SPEAKER_00: turn to novak is here uh and he is a vc if you're on twitter and you're into vc twitter which is a full point seven percent of adult males in the united states you're obviously know who he

SPEAKER_01: is and uh he's spicy is your screen okay it looks like you're jittering a little bit there you're

SPEAKER_02: you're on an m1 mac yes of course no no i'm on a asus zen book i got for 50 off at best buy

SPEAKER_03: all right hold on a second you're a vc you're showing up to meetings with a zen book hey it's

SPEAKER_07: all zoom so no one knows they know when your machine crashes like every five minutes and

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SPEAKER_01: the heck's going on here with the format with the lack of formalities uh we're trying something new

SPEAKER_00: i'm just asking people uh you know who are guests on the program if they would consider going on live when we go live we use a piece of software for restream it sends a video stream to youtube facebook twitter twitch linkedin which is kind of cool facebook which i guess we don't get any viewers over there anymore um well it's interesting you know turner when you when you build up an audience

SPEAKER_01: on these platforms then at some point the platform's like we'll just take that audience back and then charge you for it so facebook i have like zillions of followers 100 000 people following the page whatever and like three people get a notification about the video and they're just like would you like to promote this i'm like no i want to reach the original audience that you

SPEAKER_13: convinced me to build for five years and whenever you know what fixes this what fixes that crypto

SPEAKER_17: yeah web3 have you have you heard of it before have you looked into it i have um all right listen

SPEAKER_01: let me just give a brief overview of who turner novak is you can follow him at turner novak on twitter i gave massive popularity over the past couple years uh in his uh full 30 months as a vc

SPEAKER_05: uh just basically turned uh ish posting into a fund his fund is called banana capital and uh he's quite spicy on the twitter turner how did you get into venture

SPEAKER_19: well it's a very long story but essentially

SPEAKER_22: uh it's a podcast so we have time yeah how much do you want do you want the 30 seconds you want the 30 minutes or somewhere in between yeah the in between whatever you should in between uh so you

SPEAKER_01: wanted to get into vc but when you were younger or when you couldn't get in high yeah i guess the

SPEAKER_22: kind of the full the minute context originally from canada moved to the us my parents got divorced dad moved back canada mom went back to school to get a visa stay in the country couldn't really work so volunteer under the table get paid cash gift cards got food from the food bank growing up she also had a small business she designs custom handmade wedding gowns

SPEAKER_04: which is a decent business if you're in new york paris not the best business if you're in a small city in the midwest uh and i just spent a ton of time on the internet as a kid got kicked off the computers at school every year that kind of uh an upbringing and just knew i'd do something kind of tech related but went to school for accounting and finance joined the investment club in college and was holy crap you buy a stock and it goes up yeah starting investing yeah they don't go down they only go off like investing this is awesome i want to be an investor and i just kind of went down that rabbit hole where you know you can invest when you're in college i'm curious just to pin it to the stock market yeah 2009 through 2014 i did a victory lap i my last three last three years i like cut down i just did a bunch of internships to make money and avoid student loans and uh yeah so i would i would look at a company like uber like it's worth 100 billion dollars publicly traded but why can i invest in uber when it was worth like 1 billion or there's some people that were like the first investors at uber like i want to do that yeah you want to do that third or

SPEAKER_37: fourth like fifth i don't know but anyway so so you became like at some point aware of private

SPEAKER_01: companies do you remember how you became aware of private companies just reading like tech crunch

SPEAKER_23: or something yeah honestly i don't i don't remember specifically i mean i think it was

SPEAKER_41: it's probably around the facebook ipo the twitter ipo i'd watch the opening bell with my roommates and be like oh man like i remember the twitter ipo it took like six hours like it didn't go public until like two in the afternoon we like skipped class and i just remember thinking like maybe not maybe not twitter specifically but like facebook what a great business like why am i why would i invest in the ipo

SPEAKER_04: like why can i just invest before like how do i set myself up to to go earlier and that was a long process of figuring all that out and being in probably the third best city in michigan to get into tech in vc like it was a it was a long process but yeah just essentially i just got some jobs related to investing and kind of more financially to michigan started writing online a lot just picked some topics to write about that i thought would be worth kind of like planting the flag building a track record around i did this fantasy vc portfolio it's like fantasy football but with startups and uh initially my twitter was probably 99 serious uh back in the day and now it's like one percent serious

SPEAKER_01: 99 just means for joking trolling i mean you get a lot more attention from that but just to confirm instead of going to class you decided to cut class and instead of trying deciding to cut class to go hang out with chicks or to go drink beer or to go to the quad and smoke weed your you and your dark

SPEAKER_49: friends went to watch cnbc and watch the twitter ipo i i would like to think i was a lot cooler than that

SPEAKER_01: but yeah i think it's the ultimate nerd move it's pretty great actually i uh so you're writing online you get a little bit of attention but then you want to start your own fund and how old are you at this time that you decide you're going to start your own fund because that's the kind of new thing that's

SPEAKER_05: occurred here is that yeah uh young people actually believe they can start their own funds and they

SPEAKER_54: actually succeed which just didn't even seem like a possibility i'll be honest 10 years it's it's stupid

SPEAKER_28: i don't know why you even try it to be honest uh yeah it's kind of an accident i mean i had been

SPEAKER_04: essentially trying to prove i could be a vc from michigan which essentially meant being online instead of in san francisco and this was like early 2019 was when i finally got all the interviews and everyone was like you got to move to san francisco you can't be a vc unless you're here no which made sense at the time but my you know when i think about like my advantage like if you're a startup you got to think how do you attack the incumbents i was like how do i compete against the incumbent vcs or just like the people who are you know probably like a shoe in to get the jobs you know i'm the complete opposite kind of background and network that i have set up so i was just like i don't think i need to be in san francisco so yeah i that's kind of i just try to figure out how to make it work and i took an internship it's like a pretty big pay cut um and i actually had to sell my house because i couldn't afford my mortgage and then we had a rental property that you can buy rent you can buy real estate in michigan for like 65 000 so i sold it because yeah i had a ton of equity in it and we had to move so we just moved right next to my in-laws instead of in in ann arbor on the other side of the state instead of moving to san francisco and then pandemic hit um as i was i joined this

SPEAKER_28: real estate firm called gelt and they were like hey let's raise a venture fund for our real estate lps and with the pandemic covid they were really focused on real estate business it was it was tough to get lps to come in and i just had a bunch of people that were like turner you know we've been co-investing together like if you ever start your own funds like i'm in like i had a bunch of money kind of soft committed for this fund that i actually wasn't going out to try to do but i just hit a point where everyone was like yo you got it you got to do this like i think you'd be good and i thought you know maybe in 20 years i'd launch my own firm i think that's why i told my pay your name yeah like that's what i told my wife the first date that we had you know i was like what do you want to do was like i want to be an investor i want to run my own firm one day and i was like 23 at the time yeah i think i'm 30 right now started raising this right before i turned 30 and in january was officially when i was like okay i have to do something and i just kind of went back to all

SPEAKER_04: the people that i've been talking to meeting co-investing with all the founders i backed and told people it was happening and everybody wanted to invest so and it was my thesis was i can use memes to get distribution online and it's way more efficient than anything else and it was while

SPEAKER_28: gamestop was happening and that was not a tough sell at the time like everyone was like oh memes

SPEAKER_04: duh like this makes sense so just really lucky timing with how covid the pandemic happened how memes have kind of blown up it just all kind of worked in my favor so yeah super lucky if you don't

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SPEAKER_01: love you guys and you decide to raise like a 10 million dollar company based a 10 million dollar

SPEAKER_76: fund based on this meme action you start and this is kind of like how open the industry is because of

SPEAKER_77: twitter clubhouse other social platforms uh previously blogs obviously podcasts getting uh into vc literally interacting with the top vcs requires mastering twitter which requires arguably a hundred hours of being on twitter maybe if you do it thoughtfully and just copy the people who are doing interesting things or being let's just say reasonably good at the twitter yeah you just slide into everybody's replies you start doing funny stuff obviously i see it you're trolling me or you're you know mixing it up with somebody else and it's like okay of course i'm going to respond you're talking

SPEAKER_05: about me i have no choice i'm at least gonna like it i have a sense of humor but you must have gotten blocked did you go over the line with some of these memes did you you know piss people off because when you're doing comedy it's a fine line you know like the joke and the hurt could be right next to each

SPEAKER_28: other yeah there's definitely it's it's funny enough it's a lot of public market hedge fund anonymous

SPEAKER_82: twitter accounts that don't like it you probably know the exact archive i'm talking about yeah it's just probably not the funnest people to hang around anyways i think most vcs they kind of like we all

SPEAKER_44: kind of acknowledge like yeah we are kind of a meme like we are kind of pretty easy to make fun of and

