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Welcome to Energy 101 with Julie McLelland and Jacob Stiller. Join us on our mission to help raise the world's energy IQ.
0:00 I'm here in LA with Andrew Chan. How's it going? What's that, man? I love LA. I think, I was trying to think how many times I've been here. And I think it's like either six or seven times,
0:12 which six, seven, shout out. But it's literally like, I can't remember for, it's like five and one like faded memory or something like that. So whatever. I love LA. I think it's incredible. I
0:27 think, I mean, I just love talking about geography and traveling and stuff. So I know this is the energy podcast, but it's like, this is the second most populated city in the country and no one
0:37 talks about it the way to talk about New York, Chicago, New Orleans, whatever. And I just, look at it, it's beautiful. Yeah, gorgeous day, sunsets coming in. And it's funny. I mean, from
0:47 an energy side too, it's one of the bigger oil and gas hubs that you'll find outside of Texas too. And no one ever talks about that in
0:56 that way. There's like, there's the classic like photos, black and white photos of all the, the big rigs, the wooden rigs. And those are either from like Beaumont or LA. And it's like, wow,
1:06 like when you learn that, it's kind of mind-blowing. Well, it's become such a niche part compared to the Hollywood ecosystem and the emerging space ecosystem. People kind of forget there's still a
1:16 lot of energy that comes through this space. Yeah. Anyways, man, good to see you. First, six times in LA, the first time you came by to hang out, that's a
1:27 little bit of a trade, but it's - Hey, I don't think I knew you To be fair,
1:32 I think it was two years ago, probably the last time I visited, so. Yeah, two. Okay, two years ago. It may have been before we usually, but fair enough. There you go, and then the West
1:41 Covina story, which is just super down the San Gabriel Valley, I always wanna say down the valley, but the valley is another valley. But then - You can call it, it depends on which valley you
1:53 want to call it. They're San Fernando Valley. Millions of people in this other valley Yeah. But it's like, no, no, this is the valley and this one is a different name. So, you know, whatever.
2:03 Everyone has their weird name and conventions. But my stepson lives, like an hour just dead East, essentially, he has like his real dad is down there. And then he has like half sister and other
2:16 family down there. And I love it down there. It's very, it's very random. It's just like, it might as well just be like the suburbs of Houston or. Interesting. I was gonna say it's like China
2:24 light. But that's how - China light, yeah I
2:28 used to, when I lived in Pasadena, I would go out there almost every week to get Chinese food. It's like that area, Roland Heights, Asianda Heights, like that's the best Chinese food you can get
2:39 in the entire state, probably. Yeah, I'm actually staying in the area and it's reminding me of Chinatown in Houston, but like for miles and it's really cool. I mean, I just had like one of the
2:49 best ramen places in my life, which I'm not gonna name drop 'cause I don't know the name of it, so sorry. But I'll pull it up here Yeah, and
2:58 we'll all along. And we'll all along. you're jumping in this evening. I love, I love, I love deep jumping. So good. That's a big weakness of mine. That was a long exploratory process in
3:07 college back days, man. Yeah. That makes a ton of sense. That's good fun though. That's a fun part. Not everybody goes out there. And I think most people who hate LA, they don't actually know
3:19 what LA is. They'll go to Venice. They'll go to Santa Monica. And they'll be like, Wow, I don't like all of these like super rich white people. They're like a better way to put that But like you
3:27 get outside of the core parts there and you can find every culture, every ethnicity, every type of food that you would ever want in the city. You just have to go and drive long enough to find it.
3:38 Yeah, which is a little very similar to Houston. Yeah. You'll hear the same talking points, like it's diverse. There's all kinds of ethnicities and restaurants and you have to drive across the
3:48 city for like an hour to get to another place. That's all Houston talking points. And they're very similar. And it goes back to the oil thing we were just talking about Like, no one talks about
3:57 how similar they are. Houston's a much better design city, the loop system for as much as like people hate on the traffic that you get there is far more effective than the 50 or 60 miles. I
4:09 sometimes have to drive to skirt around different parts of LA.
4:14 Hopefully, they'll fix some of the infrastructure and the metro might work by the time the Olympics comes in, but I like that convinced. That's the other thing. You only have like a known public
4:22 transit train that's the second largest city. Meanwhile, New York and Chicago, it's better than driving, right? You don't even have to own a car to live there. Yeah. I mean, Metro exists. It
4:32 works. Sometimes. LA Metro is not the worst public transit system I've been on, but it's definitely up there with like Denver as like really needs some TLC. It could be there, right? It could be
4:44 there. Exactly. The bus system is actually really comprehensive, but that doesn't solve the fundamental issue, which is getting stuck in traffic because you're on a highway Right. Yeah. Yeah.
4:53 These cities, they build an awesome bus system, but they share the lanes with the traffic. It also needs a dedicated bus lane, but you know, that's why trains are on rails and you don't have to
5:02 worry about them to go underground or whatever, but anyway. Anyway, not what we're supposed to be talking about today. You're getting me, you're acting about my geography, nerdism, but let's
5:14 talk about energy somehow. Yeah, energy somehow. Your first title, I would say is venture capitalist. Yes, completely. All right, so we got a venture capitalist here in LA, one of a million
5:27 No, actually not as many in LA as you would think, but in the world, yeah, there's like 8, 000 venture capitalists broadly, of those, the number that invest in energy is probably like sub 10,
5:40 maybe, if not lower than that. You said 8, 000, enough to count. Yeah, like relatively, and then how many in energy? Like 10, 10 people. Yeah, 10, 10 people, like, I mean, you can -
5:52 You're one of 10 people in the world You got what, like David Forsberg. I feel like. Jim Thor, sitting in Colorado, whatever that fund wasn't Houston that went out of business, that you may know
6:05 the name of. I
6:08 have probably heard the name a million times. Yeah, it's a small set. My problem is Madam. It's a small set. And there are some people who will touch energy. I'd say I fall more into that
6:16 category of, like, look, I'm not looking for oil and gas technology specifically, but I've invested in the space. I'm an investor in Collide, very proud investor in Collide, and I still look
6:25 for a lot of things that are energy-adjacent, very relevant to that sector, where, you know, the first deal I wrote out of when I'm in the process of building my current firm is a company doing RL
6:36 optimization for microgrids, so, you know, still very much around that space, that sector without necessarily getting into oil and gas tech itself, because a lot of people lost money that way.
6:48 Wow. That's great. I did not know there is Now I said enough to count for eight thousand literally this many. No, no, no, you sort of go down the list and you're like, Well, okay, I know that
6:59 guy. Met a couple others.
7:05 All right, so this entire office, it's one of these art studio offices, 'cause we're in Venice, we're not in like, and also shout out to our hosts for today, I'm Pacific. I don't, yes.
7:25 It's gonna give a quick pitch, we won't do that. Here's their website. Here's their website On the link, but no, it's like we're in Venice, even the normal VC offices, like my old firm riot is
7:30 across the street, but they're in a converted house. Like all the offices here are kind of funky and funky vibes. I love that. Kind of like the show Silicon Valley. Yeah. Where they're literally
7:40 in house. Yeah, that show. So if I had to be honest with you, Silicon Valley is like the single most accurate representation of venture capital that like exists anywhere online. And the reason
7:51 for you boil this down, you go through the first season, you're like, Wait a second, that's Peter Teal. We're supposed to be Peter Teal. It's Peter Gregory, right? And then there's like a, I
7:60 still remember, I was watching it was like episode six, some random Indian guy shows up. And you just know it's supposed to be Vinod Khosla. There's no reason or explanation behind it. But it
8:11 like was very much token throwing in like these characters from real life. So like, there's the guy who's supposed to be Mark Zuckerberg. There's the guy, the Tris Kolmasticula guy who, I don't
8:23 know who he's supposed to be, but like, I know he's supposed to be someone. And until you get to the later seasons, it's just a very realistic representation of how things used to work. Issue
8:33 being they need like a 2025 version of Silicon Valley. It's not as relevant as it used to be. You don't go to Sandholl Road and like, you know, shake down the VCs until the money falls out. You
8:43 used to do that though. And then COVID hit and everyone's on Zoom now. So it's not as much fun. What about the strippers?
