in this industry, so it's been really exciting. It it kinda 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. And there's getting a lot of similarities in how the firm operates relative to where I was at Kleiner Perkins.
Speaker 4: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 used to run run our operations here that I'm kinda getting used to. But super excited about this opportunity. I mean, I think it's just such an incredible time to be investing right now. And, given we're kind of in the midst of the super cycle, I'm just really, really excited to kinda hit the ground running here at Lightspeed and and, make the most of the opportunity in front of us. And
Speaker 1: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. Now you're early stage. Is that right? Is that a correct characterization?
Speaker 4:So Everett would be the growth guy at KP, but I think what's unique about KP is we all we preside over the growth and venture bonds together. Right? So every every investor makes growth investments. Every investor makes venture investments. And for me, my roots have always been early stage.
Speaker 4:I love, you know, pounding the pavement, going to Stanford, figuring out who that next postdoc is that's gonna 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. 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? 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 groups of where I started. And that was a big, big driver for me about why I was so excited about this opportunity.
Speaker 1:Is there some sort of like, how would you how would you define the delineation between growth and early stage at Lightspeed specifically? Is it like certain round size, certain valuations, certain just like you're getting out an Excel model for the first time. So the growth guys have Excel installed, the the the early stage team hasn't touched it in years.
Speaker 4:Yeah. Yeah. 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 as a possibility, there isn't a ton of repeatability in revenue generation or how they put product in customers' hands. I think that feels a lot more like like a venture type of investment. 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.
Speaker 4:Setting aside quality of revenue and that whole debate, you're you're you're starting to see more and more that, these companies become growth stage companies very quickly. So I think what I'm really excited to focus on here at Lightspeed 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. 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.
Speaker 1:Yeah. What what what is the shape of, like, these AI companies and where they fit between growth and venture? Because I saw some some firms were putting OpenAI at 27,000,000,000 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.
Speaker 1:Like, it it does have binary risk. But, again, it's, like, almost 10x or something. It's been, like, a venture style return very quickly. On the same time, you have a lot of these very hyped, AI companies that are maybe rappers would be the the the negative critique. They're generating a lot of revenue, but everyone's worried about churn and durability of that revenue.
Speaker 1:It reads like a growth stage company, but maybe it's more of a venture bet. How are you seeing the AI landscape kind of break down?
Speaker 4:Yeah. 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
Speaker 2:Yep.
Speaker 4:There is absolutely a venture, like, return to be made at that round. And and, you know, that's gonna make a lot of funds that that went in big
Speaker 1:there. Yep.
Speaker 4:I think with respect to your to your second question about just, how these, these rapper companies sort of fit into this box, the first thing I'd say is I think it's becoming clear that when you look at the mature companies that were once referred to as rappers, like the Harvey's, the Curcers of the world Yep. They're getting a lot fatter in terms of, like, much of the tech stack they own themselves and how much differentiation you can argue that they build in. So an example in Cursor's case is, like, they've been very publicly public about, like, the people they wanna hire are people that can help them train models. Why is that? Well, the the cost that they have to pay to the model providers, as we all know, is nontrivial, hence, this wrapper distinction being a bit pejorative in nature.
Speaker 1:Yeah. Of course. And so
Speaker 4:what I think you're gonna start to see happen is that these breakaway companies that were once AI wrappers, once riding on top of the existing frontier model companies are gonna 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. Yep. So that's, like, one trend that I'm seeing. But I think to your point about the quality of revenue, there the the the capabilities that these products bring, especially those that kinda have a prosumer adoption motion, are just so alluring and magical that everybody's gonna try it. Right?
Speaker 4:And I and not everybody's gonna stick around. Not everybody's gonna stay with that product, and they might go to another. But from my perspective, I don't think as much about that because I just think the pull for these is so extraordinary that, 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 in to to larger companies, go from kinda credit card swipes to invoicing customers, you're gonna see that these companies look a lot like traditional enterprise software businesses. But in theory, they're gonna grow and compound at much, much larger scales.
Speaker 2:Yeah. How do you, how do you think about the the competitive dynamics and differences between b to b sort of enterprise focused agents and consumer agents from from my point of view in evaluating a lot of consumer agent businesses lately, a lot of my thinking comes down to, okay, this is not necessarily explicitly on Anthropix 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 at businesses like, for example, like Harvey, something like that, it's like, okay, there's a ton of 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.
Speaker 4:So I I agree directionally with everything that you said. And with the caveat that I'm not a consumer investor, it just it it intuitively looks to me as though a consumer agent is only useful when it can do everything from planning my kid's 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 that can really do that in a holistic sense yet. And I think someone will figure it out, 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 kinda maintain that core consumer mind share that they have today. So on the consumer side, I 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.
Speaker 4: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 kinda move on and go back to doing it your way. So that's sort of where I see consumer today and where I see it going. 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. So you mentioned Harvey. There are companies obviously doing this in in cogen and trying to abstract away parts of the software engineering process.
Speaker 4:There are some really interesting companies that are kinda going after, like, people that use Datadog, for example, and helping automate the human intuition that goes into munging through all that data when your software breaks. 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. 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 just think that's a lot harder to to deliver on the consumer side in a way that's compelling.
Speaker 4:So my sense is the inflows that we see into, like, agent investing will be very heavily concentrated on the enterprise side. And I think that those companies are gonna get very, very big for the obvious reason that they're starting to chip away at human labor budgets rather than tool budgets. And I'm seeing that with my own eyes today. Like, I feel like I'm seeing the future every day when I meet these new companies that, can can just they they just have superhuman capabilities in terms of some of these enterprise tasks they're automating.
Speaker 1:Yeah. That makes sense. We have what is your take on, like, the rapper meme? It felt It felt like a VC psy op basically to me in the sense that like a lot of VCs were like, hey, maybe there's some rappers out there that they might get steamrolled, but they're going to be fantastic lifestyle businesses for a few years. And then we had the Windsurf rumor about, you know, kind of a a pretty fund returning, result, if that deal goes through.
Speaker 1:And so it feels like is the Windsurf acquisition potentially like a, like, an Instagram moment where it kind of unlocks, like, a new mindset around the ability to go and build businesses in AI, it won't be totally winner take all or, like, the the, 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.
Speaker 2:Credit to Bucky too, Windsurf, angel investor.
Speaker 1:Really? Very nice.
Speaker 4:Proud angel investor before it was Windsurf, and I have to give credit to my former partner Lee Marie for for leading that at Kleiner Perk, and she's, amazing. And, you know, it's it's a really special company. 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 cogen, but also just more broadly in these, like, core categories of agentic work that the model providers are gonna wanna get into. OpenAI famously, said anyone who's an investor in a company called Glean is not allowed to invest in OpenAI anymore. 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.
Speaker 4:To me, that's indicative of, you know, them looking at that piece of turf as something that they wanna occupy. Mhmm. So to the rapper SIOP question, like, I would completely agree, and you 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 SIOP. That said, I think the 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?
Speaker 4:And so a sense, if you look at Winsorf versus Cursor, Winsorf 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. And what that to me says is that, like, really the IP of these companies is gonna 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. So I think you and given cogen is the most mature category, you're kinda getting to see how that plays out. So I think what you're gonna 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 gonna be the ones that that figure out the best set of retrieval steps to give the models optimal context. And then coming back to what I said earlier, I think these companies are gonna look a lot fatter than the wrapper, name might indicate over time.
Speaker 4:And, again, you're seeing this with Cursor, Windsor. These companies are, you know, really out there trying to take more and more of the stack on versus just being, like, you know, dependent entirely on a frontier model provider. I think it's safe to say the same about Harvey. They recently published a a really interesting blog post that kinda shows the architecture of their of their app in terms of how it interacts with the AI models, and what you see very quickly is it's a lot more than just a wraparound. And so I think the trends are only gonna continue, and it's why I think, you know, we at Lightspeed are very bullish on this this form factor of company.
Speaker 4:I think you're gonna see a lot of, activity from us there over time.
Speaker 2:From how have you personally evaluated, you know, businesses that are looking to eat into effectively labor spend through rolling up businesses versus companies that are looking to get into that on a ground up basis. 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 SaaS business today, but over time, it could look like more like it, you know, it's sort of eating more of the value chain.
Speaker 1:Like what Salesforce did where they, where they had comped on per ticket closure as opposed to just pure sales.
Speaker 2:Yeah, results, results basically or But I'm curious.
Speaker 1:Go ahead. Yeah.
Speaker 2:Sorry. Yeah. Just just this nature of, you know, ground up, you know, new software businesses that are Mhmm. Leveraging AI versus this sort of buy and and build on top of strategy.
Speaker 4:Yeah. So I think this question is sort of being answered collectively by the industry, like, as we speak. As in, like, there's a a lot of chips on the table around this notion of, hey. What if we go and buy the BPO in India and inject AI into it? Or what if we go and, you know, buy the home owners association, administrative businesses all over the world and inject AI into those?
Speaker 4:Yeah. Just just an idea off the cuff I
Speaker 1:have here.
Speaker 4:And and, and then on the other hand, 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 a copilot like product, and then over time, you start to chip away at the labor spend and and bring more automation to do it. The first thing I'd say is that, 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 gonna get better. Part of that is obviously just the models getting better. And I think just, when you have, like, logarithmic rates of improvement, it's just really hard for the human mind to, like, intuit that and look forward and actually feel, like, confident in, okay.
Speaker 4:This is what it's gonna look like a year from now. Mhmm. So for example, I I think it's fair to say that, if you met Harvey at, you know, c or series a and you saw the product, you'd say, hey. I don't know if there's, like, a lot here. It's hard for me to see how this is gonna be, like, a daily active use for the average lawyer.
Speaker 4: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. And so that product is just a totally different beast than it was, you know, a year or two ago, 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. So that's kinda one point on on that end. And then I think with these turnarounds, like, I I haven't spent a ton of time digging into these. I think my my high level concern would be, one, do the people that know how to bring the AI into these products know how to run the, you know, the BPO or the call center operation or the community association administrator?
Speaker 4:I just think these are these are kinda oil and water like DNAs, and it it feels a little bit like, you know, Doge coming into the US government and telling all these people what to do. I think there's gonna be some friction like that.
Speaker 1:Of course.
Speaker 4:But on the other hand, you know, having that existing distribution and scale is really, really powerful. So I can see how there'll be a lot of enterprise value created by these if if they can kinda manage that DNA mismatch that I foresee being being an issue.
Speaker 1:Yeah.
Speaker 4:So if you're asking me, I'd much rather invest in the AI native company. One and the other thing I'd say is that, if you're the AI native company, say, competing with the company that's transforming itself around AI, what I see out there right now is that there's sort of a 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 gonna perish if they don't do this right, and more immediately, they're gonna 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 Windsor. You could say this about Glean and some of the other companies that I've that I've been somewhat close to, is that if you can get mind share with the CIOs, there's this mimesis that plays out where then the next one has to buy it, and the next one has to buy it.
Speaker 4:So I think really being first and being looked at more of as, like, a true pioneer of the space rather than, like, a company that's being confident about how they bring AI into their existing products is just a much, 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, that's the side of the fence that I'm I'm more inclined to to bet on as an investor.
Speaker 2:Makes makes a ton of sense. Let's talk about outcomes. I think in 2021, '20 '20 '2, or, you know, especially early twenty twenty two, everyone was writing of, like writing to lots of $10,000,000,000 outcomes. That was, like, maybe the general sentiment. You shared recently that you're thinking about, you know, trillion dollar outcomes now.
Speaker 2: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, you know, $1,010,000,000,000 dollar plus companies.
Speaker 4:Yeah. 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. They can they can actually convince me that there will be companies that cross trillion dollar valuations in the private markets. 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.
