SPEAKER_00: and that framework i think um that elon came up with was elegantly simple yet very complex and then he executed on it very definitely as you can see because he's shipping more product with 15

SPEAKER_05: of the people and some people were saying oh no twitter is gonna uh die you know the website's not gonna work the team is not there how can they operate for it not to work exactly and uh blue check mark people it works just and so that's inspired a whole generation of founders to think hey i could operate this company with a fraction of my team this week in startups is

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SPEAKER_18: at coda.io twist welcome back to this week's liquidity podcast with me today i have eric tornberg co-founder of on deck and village global and now founder of media company turpentine next we have guy perlmutter founder and ceo of grids capital a deep tech vc fund and author of present future and of course we have jason calacanis from the launch fund i'm your moderator david weisberg co founder of 10x capital today we have three topics on the docket vc returns have been leaked including returns from sequoia capital and union square ventures vcs may be sacrificing returns in order to return cash back to their investors also known as limited partners and we now have bear signs for the startup employment market we'll end with the latest three investments from each of our guests let's dive right in hot off the press utimco the university of texas endowment which currently sits at 65 billion dollars under management was forced to disclose their vc returns due to a public records request by blogger eric newcomer while many top branded vc firms did not have the returns one would expect one firm that stood out was union square union square is sitting on a sensational 9.14x cash on cash return for utimco across nine funds with founder fred wilson telling newcomer that there's a lot left in every other fund than the 2004 vintage meaning that these returns will likely go up

SPEAKER_20: gui as a limited partner tell me about vc returns over the past three decades so what happened over

SPEAKER_21: the past 30 years in vc is basically we have created a market that started with about 30 billion

SPEAKER_22: dollars back in the 90s and now it's anywhere between 300 and 400 billion dollars globally the us is about half of that maybe a little more uh over time the secretive attitude that gps have had towards

SPEAKER_23: their own performance has been a constant so it's very hard to get accurate data when it comes to performance of uh the uh venture capital world but it is very fair to say that over time we have seen returns that will go anywhere between 1.8 and 3.2 x that would be like a big chunk of the returns over a broad interval of time however the tricky thing with vc is that the difference between top quartile and bottom quartile or top five percent and bottom five percent is just gigantic could become 10x 40x 60x you can basically pick your number and the other thing that i believe is quite important especially for

SPEAKER_22: the time we're living in now is that those vintages that started at the tail end of very severe crisis

SPEAKER_23: like nasdaq the dot-com bubble back in the late 1999s 1990s or the financial crisis of the late 2000s uh in 2008 2009 those vintages they on average they outperformed so at the end of the day if you are an investor uh you should first and foremost try to stick to an investment program because every vintage has a story but if you want to be picky about when you want to dip your toe in the market i guess the tail end of crisis is probably historically at least a very very good time for you to start doing uh some vc

SPEAKER_27: investing jason you started angel investing in the mid 2000s at sequoia how have your returns have your returns been counter cyclical meaning that if you invest in the bear market your returns have

SPEAKER_30: have been significantly better than the opposite yeah so there's two things to take from this chart

SPEAKER_31: um and people need to understand this because especially journalists because they don't understand something called the j curve um so if we pull up this chart one more time uh all the way on the left you have union square ventures 2004 2005 vintage right do you see that there the second hash mark and then if you go all the way to the right uh and we were to look uh for a union square fund or thrive capital partners eight is a 2022 fund right so you see that they're down what this shows is you have a bunch of them that are down there well those are funds that were just started deploying of course they're down there's no time for the those investments to get marked up and then in the middle you see a bunch of ones that are flat right the 2020 to 2022 they might be flat and then you know smaller returns on the irr and then all the left you have the fully returned funds

SPEAKER_34: so uh you can't judge these things until you get to year seven eight nine ten so realistically if it's

SPEAKER_31: 2022 this data runs to and it's 2023 now 2022 minus seven eight years you can start looking at the 2015 funds which is maybe 10 funds in um and you start to get a realistic idea these rest of these funds are still um baking and i think that's probably why fred wilson gave that caveat um so that's just number one thing to think of is you really can only judge the ones on the left and what i see there is well it looks like everybody um it looks like they've done spectacularly if you were to just take from 2017 uh that dark blue line to the left those first you know 12 funds or so they're all 20 irr 40 irr you got a couple here sure that are 10 irr um you know uh but still pretty fantastic so this just tells you what a great vintage you know it's been since the 2008 financial crisis that's my number one takeaway from this and of course you know when you double click if you have the second chart if you pull that up on fred wilson and union square ventures specifically uh what you'll see is the cash on cash return right column four those first three funds 2004 2008 2012 they've had time to bake right man something happened in 2012 fund that they hit 22x i think that's the twitter fund i'm gonna guess uh and some other names in there and that just shows the power law you know if you're the he did the series a in um twitter i remember when evan williams was asking me uh and some palace entry that deal was between sequoia and

