SPEAKER_00: we have a number of companies that have a file to go public or in the ipo queue they look like public companies and they just won't get out i love dan premac's piece the other day where he's like hey just a reminder the ipo windows open people right let's go you're going to need the

SPEAKER_04: team in-house to be able to separate from the roadkill and the disruptive companies right so you know obviously like the aspect of ai washing that we're seeing in startup community um the same thing we saw with kind of greenwashing in the climate space uh it's important for vcs to have the technical skill set in-house to be able to determine when their startups are actually building

SPEAKER_05: good technology and in a position to do what they said they'll do this week in startups is brought

SPEAKER_08: to you by intercom intercom's ai first service is the best thing to happen to your customers since you twist listeners can get 90 off intercom's platform at intercom.com twist assembly ai get maximum value from voice data with assembly ai build powerful products and features for your end users on the industry's leading speech to text models get 100 free hours to start building at assemblyai.com twist and venture venture is an hr firm that specializes in serving rapidly growing technology companies providing fully customized hr and benefit strategies designed to grow with their clients needs visit venture.com today to schedule an hr evaluation and learn how they can help you welcome back to this

SPEAKER_15: week's liquidity podcast with me today i have logan allen from fin capital next we have neil data from

SPEAKER_17: nkd advisory of course we have jason calacanis from the launch fund i'm your moderator david weisbert co-founder of 10x capital today we have several interesting topics to discuss the note khosla sounds off on ai developments and regulation at the collision conference trump weighs in on h1b visas and green cards and carter releases data showing how long it actually takes to succeed in a startup we'll end

SPEAKER_18: the show with the latest three investments from the guests let's dive right in and hey as we start

SPEAKER_20: here i just wanted to say thank you for a moment to some of the amazing partners we had at the liquidity event in june in napa david a great event i think you had a good time yeah yeah it was a great time so thanks to uh some of the folks who sponsored dinner and lunch eventus advisory they're a leader in on demand finance and accounting support uh venture they provide end-to-end solutions for payroll hr benefits and risk management and forge global which provides investors and shareholders a transparent

SPEAKER_23: view of the private markets thank you so much to our partners all right big docket let's go yeah let's go

SPEAKER_18: so binot khosla spoke at the collision conference in toronto and discussed several pretty interesting

SPEAKER_17: topics uh he's not very interested in deal making hasn't personally taken a single dollar of management fees since starting coastline 18 years ago his concern of the us going the way of the eu which has regulated itself out of leading technology innovation and the implicit nod of confidence that apple and tim cook has bestowed on sam altman through the apple open ai deal which he believes expresses confidence into sam altman's ability to lead developments in ai over the next five to ten years neil you got a chance to listen to the talk what did you think about the notes talk well it's not surprising to hear

SPEAKER_05: a prominent venture capitalist push back against regulators i think at a high level i do agree with

SPEAKER_04: his premise that the the passage of the act is is going to have a profound impact on the industry but however i think it's much more nuanced than the standard argument of government overreach in terms of regulating new technology may or may not fully fully comprehend and i think uh the act itself if you look at it there's two prime areas of focus right there's the the privacy section and the kind of risk section and the privacy section um it mentions things like deep fakes and social scoring systems and it creates controls around that and i think stuff like that we could all agree about and get behind the area that i think is is concerning for hardware makers and software makers is the inclusion of you know companies based in america trying to sell product or or software to the eu however uh you know if you think look at the history of the eu the eu historically has taken a leadership role in regulating technology uh the two instances i could think of is in 2002 the e-privacy act which effectively forced websites to disclose cookies and tracking which you know we all enjoy today um the other thing that that is uh gdpr which ultimately led to things like ccpa and other privacy laws um around the world so ultimately you know the eu has you know historically taken the the kind of first mover approach in terms of um regulating technology but you know a lot of it is tbd so i i think it's super nuanced and you know worthy of uh uh you know regulation playing out jason you've talked about

SPEAKER_30: kind of the side effects of eu regulation how some businesses may avoid the region what are your thoughts on eu and its position on a global scale yeah i mean it's a pretty tight filter i think most of

SPEAKER_34: the companies in m a that are most of the let's say ticky tacky you know what would we call them tactics that companies are getting dinged by in the eu um are manageable and other ones are seismic right and so it's very early to start regulating ai i think it's all regulatory capture and generally we just need to use existing laws and maybe keep an eye on it so i don't mind like an exploratory committee and that kind of stuff i do get a little concerned when they want to regulate something so early on because we don't even really know what we got yet now when we look at something like um usbc cables and iphones and versus lightning in a free market one might suspect like you could pick whatever charging cable you wanted for your device the eu put so much pressure on apple they uh moved to putting a usbc uh inside of every device which has been great for consumers right so you know i get the free market person in me says like they should be able to use whatever cable they want and the environmentalist

SPEAKER_39: and as a consumer it's just so much better that everybody's on a usbc it's better for the environment so i don't know where to stand on that one um i do think opening up an interoperability that's a really great speeding ticket to give a company like apple where you know they're so heavy-handed oh you can't even tell people about a better deal they could get in buying direct from you um so i like those kind of actions i don't like the blocking of m a it's killing the industry it's taken an entire swath of returns away from our lps away from founders and you know it's just so important to have m a back on the table you know blocking figma because you know some uh regulators in the uk don't want it to happen seems crazy to me and so i do think there is this possibility eventually where people will say you know what i'm just not going to launch my products in a region that's 10 of my revenue but that's just too onerous to deal with and that's where the eu might overplay their hand and i think we're we're kind of getting towards that area where people might just say it's not worth even launching my product in the eu or i'm going to launch this like sub product it'll be like here's my salesforce or hubspot or figma for eu under some shell company or something you know unnatural acts to get around