8:53 Next question, what about the, what about, I love the, 'cause actually I did start re-watching it, 'cause I'm in startup world and I was like, holy shit, is this accurate? Did this age well?
9:05 And thanks for confirming that 'cause, wow. So I'm very eager to get back and re-watch it. I never finished it originally. But there's a kind of a trope in the beginning
9:15 where these people get contracted and then they become useless and then they hang out in a roof and barbecue and drink beers all day, like how accurate is
9:23 that? Yeah, I've seen that one or two times. I mean, the show in general, it's like even to answer your question on strippers, like adult entertainment, in venture capital have gone hand in
9:32 hand since the early days of doing business deals over scotch and whatever you need to do to grow out with the right people. Realistically, one of the things you learn very quick when you're in
9:44 venture is you meet people where they want to be met. And if somebody says,
9:50 not that I've personally done this, but that you were going to a strip club on some night or you're going to Hooters. Or, and this is a real story when the former CEO of Collide said we're going to
9:60 a karaoke bar in Midland, Texas on a Tuesday night. You go to the karaoke bar in Texas on a Tuesday night and you start singing, right? Like that's, by the way. Yeah, it was, it was a great,
10:11 it was a great night. Have fun memories of that. Rate the new album right now, one out of 10. Shoot. Face.
10:19 No, okay, look, the new album, if you have to break this down, I've been a lifelong Taylor Swift fan. You know, I'm going back to the first album release. And for this in particular, the
10:31 lyrics weren't that good. Melody felt canned. And like, did any of us actually need a, like a three and a half minute song talking about Travis Kelsey's? I'm trying to think of the word to
10:43 describe Redwood tree.
10:47 On brand, okay On brand, yeah. But no, not great. But that's to say, like, one of the more useful skills in venture, broadly, too, is also having good pop culture knowledge, having good
10:57 sports knowledge, because your job is to relate to people. You are a service provider, whether that's to your portfolio companies, to your living partners. And because you are providing a service,
11:08 you want to be good at providing a service, usually that comes from building personal relationships, which is easier to do if you're like, a real person with like interests and hobbies Not
11:18 everybody does that, but that is. I mean, you're literally portrayed it. We're talking about TV shows, music. Yeah, we're running through the full set before we get to talking about real-world
11:27 titles. If I didn't mention like your title so far, people would, they would just think we're like try hard comedian - Yeah. Or casters, friends. I would love to be a try hard comedian podcaster.
11:37 There's nothing I want more in life than to be like a fashion influencer in LA, but it's like just you dressing down the entire time. And then you like, your entire idea is like, you're making
11:48 jeans and t-shirts. again. Yeah. Anyways, that's,
11:54 no, I completely agree, but that's, there's like an art to what I would call this first 10 minute segment or so, like shooting the shit, which is a very important part of VC. It's a very
12:04 important part of sales in general, actually. And if you really boil down what venture is, it's just the highest level of sales, because you're selling LPs, you're selling to founders, and it's
12:13 your service provider. Cool. Yeah. Let me knock out some real dumb questions Real dumb questions. Which is a slogan of this show. Can you explain to me, so I hear this a lot, and I've come to
12:24 learn it from being forced to, or googling it, or chat GBT in it. Can you kind of run down the series of money, gaining money that companies and startups go through? Like Seed Rounds from Series
12:37 A, B, C. Can you just start from having a good idea, maybe a small community, and just starting there to boom, boom, boom, billion-dollar company? Yeah. And what I will tell you broadly,
12:48 venture capital round names are made up, right? The stage that your company is is whatever your investors choose to call it at any given time. So usually an ideal on an appkin is what you call a
12:59 pre-seed, right? Sometimes people will raise money at a pre-seed. They will, you know, get that 250k from Y Combinator, use that
13:10 to build out their every most normal people cannot raise money at that point in time. So they build something, get some early customers early traction. That's what gets you to this seed round. Now,
13:19 here's the problem of that though. I've seen seed rounds that have been raised with, you know, 300, 000 a year in annual revenue, a team of five people, fully built out MVP, ready to scale to
13:31 market. I've also seen seed rounds that are like, oh, we haven't formed the company yet, we're raising5 million at a 35 million pre-money valuation. And you're like, great, well, I'm not going
13:41 to do that deal. But it's, it's very nebulous. And then you start to get more we're like a series A, usually you need one to two million in annual recurring revenue if you're a software business,
13:52 if it's hardware, obviously more complicated.
13:56 Series B, we're starting to talk like the four to eight million dollars in ARR. Series C, whatever makes a discounted cashflow makes sense for your hundred million dollar round, but you have to
14:10 have real metrics that then at that point in time get underwritten in these more complex financial models. It looks much more like a banking or a PE job, whereas in the very early stages you're like,
14:20 Well, oh no, I kind of like this guy. Here's
14:24 the check. And so that's where the round stage is. You grow quickly in revenue, you have to keep growing that revenue to IPO, but again, some people choose not to IPO. You're seeing that a lot
14:33 more frequently now where people are staying private for longer. That's causing liquidity issues. Environment hands. Yeah, but it makes a lot of sense to do it if public markets aren't going to
14:42 react well, or if you think there's a recession incoming, which We can debate that for. ever. I'm not an economist. This is, this is not, sorry, this is not financial advice. I am not a
14:52 registered financial advisor. They're in the bottom for you. So you must have like a, like a, a very deep nihilism about life, which is a theme on this show. I love to talk about, you know,
15:07 when you talk about energy, you get in
15:11 like energy poverty. And what's the point? Yada yada. I mean, when you, you see money, the way you see money, transaction flowed, whether it's counting or you predict its future of just
15:20 completely, you see billions burning, like, yeah, you must have like, you must just think like, what is literally like money? What is the point? Who am I? I wouldn't go that far. And I mean,
15:32 like, look, I think for me, and the reason that I work in energy, right, and my entire broad level thesis is an investor for both my angel investments for the firm that I'm currently building is
15:42 about, you know, investing in real technology that solves real problems for real. And that means I invest in hardware, applied AI, but not in a LLM wrapper way, and connected devices focusing on
15:56 energy, agriculture, manufacturing, supply chain logistics, things that affect the lives of the 99 of America, not just the people in Silicon Valley. It's funny how that works sometimes.
16:08 And for me, that belief is built on this concept that like, look, historically venture capitals, I just think they're bad at their jobs. VCs are bad at their jobs They don't know what they're
16:16 doing. They invest in technology that doesn't actually work or just install problems for anyone. And that you don't have to light cash on fire like people do, but people are bad at their jobs since
16:27 they light cash on fire. And so I'd actually say I have a healthy dose of optimism, but it's an optimism that we can shift how people are operating to invest in more tangible products, more, you
16:39 know, actually revenue-generating ideas instead of chasing down
16:45 hypothetically, not that I would ever call a company out on the podcast, but tools that help you cheat on everything or something like that, you know? But and I think we can get there as an
16:57 ecosystem. It's just, I think that's a sort of problem that might take my entire career to try to affect 10 to 15.