SPEAKER_00: union square um uh that series a of twitter uh and i had you know talked about it with actually evan williams which one to pick and he went with union square um i had advocated both i thought i i told him to split the round between the two like uh google and then you see the later ones you know have less um upside in them so it really is about time and fred wilson's been a spectacular investor

SPEAKER_31: for a long time and they always kept their funds uh at a small size too so we don't have the fund size here of each of these but my understanding is 200 i bet you those are 200 300 million dollar funds of which uh the university of texas it looks like they put 20 million 25 million at each fund so they

SPEAKER_00: were probably 10 of each fund which might have been their upper limit so anyway that's my analysis

David Friedberg: of this you had another question but i thought i would go with the question i wanted to answer

SPEAKER_27: absolutely you mentioned the dispersion between top quartile and everybody else and the variance i think few asset classes in the world have this kind of variance where over 10 years in the same time period something could go up 10x and something could go up 1.5x how do you build a portfolio your fund of funds how do you build a portfolio of managers that continues to return so ultimately when

SPEAKER_23: we try to the the fund of funds part of our portfolio uh basically we try to ask ourselves you know a very simple question if i were an entrepreneur would i want to have money from that particular gp because i think this is the key to build a healthy portfolio you want to be with gps that are you know the first

SPEAKER_22: picks uh for every top entrepreneur out there and in our world in the deep tech world that's a relatively short list uh there are a lot of sector specialists there are lots of generalists but at the end of the day what you want to do is you want to make sure that in your portfolio you are taking the managers that will be able to attract the best entrepreneurs of that particular vintage of those particular subject matters that they are trying to invest in one thing i just want to mention on top of jason's

SPEAKER_05: point earlier is that some firms get lucky and have one big winner that uh returns nearly everything but usb has many winners it's not like they they caught a facebook or nvidia and they've held it they've got you mentioned twitter but they've etsy and tumblr and coinbase and mongo and lending club and zynga their hit rate is is phenomenal uh yeah mongo is a big one that's that's probably one of the

SPEAKER_31: the big ones here tumblr was a billion right etsy was probably a billion so those you know still great if the series a but i think mongo and twitter are the big outliers right yeah and then and

SPEAKER_42: coinbase uh and coinbase yeah depending on when you sold because my understanding was they liquidated their position right i think that was also like another question mark is when do i think fred's philosophy

SPEAKER_31: has always been to just immediately sell everything we're distributing immediately his philosophy as far

SPEAKER_05: as i understand it is a is a mixed position which is a third a third a third so sell a third once it's reached some threshold uh hold a third irrespective of price and then sell or hold the last third around lockup expiration based on your thoughts on valuation so they definitely sold a bunch of ipo which probably turned out to be a good a good good a good decision um and held some and i think this was a reaction to his experience riding uh in the dot-com bubble where they rode up a bunch of the the winners and then wrote wrote them down as well and so this strategy of hold some sell some is sort of a regret minimization strategy where where at the very least you return some to lps you make sure they're happy but then you also get to to keep some for later so it's a strategy where if if the company does great you're you know a little regretful because you you could have held on to it but if the company you know falls down 90 after ipo you're you're you think you're a genius because you you've at least

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SPEAKER_27: bunch of gps do you want your gps just always swinging for the fences or do you want them to take some

SPEAKER_22: money off the table so what i want really is that there's a very clear policy on how you're going to deal with exits that's for me is more important because the one thing that i think investors hate uh not maybe as much as losing money but right up there uh are surprises right inconsistencies you want to make sure that you're dealing with someone and you actually can understand where they're coming from so as long as there's a very clear policy okay this is how we do it it's like the

SPEAKER_23: a third a third a third policy or we immediately sell everything or whatever that's what you want to hear from our perspective every single position that we own that has crossed the 3x mark after we compare entry cost versus market cost it's out the door we will do that every time we did that and felt like schmucks a couple of times because then the market continued to go up and then as eric said we felt like geniuses a couple of times because everything went went south and we were looking really good so i think consistency is key here and i think it's important for every single gp to have a very clear policy on how they will deal uh with success with an exit and how they will compensate

SPEAKER_73: the lps uh when that happens can i follow up to that in terms of how do you think about consistency

SPEAKER_05: across the board for for your managers because sometimes the facts on the ground change and they they may say oh you know it was a great time like we allocated a certain amount for following investments but these prices are going up too high and such we think we should you know move more dollars to uh to first checks is that is that a type of change that you like your managers to make or do you like your managers to say hey here's what you invested in i executed on it and you know and we'll reevaluate

SPEAKER_21: for the next fund i think it's a great question because at the end of the day what we do investing

SPEAKER_23: is a blend of arts and science right and and whatever percentage of art or science you're going to use it's kind of up to each and every one there are a few managers that are much more quantitative

SPEAKER_22: driven a little more dogmatic others are a little more flexible but again to my earlier point as long as they don't drift too much out of the style they have some managers i would not be surprised if they came back and said you know we do believe that we should have a little more leeway here because of x y