Speaker 4:Obviously, now these companies are staying private longer. They're growing faster. And, therefore, I think it's not unfathomable to think of an OpenAI or a SpaceX, you know, getting to this place where we're talking about trillion dollar companies in the private markets. So what does that mean for the venture business? 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, to generate alpha there that I think just wasn't there before.
Speaker 4:So that's hard for me to ignore personally, and I think why these mega platforms like Lightspeed are are in a really unique position to to capitalize on that. I think there's an obvious question as to, you know, know, are these the are these companies a point in time thing, or are they more foreshadowing of more of these to come? I think that's something that we're kinda figuring out as an industry and and watching. But my instinct will be that just the the the problems then 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, aligned with those companies succeed at going after these, like, really fundamental problems like space travel, like intelligence, for example. Yep.
Speaker 4:And then I think with respect to the $10,000,000,000 outcomes, I mean, look. You're, you're you're still gonna see a tremendous number of those. Right? I think that these these AI app companies are like, the the large platforms are gonna be very acquisitive of these companies. I think you're gonna see things like Moveworks, which, you know, ServiceNow announced or, or, you know, the Windsurf rumors that OpenAI and and Windsurf are having conversations around.
Speaker 4:Like, I think there's a lot more of this to come. And so I think the the the venture business will still be driven by those outcomes. 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. And I think that the mega platforms are well aware of that and and and and architecting their setups with that in mind.
Speaker 2:Yeah. In many ways, you know, these these bigger companies, 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 if you could just have, you know, if you could get the majority of your cap table around a single dinner table for a few more rounds, might be more inclined to to stay Yeah. To stay.
Speaker 1:Sure. Last question. Any lessons from Warren Buffett? He's transitioning out of Berkshire Hathaway. Obviously, a very different style investing from early stage venture, but at the same time, if Lightspeed keeps scaling AUM, who knows?
Speaker 1:Anything's possible.
Speaker 4:Yeah. 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. The one that I always come back to is this notion of the too hard pile. Right? And so what the too hard pile refers to is when they see a business that someone is trying to pitch them, on being a really compelling investment.
Speaker 4: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 even if it ends up being a great investment. And, look, I think venture is all about exceptions, 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 kinda look out forward and have a sense and intuition of what they can be, There's this notion of a too 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. And what I think I've really learned in the eleven or so years I've been doing this is, like, there is a notion of a two hard pile adventure 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.
Speaker 4:And so that that would be my answer.
Speaker 1:That's great. Great answer. Well, thanks so much for stopping by. Congratulations. Job.
Speaker 1:Come back on again We
Speaker 4:love personalities Thanks guys.
Speaker 1:We really appreciate you.
Speaker 2:Awesome We'll
Speaker 1:talk to you soon.
Speaker 3:Thank you for having me.
Speaker 1:Cheers. Next up we have Catherine Boyle from Andreessen Horowitz, the pioneer of American dynamism. What One of
Speaker 2:the top coinages of the last few years.
Speaker 1:Yeah. For sure. And and more relevant than ever. In some ways, mission mission accomplished. I mean, last week in DC, it was American dynamism on display.
Speaker 1:Right? That's Everyone everyone is a believer, and the question is, where do we go from here? And that's what I'm excited to dig dig in with her today. Katherine, welcome to the stream. How are you doing?
Speaker 4:Thanks for having me.
Speaker 7:It's about time. I'm so
Speaker 2:happy to
Speaker 3:be here.
Speaker 4:You just made me.
Speaker 7:Longtime listener, first time caller.
Speaker 2:Great to have you. With the flag in the background.
Speaker 1:Yes. Fantastic. Where should we start? I I'm curious about just a state of affairs with the American dynamism movement, the project. Feels like it's maybe time to rest on our laurels.
Speaker 1:I know what's What do think?
Speaker 7:We've we've achieved American dynamism.
Speaker 3:We've not
Speaker 1:been Yeah. Seriously. It feels like it's broken through, it's mainstream.
Speaker 2:Cultural victory maybe coming before actual victory. Sure, sure, sure. In that American dynamism is almost mainstream now, at least in the venture world. Yes. But job's not finished.
Speaker 1:Job's not finished. So what are the key, asks in DC from, from Silicon Valley right now? What are the top projects? Where should, tech be focused in terms of the American dynamism project broadly right now?
Speaker 7:Totally. So it's nowhere near finished. I mean, this is, like, three or four years into a thirty year project, which is always good when you have those sorts of aims. And I'd say it's even longer than that. When you think of defense one point o, it started around 2015, '20 '16.
Speaker 7:Mhmm. You know, it it sort of has it's become this this very large movement. 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 tech land, but it was just it's probably one of the biggest things to happen in the first hundred days of of the Trump administration. The army announced what's what they're calling their army transformation initiative.
Speaker 7:Mhmm. It was with secretary Driscoll, general George. 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. Like, we we have so many platforms we wanna modernize.
Speaker 7:We want to divest from technologies that are no longer useful. Mhmm. We want to to modernize the force. We wanna make sure that we get rid of civilian jobs that are not important anymore. We wanna make sure we are not having wasteful spending.
Speaker 7:I mean, it was sort of like, you know, what I I I had read in NBC after it came out, they said, like, the army is dodging itself.
Speaker 4:Yeah.
Speaker 7: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, they want acquisition reforms, saying they want to work with startups, saying they have to have new platforms that come in and actually support the needs of the warfighter, and they've been pounding their head against the wall with little results. And so when you have a Doge effort going on in Washington and an administration that really wants to see, you know, the the the waste disappear, it allows for those people who are really forward thinking like general George and like secretary Driscoll to come forward and say, hey. We're gonna do this ourselves. We're gonna pick out the the new technologies that we need. We're gonna get rid of things like Humvees that we haven't needed in twenty years.
Speaker 7:We're we're going to figure out what is actually use for useful for the army, and we're gonna do it ourselves. So it was a huge week. I think it was probably one of the most it was reported, but it it didn't get sort of the the praise from from technology that it should have. 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. So congratulations to the army.
Speaker 1:Yeah. So can you
Speaker 2:give a little bit doze yourself than get than get dozed.
Speaker 1:Always doze yourself. Doze yourself. Yeah. Can you give me a little bit of a tour of the market map of the beneficiaries of this transformation? Obviously, everyone knows the Palantirs and the Andurals, but I imagine that there are tons of pockets of value and projects that need to be overhauled.
Speaker 1: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?
Speaker 7:Totally. So, I mean, in the in the early days, that's what's been called out. So it's, you know, it's it's early UAVs that were developed twenty years ago. They're not relevant post Ukraine war. I mean, it it's it's it's actually sort of I I don't wanna say comical because it's not funny.
Speaker 7:But when you think about the fact that the Humvee was developed in in 1980, it went into production in 1985 Mhmm. And that the army said in 02/2004, 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. And these and these are still in production in 2025. And so that's a perfect example, and I think they're sort of you know, they're they're they're showing certain programs that are are so long overdue Yeah. That they're to be changed.
Speaker 7:But I I think it's also smaller things like, you know, the 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. And and now the army has ways to acquire things where technology is changing at a pace and at a speed that that really needs to have a a genuine competition every year, every couple years. And so that really benefits all startups. That that benefits all, you know, incoming emerging technologies that are going to serve sort of the fight of the future.
Speaker 7:So some ways, I think it it's you know, they have specific callouts that they're that they're pointing to now. Yeah. But there there's definitely 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 gonna give you a There's advice.
Speaker 1:Is there any movement on, procurement reform? I remember I watched this, hilarious movie, Pentagon Wars, all about the development of the Bradley fighting vehicle. And it's a very funny movie, but it kind of, 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 these different problems. Part of the benefit of modern technology is that we do develop platforms and things like Andoril's ghost can do ISR and also do, munitions and a whole bunch of things.
Speaker 1:There there are projects that do need flexibility, but is is there a cultural shift around moving away from exquisite systems or just when when folks in defense tech say we need procurement reform, what are they really talking about in 2025?
Speaker 7:Yeah. Well, I think they're talking about different things because I think what Yeah. 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. I think other branches will look at this and say this is a great idea. 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.
Speaker 7:We would love to recompete that that program. We would like to be able to be better capital allocators 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 ten years and get no updates, and you would not be allowed to change it, what would you do? We would say that that's insane.
Speaker 7:Like, how is a CEO gonna say they're gonna acquire technology for their company that they're gonna use for ten years, and there's going to be no software and updates, no nothing? And if it's not working, you can't get rid of it. Yeah. Because you're told you can't get rid of it. I mean, that that is that is literally what the the DOD has to deal with.
Speaker 7:Yeah. 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 gonna tell ourselves is, you know, it it Doge has been very public in the last week of what they're doing. There's been some pushback on, you know, why are you working on IT systems? You know, everyone has sort of their their favorite Doge meme of why it's not working.
Speaker 7: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. And the first example inside the DOD, this is the biggest example in the last hundred days 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. I just think it speaks volumes, and and tech should be celebrating. This is a big, big day for everyone in the American dynamism ecosystem, for every defense company that's been fighting for this for a long time.
Speaker 2:Yeah. Yeah. And for for all of this to be actually achieve those sort of thirty year goals or execute against that thirty year plan, things need to be bipartisan. People need to realize we want efficiency and innovation across every branch.
Speaker 1:Yeah.
Speaker 2:I'm curious on the investing side, I'm sure you have this painful experience all the time where you meet companies that probably are gonna be great businesses, are good for America, but maybe aren't a fit for venture. 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?
Speaker 7:Yeah. Like, one of the one of the biggest mistakes I see investors make is trying to predict TAM. So so, you know, early, early days of Andoril. A lot of people, you know, didn't wanna look at Andriel 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 is, well, it's kind of a small town.
Speaker 7: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 like like, these were real things that people said that are hilarious now. Yeah.
Speaker 7:You guys can imagine. 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. But I but I agree with you. There are some examples of companies that might not be, you know, stand alone businesses, but will ultimately you know, Endril'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. But I think in in some ways, there's always surprises with with companies that were initially passed on or or people were very skeptical of their TAM in the early days.
Speaker 7: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.
Speaker 2:Yeah. How do you how have you been kind of reacting to, you know, ignoring the politics of it all, but reacting to, you know, the trade war in, in many ways, like when you have these like big geopolitical, events playing out. That doesn't necessarily mean start to make a lot of venture investments because venture investments take a long time to play out and it's very hard to predict the future. Are you seeing new opportunities related to the events of the last month? Or are you still just continuing?
Speaker 2:Like I imagine when you guys invested in Hadrian, you weren't betting on a trade war in two years or something like that. Right? But how do you think about timelines? And and is American dynamite and and is the benefit of sort of thinking in that thirty year timeline that you're kind of able to broadly, you know, ignore or not place too much focus on the headlines of today and just think about what America needs in the long run?
Speaker 7:Yeah. 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. These are very long cycles. 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.
Speaker 7:So I think even when we made the investment as hay and Hadrian, as you called out, there was a movement towards a reindustrialization and towards investing in manufacturing that was early and nascent. 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 about, you know, in investing in America, reindustrialization, 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, if you if you think about kind of the next ten, twenty years, reindustrialization is going to be a very important theme.
Speaker 7:Yeah. So so, you know, it it can feel like 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 thirty year journey of this this sort of, 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. And so you're going to see a lot of companies that are built in the next few years that become generational companies.
Speaker 1:Yeah. How do you think about the kind of broader market map of American dynamism? Obviously, Andoril is like a just a great case study in the American dynamism thesis. But at at the same time as you go through the American dynamism website, you can go back to, like, the moon landing and, the the development of the iPhone as, like, examples. At the same time, there's this question about, like, the Andoril of x is Andoril 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, you know, flock safety or Hadrian.
