SPEAKER_00: Today, we have an amazing interview for episode two of season six of Angel. Yes, this is the series where we're talking to first fund GPs, the general partners at first time funds and David has been a VC for a while. But he just launched his first $2.8 million fund with his partner, Nat Manning. And we get into why they went for such a small size fund when he could have probably raised more and using his podcasting community to generate deal flow and to help his companies. But first, a lot of news is happening. And we're talking about the 5g rollout. This is not a conspiracy theory. This is not fake news, causing problems with airlines and planes landing safely at airports. It's a super fascinating discussion between Molly and I we then move on quickly to Lena Khan, the head of the FTC, who is only 32 years

SPEAKER_01: old and incredibly well spoken and a great thinker apparently from these clips that we saw today, she talks about remaking antitrust laws, not looking at consumer harm, but looking at actually downstream competition and does a merger result in less competition in the future. It's going to be a great episode. Stick with us.

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Jason Calacanis: So in the news today, a story that actually we've been walking by

SPEAKER_10: for a couple of days because it has been the most bonkers tech and everything else news week in recent memory, but I don't want to sleep on this kind of ongoing story about American telecoms, specifically Verizon and AT&T wanting to roll out their 5G networks, having all of these issues though, with airlines saying, no, no, no, that's going to crash our planes. In fact, Emirates, the largest airline in the UAE, the United Arab Emirates, indefinitely suspended flights to nine US cities because of this recent 5G rollout. Yeah, because they're so worried that 5G cellular service near airports is actually going to impact their altimeters specifically. This is like, you know, hearkening back to way back to using cell phones on planes, but like kind of worse. Verizon and AT&T were about to roll out new 5G service and they actually rolled it back. They put it on delay briefly, but then also basically said, what the hell FAA? Like lots of other countries have figured out how to roll out 5G without having to ground airplanes. What's going on here?

SPEAKER_14: Yeah, I watch a channel on YouTube called Blanco Rilio. Blanco Lirio.

SPEAKER_16: B-L-A-N-C-O-L-I-R-I-O. I got to have this guy on and I think he's up in the

SPEAKER_19: mountains in Lake Tahoe according to his channel. And he is awesome. He literally went over the Kobe Bryant crash, every crash. And then once you start going down that rabbit hole, you know, YouTube shows you more. So I watch every one of his videos. It is so informative of why planes crash always on the way up the way down, always pilot error, always compounding errors. It's amazing. And so avoidable because he knows the whole history of

SPEAKER_25: this stuff. And as he explained it, it turns out the FAA has no money. They

SPEAKER_29: rely on a bunch of pilots and radio experts, who basically, the radio in, in

SPEAKER_01: order to land a plane automatically in under like half a mile of visibility, there's a system on the plane that 5G interferes with. There's a bunch of

SPEAKER_00: airports now, there's the FAAs unfunded, and then all the greed from the Verizon's and AT&T's of the world, they are so hungry for bandwidth, that they bought all this extra bandwidth, the C-band frequencies is I think what they're called. And it's very high powered. And they don't care. They're just like, we need more bandwidth. By the way, the United States sold them. They sold for billions of dollars. Exactly. And lots of people were

Jason Calacanis: saying, please don't sell this specific spectrum, United States government. And

SPEAKER_10: then United States government was like, you know what, though, Verizon writes a lot of our checks. So we have to.

SPEAKER_01: Yeah, so this is crazy. The buffer zones for airports are just like,

SPEAKER_00: basically for the last 20 seconds of these flights, the power levels are just bonkers. And so what Blanco Lirio said is, like starting at midnight, like this wall could have been avoidable, if the FAA had proper funding, or, you know, the, I guess the FCC is responsible for this.

SPEAKER_41: Yeah, the FCC ran the auctions, the spectrum.

SPEAKER_00: Yeah, but they didn't run the tests. But they didn't run the tests. Nobody took any responsibilities. So it's basically, this is the diffusion of responsibility. You know, when there's multiple parties responsible for something, it makes it less likely that anybody's responsible. Paradoxically, or you think, oh, there's more people who have responsibility here. That's good. No, you need to have a single person, single threaded leader. So if there's one person on train, and another person is being attacked, that person will take action. What the study showed was when there were three or four people, nobody took action, because they saw other people not taking action, and the continuous nature of non action, then reinforce it. It's related to the tragic comments. But basically, it's diffusion of responsibility. You can look it up in psychology. That's what happened to you.

SPEAKER_10: Yeah, no, man, as a result, and the reason it's relevant, I think, I mean, it's relevant, no matter what, it's a huge tech story, and also kind of a safety story. But also, I mean, if you look at what 4g enabled in the startup ecosystem, right, you don't have Uber without 4g, there is an entire industry, an entire economic driver, like massive revolution that was enabled by 4g. And people are hoping that 5g is going to enable that as well. I mean, what we talked about in terms of the Apple headset, the idea that you could have this kind of like constant, high bandwidth connection to be experiencing AR everywhere you go, that's not possible without this roll up rollout. And if it just sort of continues to get botched or delayed or crashes planes, I mean, let alone all the other weird conspiracy theories about it. I mean, it's just sort of like a rolling disaster in terms of 5g. And it just means like, I feel like I can hear you saying this already, Jason, like other countries are going to get there first.

SPEAKER_29: Yeah, I mean, if you if you look at this, like, there's an interesting graph that our producers found, this is the buffer zone. And so also Blanco Lirio, and we'll link to it in the show notes, he explained that like, when they're really bad conditions, the plane can land itself

SPEAKER_00: essentially like autopilot for landing. And it knows on a very fine tuned basis, exactly where the runway is, and where the plane is, when it hits the runway that it's in the center, etc. Now, if we pull up this graph, you'll

SPEAKER_01: see, we're only have like a 22nd buffer zone in the landing to not have interference in France was like, you

SPEAKER_52: know, maybe that should be 96 seconds. You know, just, I don't know, maybe go for a little short thing. I

SPEAKER_01: don't know, like, let's, you know, let's not interfere with the planes with 300 people on the landing. And so, you know, this, this reeks of incompetence, stupidity and greed. In other words, our government,

SPEAKER_33: I was just about to say that I was like, Oh, you mean the American story in a nutshell?

SPEAKER_59: Yeah, exactly. So like, just get your other people big story. Yeah, yeah. Get your together, people. We all want faster phones. But like, we don't want planes dropping out of the sky. We certainly don't want people diverting their flights. I mean, that's embarrassing.

SPEAKER_62: We're gonna have to monitor this story. Yep, I agree.

SPEAKER_65: But this is, this is real stuff. Like, this is, this is not conspiracy theory. I know we said 5G,

SPEAKER_66: everybody's like, Oh, here we go. Brain cancer, conspiracy, whatever. Like, this is in the literal, not a conspiracy theory.

SPEAKER_10: Plus from the Noda gang said, I sure hope this doesn't slow down the rollout of the 5G microchips in the vaccines. Ha ha ha. Good one.

SPEAKER_67: He's not helping. Not helping.

SPEAKER_10: But no, I mean, none of this is conspiracy theory. And in fact, 5G could be a massive economic driver and improve, you know, broadband access for people who don't have it. And like, there are a lot of benefits here that are just getting like, flushed down the toilet by this bull hockey.

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SPEAKER_01: And speaking of economic opportunity, American, America winning, Alina Khan, is now in charge of antitrust. She's very young, considered very visionary. I think she's 32 years old. And today on CNBC, Kara Swisher and Aaron Ross Sorkin, did you get that right? Yeah. I guess interviewed her. And they talked about reframing, as we discussed with the Microsoft acquisition of Blizzard Activision yesterday. Yep. You know, the definition of antitrust. And we were speculating that this was a definition that was going to change because there is no consumer harm. When Disney buys Star Wars and puts the entire Star Wars archive in Disney plus and doesn't raise the price. But we said, hey, what about future competition? And Molly, you pointed out counterfactuals. Well,

SPEAKER_00: right on cue. And we'll play this quick clip here, 13 minutes in. The new framing will be, does it reduce, does the acquisition reduce competition in the future? Here's Lina Khan.

SPEAKER_76: You know, for enforcers, the real question is, is this a deal that could lessen competition?

SPEAKER_78: And in hindsight, all deals to some, all deals to some degree, substantially lessen competition or

SPEAKER_76: tend to create a monopoly. And there's also indication that Congress wanted enforcers not just to act when, you know, the third and fourth companies are merging or the first and second, but actually in the incipiency, when you said see trends towards concentration, that those can also be important moments for enforcers to jump in. We, the FTC has a lawsuit currently against Facebook, in part alleging that the Instagram and WhatsApp acquisitions were unlawful, that those also were designed to maintain its monopoly, in part because, as the lawsuit alleges, there was this moment of transition to mobile, right? And Facebook saw that it wasn't up to the task and it really needed to make this acquisition to survive that transition.