SPEAKER_23: and z as long as it's for the greater good the great good of the portfolio that's okay but what i really don't like to see is when a manager that is typically very uh quantitatively driven uh kind of drift into a more qualitative subjective approach that's where you start to worry because you don't see them

SPEAKER_22: performing to the best of their own abilities if that makes sense great analogy for this david is

SPEAKER_79: like when you play poker uh you'll see somebody run up their stack

SPEAKER_31: playing a very disciplined strategy you know they're playing tight they're playing a great

SPEAKER_34: range of cards they're letting go of things when they feel like it's not right they're going all in when they think they've got you know when they know they've got the strongest hand or most likely

SPEAKER_31: have the strongest hand and then they win a bunch of pots they go up 5x and then they start playing every hand and they totally change their game they get loosey-goosey because their chip stack is so high

SPEAKER_00: that's where you get yourself in trouble this is why i think you know as a fund manager i think i've

SPEAKER_31: learned going into my second decade is you really have to write these policies down um and then go back to them and then have a team where they hold you accountable to them so my team holds me accountable to a lot of our investing and i was looking at a cpg company and i had said you know listen no more cpg companies but this one had come through a friend of mine who built one of the largest cpg brands ever and i was like okay this is an exception here and i explained to the team why we're going to make an exception here and perhaps you know go into this we didn't wind up doing it but you know those are that's where it's super important to gi's point have a philosophy be thoughtful about it hold yourself accountable our philosophy is pretty simple we'll sell 10 percent two or three

SPEAKER_00: times on the way up if we're investing at companies you know at two to twenty million dollar valuations and it gets to 500 million a billion two billion you know as seed investors we want to start pairing our position and then deploying into more pre-seed and seed stage startup which only makes

SPEAKER_31: sense right our window is slightly different it's a little bit earlier than fred's and so yeah you would start selling a little bit earlier but happy happy thoughtful is the key i think in all of this

SPEAKER_05: yeah i agree on that i think it makes sense to sell you know 15 to 20 if it's really meaningful to the fund especially if you're emerging manager trying to put uh numbers on the board and even if it still 10x's from there you still you know get 80 or so percent of the upside next up january employment

SPEAKER_18: numbers are out and it's not looking good according to carta january 2024 was the first month since february 2023 where the amount of people laid off exceeded the number of people who quit this helps shed light on unease in the startup ecosystem among employees the increase in quitting shows that employees are reluctant to quit and find new positions at other companies jason what do you think of this data and is this a temporary setback or a new normal for startups with the advent of ai

SPEAKER_31: well we're certainly going to find out i think you know the pendulum swings um you know both ways and for over a decade silicon valley has coddled um elite programmers sales people product managers etc we all live here we all see it we've all been on the other side been on boards of companies and seen somebody come in with a request this person's got an offer from uber airbnb and google and you know we have our hot growing startup that just raised 10 million we want to get it in the sweepstakes and i would be like is there another person who could do this job who doesn't live in silicon valley who doesn't cost 500 000 because maybe we could hire three people at 150 each and save 50k and it'd be 10 cheaper and they would do more work and you could have them working 24 hours a day or whatever you know in aggregate and you know a lot of times people didn't buy into that you know alternate philosophy now we're seeing the opposite now people are saying when they're running startups i'm sure eric

SPEAKER_35: you see this in a lot of your contemporaries and early stage startups how do i get uh how do i hire people offshore how do i not hire somebody for this position and automate it and so i wrote a piece

SPEAKER_31: earlier this year called my add framework and i've been working on this for a couple years internally at my companies but i told everyone in the company you know every quarter look at everything you did for the weeks you know in the 12 weeks in that quarter and ask yourself what can be automated what could be deprecated what can be delegated and we are now on that journey of automating stuff delegating stuff deprecating stuff and my hope is we can stay a 21 person firm but be 10 percent five percent more efficient every month which means that's the equivalent of you know doubling the size of the team every year without actually adding headcount and that is a very that little mark there where the yellow uh of the laid off leaves the uh crosses the left by choice is a very significant

David Friedberg: moment in time i think that's cross what did you call it the uh death cross it's a death cross because listen if you are at one of those big companies and you see this on tick tock with young people who are at these companies who are holding on for dear life that you know geez i've got this incredible pay baggage i've got these incredible rsus i hope i don't get laid off by discord on monday oh i got laid off and they just do another tick tock or whatever i think a lot of those folks are

SPEAKER_31: realizing that they may have experienced their peak employment package at 30 at 35 and that they may just begin they're going to get paid less for the next 10 years and it may take them time to beat that um high watermark that they experienced um and ai is definitely part of this this is two things one what elon did cutting and showing everybody that he could run twitter with 15 of the people and then zuckerberg following him like zuckerberg tends to do uh and then uh you know he follows a lot of other entrepreneurs kind of copies them uh er you know spiegel from snapchat you know elon whatever but he does it better sometimes well he's a mimetic machine i mean i think that's like he's like a perfect photocopier i mean um and so then you look at this the cross um you know ai is definitely part of this i think people are looking at customer support customer success sales and just saying yeah we can get rid of the top 20 the bottom 20 percent and then just use tools to make the top