SPEAKER_30: regulators could be coming for europe i think logan you're nodding your head you've built quite a big franchise at finn how do m a's play out in your portfolio how critical are they to the

SPEAKER_43: success of your funds critical and i'd agree with jason just on certainly the justice department and

SPEAKER_00: antitrust environment here in the us but also in the ek and eu eu i was just in europe for two weeks and and actually ai regulation was certainly a hot topic the other topic was tax right so labor party looks like they're going to win here in london and my colleague in london uh is sitting there looking at taxes that are going to go from 28 on his carried interest to 50 right and i had a dinner for about 40 vcs and half the room raised their hand when i asked them if anybody was thinking about leaving as a result of the tax issues i think that's a huge problem and so you think about just the regulation environment the tax environment those are spelling challenges just in terms of trying to be constructive about investing in the uk and eu where we have 35 companies on the m a side we just announced an exit a couple hours ago with a company of ours called salt uh selling to chime uh m a is is the lifeblood of of venture capital certainly in in terms of our early stage book our pe book where we invest from growth to pre-ipo exclusively in fintech software we're underwriting to an ipo but inevitably there's a dual track process so m a comes in place there as well so to jason's point we're concerned about the uncertainty and certainly the time frame that it requires to be thoughtful and diligence uh and check all the boxes in terms of making sure a company will actually successfully prosecute an acquisition as related to ai uh in binot's comments um you know we fully agree there's just going to be a ton of companies that will will become roadkill here as um you know they're trying to wrap uh existing llms and they're not really building any true ip or defensible modes around their business we're focused on vertical applications in ai and then orchestration of ai in the enterprise which is particularly important to the end customers we serve that have to deploy ai in many cases on premise so very excited about our investments in ai we have 20 companies there and certainly more to

SPEAKER_17: come it's interesting you mentioned taxation some of the forward-looking lps that i talk are rebalancing some of their portfolios towards venture capital with the assumption that all these things interplay with each other specifically on the national debt in the us their assertion is that in five to ten years we're gonna have to increase the capital gains on on everything including long-term gains and with exemptions like qualified small business stocks allows investors in the venture ecosystem to essentially pay no federal and sometimes no state income tax on their gains so a lot of people are kind of thinking one step ahead in the us in terms of investing into asset classes that are going

David Friedberg: to be much more tax advantaged well just to that point david jurisdiction matters and if you start putting your thumb on the scale too much people in today's era are very willing to move jurisdiction this is

SPEAKER_38: something new i remember when i was starting my career in the 80s 90s you know it was like you have

SPEAKER_34: to be in new york or you had to be in you know the bay area and now people are in salt lake city doing great work they're in austin they're in houston they're in miami they're in la they could be in

SPEAKER_39: any jurisdiction and then people are now starting to move to singapore or to uae abu dhabi in dubai and these places are giving incredible incentives why would a venture capitalist in a large firm ever want to live in a jurisdiction that just killed them on the you know with 50 taxes on capital gains and when you could move to dubai or you could move to florida or you know pick a location i think you're going to see a lot of young people and maybe even some of the oldsters who are at the end of their career saying hey how do i manage this wealth transfer just pick new jurisdictions you saw the texas stock exchange coming uh so this is serious momentum and i think there's the you have covid in some way and remote work as the accelerant right if you can manage people and you could have a couple of people on the ground in europe but have your headquarters in dubai or have your headquarters in miami and your analysts or you go to broadway shows every now and again in new york for a couple weeks you kind of can get the best of the city and the best of the proper jurisdiction for running your

SPEAKER_23: business what person wouldn't do that a person with kids in school maybe you know that would

SPEAKER_17: be the only reason to not do it i can think of it is interesting we just ran the simulation as you mentioned and covet one of simulations was moving to miami we had so many people move from new york to san francisco and some people came back but the people that really remain in miami are investors and i think governments should be thoughtful in terms of the regulations that they make for investors versus startup entrepreneurs many of the top startup entrepreneurs have decided to now go back to san francisco especially ai entrepreneurs because there's such a ecosystem there but i think governments that over regulate uh investors will find it to be a slightly different

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SPEAKER_17: prefer you can just do an email at startups intercom.io logan uh you also had some thoughts on what the note was saying around the other topics what are your thoughts there yeah so i think you

SPEAKER_00: know thematically we're we're all seeing some frothiness in in ai um where you've got you know several very very smart phd researchers founding a company with no use cases in mind right they're founding a company to found a company and then they're backing into you know hopefully some use cases and monetization over time we have to remember open ai was founded in 2015 first use case launched in 2022 um obviously there were some non-for-profit aspects to that um and some some pivot but that was a very lengthy period of time we're now starting to see founders emerge from the mistrals the open ai is the anthropics right because they're seeing real pain points and real use cases out in the market and spinning out to start their own companies and our view being a financial services and fintech investor is that there's got to be application verticals within fintechs that could be cfo tech stack tools it could be compliance automation it could be kyb kyc aml automation could be operational and docs processing it could be improving your cyber capabilities in terms of deep fakes which we think is a huge problem particularly in the bank and the wealth management worlds or two you could be helping people orchestrate right so we we've invested in several companies on the orchestration side like articulate and liminal and we're going to announce another

SPEAKER_60: one in september that's just focused on how do i deploy on-prem because everybody has to remember less than eight percent of bank data is in the cloud the banks have not adopted the cloud and so they

SPEAKER_00: can't just ship their data outside of their four walls and expect to leverage sas tools for all the regulatory reasons that that um you know are familiar to all of us and only getting more constrained so i i liked his comments um and i and i frankly think he was pointing out some of the pretenders and those that will get consolidated or be roadkill in his words uh versus ones that will have sustainable long-term advantages on the apple side the open ai partnership was interesting but i think as we all know they're going to look at additional partnerships much like microsoft has uh and in addition to that just on the european commons apple announced that they're just not going to turn on ai capabilities in europe to jason's point it's like we're going to have like sub versions across different countries