SPEAKER_00: i think it's pretty easy to make fun of yeah it's like who are these affluent fee bags who just write checks and then take credit for all their portfolio companies success and yes what is that job even doing like you listen to a pitch and you say yes it's like okay you wrote a check yeah like congratulations you're an atm i always tell people like don't forget you're an atm like people are not talking to you because of your personality they want a check they want money to fill their dreams like and sometimes maybe on the margins you can help them with some stuff um but you didn't you didn't uh go fly so

SPEAKER_76: close to the sun that you burned any relationships that you can think of who's got the least sense of

SPEAKER_00: humor who's got the least sense of humor that like was like blocked you or something certainly

SPEAKER_95: mark andreason's blocked you for sure no he actually hasn't he's retweeted a couple of memes

SPEAKER_41: you've got work to do yeah he uh yeah i love a16z they're awesome i think they're the strategy that

SPEAKER_04: they're trying to execute on like there's all these different if you think about venture firms and you pick a strategy it's just like companies like the one that they're executing on it's working like i think they're really good at what they do and there's other lanes to compete on and so yeah i have a ton of respect for them i think they've done a really good job

SPEAKER_00: so tell me about mechanically uh you know for the benefit uh obviously i know embraced funds but for the benefit of the audience there's people who are watching who are 22 years old or they're 19 year old turner novak's in college watching this and like okay yeah he did it at 29 30 i'd like to

SPEAKER_76: do it at 24 25. how does it work to you know raise a micro fund that's like 10 million dollar my first fund kind of situation my first one was 10 million in fact as well uh i just passed the hat you know 10 years ago at a poker table with a bunch of my besties you know that's how i did it you know didn't do over twitter but your technique over twitter seems a lot more effective yeah honestly

SPEAKER_28: it was so initially like it was a pipe dream that i might take a really long time it was just trying

SPEAKER_04: to build a track record and like trust because people are not there's people who want you to be a fiduciary of their capital and get a return and there's other people if you're a vc it's and if you're raising a small fund they want you for a deal flow like it's almost like be a scout for me 50k a tell me when your best portfolio company is raising a series a or a series b i want to lead the round with the 20 million dollar check so those are kind of the spectrum of the people it's like

SPEAKER_76: that's a new dynamic in the industry which is mark andreason did that in my first fund a bunch of venture firms are in my first fund you have sequoia capital in yours i was the first outside venture fund that sequoia backed actually would launch back in my first one um and that's a new phenomenon

SPEAKER_13: mark andreason did this as a way to sort of spread influence he put 50k into a bunch of funds i subsequently kicked him out of my second fund well he wouldn't speak he wouldn't come on the podcast and he wouldn't come to the event so like do a fireside chat and i was like he's like do i have in order for us to like be in business together do i have to like be on your podcast or come to an event and i said yes and he said okay and i said great just that was the end of the relationship basically well i started with like a like a jerk move like you you want to support me or you don't

SPEAKER_05: want to support me you know like pick one mark like and then you block me and unblock me and email me and then not email me and then you know want to buy my superhuman shares for me and you know it's just like no i'm not selling you my superhuman shares like but this is a new phenomenon of

SPEAKER_76: venture firms wanting to use you as an early signal so how many venture firms are in or partners in venture firms are in your fund approximately a dozen it's a pretty big number uh venture firms

SPEAKER_41: and partners probably like 50 50 or so wow they put in 100k each that'd be 5 million so on average they

SPEAKER_117: hit 100 or 50 it's 2.5 to 5 million something like that yeah it was probably about 75 75 average yeah

SPEAKER_76: that makes sense so that's amazing now you have 50 of them you have a portfolio company that's breaking

SPEAKER_118: out how do you communicate that to 50 people because they all want to relieve the ice or just do a bcc and

SPEAKER_120: or do they just read your you know lp update like hey here's what we invested and then they just look at the spreadsheet or do you give them a spreadsheet and say hey here's what we're investing in so they can

SPEAKER_76: double click on it and it's up to them to go drill down and ask for the the uh introduction yeah i think

SPEAKER_41: that's the art of it right like you want to keep all these kind of downstream or upstream i guess depending on how you think about investors downstream is the way i think of it yeah yeah

SPEAKER_05: the way i think of the downstream thing just so people understand the metaphor what we're talking about here is downstream investors so if turner and i are at the well yc's at the well you know you're

Chamath Palihapitiya: just watching you know the water come out of the well uh you know the spring it goes downstream and

SPEAKER_05: then seed funds that do three or four million dollar checks and venture funds that do 10 20 million

SPEAKER_13: dollar checks would be downstream from us downstream from the series a funds would of course be the

SPEAKER_28: late stage ones yeah yeah so it's essentially you yeah you just try to have a good relationship with all of them and you kind of know what people like like some people i i invest in kind of tilts

SPEAKER_04: consumer there's a little bit of more like software stuff and i just kind of know this guy's not gonna

SPEAKER_28: like this thing don't have to mention it to him um but you just kind of balance it and you i think ultimately you take what the founder wants ahead of everything sure uh like you might say you know

SPEAKER_04: hey just a heads up these guys are raising money he he's not taking you intros but you can reach out if you want and i'll just tell the founders like hey i mentioned to some people these guys might reach out you don't have to reply but you know you probably should with these guys you know so

SPEAKER_41: it's a spectrum you just try to balance it it's like a relationship thing how far into the uh how

SPEAKER_28: far into the 10 million deployment are you so of the fund we have invested it's probably like 55 60

SPEAKER_04: um and through spv's kind of total uh it's like 25 million oh so you're doing the model which is the

SPEAKER_135: model i i did or pioneered yeah yeah and it was explain to the audience how that works

SPEAKER_06: yeah so the so the the fund is essentially 25k to 300k checks try to have a balanced portfolio

SPEAKER_04: i basically pitched people there's going to be 40 to 50 companies nothing is going to be tilted and

SPEAKER_28: weighted really heavily in the fund and there's some cases where we'll put a million dollars 1.2 million in the c or 5 million in a b or 10 million in series d and i can't fit in the fund so we'll have invested in those companies earlier in the fund but then when they follow on and break out we'll go to all the lps and there are some people who don't they don't want to do spvs they you know they're like

SPEAKER_04: i don't want to pay fees like i want to invest direct or i just i want to leave the round but there's a lot of people they're just like high net worth you know have a lot of money that are like hey let me know i can't do 100k checks but let me know when we can do a million or five million in

SPEAKER_28: spv and we're interested and um so you kind of use those to augment the fund um i actually do not

SPEAKER_41: like the spv process is i think it's a hassle we're raising the money um it's it just like it takes a lot of for you have to convince people six weeks you have to pass the hat you have to

SPEAKER_140: write a deal memo which you're doing diligence like who do you do who does diligence uh i do

SPEAKER_00: massively uh i do absurd diligence for the same with me yeah no you don't i don't sleep usually i just

SPEAKER_76: know i have 18 people i mean you uh have but this is that this is the the big challenge when i first had my phone which i had no people i had an executive assistant at the time um then became my chief of staff but you have a 10 million dollar fund even if you were taking fees on it i didn't take fees in my first month if you did take fees two and a half percent a year is 250k that's basically enough to pay yourself so how do you staff one of these funds or you just not staff it and you you just that's kind of part of the the issue here is like you're writing 50 to 300k checks you you're not going to have to read the legal documents you're kind of going along for the ride you're not going to be doing the diligence you're just going to get to the founder and everybody kind of

SPEAKER_28: understands that at this early early stage yeah yeah i think it it depends so my pitch to my

SPEAKER_04: investors and the founders that i back is there's all these hedge funds that are coming down from the public markets and they're going earlier earlier i my long-term vision is do the exact opposite start at pre-seed but eventually invest in the public markets and to the founders it's like okay so you have like the dna to actually like understand what i'm doing and like maybe work with me a little bit earlier on like i i don't pitch a value add at all i'm just like i'm a dude i'm not going to help you grow your business but can maybe understand the product maybe a little bit better than

SPEAKER_28: a later stage hedge fund that's that's coming in um and then which is sequoia's point with the new

SPEAKER_05: sequoia fund um sequoia's saying hey listen i'm rule of both i've been on the board of square forever uh and why would i leave the board and when it went public was 15 or 20 bucks a share it's now 200 bucks a share we're going to distribute late and we're going to hold our shares forever at the end

SPEAKER_76: and i think they were also in doordash after linda doordash and you know they're just staying on those and you know uh according to them they don't distribute their shares to their lps until they think it's fully realized or you know maybe in the public markets for two or three years uh and now they're saying hey we're just going to hold these equities because they're sitting on 45

SPEAKER_05: billion dollars in equities that they have so they're going to become everything seems to be

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SPEAKER_05: reading all those great deal memos have you hit you know it's been pretty crazy days here two questions

SPEAKER_76: one how do you think as a neophyte investor uh first time investor who's only operated at the top of a market you've only operated at the top of the market and in fact you started your career monitoring all this right after the last crash 2008 was the last crash so you've only been an adult in an up market yeah basically stocks have only gone up for you and valuations consequently uh you're probably seeing this as well 25 50 million dollar even an occasional 100 million dollar pre-launch uh valuation pre-product market fit pre-launch valuation how do you think about these crazy valuations uh and having not lived