SPEAKER_42: 80 20 better no problem easy peasy lemon squeezy and jason you were at twitter now x with with elon

SPEAKER_27: uh shortly after the acquisition a lot of people know that how he cut the employees but how did it actually work on a granular basis how how was he able to you know keep so much of the infrastructure

SPEAKER_42: and company running with so little staff i will say what he said publicly because i don't want to speak out of school and my involvement has been over over overstated uh you know it's just a friend of

SPEAKER_31: mine and i hung out with him for the first month so i don't want to overstate it um you know the there

SPEAKER_34: was already a plan in place everybody knows this to cut 25 of the team so there was a plan in place

SPEAKER_31: that twitter was going to execute anyway and then there was elon's plan and so um i think you know he he had a really interesting moment me david sacks and elon were there and elon just said who is who kicks ass at their job like who is incredible at their job and then who is essential those two things and then david's you know kind of repeated it back to him we were kind of grokking it and i just went up to a whiteboard and i drew four quadrants and i just put exceptional average essential non-essential and you you look at those four quadrants well if somebody's not great at their job and they're not essential it's a pretty easy decision right and i think that's what you know zuckerberg did that's what google did everybody's done that now that's a really easy quadrant right then you've got the quadrant essential and exceptional well that's an easy quadrant too you're keeping them so then you've got just two quadrants that people would fall into exceptional but um you know maybe they're not essential right so they're exceptional at their job but they're not essential they haven't been deployed to the proper place so you got a sniper and they don't have a sniper's rifle so that person should probably be redeployed into an essential position and then you have somebody just not good at their job but they're doing something essential and okay yeah maybe you can keep them around until you can automate it or whatever so it just that

SPEAKER_00: framework i think um that elon came up with was elegantly simple yet very complex and then he

SPEAKER_02: executed on it very definitely as you can see because he's shipping more product with 15 of the people

SPEAKER_05: and people at the time thought that or people you know some people were saying oh no twitter is going to uh die you know the website's not going to work the team is not there how they were rooting for it not to work exactly and uh blue check mark people it works just and so that's inspired a whole generation of founders to think hey i could operate this company with a fraction of my team you know there's this phrase first time founders care about product second time founders care more about distribution similarly first time founders care a lot about how much money you raised how big your team is and second time founders are trying to raise uh as as as little as possible sometimes or as much as they need and they're trying to do it with as few people as possible yeah right it used

SPEAKER_113: to be a status symbol how many employees you had you know how many people work there and oh 60 people oh wow you're 60 people eric how many people work oh i have 120. oh eric's company's twice as good

SPEAKER_42: exactly it's a very perverse thinking and then also the benefits you gave people that was the most

SPEAKER_31: pernicious thing of this last cycle was oh yeah no no we we have dry cleaning we have 20 time we've got neiman ranch steaks i remember when i went to google for the first time you know this is 15 20 years

David Friedberg: ago and i had neiman ranch steaks and i was like i can get a neiman ranch steak here i'm like how much

SPEAKER_118: is it and they were like it's free dummy i was like okay beginning of the end now it's high statuses instagram you know 12 people whatsapp you know in the teens um or mid journey you know 200 million

SPEAKER_86: dollars revenue boots bootstrap company yeah no outside funding valued at 10 billion dollars

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SPEAKER_27: sam altman has a betting pool with his friends i don't know who's in this group but they're betting on when the first one person unicorn will happen and guy you you've written about ai you've been researching ai since i believe the 90s when is that going to happen what is your guess in

SPEAKER_129: terms of when the first one person unicorn will be started it may be already out there and they just

SPEAKER_73: don't want to tell us because they don't want the world to know right it's it's perfectly possible

SPEAKER_23: there's this thing that i believe is going to be uh very well known uh in the very near future uh and some of us have already heard about that or read about it but there this guy this economist back in the 19th century a guy named jevons uh william jevons i think and he was observing the world through

SPEAKER_22: the lens of someone who was experiencing the first industrial revolution right and he saw that coal became this uh incredibly inexpensive good because now people had mastered coal the you know the steam engine and so on and so forth and logic dictated that okay now it's so efficiently used that people will not need it uh because the efficiency has reached new heights and what happened was just the opposite right there was this incredible demand for coal and for uh that new source of innovation and what he wrote which was proven through like 450 years is that when something a good a resource uh any sort of special talent becomes widely available and much more inexpensive the market will create demand the market will create new uses and what we are witnessing right now is the creation of of very efficient intelligence right inexpensive and efficient intelligence it's what i think uh sam altman referred to as the marginal cost of intelligence dropping dramatically so what i believe is going to happen is instead of people going into a shortage of labor maybe the in the short term

SPEAKER_23: we'll see definitely see careers ending and and new paths being created but on the long run i think we're going to see more demand for human labor in different types of expertises different types of of areas and fields and this i think will open all those possibilities for companies that are going to be