SPEAKER_60: because of regulation and that's going to be the debt to the detriment of small businesses and

SPEAKER_61: consumers ultimately yeah you know it's uh globalization is really interesting and i remember

SPEAKER_34: when airbnb and uber were going around the planet you know sometimes you'd want to fight the good fight in a region other times you just said you know what we don't need to be in austin we don't need to be in vegas we'll be everywhere else and then you know what happened people in austin and people in vegas were like we need lyft we need uber we need airbnb like we we want these opportunities why are you and then you all of a sudden as a politician become pretty unpopular

David Friedberg: so if you're in europe and you can't use certain ai features then you're going to get a vpn and you're going to vpn to get those features you'll ride around the government if you have means

SPEAKER_34: or intelligence and if you don't you're going to start complaining uh and what are they going to do like you i have a vpn and i'm you know like i can watch bbc with a vpn uh because it's free and they

SPEAKER_39: can use microsoft's co-pilot or apple's copilot because they use a vpn i mean it's just we're getting to the point of silliness here uh with too many restrictions now it's your decision in a society to do that but aren't the politicians supposed to work for the benefit of their citizens and like i don't see how this benefits it and if you don't adopt ai man your country is going to get decimated how are employees you know for knowledge work companies in france or in germany going to compete against knowledge workers in manila in the philippines or singapore or portugal or you know south america if they do have the tools the answer is you're not going to compete and then you're not going to get work and then work will go to places where it's most efficient cost and skill you're going to

SPEAKER_46: lose on both not not a great idea neil how do you look to navigate ai world when it comes to investing

SPEAKER_05: into venture managers i mean i think to jason's point just like you know these companies need to

SPEAKER_04: uh adopt ai into their processes the same as true of venture managers and lps are are becoming cognizant of this and incorporating this into their their diligence process and ultimately i think you know what it does is it creates a significant advantage for um vcs who historically have used data and have been quantitatively focused and you know over time have been collecting this this this proprietary data whether they're focused on a particular sector or a particular space in the market i think you know to the extent you're not doing this you're going to get left behind um the other thing i think is is is really critical to to jason's point as well is um you're going to need the team in-house to be able to separate from the roadkill and the disruptive companies right so you know obviously like the aspect of ai washing that we're seeing in startup community um the same thing we saw with kind of greenwashing and in the climate space uh it's important for vcs to have the technical

SPEAKER_05: skill set in-house to be able to determine when their startups are actually doing building good technology and in a position to do what they said they'll do just on the one point about uh the apple

SPEAKER_34: deal with open ai they went through great lengths to talk about that deal being swappable hot swappable

SPEAKER_39: i think they're going to swap it out the second they get a chance and i think it's going to get swapped out in one of two ways either to the highest bidder like they did with google and search uh in which case your apple stock's going to go up because that's going to be a pretty penny to be the default llm on there and these are cash rich companies so can you imagine you know claude uh grok and open ai and gemini all fighting it out to become the default or not to mention microsoft's version of open ai and and their co-pilot fighting it to be the co-pilot on apple's devices with those high-end consumers man that could cost 10 20 billion dollars a year who knows i mean

SPEAKER_34: that could be just a huge check every year and then the other possibility is they they work on the

David Friedberg: open source projects and build their own and have complete control which i think they plugged a hole because they didn't want siri to be completely embarrassing and have their phone fall behind and then have other people saying look look what you can do on an android phone that you can't do on an iphone so it was existential for them to plug the siri embarrassment and have the ability for you to say like hey can you you know start my order in doordash or can you call my uber and have siri actually be able to do that correctly with ai but yeah this is too core to their business they're not going to give up their their iphone franchise to anybody i bet they have their own version that

SPEAKER_34: they'll slot in there or they will buy a company uh or they'll charge the highest bidder i i give like open ai almost no credit for this i think it's like an instant swap out i don't give them any credit there just happened to be six months ahead of everybody else right now i i would almost i would

SPEAKER_39: place a bet in five years they do not have the default or if they do have the default they're paying

SPEAKER_04: billions a year for it yeah i was going to jump in and say i i think that they'll rather than being one winner there'll be multiple winners right so there may be somebody in the kind of the the you know financial market space where bloomberg gpt does plays one role in kind of the medical space and you know so i you know i i take the view that the data is so differentiated the folks that have the best data in their sectors mill to millie winners so you think siri fires off the bloomberg

David Friedberg: when you ask a stock question sure sure it fires off like the web md or whoever's version gemini if

SPEAKER_34: it's better for health that's actually a really clever idea i was thinking of it more like the search engine swapping or your browser swapping but what you're saying is there this might be so important there you might have 10 defaults who do i want for medical who do i want for entertainment who do i

SPEAKER_38: want for news who do i want for financial news that's actually a really good idea the data sits

SPEAKER_04: in different places so more efficient from a rather than having it centralized and a better user experience

SPEAKER_17: i think most importantly it is wild that it seems like we're living in two different decades you take your phone and you're like in 1990 and then you put on your computer and you're like in 2030 and you're switching between these different data sources so it's it's wild to see that two of the largest consumer brands amazon apple have basically been playing defense this entire time it's so it's

SPEAKER_46: it's a very predictable problem set that they haven't gone in front of all right you might not realize

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SPEAKER_17: moving on on the latest episode of all in podcast president trump declared support for increasing h-1b visas for highly skilled immigrants and even expanding it to any graduate of two-year and four-year programs since the episode aired the trump campaign has had to walk back the statements a bit clarifying that would not automatically be given to anyone that graduates any program and that there would be further vetting several conservative groups such as the conservative immigration accountability project have criticized the policy saying that u.s immigration policy must serve the interests of all americans not just the interests of elite business leaders who seek cheap labor logan what are