SPEAKER_29: All right. So yeah, great coverage there. Molly, what do you think about this new lens and specifically looking back a decade to the Instagram acquisition?

SPEAKER_10: Yeah. I mean, I think there's no doubt that that's going to be an uphill battle. It's going to be hard to unwind things that were already done. However, it is super useful to look at those things holistically and then figure out what the landscape could have looked like. When you're trying to prove a counterfactual, that's the only evidence you're going to get is the past. And they are absolutely able to, I mean, for one thing, point to emails, right from Mark Zuckerberg and internally at Facebook that were like, yeah, this is we got it. We need to shut that down. We need to catch and kill that mofo. So that is obviously helpful when you look at future mergers. But I do think like it's a massive and probably long overdue conversation to have about reducing competition. And that that being harm enough, right, that it doesn't have to translate into higher prices. Because what it means is you only have six companies. And when those six companies stop caring about you, see also Comcast, right, they don't have to because they're so big. That is a consumer harm. And there are lots and in fact, they're starting to look at data and privacy as a marker for consumer harm. Can a company use the amount of data that it has about you to push out other competition, which obviously we're

SPEAKER_01: saying happen all over the place. And listen, the goal of business is to kill your competitors. Yep. So what we're talking about here is not that we're not saying don't try to kill your competitors. If you're, you know, Google, don't try to beat Yahoo. If you're Microsoft, don't try to beat Apple and vice versa. Right. We want competition. We want people in a dogged fight to win. That's good

SPEAKER_00: for consumers. Ultimately, what we're talking about here is, does an acquisition result in less competition. So that's the framing. Is this a deal? We're talking only about deals here, not when you make a product internal. If you make a product, and you do it on the playing field, that's fine. Now there might be some bundling and some other strong price fixing. There are other things that are lowering the price and losing money on something to drive out a competitor. There are nuanced anti competitive practices that you can bring up on the

SPEAKER_19: battlefield. But that's in the game, right? That's in the game on the court. What we're only talking about here is an

SPEAKER_00: acquisition. So if this was the NBA, listen, if you are great at three pointers or steals or setting picks, that's all part of the game. What we're talking about here is if you interfere with another person's contract, and you, you know, get Chris Paul to leave one team to create a super team, and there was some malfeasance there. It's only in the acquisition phrase here in that that are deals. And I think this is an interesting lens to look at. Because I think anybody who is looking at a market share, you got to take numbers out of this, because it wasn't a big acquisition a billion dollars for Instagram, what you have to look at is, in social networking, how many users did they each have? What percentage of users in the United States did they each have, and it was both very high. And that's really the lens to look at. Now, if you look at the Microsoft lens, right now, is there like, is, is there in terms of

SPEAKER_19: game share, and I don't know where we'd ever get this data, and maybe somebody could email producers at this week at startups, and we can we can continue this thread, Molly, when we look at game share? Is

SPEAKER_00: there with Call of Duty and Diablo and Candy Crush or whatever? Do these make up 60%, 50% of game share? I don't think so. I think if we look at the totality of gaming, this probably Blizzard and

SPEAKER_19: Activision are 10% or 20% of gaming hours played or gaming users, I don't know the exact number. So yeah, it doesn't feel like it would not pass that lens. You have to take I believe you got to take

SPEAKER_00: money out of it, look at market share. And I like this lens to look at it. Because as an investor, I want more competition. And I want companies to go long. The investors were very upset. When Instagram sold, the inside information was, they were throwing money at them. Please don't sell.

SPEAKER_19: Kevin Systrom and his partner regret selling, you know, as much as one can, when you make a lot of

SPEAKER_01: money. But obviously, there's a lot of regret there. And so those are my thoughts on it. You know, if I was a shareholder in Instagram, I would have preferred they keep going, prefer they keep

Jason Calacanis: going. And you've made that point. You've made that point about YouTube. Also, like YouTube, I

SPEAKER_10: mean, it's so interesting that YouTube is in many ways, like flies under the radar in these conversations. But that was an acquisition that that unquestionably, $1.6 billion, you know, consolidated a lot more data and information inside of Google, but also maybe reduced how big YouTube could have been.

SPEAKER_29: Brian Smith Or the counterfactual is maybe you YouTube would have gone out of business because of the lawsuits and the bandwidth bills. From the inside, my friend rule off was the person who

Chamath Palihapitiya: did that deal. And, you know, at Sequoia. And so, you know, just based on the best deal memo ever,

SPEAKER_29: best deal memo ever. Yeah, pretty good one. If you look at, you know, the YouTube deal, you know, they

SPEAKER_01: were in such a huge lawsuit at the time, the money, the smart money predicted it was going under, because of the bandwidth bills, which were significant. Because every time something trended, like lazy Sunday was the first one, somebody had uploaded lazy Sunday, the SNL short, the bandwidth bill was greater than the money they made. And they couldn't monetize that because it was stolen content, and they were being sued. And the lawsuits were crazy. So you get the idea.

SPEAKER_10: Brian Smith Yeah, totally. Not so much of it. Yeah. Brian Smith YouTube probably didn't. YouTube might be the wrong example. But I do think there's I mean, I think there's so much value in looking at acquisitions in looking at the idea of what the competitive landscape looks like, and why acquisitions happen, right? Because we know they happen to catch and kill. And in the case of Microsoft, once you finally get to Activision and Blizzard, you already you can't examine that without looking at the like 15 other game studios that Microsoft bought over the past like two or three years, right? Being a monopoly is not illegal. Like you can have a

SPEAKER_109: monopoly. Yeah, if you earned it, if you well, even if you didn't earn it, it's not illegal to be a

SPEAKER_10: monopoly. But there are specific actions that we determine monopolies cannot take those are unlawful. And that includes like the bundling that Microsoft did. And increasingly might include like, are you buying competition to take it off the

SPEAKER_112: market so it doesn't compete with you? Yeah, it's great. Do that. Love it.

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SPEAKER_19: extra 10% off by using my promo code, which is TWIST, twist, twist, twist, and broker.com slash twist. And by the way, producer, Justin just said my back of the envelope math, once again, is directionally correct. Here is a from the Wikipedia, the number of players in various games as of particular dates. And I think if we look at game share term, I just came up with. If you look at any game share here, you know, Candy Crush Saga says 500 million free to play and Call of Duty, I'm trying to find on this list. I don't see it on this list. I don't even see on this list. Because I think some of those title games that were very expensive, do not have as many where casual games or free online games have a lot more. Look at that Pac Man, Google Doodle. You see that number six are in the list. One,

SPEAKER_10: two, three, four, five, five hundred and five million peak daily players as of May 2010.

SPEAKER_29: You want to talk about a monopoly, Google Chrome over a billion users, Google search many billions of

SPEAKER_01: users, you put a game on the homepage of Google, you now have a top 10 game. Yep. So literally, the Google Doodle of Pac Man is number one. You want to talk about like, if Google's wants to win gaming, all they have to do is put a game on the homepage every day, they win games. I don't know

SPEAKER_19: why they don't do it. I know they don't do they don't want to have more red flags.

Jason Calacanis: Oh, yeah, that's right. And Peter Peter Notenbaum points out that PUBG sued Fortnite. I don't know

SPEAKER_10: if you call it PUBG, but we do at my house, but player unknown sued Fortnite for stealing the Battle Royale mode. I remember that's why I was like, that name sounds so familiar.

David Friedberg: Battle Royale mode, protectable. That used to be called free for all mode. I think they lost. Yeah.

SPEAKER_01: Yeah, that used to be when I even when I was playing video games 20 years ago, there was free for all mode in Doom or some Quake or something when I would go to LAN parties. I mean, I'm dating myself here. But to play these games, you went to LAN parties at pseudo in

SPEAKER_134: New York in the 90s. And they would set up an Ethernet router and put 10 computers around. It was pretty fun.

SPEAKER_121: Oh, I remember that LAN gaming played on real and unreal tournament. Yeah, fun.

SPEAKER_134: Here's the part of Lena Khan's discussion with Kara Swisher and Andrew Ross Sorkin today. And another lens on

SPEAKER_14: antitrust that I hated 17 minutes in consolidations impact on labor. Aka unions.