SPEAKER_73: managed by just a handful of people and that are going to be doing some incredible stuff and there

SPEAKER_00: probably was a billion dollar company already uh my friend phil kaplan's company distro kid um you know he's pretty famous for creating these small companies um and i don't know if it was a company one but pretty close to it i do think it won't be one i think in that betting pool i would

SPEAKER_31: bet it's going to be like a three-person company because it's kind of boring to work alone um i

SPEAKER_137: don't think people want to work alone but it's possible um it's just not probable but what you're

SPEAKER_31: talking about also is the induced demand right g if you build you know an extra lane on a highway then they did this in la over and over again and um they they just kept adding lanes to the 405 and every time they added a lane more people from the valley would commute to santa monica to get dinner or to go work there or to go to the beach and then all of a sudden it's the 405 and the 10 exchange are backed up people would then see the 405 and 10 exchange and they would not get on the

SPEAKER_00: highway and um when i was living in brentwood they wanted to take the beautiful median when i lived in brentwood in la david had this gorgeous median and then they had the sunset part and then they were

SPEAKER_31: going to take away the sidewalks on sunset and add a lane or that and i said i went to the council

SPEAKER_00: meeting and i gave my presentation because i lived on sunset boulevard and i said if they if you let them do this to this five block stretch and you take away this lane the next thing they're going to do is look at the median on san vicente the gorgeous median that is part of our culture and they're going to take two lanes away and just leave a thin strip there and it will destroy and we're going to

SPEAKER_31: destroy our neighborhood for people commuting and i got the most rousing round of applause because i just i explained the concept of induced traffic that's my story of winning i literally squashed the expansion of sunset boulevard to an extra lane i said you know it's already four six makes it kind

SPEAKER_00: of like a highway doesn't it and they're not going to stop at six eric you're you're very deep in ai

SPEAKER_27: both through your funds and through your previous uh personal investments what's your take on this

SPEAKER_146: so i think the greater threat short term to um to people losing their jobs is less from ai and more

SPEAKER_05: from what jason mentioned earlier offshoring the the threat to me hiring a us uh employee whether an assistant or engineer is it's not going to be replaced with an ai agent any any time immediately soon but it's going to be replaced by the startup athena that i use my assistant or the startup squad that i have outsourced engineer uh operating in at a fraction of of of the cost um so short term i i don't think the uh this technology is good enough to wholesale replace uh key employees um though i think offshoring is a concern for them for those employees um that said at some time scale i think there will be a threat uh i think that we'd like to imagine this sort of co-pilot for everything ai that makes us better this idea that you know it's the human plus the ai that beats the ai in chess and and that was something that was true for a minute but uh over time the ai gets so good that it actually doesn't need the human anymore and and defeats the the human in chess now there are going to be certain areas where we're just going to want people to do them even if they do them worse um you can imagine certain fields in healthcare where you just want to be you want to talk to a human or work with a human even if they can't uh can't sort of uh operate as effectively and there are going to be other areas that are just going to be so regulated even if people don't want them uh they're we're just going to ensure that there are humans in the loop there so i was with vano kosala earlier today and he said that 80 of 80 of all jobs uh in the future will be uh sort of replaced by by ai but the the productivity gains will be so vast that we will uh whether it's some combination of of ubi or some government works programs we will have some redistributionary uh redistributionary effect that will take care of the the remaining people who are working not because they have to but because they want to so i think it really depends on on what time scale we're looking at

SPEAKER_147: but in the in the short term i don't really see a threat but in the long term i do what do you think

SPEAKER_148: impact this has gee on lps in vc in general if companies need less capital there's less opportunity

SPEAKER_31: to buy shares the founders keep more of their shares do you think this ever has an existential risk for

SPEAKER_00: you know uh making vc smaller and a more intimate pursuit again i think at the end of the day what

SPEAKER_21: we're going to see as we have seen before is the creation of absolutely new careers and new paths

SPEAKER_23: and here let's imagine for a second that this scenario that vinod mentioned uh turns out to you know to become true uh all of a sudden we're going to see you know a bunch of uh new funds that are going to be pitching uh ideas or enterprises that have nothing to do with any of the previous subject matters that we were interested in right uh i remember reading an article a few years ago uh about the advent of the comparison between the advent of ai and the excel spreadsheet right so there was this great article and the uh i think it was the the journal and uh it said that uh there

SPEAKER_22: were a bunch of jobs that almost disappeared after excel showed up like bookkeepers and stuff but then

SPEAKER_23: auditors and financial managers and managers as a as a new category of of labor just skyrocketed right

SPEAKER_22: so i think that even today if you look five years back and we think about the prompt engineer role we're going to look at each other and say what the hell is that right and now people talk about it like it's the most normal thing in the world someone who will be proficiently in building prompts for an llm and i think we're going to continue to see that i don't see that as as a static movement