SPEAKER_00: your thoughts on this so i i was at uh stanford business school graduation in 2013 i was graduating and mike bloomberg was speaking and and he said emphatically and i totally agree with this statement that we need to staple a green card or visa to every single diploma in this football stadium and it's done at the stanford football stadium and he meant that more broadly obviously than the cohort that was graduating that year and i think we do such a poor job retaining talented immigrants in this country and obviously the nvca pitch book there's been a ton of data supporting the obvious which is immigrants are founding amazing companies particularly in technology in this country and we treat them like second class citizens when we should be bear hugging them and so we for example pay for all visa and green card sponsorships within our own firm we're sponsoring several now and it's one of my kind of favorite things to do uh as a as a leader and i think other vc and p investors and certainly companies and technology should be advocating and pressing on this and immigration policy in this country is broken uh this administration has tried to make strides to fix it but they've focused on the border immigration versus i think what is more low-hanging fruit which is the h1bs and uh uh the talent that uh is leaving this country to to go either back home or uh to other countries that are more accepting of them like a like a canada for example so i think trump was uh hopefully leaning into saying the right things and then

SPEAKER_60: and then walked it back a little bit um but i'm hopeful that we continue in that direction i agree

SPEAKER_04: 100 with with both logan and and and mike bloomberg i think um you know i one thing that both uh parties i think get wrong is that this this belief that you know immigrants themselves want open borders and i think it's just not true right immigrants particularly you know my family's from india and you know i speak to immigrants all the time and all the immigrants i speak to are are fiercely patriotic and really like the first in terms of you know being pro america and and being uh kind of the the the concept of being an american the concept of of you know as americans we have the best you know universities and institutions in the world and it's just silly that we force them out after training them and and educating them so you know 100 agree and hopefully that's something we can pull off and neil's got a

David Friedberg: great insight there about immigrants they understand the value of immigrating to the country they understand you know in how hard it is to do that and if they came in legally it feels profoundly unfair at least the ones i've talked to when somebody you know crosses the border illegally and you know they also understand the pain and suffering because they might know somebody who did make that really difficult journey so you know this is a highly charged issue the reason i pushed trump on it is i've been trying for close to a decade now to change the dialogue and reframe it reframing in psychology is just you know like how you perceive the world how you perceive a challenge or you know uh something bad that happens to you etc so if you reframe it from immigrants coming across the border to commit crimes and to take our jobs and and take lower wages let's reframe it as uh recruiting okay if we were

SPEAKER_39: going to recruit for this great country if we are a sports team who would we want to recruit well we'd want to look at the current team and say hey what are we missing do we need a center do we need a point guard do we need three point shooting do we need a wing what what do we need on the team what do we need on the team we know that we need people to work in healthcare we don't have enough of those we need people who are nurses and doctors we got a shortage we need labor to work in restaurants we have a shortage of the of that specific type of labor we also need people who want to create companies and be competitive do we want people going back to india to saudi to china to australia and creating their great company here or would rather they be building the companies here and we get the tax and we get the in the jobs so there's a big picture you know that you kind of have to reframe here there's recruiting there's illegally entering the country and then there's compassionate immigration let's separate these things and make them less politicized and then put numbers on each one compassionate immigration that could be you know whatever a hundred thousand people a year from countries where they are absolutely going to be politically prosecuted if they if they stay

David Friedberg: uh workers well that should just be based on our unemployment rate if the unemployment rate is low single digits we're going to accept a million people if it's ten percent we're going to accept nobody right we're going to keep it we're going to turn it off until the unemployment rate comes back down you could actually have a very thoughtful logical mathematical you know and recruiting based discussion on this and you know when he when when i saw them walk back my question and me pressing him on it what i saw was there's a base of people who lost their jobs when you know bush clinton globalization obama we we gave jobs to china we moved factories out of here that's the people who are they're i don't

SPEAKER_39: want to say pandering but they're trying to address there and they're also trying to address the issue of terrorism yeah of course we don't want this to be a back end for terrorists to come to the country yeah some basic vetting obviously and um yeah we don't want people to hack the system so it should be you know people with green cards are tracked in a way that americans aren't tracked like you will get pulled into an office with a green card you will get stopped at customs with a green card anybody who has a family member or friend who's had a green card understands the anxiety they go through just going home can i get back in are they going to stop me so that's kind of built into the system i think that's what the trump campaign was doing is just making sure that those constituents don't feel like he's talking out of both sides of his mouth and i i actually like the clarification because i didn't even think oh yeah some terrorist group's going to send 100 people here to go to university of phoenix shout out university of phoenix no offense and get some fugazi degree or something and you know they blow up a building god forbid so i kind of like the walk back in a way um and trump was um i think trump 2.0 is

SPEAKER_34: being very thoughtful um and he's winning a lot of moderates so maybe democrats need to take some notes

SPEAKER_30: i don't think this is a partisan issue i think this is a messaging issue um there's not enough people

SPEAKER_17: really advocating for immigrants specifically highly skilled immigrants the nvca is really taking a

SPEAKER_30: leadership role here but it's just one smaller uh group that's pushing for it just to give you some stats 44 of fortune 500 companies were founded by immigrants or their children this isn't new tech companies these are the fortune 500 the bread and butter companies of the economy 76 of patents awarded at