17:04 So healthy dose of optimism. That said, you know, you do start to realize that nothing matters unless you have billions of dollars There it is. Thank you. Yeah, there we go. But, but if you
17:16 have billions of dollars, you can affect great change. And so that's, that's my challenge to all of you billionaires watching this podcast. Shout out. Shuck Yates. He never, he never hit it.
17:27 Sorry. I know. Keep dreaming. Sunday, Sunday. He's, he's open. So let's talk about risk. You know, I just met this, I had lunch with this, I guess he would be, he was just like an investor
17:39 in general and like he is invested in like restaurants and like entertainment places for families. but also just like into, you know, energy and like, very grandfathered in things, you know,
17:52 what would you call it? Just like low risk, basically stuff. And it kind of seems to be at the point where like, he kind of just do whatever the hell he wants, you know? And we all have dreams.
17:59 It's like, oh, you know, I'm gonna invest in SP 'cause that's
18:04 safe. But then, you know, also, when I hit a certain amount, you know, I wanna help my sister open up her food truck, you know, so it's like, how do you, and like, that's a risk, right?
18:13 Yeah, so what is like your portfolio look like, you know, generically, unless you wanna actually say names or whatever, like? No, I'll happily say names. I think most of my companies know
18:21 where they fit in a risk management cycle for me. Yeah, risk management is a topic basically. Yeah, so describe that. And look, venture capital portfolio construction is completely a risk
18:30 management game. And there is only one correct way to do risk management and venture, which is to correctly diversify and take different types of risk. For me, I use what you would call an
18:40 expected value approach, where I look at every company, I say, what's the probability of - whatever outcomes I would expect here, and how big are those outcomes, and then try to maximize that set,
18:51 and then also diversify the different types of risks. So for example, Clyde is an AI business. A lot of the customers are oil and gas-centric. The biggest risk is probably on the customer side,
19:01 that if oil prices go negative again for a year or two, we're gonna have to pivot or figure something else out. Hopefully not, because I think there's a lot of other stuff going on that you can do
19:12 there But that's like a very customer market driven risk, right? And the way you diversify that is then you do some like other, you either do other sectors, right? For example,
19:24 like, you know, I'm an early investor in a company noteworthy, which is a different side of the energy coin. They do inspections for power utility pools. That's pretty much market proof, but
19:35 it's just a slower business. And it may not exit at quite the same value. I hope it will, you know, probably not a10-20 billion business there. Now, then you get to have a little bit where
19:48 you're like, okay, so, but you also want some things that are really high risk, really high reward. And that if they work out, this will be a billion dollar business, not just billion, but
19:57 trillion dollar business. And so I'm investing in a company, Origa Space, which is effectively building a railgun that launches stuff into space. And yeah, I've seen so many YouTube videos about
20:08 that and it's coming to life. And it's so sick and it's, you know, it's going really well. They've closed a good amount of capital There's massive science and technology risk. There is no market
20:17 risk of that business. If that works, they're going to corner the space launch business, Falcon from SpaceX is out the window, right? Now it's not a high odds that that works, but it's a risk
20:27 you can take in that portfolio construction because you have safer bets, you have medium safety bets. And they're all exposed to different types of risk where Auriga is actually more like government
20:35 risk. That was about the same. Right, ambulatory. And then a little bit on just like engineering of like, can you even physically do this? Hold on, did they have like a proof of concept that's
20:46 done or is like an animation? I don't know if I can legally answer that question. If I just want YouTube to put it on the edit right now, will I have something to show to fans? I think we'll find
20:58 out. And we can jump cut to that if it exists. If that don't cut to like, Liny Tunes or something like that.
21:05 But no, so it's like, those are all examples. And then as an angel investor, and when you're doing individual capital, like, that's the way I think about portfolio construction from a
21:17 fiduciary, because it's just as important not to lose my investors' money or to underperform other assets as it is to make great returns. And I'll tell investors on my book. I'm not the type of
21:26 person you put money into if you want a 50x fund. I am instead going to promise you that I will do my damn best not to make sure I return anything below the top 25 of VCs, which is at about a 3x.
21:40 And that's something that not all VCs understand, where if you're wailing checks into just pure play AI businesses right now, we get down a year and a half from now, AI bubble bursts, you're not
21:50 at a three X, you're at a zero. And for me, for the investors that I work with, for the people I care about, it's more important that I never end up on that side. And if I miss a 50 X, that's
21:59 okay, because that's part of their portfolio construction too, and where I sit in their portfolio. Now, on the flip side of that, when you're a personal investor, like, and you start to get
22:10 more and more money, there becomes an amount of money, you're just willing to like set on fire because it's fun, right? There it is. And I have a couple of those checks. My favorite is a company
22:19 called Barrel Room. They're actually based down in Torrance. And what they do is they age brown liquor overnight. So they produce tequila, rum, and whiskey. And one day. And one day. Which it
22:30 usually is eight to 12 years. And
22:34 it tastes really damn good. Business is doing great Was that a responsible investment? absolutely not. I know nothing about consumer. I know nothing about alcohol or alcohol brands, although I
22:44 know a lot more now. And the company was three people, two of them were part-time. The part-time CEO lives in the Cayman Islands and is the full-time CEO of a publicly-traded drone business.
22:55 Cayman Islands is raised as red flags, by the way. No, it's tax purposes. He's a very good guy. It's all above water, but it's the sort of thing where you look at that as an institutional
23:05 investor and you say, there's no way I can like, the risk profile of this makes no sense whatsoever. As a personal investor, I love the guys. I love the product. I said, fuck it. I can lose
23:15 this money. I'll write it off. And so I put in a check. And like, that's what you do. And so that's where if it's like, your family's food truck, for example, and you want to support their
23:24 dreams, which is a good thing to support people's dreams. Like, I'm not saying that's a bad thing. I'm just saying that has to be money you're willing to lose versus if you're a fiduciary, you
23:32 have to act in a very different way, where maybe you have a portfolio who trucks you're investing in and that's one of them. If that's a thesis that you and you think you can generate good returns
23:41 and you can show that, I will tell you investing in restaurants is a tough, tough business. And most people get royally screwed. And the reason you do it is not because you want to invest in a
23:50 restaurant. It's because you want to own a bar and like bartend. And like, I do have dreams someday of you know, investing and operating a artist in T-Shop in Los Angeles. I don't think there are
24:02 enough of those, but that's yeah I love that stuff. Let's do a speed around vocabulary.
24:10 Venture capitalist. So let's actually compare venture capitalists to angel investors. Yes. Is there a difference? Yeah. Completely. No. Angel investors suck other jobs more than VCs do. And
24:22 angel investors are people writing, let's call it. And look, there are super angels. So all these things, we say it would caveat it effectively. But angel investors will write, you know,
24:31 anywhere 5, 000 to usually25, 000 checks That's a typical angel check size. They invested the early stages. Sometimes they invest in what are called angel syndicates. I have yet to see an angel
24:41 syndicate that has performed anywhere above a 1X, which means that every angel syndicate loses money. It's a call out if you are in one of those. You should probably get some formal investing
24:50 experience or deploy money elsewhere, unless, of course, again, that you're willing to light cash on fire.