SPEAKER_23: so i think there will be opportunities maybe and hopefully smaller funds are going to be created because maybe the opportunity set may be a little tighter but i would be very very surprised if we come into a world where the opportunity set is not larger it's actually smaller because i think that's

SPEAKER_73: where we're heading to we're expanding the horizon of opportunities for us kind of like that version

SPEAKER_98: of the world to be honest one analogy is actually crypto if you look at crypto a lot of these

SPEAKER_27: protocols do not need hundreds of millions and if you look at vc it's been a bundling of resources whether you're sitting on the board you're giving advice you're giving money you're giving brand and signal in crypto that's been unbundled so you have somebody that's a kingmaker that will lend their name to a project that will make introduction to a couple exchanges and there they're basically taking a much lower fee so instead of taking 20 of around or 10 of around they're taking one to two percent of advisory so we might see some companies that are not as capital uh that that is that are much more capital efficient in the vc uh in the startup ecosystem uh look for people that could give that

SPEAKER_98: advice and that brand that signal and do it for a much lower cost yeah if only those crypto projects

SPEAKER_00: had ever shipped a product still waiting on some of them although your guy eric your guy eric who's

SPEAKER_05: doing farcaster yeah um that seems like a real product yeah he's a forecast is taking off it's a it's a decentralized or it's a crypto twitter where where the idea is developers can build on top of it

SPEAKER_118: and trust that they won't get rugged like they were you know back in the day of twitter and facebook yes yeah exactly um and so it's uh it's really taking off yeah awesome shout out damn okay listen

SPEAKER_157: i got a lot on my plate gotta do a couple podcasts i got found a university launch accelerator and all my personal life and you know things i want to do so there's just a lot but i'm able to manage it all

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SPEAKER_18: street journal is reporting that founders investors who moved to locations such as miami during covet are now returning back to san francisco eric you were quoting the article as one such person that moved from sf to miami and then back to sf what made you move to miami in the first place and then what made

SPEAKER_161: you move back well to be uh to be sure i was quoted without my consent i did i did not want to be uh

SPEAKER_05: a pawn in these uh location wars my move to miami was always temporary my family and friends are in california and um i wanted to check it out i was really impressed with what keith and delian and some of my other friends were doing there i'm always inspired by people trying to sort of create new new communities and i i wanted to check it out for a few years and uh and it was great i think what they've done there is is pretty impressive you know one of my better investments is is traba which was started there and still uh operates there and in new york i believe and um i think what keith and delian have done they've kind of memed the movement into existence is uh is pretty impressive and and i think uh people would be better to uh to highlight the um sort of the positives of what they achieved as opposed to maybe the you know where they've fallen short in the sense of of course miami was never going to be another uh another silicon valley that's an impossible um proposition but i i think one lesson that we've learned in the last few years is just how network effects remain undefeated whether it's twitter or san francisco if you've got strong network effects it's very hard to disrupt no matter how incompetent the governance is and so san francisco obviously the government is tremendously incompetent um and in twitter whether you think elon is incompetent or you think the previous regime is incompetent no matter what most people are are staying in twitter and staying in san francisco or reddit yeah exactly

SPEAKER_18: reddit and and and the years that i went through it without management or with corporate management

SPEAKER_118: just continued chugging along totally in front moving back to san francisco i felt like a like

SPEAKER_05: a journalist who who left twitter and then you know came uh shirking but you know crawling back because of the distribution now i never announced that i was leaving san francisco or announced that i moved to miami because sort of the temporary nature of it but i support the movement that's happening in miami but i'm really excited about what's happening in san francisco now too a lot of something i didn't appreciate is how every five to seven years there's a new generation of young entrepreneurs uh and san francisco is getting getting a lot of them right now but then also the emphasis on changing san francisco and and its politics specifically is is higher than i've ever seen it i was in san francisco from 2012 to 2020 uh or 2013 to 2020 and i never really politics wasn't really something that the best people focused on quite the opposite exactly they ignored it and now i see talented entrepreneurs who are saying hey let me run for supervisor or let me run for this you see gary tan you see all these other people are saying hey it's it's like the the votes are actually just in the low hundreds or low thousands like if you just organize a little bit maybe we can change things and so just like going to miami was feeling i felt like i was part of movement coming back to san francisco for the first time it also feels like there's a little bit of political consciousness and it's exciting to be a part of

SPEAKER_31: that i would look more at how those other regions are growing you know independent of san francisco san francisco is always going to be the heart of this we know that and you can't have apple and google and facebook here and not have this be the epicenter but you know amazon and um microsoft are not here they're in seattle and you know tesla is now a texas company spacex is a texas company or nevada

SPEAKER_00: slash texas company so i think in the future what we'll see is those regions are going to grow

SPEAKER_31: at a much higher rate you know than san francisco and san francisco is kind of topped out right you can't fit any more people here the nimby ism is going to take decades you know if it ever you know breaks in the right direction so it's gonna still be hard here um and great companies can be built any anywhere so you know you have tons of great companies being built all over the country i think austin miami new york and la are going to continue their growth and continue to be destinations and then this is a great place to start i would tell any young person come here if you really want to be in

