SPEAKER_00: Okay, no Molly today. It's day nine of her being the co-host and she's out sick. Oh my God, she might have the Rona. Let's hope it's the Omicron, but she's doing okay. So I'm going to do just a quick solo news and then I'm going to talk with Zach Coleus and do Ask an Angel. The first story I want to talk about is the fact that a million less kids have enrolled in college in 2021

SPEAKER_01: compared to 2019. And I'm going to tell you why this might be a great thing. Stick with us,

SPEAKER_03: it's going to be a great episode. This week in startups is brought to you by Dataiku allows companies to leverage one central solution to design, deploy and manage AI and analytic applications. Visit Dataiku to learn more. Lemon.io. Need to speed up your product development without draining your budget? Hire vetted engineers from Europe at Lemon.io. Go to lemon.io slash twist to get 15% off for the first four weeks. And Fiver Business is a modern workplace for the digital world. Their team of dedicated business success managers help match you with the best freelancers for your team. Right now, you can sign up for Fiver Business free for the first year and save 10% on your purchase with promo code Jason. That's Fiverr.com slash business and use promo

SPEAKER_06: code Jason. All right, everybody, before we get to our Ask an Angel with Zach Coleus, there was a story that I saw across my newsfeed. And I thought this was particularly important. And I had something to

SPEAKER_08: say about it. And here's the big headline over a million fewer students enrolled in college this fall, this is in the United States, compared to pre pandemic levels. In other words, two years ago,

SPEAKER_00: 2019, I would assume. That represents the lowest enrollment numbers in 50 years. A nonprofit called the National Student Clearinghouse released this data Thursday morning, and NPR reported on the metrics in the fall of 2019, there were 15.4 million new enrollees. And two years later, in the fall of 2021, there were only 14.4 million. Since 2019, total undergrad enrollment has dropped 6.6%. Undergrad enrollment was already on a slight decline since 2012. But the pandemic has accelerated this. Now, I don't know

SPEAKER_08: if that has to do with the number of young people there are in the country, who knows if there are other demographics there, or the fact that we didn't let a lot of people into the country. Those are two factors that I'm not sure were addressed in this study, where we have a lot less immigration in the country. Trump was anti immigration. And it does seem like Biden is continuing the less immigration or straight up anti immigration, which is a big mistake, we should be letting people into the country when we have over a certain number of jobs available. And we obviously want the smartest people in the world to come here. So my feeling on immigration, I made it very clear on this program over and over again, anybody who's got a STEM degree who comes to college here, should get a 10 year green card with a path to citizenship, anybody who has a STEM degree or an in demand, science, technology, engineering, math, or is entrepreneurial starting a company, we want those people in this country, not other countries, we should be looking at them as draft prospects, like in the NBA, and we should be trying to get all of those draft prospects here. Now back to the college study, community college were initially hit hard with 500,000 students decrease from the fall of 2019 to the fall of 2020. That represented a 10% decrease in in enrollment, community college enrollment is down 13% since the fall of 2019. Pretty staggering there. And you know, listen, community colleges, I don't think are the most flush with cash already. So as the pandemic has gone on longer, students

SPEAKER_00: seeking four year degrees have stopped enrolling faster than those seeking two year associate degrees. So that's an

SPEAKER_08: interesting rub here. This means students seeking higher level degrees are now opting out at a higher rate than

SPEAKER_00: those with associate degree counterparts. So that's fascinating. Why would that be happening? Do people see less value in a four year degree to the people getting the two year associate degrees? Are they hungrier? Very interesting, or maybe people are looking at the amount of debt and saying maybe I can just get by with a two year

SPEAKER_08: degree and be considered a college graduate, right? That's another possibility. In the workforce today, the stigma of not having a college degree is much less than when I graduated in 1993, I was supposed to graduate in 1992, but I was a

SPEAKER_10: couple of credit shy, took me four and a half years to go to school at night while working two or three jobs. So I was

SPEAKER_08: supposed to graduate in 92. And back then, your college degree did matter. And whose name was on your college degree was actually a deciding factor on how much you would get paid, and which job you would get. So literally an Ivy League degree, a Fordham degree, a city college degree, it was probably $10,000 $20,000 in salary