SPEAKER_17: the top 10 universities have at least one foreign born inventor as well and one of the interesting things about this policy is that we actually have are able to a b test it trump alluded to it but there are people that were not given green cards that go back to india or go back to china or even go back to to canada or europe and start these multi-billion dollar companies and what that has enormous uh multiplier effects on those economies and that really robs us of the next generation of great companies and one of the reasons the u.s has has really incentivized entrepreneurship is because entrepreneurship and the benefits of it don't just accrue to the founder it's not just the founder getting rich and getting a tax break it's also the employees it's also the employees taxes the goods that they buy every all that effect goes into the economy so i think if people really were educated on the multiplier effect that every highly skilled immigrant came in the country i think it would go from a uh partisan issue to just you know more of of question of nuance you know do you want to really bring in everybody from a two-year degree or maybe we should start with phds why is it that we have a single phd in the united states that doesn't automatically get a green card to me that's a very low-hanging fruit or maybe we start with four-year degrees so i think we really need to continue talking about it and continue um you know leading with data on this issue and i think it's going to be something that over time just like anything that's kind of an obvious policy over time it'll continue to gain steam and hopefully either in the trump or biden's second term something that we could get passed through i mean

SPEAKER_38: did you guys see the interview do you guys have any questions for me on it or any thoughts on it jason what was your biggest surprise surprise um you know the h-1b visa was a really great moment i think

David Friedberg: for him to you know show hey it's not just all xenophobia and you know that was kind of what that first administration his first term felt like and if he has a second term i think maybe lowering that rhetoric and just having a more pragmatic approach to immigration would settle down a lot of the i think tension about his presidency and his personality i think overall his tone is on at

SPEAKER_39: least on the on a business program like all in was very um what i put in that trump 2.0 not insulting people not that like rhetoric that makes everybody go oh god here we go again it's going to be chaos and i think he's running against himself i think trump is in 2024 is running against trump's chaotic presidency the first time around and i think people are going to make the decision a lot of moderates of do they believe this time will be more or less chaotic than the last time january 6th the you know trying to overthrow the election results you know depending on how strongly you feel about those two instances and just the general chaotic nature of it and so if he can come across as presidential and refined and less chaotic and more and less name calling and less i'm going to be your retribution that kind of stuff i think turns off the moderates and they're going to flock to

SPEAKER_34: biden if he's moderately cognizant so to answer your question you did a really good job um and i didn't expect him to be so presidential and focused and deft at speaking to the business community and he's not my preferred candidate but boy does he come across better in that interview than biden does generally speaking to moderates and i'm just watching those moderates and women and wondering i think women aren't going to vote for him but moderate smite and i think he's got a pretty good

SPEAKER_20: chance of winning this i don't know if you saw nate silver and other folks coming out today they think he's got like maybe a two-thirds chance of winning yeah 66 two-thirds maybe jason you're still

SPEAKER_29: officially undecided what are your top two issues top two issues um you know number one i think we have

SPEAKER_34: to cut spending you know freeberg and i are both you know concerned about that and we talked about it here earlier you know this existential spending is crazy so we need less government um so that's definitely number one for me um i'm not too worried about the foreign wars i'll be honest i think actually they're pretty contained wars are terrible there's always wars and these two seem to be somewhat contained right uh you know given how horrific wars can be um and i do think we need to have a very pro business environment so i'll put taxes m a you know uh antitrust and immigration recruitment all in that bucket of just being pro business um we have to keep pushing our advantage in building these next generation of companies like we all do here as capital allocators and founders do

SPEAKER_39: because the world is getting decided by how good your companies do it's really that simple if you have jobs if you have the best companies you have the best tax base you can basically win uh the global

SPEAKER_34: competition with your balance sheet and i'm worried about our balance sheet so i guess both of those issues are balance sheet related revenues coming in incentives to build great companies it's like a uh

SPEAKER_20: an rand novel right now what are your number one and two issues everybody since we're we're already

SPEAKER_111: here in the deep end of the political pool issue one issue two i i think for me immigration is is

SPEAKER_05: important um just having young children living in new york and and you know the the crime piece is is something that i worry about and then the economy um you know inflation jobs just general feeling consumer sentiment you know the the the way people are feeling obviously has a lot of effects on spending and business activity and startups and things like that uh on my end definitely spend and and

SPEAKER_115: business environment as well jason i think um your spends out of control we're now getting notified by

SPEAKER_00: other countries including the eu and uk uh banks uh respectively central governments saying hey look us you're spending way too much money and we continue to to do that particularly given interest rates uh our servicing on the existing debt is is uh is incredibly high approaching a trillion right so that that can't persist on the business environment we continue to see laws around carried interest adjustments and that's just going to create really bad negative incentive loops we saw what happened when you know the california government in the middle of covid um right was passed going to pass a surcharge on carried interest and we're all emailing gavin and saying hey like if this happens we're out right we're all searching for homes in tahoe miami and austin around those times and many left right and many have not come back um i think um you know third is on defense and and what we're doing there i do agree hopefully these wars are contained i agree with some of the hey we need to fix our own problems at home um versus sending money out but we have a global role to play as we always have and and that will ultimately reap the the benefits that of stability globally that um we've had long term and so it's gonna be a very interesting election i think the challenge is that it's creating uncertainty alongside of obviously interest rates on the ipo environment and between that and the antitrust issues dpi is a huge question mark for so many um and that's that flywheel effect of lp return and then commitments and then deployment is broken um for many of us and i think that's going to continue to create meaningful challenges in the fundraising environment and create challenges an extended round dynamics for the portfolio companies you could basically take this incredible flywheel

SPEAKER_76: we have and we're literally throwing junk into it it's like let the flywheel go stop throwing sticks

SPEAKER_39: and rocks and wrenches into the flywheel we we have the best capitalistic flywheel ever created in humanity and we're somehow trying to you know muck it up hey we should be doing the opposite we should be trying to accelerate it make it a wet even more well-oiled machine we should have more company formation more exits more ipos more winning and all of it trickles down all of it results in that lowest unemployment of our lifetime right and if we keep screwing with it and there's less companies and less m a and less capital allocation you know a lot of people retiring and you're not gonna have a lot of productivity in the economy and that's what we want we want a productive economy where people are spending and they're clenching it up don't clench up the machine i think the math on on the