SPEAKER_76: So the Justice Department, including in the last administration, started looking at no poach agreements more closely, instances in which employers may be colluding to suppress wages. Both agencies have been looking at the ways in which mergers in particular may lessen competition for labor and have downstream effects on workers in ways that are harmful. And that also needs to be on our radar. So I think this is an ongoing conversation. But increasingly, the question is, you know, how we implement some of these priorities

SPEAKER_140: and not, you know, whether they're important. But this is the first time you've included labor. This is something labor's wanted for a long time. The idea of looking at antitrust through the lens of

SPEAKER_76: unemployment, essentially. Yeah, there's an interesting history here. I mean, you know, there were cases in which, you know, unions were supportive of transactions because they thought they would lead to more downstream benefits. But I think we started to see through retrospective studies, instances in which, you know, mergers actually ended up having a harmful effect. And so I think that is what's significantly contributing to this reassessment. What do you think, Molly? You don't like it?

SPEAKER_19: I hate it. But I want to hear your initial thoughts, because I don't want to lead the witness here. And

SPEAKER_148: it'd be good if you had a difference of opinion. Not that I'm saying you should, but I hate this lens, but I'll explain. Well, maybe I should explain if you don't have an opinion. Yeah, why don't you tell me

SPEAKER_149: why you hate it? Do you have an opinion or no? Well, I don't think I hate it. No, yeah, I think I'm

Jason Calacanis: grokking it. And I also think that there is value in saying when I mean, it's all sort of part of the

SPEAKER_10: exact same question, right? If a company gets too big to have any competition, it can do what it wants. Now we have seen in recent years, as you pointed out many times, Amazon and Walmart have to respond to criticism of their labor practices and raise prices and start paying for college, but they're still not paying like living wages to their warehouse workers, right? There's still is, I mean, $15 to $18 an hour, like, not really. Depends on where you live. Pretty great salary if you live in a- Sure, it depends on where you live. But like, we have a national massive housing cost spike. Like it still is, people could be making a lot more money. Yeah, but I mean,

SPEAKER_29: then those jobs would get automated. So that I mean, that's the balance. Like if you literally double those salaries, they doubled those salaries already. If you double it again, then it's like, Oh, well, here's a great incentive to automate it, right? So,

SPEAKER_01: which is what happened in the restaurant business. And so that's my point on this,

SPEAKER_00: which is companies need to be ruthless about efficiency. And if you put on top of an acquisition,

SPEAKER_01: what's going to happen to the employees? Well, there's employment law already. And companies can do that independent of the acquisition, you know. And so I just think it's a

SPEAKER_00: lens that doesn't make sense here in terms of the consumer, the company is going to do what's in the best interest and efficiency of their business. And if they don't, they're going to get beaten by other businesses. So then to say, Oh, if you do this merger, you can't fire anybody. Well, the whole point of a merger is, we're going to get have one accounting team, one sales team, you know,

SPEAKER_01: and the infrastructure. So if we buy, you know, Zappos as a great example, or diapers.com, Amazon looks at that acquisition and says, Hey, we can get rid of the accounting, legal,

SPEAKER_00: back office, and the computing layers, and have them use the Amazon infrastructure for that and

SPEAKER_19: warehousing. That's why this makes it more efficient, better for consumers, right? That's the whole

SPEAKER_65: premise, which makes a lot of acquisition. So you can't put on top of that, well, well, you can't get the benefit of the acquisition.

SPEAKER_10: Yeah, no, I think that's so I actually think that's totally fair. The part I'm not clear on is so they're talking about how acquisitions impact labor specifically, as opposed to how size impacts labor. Because that's a different that's a whole door dash and full time employee. And there's that conversation. But yeah, I mean, if you're talking about how, yeah, that does seem like maybe

SPEAKER_166: a little a bridge too far. And it looks like just unions inserting themselves to try to get more

SPEAKER_29: power and influence to, you know, increase wages or whatever, which is fine. That's why they're there. But I don't think they should have anything to do with it. It's like too many, too many factors here.

SPEAKER_01: I think we have to look at competition, which is the overriding issue here. Like, if you want to have a great playing field, you can't have one team break the salary cap, you know, or go so far over the salary cap, which is why in the NBA, they said, you know what, if you spend over, I think it's like if you spend over $5 million, the salary cap, they charge you double for that 5 million, the next 5 million is triple. And then every dollar after that is like quadruple or something. I mean, it gets super punitive. Yeah. A lot of teams are like, we can't do this. We can't go over and they come up with all ways of

Jason Calacanis: why you can't. Exactly. Rules work. Like you can't, you know, we're nobody's talking about getting rid of capitalism on this show ever. What we're saying is unregulated capitalism is suicide.

SPEAKER_10: You can't just grow forever. Depends on if I'm holding the shares.

SPEAKER_177: Let me be honest. Jason's like, well, I don't know how bad, how bad could that tumor really get?

SPEAKER_178: We just let it grow a little more. I don't own any Facebook shares, break it up.

SPEAKER_181: All right. That is more than enough news for today. That's a lot of news.

SPEAKER_25: Hey, Tom Eschbacher is here with us again. He's a senior sales manager at LinkedIn marketing solutions. And we're talking about their amazing report today in startup marketing, as well as how to use LinkedIn

SPEAKER_16: to grow your startup as an angel investor. I like to see revenue early and often from startups. How can LinkedIn help with that?

SPEAKER_184: Yeah. The short answer is LinkedIn lead gen forms. 89% of our startup advertisers utilize them. And I'll tell you why. Think about all the effort that goes into creating interest within a prospect. You have to nail the value proposition, create compelling content, find them, and then message them with enough frequency so that they engage. You do all that, you get them to your signup page and you know how many of them are going to convert just 2%. That's so much value that marketers are failing to capture. And it's a big reason why LinkedIn marketing and specifically LinkedIn lead gen forms are so popular with startups. So people know a lead gen form lives on LinkedIn. They click one time and boom, the email is sent to the company. By using LinkedIn lead gen forms, you're ensuring they're coming from an audience that you care about. And then we're pulling the information right from the members profile. So it's great. Your SDRs are going to be thrilled with that info. They're going to want to follow up. That's the improved lead quality. And as you say, Jason, it all takes place in just two taps in the LinkedIn newsfeed. And so if you would like to get this incredible report, you can go to

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SPEAKER_01: All right, everybody, welcome to another episode of Angel. Yes, a special series where we talk to Angel and venture capitalists and capital allocators. It's our season six. And we decided to do for season six, first time fund, first time fund managers, right? And so we're really excited about today's

SPEAKER_187: guest. And as a special pot sweetener, Molly Wood will be doing the interview with me. Welcome, Molly.

SPEAKER_188: Thanks. Glad to be here. This is a David, I warned him already that this was the first two on one. Yes. Interview. So like, yeah, I figured out who's good cop and who's bad cop, but it might just like

SPEAKER_192: flip flop throughout the show. Yeah. And how are you? How are you feeling Molly? We were pretty public that you got the you got the Rona. Well, the voice the pipes sound good. The pipes are okay. Yeah,

SPEAKER_188: we're hanging I'm at about like 90% today. If I were an iPhone battery indicator, I'd be at 90%.

SPEAKER_195: Fantastic. No, not mild. Not mild. Not to be clear.

SPEAKER_75: So but it started mild, you had two of 10. Where did you peak on one to 10? Where 10 is going to the

SPEAKER_01: emergency room with the flu or, you know, calling your primary care doctor to get an IV drip or something?

SPEAKER_10: No, I mean, if that's 10, I probably peaked at like six. But I will say that there was some like trouble breathing and some really like such bad sinus pain that I was like, this is the aneurysm. It's here. I read all about it to your lungs. No, it started there, which was weird. So it started in my chest. And then the first night or two there I did. I was a little short of breath and I had a cough and sort of lost my voice for a couple of mornings in a row. And then it just moved up into my

SPEAKER_204: head. I wonder if you had Delta Omicron. Yeah, but enough. So enough about me. Let's talk about

SPEAKER_29: David. I thought me and my coronavirus. David Rosenthal, of course, is the co-host of the Acquired podcast and a frequent guest on this week in startups. But he's here today to talk about his new fund, Kindergarten Ventures. Welcome to the program, David. Thank you, as always honored to be here with both of you. Did you get the Rona yet? Did you get the Omicron? No, fortunately, we,

SPEAKER_210: uh, my wife and I have a three month old. So we are trying to be extremely careful right now. Uh, I mean, we're still like stressed about it, but a little lester three months. She's a little more robust than when she was two months. We were like, this is, um, scary. But yes,

SPEAKER_215: fortunately, everybody's okay. Also congratulations. Oh, thank you. Congratulations.