SPEAKER_00: difference based on your degree. So the NPR article quotes why young people might be skipping college. At this point in time, wages at the bottom of the economy have increased dramatically, making minimum wage jobs, especially appealing to young people as an alternative to college, let that sink in. We've been sitting there saying, Oh, my God, the minimum wage, the minimum wage. Well, when we stopped letting people immigrate

SPEAKER_08: into the country, then we had less people fighting it out for minimum wage jobs. And as the economy boomed, and people embraced services like DoorDash, or Uber Eats, you had all of these gig economy jobs happen, the gig economy put pressure on fast food, factory jobs, Amazon warehouse jobs, everybody in a dogfight, which means now, what used to be seven to $12 is 15 to $35. I could see people saying I could go into debt, or I can make 30 bucks an hour, or it's a pretty easy choice there. If you can make 20 30 bucks an hour, or go into debt. That's a very interesting observation from NPR. In December, for example, jobs for non managers working in leisure and hospitality, pay 15% more than a year ago, according to the Bureau of Labor Statistics and the statistics I have, you know, from gig economy and factory jobs, I think it's even much higher than that 50% increase. Do some back of the envelope math here with me. We love the the boat B O T E back of the envelope math. If you want to be good at business, I'd be able to do this stuff on the back of the envelope. If the average pay went from 1466 to $17 an hour over the last year, that means the average non manager or cafe employee went from making $20 more a day under 17 to 136. And they're making almost 200 more per paycheck from 1172 to 1360. And you could actually do that over the entire year $20 more a day, if you worked 250 days, you get the idea is 5000 more a year, right? It adds up quick, right? If you were just making $1 more a day and working 250 days, that would be 250. Now you add a zero, if you're making $10 more a day, you're making 2500 now you double that to get to 20. And you're talking about $5,000 more a year, that's a lot of Coachella tickets or a lot of crypto and NFTs. So quote from the National Student Clearinghouse head of Research Doug Shapiro. It's very tempting for high school graduates, but the fear is that they are

SPEAKER_00: trading short term gain for long term loss. And the longer they stay away from college, you know,

SPEAKER_08: life starts to happen, it becomes harder and harder, start thinking about yourself going back

SPEAKER_00: into the classroom. So this, I don't know what the National Student Clearinghouse's head of research or what Doug's personal biases here as the head of research, but I would assume that he is, you know, in some way in favor of higher education. So maybe he's pumping his own nonprofit, who knows what his motivation is. But I think it's a valid observation. If you don't go to college, and you start operating the real world and doing well, then the need to go back to college kind of goes away, right? And you're kind of like, Well, why would I do that? I, you know, have been giving this a lot of thought, and I've been saying for a long time, if college was less than your total debt for college was less than the amount of money you make year one getting out of school. So if you get out of college, you make 40 or 50k. If your total debt was under that number, I could see it being worthwhile. It's still you'd have to think it through, right? Because you got to pay that money back. So if your first job out of college was 40,000, and you're 40,000 in debt, okay, and then you went up 5% a year, you know, okay,

SPEAKER_08: you're going to double your salary in about five divided into 72 is how you do the rule of 72. So if you're, let's just say you were growing your salary at 7.2%, just to make it easy. If you're growing your salary 7.2% a year, in 10 years, you would double that 40k salary be at 80k. If you're at 80k, you're taking home 60 and change, paying back the 40k not so difficult, right? You start paying back, you know, 6000 a year, 12,000 a year, you're going to be done with that loan pretty quick,

SPEAKER_10: right? And now people would probably accelerate paying that back unless it was very low. Potential

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SPEAKER_08: to learn more. Here's another option. If you were going to go 100k into debt, right? It's just because that seems to be what a lot of Gen Z's are looking at $100,000 in debt. And you get a degree which let's

SPEAKER_00: face it is not very practical in terms of what you're going to use in the real world when compared to trade schools. Well, how about you stay home for a year and save up $25,000, right? So you work for these

SPEAKER_08: Ubers and door dashes or whatever. And you save up 25 because you have to spend some money to exist. You put a $25,000 deposit down on a studio apartment, Phoenix, Atlanta, Tampa, those are cities where I think you could put a $25,000 deposit on a 150k studio apartment. I'm not saying this is a three bedroom that you're going to raise your kids in, or a small house, you know, and in that same price