SPEAKER_52: through the wars clone wars or the empire yeah that's the star wars references it was like harry potter

SPEAKER_28: but before that hey cool i'll look it up after this yeah um no yeah i it's kind of a loaded question there's a lot to unpack i think yeah unpack ultimately like i don't expect any multiple expansion on any investment that i make probably expect some multiple contraction and that could be on revenue users hype whatever multiple you're paying um so i think anytime i make an investment the value has

SPEAKER_04: come from actual execution and just like growing the bin like making a fundamentally like sound business that is eventually a publicly traded company and i think if you if you invest in a seed round and it

SPEAKER_28: goes public in 10 years you might get a 20x you might get 100x but you'll make money so i don't get too worked up about the exact nuances of it especially for this fund like if i was if like

SPEAKER_04: i think any check that's like a hundred thousand dollars 150 can return a 10 million dollar fund you're not leading round so the way i kind of approach it right now is you're really just trying to find the best founders and products and companies and teams and just back them and you're kind of building a track record in the future you have to be a little bit more sensitive about what the ownership looks like and you know you look what the valuations are i do i have backed out around which is like i just think this valuation is kind of crazy don't have a lot of conviction in it etc so you kind of so that is

SPEAKER_05: kind of interesting you're taking the valuation and your conviction and you're taking those two vectors and saying hey i'm high conviction and then this is how delighted i am with the valuation if you put it on an xy obviously if you think it's a reasonable valuation reasonable unreasonable you can kind of plot on an xy chart if it's a reasonable valuation and you have high conviction you're pulling the trigger you know reasonable value even like unreasonable valuation high conviction you might actually pull the trigger right yeah you're going to give them credit for their series b essentially at the seed

SPEAKER_162: rank yeah that i i really don't think that's happened so maybe i mean clubhouse is 100 million

SPEAKER_00: dollars and that yeah that was a series b price previously and i thought it was kind of crazy i didn't

SPEAKER_04: have enough conviction in clubhouse i didn't even really try to invest i probably couldn't have i tried

SPEAKER_165: a couple times but mark andreason was in it and as i previously oh yeah mentioned we have a little bit

SPEAKER_168: of a uh yeah you gotta work on that relationship he's the man no i mean i just think that's one of the

SPEAKER_05: things about being early is you answer to nobody if you're willing to do the work i mean think about how painful our job is being the earliest investors you we have to have conviction when the product maybe hasn't even touched consumers yet or there's 10 customers right i mean how do you make decisions

SPEAKER_76: do you actually talk to customers at this point do you look at data uh or just look at the product and get to know the founder and that's enough for you for me uh yeah it's a little it's a mix of

SPEAKER_28: everything i think data is always helpful you want to be able to benchmark it but the thing is almost i think like the sweet spot is decent data like there's some promise there's a lot that needs to that could be better and you can just tell based on playing with the product and talking to the

SPEAKER_82: founder like oh the data is going to look way better in the future they're going to make the metrics look better and the valuation is very fair because of that like it all reflects it and you have the

SPEAKER_28: conviction that oh they'll be they'll easily be able to hire some some engineers to just go a little bit faster and like they just they just need the money and they'll execute on all these things that need to happen to kind of close all this and pick all this low-hanging fruit that they still need to do so that's almost like the sweet spot that i try to look for is like there's some proof point there's

SPEAKER_04: some traction there's still some questions and that's typically when it's like c when it's like a series

SPEAKER_76: most things haven't been most things haven't been figured out but something promising has emerged is if i'm reflecting back to you what you're saying yeah it depends on stage like i've done some

SPEAKER_28: pre-seed it's like pre-launch the founder's 20 years old has never started a company before

SPEAKER_82: but you can just tell based on the conversation like you you pull out all these things she's done throughout her life and you're like okay i should probably make the bet now because i will regret not doing it because it just feels like she's probably going to keep doing all these impressive things and it but it will now be through her company instead of you know running tuition or running uh tutoring classes in high school and like getting into a good college from like a bad background and like all the stuff that she's done so you kind of try to find those there's like the famous thing saying it's like you invest in in lines not dots so you kind of if there's no lines you try to like go backwards

SPEAKER_28: and like produce the lines that happened before you met the founder and like or before they even have any actual data or progress on their company and then when it's like series bc typically for me

SPEAKER_04: it's more of uh like do i feel like my spreadsheet is going to be way like the the market size in my

SPEAKER_28: spreadsheet can be 10 or 100 times bigger than how everyone else is thinking about it like all this boring you know this lame consumer app actually has like you know a hundred times more people could potentially use this based on some new features they're adding and down the the pipeline and 20 times subscription revenue is actually a fair valuation because of all these things that they'll do and again it's a super contextual very nuanced it's not like a one sentence kind of answer but you kind of try to think about all these things and i kind of try to back into like do i think this founder is going to build a publicly created company that's ultimately what i try to find and you know you try to look for like comps like oh there's this big dumb legacy 100 old company that does 50 billion in revenue and like their executives print their emails to read them or like they still use faxes so it's an interesting company to compete against if you're a tech startup so you just try to find like all these different little things to kind of piece together and like honestly i don't go out and try to invest in like this is a slam dunk home run super obvious to everyone that's generally not what i'm investing in unless i have some kind of unique edge in and like the

SPEAKER_178: founder really likes me the things that are consensus uh generally exist in the world already or so

Chamath Palihapitiya: obvious they've probably been tried already and people have failed it's the non-consensus bets you know airbnb famously pitched 37 venture firms before they got a yes um at the open angel forum when

SPEAKER_139: travis presented uber three of us invested and 19 didn't uh mark susten wrote a famous blog post about

SPEAKER_76: not investing wow and so you know and i introduced tesla to dozens of venture capitalists and you know just email friends like hey you know you should take a look at this they're like our company are you crazy did you invest i didn't i wasn't an angel investor at the time uh it's always people always ask me that and it's like i wasn't an angel investor but elon was raising money and i just emailed a bunch of friends who and that's actually how i wound up becoming a scout at sequoia was i had emailed them and said hey you know i know you know i know you know elon really well like he's making progress on this i just drove in the prototype i ordered one like this isn't going to be incredible and then i emailed twitter and i was like michael moritz and roloff you just have to do this deal it doesn't matter that fred wilson is overbidding like and i had been talking to the twitter folks and they were asking me hey what do you think you've got backing from sequoia that's all been my autobiography at some point but and fred wilson was doing the deal and evan was like hey what do you think of fred because i know you're friends with fred and fred's wife used to work for and i was like fred's the nuts he's amazing like east coast vc but you know back then east coast vc was kind of a negative signal and he's like and what do you think of sequoia and i was like oh you know honestly like sequoia you can't go you know sequoia versus fred wilson like if you were in new york i'd say go fred wilson if you're in the west coast maybe it's sequoia like you this is like picking between like two of the best options um and sequoia didn't close the deal and fred did so i didn't do tesla and then i told them to do my friend's poker app uh which was eventually became zynga but it was online poker so all three of those they passed on and then they were like can we just give you money and you invested and i did uber thumbtack and data stacks in my first six or seven investments so three unicorns in the first seven uh and that's basically the serendipity of how my career started was i i had been forwarding so many founders and that really is like a your story as well have apple's new privacy

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SPEAKER_77: just start doing the job and then somebody will give you the job yeah this is like such an easy concept that a bunch of cryberry snowflake peers of yours do not understand so explain to me why it is so obvious to you that if you just do work in the world that is credible and that is in the vector and the sector that you want to perform in then everything just falls into place and you said it yourself like you're like hey listen if this founder if she's done a bunch of stuff and she is entrepreneurial and she you know worked on this project and it took grit and you're just putting together all those dots and then making a bet what's going on with your generation you're gen z correct or are you millennial

SPEAKER_189: are you bubble okay so yeah so with these millennials there's a lot of crying there's a lot of emotions

SPEAKER_76: there's emotional labor going on from what i understand from one of rachel reporting's uh okay boomer segments fridays on the street and startups why are they so why are your contemporaries so caught

SPEAKER_189: up in their goddamn feelings as opposed to simply posting on twitter like you did for six months and

SPEAKER_183: then raising your own fund i mean it's such an obvious path if you just do the work even if you're not getting paid you will then get the job what's going on with your generation be referee you represent now all millennials go yeah this is a hard question uh i i guess i just kind

SPEAKER_163: of like i saw it as well i probably wouldn't hire myself so what do i have to do to convince myself to hire myself well because i like knew in my in like in my head i was like oh i could be so good at this

SPEAKER_28: i think those are like all the skill sets i have i just like how does someone else know that so i just kind of started writing online and tweeting it was more serious stuff back in the day it was like yeah you know you probably know like the thread emoji the thread emoji did not exist on twitter like a couple years ago but that's like the kind of stuff i would do and just yeah try to try to like build a public track record of just my thoughts on stuff and hopefully i'd be proven correct in the future and yeah like i think and that's hard to do i mean i think it's actually hard to come out and say right now like web 3 is like a terrible idea like it's going to fail like that'd be very uh very keen to say right now or to come out and say like you know san francisco is the future