SPEAKER_217: Babies are amazing. We have a number of them. Uh, okay. So try to avoid it. Uh, and for folks,

SPEAKER_28: um, if they want to check out the angel podcast, you can either get it here on the, this week in

SPEAKER_19: startups feed, or, uh, you can just search for angel and you'll find the angel podcast as well. Episode

SPEAKER_219: one, we had Mac, the VC from rare, uh, breed VC. So just starting off, tell us about your first fund.

SPEAKER_210: Yes. Well, it's funny. I'm trying to decide if I officially qualify, uh, for this segment or not. This, uh, we, uh, I, and my partner in the fund, kindergarten ventures, Nat Manning, uh, not been my cohost at acquired. Nat is my partner in kindergarten. Uh, we are investing out of our first fund, but this is the, uh, fifth fund I've been investing out of as a VC. Uh, but first with kindergarten, it's a very, very different experience. Uh, kindergarten, we closed fund one in July. I

SPEAKER_226: want to say July or August of this past year. So about six months. How big is the fund? And do you

SPEAKER_205: have a thesis and what, who are you targeting with this fund? Check size and verticals? And how'd

SPEAKER_230: you get that name? That is the best question. That is the best. I'll start with that. It's called.

SPEAKER_234: Oh, sorry. Sorry. Sorry. Molly's like, Oh, I'll just put up three. Yeah. Okay. Jake. She's like, I'm not even looking. Boom. I was going to get there. I had that on my list of

SPEAKER_236: questions. Here we go. But it's like, it's the title. Yeah, you're right. You're right. I should

SPEAKER_238: have gone there earlier. I should have drove the lane. No, now you have four questions to answer.

SPEAKER_210: Go. Okay. Okay. Can I remember them all? Kindergarten because Nat and I met in kindergarten. You can believe that way back in the day. So cute. Let's see. Fund size. Fund one is 2.8 million, which we can talk about. It's a experiment fund, a proof of concept fund. Oh, that's two out of four.

SPEAKER_243: Now I'm blanking. And the theme, are you going in for a certain type of company and maybe the check

SPEAKER_244: size with the 2.8. So your thesis is a check size. Check size, max check size out of the fund in fund

SPEAKER_210: one is 100K. Our average, we're most, at this point, we're most of the way through the fund. Average has been about 75K. Thesis and theme is interesting. None. And one thing that I think used to be a belief that we are explicitly not doing is that small funds and angel investing was about super early stage. We do plenty of seed, pre-seed. We've done about 50% of the companies in the fund are seed and pre-seed, but then 30% are series A and 20% are B, C, D, growth. We do everything. The thesis is a combination of companies in the acquired network, broadly defined. We've invested in sponsors. We've invested in guests. We've invested in folks we've met in the acquired Slack. And then my partner, Nat's networks in climate tech and in fintech, specifically insurance, which obviously Kettle is

SPEAKER_248: So to be clear, the podcast has created a big community.

SPEAKER_01: And that gives you deal flow. Other investors are involved. You have a Slack that's pretty vibrant. I mean, it's not giant, but it's vibrant. You have good discussions going on there. How many people are

SPEAKER_25: participating in the Slack and, and what type of companies have you been getting in terms of stage?

SPEAKER_252: Uh, we are coming up on about 11,000 people in the acquired Slack.

SPEAKER_253: Oh, that's huge. Okay. My information's old then because I was on there when it was like 1000.

SPEAKER_210: That's a, well, I think you brought the other 10,000. So how big is the twist Slack now?

SPEAKER_00: You know, it was like 30 or 40, but we deprecated it. I basically turned off every channel except for the cities. And we just said it's for book club and the cities and for doing meetups because it was too much spam and too much to manage and not enough like focused discussion.

SPEAKER_19: And I really think any community you have has to have a purpose. So he said, the purpose here is to talk about this week in startups, do book club for this week in startups, and then set up local meetups and meet other founders in your neighborhood. And that's it because the focus was just getting out of control and people were spamming it like crazy. Yeah.

SPEAKER_255: So how do you, how do you manage 11,000 people in a Slack channel?

SPEAKER_256: Uh, well, a couple of things. One, we've been super lucky. I think the whole life of acquired that

SPEAKER_210: our community has been very, very friendly, generous, uh, you know, low drama. Uh, we, we aim for that on the show. And I think we've been luckily attracted that community. So we've had almost no problems, but once you get to that many people, just like managing messages in the scale of it is tough. So we just, we kind of gave up, uh, on managing it and to borrow a phrase, open sourced it to the fans. Um, so we have a few sub communities in there,

SPEAKER_226: probably the most vibrant of which is the digital assets community, uh, that we give over to

SPEAKER_210: specific folks in the community to manage. So Austin Federer, who's awesome. He runs marketing at Solana. He runs the digital assets channel in the acquired Slack. So it's kind of become this like fractal thing. We've got a FinTech channel. We've got all sorts of different stuff.

SPEAKER_261: Does that mean you made him an admin in the Slack to like bounce people and delete stuff? Yeah. So the tools are so not robust in Slack for managing a community at scale. We just,

SPEAKER_01: we're thinking about that as well, maybe deputizing people, but it's just so much work. Are they all paid, uh, members then, or do you let people in who aren't paid?

SPEAKER_263: No, everything's we're just on the free plan, the acquired Slack.

SPEAKER_29: No, no, I'm saying paid, um, members of the acquired community or just anybody can join the Slack?

SPEAKER_265: No, anybody can join. Well, we have big news too. Oh, we haven't caught up in a while. Um,

SPEAKER_210: so the acquired L quote unquote LP community confusing given what we're talking about now, but that was our paid program for acquired. Um, it still exists. It's awesome. We love it. We got so many folks, thanks to you plugging it for us all the time. We kind of realized we had the wrong business model though. Uh, and it's relevant to kindergarten. Um, so we, while we still have the program and we do fun stuff for our LPs, the LP show, uh, our second show, uh, we made a free and it's open. It's just a second show on any podcast player of your choice now. Uh, and we changed that to an advertising model. Um, and the biggest reason was that we have, we'd have guests on there, like a bunch of founders of companies, kindergarten invested in, and the like, and then they'd be like, great. This is awesome. Where can I share it with my team? Where can I share it with folks? Like, well, you know, uh, sorry, it's this thing. We can create a page for you. And then we're like, this is not aligned. This doesn't make sense. Like we want to get great founders. We want them to have as much reach as possible. We want to invest in these companies. Like let's just make this cleaner.

SPEAKER_19: Yeah. I mean, and advertising is going really well for podcasting. Once you get into the top hundred in any category, you'll have advertisers, you know, basically trolling you and reaching out

SPEAKER_08: to you. So that makes sense, Molly. I wonder, I mean, this is a model that we're somewhat familiar with here, which is, you know, a media empire and some investing attached, uh, or the other way

SPEAKER_10: around, depending on the day. Do you think though, like getting to this idea of a first time fund, can you now be a fund if you're also not a brand?

SPEAKER_210: Oh, interesting. Um, well, here's how I kind of think about it. Uh, I think being a brand doing what we're all doing is hugely advantageous. All, so many trends are at our back, the wind is in our, in our favor, mix that up. But anyway, you get what I mean. So it's going great. I think, um, so I was super lucky when I was in business school to take, uh, one class. He was only teaching one class, uh, with Andy Ratcliffe, who's of course one of the founders of Benchmark and, um,

SPEAKER_285: and Wealthfront and, uh, one of our like most frequent guests on this program. I think he's been on five or six times, almost on your level, David. Oh man, gotta, gotta keep going. Beat Andy.