SPEAKER_00: range, you might even find a one bedroom. But I say go for the studio, just tiny, tiny, tiny. So you don't have high overhead. Now you have like, let's say 3000 a month into living expenses for the next 25 months, just over two years. You know, stay home, learn project management, learn growth, learn developer skills, get on MIT, open coursework, get on Coursera, all of this stuff is online. And then just do your door dash for 20 hours a week, make your 500 bucks a week, 2000 a month. This leaves you with $1,000 left to play the stock market by crypto, and just screw around learning finance. Right? Maybe you go on Republic, you go on seed invest, you start making $250 $100 $500 bets. Now

SPEAKER_08: you're two years into this. And you've got some actual skills that startups need, whether it's being a developer, project manager, growth, any of those things, even sales, like enterprise sales. But I would go with project management, UX, UI growth, developer skills, those are in demand, high paying, high paying means 50 60 70 80 K entry level, you know, that's what people would get in one of those cities or work from home, if you were reasonably good at it, you don't have to be an expert, that's I'm talking entry level, 50 to 80 K would be the entry level for a project manager, a growth manager, developer, or even a sales executive with their full comp. And now you're two years in, you got real

SPEAKER_00: skills, then go to a startup accelerator, go to tech stars, go to launch accelerator, go to Y comedy, whatever the local one is, and say, Listen, I have this skill. I taught myself, can I sit in on your

SPEAKER_08: accelerator? And see if there's a startup here that wants a third co founder, who has a scale that they will not need to pay for, or they can pay very low little for. And now, all of a sudden, you get picked up as the project manager, you just watch the 20 startups, you pick the one you love best, or pick the three, you go to the founder, say, Hey, can I work for you? I'll work for free, I'll work for minimum wage, I'll work for $1,000 a month draw. Because remember, your expenses are very low, and you got the DoorDash job 20 hours a week, which is basically your weekend, just, you know, work the weekend or work two days a week. Or maybe you drop that down to 10 hours a week, right, because you got such a low overhead. This isn't for people who have three kids, this isn't for people who are in debt already. I'm just talking about people who are graduating from high school, and I have a clean slate. Now you've learned a whole bunch of skills,

SPEAKER_00: you got a decent salary, maybe it's a baller salary, if the startup gets funded, you got equity in that startup, you might have even founder level equity, which could be in the double digits 10% or higher. And you got your own studio apartment, you may have some ETH and some NFTS, you've got some equity in startups that you placed bets on, maybe one of those will work. And then bonus, maybe in a few years, you flip the apartment and make a little bit of money. Now, why would people not take this

SPEAKER_08: path pre pandemic? Well, because it seems crazy and risk taking. But, but if you were learning from

SPEAKER_00: home in the pandemic, and you couldn't come to the campus, you basically unbundled the college experience from the learning. And I think what's happening, this is my interpretation, my opinion, I think young people have had an awakening from the matrix, they were in the college matrix.

SPEAKER_08: And they didn't realize, and then they took the pill. And they got red pilled. And then they woke up and realized, wait a second, what exactly am I paying for here? Because I'm doing this online

SPEAKER_00: learning. And it's bullshit. And I'm not getting anything out of it. And it's a boring topic. And the teacher is okay. But I found a better teacher online because MIT put other courses online, I'm taking a microeconomics course. That's unbelievable. And there's no difference when you're doing distance learning of watching the MIT course, or the Coursera course, or the Linda course, you know, or whatever other courses out there, there's no difference between those free courses or close to free courses,

SPEAKER_08: and watching your own teacher. So if you're going to some mid tier college, or even lower tier college, what are the chances that that professor is as good as the MIT one? Yeah, I would like to be generous, but I would say it's one in 100, one in 50, possible, but it's not probable. And that's what's

SPEAKER_00: happening here. Finally, after the millennial generation got themselves horribly into debt, then Gen Z, and now on to this next connected generation, they realize, wait a second,

SPEAKER_08: distance learning proved it to them. It's a bit of a scam. And it's not worth it. Again, if your