SPEAKER_82: you got to move to san francisco here's all these reasons why like you basically pick stuff that other people are not talking about but then right when you're there'll be some people to read it

SPEAKER_28: and say god this guy's dumb has no idea what he's talking about there'll be some people reading like oh that's actually that's a good point like interesting point of view yeah he could bring

SPEAKER_163: a good perspective and then over time you know san francisco comes back and yes everyone's like oh

SPEAKER_82: turner was like on this he knew that san francisco would be a thing or like he was all about miami

Chamath Palihapitiya: and austin before everyone moved there so or if you bet on airbnb or you bet on uber when nobody else did you just all of a sudden get some disproportionate amount of credit for the founder and their team crushing it right it's like oh you know what you saw it before everybody

SPEAKER_139: else and it's like well i actually placed you know 16 bets as a sequoia scout i think 700k total and

SPEAKER_00: 16 bets and yeah like four of them five of them you know became worth over 100 million famously but like that is the model in what we do it worked out okay uh you know it's one of the things

SPEAKER_139: about starting in an up market you know if i started 11 years ago so you start in 2009 2010 yeah you get this huge bet i'm very realistic about that when i went out and raised my previous

Chamath Palihapitiya: funds i was like i can guarantee you one thing my irr from the sequoia scouts fund and going forward like it's only going down you can't maintain 109 irr you know or 109 ir like that's just impossible

SPEAKER_139: that's just luck uh you know and a small number of investments you know going very big but i think it's important for people to hear listen i don't want to get into generational war but i do think it's an important note because gen xers when we came out we were like listen we're not part of the

Chamath Palihapitiya: system therefore we have to make our own system and we were very entrepreneurial in that way and was like you know what we're going to be rebels we're going to come at it from a little bit of a punk rock you know alternative kind of approach here which is yeah you know we may you know uh be

SPEAKER_77: moody or whatever but we're going to build it for ourselves and then millennials came along and it kind of like bifurcated because i meet a lot of millennials who are like you who seem like i'm not employable so f it i'm going to just build my own you know i'm going to take my own course here i'm going to chart my own course i'm not going to just go up the ladder and wait in line um but there's a bunch of them who seem paralyzed and like the system is so rigged it's so unfair what do you think now that you're in business a lot and you were outside of silicon valley do you think it's a closed ecosystem or an open ecosystem having experience right i mean we're touching the third rail here but let's be

SPEAKER_211: honest about it yeah yeah open or closed in what sense uh new people being able to incorporate themselves into it accessibility to new voices new people openness to accepting young new people

SPEAKER_28: i think it's very open honestly i think it just depends though like to certain um you need the right kind of mentality and things that you bring to the table and you know there's there's a lot of things that are probably wrong with how it works and i i do try my best to to fight against those and give like certain people a voice but i think if you ultimately you know they think there's like i think at the end of the day the startup ecosystem people are trying to make a big impact in the world trying to make money so if you can do those things bring a new perspective in like people will value your perspective right like yeah they don't know like they meet meeting you 20 years ago who would have known that you would have been the guy who sourced tesla uber like yeah like if they would have just you know brushed you off they wouldn't gotten access to all those things but if they would have just taken the one call and got coffee with you you know they're they're the one person who did

SPEAKER_22: that for you you'll love them forever and they'll like that's why they're yeah yeah yeah so i think it's fairly open i think like i think a lot of people are very busy though so if you just say hey i

SPEAKER_76: want to pick your brain like not the right way to break into the system but if you say i'm going to write i'm going to do a podcast i'm going to make funny tick tocks like i bring something to the table i'm going to bring something to the table you're going to prove something you're going to show some

SPEAKER_28: work yeah yeah it's like with with investors investing in startups i don't think anyone invests pre traction or pre some kind of proof points like there's a lot of pre like these pre-launch

SPEAKER_23: seed rounds the the founding team has a huge history that you don't need to gather at facebook and

SPEAKER_76: built some you know mobile ad technology that has seven patterns and they're like yeah no we invested

SPEAKER_05: pre-launch and it's like in three people with four patents each like okay great you know like yeah

SPEAKER_41: so well i think it's like risk you took there yeah so i think it's just like everybody is looking for

SPEAKER_28: just like new information or meeting new people and you know i think there's always like some proof points that you can show i have a theory about it my theory is the industry was so closed and it was

Chamath Palihapitiya: all mbas and stanford and harvard mbas and to get in a seat in a vc firm was extremely hard you had to know somebody be a frat brother you know and even then you know it was hard you know there were only

David Friedberg: a limited number of seats right then you had this like angel investor thing which when i started 11 years ago i had a hard time finding six or seven angel investors in silicon valley like the demo day is like yeah i mean 10 years ago you know it was me cyan chris saka you know it's just you know ron conway

Chamath Palihapitiya: there was a very small group of people angel investing and you know the 20 people 30 people that you could round up for a dinner to look at companies when i did open angel forum was just so small uh but it was enough to get 250 or 500k a million dollars you know passing the hat 25k at a time that it did work but i think there's an overhang between what was true in 2000 which is it

SPEAKER_139: is a closed system and you're probably going to be a white guy out of stanford or harvard uh if you're going to get this job and then 2021 which is if you want to start being a vc you can

Chamath Palihapitiya: just be an advisor or you can pop up an spv or you can pop up a fund on angel escarda assure like

SPEAKER_76: all these services didn't even exist i give a lot of credit to naval and angel list uh and assure fund management and carta well they kind of were a fast follower but really angel list and assure those were opened the world's eyes to like yeah jay cow could have a syndicate and tim ferris myself

SPEAKER_139: and um kevin rose with the top three and gil pancino with the top four syndicates on angel list

SPEAKER_76: and it was like really yeah well you know launched it and the four of us were on there and then tim ferris saw and kevin rose with their followings had five million dollars in commitments and like a thousand people and then gill and i had like a hundred or two hundred people and like you know 300k and commitments but those guys never syndicated deals uh because they were too busy doing other things and gill and i actually just hustled and grew and we actually did a lot of deals

SPEAKER_28: together i feel like that's very impressive 10 years ago or whatever versus that um look to your one point though about the cycle i do think about it a lot so what i focused on quite a bit is i'm trying to get very institutional lps that are in it for the long haul all my communication with them is it's kind of insane i i'm doing really long paper like it doesn't mean anything i'm just trying to lay the proof points and lay the foundation to actually do this for a very long time and hopefully over

SPEAKER_04: a long period of time be a good partner to you guys and you know for 10 funds or however long it takes and my expectations are always fairly low around uh you know i do think we're closer to the top

SPEAKER_248: than the bottom so i'm gonna act you think like that yeah actually what i'm doing right now

SPEAKER_139: as a strategy is you know we invested in 350 companies in the last 11 years over 200 of them are i would say vibrant and active other ones have exited or you know are kind of sideways or whatever maybe zombie mode or you know eventually going to be shut down the founders just haven't you know put the final uh nail in the coffin um i have 50 to 60 of them raising money concurrently

SPEAKER_05: the last six months so every you know every week three or four of them close around and then three

SPEAKER_77: or four more start around the next week so literally i just took the team and i was like can we just focus on our portfolio that's raising money doing our pro rata you know we'll still do

SPEAKER_76: you know primary investments and uh syndicate investments whatever other things but let's just make sure that our companies get cashed up at this high valuations high market let's make sure they have all the dry powder they need to succeed in their missions um and it's given me the ability to

SPEAKER_77: be like you know what i'm gonna say no on i'm getting invited to crypto rounds and i find the idea and the team's credible right so that's actually a big and we should talk about crypto but that was a big turning point for me because it was just like all these like shysters and like like really smarmy people uh who were like i knew them from the dot-com era who were just clowns during the dot-com era and they're just like now they're billionaires in the crypto era um and i'm like okay you're you're writing a white paper with spelling errors in it and you're raising a hundred million dollar ico and you're gonna destroy airbnb with a token that's not gonna what are you gonna do take the tokens and like throw them at the airbnb employees and like break the windows and break the windows it's not gonna work like airbnb's got network effects like how why is a host gonna want tokens instead of cash you know pay their it was just the whole thing was so stupid but now like i'm actually seeing some credible teams and they're like yeah you know solana's already built this is already built this is already built so here's what we're doing we're building it down here's how it works it's in an lc it's legal we got this you know goodwin proctor figured this out well since i'm like okay you're

SPEAKER_257: you're not a criminal but no you know me from these three other startups and i'm like oh okay that's true i do you're legit oh you have four developers okay so there's there's four full-time developers working on this not like maybe some developers who are doing this on the weekends what are your thoughts on

SPEAKER_76: crypto in 2021 are you investing in it actively or are you just dunking on it on twitter or both

SPEAKER_28: yeah both so i think there's a lot of really there's a couple interesting things about it i do think it's just like my i guess my my twitter is just like poking fun of the stuff that we're all kind of thinking about and like no one else is saying and there's a lot of people talking about crypto