SPEAKER_30: national budget and on the economy in general is very simple it's revenue in and costs and the only

SPEAKER_46: non-zero-sum aspect of that is company creation is entrepreneurship it's it's the thing that makes everything else possible and although people argue about lower taxes versus more entitlements you know that money has to come from somewhere so i think if we just refocus the debate on how we can make it a better economy it would be a rising uh tide that lifts all boats hey founders you know that

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SPEAKER_30: the economy uh let's move on carta has released the average amount of time from incorporation to important funding milestones and the data is around fourteen thousand four hundred thirty three primary rounds the median amount of time to raise a series a was 3.1 years and the median amount of time to series d was a whopping 8.1 years logan what are your thoughts on this i'd be really interested to

SPEAKER_00: see this data split between 2019 to december of 2021 and then 2022 through may right i have a feeling the median's been been pulled upward as a result of the non-zorp environment and i think as we've all observed rounds are taking longer the pendulum has swung back to investors hands in terms of valuation multiple consideration more structure in rounds and more structure means longer negotiation times more legal documentation etc and then third uh less competition and um i think on the less competition side that's a double-edged sword it means there's more leverage from investors to be able to say hey you know we're the only game in town we're gonna put a bunch of structure in place and we're gonna have meaningful dialogues around the valuation of the multiple and then insider and bridge rounds also uh take longer right because everybody at the board is pointing to somebody else it's like who's going to lead this who's going to price this right so i'm not surprised at all by the data but uh i am in customer card is analysis i wish they would have some macro overlay uh and i'd be curious and i'm guessing right that this 2022 through may of 2024 the medium got pulled up meaningfully and a large percentage of that kind of 8.1 years in the series d time frame has been driven by the last couple years um where it's just been much more challenging to get financings done and the bar of metrics and efficient growth particularly for those series d companies where people want to see

SPEAKER_60: profitability or near-term profitability are so much more important to investors logan you have a you

SPEAKER_43: have a healthy growth equity franchise what are you seeing on the ground today in the growth equity

SPEAKER_00: side in the later stage rounds we're seeing companies that are growing efficiently uh we have to remember top decile ipos from a growth rate perspective is 30 so if you're growing at 30 you go public you're in the top decile that's that's pretty amazing given that we all thought 60 to 80 growth was what good looked like and so if you can tell a company grow slower bring ebit afford and improve your gross margins and position yourself to have top decile sas metrics because this is software data here before you go public or give yourself the ability to control your destiny on the m a side so you don't have to force an equity financing that will probably lead to a recap and restructuring the business right and massive dilution for the founders so i think that conversation's happening every day at the board level and certainly within our growth and pe book and then we have a number of companies that have a file to go public or in the ipo queue they look like public companies and they just won't get out right i love dan premac's uh uh piece the other day where he's like hey just a

SPEAKER_34: reminder the ipo windows open people right let's go let's go it's definitely um the rules when the rules change dramatically from the serp to a high interest rate environment um and it's hard to close around you know you see behaviors change and people have to try to adapt and all of a sudden a hundred percent growth but burning money is just not as attractive as 30 growth with a line of sight

David Friedberg: to break even in profitability so you have to be nimble as a founder especially at the later stages and

SPEAKER_39: understanding like hey what's the overhang on this company how much preference stack is there and did we raise that you know all those warnings about raising too much money or raising at too high of a valuation now we're seeing why that advice came from the elder statesman and stateswoman like they've seen this movie before you raise at too high of a valuation you get caught in this valuation trap and now how does anybody on the management team ever make money how does their equity become worth something you know you look at instacart you know that became an 8 billion dollar company private market valuation 30 40 billion i think the last one so these are really hard um you know formulas to try to to try to net out and a lot of it just has to do with capitulation at a certain point like this company's been private for far too long reddit's got to get out instacart's got to get out at some point stripes got to get out adjans got to adjans still not still private i think um so yeah people need to get these these companies out there you know when you look at the data from carta pitch book or any of these places they're generally because there's private company data it's not going to be perfect and you have to maybe squint a little bit look for trend lines because carta's data is a subset of people who use carta right that's all they have is carta data they don't have the

SPEAKER_34: companies that aren't in carta uh and so you know the fidelity of this data is probably imperfect but the trend is probably correct it's taking longer and then there's a lot of nuance in here which is people are doing a lot of convertible notes and so they're not naming their rounds series a series b series c but you'll see a convertible note for a five or ten million dollar round with nobody joining the board these are really concerning to me i just passed on an investment because they don't want to start a board they don't want to have a board i would have done it the lead investor doesn't want to have a board where like this we would have been the second lead we've put less money in but you know we want to have a board seat we want to have at least an observer seat people people don't want to have governance they want to raise large amounts of money i just have a problem with this approach to

SPEAKER_68: building businesses because i watched bill gurley and michael moritz and doug leone and these folks

SPEAKER_34: build jim getz build these businesses and they seem to take it seriously and these like never-ending convertible notes no board meetings million dollars in arr no plan like let's can we make plans can we have a board meeting where we talk about the plan and if we're on a plan or not like i think the

SPEAKER_39: industry got a little bit loosey-goosey and i think this is all a process of tightening things up

SPEAKER_97: right and it's just it's arduous it's painful but it's necessary logan do you see a lot of structure in

SPEAKER_30: the market do you see people putting 1.5x 2x press in the late stage absolutely uh quick record connection