SPEAKER_00: parents are rich, and you're not paying for it, sure, enjoy the college experience. And you can have a four year luxurious vacation with low expectations and party and, you know, meet a lot of fun people. But the reality is, if you're trying to make a career, higher education at $100,000 in debt makes no sense. At what 10 to 40k in debt, I think I graduated with 12k in debt, I paid it off in two

SPEAKER_41: years, just because I didn't want to fill out the little vouchers, it was so boring. And connections,

SPEAKER_00: give me a break. The college connections, you're meeting a bunch of other kids like yourself. Those aren't important connections, you want the connections to the people who are just ahead of you. That's why I said, don't go to college with a bunch of looky loos and, you know, the average people gen pop, that's gen pop. Go to the accelerator, where there are the people who are just ahead of you in life, 2345 years ahead of you, who have self selected because they want to be entrepreneurs, they want to change the world. Go run with people who run faster than you and

SPEAKER_08: you'll be a better runner. You go to a bunch of people jogging and speed walking at like the average college, they're just going to slow you down. You want to you want to go with those you want to network with the people slightly ahead of you, the people in graduate school, or startups, those people

SPEAKER_10: if they're in MBA graduate school, maybe, but you really want those startup founders, the people who

SPEAKER_08: are a cutthroat. Okay, listen, that's just my opinion. If you disagree with it, you know where I am twitter.com slash Jason, instagram.com slash Jason. Go ahead, that mentioned me and we'll have it out on twitter. That's my belief. And if college wants to change this, it is a very simple solution. You should give people the college for free and let them pay you back on an ISA, an income sharing agreement. If your college is so great, then you should pay for college, you should take the risk, and then get paid double with an ISA. That's my belief, you know, sorry, if again, if you've got rich parents or you're on scholarship rate, and that's what I think should happen. I think all these colleges with the huge endowments should go to free and it should be merit based. I think all STEM degrees

SPEAKER_00: in this country should be free. If you graduate and go get a job, or they could be on ISIS. And you just you know, if you pay your first $25,000 in taxes, when you hit $25,000 in federal taxes, your your loan is forgiven. How about that as a concept, government makes their money back,

SPEAKER_08: or the government makes back 1.5. So you have a $20,000 loan. The second you pay $30,000 in taxes, the government says, Don't pay us back. You did good enough paying $30,000 in federal taxes. Okay,

SPEAKER_00: let's go to my all asking angel with my pal, Zach Colias. When you're growing your startup fast,

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SPEAKER_55: welcome to our monthly Ask an Angel segment. This is where I, Jason Calacanis, investor in over 300 companies, and my good friend and dare I say bestie, Zach Coleus, my brother in Omicron, we both got Omicron at a particular of super spreader event that we shall remain nameless. We answer people's

SPEAKER_57: questions candidly. And that's the key here. This is why Zach is such a great advocate for startups and is so loved in the entrepreneurial and investing community because he's candid. Zach, welcome back to Ask an Angel. Awesome to be here. I miss you, brother. I miss you too. But now that we're both Omicron brothers, we can go anywhere we like. We can go to Hokkaido and go snowboarding or skiing. We can

SPEAKER_52: go to Miami and get Cuban sandwiches. We can do what we want. Let's go. Let's go. We are free. I am ready to go. Just like I was when I was hot to trot when I got the vaccine. And then they told me, Oh, yeah, vaccine doesn't work. Or it kind of works. It keeps you from dying. You're still going to catch it. We didn't die. We did not die. And it went pretty easy. So I think the vaccine did it

SPEAKER_64: great. I'm happy. I wish some people here I'd give a big fat wet kiss. Just boom. Big hug. Two of us

SPEAKER_52: could hug those great mRNA folks. Literally Omicron was a cakewalk. Zach rated a one of 10 on a flu scale. And I rated a two of 10. It was so easy to get through because we were both boosted. I believe that is my belief. So we are homicrons for life. All right, let's get to it, Zach. You and I always

SPEAKER_70: like to get to it. This is from Tim Ryan on Twitter. Everyone has their definition of an outlier