SPEAKER_210: What class did he teach? So he was on sabbatical. Cause you remember he went, he left, he stopped being the CEO of Wealthfront, then went back as CEO. So when I was in business school, that was when he went back. Yeah. So he didn't, he ordinarily full-time teaches one class. He didn't teach that my year, but he co-taught the, uh, venture capital class that Peter Wendell, who founded Sierra Ventures, teaches. And that was an amazing class. Eric Schmidt also co-taught. That was, that was such a cool experience. Um, uh, so Andy taught a few, a few classes of that course. Um, and I remember asking him, uh, uh, when, when I got to take his course, I was like, what's that, you know, what's the secret to

SPEAKER_226: be great VC? Like, how do you, how do you start a firm? I mean, do you start a benchmark? What do you do? And he just had the best answer I think I've ever heard, which is that you gotta have a

SPEAKER_210: reason why a great founder is going to take your money. And like, it's so simple, but you gotta have a good reason. And you know, what we're doing is a great example of that. Uh, acquired is a great reason why founders should take kindergarten's money. Or if they're in insure tech or climate, you know, Nat Kettle and Nat's work there. Um, likewise for you guys and launch and twist and all in like, those are really, really good reasons. There are other good reasons that have nothing to do with being a brand. Um, could be that you're like super deep in a esoteric field that very few

SPEAKER_75: others are willing to invest in. Could be lots of things, but 2.8 million small fund. How do you deal

SPEAKER_01: with pro rata rights and follow on investments? Because if you're under a hundred, if you're 50 to 100 K per bet 75 K on average, you don't hit the typical 250 K major investor rights. So you're at a disadvantage. You explicitly asked founders, Hey, even though we're smaller, can we get pro rata? Or do you just rely on their good graces to allow you to have pro rata? And then what's your follow on strategy in terms of, Hey, you hit a winner and you got an Uber, you got a Robin Hood, you got a

SPEAKER_294: grin or a common there. How do you double down? How do you 10 X?

SPEAKER_226: Ah, we should be so lucky like you, um, explicitly for this fund. We just kept it super simple. No

SPEAKER_210: strategy on any of that. Like with this first fund, this is a proof of concept fund. This is, you know, we were testing a couple of things like would Nat and I enjoy working together? One, uh, would we be able to invest in good companies? Would we be able to get allocation in rounds at all? Like we're not leading rounds. We're participating in rounds. Would founders want to say in what other would lead VCs make room for us? Um, and then two, what was the right check size to write? Uh, but so we explicitly said, we're not going to try and figure out pro rata. We'll figure that all that out down the road. So for companies in this fund of which I think we've got some, you know, it's early, but I think we've got some really good ones. Um, we will most likely, assuming it all works out and as possible, invest in them out of future funds that we raise. Uh, we may also do SPVs. We've done

SPEAKER_273: one SPV, uh, thus far, but explain what an SPV for the audience who doesn't know and what that does

SPEAKER_210: for you. So their SPVs are good and bad. It's a special purpose vehicle. Uh, you can do things like, say, you know, we're a small fund, say a company we invest in is raising their next round. It's a much larger round. We could put a larger check in. We can't do that out of the fund. It would maybe be larger than the whole fund size. We can put together this vehicle with our LPs or with other people to invest for this one special purpose. Um, and so we could, we, we've done this, our average check size, like I said, was about 70 K in fund one. We did one SPV for 500,000. We couldn't write a $500,000 check out of the fund, but easy to do with an SPV.

SPEAKER_226: But the problem with SPVs is you gotta go fundraise for each of them. And, you know, even if you have

SPEAKER_210: LPs lined up who want to do them, it's just hurting the cats to get all the docs together. And usually, you know, these rounds are coming together fast and closing. You gotta be like, wait, wait, wait, I'm still getting all my ducks in a row. And it's difficult.

SPEAKER_304: Yeah. Don't I know it.

SPEAKER_10: So tell me, I mean, everybody in the audience knows I'm new here and learning at the same time, and this is like the best opportunity ever, but how common is it for someone to be in a position and it's setting aside the sort of the media part of it. Right. But you're like, we've raised this fund. It's pretty small fund. There's no real thesis. We're not that stressed about pro rata. We're just going to sort of like experiment and take it as it comes. How do you get lucky enough to be in

SPEAKER_08: that position? Like, is that a common place for first time fundraisers to find themselves?

SPEAKER_310: No, no, no, no, definitely not. And, um, uh, this was only possible because of everything we had done

SPEAKER_210: before and, and honestly, not even really before just concurrently. Like, um, this has been something, a surprising number of LPs had trouble getting this. We thought this would be a harder message. And we've been very pleasantly surprised that lots of folks just, just get it easily. Like kindergarten works because of Nat and my full-time jobs. We are not full-time on kindergarten. We do other things very much full-time kindergarten runs a hundred percent on AngelList. We don't do any of the back office. AngelList is amazing on that front. We couldn't do it without them, but we're not, we don't have an LPAC. We don't do regular calls. Like this is not professionally made.

SPEAKER_313: Explain what an LPAC is and why I chose not to have one. Yes, please. That was my next question.

SPEAKER_210: Yeah. Yeah. Of course. An LPAC is like the rough equivalent you could think of as a board for a venture capital firm. It's usually the biggest LPs. It's called, LPAC is short for a limited partner advisory committee and you do quarterly calls with them and walk through just like kind of a board meeting for the venture firm. Uh, and they have certain governance rights. Um, you know, and like, that's great and that makes sense for a traditional venture fund, but it doesn't make sense when the only two people running the fund have full-time jobs doing other things. But Molly to your question, kindergarten works and all this works because of the stuff we do in our day jobs naturally yields great deal flow for investing in. And I guess the followup to that is like,

SPEAKER_10: are there parts of what you're doing that could translate to an angel who's trying to become a first time fund who doesn't have a full-time job as like a really well-known podcaster?

SPEAKER_256: Yes, absolutely. I mean, I think it gets back to the, what's the good reason why a great founder

SPEAKER_210: out there who is going to have no trouble filling their round, or if you're trying to lead rounds, could get Sequoia, Andreessen, Benchmark, you know, you name it to lead their round. What's the good reason why they're going to choose you or let you in? And there are a million good reasons out there. Uh, you know, obviously Paki McCormick is doing a similar strategy as us with not boring and not pouring cattle capital. There are plenty of solo operator funds out there. There's, uh, you know, Rahul Vora and, uh, Todd Goldberg, I think this is part of it. Oh, nice. Yeah.

SPEAKER_323: Or in the first one, I don't know if they've done a second one, but I'm in the first. Uh, they have, I know they've done two core funds and then, uh, uh, follow on fund as well.

SPEAKER_210: Yeah. So, um, you know, it's gotta be something I think like that's the, um, you know, Molly to your question and it doesn't have to be a brand, but this is, you know, Andy's kind of simple way of putting this is he's so eloquent about this is like, you need a reason and it has to be good.

SPEAKER_256: I can't tell you what it is. There's no formula for what the good reason is, but you know, you'll, you'll know it when you get a good reason.

SPEAKER_01: Uh, did you do the 506c designation when raising your fund, which means you could publicly talk about it obviously as a podcaster with an existing audience, some percentage of with would be accredited investors. If you do 506c, you can publicly solicit. You know, as 5% of the country is accredited in a, in a podcast like acquired, you know, it might be 30% more than 5%, 40%, who knows, half, uh, might be. So this would be a huge advantage. So how many unique LPs do you have?

SPEAKER_243: And then did you choose to do 506c? Yes or no?

SPEAKER_331: Uh, we first question unique LPs and fund one, we have just shy of 50, I believe somewhere around

SPEAKER_210: there. Um, no, we did not do 506c, which we can talk about in a sec. Uh, our LPs in fund one, we have a few sort of family office offices, real, real family offices. Uh, the majority of the capital though is GPs at other venture funds, primarily large venture funds.

SPEAKER_334: So they're using you as a feeder, ostensibly?

SPEAKER_210: Yeah, feeder. It's more, I think about the relationship, uh, than specifically as a feeder. If anything, this is ironic. I did not predict this. It's a feeder the other way. So we track our sources of deal flow. Uh, the first as expected is the acquired network and the kettle network. Our second largest source of deal flow is GPs at large venture firms who are leading rounds and when they're leaving, you know, folks, you know, and plenty of folks listening. Sequoia is leading around or Andreessen's leading around. They're going to do maybe 70% of the capital into it, but then they leave 30% open for value add folks. Yeah. And so we're just as often- Basically, we'll give you a slot if you can

SPEAKER_338: get us a slot on your pod. Maybe. It's not explicit. It's not quid pro quo, but it's close.

SPEAKER_344: It's, uh, uh, Is it quid pro quo? No, definitely not.

SPEAKER_348: It is for me. I'm just putting it out there right now. You get me a slot on that cap table. I will guarantee you a slot on this podcast. Well, you're on five day a week pods.

SPEAKER_349: Six, but it's an easy guarantee. Yeah. Six, but who's counting?

SPEAKER_351: We make it seem like a favor, but really we got to fill every day.

SPEAKER_65: Exactly. Okay. I got one follow-up question. Was it a mistake? Since you are well below the 250 and $10 million limits, was it a mistake to not do 506 C? And will you do 506 C on your next? Uh, can you explain that what that means?

SPEAKER_357: Oh, making me do all the hard work here. Um, uh, let's see.