SPEAKER_34: the industry and just get a place in like san bruno milbrae san jose like one of these really gnarly not in san francisco neighborhoods in the peninsula because that's actually where a lot of the

SPEAKER_31: tech workers live that's where all the vcs live san francisco yeah people live there but san francisco is always kind of an afterthought to the peninsula um and then it got popular and then you know kind of fell off again it's just hard to live there too so anyway san francisco is going to do great these the

SPEAKER_00: press is like a review mirror i don't know people should not founders and vc should not pay attention to the press anymore just ignore it go directly to the source how much does geography play into the

SPEAKER_98: gps that you back and do you want them in the city that they're investing so i think that the uh the

SPEAKER_22: fact of the matter is that the bay area in general or you know california more broadly especially over the recent years with los angeles becoming some sort of a manufacturing herb and airspace hub but

SPEAKER_23: california in general i think it's almost like this uh this shopping mall where everybody wants to be seen and to see where everybody who has an id and a company will try it uh in that particular part of the world uh so every single manager we back they are us-based we have folks in new york we have folks in boston we have folks in in the bay area for sure folks in san diego uh and for me it's less of of which state they uh they live in or they work at but more of the fact that they are in the us and and the reason for that is the us brings in a few very unique features that i think every single ecosystem should pursue in way one another right first there is this very uh a close relationship between

SPEAKER_22: universities and the market in the industry it's relatively easy for you to just you know develop your patent uh go through your technology transfer office at university and go to market license some of that the university will license some of that to you and you're off to the races a second there is this willingness the government and more recently especially the military if you look at the history books every time militaries uh were interested in funding ventures and trying to push the boundary of

SPEAKER_23: technology without the confines of the government but getting the uh entrepreneurs to try their hand at it we saw incredible advances and history is filled with those and that's something that we're seeing again in the u.s and third the willingness of taking risks and of rewarding people that take risks that's something that u.s uh citizens take for granted but that is very different elsewhere right in the u.s you can wear your failures uh if you fail right right uh trying to do the right thing uh you can wear that as a badge of honor you know i tried this i i was wrong but this is what i learned and then this is what i was able to build on top of that so i think for me the the mindset is very unique and it's very critical so all our funds uh regardless of where they're based i guess i wouldn't mind if they're based in texas or or florida or or whatever uh but i think that the the mindset the u.s mindset in venture uh and the whole ecosystem is still absolutely unique uh and i wouldn't change it for

SPEAKER_00: for anywhere else in the world right now amen to that so our competitive advantage i was uh talking to the cto of palantir today and um you know we're just talking about how capital allocators um you

SPEAKER_31: know help us create these amazing defense companies right that are now emerging and space companies and you know those are going to help us win the future obviously you know we've got a very um hot planet right now with a lot of potential conflicts conflicts going on future conflicts well you can't have those defense companies and spacex and andro and everything if you don't have capital willing to have 50 60 70 percent of bets go to zero and imagine you're in japan guy to your point um i don't know if you spend time in japan or france i mean failure in france and japan is looked at

SPEAKER_00: and entrepreneurship looked at much differently than here and so this crazy pursuit we're in to invest in

SPEAKER_31: a hundred companies and have 60 or 70 of them return zero dollars but be stoked that the founder tried is unique to american dna it's unique to american the american spirit and to the american operating system it is literally as important or more important than the battleships we own that's it

SPEAKER_18: i can wave an american flag behind me moving on uh now to our our segment our weekly segment of our

SPEAKER_122: panelists uh last three investments eric let's start with you sure so the first one is jam jam is trying to do for engineering what figma did for design so figma made it so that non-designers can more easily communicate with designers and eliminated a ton of meetings in the process jam is trying to do the same thing but make it so any product manager anyone with without any engineering background can communicate with engineers on what they need to do think of it like instant replay for bugs

SPEAKER_05: right after the bug just happened it's a super sticky chrome extension no no no okay yeah super

SPEAKER_122: um yeah it's uh growing really fast and it's very sticky how do you size the tam on something like that

SPEAKER_185: well it's sort of how many uh you know engineering teams are there or every company view you know

SPEAKER_188: hasn't hasn't changed yeah totally how many products are in the world how many digital products

SPEAKER_42: are in the world that are being maintained right i mean i guess as a proxy you could look at the number of github active github accounts right anybody who has a github account who's pushing code

SPEAKER_00: is going to push a bug once in a while therefore there is the possibility that somebody could correct

SPEAKER_192: their bug right i like that one a lot it's seed stage where is it at and it's funding um it's just uh

SPEAKER_05: announced at series a oh congrats awesome yeah the second one is antaris antaris is a company started by