SPEAKER_00: correction so audion is a public company they they went public in 2018 we own and like the stock and on the lick pref ratchets warrants coverage um deeper discounts on safe notes or convertible notes all those things are back in vogue we never could approach those conversations in 2021 2020 2019 maybe 2020 right so in 2020 with some coveted uncertainty there was definitely some structure that quickly dissipated going to 2021 and now it's back from 22 into the present we all have to remember 2009 2010 2011 three best venture capital vintages in history terrible macro awesome returners and if you sat on your hands those three years you missed airbnb you missed uber you missed stripe you missed plaid on and on and on right it's a long list and so from our perspective we were the most active fintech investor in the world last year we finished second next to tiger as did the rest of the world in 2022 and that's because we saw more structure better ev and multiples and less competition which is as we all know the number one driver evaluation dynamics versus fundamentals in private markets so

SPEAKER_38: you got to spend more time with the management teams make more thoughtful decisions and then create

David Friedberg: a structure where you know if people were optimizing for valuation you had some downside protection yeah seems like thoughtful behavior to build meaningful businesses and you know that's that's what's got me

SPEAKER_20: very excited i've been a capital allocator just over 10 years as you guys know i started as a sequoias

SPEAKER_34: sequoias first scout right and you know i'm just the quality of the companies and the seriousness which people are building businesses reminds me of when i made that uber com robin hood investment 10 plus years ago feels like people are serious because if you're not serious as a capital allocator you're just not going to start you're not going to raise your next venture fund the statistics on people not raising their next funds i think david you brought that statistic up once on this pod i mean it's pretty crazy people are now saying hey maybe i won't do another fund or you know and so there maybe there'll be less investors and maybe there'll be more board meetings and maybe there'll be more planning and less foosball and aspen six-week trips and people being on silent retreats uh and maybe more work

SPEAKER_39: ethic i hate to i'm starting to sound like trump or like an old man but i don't you know there was a period of there where i was just watching behavior in just going i think i am a seller right now and we

SPEAKER_34: sold we did like three or four secondary transactions i did personally with my uber shares some secondary transactions with masayoshi son and then we just sold some shares in peak serp era because i said i

SPEAKER_39: don't understand how you're valuing this company at 50 times top line revenue but if you are i guess

SPEAKER_87: i'll sell 20 of my holding short why not but this now it feels like being a buyer is a good idea like

SPEAKER_32: some of these sas companies are trading at absurdly low multiples and in public markets so maybe you

SPEAKER_34: know we should all just be buying them and 50x for a private company that's growing 30 percent 7 8 9 x for a company that's growing 30 percent in the public markets that's liquid i mean so the re the great

SPEAKER_138: rebalancing is still happening i think neil what are your thoughts on the card of data you know i

SPEAKER_04: think from a macro perspective zooming out for a second you know it feels like we're in a correction for venture you know by by what's going on and what you're hearing in the space but if you're zooming out and you're looking at more of a 20-year track a 30-year track it's really not it's more of a you know return to the mean to logan's point and jason's point i think it's good it's cathartic right it forces companies to be scrappy it forces companies to to think outside the box um and

SPEAKER_05: you know that's when the greatest american companies were created when it wasn't a zerp environment that they were forced to to to be creative with their problem solving so i mean i'm i'm bullish on america bullish on venture and i i think it's uh it's a great time to be an investor well speaking of great

SPEAKER_17: times to be investors let's go on to lightning rounds with everyone's latest latest three investments

SPEAKER_144: we'll start with logan all ai companies shocker uh so liminal.ai healthy.ai and articulate.ai

SPEAKER_146: tell us tell us about each one yeah what do you love about each one of them yeah happy to

SPEAKER_44: so liminal and articulate are in that orchestration middleware theme i mentioned earlier so i'll start

SPEAKER_00: with those two healthies in the application vertical so liminal is i'm a bank or i'm a health care provider or i'm a government i have source of record data i have pii i have i probably have social security numbers and data bursts and all kinds of very sensitive data i have regulated data i still want to use ai how do i get source of record data to application and use ai without disclosing all that right and liminal is basically that pipe of data sitting in between those two things and so they can uh encrypt and then they can extract data out that you don't want to be sharing and and we think that's incredibly important for this orchestration problem right we we have still a massive crossing the chasm moment for enterprise adoption of ai it's just not really happening in these large enterprises yet right outside of some co-pilot use and and some playing around with chat gpt so we think orchestration of middleware is a massive theme if you think about where money was made in the cloud uh 80 if you look at the return pi of just the cloud wave and that wave is still going on but 80 of the returns we estimate in the cloud transformation were made by public equities where was the money made in the private markets it was made really by the on-ramps the cloud and the orchestration of middleware players like a snowflake and same thing we believe is happening in ai where 80 of the returns are getting made by nvidia microsoft uh google etc and the 20 is going to be a little bit application um maybe some of these llms although we definitely are seeing some commoditization there and there's going to be one or two winners but third we think there's going to be massive power and orchestration so that's what liminal does articulate carries that theme where they're focused on deploying generative ai on-prem so again if i'm a regulated player and i actually want to use an llm and i need to deploy it on-prem with the right integration and so forth at scale i'm going to use articulate to deploy that this was also our very first investment where we took a public uh team so this was intel's ai team and they spun out to form articulate intel basically figured out we're not going to keep up with nvidia uh we have this amazing ai team that's about 50 people let us support the spin out working with a couple of investors to help drive uh this company forward so we think that's super interesting uh and then third is is healthy so we all uh really uh struggle as employers and employees of picking your health care plan right as well as understanding your benefits and healthcare insurers are just uh designed to try to sub optimally provide you health care uh healthy helps you navigate that journey so both for me and all you guys who are making decisions about your employees in terms of what healthcare benefits and plans you should be providing to them optimally based on geography age demographic mix etc and then healthy provides effectively an ai agent to say hey does my insurance cover this how many times can i get physical therapy all these questions that you have to typically call an 800 number for healthy helps you navigate predominantly through uh payroll and benefits providers um so really excited about those