SPEAKER_82: in web3 so i'll poke fun at it uh but i do think that there are some interesting like if you can use the token economics to jumpstart the network effects in some kind of a business i think that

SPEAKER_260: can be interesting you probably need like a compelling product that's better than the existing

SPEAKER_262: product but then really consumers need a better product to replace the existing one that's solving the problem this is the key insight you're 30 years old and you or whatever 33 i don't know how old are

David Friedberg: you 30 yeah you're 30 and you understand this basic concept that the product you're replacing you have to be at least 50 better for people maybe twice as good yeah i'm changing for a 10 better product

SPEAKER_268: or a product that exists in a white paper yeah so like there's there's been two that i've invested in

SPEAKER_82: one's lolly cashback bitcoin cashback um the the the tldr is young people consumer yeah yeah so young people don't use the cashback products like ebates but lolly gives you bitcoin instead of a cashback so

SPEAKER_28: it's interesting to people you use that as a wedge to build up a crypto fintech product the brands that they work with love it because young people don't use them use their cashback products elsewhere so it's it was a really interesting kind of wedge to build in and all made sense and yes it's crypto

SPEAKER_82: and then the other one it's a game it's like a free-to-play fifa like it's it's basically free fifa like free soccer game multiplayer first cross-platform free to play i invested and he's like oh i can actually use some of this some of these web3 components to monetize and it actually makes sense i think it will help us grow faster too so i was like yeah makes sense to me um so that's

SPEAKER_163: simply the crypto i'm investing in where it's like you understand the end user value proposition as

Chamath Palihapitiya: opposed to some theoretical these are going to be rails or something that everything everybody's

SPEAKER_139: going to build everything on top of and this is the next app store and so it's worth a billion or five billion or ten billion dollars and it's like yeah there's that's a long way to go but okay uh you

Chamath Palihapitiya: know that i've been giving this some thought this is my new theory on crypto um because i'm the store of value i thought was like a pretty weak use case like star value like most people don't own their home so like they should probably accomplish that test first of like own your home it's a pretty great store of

David Friedberg: value because you can live in it that's true and you need to live somewhere and rent is just you giving money away but if you own your home so or maybe own a second home whatever so store of value i thought was that you know like and there's other things you can buy that sort of value like equities

Chamath Palihapitiya: in companies that have value propositions like say amazon or disney or netflix that we know are going to be here in 10 or 100 years so store of value i didn't like then money transfer i was like

David Friedberg: are you guys actually looking at the fees and saying this is cheaper because i don't know i just saw 30 percent in gas fees for the constitution dow and we're in year 12 of crypto like are you guys morons like money transfer this is a racket they're they're just fleecing people this is like i there i

SPEAKER_77: mean tony soprano is looking at the hash on the sopranos is looking at the vig at this and he's jealous he's like crypto vigs or 30 percent he's getting five percent a week is his juice uh you know and then i was like nfts huh that actually is interesting if you own the ip okay crypto punks you don't own on the ip oh but the monkey you own the the ip okay that's interesting what about royalties oh you can get royalties maybe okay yeah that's actually pretty interesting smart contracts oh yeah i could see that

SPEAKER_76: working because i remember you know like i remember music licensing i remember photo you know uh stuff

SPEAKER_77: photography yeah these things made money and like there was a lot of money moving around and like if there was a new structure in creative commons and the original photographer gets 10 of every use of their photo and then if they sell it they get a 20 kick or whatever it is yep i was like well that's really brilliant sorry i can't help but like it now i think these nfts are all a giant scam and that people are doing insider trading on them to paint the tape like there's been 20 transactions on this monkey but

SPEAKER_76: it's probably just a bunch of friends trading between each other and then you're the 21st who buys the monkey and you're the bag holder like are you guys schmucks do you not think this is occurring uh putting that aside then i saw downs and i was like uh this is smart so when you look about

SPEAKER_194: dow's like i i don't think i get the dow's i get nfts explain it okay so uh you just went through

Chamath Palihapitiya: uh putting together a venture firm did you use carta ashore angelist okay use angelis so angelis charges like whatever 30 40 grand to set these up where they you need to give a percentage right so you're giving of your 20 points two points or something

SPEAKER_28: what's the deal on angelis now it is 25k i maybe got a deal because i'm have like a twitter following i have no idea but it ends up being like point three percent kind of like admin fee which i thought

Chamath Palihapitiya: was really great so that exists as a concept and so that changed venture forever because it used to be 250 000 to set up a venture firm so now you did it for 10 if it was 250k how accessible would building a 10 million dollar fund be for you not as accessible wouldn't have been able to do it wouldn't have been able to do it okay great so now you've proven my point now we start looking at capital formation uh as a just a genre right as a as a toolkit and uh you know sure we have gofundme gofundme's work i did a gofundme to report on crime and sixty thousand dollars showed up and i gave it to an

SPEAKER_299: investigative journalist and wow just required a couple tweets and they're doing gotham by the

SPEAKER_139: bay if you google gotham by the bay you'll see a newsletter on substack just about crime in san francisco and a bunch of people donated to it uh is that i'd be one percent of it so i think i put in six hundred dollars other people put in a couple thousand hundreds 50 uh it was pretty neat okay so

Chamath Palihapitiya: we have that proof point we have you as a proof point okay so now let's say we want to buy an asset

SPEAKER_77: uh let's say we all live in san francisco and there's an open lot in san francisco it's a giant triple lot going for 12 million dollars and i just tweet i want to buy this 12 million dollar thing and i want to make it into a dog run and a kid's park anybody want to put 12 million dollars into this i'm starting a dow dow gets fired up their donations but then i say in the programming uh we're going to share the designs and everybody gets to vote on the designs and then uh we're going to let anybody who donates use it for their kids birthday parties there will be a reservation system you get up to six hours a year in using these facilities either the dog park for your doggy birthday uh or the park for your kid's birthday party or whatever you want to use it for and uh we'll have a special key and a key code the park will be available to everybody during these hours

SPEAKER_189: but only to members with this key code after hours so you can use it 24 hours a day since the private park

SPEAKER_77: might that be an interesting concept to fire up for close to free if let's say it was in fact you know it gets to this free and then some programmer just fills out a form it could be like a no code like a bubble or a web flow or even zapier or if this then that so you go in with an if this then that statement you're like if you own this many tokens you get this many hours and then you have governance and oh you can sell your tokens to other people if you leave the neighborhood and so boom now we've bought this acre in san francisco we tweeted it it caught viral which is what happened with the constitution you can just start thinking about every possible use case like that let's say we said hey you know we we want to fund five new managers we create a fund of funds of 100 million and we're going to just give 20 million to five uh fund managers and we're going to all vote on which fund managers the fund managers come before us they give their presentation they show their metrics

SPEAKER_211: we all get to vote and then you can share you could sell your stake in this fund of funds to each other

SPEAKER_309: how interesting would that be would be interesting i feel like there's some regulatory stuff that has

SPEAKER_311: to be figured out because that definitely sounds like we're screwing because you would have to be

Chamath Palihapitiya: these dows these would have to be uh people who were accredited investors and then if they're donating

SPEAKER_203: the money they don't need to be but if you did have a share of it it would have to be accredited

David Friedberg: investors today but i think what they're doing is with the dow stuff like they're pushing the envelope each

Chamath Palihapitiya: time with these dows yeah and kind of like bitcoin like can could you ban owning bitcoin in america today i don't think so like too many politicians own it too many people have adopted it just like at a certain point you couldn't bear ban airbnb because if you were a senator or congressman you know president mayor you have too many constituents call you yeah yeah we political suicide and actually bradley tusk used that technique against the mayor of new york when they tried to cap the number of lifts and ride turn oh interesting and when you opened your app in new york it said hey you know the mayor de

SPEAKER_76: blasio wants to cap the number of things if you disagree with this press here to email him click this to call his office right now and de blasio was like i give up i submit all right

SPEAKER_77: uh so that's what i love about dows and now i do think i am looking at it saying there's i think it's five percent realized and i do understand that people are looking at saying hey jacal and this is a big fight we had on all in episode 56 and a little bit in 55 when i was so pro these they're like this is idiotic and i'm like you guys are pulling up the ladder behind you yeah this is not

Chamath Palihapitiya: idiotic you just have to imagine squint a minute and assume like okay they've solved five percent of this now assume they've solved sixty percent of it seventy percent of it eighty percent of it that's what's going to happen over three four or five years and at some point somebody's going to just say i want to buy the next probably going to be me and six billion dollars going to show up from

SPEAKER_173: around the world and you know a bunch of funny imaginary money and i'm going to convert it into

SPEAKER_28: owning the next that's what i like about it it all makes sense i think it's like we'll see because with all these new crypto innovations or waves i feel like the first the first wave of that new concept is yeah kind of just people trying things out there's some grifters that come in and there's a lot of bad actors like you kind of pointed out earlier so yeah yeah i think like i'm approaching it from an investment like i try to be a fiduciary of my lps capital so i like to really understand what i'm investing in which is maybe crazy for a vc and i also try to make sure that i know what's going to happen after i invest so um so for me personally with a lot of the crypto stuff