24:57 Venture capitalists are people who manage money on behalf of LPs who are limited partners. And venture capitalists will raise funds themselves so they'll go and they'll collect these. Sometimes they
25:08 can be25, 000 checks, but usually the 100, 000, 200, 000 multi-millions, in some cases, checks from people, and they will manage that money. They get paid a management fee to manage that
25:19 money, but they also then have to return that capital. They also get paid in terms of upside. It's very different where if you're angel investing, it's just your money and you either get that
25:29 money back or you don't. And so venture is a much more complex game. There's a lot more rules and regulations around it. Angel investors, if you're accredited, You don't have to worry about too
25:39 much. as a VC, as a VC firm, you have to worry about a whole lot of regulation, increasingly more, actually not increasingly more in the current, we'll see where the wind's below in the next few
25:50 years. But
25:52 yeah, those are the sort of the main differences, usually venture capitalists train for years and years before they watch their own firms, even sometimes they never will, right? And so you'll do
26:04 investment banking for two years and then you just like go die at insight. They're never seen again. So what about an investor, just the blanket term? Anyone who, well, so there's a credited
26:15 investors and there's non-accredited investors. So an accredited investor is if you're making200, 000 a year or your total net worth, including property holdings, I think it's combined between you
26:26 and your spouse. They've got some strange cut off. I think it's that like 3 million right now in total net worth or you hold a series 65 or I think there's like three other certifications, you can
26:39 get to do that. have not done that. Fun fact, if you are employed by venture capital firm, that's not actually something you have to go through. Interesting work around. But all of that to say,
26:50 anyone can be an investor. Anyone can cook to flash to the rat at two equally.
26:57 Dizzy's gonna take down that video real quick. Oh yeah. But it is like anyone who writes a check can be an investor. You don't have to write a big check. I have written my very first check I wrote
27:08 into venture backed startup because there are certain exceptions you can get around on a credit investor rules was500, right? I am on
27:16 that cap table. I am next to the guys from Founders Fund, so one of the biggest funds in the United States and the former CEO of China Minnetles. And I'm sitting there with 500 bucks. I'm just as
27:26 much of an investor with that business as they are. And Frank was speaking, it was a much bigger part of my net worth at the time I wrote that check,
27:35 but that doesn't matter, right? Anyone's an investor if you write the check there. which is also why you see a lot of people in LinkedIn who will call themselves investors, different credibility
27:43 levels of investors. I see lots of people say lots of things on LinkedIn.
27:49 If
27:51 your title is over, it's like Twitter. You have over 144 characters. Oh, no. I think anybody who lists more than one or two things in their job headline, I instantly ignore that invite. It's
28:07 good advice. It's just vibes-wise. It's just like, Okay, we'll get it. The worst is when you have a bunch of things and like, Yeah, you actually do all these things, whatever. You're not just
28:18 visionary. You're literally listing things you do on a daily basis. But then you kind of just describe the roles, but you don't actually say the name of the company. So I'm the editor for this
28:28 podcast, and all the other shows for Collide, and I have to look these things up, and I'm like, Okay, what do you work? And it's like, Okay, they're present. It's like. length year to
28:37 present on LinkedIn on like 10 companies. But this is like usually investors see, right? So they're actually all so yeah, that's all this shit. And then it's like, I don't know what you work.
28:46 Can we just talk for a second? I hate that investors list that they work at each individual company. You should put your firm and then you list your investments under the firm on your job
28:57 description. I like that. There's so much more sense. And then you don't have to scroll through the whole LinkedIn. Like you can look at my LinkedIn. You look at the firms I've worked out, the
29:04 deals I worked on, the boards I sat on, and you can be in and out of my LinkedIn in two minutes. And there are people who you will like, especially the longer and the older. It's usually guys in
29:13 their like mid 50s, 60s, you know, like list down. They've got 50 or 60 portfolio companies. You're scrolling down. You're like, dude, I just wanted to see where you went to college. Like I
29:21 don't need to see this. Yeah. Like, yeah, yeah, right on. I don't want to get in the weeds with that because that should always be a lot. That is funny stuff. But LinkedIn etiquette is like
29:33 something I would like for us to like. but it's also why I think we're gonna get rid of LinkedIn. It's a verticalized unbundling of LinkedIn. Rip, I mean, I'm wanna talk. My profile's literally
29:44 like unhinged and I just do whatever the hell I want, but at least you could tell where I work and what my job is. Yeah. Let's wrap up this vocabulary round. Faduciary. Faduciary. I
29:54 don't even know how I'm gonna describe that. They're like someone who works with money. Yeah, it's someone who is trusted to make a very financial decision We should look up what the technical
30:05 definition is 'cause I actually don't know. Okay. I know what a Faduciary responsibility is. So I'm guessing you can't spell it 'cause that was the next question. I could probably spell it.
30:16 Faduciary. Faduciary. Involving trust with regard to the relationship between a trustee and a beneficiary. But it's like a third party person. And this is the reason why it's kind of tricky. In a
30:26 venture, you use that to say like that's between an LP and a GP, right? And you have a Faduciary responsibility between the LP and the GP, uh,
30:34 to manage money and to manage money in the best interests of that person, which you can get sued for if you do poorly. Now, granted, nobody actually files those lawsuits. I wish people filed more
30:44 of those lawsuits for breach of fiduciary, 'cause like, I've seen some dumbass shit.
30:51 I like every person who invests in clearly, like, my God, you should get sued for breach of fiduciary. But yes, it's, I guess it's, the legal definition is a little bit diceier
31:02 F-I-D-U-C-I-A-R-Y. Oh. Oh. And I can't believe you knew the definition off the top of your head. Yeah. 'Cause I just happen to cut to, like, B-roll of like flowers and a meadow when you set it
31:14 up loud. Well, it's like, look, and this is something you start to realize. There's a lot of acronyms in venture. The - An oil and gas. An oil and gas too. And everywhere. Everywhere. People
31:25 love acronyms. In LA. People love terms. The street legal definitions, and then the definitions in context are often. in different. And so it's good to check those things before I'm a big
31:37 believer. And as we'd say, checking oneself before one wrecks oneself. And so I think the Mozart. Yes, I think that was, I think that's a Mozart quote. All right, one more word. Okay, one
31:47 more word. And this is back on track. AI bubble. AI bubble. Okay, so I am a huge believer right now that venture capitalists, especially are throwing money at dumbass shit. VCs love to invest
31:60 in dumb things. VCs love to invest in the hype waves. But VCs do not love to invest in our things that make real money. And so when you look at AI right now, it's not a fundamental issue with like
32:10 open AI or anthropic. Although to be fair, those companies are burning a metric ton of money. And I don't know when the margins will improve separate issue for a separate point in time. It's an
32:19 issue with all of these like very low effort AI wrappers that have gotten millions and millions of dollars thrown at them and are We're producing what I would call AI sloth, in a lot of cases we're
32:31 producing bad products
32:35 and that have no moat to win, and it reminds me a lot of the dot-com bubble, which is why I say AI bubble. I obviously, if you cannot tell by the many gray hairs I have, did not live through the
32:45 dot-com bubble. A lot of my mentors did, and my close friends were investing during that era. One of my advisors is this guy, Tom Baruch. He went through the climate one bubble, the climate two
32:58 bubble, and we are now in probably the climate three bubble, right? You have these battlescores. You look at the reflections. You're saying it's not that there are companies that will not make
33:06 money, right? Amazon is a dot com bubble company, eBay, same era, Google, but you could even argue same era, right? It's all huge businesses. The thing being, there are so many businesses
33:18 that aren't going to make money that the net is, if you're investing in space, you're probably going to lose money. If you're just not being intelligent, you don't have a unique thesis, a unique
33:26 outlook, and you're saying, oh, I want to invest in jobs with AI, right? I think that that's a massive bubble. And then the other fundamental issue, and this is more of an issue like later