SPEAKER_149: three investments yeah three strong ones neil what do you got uh so not as interesting as as logan but

SPEAKER_04: most recently my my two most recent investments were the private credit space uh i did one with uh blue owl

SPEAKER_05: big kind of uh private credit manager uh also with uh star mountain um i think uh you know private

SPEAKER_04: credit continues to get a lot of uh interest from big family offices uh maybe a little bit more interesting is uh i i did a recent investment in a fund called guardian uh life settlement space super fascinating what really attracted me was that um i learned that 92 of life insurance policies in america expire worthless so only eight percent of the time where in america you're buying a policy does actually someone actually collect the death benefit so that creates this huge secondary market that is largely untapped by institutional investors so this group there they've been doing this for a long time they started flipping these policies and they built a fund around it um and it's actually you know quite quite novel that you're you're you know you can leverage the advances both in ai and medical records to quickly make decisions on these policies and build a portfolio around you know um you know diverse geographies diverse life expectancies diverse you know in terms of uh um size of investments and ultimately it's you you know i mean it's it's fascinating because there's there's a huge appetite upstream from the tpgs and the powers of the world so they they package these policies up and flip them and then they keep policies

SPEAKER_151: on their balance sheets what they think are most compelling so that's uh what i'm working on and i

David Friedberg: guess that shows just you know that there are other options for family offices to put their money to work other than venture and we're in a competition to get returns um and we have to prove it on the playing field uh krapling's a great company that uh you know is building on this incredible e-commerce revolution that's occurring and they let you with a very simple drag and drop interface as you can see here build sequences for customers so somebody registers then uh they join your mailing list they order something or they abandon their cart now i want to retarget them with this specific ad

SPEAKER_39: based on that skew or skews that are also put into people's you know buckets this is incredibly complex stuff that maybe a nike would do or an amazon might do uh but that generally has not been available to your average uh mid-sized or smaller uh e-commerce vendor and so that's krapling.com with a k um ai uh and computer vision obviously is in the real world gonna gonna help make everything better faster cheaper right and and that's just such a winning proposition quick service restaurants um

David Friedberg: really need to monitor how long people are in uh the drive-through right and you're dealing with low wage employees maybe they're not focused at work maybe they had a gummy or something who knows anything can happen and so they're using computer vision and ai to watch people you know through just standard cameras coming around a restaurant's drive-through or inside of uh the restaurant and then watch um with computer vision how long it's taking these vehicles to get through the the uh the restaurant or what are people doing how long are they in line for what's going on with the dining room

SPEAKER_34: all of this from you know door to dine uh and to manage your drive-through and then also you get a little bit of security benefit maybe people are stealing maybe there are people you know who are shouldn't be in the facility who are and this is all done by a company called hellometer.io that we found just computer scientists making things uh better cheaper faster uh using ai really clever company uh valley

SPEAKER_39: doing something similar using ai to take sdr sales development reps which are kind of the front line of every sas company everybody understands there's millions of people selling sas products and business solutions how do you pick the next best customer well you typically have an sdr out there finding a sales development rep trying to nurture leads what if this could all be done by ai what if you could have your schedule fill up uh and so basically you set up valley you give it access to your data salesforce hubspot whatever you're using you got your prospect list and then it uses ai to book sales calls and so we believe that sdrs will either be made bionic or be ai or some combination of that and that's what join valley.co is doing it's called valley and they want to be your highest performing sdr for only 500 bucks a month join valley.co uh and these are all you know early stage uh companies which is

SPEAKER_23: our speciality at launch if you want to apply for funding launch.co apply and get a meeting with my

SPEAKER_00: team i like both of those companies jason hellometer.io i just sent to my dad we're very large owners of five guys so i'm gonna get you some customers on that you guys own five guys franchises a bunch of them

SPEAKER_160: yeah so ah man that's gotta be the nuts man i love five guys those fries yeah and then also i

SPEAKER_165: love you know they're very generous with the peanuts i love i love uh getting those peanuts

SPEAKER_168: while i'm waiting but those french fries and that burger that's right now for me i go right now my order

David Friedberg: five guys shake shack in and out but sometimes shake shack it goes above uh you know it just depends

SPEAKER_68: on my mood but i man i love those that's all working on getting hello meter in there we'll get

SPEAKER_170: you some free food there you go i don't i don't need it i don't need any free food man i just lost

David Friedberg: the weight it just loves the way it's dangerous what's your anybody else got a burger ranking anyone else got a stack ranking for their burgers you got a stack rank your burgers i'm a big chick

SPEAKER_46: filet guy i'm going contrarian here i'm going chicken what do you like spicy you're a spicy

SPEAKER_87: chicken guy yeah oh you go grilled or you go grilled yeah oh so healthy but it's relatively healthy

SPEAKER_175: yeah i like it and the fries i'm a big fan yeah what do you got have you tried schnippers in new

SPEAKER_28: york jason schnippers no snippers yeah so it's it's in midtown so we we used to have annual uh in

SPEAKER_05: my office an annual burger contest and they would do like blind taste testing it was a whole big thing so

SPEAKER_142: nice either five guys looking at this five guys or or um uh uh chick-fil-a would be typically the winners

SPEAKER_32: uh yeah i had a friend um and he started when i lived in new york in the 90s and 2000s he started

SPEAKER_39: a burger club and all he would do is find the next great burger and you know a half dozen of us would go take over and get the burgers right but here's your schnippers it's a good looking burger a good

SPEAKER_32: looking burger all right there you have folks take us out david another great episode of liquidity

SPEAKER_46: podcast for logan allen neil data jason calacanis this is your host david weisberg thanks for listening

SPEAKER_185: see you next time