SPEAKER_82: i'm just going a little bit slower um like i'm kind of waiting to see how it all plays out what i'm

SPEAKER_327: looking for right now is a call for startups i'm looking for like two or three developers who want

Chamath Palihapitiya: to create a dow company that builds the infrastructure of a dow in other words you come to the website you press a button it creates a chat environment it creates suggesting of uh governance it lets people vote on the governance it lets people see their ownership to see the cap table as it were of all the shares and allow somebody to just fire up a dow at any time for

SPEAKER_77: any reason almost like if a go fund me and a dow were combined i want to build the platform that is the dow of go go fund me dow platform you know so if somebody has two or three developers i'll put like

SPEAKER_76: 500 hey a million dollars into that just if you build me like a pitch deck and you're credible so this is a call for startups let's go through your portfolio and questions from our live audience what's the

SPEAKER_257: best question we have good put it up on the screen oh bob g always great questions what data do you ask to see first when investing in a startup what metrics are most important big fan there you go big fan

SPEAKER_28: wow that's huge thank you uh what data asks you first it's tough probably retention whatever that means whatever kind of company it is i think why is that important well you can be growing really fast but if you don't have a sound product it will kind of all fall apart at some point so i think the growth is really important but i really i really care about like okay cool retention is two percent that's a leaky bucket or if it's 90 like people do not churn from your product over a certain period of time depending on what your business model is you can be like a cash generating machine like and you don't even need to raise money so like that's there's kind of that spectrum that you can be on so i really like to see like hey the product works really well typically the retention is a function of how good the product is how the founders think about things the team that's been hired the market that they're competing in like it kind of answers a lot of those questions so that would probably be the number one but yeah you always like that yeah you you look at the growth rate and like the economics like the unit economics the business model like all that kind of stuff makes sense um like average contract size or revenue per user on the consumer side um yeah retention is probably number one for me yeah i

SPEAKER_203: mean if you have a leaky bucket as we say in the business you could be acquiring customers incredibly

Chamath Palihapitiya: efficiently and then if four out of five are leaving now you've just your cat's gone five x okay tell us about your thesis of why joker 15 minute grocery delivery is going to beat uber eats uh okay

SPEAKER_28: doordash instacart etc etc etc yeah so if you look at joker's website the careers page you look at all the public information that's out there they're really focused on lat america they're really not they're smaller in the u.s smaller in europe so they've essentially built a business that's really similar to gopuff but in line america and when you look at these dark store vertically integrated model versus the marketplace model the marketplaces are typically more capital efficient you can spend them up quicker because you don't have to build the warehouses you just partner with the local store like local grocery stores local convenience stores gas station restaurants etc but typically there's two different systems that are communicating so it's a little bit more inefficient since it's not all vertically integrated it's a little bit slower the inventory systems aren't hooked up so

SPEAKER_04: oftentimes there's issues with like your order going through the platform doesn't actually have control of the supply in the product in a lot of cases so that flows into lower retention and sometimes

SPEAKER_28: less controlled growth and just like a worse customer experience so when you go super vertically integrated way more capital intensive maybe you can't scale up quite as quickly uh but it gives a way better customer experience and jokers early numbers the the traction and the retention that they have uh compares very well to kind of some of the other models so and they're mostly focused in latin america there's really not quite as many people doing it down down there and i think they're in new york so they get comped against everyone else that's in new york but that's not really their main business makes sense they'll still try to be in the us but and yeah just the team previously ran food panda which is like the grub hub or the doordash of southeast asia yeah yeah so they it's it's the majority of

SPEAKER_04: delivery heroes business now by like revenue and gmv and delivery heroes like a 30 billion dollar company so i have a no-brainer just met the team before they launched to invest a couple times and yeah

SPEAKER_327: they're doing really well so uh okay let's take another question from our audience we'll take two more questions next question is from kevin he asked breaking into vc question if a 37 year old cpa business owner was bored of accounting and wanted to break into vc zero current network or prior industry experience

SPEAKER_222: how would you do it how do you do it interesting i would start writing online do some tweets do some

SPEAKER_28: blog posts pounding related startup concepts very boring that doesn't feel like a sexy place or a place that's very competitive so i would have some content out there specifically on your twitter timeline make sure when somebody hits your twitter or whatever your whatever social channel you're using whether it's blog whatever the first couple things they see are all relevant and interesting to people like how qf how a founder can use qsbs to maximize their secondary perfect or something i i don't know

Chamath Palihapitiya: just like some topic that's a perfect example of like something that's incredibly boring but that uh a large number of people would be compelled to uh read i would say also um i've seen people use quora and tons of questions come up on quora and so if you branded yourself

SPEAKER_77: the vc accountant uh or you know the venture accountant and you started answering questions about qsbs on uh something like quora when somebody comes to me and i see they've answered like 150 questions on quora and i can read the actual answers each answer might take you 15 minutes you're making yourself smarter so back to how turner was able to just pull a venture fund out of the air um based on this exact strategy i mean core is another great place to be active a blog is a great place to be active and then rachel who works here uh had started her own podcast and i listened to it and i was like seven out of ten that's what i thought immediately i just said how good is this it's a seven out of ten and i was like seven out of ten for somebody out of school who just manifested a podcast out of nowhere like if she's starting on second base that's pretty good okay yeah that's pretty freaking impressive like her podcast was better than my first hundred episodes of this week in startups like it was in terms of production and like how refined it was so obviously she's taking notes right more than qualified to work here at this

SPEAKER_76: week in startups let's go uh and then henry bellicester famously you know wow david sachs and now like i think they're in like a chat room together working on edits to make david sachs you

SPEAKER_139: know in his right-wing position papers even more palatable to democrats like they've got some

Chamath Palihapitiya: they've got some like signal room with keith roboi and peter teal and sacks and henry bellcast is what i'm imagining and they're making videos and memes together

SPEAKER_362: like this you know purple pill meme okay that's what i think all right pick uh what's uh what's an

SPEAKER_148: underdog firm in your portfolio in other words one that's under the radar maybe most people didn't

Chamath Palihapitiya: understand when you sent it to them that you're absolutely delighted and have strong conviction about this is the one for you to pick an under the radar firm a company that most people didn't

SPEAKER_28: understand but that you have high conviction i was uniquely just smart and proud investor right uh yeah i i guess probably the easiest answer is a company called fastly it's if you've ever heard of pindo doe it's the it is now the largest e-commerce company in china by number of customers it was founded about six and a half seven years ago grew like 100x a couple years in a row just insane guy who started a similar concept in lat america it didn't quite pattern match the same if you're just pattern matching and you were an earlier investor in pdd in china so i mean i sent it to all the early investors and was like this is insane what he's doing like it's the same thing i think it's going to work just as well and so i've invested a bunch of times in almost all the rounds i had to skip one when i was raising the name of the uh company it is f-a-c-i-l-y facility is how you say facility

SPEAKER_139: and their domain name is i'm looking for them f-a-c-i dot l-y ah they got the dot l-y rocking they do

SPEAKER_309: which i think was libya so they're an e-commerce platform for lower income consumers in latin america

SPEAKER_28: so that's the majority of people um and it's unprofitable for the mercado libre they're like the amazon of latin america they just can't really serve these people very well because the ticket sizes are too low so he figured out a couple tricks to get really cheap cash get really cheap distribution and then logistics to serve them and amazing it's working pretty well the company breaks a lot

SPEAKER_82: because they're growing like hyper growth and they're opening new locations and warehouses and

SPEAKER_28: rejiggering everything every couple months because it's just always it's growing exponentially but yeah it's they're really i think they're the number two overall downloaded app in brazil right now

SPEAKER_41: amazing but and no one is really talking about them but i'm i'm gonna make the concept here that a group

Chamath Palihapitiya: of people can buy in bulk together and then chop it up when they get the package to their house or

SPEAKER_139: something like that like in terms of social commerce or is it just small ticket sizes and being able to

SPEAKER_173: figure out how to get those to people who aren't ordering 200 in grocery they're ordering 30 in

SPEAKER_04: groceries yeah it's smaller ticket sizes and typically what it is like if i if i go on the app and there's like potatoes that are on there like maybe 10 cheaper than the store but if i invite you to buy your first time your first thing of potatoes on the app you get a discount and so do i so i'm incentivized to like spread the word and get more people on board and you basically buy together and

SPEAKER_28: then so what they do is they eliminate a lot of middlemen they go straight back to the suppliers

SPEAKER_04: they get a better deal from the suppliers but the suppliers make more money because the middlemen are cut out and then the consumers get lower prices because the middle middle middle middlemen are

SPEAKER_28: cut out and then since it's all in the hat it's like you can run an advertising business you can target people um essentially yeah and then what they did with uh on the the logistics side it's all pickup so they do a little bit of directly to your house deliveries but most of them are they actually partner with local mom and pop stores and people pick up their orders from the from the store so you can pull 20 orders in one neighborhood just to one delivery point and drastically cut your logistics costs and