Speaker 1:These companies are not competitive but maybe fit in the thesis. What, how how are you seeing the the investing landscape of American dynamism kind of evolve as more people come into the to the category, but then think outside the box and address different issues? I mean, I've seen even, like, some education stuff kind of fit the the broader thesis. So how has that evolved over the last couple of years?
Speaker 7:So, yeah, we define it as companies that are actively supporting the national interest.
Speaker 1:Sure.
Speaker 7:So it 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 out the platform. Mhmm. It's because these companies need something entirely different than a true enterprise or a true consumer company. Yep.
Speaker 7:And when we looked back at our our early portfolio of Shield AI, Androl, you know, these Astronis, these companies that that were sort of what I would call space and defense one point o
Speaker 1:Yep.
Speaker 7: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? It it doesn't make any sense. They have totally different needs. You know, Andrew has famously said that they had a lobbyist on staff on on week one.
Speaker 7:Yep. 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 early stage startups, 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. 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 totally 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 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.
Speaker 7:But all these companies have very similar needs and sort of things that they have to think about early rather than later. And we've now seen enough of sort of the early success stories in public safety and 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.
Speaker 1:Yeah. Can you talk a little bit about almost like lobbying as value add for venture capital? I remember I was running an Andreessen backed company a decade ago and there were I met the CEO of McDonald's through Andreessen at some happy hour and there were trainings on b to b sales and PR and all this stuff, but there was no concept of, regulatory or 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. How are you working with early stage founders to get them up and running in Washington?
Speaker 7:Yeah. 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 people they should be meeting with in the DOD. But the thing that I think we're we're actually, I I would say, even more successful in doing that's really important is making all that knowledge public. You know, we make our playbooks public. You know, my my partner, Leila, who who runs runs our go to market in DC, she wrote this incredible glossary of things you need to know if you're even going to approach a venture capital firm about, you know, about a a defense tech company.
Speaker 7:Like, these are the acronyms. These are all the acronyms you could possibly hear in a conversation with the DOD. And it's it's things like that where we we do wanna make that public, and we wanna help educate the ecosystem. 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, that understood the names of, you know, of different, you know, people on the appropriations committee. Mean, these these things that are now sort of, I I'd say, taken for granted were were not well known.
Speaker 7:And so I think that's a huge part of it too is really helping the ecosystem get up to speed, helping companies sort of speed run that early stage process of, like, you can ask any dumb question, and we're gonna help you with it. 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. I mean, we have a a Washington office now. We are fully staffed in terms of both Republicans and Democrats and people who work on both sides of the aisle, people who specialize in DODs, people who special specialize in certain types of the DOD. And I think that is, like, a very important thing to be able to say, okay.
Speaker 7:You're you need to meet with x, y, and z people, or you need to understand the glossary before you can even begin to have those conversations.
Speaker 1:Do you think defense tech is now mature? It's oversaturated. I was joking with Jordi that I world peace is like maybe six months away. And then I'm gonna start poaching top defense tech talent to build the next generation of advertising optimization.
Speaker 2:Because I think that we
Speaker 1:just gotta get them back
Speaker 2:two more, 2,000,000,000 more and
Speaker 1:like World World peace, yeah. But I mean, is a serious question here. Like there, I know some people who are like, just so excited that they're jumping into things, you know, being even, I'm not even in the industry, but I'm a little bit more tapped in and I'm there are already seven companies working on that exact thing. I don't know if this is the best time. Is worthwhile to steer, you know, these incredible hackers, these great entrepreneurs, like maybe towards the more like, the more tangential hard tech problems.
Speaker 1: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 Andoril's roadmap. 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, multibillion dollar founder mode company?
Speaker 7:So so I'll say deterrence is the constant project. Right? So, like, your whole your like, the the meme of we're maybe six months away from world peace. Yeah.
Speaker 2:Of course.
Speaker 7:It's a it's like, I I actually think that was was part of the problem in the nineties. Right? Like like, seriously, that was problem.
Speaker 1:Yeah. Democracy will The end of history. End of history.
Speaker 7:Yeah. End of history. We flourished, and we don't need to be working on these things. So Yeah. The the the kind of it it is very important that we've gone back almost to the roots of the DOD saying, like, hey.
Speaker 7:Actually, we remember what it's like to be a country at war, and we need to be constantly focused on the next technologies. We need to be focused on deterrence. Yeah. Thinking about us deterrence because we want to prevent war, but we have to be continuously building. So Yeah.
Speaker 7: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 thirty year project. I think that's what we all really should be should be focused on is making sure it's a thirty year project and even longer than that. But to your point, what what I think is so interesting about companies that, you know, are founded out of Andriel or out of SpaceX Mhmm. You know, we've done an analysis where we looked at all of the founders who've left SpaceX since, you know, in the in the last, say, ten years. Yeah.
Speaker 7: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, you know, Castellian, which is in our portfolio, and they're building hypersonic weapons. I mean, some of the best founders are trained. I always say they go to the school of Elon Musk. They learn manufacturing. They learn production.
Speaker 7:And then they wanna take that to something that, you know, is pretty low hanging fruit. Like, they they they wanna make sure that they're competing against the incumbents of of of yesterday who who have not modernized their production, who've not modernized a lot of the technology that they're working on. And so, you know, I 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. 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 low hanging, you know, it's low hanging fruit. It'd be interesting to work on that, or they're interested in being a tier one supplier.
Speaker 7:We have a number of companies that are really focused on the supply chain aspect of defense and and their partners to Androil and their partners to SpaceX and and other companies in the ecosystem. So so you really are seeing founders, like, understand that question in a very sophisticated way and saying, okay. We're gonna go after the parts of the supply chain or or the things that the DOD needs that no one is focusing on. And that's been exciting to see too.
Speaker 2:You can you talk about M and A in defense tech broadly? Anderol's done this very well. Ceronic announced a deal last week acquiring Gulf Craft. That feels super significant. I'm I'm curious, you know, how you advise founders kind of broadly when when thinking about that.
Speaker 2:We actually had Augustus on from Rainmaker earlier who had acquired a company in his space, but when's when's the right time to be, you know, thinking about that as as somebody in defense tech and, yeah, what what kind of opportunities do you think make the most sense?
Speaker 7:Totally. Well, I I think, I mean, both Anderol and Saronic, 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 at at a speed that is just incredible. Right? Like, they they they they have very sophisticated teams that know a lot about acquisition. 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.
Speaker 7:It can speed up it can speed up innovation. It can speed up being able to to work with certain customers. That's for sure. If you're acquiring a certain 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. Like, I don't think we were seeing that several years ago, and now we're certainly seeing companies experiment with that.
Speaker 7:But when you when you said actually m and a, 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. When you look at these existing prime prime companies, the big five say, they've really only acquired companies that have not raised any venture dollars. Right? Like, they they don't acquire companies that are kind of seen as these bleeding edge companies to to shore up their capabilities. And my instinct to you know, we're talking about army transformation initiative.
Speaker 7:We're talking about a government that's becoming far more sophisticated and a DOD that's becoming far more competitive. Right? It hasn't been competitive for decades, and now you're seeing all of these startups come in. My my, like, prediction, if we're looking five, ten years out, is that the companies that have not been acquisitive 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. And I think we we could potentially even see another Last Supper situation, which, of course, in the nineties was the famous case where the government came to all these primes and said, you have to merge.
Speaker 7:You have to have kind of forced mergers and acquisitions because the budget's going to decrease. And, of course, that was that was probably the wrong strategy given sort of the results that came out of that. But I do think it is something that I would not be surprised if in five or ten years, you're seeing the existing primes that have been around in 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 acquisitive ecosystem that that people don't necessarily kind of write into their their their kind of thesis today.
Speaker 2:How would you 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 by pretty much everyone. But I think of it as a great, in in the fullness of time, it's great Good
Speaker 1:name Boeing, I ain't going.
Speaker 2:Yeah. John is, John's so loyal.
Speaker 1:Trail Boeing. Think you're an in 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 seven thirty seven max, I'm
Speaker 2:not I mean, I I just look at it as as as as China would love to have a company that was actually competitive with Boeing.
Speaker 1:Totally. Right?
Speaker 2:It's it's hugely strategic asset. Yeah. But I'm curious, 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 Andoril movie, you know, and then they put it out. But but how do you think about, do you do you see that the the leadership at at the primes?
Speaker 1:Well, Lockheed Martin invented artificial intelligence, remember?
Speaker 2:Yeah. They came out last week and claimed that they invented Artificial intelligence.
Speaker 1:They basically just said, you're welcome.
Speaker 2:You're welcome. Yeah. By the
Speaker 1:way, you're welcome. But I'm curious Any hope for transformation?
Speaker 2:Yeah. Do you have conversations with them or is it is it
Speaker 1:because I mean, even though it's not an opportunity for, you know, venture capitalists necessarily, like, would be great if they were highly functioning in the American interest. As Americans And then
Speaker 2:you have the program that was spun out of, was it
Speaker 1:Microsoft's Microsoft and Oh yeah, yeah, HoloLens, yeah, sorry.
Speaker 2:So I think there's probably more kinda even spin out opportunities where new companies Collaboration. Totally. You know, value on top of existing programs.
Speaker 7:Yeah. And I think, you know, Amar, and actually Brian Schimpf 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. Yeah. They sort of they they didn't really need to. 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.
Speaker 7: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. And I went back actually last night and was reading the first few pages of the kill chain by Christian Bros Yeah. Which, again, it it's like it's reading it. It was written, I believe, in 2019.
Speaker 7:Yeah. Things have changed so dramatically in terms of the conversation, 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? That was prewar in Ukraine.
Speaker 7:It was sort of you know, in some ways, it was a security theater. Right? Like, we don't actually have to remain secure. We just have to pretend we're secure. And so I think there is this new sort of wake up 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.
Speaker 7:So, again, I that's why I think you're gonna 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. But, two, like, these initiatives inside the DOD that are now getting real steam, that is gonna force incredible competition that has not existed even in the last ten years when we've all been investing in American dynamism. 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 but are looking for solutions because now they know they have to.
Speaker 3:Yeah. Yeah.
Speaker 1:I I was a while ago, I was talking to Trey about just the lack of the deeper supply chain, specifically in drone motors. Like, there are no small drone motor manufacturers in The United States. They're almost all made in China. And that feels like, oh, there's almost a startup idea there, but I don't know if it's a venture idea. There's actually a drone motor company in Washington.
Speaker 1:They outsourced some of their supply chain recently. That feels like almost like we need an American dynamism private equity fund to just turn those companies around. They're not gonna be these power law hundred billion dollar companies, but they might produce 20% returns more reliably, and there's maybe no venture style zero, you know, loss of capital risk. Do you think we need a, American dynamism for private equity? Is that something Andreessen would do at some point?
Speaker 1:I mean, you're you're kind of in every asset class now, so anything's possible. But is there is there a flip side to the venture model within invest investing in the national interest?
Speaker 7:Well, I certainly think we we've we've invested in some companies that are focused on component parts. Sure. We're, you know, we're invested in Amka. I know that Jay was on recently. So, like, there are more and more companies that are figuring out ways to do this.
Speaker 7: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? How do we how do we Yeah. 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 with some of these larger primes. Mhmm. 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 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 gonna build in the best way that that suits them.
Speaker 7:So Yeah.
Speaker 1:Does seem like there's almost like a way to turn something. Like, MP Materials, were talking about, like, you you wouldn't think like, oh, yeah. Venture is suitable for, like, mining at all. But, like, now there's a couple of mining companies that are figuring out how to inject enough technology to make it potentially a venture scale opportunity, which is interesting. Do you have anything else?
Speaker 1:I have a couple more.