SPEAKER_122: julia dewall former spacex executive and jordan bramble um and it's a nuclear company it's a it's a micro reactor it's 300 kilowatt size diesel generator and they don't have to go through the nuclear regulatory commission and they're trying to sell to entities like the department of defense department of defense is interested in resilience they want a power source that can last for five years without needing refueling and that's what antaris is trying to offer and julia has gotten extremely passionate about nuclear in the past few years because nuclear is this category of energy that we should all want more but uh environmentalists for some reason don't want and so there's an arbitrage opportunity where most talented people weren't going into nuclear because it's either been regulated away or because culturally there's been a stigma against it the third one is perplexity we all know uh perplexity the conversational search engine that's trying to overtake google and is even ahead of uh ahead of chad gpt um and has a founding team from from open ai and is uh is growing like crazy and every time i'm trying to make sense of what's happening in the world at this moment i i go to there instead of uh instead of to google because i feel like there's less less bias and uh what's happening to google in the last few weeks is is amazing for for for perplexity because they're not putting their

SPEAKER_15: their thumb on the scale in the same way that google is great ones gui you're next yes uh so we

SPEAKER_23: start with the mesodyne mesodyne is a very cool company they are basically uh have built a technology

SPEAKER_22: that allows you to just use some fuel to generate heat the light waves that are being emitted are captured and are turned into electricity simple as that they are able to create sources of energy that are 10x more durable than existing battery technology and they're already have working

SPEAKER_23: prototypes they're in talks with the defense department and i think they're going to be a very interesting choice uh going forward uh when we're you know avid to search for actionable sources of energy

SPEAKER_22: for multiple types of missions uh both uh when it comes to defense but also for remote locations that need power generators where maintenance is hard to get to and so on and so forth so that's mesodyne

SPEAKER_172: so next up is lima charlie lima charlie uh they're basically a sec ops company they're basically

SPEAKER_23: cloud native they're building this infrastructure to be able to defend and to protect companies uh through uh multiple api calls and multiple coverage of every single data point every single

SPEAKER_22: surface attack of attack that the company has and this one plays to our view that uh you know while

SPEAKER_23: everybody is very excited about the positive uses of ai and rightly so um there is this very nasty side to it where it can create code create viruses trojan horses ransomwares every single type of uh you know evil digital entity you can think of and i believe that lima charlie with its nature uh its cloud architecture it's going to be able to really play a part in trying to protect companies that have

SPEAKER_22: large surfaces of attack so that's lima charlie and last but not least it's cloud nc cloud nc is an

SPEAKER_23: interesting company it plays into our uh manufacturing thesis we believe that there there's you know a lot to be done uh in the so-called industry 4.0 a world and cloud nc they have developed they have

SPEAKER_22: they're all about cnc and machining and milling and have created this assist uh assistant that allows

SPEAKER_23: you to use uh a very little time for very tedious tasks it's unbelievable how the the current generation

SPEAKER_22: of of professionals that are using those milling machines is is simply retiring and there's no replacement no incentive to do that but that's a cornerstone of modern manufacturing everywhere and what cloud nc has done is they are able to automate and make the process efficient you can forecast how

SPEAKER_23: much time how much material how much energy uh you can plug into very well-known brands of cam software like autodesk uh where you can just use it as a plug-in and expedite your work that could take days uh to make it you know just take a handful of hours and we believe that they are going to do some very very

SPEAKER_200: interesting stuff uh when it comes to multiple traditional uh industries going forward that's a

SPEAKER_31: killer idea i guess it's my turn sorry i just gave a whole thing we don't do consumer electronics consumer packaged goods anymore so uh terra cafe is one of our uh investments we did a while ago that is just doing absolutely awesome uh they make a super espresso machine uh called the tko1 and the tko2 is coming out and these things just sell like hot cakes they have a great margin and um yeah we're just really happy with the company if uh it's really hard to be in consumer electronics but they figured it out obviously um i don't recommend uh um too many founders get into this kind of space because it's really hard uh golf golf is in our founder university and we knew somebody would do something like this but you basically just take uh pictures of your swing and it gives you advice um and it's getting smarter and smarter with reinforcement learning and talking about like a one-person startup this is kind of like one of those startups could have a small number of people a very affordable price and you know you might not pay for this um if it was at a very high price but because it's ai because it's accurate customized you know if you couldn't afford golf lessons which are hundreds of dollars an hour you know maybe this makes you a little bit better each time and so we think there's

SPEAKER_00: going to be a lot of these uh kind of approaches to getting better at sports or anything writing poetry whatever you're into um and codemate.ai um is um looking at existing code bases and trying to

SPEAKER_31: clean them up so uh you know chrome extension lets you do uh you know a copilot type experience but most importantly debugging code and looking at legacy code bases to make um them work better or help people who inherit legacy code bases fix them and i think that's

SPEAKER_00: going to be their speciality over time uh two extremely early startups golf golf and codemate and one that's been around for a little bit terry cafe that's doing wonderfully so great job entrepreneurs and great job david well done thank you well it's been another great episode of the

SPEAKER_18: liquidity podcast for eric tornberg geet perramuter jason calacanis this is your host david weisberg thanks for listening