SPEAKER_41: then makes sense you also give some traffic to the to the local businesses which they really like

SPEAKER_139: that's great yeah so oh you can pick this up at this essentially bodega corner store whatever it is that store now hey maybe i need some shaving cream or deodorant or whatever i got some milk whatever i forgot to get sort of like poker tournaments at casinos which are money losers but whoever wins the tournament then wants to play in the craps table with everybody else's money and they all lose it all anyways yeah so when you invest in an overseas company do they have to be a delaware c corp or have you figured out how to invest in a brazilian company or how do you mechanically do that because that does come up right in our line of work and what's your advice to

SPEAKER_28: founders then yeah it's typically delaware or singapore i've done one uh luxembourg entity one that was based in france one that was based in sweden basically just pay a lawyer to look at it and

SPEAKER_82: make sure it all makes sense there's no tax implications it costs a little bit more

SPEAKER_28: but i prefer if it's in the us if possible usually southeast asian india i think they're generally singapore latin america sometimes like caribbean virgin islands often it's delaware

SPEAKER_386: so i think that's kind of the best practice seems like everybody's doing delaware corps now we see

SPEAKER_380: that even australian companies uk companies they they get that they want to make it easy for american

SPEAKER_164: investors who in some cases just won't invest if it's not a us company okay let's take a question from the audience next question is from noah noah asks why would a first-time founder be interested in being in your fund if you aren't hands-on what is the benefit why would a first-time yeah that's

SPEAKER_22: it's a good question uh i mean it really depends on the context there's somewhere we're a little bit more involved than others um and it's it's kind of the extent of like an angel like if you were to have

SPEAKER_28: ceo of some company like you really respect the founder you know they'll help you with a couple things they're not going to hold your hand and talk to you two hours a day and sit on your board i mean i'm i'm kind of in the same boat and there are a lot of founders who like really don't need a lot of help they a lot of times they just need money or they need you to connect them with a couple people and that's ultimately the value you provide there's a lot of vcs that pitch this will add a ton of value

SPEAKER_82: will roll up our sleeves we'll make hundreds of introductions and we've got a marketing pr department

SPEAKER_393: we've got an hr department and the founders who are the most dynamic are like i don't want a vc fund

SPEAKER_299: running my v my exactly my employment process my hr department sorry or my pr department like why would

SPEAKER_176: i do that yeah you want the company to build those capabilities internally yeah that's i'm

SPEAKER_28: yeah i could help kind of a little bit and you know i'm happy to jump on a call like there's some founders i talk to them literally every day some that i talk to once a year like i haven't heard from them in a long time but i've actually noticed the the founders that send consistent updates to their investors on average do a little bit better than the ones that don't um and then the ones that do like to just stay in touch and like they'll just give me quick updates like we just signed this head

SPEAKER_82: of sales like so pumped and like awesome like that's cool like you you just be responsive and they're

SPEAKER_400: like hey yeah it's like being a friend who can give you a high five and then you know maybe be a warm

Chamath Palihapitiya: ear if they want to talk something through and yeah if there's something acute and that has to be handled and there's some fire that needs to be put out they might ask you yeah can you come help me put

SPEAKER_170: out this fire yeah but i know that i'm yeah i'm like there's nothing unique about me like i'm not gonna

SPEAKER_28: like change the trajectory of your company any more than someone else could so for me i just i just you kind of have to be a market taker you go out and find the people that no one else is making bets on or you find out where you have like a different view on what they're doing and that's ultimately how i make money as an investor is i just try to back the people that you know they just they need your they just need your money and they just they need someone to believe in them so yeah i mean at this early

SPEAKER_139: stage it's just about filling out a 500k to five million dollar round and you're passing the hat a

SPEAKER_299: lot i mean more and more i'm just seeing founders in this environment do a party round they're like

SPEAKER_139: i'm not waiting for a lead angel investors now have realized small seed funds have realized if

Chamath Palihapitiya: i'm going to get into the round it's going to be before a lead has been established therefore i'm going to put the 50 to 100k and now make sure i sign my documents make sure i wire the money and if i

SPEAKER_82: happen to like i'll help you get the lead like after i do that like i'm in and i'll make sure we

Chamath Palihapitiya: yes someone else on board yeah that but it's different now what it used to be when you were an angel you'd say okay when you get a lead let me know i'm in for 50 the lead would come in and then you put your 50 in and you there wasn't this idea that you would lose your allocation because the market is so hot and somebody's got so much money and they're a billion dollar fund that they're going to take everything and say i'll give you the five million but no nobody no free no free rides for anybody and so that's actually a really interesting switch because what used to happen as an angel you

SPEAKER_76: put in 50k the company's burning 50k three people put in 50k the company gets three months of runway and then in month four they're like hey we're going out of business yeah and that was like happening so often 10 years ago that you're like okay get all your commitments together when you have 12 months of

SPEAKER_139: runway then we'll hit the fund button but things have changed you know like it's just things are moving a lot faster okay let's take a final question from our really astute audience turning

SPEAKER_257: you okay over there yeah i'm sweating a little bit but okay here we go it's a big tough question coming in for turn over okay muhammad asks why do you think tech stocks are correcting itself now zoom is down 50 any thoughts okay great questions public markets do impact private markets obviously they're

SPEAKER_139: they're connected in some way so uh what do you think is happening in the market yeah i think the

SPEAKER_28: biggest thing is just interest rate expectations you know you value these companies and it is a lot that goes into it but you basically take the value in the future and you say what's that value that they're going to create over the next hundred years what's it worth today and the way you do that is you discount it at whatever the interest rate is being set by the fed it impacts that value that you'll pay today and when interest rates are lower that is a it makes the valuation higher of that future cash flow what the business is worth when interest rates are higher you can essentially earn more money taking less risk so you would not be investing in some of these businesses essentially that's kind of the easiest way to describe it in just like one or two sentences so it's really just interest rates changing it impacts where people want to put their money and you know people say why would i be in zoom super risky it's a tech stock all the value is going to come in the future when i could instead invest in a bond from the federal government from from the fed yeah somebody somebody just commented dcf discounted cash flow model is essentially how you think about that um

SPEAKER_413: that's nicola down 85 i mean that was a scam like that was a fraud that's why beyond meat down 67

SPEAKER_410: percent lemonade down 71 peloton down 72 percent almost zillow down 72 stitch fit 73 redfin down 54 percent from their high so yeah it's uh it's happening right now twitter down 37 snap down 38 from their high lift down 39 from high it's happening out there right now obviously the chinese stocks are

SPEAKER_173: also getting crushed by doodaf 55 from their peak alibaba 55 as well zoom 55.8 robinhood 58 although that was kind of a weird meme stock moment when they went up to whatever they went

SPEAKER_362: up to so i don't i kind of like we'll cut that off uh you know i kind of like when they get to

Chamath Palihapitiya: meme stock territory i just kind of cut off that high and i just like just like let's forget that

SPEAKER_418: happened and just you know keep it in the 20 to 30 40 billion dollar evaluation range i do think you

Chamath Palihapitiya: know people have gotten a little bit crazy with this you know price to sales ratio in other words

SPEAKER_299: just valuing companies as a multiple on top of whatever their top line revenue is and it's just a little aggressive uh i think people got too aggressive with that you do also have the pandemic stocks coming back down to earth so zoom and peloton and e-commerce companies and then china obviously cracking down on their startups and their big tech companies explains those so you have to kind of double click on some of these to understand what's going on there's interest rates for that

SPEAKER_139: affects all the stocks uh because people are rotating out of tech and maybe going into safer things but china and pandemic stocks because you did mention zoom people get super enthusiastic about these

SPEAKER_299: things but uh and zoom is a commodity product is one thing to keep in mind they happen to be the best version of it but that is something i would be cautious about with zoom is is that how unique is that product have you used microsoft's uh have you been on a board call or any kind of microsoft's

SPEAKER_77: team sucks yeah it's just like what are you what is going why are you changing the size of everybody's images like i was in like a iphone size and people's images are moving all around and i was like yeah this

SPEAKER_257: isn't very good but you know microsoft i always judge the fourth or fifth version like i remember

SPEAKER_362: when microsoft word came out that's how old i am and i was like wow this sucks compared to word perfect

SPEAKER_257: and like word perfect and lotus one two three were the standards they were independent companies right and then microsoft's like we're going to create microsoft word in excel we're going to bundle it call it office and yeah yeah come at us and that distribution advantage that they had

SPEAKER_76: and everybody was like these things are dog man they're never going to compete and sure enough version four or five of excel version four or five of microsoft word was like whoa they figured it out like they are like this giant brontosaurus or like elephant woolly mammoth like man they walk really

Chamath Palihapitiya: slow but when they get five or six steps and they get a little bit of momentum going like yeah be careful

SPEAKER_28: so they're a freight train uh well i think of zoom is more like cisco like they gotta get into the phone