Speaker 2:I got a I got a totally switching gears, but you had a post recently that I that I liked. It was I'm committed to doing whatever the opposite of gentle parenting is. And I wanted to ask you if you found any Lindy books on parenting, anything that sort of resonated that you're implementing. John and I, both have similar aged, children. And I always have this, you know, sort of concern around, you know, you want to experiment, you know, with with parenting and try new things and maybe not just take exactly what the mainstream media says is the right way to do parenting.
Speaker 2:But then, you know, your your children have one life, you know, you want to to not run, you're not trying to run AB tests, you know, on I have three
Speaker 1: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 know, if there's damage, they'll heal and that's fine.
Speaker 7:Great way to do it. Well, I followed up that tweet with the the tried and true Irish Irish strategy, which is the hey method. Yeah. You just shout hey and create a loud yeah. Hey.
Speaker 7:Hey. Hey.
Speaker 3:You know, it
Speaker 7:it works. Like, there's something to put for a day where where your sons actually turn around and listen to you. But but sadly, I know, there there aren't, like, any books, like old timey books that I found that that actually teach, I would say, the best way to to, you know, to to children or to to child reare. But, you know, it's it's interesting. I always think that grandmothers kind of know best.
Speaker 7:So if there's a grandmother in your life anywhere, 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. So it's like basically just ask grandma. Like, grandma I
Speaker 1:would plug I would plug free range kids all about this the like, our society has moved towards, like, don't let the kids just run around in the neighborhood. They could get kidnapped. There's so many bad things that could happen. There's been a lot of fear mongering from the media. And so that's kind of led to kids turning in in inside be becoming inside kids, staying on the iPads or whatever.
Speaker 1:But there's this movement in the free range 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.
Speaker 2:I need to find the rate repeat of parenting. Yeah. That's that's the next alpha. Yeah. My my problem with the grandma method is that my my mother and mother-in-law just wanna let the kids do exactly what they wanna do.
Speaker 2:You wanted two cookies?
Speaker 1:That's good. Great.
Speaker 2:You want three cookies? So maybe they're maybe they're right.
Speaker 3:Maybe that
Speaker 1:is Lindy.
Speaker 2:Who knows? Maybe it is Lindy.
Speaker 7:Mean, great. I'm the great grandmother. Right? Like the the one who remembers how tough it was. Yeah.
Speaker 2:That's right.
Speaker 1:I I wanna get your reaction to Warren Buffett. Obviously, he stepped down over the or or announced his transition at Berkshire Hathaway this weekend. What do you take away from Buffett's legacy as an investor? 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. What what was your reaction?
Speaker 7:Yeah. You know, I'll 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. 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. It was like, you know, I think I I think I cheered up seeing it because it was like he had he was so in his zone.
Speaker 7:Yeah. After so many years of working together, he had forgotten that that Charlie had passed. Yeah. And he's almost embarrassed about it, but I thought it was the most beautiful moment because I one of the things I don't think we talk enough about in venture world is founder friendship.
Speaker 1:Mhmm.
Speaker 7:And I mean, like, deep, deep friendship. Not like, oh, we went to college together, we were friends or whatever. We're gonna start a startup together. I mean, those people who, like, work together decades and decades out, I actually think this is why family businesses often work better where you even if you look at, the Collison brothers, it's
Speaker 3:like they've Yep.
Speaker 7: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, suffering with someone, understanding how to, like, you know, end someone's sentences that leads to these just incredibly rich and beautiful companies. And I think if, you know, if we did an analysis in Andreessen Horowitz and just looked at the companies that were true outliers, I think there would be stories of these people are like brothers brothers and sisters, and and Andrew is certainly this. Right? Like, it's you know, the the founders there were sharp a challenge together, like, their first day of college.
Speaker 7: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 with someone, and it's real, like, Aristotelian friendship, not like friendship, but true love. And and clearly, you saw that with them. It's it's just a remarkable thing how they were able to to kind of be true brothers and and kind of, you know, each other's better half throughout their business career for as long as they were.
Speaker 1:It's amazing. Last question, what should we do with Alcatraz?
Speaker 7:Oh, you know, I I love all I love all the ideas of turning it into a casino.
Speaker 1:I don't know. Haven't seen that one.
Speaker 2:Like that I saying I was saying tax haven and and and Yeah. No no general solicitation rules. You can like go out there
Speaker 1:Your quiet periods. Sell your angel Just unfettered libertarian capitalism out there.
Speaker 7:Oh, that that sounds good.
Speaker 3:But I
Speaker 7:but there is something about bringing it back in its original form. You know? It's like there is something about these buildings that that the the the president likes to restore into their former glory. And so if Alcatraz is the case, like, to keep the historical details accurate Sure. You can kind of see where it's coming from.
Speaker 7:He's he's definitely a historicist in that in that regard.
Speaker 1:Okay. Well, thank you so much for joining us. This was fantastic.
Speaker 2:Yeah. Was great.
Speaker 1:Come back on again Thanks
Speaker 3:for having me. Have a good one.
Speaker 2:We'll talk
Speaker 1:you soon.
Speaker 2:Bye. Cheers.
Speaker 1:That was fantastic. I hadn't heard the casino idea. She's clearly on a different part of x than I am.
Speaker 2:No, saw, I think I saw a little bit of that.
Speaker 1:Turn into casino?
Speaker 2:I was thinking if you made it a tax Yeah. Riverboat. Then you could just put casinos on True, true, Yeah.
Speaker 1:It should be completely lawful
Speaker 2:riverboat gambling.
Speaker 1:It needs to be either more lawful and become a prisoner or more lawless and become a gambling haven. It does have like that riverboat vibe of like, you know, being in the bayou hanging out on the riverboat gambling. It's kind of like international waters Yeah. Anything goes. Anyway, our next guest is here.
Speaker 1:Welcome to the stream. How are you doing? Do we have you? Hey.
Speaker 2:How you
Speaker 3:doing? Are you doing? Good to see you.
Speaker 1:We're doing great.
Speaker 2:Welcome to the show.
Speaker 1:Would you mind kicking it off with a little introduction for yourself yourself?
Speaker 3:Yeah. For sure. Hey hey, everyone. Aditya Agarwal here. I'm the managing partner here at Southpark Commons.
Speaker 1:Mhmm.
Speaker 3:I've been in the tech industry for about twenty years now. Kinda started off by meeting a very young 19 year old, Mark Zuckerberg, in, like, early two thousand and five when I just moved out here. Facebook was still working out of the famous house. Mhmm. And, you know, so kind of meeting a 19 year old Zuck at that point was pretty obvious.
Speaker 3:The dude was special. Yeah. How old were And then kind of that
Speaker 2:How old were you at that time?
Speaker 3:I was 22. Wow.
Speaker 2:Okay. So you were like, three years younger than me, but generational founder. I should probably join the company.
Speaker 1:That's great.
Speaker 3:You know, it's funny. It's like I I kinda joke that I love working for founders younger than myself Mhmm. Because I went for working for Zuck too. I then did my own company after Facebook, which then got acquired by Dropbox. So Dropbox's first acquisition.
Speaker 3:And then I was the CTO there working for a young Drew Houston and a young Raj Vadoshie.
Speaker 1:Wait. So did you recruit Guido van Rossum personally?
Speaker 3:Did. I did. I recruited GVR to come join Dropbox. Creative Python. Wow.
Speaker 1:Absolutely Yeah.
Speaker 3:It's interesting.
Speaker 1:The Benevolent Dictator for Life of Python. The most important programming language in modern history.
Speaker 3: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. Yeah. But most of our a bunch of our back end and front end was actually kind of, like, code gen using Python.
Speaker 1:Yeah.
Speaker 3:And Guido's 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 auspices was just legendary. And it's kind of amazing. It's kind of becoming the the programming language of choice for AI as well. Right?
Speaker 3:Kinda like most of the AI programming is actually done all in Python, which is pretty which is pretty crazy.
Speaker 2:Wild. Yeah. He's one
Speaker 1:of best to ever do it.
Speaker 2:Let's talk about let's talk about the news because it was hitting the timeline. I think it was Friday. Mhmm. Yeah. New fund three.
Speaker 2:Maybe talk about the genesis of the fund and, you know, the the series of funds to get where you guys are today.
Speaker 3:For sure. You know, happy to tell you about SPC fund three, that's South Park Commons fund three. But maybe I you know, instead of kind of telling you about the fund sequence, let's talk about why SPC exists.
Speaker 1:Yeah.
Speaker 3:Right? SPC was started in 2016 with the simple premise that, if you are a talented technologist, do not waste your life kind of stacking small ideas. Right? I'd say that there are two big mythologies that we've been trying to 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 the stroke of inspiration, going up at the top of a mountain, and then coming back to us with kind of the promised product.
Speaker 3:Right? Mhmm. It's a very it's framed as this, like, solitary 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?
Speaker 3:They come out of places like PayPal, which kind of, like, kinda show, like, you know, what greatness looks like, and then people go out and build things. They come out of, like, places like, you know, obviously, Facebook. Then we have had a bunch of companies out of Google, Xerox, Spark, obviously. You know? And we also see this greatness kind of occurring in clusters all across us.
Speaker 3:Like, we see it in, like, elite sports teams. We see it in elite kind of, like, musicians. We kinda see it in, like, essentially academia. So our take was that if you wanna start a company, why would you wanna go and kind of, like, ideate by yourself? Right?
Speaker 3:Instead, be surrounded by super high talent density. People who challenge you, like, you know, where interesting collisions of ideas can happen. And it's kind of a semi competitive collaborative setting. Right? You wanna be surrounded by the best people who are kinda challenging and pushing on your ideas.
Speaker 3: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? Mhmm. So that's our first mythology, which is that in order to start a company, you should be surrounded by great people. And the second one, which is maybe it's almost you know, it's it's more than a pet peeve for me, which is that they're the 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 of latch on to the first idea that they think of.
Speaker 3: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 wonder. Let your mind kind of, like, go lateral.
Speaker 3:Figure out, like it's unlikely that the first idea that you have is the best one, right, if you kinda just think about it from a probabilistic perspective. So our take at SPC is that come spend six, nine, twelve months with us wondering, ideating, exploring, tinkering, letting interesting ideas come about. And in some ways, everybody is so focused on scaling the mountain. We talk about hyperscaling. We talk about scaling the mountain that nobody stops to ask, like, is this the right fucking mountain?
Speaker 3:Like, is this the best mountain that you wanna go climb? Everest has, like, you know, 16 peaks over eight sorry. The the Everest Range has, like, 16 peaks over 8,000 meters. Like, which one are you gonna pick? Right?
Speaker 3:Like, that's a pretty good one. Right? So
Speaker 1:K 2 because it's the hardest.
Speaker 3:K 2 is the hardest.
Speaker 1:In the winter.
Speaker 3:Highest fatality rate by sure.
Speaker 1:Yeah. Yeah. Some founders just want the pain, and so they go K 2. North Face during the winter. Oh, yeah.
Speaker 1:What wait. Wait. Wait. Really quickly. What the the name, not South Park Capital, not South Park Ventures, South Park Commons, what's what does that mean?
Speaker 3:It it was a name that was actually chosen by our early members. Right? So our early members in circa 2016, '20 '17. The idea is that it is a meeting place of ideas. Right?
Speaker 3:Like, it's kind of formed by the commons, obviously, very famously out of London, but a place where a if the intellectual public can gather to kind of, like, you know, introduce ideas, kind of essentially debate ideas. Some of, you know, some of the folks that we were inspired by back in the day were ben Benjamin Franklin's Hundo Club. Right? We actually remain deeply inspired by that, which is it exists in a society to better each other to kind of, like, to towards greatness. So the idea was that SBC I mean, sure.