33:39 stage businesses, models, a lot of the valuations, and I harp on valuations. Not a lot of young people talk about valuations ever. I'm a stickler for valuation, but the valuations are being
33:50 predicated on either AGI or like massive model improvement to decrease cost. We're not gonna get there. Like we're almost at the limits of what OpenAI can do if you've been around the platform I
34:01 started using, and this is actually a fun fact, I started using GPT when it was GPT too. So way before the public website launch, we were using it to try to train in college, train a bot that
34:16 would write short stories like me, so I could get out of doing work in English class. It was really bad, like incredibly bad. So bad to the point that none of us really gave it second thought
34:26 because we didn't really see how it could get better
34:30 since GPG 3. We got a lot better with GPT-35. Got a lot, mostly better with GPT-4. The difference between GPT-4 and five is not that big. It's pretty marginal. And we're getting closer and
34:43 closer to this logarithmic scaling instead of exponential. If you're betting on exponential, but the reality is logarithmic, then you're going to lose money on valuations because that's how life
34:52 works. And so there won't be massive improvements. It's not gonna, AI is not going to take everyone's job. Your job will be fine as long as you're doing something like a human actually needs to be
35:01 doing. And you're not like sitting and copying and pasting stuff from one form to another form. As Chuck Yates and our community likes to say, AI is not going to take your job. People who are not
35:12 a used chat GPD or an AI are going to take your job. Probably. I think that, I've actually never heard that. That's, I missed a couple of podcast episodes. Well, he said it about five times and
35:21 I roll my eyes at this point when he says it, but it is true. Yeah, no, it is. And it's also jobs evolve, right? And things change over time and look, the Internet. not take like they're not
35:33 less employed people now than they were back then because of the internet it's just new jobs evolve out of AI. I'm a big believer that I think like creatives have a much better place in positioning
35:42 because AI cannot be creative by at least in the current structures algorithmically AI cannot be creative. So you know if you're an artist if you're somebody doing something unique writing wise you
35:54 may be actually better positioned than some of your peers who spend years doing coding or data entry which is supposed to be more technical but isn't but yeah hardware creatives. Yeah it's crazy I
36:06 mean the stepsome were walking around the grove yesterday and you know 12 year olds they'll just start saying something out of nowhere so there was no build up to this and he was like I heard uh you
36:16 know or like he was asking me what do you think is who's smarter AI or humans you know and I was like and I think he might even mention like Chad GBT specifically and I was like Chad GBT is humans
36:28 yeah yeah everything it knows is human stuff. It can't create its own thoughts. And it's just, it's so interesting and precious to see what the kids, you know, especially a 12 year old who can
36:39 like, what they're, what they're seeing as, as we're seeing at the same time. And I'm like, man, like he really doesn't like understand or has it put thought into it? But, um, well, the
36:50 highest level issues, nobody knows how it actually works on the back end and nobody. I posted a video about this on TikTok. It flopped It's like one of my worst performing videos where it's seven
37:00 minutes of me walking through algorithmically how transformers predict the next word to send back to you. Um, and what you eventually realized though, it's a complete the sentence engine more than
37:12 anything. It's a complete the sentence engine that is trained to be the average of the person on Reddit right now because it's trained over the entire internet, which means you're going to become
37:21 the average of the person on Reddit. But it's the equivalent of that person if you have unlimited time and unlimited access to the internet. You know, I Even with unlimited time and unlimited
37:32 access to the internet, I'm not going to let somebody from Reddit perform surgery on me, right? Like
37:39 stuff like that, it's interesting. But on the flip side, you think about your average high school student, and you're like, yeah, I probably will write a better paper than 9 out of 10 people. I
37:48 went to high school, you know, Metro Denver at public school. It would write a better paper than 9 out of 10 of my classmates, for sure. Because half of them were just copying and pasting shit
37:58 from the internet
38:03 That just hit. I didn't even think about that. That's hilarious. No. So that's like, when you say, Is it smarter than these people? I mean, like, in some people, sure. He hit me with like
38:13 that. I was like, Whoa, hold on. I answered it quickly, but then I've been thinking about it for 24 hours. Honsie, man. But no, and then as you think about the energy problem, too And if
38:26 we're on this vocab of AI bubble, if you want to fundamental issue is the energy cost is so high right now that that will be a rate limiting factor for scaling until someone figures that away around
38:38 it, which is Frankly speaking about as realistic as a railgun to space. It's not out of the question, but it's just like You may get there. You may not find a way to make these models more power
38:49 efficient I view those as actually pretty equivalent engineering risk problems Or we unlock massive amounts of new energy, which we could be moving in that direction Like I the deregulation on
39:00 nuclear is one of the more interesting trends that I'm tracking I'd never bet in spaces through regulatory risk because Politics in this country are unstable at best and you have a new administration
39:12 every four to eight years Because that's just how politics work in the US. It's not positive that we do have elections and that we are democratic But also means that policies change rapidly
39:24 But if nuclear unlocks, that's one thing if we start doing a lot more natural gas development All things I'm tracking pretty aggressively as you think about AI in the long term, but at that point in
39:34 time, if you're worried about the downstream AI companies, when the smarter investment just to be an energy and energy related infrastructure, it will get used for something one way or another.
39:46 And that's why I have that as a sector of companies I invest in. Wow. Yeah. I mean, let's wrap this up with Tomo Energy. Talking about energy 101. Yeah Welcome
39:57 to the episode, venture capital 101. Yeah. So here, first, let's kind of like wrap it fire through these sectors of energy. So what is your, and like, we'll come back so you can kind of just,
40:09 you know, brief over these quickly. What, what have you actually invested in oil and gas wise? Whether it's companies or the second. Literally just collide. And I have looked at a lot. In fact,
40:18 I started in venture doing mining and oil and gas venture capital. That was what I was brought on to do as a consultant I was doing 10 hours a week, but I was still working at NASA. Um, we got
40:29 NASA? I have, which is the job propulsion I've been. Oh, JKL. You're looking awfully rich. I'm still there, yeah. Wait, did you not stalk the LinkedIn? Are you pressing Mark Rober? No, I'm
40:37 winch. I'm friends with William Osman, who's the same network. Really? Yeah. I love him. Yeah, he's a fun dude, he's a homie. I was doing 10 hours a week in oil and gas mining. Talk to as
40:47 many funds I could find who would invest in oil and gas of those. Oh, I remembered. Montrose Lane, they're out of business now. So that was the only specific oil and gas venture for my new, with
40:57 the exception of Ascent Energy But David does a lot of oil and gas adjacent, not as much direct. And you quickly find out that oil and gas has been a black hole for venture dollars. Oil and gas is
41:07 one of the worst - if not the worst place - actually, I'm going to rephrase this, because I'm saying deafness. Oil and gas is the single worst place as a venture capitalist that you can deploy
41:16 money. And it's because the customers have no control over their budgets pretty much. And they don't effectively adjust workforces and software, hardware. Hardware adoption is hard because it
41:29 operates like mining where it's a bunch of older guys who don't want to change their processes because if they're making money now, why would they change to try to make more money? So adoption's
41:38 hard to start. Once you get in there, it's easy to get churned because if the oil prices drop, you're the first thing to go on the budget. It's just like a black hole of venture dollars. And so,
41:49 why does my only investment in oil and gas directly? I've done a bunch of other things in energy now. Some of which I can talk about, some I have talked about, but noteworthy AI is doing very well.
41:59 They're out on the East Coast doing grid inspection, grid maintenance. So like utilities? Yeah, utilities. Jules AI is doing grid optimization. So that's a little bit more upstream. I looked at
42:11 a bunch of plays and discovery.