David Friedberg: the communication systems they should buy some they should have bought some companies at the high valuation who make the hardware like howl or something they did they bought the the call center

SPEAKER_368: company right five oh yeah that's right what was it called yeah something you know what i'm talking

David Friedberg: about i mean they should have zoom headsets zoom cameras they should have they did have a zoom hardware product they made a monitor for meetings so they did dabble maybe keep pulling that string

SPEAKER_22: it's my advice yeah well also when i make the cisco comparison cisco's also had a nice fall from their

SPEAKER_311: high so maybe that's what zoom's doing too well yeah zoom is drinking their milkshake because those

SPEAKER_139: uh cisco rooms that big corporations had they were about quarter million dollars and then they went down

SPEAKER_393: to a hundred thousand dollars and fifty thousand dollars and now it's like nobody's going to a

SPEAKER_299: conference room everybody's in their living room or their you know closet and they're just i was on a call with the vc actually she was i think she was on the podcast and she had the blur background thing and then she had blurred it at some point and i was like are you in your walking closet she's like yeah my husband's working at home there's two kids here i just like the quietest

Chamath Palihapitiya: like back of the house bedroom closet i'm literally in a closet doing a podcast and i was like that is peak pandemic moment all right listen yeah turner how can people pitch you that's what they all want to know uh so what's the best way to pitch you do you like to hear ideas you like to see mvps uh what's you know you're a new vc so you're probably not cynical and annoyed when people contact you so or maybe you are are you cynical yet when people contact you have you written a blog post about the right way to contact you i have not yeah i hope i never know if vcs jump the shark

SPEAKER_153: yeah when they start tweeting about like please stop emailing me your ideas and i'm just like

SPEAKER_441: i'm too busy ringing the bell are you in the business um investing in founders of the customer

SPEAKER_257: like it's it's literally almost like clockwork some vc hits a unicorn back in the day and all of a sudden they have a blog post here's how they contact me correctly

SPEAKER_76: your best bet is to go through somebody i know and jump a hoop and it's like or you could open your

SPEAKER_134: email and just look for 10 seconds or forward it to an associate that's that's honestly that's

SPEAKER_28: probably the best channel hi there's a meme that i don't respond to dms because i don't i just lose

SPEAKER_448: track of them uh yeah no they go by they're like a river they're just like yeah this dms you you don't

SPEAKER_82: understand it until it happens to you when you're just like every day like 100 and it's not usually

SPEAKER_309: not that high but i just don't have time to to respond to them all and actually twitter's ui is

SPEAKER_178: not very good for responding i've been talking to the product manager at twitter about this i said if

SPEAKER_189: you really want twitter dms to work make a product called dms and make it a standalone dm app as part of the paid program make it searchable you know they just added pins so you can pin four conversations whoop-de-doo congratulations like oh but they should make a full-on dedicated app like facebook has messenger there should be a twitter dms app it should live and die on its own and it should have like an email function where if you're using twitter dms and you're paid you can slide into people's dms even if they don't have open dms on they could be like a third tab of like paid dms and really make

SPEAKER_77: it a robust product where you know dming somebody with a cost would at least build some signal whatever there's just like a million different ways to monetize it but yeah the product sucks and searching and it sucks there's yeah the search on twitter is amazing people don't realize how good this the semantic search on twitter is you can search by you know time period you can search by if they're verified or not you can search by you know keywords booleans i mean it's very sophisticated and none of that made it into twitter dms so if you're searching for you know like yeah it's just terrible it's

Chamath Palihapitiya: terrible interface no starring you can't star them can't put them into folders how about folders would that be too hard to do twitter imagine if you had twitter dm folders and you could just be like vc founder journalist and at the top when you opened it up it would be like vc founder

David Friedberg: journalist media and you just go into them what's that i said meme accounts memes dank memes memes dank memes two different ones yeah uh so anyway email works great job on the program today uh thank you oh

Chamath Palihapitiya: now you're halfway through this fund so that means there might be at some point another fund coming

SPEAKER_22: yeah we started to think about it we're what do you think about these rolling funds does that seem

SPEAKER_163: like a good idea to you or a bad idea to you well if you think about tiger global i know i know i know

SPEAKER_28: you are aware of them their last fund they deployed in like three or four months this next fund i would not be surprised if they deploy it in three or four months they are essentially a rolling fund where every quarter lps re recommit to the next quarter launch or a couple months yeah and i think that's it seems to be the direction everyone's going everyone's everyone is decreasing their deployment periods and they're increasing their fund sizes which is showing up in valuations and the intensity of the market so yeah i i try to stick to 24 month funds i'm i'm not trying to become an asset manager where i'm running a treadmill like deploying as much money as possible um our current portfolio was was pretty diversified the next one will be a little bit more concentrated um yeah and so let's i've started to think about it we're not like really fundraising there's a lot of people that are kind of interested but i haven't really actually figured out a game plan yet uh but i'm excited about it it'll be cool to

SPEAKER_204: officially you didn't have to go on the road for your fund you just did it all over zoom right and

SPEAKER_354: emails and small check sizes people don't even want to meet they probably just commit over email right

SPEAKER_04: yeah it was a little bit like a lot of people i met and like you know knew them for a couple years they're like put me down for this and that's the best part of it now it's just that you can just

SPEAKER_173: raise your fund without going on tour last time i went on tour you know the east coast i'm going to boston i'm going to pennsylvania i'm just going to wear a suit and all that i was wearing a suit and tie yeah i mean i was suited up and uh it was felt great felt great to wake up in a hotel and get your

SPEAKER_178: suit on and polish your shoes have a proper breakfast at 7 a.m get over there at 8 45 for the 9 a.m

SPEAKER_148: meeting and just get drilled yeah i kind of found it but then i kind of had it you watch the show billions at all you're a fan of billions i've seen a couple episodes yeah i basically went what's the

SPEAKER_77: guy's name axel bobby axel rod bobby axelrod moment and i was like what am i doing like this isn't me and i was just like i'm just gonna put on an acdc shirt and just be like i'm putting in my money you want to come along for the ride let's go there was just a scene where he was like enough going and pitching everybody and he just went punk rock he's like listen the fun's going it's my money if you

Chamath Palihapitiya: want to come along for the ride you can come along for a ride the end and uh he just took like a more and everybody's like oh yeah no no of course of course of course actual bobby oh mr axel of course

SPEAKER_139: we're in uh and some people were offended but other people were in you don't need to please

Chamath Palihapitiya: everybody all right listen turner you were a great first appearance on the show will not be your last let's do a let's do a six month check-in nick can we can we uh if mr novak's uh schedule allows

SPEAKER_76: between tick tock i also like your tick tocks what is the inspiration of this like big nose tick tock

SPEAKER_44: guy who's just i just try to think of the most ridiculous things i could do that was funny and

SPEAKER_28: really didn't offend anyone too much uh and just yeah that was that's where it came from i honestly if you if you go on tick tock and you scroll it you get ideas that you can borrow from the mainstream to like the vc startup so that's where i get most of my ideas from they'll be like a funny sound or music or a different like character like what is that character have a name yeah i think he's just

SPEAKER_141: like the vc he's just like steward to back maybe i don't really want to be associated with the

SPEAKER_139: character even though it's me i don't know my favorite was i think is when i became aware of it and i just i retweeted or something was he just kept interrupting the person with inane or maybe they

SPEAKER_77: nerner tovac does this every time but it was like he kept interrupting them with inane bull

SPEAKER_183: like what's the tam what's the ltv yeah i was like okay it's in the deck did you review the deck before

SPEAKER_481: you got here like what does the company do again what's the name of the company who else is who else is

SPEAKER_28: investing you might like this one i i did one where i reviewed all of chamath's uh alphabet ipo

SPEAKER_82: specs i don't this was like a year ago but i like i like open door was like the worst and i like i made up a bunch of fake ones like ihop um he was gonna like i just i made up some funny stuff i don't

SPEAKER_163: know if you saw i do remember seeing that one now he thought it was hilarious so yeah so i just i

SPEAKER_28: try to make it funny i think founders like they don't need people to give them all this advice and like tell them how they're on the front of their business usually they're just like i want to get to know the people they're investing i want to be able to trust them you know i think in making jokes and you know making memes and being humorous like you kind of show like i know what i'm talking about like i i get it you know i'm just i'm not gonna come in and boss you around and usually for for me like for what i meant i'm not leading around i'm not sitting on your board founders just want somebody that they identify with and think they can trust and feel like they know before they reach out like they know what it's going to be like talking and working with me so that's kind of what

SPEAKER_203: i try to portray in the in the tweets and the tick tock so all right everybody follow our turner novak

SPEAKER_173: uh t-u-t-u-r-n-e-r-n-o-v-a-k in case you uh need the spelling yeah search from on twitter search from on tick tock great follow and we'll see you online and in six months have you back on the

SPEAKER_178: program we'll do another q a we'll do a little more uh portfolio review and we'll see you all next time on this week in service bye bye everybody