Speaker 3:We have 20 people on staff here. We have a bunch of investors. I think we are awesome. But, ultimately, a lot of, like, the value of SBC is being surrounded by great talent that can all kinda, like, push each other. So when you come back to the genesis of the fund, right, guys, like, in the early days, there was no fund.
Speaker 3:We framed ourselves as a learning community. We framed ourselves essentially as, like, an exploration society, kind of like a royal exploration society in the eighteen hundreds in The UK with the idea being that, like, being a founder is kind of being like an explorer in the early days. Right? You're trying to navigate the idea maze. You should be able to, like, you know, throw away, like, the bad ideas in pursuit of the great ones.
Speaker 3: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.
Speaker 3:We put people through multiple interviews, reference checks. So for instance, this people this year, 20,000 people plus will apply to be part of SPC across 250 spots across SF New York and Bangalore. So it's 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. You know?
Speaker 3: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. We would have GDB and Ilya walking around telling people about kind of what was happening in deep learning. 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?
Speaker 3: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. So, you know, we have always welcomed the people who are kind of, in some ways, pushing the boundary. And it 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. So as they started essentially starting companies, 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, investor network.
Speaker 3:But over time, we decided that, like, hey. Why don't we start a fund to invest in SPC companies? 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 have in South Park. Right? And that fund one was a $55,000,000 fund in 2018.
Speaker 3:That fund, has done phenomenally well. It's kind of going to be in the top 5% of its vintage of that year. On the back of on the backs of that there you go. Boom. Boom.
Speaker 3:Boom. Boom. Yeah. Is Set the money bell. Okay.
Speaker 3:There we go. Yeah. The size bell. And then on the backs of that, you know, we raised another fund in February in late twenty twenty one, which was a hundred and 35,000,000 fund. That fund is actually outpacing fund fund two is outpacing fund one.
Speaker 3:And on the backs of that, we have just raised fund three, which is the $275,000,000 fund to invest across across the globe, but also specifically The USA and India. And the model's scaling well. You know? Like, have Yeah.
Speaker 2:I'm curious. So so I wanna get into potentially some of the learnings, the broader learnings for companies. You talked a little bit about the sort of the unicorn factory, you know, companies come, they get, you know, 2 to $5,000,000, they announce their fundraise, 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 and speeds up and and, you know, hopefully you don't get thrown off of it. At some point, you can keep the pace up. But 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.
Speaker 2:If you pick an idea, 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. And I'm curious, you know, seeing so many of these companies go from zero to one and then I'm sure ultimately oftentimes, 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 early stages SPC, maybe pre idea or maybe they only have ideas of an idea to help them avoid that. You know, we saw, we had the founder of Cluly on a couple weeks ago, and he's had, you know, two, maybe three, four, five super viral moments around what he's doing. And my 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.
Speaker 2:Right? 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 Yeah. Not always Gift
Speaker 1:and a curse.
Speaker 2:It's a gift and a curse.
Speaker 3:Right? Double inch sword. Yeah. Mean, honest I mean, it's it's I think it's a well phrased question, and I think in insofar as the question also contains some of the answer. Right?
Speaker 3:My take is that, honestly, the cheapest time, the easiest time, to kinda do pathfinding and to do pivots is in the 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, five million dollars should be easy to raise. Right?
Speaker 3:Like, that should be your easiest raise. Right? In the sense of, like, you have you have you're kinda converging on an idea that is making people excited. 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?
Speaker 3:Like, if it's not working and put another way, here's something I often tell founders. Your first two million dollars of sales should be damn easy. Right? Like, I think that people often conflate that, like, I'm gonna go and do hand to hand combat to kinda go and get my first two million dollars of sales. I'm like, what are you talking about?
Speaker 3:Like, if you have a great idea, that first two five it should be easy. Right? People should be taking a product that is half baked because it's so resonant. 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?
Speaker 3:Yeah. Entrepreneurship, like any founder that you talk to that has gone on kind of a unicorn or a decagon journey, it is long. It is super painful. Right? 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.
Speaker 3:And I think that I mean, if you're gonna think about it, guys, it makes sense that a lot of trends, I think, at least in our industry, makes sense to me when viewed from the lens of, like, we are trying to push founders to start things as soon as possible. Right? 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 ten years, founders have shied away from a problem that doesn't immediately come into focus.
Speaker 3:Right? If you can't code, like, v one in, 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? 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. And, you know, whether you raise, like, a million dollars or $5,000,000, I I would urge, raising less.
Speaker 3: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 is just there.
Speaker 2:Yeah. How did you think about fund construction with the new fund? 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. Yep. 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 Yep.
Speaker 2:And and that kind of thing.
Speaker 3:Yeah. For sure. I mean, I'd say that the the first thing that we often talk about is that fund size is an in, is an output, not an input variable. Right? 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.
Speaker 3: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. We strongly believe in that our community is best facilitated when things feel intimate. Right? So this is why, like, you know, none of our, spaces in SF, New York, and Bangalore are more than, like, a 50 people. 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.
Speaker 3:Like, I personally work closely with, like, thirty, forty, 50 founders per year, and that's a 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 kinda back our way into a fund size from that. Frankly, you know, I think that right now, we are not constrained.
Speaker 3:The big the big thing that we are 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 wanna be part of SPC, I think we are humbled, I think, by the interest. It also kinda 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?
Speaker 3:Or how many, like, essentially people who have been early employees at, like, a Stripe or a scale join us. And I think it's because they see the I I think we're kinda spreading a philosophy, which is that if you want to play this repeated game of startups, right, and you wanna start companies, like, it's better to be surrounded in the early days by super high talent density. I think one of our goals at SPC has always been that startups are hard, but startups create a lot of value. Let us figure out a way to kind of, like, actually make them more net productive for everyone. So I think that the minus one philosophy is resonate is resonating.
Speaker 3: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? Mhmm. And we're starting to see a bunch of, I would say, folks who have similar philosophy.
Speaker 3:Like, minus one, I think, has entered the vernacular now, which makes me really proud. So, yeah, one size is an output. I actually think we can serve a lot more people as we figure out ourselves how to scale. But more than that, you know, like, minus one is kind of a big thing. It's kind of a big philosophy that makes me proud to be able to share with the world.
Speaker 3:Totally.
Speaker 2:I I would love for you to talk about that and and how it's been. It makes a lot of sense. I think one of the biggest complaints people have about different fitness trackers is the the the data is not always consistent. Right? Know Correct.
Speaker 2:Your your whoop might tell you a different, tell you you're walking more than your Yep. Oura Ring or or Push up. Or whatnot. 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
Speaker 3:sense. And,
Speaker 2:you know, just just the nature of, you know, bundling and and unbundling. But talk about maybe the genesis there and and how it's been going.
Speaker 3:For sure. You know, I think probably, like, a bunch of us six years ago, kind of when COVID first kind of, like, the lockdowns and stuff started, decided to channel a lot of my pent up energy into kind of just, like, going full beast mode on my health, you know, like, basically analyzing everything, like sleep, fitness, nutrition, body metrics, everything. 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. It's kinda stored in a combination of Excel, sorry, like Google Sheets and Airtable. Yeah.
Speaker 3:And I think everything that you said, like, you know, I would collect data from three different sources. Right? I would collect data from my Oura Ring. I also had an early Fitbit, 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.
Speaker 3:I would also collect a bunch of qualitative data about my own kind of, like, I would say, experience. Yep. So when I was talking to Ben and Gray who were at SBC, you know, they were also essentially going through similar journeys. They've kind of been through a little bit of the ringer in terms of their first startup. And if you were talking about what we wanted out of essentially, like, a health app, a lot of what we were saying is that, essentially, number one, all of these health devices at this point were kind of, like, offering you, a dashboard of your data, but nothing was really tying it together.
Speaker 3:I mean, Apple Health is fine. Right? Like, it's not a bad product, but it's a little busy, and it's kind of, like, very specific to that ecosystem. So our take was that how do we kinda 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.
Speaker 3:It's also your Eight Sleep mattress. It's also like you know, 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.
Speaker 3:How do we get all of this into the into a one place that essentially oh, is that a Eight Sleep? There we go. Amazing. Yeah. That that that's a great product.
Speaker 3:Right? Like, Eight Sleep.
Speaker 2:Yes.
Speaker 3:But Eight Sleep gives you a nightly sleep score as does your Oura Ring, maybe if you wear your watch. So, like, how do we make sense of all of this data into a clean, consistent place? Right? And it's, I mean, it was a simple proposition. It was one of those classic things.
Speaker 3:Let's just build what we want. Yeah. And Ben and Gray are just world class kind of builders and designers. So they just built something that was beautiful. It was easy to use.
Speaker 3:And we put it out there, and it's just been all kind of, like, crazy organic demand. You know, we're not diverging too many numbers, but, you know, we are definitely kind of the, the number of users and kind of paid subs. It's just kind of blown us away. We've kind of been on a tear for the last four, you know, last like six months.
Speaker 2:Well, there's there's this I there's this idea that 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. But in hindsight was like, I think a terrible use of funds. But it was like, it it was like a series of I think it was like $6 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 gonna make me is performance.
Speaker 2:Yeah. If I'm gonna feel like, you know, 5% more energized during the day, it's totally worth it. But Yeah.
Speaker 1:It's a great market.
Speaker 2:That's cool. I'm curious. Last thing, because I know we have a cutoff here and there's probably a founder you need to chat to chat with. What are you seeing today at a high level? You guys have a unique insight into the sort of trends and categories that will be probably hot in a year, and you're probably making those investments now.
Speaker 2:You know, I'm sure a lot of the obvious stuff, you know, agents, MPC, that that kind of thing. But what what what's what's getting Yeah. A lot of
Speaker 3:your attention. Probably two areas that I would highlight, and may maybe this is I 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 building actual robotics, like hardware to kind of building robotics, kind of, I would say, middleware kind of like think, like, you know, end to end stacks for coding on robots, then obviously robotics foundation models. It's it's it's hard to say whether it will all translate into usable products over the next three or four years.
Speaker 3:But over a ten year horizon, I think that the energy is just substantial, much more so than I've ever seen in my career. 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 kinda, like, throw more compute at it, throw more data at it. But I it's surprising to me that a lot of people don't actually take a step back and realize there are lots of smart researchers out there who are building the next generation of algorithmic changes to these models. So there are lots of really interesting, both, I would say, variants, but also novel takes on, for instance, what would a pure RL based 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 around building the next generation of foundation models.
Speaker 3: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 gonna see on top of these core LLM capabilities.
Speaker 2:Yeah. It makes total sense. I mean
Speaker 1:I can't assume we're at the end of history and all the future algorithmic progress
Speaker 3:It's so crazy. Right? Like, everybody assumes that, like, it's just gonna pause and then we're gonna scale it up. And I'm just like, no. No.
Speaker 3:No. There's a ton of, like, energy around core innovation around the algorithms.
Speaker 1:That's very interesting. Yeah.
Speaker 2:Makes a lot of sense. Good to Well, I know we've already had some of your founders on, but let's make sure to get more on and thank you for coming on and and telling the story and congrats on the new fund.
Speaker 1:Amazing. Thank
Speaker 3:you so much. Appreciate it.
Speaker 1:Cheers. Congrats.
Speaker 2:Have a good one.
Speaker 1:Should we rip through some timeline? Get out of here.
Speaker 2:Let's do it.
Speaker 1:Start a little bit late. We'll get It's timeline time. Hours. It's timeline. Play some sound effects.
Speaker 1:I've been missing that sound effect.
Speaker 2:It's so great. I mean last week was That's not even
Speaker 1:the main one. That's the different one. I want the Ashton Hall. No, not that one. The Ashton Hall.
Speaker 1:The Ashton Hall.