SPEAKER_310: What is it? Let's see if I can take this in order. Well, Molly, as I'm gonna go with yours

SPEAKER_262: first. Cause that's the best question once again, what is 506 C and why didn't you do it?

SPEAKER_310: And was it a mistake? Yes. 506 C is a, if you choose that designation, then you can

SPEAKER_210: raise venture capital, you can raise publicly, which take out to be fair to you. I think you did say a minute ago, um, you can solicit publicly. You cannot solicit publicly, i.e. on a podcast, uh, as an example, if you're not 506 C, we chose not to do it. Um, it was not a mistake this time. We will likely, I think not do it for our next fund, but very open to doing it in the future. Um, and things continue to go well, we probably will do, I think at some way, shape or form. The reason we chose not to, and why I don't think it was a mistake was we just wanted this to be simple. And, uh, you know, we are not as a full-time founder of a very full-time job, you know, running a hot company. Uh, I am a full-time podcaster. Like we have no team. There's just only so many hours in the day. I've got a three month old. He's got a three year old. Uh, so we wanted to kind of move slowly into this and walk before we crawl. There was one technical little

SPEAKER_29: detail here. And obviously in the last episode, Matt, uh, the VC with Rarebreed did do 506 C and

SPEAKER_01: got a lot of his Twitter followers, but here's the technical difference, Molly. When you do a general solicitation, you have to, uh, verify that everybody's a credit. In other words, you can't just take your word for it, which means, and there are companies that do this where the person who's going to be the LP, instead of just filling out the LP agreement, they have to then have their accountant, lawyer, basically verify that they are in fact an accredited investor by sending their tax returns or a letter, et cetera. This creates friction. Uh, and sometimes that friction could

SPEAKER_00: result in 10 or 20% less LPs because they don't want to do the work. So in the, in attorneys for the last 30 or 40 years, you know, have just said like, if you're a VC, never, ever to a journalist or

SPEAKER_01: anybody ever talk about raising a fund, which is why Molly, when you were a journalist, they just said, Hey, you're raising another fund. They were like, I can't talk about that. Please don't ask me insane. Yes. And you're like, we know you're raising a fund. 10 people told you they're like, please don't ask me. I can't speak to that. That's why there was all this hand wringing. But now with the

SPEAKER_00: jobs act five or succeed is very much in favor. Um, because you can shake the trees and find out

SPEAKER_373: people who maybe you didn't know existed. It is totally doable. And again, like I said, I think

SPEAKER_210: there's a very good probability we will do it at some point in the future. We just, we thought even with that paperwork aspect aside, the idea of managing hundreds of LPs versus 50 LPs felt like a lot to

SPEAKER_310: bite off for the early, early days for us. Yeah. Well, talk about, I just, I'm sort of loving this

SPEAKER_10: vibe that you're like, we podcast and on the side, we have this venture fund. So, you know, by comparison, Mac the VC came on the last episode and talked about having like, what was it? Something insane.

SPEAKER_219: I mean, a thousand meetings a week or something like that. He did 1100 meetings to close his fund

SPEAKER_01: is what he told us. And he was doing 20 a day for 20 minutes each. He was doing it from 6am to 11pm. Just get on the phone with anybody. Oh, I've been there and done that. And it is, uh,

SPEAKER_10: I mean, tell us about that and how different it is now, because it sounds like the bulk of your meetings are like, come on my podcast, which is awesome double duty.

SPEAKER_210: It is, it is so different. I think it just gets back to what the goals are, what the intentions, like we, you know, uh, I've been part of firms that have billions under management. I've raised, you know, 10, 50 plus million, you know, on my own as a first time GP. We set out, we were like three, we actually set out to raise 1 million as a brief concept. We ended up with close to three. Uh, it was just about setting that as the expectations. Um, you know, Mac's experience, uh, is very common, uh, as you know, and probably a lot of your audience knows for a first, first time fund, first time GP raising what looks like a traditional fund where you go to the institutional LP community. Um, and, and that makes sense. And, you know, he, I'm sure had to say just like everybody does. And I've said in the past, I'm full time on this. I'm so dedicated. I need to make this work. And I think part of that process is the LPs in the institutional community being like, all right, let's see how serious you are when you go a year with no salary and doing nothing, but taking 20 minute meetings all day. And if you're still at this in a year, like, okay, maybe I believe you'll, you're dedicated enough to make this work. Um, but that's, you know, again, there's nothing against that model. It's, it's great. And I think it will continue to work,

SPEAKER_226: but there's this whole new world that AngelList enables for folks like Rahul and Todd,

SPEAKER_210: for folks like me and Nat, um, for folks like Paki to say, no, no, no, there's, there's a different path. There's a different way we're going to do this. And the work they do is they just abstract

SPEAKER_29: away all the legal and accounting and just, uh, all of that stuff. And they do that for a small

SPEAKER_382: percentage of the carry and some cash, correct? Well, I should make two points. One is, uh,

SPEAKER_210: day to day wise, what you're saying? Yes. You know, we don't have a team. We don't have a back office. We couldn't run this. AngelList does all that for, I believe. Oh, don't call me on the percentage. It's a small percentage of the fund capped at $250,000 over the life of the fund.

SPEAKER_29: $250,000 in carry. I think they take 5%. So if you had a 20 point carry,

SPEAKER_256: they would take one of the 20 points. That is if they bring LPs. If you bring all of your own OPs,

SPEAKER_205: LPs like we did. So you just pay a hundred K in fees or whatever over the life of the fund. Over the life of the fund. It's really, it's like a roll your own fund is what you're saying.

SPEAKER_388: It's AWS, just like a shore, which we're investors in. So a shore, Carta and AngelList all provide AWS for your fund, pop up your fund and don't need to have,

SPEAKER_19: you know, like we have on our team, you know, a Heidi and Ashley and all these people doing all

SPEAKER_210: the back end stuff. And we still use it for some of it. Yeah. Here's what's amazing about it. That's all the nuts and bolts of being an AWS for venture enabling firms like us, but it's actually more powerful than that. We have a $2.8 million fund that you would never raise a $2.8 million fund in the old world. The economics wouldn't make sense. You wouldn't have enough management fees. Even if you took a management fee on that to support the team members that you would need to make that fund

SPEAKER_398: actually. Explain that math. Most people get two and a half points as a management fee. So walk us

SPEAKER_226: through that math over the 10 year life of the fund. Yeah. Let's take a, oh gosh, let's, let's make

SPEAKER_210: it easy. You say it's a $2 million fund, uh, total fund size, uh, over the life of the fund you're getting in a typical structure, 20% of that fund in management fees, you know, over 10 years. So 20% of 2 million is what? 400,000. Sorry. But that's over 10 years. So 40,000 a year, you're going to pay a back office with $40,000 a year. And not to mention yourself, like if you're, cause it's expected, you're doing this full time, you're fully committed to it. It's like, come on. Like there's, it's just a total non-starter. Right. But now you can scale, uh, down to like these small sizes, do proof of concept funds. And I think a bunch of people are finding like us, you know, I, I know, you know, Paki, we're good friends with him that he found this with the first not boring capital fund that he

SPEAKER_226: did. Um, there's actually this whole other way to do venture that works with these small funds. And then if you prove the model and like, okay, well maybe we'll try adding a zero next time.

SPEAKER_01: Micro venture. Basically it's the same thing that happened. If you think about it with the internet, it used to cost a million dollars to set up your servers, set up your T1 in 1993 to 1998. And if your website was going to make, you know, 500,000 a year or 250,000 a year, it made no sense to spend a million dollars and then half a million dollars a year maintaining it. AWS comes out or spot or actually better example would be Shopify and Squarespace. They totally abstract everything.

SPEAKER_19: And now you could have a million different little sellers, you know, eking it out to make five or

SPEAKER_406: 10 K a month in profits. And it's, it's a great way to, to sort of get to this one point. I,

SPEAKER_210: I'm such a geek about this, but, uh, it's completely changed and enabled us, us to do this. The third aspect of this is it's, it's like, it's a dead same dynamic as when say, when convertible debt and safes entered the startup funding ecosystem with a traditional fund. You got to have a close of the fund as, you know, I'm sure you've done with most of your funds and everybody used to do well to get to a close, you know, that's where you round up all your LPs who've said they're in and you're like, okay, no, no. You're like, you're really in, we're doing this. You're going to give us the money now. And all the LPs usually kind of look around and like, all right, are we doing this? Is there enough money? Are we doing this? Is there enough money around the table for this fund to be viable? That's why it takes a year to get going. Cause you need enough capital to get over that hump of like, everybody's like, okay, you may not be done. Say you want to raise a $20 million fund. You're at 12. Okay. I think you can make this work with 12. Even if you don't get another dollar in that takes a long time, but with AngelList, it's just rolling. It's like a safe. So when we got going and we're like, great, we're standing up kindergarten, we talked to some folks, they want to invest. AngelList throws up a fund page in a week. They log onto the page, they commit, they link their bank account monies in the bank. We just start investing. And it's all happening in real time.