42:15 Couldn't quite get there on anything. Like AMPs? Yeah, looked at a fair bit along the optimization of extraction and extraction processes again, couldn't get their look. a little bit into the
42:30 supply chain side, realized that I was the dumb money and did not want to be the dumb money and that the ways that oil moves around the country are unpredictable and confusing. So oil and gas is a
42:43 horrible place to deploy venture dollars. And that hasn't gotten better. The tides haven't shifted where companies are better at adopting technology. So you have to find a place where the budget
42:54 actually works. That's part of why I love collide is like, for a while, we were doing an advanced business, which is where the budget was at that time. As soon as the AI budget started opening,
43:03 immediately pivoted, it's the right place to be in because that budget doesn't change if you start laying off people on prices because it's such a core part of the digital transformation that it will
43:15 exist throughout, right? And so that's, that's where like, from a strictly energy side, I've looked everywhere, invested only very specifically. And this is not like me saying like gassing up
43:27 collide or anything, although obviously I'm, you know, I'm going to toot my own horn here. But it's to say that like the reason most venture capitalists will stay away, the reason there are so
43:35 few people who play an oil and gas and like I'm still open to it. I found the right deal. I do it because I'm not afraid of some of that risk and I know how to manage it because I've been around the
43:44 block enough times. But it's because historically it's a black hole for venture dollars because the startups will get in and will get churned. And if you get churned and you're in a bad venture
43:53 fundraising cycle, you're dead. It's just straight zero. It's not an MA. It's a straight zero. Damn. Yeah. Spitting over here. I did tell you to brief over that. So can you say all that
44:04 really shortly? No, I'm just kidding. No, Ben. Yeah. You know, Colin and you know, just the company as a whole, we
44:10 were like officially, it's like, we're an A, we're an AI company. Don't say we are, you know, an only gas company. Don't say we're an EV company. Don't say we're a service company. We're an
44:19 AI company. And I mean, Obviously a smart, smart way to go. The reason we say oil and gas here at Colitis because that's what our customers are. They are not stream like specifically 100. So
44:30 there's room to grow in the future to like other sectors, but that is why we call it that. Makes a ton of sense. And look, don't get me wrong. I love oil and gas. I love the oil and gas industry.
44:40 I go down to Houston two to three times a year. I go, whenever I get the opportunity to go to Midland, I go to Midland. I have a ton of fun in middle. I fucking love Midland. I think people hate
44:50 on Midland for no reason whatsoever. Like, shit, fucks. It's core America. Like, it's what I wanted America to be when I was growing up. You're making all the libs mind-blowing in California
45:00 right now. I'm going to censor this for their light hearts. Yeah, I don't feel a need to censor this. Like, look, man, I love Texas. I'm not a
45:09 wildly political person myself. I think they're great people everywhere. And I think oil and gas is far more important to the country than people want to admit. And it's far more important to an
45:20 energy revolution than people want to admit. And so any road to producing climate emissions is gonna have to go through oil and gas at some point in time or another. You're also gonna have to
45:29 negotiate with all of the multi-billions of dollars that Chevron can throw to try to shut you down too, right? Yeah, 'cause I'm on the same boat. You know, I grew up just thinking oil and gas bad,
45:43 activist thoughts, yada yada. And then you're like, up, you kinda need both. And you kinda, yeah, everything relies on it. And so I found a healthy balance the same way you seem to But let's
45:54 move on to the other sectors, you know? So like, yeah, you invest in oil and gas, and you have good things to say about it, bad things. But like, you're also, I'm assuming, supportive of
46:03 other sectors. You live in California, your mix is like, probably the most diverse besides like Vermont or something, when it comes to energy use. It's like, what do you think? What, what have
46:12 you like touched when it comes to renewables, like when solar, even nuclear? So I'm currently working on a stealth project, which we don't have to edit this out, doing what I would do. call,
46:24 that's the correct way to phrase this, offshore exploration of minerals and mineral resources using applied robotics
46:36 that will hopefully be live with them the next year. You're not talking about the metals companies, sucking up all those metals, right? No, actually, I know those guys. I've known them for a
46:44 while. I met Greg. That's how he got my first job in ventures. That was the answer to a pitch of series B company Well, this company was this series B. If we invested that route, we would have
46:52 made so much money. I just want this up in this last episode. We just recorded this week. I don't know what order they're going to go out. But the guy, he didn't know what I was talking about.
47:04 And I was like, God, like mainstream media is covering this. Like everyone's talking about the nodules being sucked up. Yeah. No, Greg Stone, who's their head of ocean science. He was an LA.
47:13 He's a buddy. We're still supposed to get beers since I moved back. We haven't done it yet on the list. Anyways, no, I actually and look they can come at me for saying this if they want to. I
47:24 think that all of the polymetallic nodules companies are going to fail. You cannot make money mining the ocean right now. You can do a lot to build infrastructure around that, to create a world
47:34 where you can mine in the ocean, to also create offshore wind, offshore solar developments. I think that's much more short-term than you can think about what the long-term looks like. Look, so
47:47 I'm working on that project. That's probably the biggest on other energy sides, minus I have done a lot in the grid, a lot in grid optimization. I think you see it. I mean, you down in Texas see
47:57 this every year that suspiciously the power tends to go out in the wintertime during certain weather conditions. All I know is that I've yet to spend under500 on my energy bill since I moved into my
48:08 new place. So that's cool. No, and same deal in California too, where energy grid is not optimized whatsoever. You have major fires every year your major outages every summer, roll in blackouts.
48:22 That's a problem that I think is very short term and that we will have to solve if we want to just continue to use power. 'Cause the grid's aging, we haven't updated it since the 70s in a lot of
48:32 cases. So that's usually where I've been playing energy side and then on the minerals. So I'm an investor in a company called Strata AI. They do, for us technical geophysicists on the call here,
48:44 creaging modeling, using applied AI models in a polar coordinate optimized So
48:54 they tell you where to mine for what quality of minerals that's - Like where is it like rare earth minerals? So they're on development stage projects. I looked at a couple of the upstream
49:03 opportunities. Like I said, I probably could have made money doing this, but chose not to because I didn't think the models were that good, doing like net new discovery of ore bodies. These guys
49:11 will take an existing ore body and say, how do we optimize extraction for that? So if you're on a nickel mine, you're on a copper mine and you're already developing it. You need them, what's
49:21 called a mine plan to tell you where you're mining and then where you're sorting minerals into what grades that you have the right refining, sometimes you won't refine certain grades. So to optimize
49:32 that, they do that with AI and it improves the mindset's profitability by 10, they capture 10 of that for50 million or your goldmine, you can do the math. It's a pretty profitable business. And
49:43 they just closed a series A actually over the summer. So that's been killer. Congrats I think those have been the two big ones out of, like, that I have personally invested in. At my old firm,
49:54 you know, I worked on it. We did the 280 Earth, which is the Google X spin out doing director capture that I should stop talking about because I may have legal limitations to what I can discuss.
50:08 And looked at a bunch of other things. Builders was pretty deep into these older industry problems as well And so looked at battery storage, looked at doing the
50:19 more mobile battery solution.
50:22 just like get across the line on those from just a margins and payback period perspective. It's a tricky business. It's not going anywhere. That's something we need. Well, and the battery
50:31 technology is improving so rapidly that I think that those will be great businesses soon. Whether or not it fits into my investment horizon is a different story. I do have one investment into a
50:44 solid state battery company as well personally that I forgot about and I don't usually bring it up because I qualify that as a quantum business, not as a energy business typically. And that is on
50:55 the highest of high technical risk sides where that's one of few instances a micro taking real science risk where we'll see if it works or if it doesn't.
51:05 But yeah, so I think that's usually where I try to play in the stack. I'm definitely not doing as much on nuclear. I think I'm a little bit less bullish than other people just because again, I
51:16 fear regulatory risk I've seen a bunch.