Speaker 3:You know
Speaker 1:the one I'm talking about. This is the one. This gets me so fired up. I love this one. Anyway, Morgan Housel, friend of the show, put a random Thread Boy in the truth zone.
Speaker 1:Aaron Richards writes, in 2020, Morgan Housel published his best selling book, The Psychology of Money. It sold 4,000,000 copies and changed the way we think about money. Now he's predicting the collapse of America. Here's everything you need to know. Beautiful photos from diary of a CEO, and Morgan Housel comes in and says, Lowell, I am a 1000% not predicting the collapse of America.
Speaker 1:Double kill. Double kill community note and the actual author of the book telling you that you're wrong.
Speaker 2:Yeah. Absolutely wild Try For
Speaker 1:Step it up on x, Aaron That
Speaker 2:should be the takeover.
Speaker 4:You're
Speaker 1:on notice. The next slop thread you post better be factual.
Speaker 2:What's Morgan Housel's, Art of Spending Money is his next book.
Speaker 1:Oh, I like am
Speaker 2:so excited about it because It's very interesting.
Speaker 1:Yeah, got to him on more regular. It was such a fun conversation when we had him on.
Speaker 2:Yeah, absolutely brilliant.
Speaker 1:That'll be great.
Speaker 2:Thank her.
Speaker 1:Anyway, we wanna take a second to tell you about Vanta, automate compliance, manage risk, and prove trust continuously. Vanta's trust management platform takes the manual work out of your security and compliance process and replaces it with continuous automation, whether you're pursuing your first framework or managing a complex program.
Speaker 2:Go sign up for Vanta. I've used them across multiple companies, and I am excited to be working with them now at TBPN.
Speaker 1:We gotta get Waymo on Vanta. I'm sure that there's a lot of compliance with a business like that.
Speaker 2:I'm sure they're already on Vanta. Probably yeah. Well, let's fact check that one.
Speaker 1:Next post is from Jane Wong. She says this Waymo almost t boned a cyclist blowing through a red light at an intersection in San Francisco. Who's in the wrong here? Why isn't the robotaxing yielding to some yielding to someone who always has the right of way anywhere and everywhere at all times? But what's interesting is that a lot of people were looking at this and being like, this is incredible performance by the way, Moe.
Speaker 1:Like, it it stopped, and and the and the biker kinda came out of nowhere. But Christian Kyle is putting his, you know, the bet, his dollars on the gambling table. I don't know what what analogy I'm using here. But he, he says prediction in 2040, it will be illegal for humans to drive cars. What do you think?
Speaker 1:Think that's day that's gonna come. Illegal though? That's gonna be hard.
Speaker 2:I think it will be frowned upon.
Speaker 1:Frowned upon.
Speaker 2:Yeah. I mean I do, it is funny as a
Speaker 1:hard It's illegal to ride horses.
Speaker 2:Yeah, true. But it's frowned upon to, it's one of those things, right? So, so it's technically I think legal on most roadways to just ride a bike, right? Yeah. Maybe, maybe not on a freeway.
Speaker 2:But it's frowned upon if you're in like, you know, 45, like if you're like expressing your right to cycle in like a
Speaker 1:In the middle of a Right,
Speaker 2:a one lane highway and you're like riding in Yeah, yeah. It's kind of I can see it being like that. I mean, I do think it will become at some point just so objectively clear that it is dangerous for humans to drive
Speaker 1:Yeah.
Speaker 2:That there could be plenty of pressure at least in some in some areas.
Speaker 1:I think I think Waymo's very underrated. Horses also underrated. First off, let's go through the stats. One horsepower. Not bad.
Speaker 1:It's pretty good. I was thinking about One horsepower. The most jacked horse, probably two horsepower.
Speaker 2:Yeah, yeah. Maybe you're say
Speaker 1:two horsepower. I was
Speaker 2:gonna say how do you rank? There was journalism was racing on Saturday Yes. Against Big horse weekend. Who who were they racing against? Sovereignty.
Speaker 2:Sovereignty.
Speaker 1:Sovereignty won.
Speaker 2:Sovereignty mogs journalism Yep. But but yeah, I was thinking about this is is journalism really one horsepower? Is that the right way to think about it? Or is journalism also getting up into the three or four range?
Speaker 1:Totally possible. Also Henry Ford famously said, if I asked people, would have said a faster horse. What's wrong with a faster horse? If we've been spending the last, if instead of the Ford Motor Company, was the Ford Horse Performance Enhancing Drug Company, we could have horses up in the 20 horsepower, 200 horsepower.
Speaker 2:Easily, easily. Who knows?
Speaker 1:Get them in right cocktail gear,
Speaker 2:here's what's This should be our investment strategy for day that humans get banned from driving cars on roads. Go and buy all these legacy racetracks that haven't really been as, you you can go and do a track day all over It's popular in some circles. But I think if humans were banned from driving
Speaker 1:For sure, going to hit the track a lot more.
Speaker 2:They're going to hit the track way It's going to become the new round of golf.
Speaker 1:There's actually some track in California that just got bought out by a new investment firm and they're gonna modernize it, build like a hotel on it and build like a paddock so you can store your cars there, do all these different things. It turned into more of a
Speaker 2:Was it button willow or
Speaker 1:I think it might be. That might be right. It was up for sale and it wasn't that expensive.
Speaker 2:You know about Thermal Club
Speaker 1:in Loosely but tell the audience.
Speaker 2:I mean, I don't think it's been an amazing business.
Speaker 1:Not yet.
Speaker 2:So It didn't work
Speaker 1:for them but maybe it would work for us.
Speaker 2:But yeah, no, it's basically they built a track and then they built a lot of houses that are specifically designed for car enthusiasts. They have transparent
Speaker 1:So you drive in and out.
Speaker 2:Yeah, they have transparent flooring so you can look down
Speaker 1:and see And your cars, that's great. Yeah. Yeah, love also hackathon project, self driving horse. Totally doable. Think about it.
Speaker 1:Horse, you just need to put a compass GPS. You literally strap a phone to the horse and then in one tiny servo motor moves the reins to the left or the right. You can steer to the horse and little motors goes kick and the horse goes. And all of
Speaker 2:the tough parts
Speaker 1:about like the horse. Yeah. Yeah. Yeah. Yeah.
Speaker 1:Yeah. The crop, the riding crop, you could easily automate that. But the hardest part about, you know, Waymo is like the fine motor, like, oh, slight object detection. You wanna scrape, you wanna look out. A horse isn't just gonna run into a bicyclist.
Speaker 1:Horse is gonna see that and, you know, stop immediately.
Speaker 2:Yeah. Have to do 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.
Speaker 1:You basically have an end to end neural network running in the horse's brain already. It's probably like GPT three level. Yeah. Give it some credit. Be frontier.
Speaker 1:Could be frontier. Horses were often on the Horses have been on the frontier. They remain on the frontier. They're frontier models. They're frontier models in the horses' side.
Speaker 2:I think we're getting somewhere.
Speaker 1:I really do think you could train your horse to just learn your commute and just say, hey, take me to work. I'm gonna take phone calls.
Speaker 2:I mean, people were doing that for thousands of years.
Speaker 1:It's so Lindy. Let's bring it back.
Speaker 2:Let's bring it back.
Speaker 1:I'm gonna daily a horse.
Speaker 2:I'm gonna daily a horse.
Speaker 1:One horsepower maybe. One horse. One horsepower. Oh, it's so good. Anyway, what should we do, Sam?
Speaker 1:Lesson data is oil? We should just have him on the show at some point and talk about it.
Speaker 2:Yeah. Let's let's have him on the show to
Speaker 1:discuss it He's he's yapping too much on here. Want him to just read it to me. I don't
Speaker 2:want to Yeah. Come on and read
Speaker 1:it to me. I don't want to read your post. I want you to read it to me.
Speaker 2:Well, know what Sam Lesson loves? Ads. Ads. He likes billboards.
Speaker 1:He loves billboards.
Speaker 2:And to be honest, Lesson is gonna love when people pivot from American dynamism back to ad optimization.
Speaker 1:He's gonna be excited about that.
Speaker 2:He's gonna be ready to fund Yep. Fund them all. Yes. But head over to AdQuick. Out of home advertising made easy and measurable.
Speaker 2:Say goodbye to the headaches of out of home advertising. Only AdQuick combines technology, out of home expertise, and data to enable efficient, seamless ad buying across the globe.
Speaker 1:Get on Edquick dot com. Just do it. Gary Tan had a funny early Palantir story. He said they were doing some of their first sales meetings for Palantir, and team was all under 25 years old at the time. They were staying at the Mandarin Oriental.
Speaker 1:We said, hey, this is a startup. Why are we wasting money on this? Alex Karp said, the people you're selling to will ask where you are staying. And we aren't selling Motel six software. We are selling Mandarin Oriental software.
Speaker 2:That's a great line.
Speaker 1:It's great. Apparently Joe Austell said he was responsible for this.
Speaker 2:A lot of people are going to take this the wrong way go and stay at the Amman. There's also, you know, probably other ways to accomplish this.
Speaker 1:We're selling Alon Giri sports betting. Podcast. Micro transaction riddled mobile app games.
Speaker 2:Yes.
Speaker 1:Something like that. Mobile games.
Speaker 2:Love this post from If we can't do trains, we should at least do a big autonomous pod network on a special guardrail, the 150 mile an hour lane with cars the size of gorgeous sleeper carriages
Speaker 1:Love it.
Speaker 2:Which link up in giant change with elegant bars and restaurants on long haul drives across the country.
Speaker 1:This is so doable and so beautiful. I love it. I've been big on the tear down the speed limits. I firmly believe this is much easier than building new high speed rail is just take down the speed limit signs and just have an American Autobahn and then put it in its incumbent on the individual to drive safely. Cars are getting way safer.
Speaker 1:They have autopilot now and lane keep assist. So if you're on a long drive and you can get a car that goes 150 miles an hour for like 50 ks, right? Yeah. Like plenty of cars have go way up demot their tires.
Speaker 2:Yeah. Going super fast.
Speaker 1:Get like an five AMG and you're good and you're just cruising. And it will actually cut the travel time in half. You can drive twice as fast.
Speaker 2:That's a lot times to get better brakes though.
Speaker 1:Yeah, they do. But I think because anytime you see Speeder AMJs are where it's at.
Speaker 2:These days, anytime you see a car driving double the speed limit in traffic, it's always a model three. Like bro, you know the brakes aren't
Speaker 1:that good. But going to Mammoth from LA and an E63, like a S 63, just bombing
Speaker 2:Can't beat it.
Speaker 1:160, you get there twice as fast.
Speaker 2:That's a drive that
Speaker 1:And it doesn't require
Speaker 2:a drive that people That's a drive that people have been known to get there in 60% of the time that Apple maps, you know, sets.
Speaker 1:I mean, takes a lot to build something new in America. 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 Autobahn. Pretty
Speaker 2:easy. So good.
Speaker 6:Pretty easy.
Speaker 2:Here was the post you were referencing earlier. Yeah. Wasteland Capital says, it's still amazing that Buffett's crowning achievement was simply buying Apple sixteen when Apple was already the largest company in the world by market cap. Wow. So true.
Speaker 2:And just adding and holding on to it. So good.
Speaker 1:Amazing. So Berkshire with Apple, hundred and seventy four percent. The S and P did a 68%. But without Apple, they would have been at one forty two versus the S and P's one sixty eight. But, again, people were saying like, is it really fair to consider that because, you know, Apple's in the S and P?
Speaker 1:So the S and P would be lower as well. But, anyway, still just like a good pick. You know, he wasn't too dogmatic about like, Oh, I'm just a silver investor. Like I'm just
Speaker 2:I mean, a long time he was not anti tech, but he just didn't fully understand it. Yep. And then
Speaker 1:realized But at this point, figured it out.