SPEAKER_153: It's sort of like Apple Pay. Like, I don't know if you guys have had this experience recently, but you know, I am now like getting onto, you know, you're at a restaurant or you're,

SPEAKER_01: you know, going shopping and like app, they have Apple Pay and you're just like beep with your watch or you are on your, you're in a, you know, you're filling out the form and it's like, oh, we have Apple Pay. And it's like, oh, well I'm done. I'm obviously using Apple Pay. So it becomes like Apple Pay for, for venture funds. Let's look at that. Let's, let's double click on the dynamics of fund

SPEAKER_19: size. Okay. You're doing your first fund. Let's go with the same $2 million fund. Most funds do, uh, two or three times cash on cash in 10 years. Let's just come up with a four, four X cash on cash, 2 million turns into eight. How much money do you make? And how much does that wind up, you know, how does that wind up working out well for, you know, people who you're average, you have 50 LPs and a $3 million fund. So they're putting in 60 K on average. Let's walk through that.

SPEAKER_10: I love, I love when Jason's like, please do math on the fly. Oh boy. You know, instantly in my head

SPEAKER_283: now, it's back in the envelope. Can other people do this? Let's find out. Well, I can, I can, uh, I do it at the poker every hand, every hand at the poker table. I don't need to do math to answer

SPEAKER_210: your question, Jake. It doesn't move the needle at all for any of our LPs. That's not why they gave us money. Um, it was much more about relationships. And I think for a lot of them also, um, you know, just seemed like seeing this starting. And I, and I do think again, it wasn't intentional. I think we were pretty early in the wave of this, this dynamic starting to emerge and being like, huh, that's interesting. Let's see what happens here. Let's run this experiment. Um, and if it works, then it'll be a bigger fund next time. But yeah, to your point about the math, say we forex, let's say we'll call us a $3 million fund. We forex, that's $12 million total. Now that's a lot of money to an individual and, you know, for us as GPs, like that's, that's meaningful. Like we're early in our careers. Like that's, that's fantastic. Um, but to our LPs, you know, net minus our carry going back to them. That's what, not even $10 million to 50 people. Take out the three. You got to give

SPEAKER_13: the three back. You got nine left 20% of nine. Well, 10% of nine is 900. So it's double that is 1.8 million. So you take the 1.8 million out of the nine and you got, uh, what is that? 7.2, 7.2, boom. You know, they're going to wind up getting roughly three X their money and you're going to

SPEAKER_210: make a little bit. Right. Great. But to none of them, you know, I think our largest LP invested, maybe $300,000, uh, you know, our next largest $250,000. They make the, these are large folks, $750,000 back to them. Not going to move the needle. Not going to move the needle. So they're

SPEAKER_148: doing it for that relationship building. Okay, let's Molly. I think we have some questions from the live audience who's watching. I do. I have one slash this weekend.

SPEAKER_08: I have one final question before we move to the YouTube questions, which is it. This series is

SPEAKER_10: called Angel. And it's about first time fund raisers. And I wonder when you describe this model and considering how easy, for example, angel list is, why raise a fund instead of stay an angel? Or is this like a way to do it if you're not rich enough to be an angel?

SPEAKER_256: Well, I think it's, it's two things. One, um, I was in a fortunate position where I was able to be an

SPEAKER_210: angel, but I was writing 10 K checks on average. And now with this fund, I got to write 70 K checks on average. Um, but the bigger thing was about pulling on this thread to see where it goes. Uh, that was what I was really interested in. And in Nat too, like, can we write 70 K checks, 100 K checks? Will founders want us in those rounds? Would VCs want us in those rounds? Well, the answer is pretty resoundingly yes. And also through conversations. And when we did the one SPV and talked about doing others, we're pretty sure we could put 250 K checks, 500 K checks into rounds. I think that would still work. And so that's kind of the whole also to, you know, why would LPs bother with this when it's not going to move the needle for that? It's about running this experiment. Like, could we do this with another zero in our fund size? I'm pretty sure we can. Could we, in another few years, do it with two more zeros in our fund size? Well, do them baby. Let's see. Same reason to put a man on the moon,

SPEAKER_41: basically. Because we can, we're doing God's work here. And if you think about it, Molly,

SPEAKER_13: in terms of gambling, or if you're skiing on greens and then you want to go up to squares and then you go up

SPEAKER_19: to diamonds, like you graduate to these things that feel very scary at first. So, you know,

SPEAKER_01: when I started, I put 650 K as a scout into whatever it was 17 companies over two years. This year, I think as a firm or in 2021, I think we put 75 million to work. And so you start thinking about that difference 350 in year one, here we are 11 years later. You know, it's, it's a, it's a considerable amount more. It's 200 times more, I think. And so, you know, you got to get comfortable writing. Yeah. And when you write the bigger check, you're going to have a lot more responsibility. You know, I have sometimes emergency board meetings, you know, two hours long, you know,

SPEAKER_19: got to push a podcast back, Molly gets inconvenience, for example, for example. And, you know, there's no choice because you're on the board and you're in 12% of the company, 15% of the company, you're in the very lucky position of, you don't have to go to board meetings, things don't work out. There's no lift for you. And then that's really what you're going to have to get more

SPEAKER_01: comfortable with when you add a zero, because you add a zero to this. Now you put in 700 K, you know, five to 10% of these companies, and you're going to be doing follow ons, your, your responsibility

SPEAKER_266: goes up. And that's really what you got to be ready for, right? That's, that's interesting. One,

SPEAKER_210: I got to say, Jake, how you totally, we've said this before, when you've been on acquired, and when we've been on twist, you wrote the playbook for all of us on this. So thank you. Keep going. Seriously. But okay, commercial for Jake Allison, but I mean every word of it. I think things have changed a little bit, or at least we're taking a different approach. If we add two zeros, I think we got to do what you say. If we were to add two zeros today, but we're doing plenty of seed and pre-seed, but we're doing a lot of series A and series B too, where we can add a zero and we're not going to be on the board when, you know, Andreessen is leading

SPEAKER_364: a $25 million series A and we're putting in even 500 K.

SPEAKER_61: Yes. The scale has gotten a little crazy, hasn't it? Yes. Yeah. On these deals.

SPEAKER_01: All right, let's go to some questions. Molly, we've got to get good questions from our amazing

SPEAKER_13: live audience. If you want to sign up for the live audience, go to youtube.com slash this weekend. You hit the subscribe button right next to it. It's a bell. You hit the bell. Now you get live notifications. We go live randomly. Some guests want to do it. Others don't when we do news. And then you get to join the nodi gang, the notification gang. And we know your names and we take your questions. Let's go to the audience. And David's brave enough to dive on in since time.

SPEAKER_200: Thank you for doing it. I know. Thank you.

SPEAKER_210: I gotta say you guys are like, you like the Taylor Swift of, uh, of, uh, you know, VCs and podcasts. It's great. You got the nodi gang. It's like, you got the Swifties. It's great.

SPEAKER_10: Oh, I was like, how do we feel about that? Is that a good?

SPEAKER_396: Oh, Taylor's the best of all time.

SPEAKER_10: Totally. Just like the Swifties. Okay, good. I'm glad you meant it that way. Uh, well then I'm gonna go to the topic that everybody's talking about since time is short with you. Beard script wants to know what is your take on the crypto ecosystem? After everything that's been going on lately, do you see real value coming out of it?

SPEAKER_456: You couldn't avoid talking about the crypto ecosystem. Come on.

SPEAKER_310: Totally can't avoid. Uh, I think it's great. I think it's wonderful. Uh, it's which my frontiers, um, all of it, right? Like, it's just, I don't, I don't see, you know,

SPEAKER_210: where we, all we do on acquired is we dive deep into history of, you know, tech history and investing history and company building history and nerdery and industries. It's always the same. You know, there were 57,000 oil companies after, uh, um, after oil was struck in Pennsylvania. What was the name of that town? I can't write it, you know, standard oil emerged, but like the same with the auto industry. Like it's this, it's a new birth of a new industry. It's great. Tons of scams, tons of fraud. People will lose tons and tons of money, but people will also make

SPEAKER_13: so much more money than they ever imagined. So kindergarten is going to be, uh, you know, this like $3 million size, 75 K you're going to do about 40 names, 40 companies in there.