51:20 Oh, you know what? So the one other space I've spent way too much time in, and you can figure out how to cut this in, is - Fortnite. Electric trains. Oh. Yeah, spent a lot of time in electric
51:30 trains. What's involved in that? Like batteries or the rail? Batteries. So we were investors in my old firm and ride ventures and parallel systems, which is doing one approach. I looked very
51:41 close and, you know, sometimes I wish I'd done the steel into a company called Intermodive that does just electric engines instead of doing parallel systems had each car electrified. So very
51:53 different approaches to the similar problem. And then autonomous rail, I looked at a few solutions there too. I think that's one of the more niche plays though. Yeah, you're kind of crossing into
52:03 like a sector. I don't even think people know like, I guess everyone assumes like these rails and, you know, modern trains are efficient and they are like even autonomous and electric. Like, you
52:16 know, we're not picturing like locomotives, like busting out coal, smoke. Absolutely, still are in some cases, yeah. I mean, that's a logistics, but are you talking about like passenger train
52:25 or? No, no, no, I'm talking about like cargo. Oh, so yeah, so I would say from a layman's term, we are thinking old school, then I am thinking of puffs as much. No, no, it's a lot more old
52:36 school than you think. I mean, it's not like, would fired old school, but it is like you are not using an electric motor. You might use an electric motor, you're not, you know, battery powered,
52:47 you're not recharging your train somewhere And it's one of the easier ways you can drive down cost of logistics broadly. It's, you know, why go trucks, trains are on a rail. You can make them
52:57 autonomous much more easily. The regulations are pending. So this is, again, it goes back to the regulatory risk side of like, if a regulatory body doesn't approve, you know, waymose, for
53:09 example, right? Man, they're everywhere here in LA. Well, it's like, I was in Austin for the last five years, and I thought, I thought that was pretty intense, Well, it's like, but you see
53:19 what happens with that too. It's, you know, Waymo hits one cat in the New York, Bodega and they may be out of the city, right? That happened like that. And that's one accident where if you
53:28 think about how many cats cars had every year, my God, like come on. But it's just, it creates the wrong headline. And so all of those are regulatory risks I just don't play with.
53:39 So nuclear's been a little bit tougher for me. I, and then I did look at a bunch of the fusion companies The fusion did not get across the line on any of those. Oh God. It's more, it's just like,
53:50 again, it's fusion's been 15 years away for like 30 years. Hey, hey, hey, it was literally, I think post COVID, they hit a ignition, right? Yeah, that's the one that Sam Altman backed. He
54:03 went up in the Northwest in Seattle. They did, but like, It's still not remotely close to being commercial. I know, but you're talking about chasing the unicorn. They touched the unicorn there.
54:17 Yeah, you're starting to get close. I mean, look, we were investors in Colossal, if you want to talk about like a company that's cloning the world in Mammoth. You want to talk about like that
54:25 sort of thing. Like, you do take big swings, and that's part of the fun of venture capitals. You get to take these big swings. You should also balance that going full circle here with companies
54:37 with different types of risk, different types of businesses, because if you take all of the binary risk and none of those hit, or you're not able to sell on secondary before, you suddenly just
54:46 lost millions of dollars, and that's never good for anyone. Wow. I mean, talk about a diverse portfolio. Yeah. Well, like I said, I think there are certain things you also get to write checks
54:56 into as a personal investor that you would never get to write checks into. I mean, like, I even, I use an AI note taker, Howie AI. Howie? We use granola.
55:08 kernel, how he does my scheduling. So, but I love how he, I put a check into how he
55:14 is that remotely related to my thesis? No, no, it's not. Like, that's, that's not, but it's fun. And yeah, I'm a small investor in GPT zero, sending the guys from college. Yeah, very
55:27 responsible investment, not the sort of thing that like makes sense in a fun portfolio. And so you want people to know that when if they park money with you, that you're going to deploy it in the
55:35 way that you say that you're going to deploy it. I think that's important to it. It's a layer of trust that's been lost. So that's, that's the fun closing segments. I feel like we need an energy
55:43 theme to closer here. What, what have you got on tap? Oh, man, I was going to do the opposite talking about culture. So yeah, here on energy one on one podcast, I'd love to keep talking about
55:54 energy, but I don't something else. I love, I just love traveling and comparing cultures so much that I just want to, I want to get kind of the scoop of why you're here in LA.
56:08 And like you mentioned earlier, you love Texas, you love oil and gas, you even love Midland. Like you go there, you get on a flight to Midland, you're like, Hell yeah, let's go. Like that is
56:16 not something, you would be one of anyone ever to get on a plane from LAX to Midland. I think Colin loves the Midland as much as I do, I will go on that record, yeah, okay, why LA? So here's
56:30 the problem, as a venture capitalist, you basically have three options for where you get to live And three is a strong word, where LA is on the fringe, where you can make an argument that I
56:41 shouldn't be here. And it's really New York SF. SF, if you're doing anything that is not fintech financial related.
56:51 LA media, absolutely for venture. But the main reason for this is you wanna live some place where people go through normally, where they're normally in town for work and you can have them come to
57:02 you instead of you having to come to them LA. is emerging in that category for doing deep tech, for doing hardware. We're doing a robotics for doing all of these more complex technologies because
57:11 of SpaceX. People come here to recruit. People come here to watch launches. They will come because there's an increasing El Segundo movement, right? I think all of that's a very bullish signal
57:23 for LA. I also think SF just sucks, like SF is the worst city you can live in as a VC because you're surrounded by other VCs, it's hyper-competitive. You get caught up in this little bubble where
57:34 you think that the reality is startups and tech, but it really isn't. LA is still a very real place where there are different cultures, there are lots of things that are not tech. I was like, Out
57:44 Friday night with one of my friends, he teaches film at a high school here. And those are people who you can be friends with because LA is also pretty low judgment. Again, outside of the
57:52 influencer communities and whatever, but like, low judgment, low drama, good place to live, good airport, very central. If I were in Texas, there's no startups there, nobody comes through
58:04 Texas unless you're in energy pretty much like you're not going to Houston for fun. the weekend. Same deal. I grew up in Denver. I would love to move back to Denver. People do come through Denver,
58:14 but they're going up to ski and you're not going to be able to catch them for work meeting on their way to their ski trip. I love to move internationally, but same deal. It's like people aren't
58:23 really come through Singapore. And if you're investing in US companies, you shouldn't be living in Asia. So here I am for now. I've debated moving back up to SF because I did live in SF. I've
58:35 thought about moving back up. I've thought about doing another year or two.
58:41 I am currently conversations and we will cut this problem. We don't need to cut this. To get a great American venture capital road trip sponsored where I do all 50 states in 50 days and do an event
58:55 in every state. If that ends up getting sponsored, I will be moving out of LA for sure. And then there will be a question on the other side of that if I come back to LA or if I go somewhere else
59:05 and it's realistically for me, it's all I rest up. I hate New York too. I actually, sorry, sorry, I shouldn't say that. I hate New York from a work perspective. I think the startups there just
59:15 don't fit the same culture in the same ethos that they do on the West Coast. And it's also very far from Asia, where I spend a lot of time for other activities, like both, you know, when you're
59:26 building a firm, you end up fundraising a lot, but also just network and relationship driving. So New York's tough on both of those sectors. I love New York as a city. I think the food's great.
59:36 Vibes are fun One of few places I've been out cloving until like 6 am. Wow. Yeah. Young blood. Yeah, back when you were a kid, we too could have gone out cloving until six.