Speaker 2:They're selling candy in hardware form. I like this.
Speaker 1:I like it. Candy Crush.
Speaker 2:Device for Candy Crush.
Speaker 1:The seas candy of mobile devices.
Speaker 2:Yep.
Speaker 1:It's
Speaker 2:great. Is funny. This is a funny post for a few reasons. It is by Unemployed Capital Allocator.
Speaker 1:Yeah. It is funny.
Speaker 2:And it's a screenshot. Unemployed Capital Allocator says, from a friend, a capable analyst, the chasm has been crossed. O three is significantly better than I at my job in almost every aspect. Brutal, but not surprised. So your job is to just analyze a thousand times more companies.
Speaker 2:Yeah. And then you'll be fine.
Speaker 1:Scale it up.
Speaker 2:Scale it up.
Speaker 1:Just do more queries than everyone else. Yeah. I guess. I don't know.
Speaker 2:I mean, was interesting. I had this up earlier and it didn't get into the stack, but I'll pull it up now.
Speaker 1:Is it really that much different than just being like, yeah, Google is like, mean, were people that were cells in individual spreadsheets calculating all day long. Excel is, you know, significantly better than, you know, somebody whose job was just to crunch numbers all day long. And we moved forward. We did more work. We found more capital to allocate, more things to analyze.
Speaker 2:Yeah. Yeah, it's funny being like Excel is so much better at multiplication.
Speaker 1:I kept trying to put this to the AI people that would say like, yeah, there's going to be serious unemployment because of AI. Okay, let's actually quantize this. Let's say over under American unemployment by twenty twenty, thirty is you think it'll be over or under 10%. Like, we've been above 10% before. It's not that crazy.
Speaker 2:China is up like 20%?
Speaker 1:Yeah. But America's always been like routinely at like three and four. And so the question of, you know, will we actually see unemployment? Still an open question in my opinion. Lots of people talking about, oh, I'm gonna stop hiring, but we're not really seeing it in the data.
Speaker 2:Yeah, China still has urban youth unemployment at 16.5%. Yeah. Who knows how accurate that is? Pull this post up Michael, I thought it was relevant to the last one. This is from the CEO of Fiverr.
Speaker 3:Okay, yeah.
Speaker 2:You know, you have to imagine he knew this was gonna leak. I think Yep. Anytime a CEO sends a company wide email that's dramatic, they're probably expecting it to leak. He says, hey team, I've always believed in radical candor and despise those who sugar coat reality to avoid stating the unpleasant truth. The very basis for radical candor is care.
Speaker 2: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. So here's the unpleasant truth. AI is coming for your job. Heck, it's coming for my job too. This is a wake up call.
Speaker 2: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. Didn't didn't mention podcasters, so you must
Speaker 1:understand He's talking about people that work at Fiverr.
Speaker 2:No, he's talking to corporate, if I You must understand that what was once considered easy tasks will not, this is the part that's interesting. What was once considered easy tasks will no longer exist. What was considered hard tasks will be the new easy, and what was considered impossible tasks will be the new hard. If you do not become an exceptional talent at what you do, a master, you will face the need for career change in a matter of months. I'm not trying to scare you.
Speaker 2:I'm not talking about your job at Fiverr. I'm talking about your ability to stay in your profession in the industry.
Speaker 1:Everyone's been saying this. Yeah. Mean We've seen like three CEOs at this point.
Speaker 2:People say, know
Speaker 1:AI first organization.
Speaker 2:The part that's interesting here is digging into easy tasks will no longer exist. Mhmm. So if you're a marketing manager and the CMO is like, hey, we should put up a blog post about this regulation. You should That should now be done instantly. Five minutes.
Speaker 2:Yeah, instantly it's not sort of a painful research and writing process.
Speaker 1:It's just
Speaker 2:sort of done for you. Hard tasks will be the new easy in that, hey, why don't you generate
Speaker 1:What should our strategy ads. Right? What should our strategy be?
Speaker 2:And then impossible tasks, think, are these more agentic sort of mile, you know, sort of milestone based tasks. But overall it's interesting. I'm gonna pull up the Fiverr. Fiverr is one of those companies that people identify as a company in trouble just given that a lot of their work is lower skilled Sort of
Speaker 1:A lot of it was like a little illustration, little cartoon or Yeah. Little blog post and that type Record
Speaker 2:a sound bite. Yeah. Record a size gong. Gong.
Speaker 1:Hilariously human in the loop for that one. I think that's Ben's voice, right?
Speaker 2:Yeah. Yeah. Ben is our fiver. That's Ben, he's like
Speaker 1:No. No. No. Not even a fiver job. It's not an AI job.
Speaker 1:It's not a fiver job. It's a full time employee job. Yeah. I know. That too
Speaker 2:you But Ben's like, Ben's like, AI, you're not taking my job. I'm making every sound bite.
Speaker 1:We tried to use AI for it and his voice was way better, still.
Speaker 2:Ben's built different.
Speaker 1:He built different,
Speaker 6:yeah.
Speaker 2:Advice I always give to founders, be present. Building a startup is very hard. You just wanna hide, it's also an incredible ride. Working with and meeting great people, 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, we only get to do this once.
Speaker 1:Take pictures.
Speaker 2:Take pictures. Look around.
Speaker 1:Yeah. Once if we're lucky, twice if we're good. Interesting. Be present. Don't know what the what is the opposite of that?
Speaker 1:Like, how are you I I guess sometimes you want you just want to hide. What does that mean? Hiding from the organization? Hiding from the world while you're building something?
Speaker 6:I don't know.
Speaker 2:I think
Speaker 3:it's one of those ideas
Speaker 2:that being part of So this is what?
Speaker 1:I'm not very into like meditation or anything like that.
Speaker 2:That's because
Speaker 1:Always on.
Speaker 2:You're always on. 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. So you're just built different. But I think this is one of those things founders, you know, go through these periods of excitement and euphoria and then pain. Yeah.
Speaker 2:And that pain is usually like the classic is, you know, you have an idea, you raise some money, you launch, it's euphoric. Yeah. And then you realize, oh yeah, you know, the reward for hard work is more hard work. Yep. And even if you're, you know, even if you're, you know, Jensen Wong
Speaker 3:Yeah.
Speaker 2:The the job is only getting Speaking
Speaker 1:of Every
Speaker 2:single day.
Speaker 1:She met Jensen, asked what brand his jacket is, told me, Ferragamo.
Speaker 2:There we go. I'm not surprised.
Speaker 1:But you know what's equally exciting and what was the word euphoric? Euphoric. Buying a watch on Oh, I was gonna
Speaker 4:say. Was
Speaker 3:gonna say.
Speaker 1:We missed Bezel. Was gonna say.
Speaker 2:Go to
Speaker 1:getbezel.com. Buy a watch. Anyway Do it. We we can move on because we can also talk about numeral which is also euphoric. Sales tax on autopilot.
Speaker 2:Sales tax on autopilot. Many
Speaker 1:people will have I mean, really will allow you to have more time to be present as a founder. Yeah. If getting sucked into sales tax compliance, you're not gonna be present growing.
Speaker 3:Yeah.
Speaker 1:Experiencing If you're
Speaker 2:spending less than five minutes per month on sales tax compliance, I mean, that's That's plenty of time to Hours back. Yeah. That you can be present and just in the moment. Exactly. Full Rick Rubin mode.
Speaker 2:Vibe Vibing. Vibing.
Speaker 1:Vibe entrepreneurship. What else is there? Some deep analysis of Grok three. Do you see this? It's like, they're doing deep deeper searching Grok three, and one of the one of the steps that it takes is searching posts by Elon Musk, the information I am looking for.
Speaker 1:Just seeing like, hey. Has Elon said anything about this? Let's throw that in the results. I mean, does post a lot. I mean, whatever he's posting is probably relevant.
Speaker 2:It's a good way to find find tune in the model.
Speaker 1:Yeah. On your But it's On
Speaker 2:your CEO's page.
Speaker 1:Even hiding it. Very silly. Anyway, what else should we talk about?
Speaker 2:Thought this post from This
Speaker 1:is the news.
Speaker 2:Kari was quoting Oh, Didi.
Speaker 1:Founder of Linear.
Speaker 2:Didi says every single one of these companies was started by people from one part of the world and it's Klarna, Cursor, Databricks, Zendesk Spotify. Linear. Public.com also.
Speaker 1:Oh yeah.
Speaker 2:That's right. Scandinavia. Unity.
Speaker 1:The Nordics.
Speaker 2:Built different.
Speaker 1:Very
Speaker 2:interesting. And of course, linear.
Speaker 1:You think it's the weather? Because it's Makes
Speaker 2:you want to go
Speaker 1:inside and similar government as the Southern states, you know, Italy and Spain and Greece. But once you're on the French Riviera, no time to grind. You're chilling.
Speaker 2:Yeah. It's tough.
Speaker 1:You're chilling. If you're in the Greek Islands, you're
Speaker 2:not Yeah.
Speaker 1:You're not putting in twenty hour days coding.
Speaker 2:That's the that's why SF just stays on top. It's not because OpenAI, you know, created a next trillion dollar It's so, at times like the fog makes it so hard to want to be outdoors that you just want to create shareholder value.
Speaker 1: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.
Speaker 2:And Portland would become the
Speaker 1:Then you have stuff.
Speaker 2:Imagine if AI was being built in Portland primarily. The the the AI safety people just
Speaker 1:Oh, are you talking about the artificial intelligence company of Portland?
Speaker 2:Huge alpha there. The safest AGI on earth. This post praying for exits, a friend of the show. We should meet him. We should meet him.
Speaker 2:Should have him on the show sometime. Actually, honestly I feel like we can go out on enough of a limb and say it's possible Praying for Exits has been on the show.
Speaker 1:It's entirely possible.
Speaker 2:We've had so many guests, it'd still be very hard to nail down. It's entirely possible. This email from Steve Jobs to Bruce, is Chizen, who is the CEO of Adobe at the time. Bruce, Adobe is recruiting from Apple. They have hired one person already and are calling lots more.
Speaker 2:I have a standing policy with our recruiters that we don't recruit from Adobe. It seems you have a different policy. One of us must change our policy. Let me know who. Steve?
Speaker 2:That's so good. So hard.
Speaker 1:64,000 likes. Prank for exits. Let's get it. Giga Gigabanger. No,
Speaker 2:so apparently there was a whole lawsuit surrounding this around how
Speaker 1:Yeah, illegal. Companies doing this.
Speaker 2:It's anti competitive.
Speaker 1:Totally anti competitive. Yeah, you're not supposed to do that.
Speaker 2:And yeah, it's good for employees, I guess if you try to recruit people If it's a free market and say, hey, you're making a million dollars at Apple, how would you like to make $2,000,000?
Speaker 1:At Adobe and then it's a bidding process, yeah.
Speaker 6:But Oh, wow.
Speaker 2:We have this policy with other podcasts so We do.
Speaker 1:Yeah, so sue us or don't. Alex Stapp has a story about Universal Anti Venom. You told me about this. I didn't understand this. So break it down.
Speaker 2:So universal antivenom may grow out of man who lets snakes bite him
Speaker 1:two hundred He move out of
Speaker 2:snakes. I hate snakes. I'm Indian. You had a
Speaker 1:I truly hate snakes.
Speaker 2:You had a snake interaction recently that we won't go months ago. It's gross. Scientists identified antibodies that neutralize the poison in whole or in part from the bites of cobras, mambas and other deadly species.
Speaker 1:He's 57. Over eighteen years, he injected himself with more than 650 carefully calibrated escalating doses of venom. Oh, okay. So he didn't actually let them wait. No.
Speaker 1: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. It's a, yeah, I built the tolerance. This is poison resist.
Speaker 3:Yeah.