SPEAKER_226: How many of them will be crypto or crypto related? Not as many as we've wanted so far. Uh, I think,

SPEAKER_263: let's see, I can tell you, we, uh, just about 10% so far are web three and crypto or five of them.

SPEAKER_13: Yeah. Got it. Yeah. Uh, we would like, how do you make your deter? Yeah. How do you make your determination that it's not a scam and that it is something worth placing a bet on? Cause we both

SPEAKER_01: know it's filled with scams, griffs and a lot of people talking, but not a lot of code being written.

SPEAKER_210: So how do you make those decisions? Well, ironically, there's a lot of debate about this in crypto and web three land right now from Jack and others, but ironically, I think VCs still have like, um, full-time big VCs still have a pretty important role to play in web three and crypto. And it's related to this, like say what you will about Andreessen and, uh, everything they've done and not done and mostly done in, in web three and crypto. Uh, they are a great and others like them are great, um, tastemakers, both tastemakers and diligence doers of like, what's for real. Uh, so we do, well, almost exclusively, we invest alongside folks like that. That's not to say we just totally outsource our diligence. You know, we know these founders too, and we connect with them through the pot or other, uh, other means. Um, but like, we wouldn't, we wouldn't just like lead a SAFT in a company that nobody else is coming into like, no, no, no, we're going to come in alongside true or Andreessen or, you know, Kevin Rose or like, what have you.

SPEAKER_10: That's interesting. It's, it's fundamentally risky capital, but they make it safer.

SPEAKER_256: Yeah. When they, they're bringing, because it's such the wild west, it's not just capital.

SPEAKER_188: Sorry. If you wouldn't mind, can you define SAFT for us?

SPEAKER_210: Oh, sorry. Uh, simple agreement for future tokens. Um, uh, same as a safe with equity. Uh, and, um, but because it's the wild west, it's not just capital that these folks are bringing it's gravity to these startups of like, no, this is for real. And if you are, you know, developer talent, like everything in the ecosystem, you should coalesce on this. And there is absolute value to that.

SPEAKER_75: Anointing is a thing. When you are a brand name, you put your name on something, whether it's YC,

SPEAKER_13: Launch, Andreessen, Chamath, whoever, you know, there is a halo and people are going to pay attention. And, you know, that's a double edged sword because if it turns out to be, you know, a scam or a fraud, or it turns out to be brilliant, you know, you get, it goes both ways. Molly, any more great

SPEAKER_10: questions from our Noti, Noti, Noti gang? I think the perfect place to end actually is OG Bob G, which we should probably make the question for everybody as they go out, which is what aspect of, and I, I swear this is not self-serving either. It was Bob's idea. What aspect of investing has been the most difficult to learn and what skills are you most focused on improving?

SPEAKER_28: That's a great OG Bob G question, right? Wow. Wow. Getting down to basics.

SPEAKER_210: Okay. I have, I have two answers. There's one easy, one easy, and one hard. Uh, oh, they're both hard. One is just Andy's question of like, do you have a really good reason why good founders are going to take your money? And for large swaths of my career, you know, I did not, you can feel it because like, you don't get into good rounds or, you know, you feel lucky if you get into good round and then, you know, it's like traction at a company. Like once you have a good reason and it's like, oh, wow, I get into like a lot of stuff now. Um, and it takes a long time to build that, or at least it did in my case, you know, a decade plus from starting in the industry until acquired being a big enough community that this made a difference. Um, I think the other answer to that is like where it fits in my life, uh, investing, um, for the longest time I defined my identity as being a professional VC, both at Madrona and then when I had my own fund and, uh, that was like, I, anybody who met me, I would, I would say, this is what I love doing. It's what I was born to do. This is my calling. And now obviously it's not my day job. And yet ironically, I'm doing better than I ever have at it. And so just like understanding, uh, that, that personal journey has been, um, uh, quite the journey for me. Uh, but, uh, but yeah, that's, that's, that's, that's my answer.

SPEAKER_13: It's, uh, it is a very rewarding job and you get to hang out with some of the most positive people in the world who want to change the world and who are hardworking, but it is a grind and it, it, it, it's a never ending grind. And so you, you can get burned out on it. You see it many times, you know, people, you know, Jeremy Lew at Lightspeed, I understand retired, obviously Bill Gurley isn't at the next fund. You kind of get to a certain point and you're like,

SPEAKER_01: well, checkbox, checkbox, checkbox. And then you really have to look in the mirror and say, do I actually like taking these meetings? Do I actually like going to these board meetings? Do I actually like dealing with, you know, the car flipping and going off the side of the road and dragging it back out of the ditch and, you know, redoing the suspension because that's

SPEAKER_226: basically what happens constantly, isn't it? And I think it starts to, even when you're successful, I don't want to say that I had that experience myself when I was a professional VC

SPEAKER_210: of being successful, but I think the movie just starts to look the same and play over and over again. And, um, yeah, it's really fine. I never would have said I wanted to go be a founder or start something or operate anything, but like running, acquired and building that business has just been this great joy in my life that I never thought I would have. And ironically has made me a much more successful investor. And, uh, yeah, I'm just glad I get, you know, both of you like, you know, you invest, but you also do these other things, right? And that keeps it fresh and interesting and you're building

SPEAKER_256: something.

SPEAKER_29: David Wright It is one of the great privileges in life. If you get successful at either of these pursuits broadcasting or investing that you get

SPEAKER_13: to pick what you do. And I think it's very important, especially for young people who are watching, you know, we're all in our second, third, fourth decades of working. Uh, and it's important at some point to just really think, what do I enjoy doing? What am I great at? And then what does the world need? And if you start doing those circles together somewhere in the middle is just pure joy

SPEAKER_134: and bliss. The world needs this. Yeah. Yeah. I love what you're describing to David about not only

SPEAKER_10: deciding where things fit in your life, but essentially hacking, but raising a fund, right? Like I have always been a big believer in hacking your job. There's the job that they tell you have, and then there's the job that you actually want. And you just like work until you figure until they realize what job you want to do. And, and you have essentially said like, there was a way that people did this forever. Lovely. Turns out there are a bunch of new tools to do this as a, I mean, who would have thought there would be a low lift fund that didn't have to be your full-time job.

SPEAKER_210: Like that's a great realization actually. Yeah. I mean, if you had said that to me or anybody three, four or five years ago, we would say that's insane. That would never happen. Yeah. Uh, the whole

SPEAKER_13: thing, you know, if you, if you just think about the innovation in the last decade in, uh, investing from syndicates, uh, to micro funds and SPVs and accelerators, all of these things, you know, 20 years ago seemed crazy. And now they become standard and everybody thought we'd run out of companies and it's like, yeah, we're still not running out of companies and we're still not running out of ideas. We're still not running out of problems to solve. I think it's one of the great fallacies of human existence that, oh, we're going to run out of work to do. We're so industrious such humans that we keep finding things to keep ourselves busy. The fact that YouTubers, you know, and influencers can make a living or perhaps people on Etsy can make global livings. Like we just keep inventing new work and, and creating new projects. And we wish you all the

SPEAKER_494: success in the world. If people want to pitch you, what's the best way to get to you to get that 75k?

SPEAKER_331: Uh, great question. Um, what best ways come on the acquired podcast, the best way to come on the

SPEAKER_210: acquired podcast is to build a great company. Uh, barring those two things, uh, the acquired slack

SPEAKER_75: is, is by far the best part. There's a little hack. We never heard that one before. Yeah. So being a meaningful contributor to a community and then maybe making a great MVP or, you know, and like you said about Andy Ratcliffe, it has to be something.

SPEAKER_210: It's, it's gotta be, it's gotta be something. And sometimes it's a journey to like Austin, who I mentioned, uh, who's at Solana. He joined the acquired, he was one of the first folks in the acquired slack, you know, years and years and years ago, I think he was right out of school. He's had three jobs since then, you know, ends up now he's, he's still young. He's running all of marketing at Solana. Like it's just been amazing to watch his journey and plenty of other folks along the way. And so we meet folks like that. We're like, holy crap, whatever you do next,

SPEAKER_10: we want to be a part of it. This has been hacking VC with David Rosenthal, AKA the angel series. Thanks so much for the time and the insights. I think, uh,

SPEAKER_456: there are going to be a lot more trying to do what you're doing right now.

SPEAKER_504: All right. Thank you both. See you all next time. Bye. Bye.