59:48 New York's interesting,
59:51 we have Colin and other sales guys flying out all the time around the country and like New York is like never said, but it is huge for raising money. Like does New York just completely not touch oil
1:00:02 and gas or energy as a whole in general? New York touches whatever will make money, I think. And this comes from the institutional side. There are a ton of rich people in New York who I personally
1:00:12 know in some cases who do allocate to oil and gas who come from the oil and gas industry and live in New York now or live in Connecticut and work in New York, right? But from a tech side, 100 not,
1:00:25 right? There's no reason to. You're not near, I mean, what is the nearest ore body? You're probably, Pennsylvania is like the nearest real place you'd be getting gas out of. So that's five,
1:00:35 six hours away Like, yeah, you can't even frack in New York. They, I mean, you talk about regulation. Yeah, I mean, not that you'd want. I don't think you want to. Yeah. No, I mean, like,
1:00:46 look, you're going to be better if you're doing energy to be in Toronto than New York. If you're already up in that part of the country. Not to take. I like that. I look, I fucking love Toronto.
1:00:54 Poutine underrated. I think people, French fries with sauces, like the greatest coffee. More of a Montreal thing. And that's big in Toronto, too. Trust me
1:01:06 the mining company investments in Toronto. So I'm out there twice a year probably. Nice. And you eat the carbs. I basically only consume the potatoes with sauce. And cheese. Oh yeah. That's a
1:01:17 little bit protein. All right, let's wrap it up with a similar questions. So Austin is like a city I've grown and lived in and like a lot, I do smell the bullshit when it comes to Austin. So I
1:01:29 have no problem talking shit about it or like saying Houston's better in I degree in many senses, but they do have to seem, they seem to have a legitimate like Silicon Valley 20 building there.
1:01:42 Houston's kind of like, they have this slogan where they love saying they're energy capital of the world, which is like, it's more like Texas is the energy capital world, but don't tell Connor I
1:01:50 said that. But it is true. It's really exciting watching these cities grow, Texas grow and like Texas is going, you know, everyone's like California is like the 10th largest economy in the world
1:02:03 as a state, you is gonna crawl up there any day now. Like, so just ended off with some good talking points about Texas, Austin, Houston. This bubble that's growing, what's going on? All right,
1:02:14 so let's break this down. And we'll go region by region. 'Cause I think as a VC at least, there are three parts of Texas that matter. Austin, Houston, and Dallas. People go to Dallas to raise
1:02:24 money. They're all the family offices for whatever reason, all out in Dallas, that's where you go through. Houston, if you're energy related to your oil and gas related, or if you have that
1:02:33 network of people, or if you sell well to that network of people, right? You go down to Houston, do you raise money? In some cases, to find startups, the government puts a decent amount of
1:02:42 money into like, queen tech development, transition, energy transition, et cetera. Austin, I'm gonna talk some magic about Austin, because I think that the Austin tech wave, Austin is Miami
1:02:55 from three years ago, okay? Where people tried to make Austin a thing, and Austin did not become a thing. And basically what you see happen is,
1:03:05 I should live someplace nice with low taxes. So you saw a lot of people go to Tahoe. Tahoe, they lived across the border, you know. And, you know, or lived across the border in Reno in some
1:03:16 cases. You saw a lot of people go down to Miami. You saw a lot of people go to Nashville. You saw a lot of people go to Austin. Austin doesn't have a tech ecosystem. Austin has no tech ecosystem.
1:03:27 Austin has ABC. And I will give Joe's credit, like, in my opinion, love the guy or hate him Joe Lonsdale is arguably the greatest investor of the modern era in venture capital. And he's based in
1:03:39 Austin. He puts a lot of money into stuff in Austin. They run a ton of programs out of Texas. He's creating the Texas University of Austin, I think is what they're calling it, et cetera. You
1:03:52 take Joe out of the picture in Austin. There is nothing. I can't name another VC firm down there. I can name - no, you take away the VC portfolio companies. I can't name another -
1:04:05 Yeah, yes, sorry, I shouldn't laugh. Those are nice guys there. But it's a very different model, like it's an incubator or accelerant model, which is literally all I could think of. Yeah, no,
1:04:17 but it's like, okay. So you take away the AVC portfolio, which is
1:04:23 the base power, I'm trying to think who else is down there. That's the big company. Yeah, I know nothing. No, bases, I'd buy far the biggest in Austin right now. I think radiant nuclear may
1:04:35 have an office down there. There's a little bit of nuclear activity. Again, all of that's AVC related. You take AVC out of that equation, there's nothing, right? Now you go to San Francisco and
1:04:44 in one block, I'll show you Lightspeed, Kleiner Perkins, you know, CoSla, you'll have the 10x the AUM of AVC in a block. And that's like, people are gonna try to make it a thing. People love
1:05:00 to try to make these tech weeks a thing. Even LA, right? Like it's nowhere near on the same level of San Francisco. It's nowhere near on the same level of New York But you can recognize that and
1:05:10 recognize what your advantages are I've always been a believer that being close to energy if you're gonna invest in energy is a good thing to do Easier said than done in some cases for me LA makes
1:05:22 sense because I get a lot of the other deep tech around here I get a lot of the other hardware a lot of the robotics I'm near my university because I went to Caltech and so you get a lot of that deal
1:05:30 flow If I were just doing pure-play energy investing pure-play clean tech, Texas makes a ton more sense right now
1:05:39 Also, I'm just gonna list off and say I think Taste of Texas is the greatest restaurant in America. Really? Yeah, I that's right by the collides studios. Is it really? Yes in Memorial. No
1:05:50 kidding. Yeah Big steak house, right? Yeah, of course the big steak. That's kind of a safe Take but okay, I don't I don't think it's a safe take because like if you're an ally I'm like, oh my
1:06:01 God, no, you have to get a Vesper to eat. Or like, you're in a saffin, the French laundry, and no, it's a taste of fucking Texas. There is nothing more American than walking in their Christmas
1:06:11 time. We've got the Christmas decorations up. You go in the back, you select your, you know, four pound cowboy bonin ribeye. They grill it up, serve it with slides, and then I got a hot
1:06:23 chocolate that was, I don't know, some type of whiskey in it, and it was in a glass shaped like a boot Like, there's nothing in the world that's more American than Taste of Texas, like - I love
1:06:33 that. America core is like, if you go to an American bar in Japan, that's like - They did a good job in the Ted Lasso, that soccer show, when they had it like one in London, and it was like - So
1:06:45 I'm a Native American. Clean up, I've tried to go to American bars in London. Not a thing, not a thing. I like, 'cause I make this point of like, I love theme and bars, I love tiki bars, feel
1:06:59 free to cut this. I've been to a lot of Tiki bars in my time. I've been to a lot of Western bars 'cause I think that the Western bar is a funny and amusing tradition. Like a die of bar? Like, I
1:07:09 like shitty country. Yeah, 'cause I was in the UK. Oh, like a year. Yeah, I think I was in the UK. No, I was in Singapore. I was in Singapore during the 4th of July. And I was like, well,
1:07:19 if I'm gonna be here, I gotta do something, Patreon. I went all over Singapore, couldn't find a single fucking bar. And then I was in the UK after that, tried to find one in the UK, could not
1:07:29 find like a trashy American bar with line dancing and like, course light.
1:07:35 Now, Japan does have this. And so, but I'm saying that's what Taste of Texas is, is what people want to think America actually is, but like America instead is like, not as much fun as people
1:07:47 would say and so Taste Texas. If you're in Houston, Taste Texas. Yeah, I love that endorsement. Yeah. Hell yeah. Yeah, that's, it's my only endorsement in Houston. That's a good one. Laura
1:07:57 Barbeque, the place to spun out of Franklin's. They make a great brisket. Boom, there it is. All right, Andrew. All right, good stuff, man.