Speaker 1:Is is what takes you in this weekend. Everyone, yeah, you just, too much of a thoroughbred. You're on the thoroughbred diet. If you're on the junkyard dog diet, nothing could, I have poison resist for everything. Microplastics unaffected.
Speaker 2:You always I really, John's had this running joke on the show for those that haven't heard that like a single inorganic blueberry
Speaker 1:would would Cause you to have
Speaker 2:Be sick and
Speaker 1:Yeah.
Speaker 2:You know, throw up and and all this stuff. And then over this weekend, I got food poisoning.
Speaker 3:And no one
Speaker 2:else did.
Speaker 4:And no
Speaker 2:one else did. Yeah. Except Sarah Yeah.
Speaker 1:Who's also on the Also On the thoroughbred diet.
Speaker 2:On the thoroughbred diet. Honestly, there's something there's something there.
Speaker 1:You need to build your poison resist, man.
Speaker 2:Yesterday was so And
Speaker 1:like, we were eating like lovely food, but there's probably something there that you weren't used to.
Speaker 2:Got me.
Speaker 1:Ridiculous.
Speaker 2:Gnarly.
Speaker 1:This bit of daredevilry, one name for it, may now help solve a global dire health problem. More than 600 species of venomous snakes roam the earth, biting as many two point seven million people, killing about a hundred and twenty thousand people and maiming four hundred thousand others. The numbers thought to be vast underestimates. Brutal. Yeah, so anyways, guys'
Speaker 2:blood scientists have discovered antibodies that are capable of neutralizing the venom of multiple snake species. So anyways, major sacrifice still kicking 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 gonna meet, never gonna talk to you, never gonna see probably. And I hope he's monetizing this. That's all. He went, he really went through the ringer.
Speaker 2:But it sounds like he enjoyed it. Bit of a masochist.
Speaker 1:Well, let's go on to Harvard. Their tax exempt status is to be revoked, says Trump. And, Sheil, a good friend of the show, says wild. Impact on our world, hearing from multiple funds currently raising that universities have paused allocations. I had some ideas for how Harvard could get back in the good graces of the Trump administration.
Speaker 1:Do you have any takes? I think step one is Harvard needs to prove that they're on the side of Trump. They need to add division one bodybuilding. Absolutely. You know, they're known for they have a football team, they have crew.
Speaker 1:Everyone knows, oh, Harvard crew team, what's it called? The something on the Charles, head of the Charles, it's really fancy crew race. But if they get into bodybuilding, I think that would be a big step forward. They should also get into pro wrestling at the collegiate level.
Speaker 3:Yeah.
Speaker 1:We've seen was a big one. NCAA pro wrestling. Yep. But, you know, Trump has been in many WrestleManias. Yep.
Speaker 1:And if you could go full scholarship to Harvard a wrestler. Wrestling. Not the typical wrestling, but
Speaker 2:the
Speaker 1:pro wrestling specifically. I think that'd be a big step up. Yep. Anything else that they could do? Think if they go for profit, it might actually wind up, maybe they don't allocate, maybe they become, they build a high frequency trading option.
Speaker 1:Like start prop trading their own endowment. Why are they outsourcing? I'm sure
Speaker 2:they're pretty close to that already.
Speaker 1:They should just start leading series A's. Yeah. Just directly. Just direct. Right?
Speaker 3:Yeah.
Speaker 2:Yeah. I mean, is interesting. One, Bucky 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 platforms, the funds they're in it with for the long haul, they're they're making commitments multiple funds out. Mhmm. And so this is primarily, I I doubt they're reneging on Yeah.
Speaker 2:Existing commitments and capital So don't worry, Lightspeed, a 16 z, General Catalyst will will be okay. You don't have to worry. Yeah. We're gonna make it through this.
Speaker 1:Mark Gurman had some news. Apple is teaming up with Anthropic on a new AI powered vibe coding platform and is rolling it out internally to employees. It could come to third party developers in the future. Details and what this means. Interesting, makes a ton of sense.
Speaker 1:I don't know how familiar you are with iOS development, but most of it happens within Xcode, which is not open source. It's not forkable like Versus Code. And so 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 And so to just not have a cursor competitor or a vibe coding option in that software is like really antiquated. It's always been a harder IDE to use, but it makes a ton of sense that they would team up with someone for this. Anthropic, probably a good pick.
Speaker 1:So we'll
Speaker 2:see. Yeah. It makes a lot of sense.
Speaker 1:And there was other news. Claude is known as one of the best when it comes to programming. Daria One says Nick Apple is partnering with Anthropic. Very interesting. I wonder what the structure of that deal will be because most of like like, you don't think of Xcode as having, like, a consumption based pricing.
Speaker 1:It's something that just comes preinstalled with a Mac.
Speaker 3:Look.
Speaker 2:Apple's golden goose. The app store is getting cooked right now. And I would not, you know, I I can imagine that Apple will find to make and Anthropic will find a way to make plenty of money.
Speaker 1:I mean in the similar vibe coding world, the CEO of Windsurf went
Speaker 2:on the white comedy podcast. You think about it though, like I'm sure that I don't believe that Apple Anthropic vibe coding, know, Xcode platform can make up for that what what may end up being a massive drop in app store revenue. But it it is pretty funny to think about, you know, it's like, okay, like, hey, developers, you're not gonna give us our, you know, 30% cut.
Speaker 1:No. We're gonna hang the cap here.
Speaker 2:We're gonna charge you, you know, you can use regular Xcode, but if you wanna use AI to code, it's
Speaker 1:gonna cost you a hundred thousand dollars a month. Yeah. That's great. Well, Windsurf CEO went on the
Speaker 2:Spotted.
Speaker 1:Spotted in two polos. Sam enjoyed the the fashion. I thought that was a fun little Easter egg in his podcast experience.
Speaker 2:I mean, I don't know I don't know any any details, but I have to imagine that's the kind of move you make when you're very close to closing or or
Speaker 1:I think so.
Speaker 2:Or a done deal. That doesn't it doesn't seem like a YOLO move. Yeah. You know, if if a deal were to not go through, I don't think the double polo is gonna save it. Right?
Speaker 2:We're talking about billions.
Speaker 1:Although he was very muted. 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 Altman's original double polo.
Speaker 2:Maybe it's more like a jobs not finished double polo
Speaker 1:versus He's like, I'm I'm open to the really bright, colorways, but we're gonna have
Speaker 2:to Let's get to a billion ARR first. Yeah.
Speaker 1:We have some personnel news. Will Brown, he came on the show, what, last week, the week before, told us that everything was great at Morgan Stanley, then he completely rug pulled them and dipped immediately.
Speaker 2:Now Will had Will had actually known he was gonna take off for a while and we gotta have him back on when he joins the new company.
Speaker 1:Yeah. He did me.
Speaker 2:I'm excited. He's been just teasing it out. I don't think he's announced it yet.
Speaker 1:Let me let me So it's time for a new adventure. The ML research team there has been a wonderful home for the past two years. I've learned more than I ever could have imagined about LLM's market's responsibility and how things work in the real world. I mean, he's a very, very interesting poster and and always brought a very interesting, unique perspective because he wasn't fully aligned with one of the labs and and kind of had more 30,000 foot view at Morgan Stanley and I really enjoyed his takes and excited to continue following him on his career.
Speaker 2:Yeah. Total narrative violation that the finance guy wasn't extremely conflicted, but Yeah. Yeah. Fun while it lasted basically.
Speaker 1:Yeah, yeah. Anyway, think that's a good place to end. Thank you for watching. This is a great show. We really enjoyed it.
Speaker 2:Wait, I got one last post because it I'm gonna throw it in here. Michael, if you can pull it I think it's pretty funny. What? Is This post. BCs trying to figure out who are for Ross
Speaker 1:Who they are trying to figure out who he is. I invited him on the show
Speaker 2:Niche.
Speaker 1:Anonymously. Thought he might do it. 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. I respect his
Speaker 2:So from my friend Anish, yeah, the the funny thing here is he kind of missed, so Arford Rock Yeah. Sort of like misreported
Speaker 1:Oh, did?
Speaker 2:Replitz revenue.
Speaker 1:Okay.
Speaker 2:He's called them at 40,000,000 of ARR Okay. Raising it 2 and a half to 3,000,000,000 Yeah. Which felt expensive. Yep. But then he had to show a follow-up graph showing that they added roughly 30,000,000 ARR in a month
Speaker 1:or so. Oh, okay, okay. That's pretty good.
Speaker 2:So he had, he basically
Speaker 1:Yeah, I mean, the problem with those leaks is that a lot of times they were super out of date because you're getting docs that like, oh yeah, they did send me a deck last year. I passed it to somebody, then that day passed it to somebody. And then pretty soon it's like eight, ten months later when that leak is happening. Founders always get frustrated with that because they don't want to share any financials, let alone old financials. So usually some horse trading, but Yeah.
Speaker 1:So it's What is this image? Citizens? I don't get the reference. Do you?
Speaker 2:I don't get the reference either but you should because you're a big movie guy.
Speaker 1:Yeah, but not this time, I don't know.
Speaker 2:Yeah, but it is interesting. I've DM'd with Mr. Arfur and also talked about him coming on the show. It's just so hard because there's so much incentive for people to try to triangulate
Speaker 1:Sure.
Speaker 2:Who he actually is. Yeah. And eventually some schizo is gonna do it. For now, it's it's very fun.
Speaker 1:Maybe there should be a poly market for it. Who is are for rock. Yes. You can list out a couple top candidates.
Speaker 3:Yes.
Speaker 1:That'd be fun. Yes. I had a fun polymarket. It's interesting. You're tracking the
Speaker 2:trade war.
Speaker 1:I'm tracking the trade war. And 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. What do you think, Dory? I believe
Speaker 2:you're good at finding win wins. Exactly. And that's kind of really what it takes.
Speaker 1:Step one, Xi Jinping, let's get a lift in.
Speaker 2:Let's go.
Speaker 1:See you at six
Speaker 2:See you at six Yeah. Let's do it.
Speaker 1:Bring some blood.
Speaker 2:Mean, that's really the chance
Speaker 1:Do some
Speaker 2:deadlifts. The the the the right strategy. Yeah. The other one that's interesting
Speaker 1:What else are tracking?
Speaker 2:I don't know when when did this Screenshot's old. Ever ever since the double polo, the chance of will OpenAI acquire Windsurf before August has just been steadily going up. The market Oh, okay. The market is reacting very
Speaker 1:positively to the double polo.
Speaker 2:Into it.
Speaker 1:It does feel like if the deal was falling apart, you would be like, I'm not in a real like joking mood. Right? So I feel like the read on the double polo is probably positive, 68%. But again, August, like the question, like the date is so important there because that could slip because a lot of people, you know, a lot of the OpenAI employees very wealthy now. And so they're probably getting ready to go on summer vacation.
Speaker 1:Usually starts like mid May and they don't come back until what? August, September, October sometimes. A lot of venture capitalists will be out for four or five months. It's actually gonna be a big challenge for us at TBPN because most of our best Yappers are gonna be at the Amalfi Coast for
Speaker 2:five, six months since summer vacation. We have to set up a remote studio in the South Of France.
Speaker 1:Yeah. Just to make sure that we have some coverage Have a
Speaker 2:dedicated helicopter to sort of take people between the boats to or potentially a water based studio. A
Speaker 1:water based studio would be good.
Speaker 2:A boat would be very helpful. Well, anyway, it is fantastic to be back in the studio
Speaker 1:It's great.
Speaker 2:John and We gotta get out
Speaker 1:of here.
Speaker 2:It's gonna be a big week for technology.
Speaker 1:It will be. Anyway, thanks for watching. Cheers. We'll talk
Speaker 4:to soon. Bye.