SPEAKER_52: based on your experience and level of success with big returns. What constitutes an outlier from your point of view? 500X, 1000X, please break down your definition of a single, double, triple and a home run. Very good question. At this point in our careers, how do we look at,

SPEAKER_72: you know, hitting a home run specifically for yourselves, Zach? Yeah, I think in any early

SPEAKER_74: stage investing, there's two key variables. One is the multiple on your outcome. So right, your cash on cash, your, your, your Uber numbers, world class, like hitting the ball out of the park times 1000. Beautiful, beautiful strike on that ball. And it just sailed. Like it left the park, it left in universe. It was a beautiful, beautiful ball. Still down. Unbelievable. And then, still going. And then obviously, ownership. Because if you would own 10% of Uber. Ah,

SPEAKER_66: I mean, if you just take, you take Mr. Bill Gurley, and you just trade seats with them. And you just

SPEAKER_80: take all that money and put that right in your pocket. Make me Bill Gurley. So nice. It would

SPEAKER_66: have been, it would have been a whole different ballgame. Okay, so that's one. Boom. Yeah. Yeah.

SPEAKER_75: So, um, but also like, you know, I look at some of my best companies, they're not 10,000 exes, but I own

SPEAKER_82: 10% of a $500 million business. It's growing 300% a year. And that's pretty, pretty amazing. Um,

SPEAKER_55: that ownership matters. This is a key, key important concept. Yep. And so, um, I think for any angel

SPEAKER_75: investor, it's really comes down to your portfolio construction, and really understanding the end of the day, how much high quality deal flow you have coming in. And then how do you maximize your ownership in those high quality deals, but at the same time, get as much diversification as possible, because one 10,000 exer can totally change the game for the rest of the portfolio. And so you've got both sort of a balancing act between how deep are you and how broad are you? And that really comes

SPEAKER_55: down to your judgment. It's a tricky game. This is a key point that I was going to double click on with you. And to just rephrase it and reflect it back to you, Zach, what you're saying is, you need to have enough portfolio companies that you qualify to have an outlier. And we've talked about this before.

SPEAKER_53: Some people say the number is 20. Other people say the number is 50. You and I both agree the numbers between those two, in all likelihood, if you're fishing in the right ponds, if you're investing in venture backable companies that are in the right sectors, whether it's SaaS or marketplace, fintech,

SPEAKER_88: or consumer subscriptions, whatever it is. So this is a key important concept, you must be diversified,

SPEAKER_55: and you must be concentrated. And these seem like disparate ideas, but when in fact, you can build ownership in the winners. Now, this is something I want to double click on with you, Zach, you said,

SPEAKER_53: when you identify a winner, you try to increase your sizing. So take us through, you talked about a 500 million dollar company that you have a 10% position in. How did you get to that 10% position? Did you buy it in

SPEAKER_91: the first time you invested? Or did you do it over rounds?

SPEAKER_75: Yeah, so both in that case. So I think my initial check into that company was, I syndicated it, and put in 800k at 15, free, and solid 5%. Good amount of ownership right out of the gate. Happy with that. By itself, that would have been awesome. But then a year later, the company went through a fundraise and struggled and had good revenue, but had some tricky business model problems that people were still trying to figure out. And the raise wasn't working, and they were in a position where they needed more capital. And that's where I had gotten a chance to know the founder over the year has spent a lot of time working with them on the business and working with them on all the moving pieces and felt really comfortable with where they were. And I was able to back up the truck and put in another 1.5 at the

SPEAKER_66: same price. So $15 million valuation. Yummy. And because, but yeah, let's just pause here for a

SPEAKER_57: second. The company had not figured it out. And sometimes this happens, a founder runs out of money,

SPEAKER_55: or they're running low on money. They haven't figured it out. But they've made progress. But because of your, if I'm reflecting this back to you correctly, let me know, because you knew the founder and trusted the founder, you trusted their assessment of the situation, you agree with their assessment of the situation, hey, if we tweak this business model, this thing's going to take off. And so you were able to place an intelligent bet because of your insider information.

SPEAKER_74: Yeah, I like to argue that there's really one key inflection point in these businesses,

SPEAKER_75: which is when it goes from being qualitative to quantitative proof. And what that means effectively is when it's qualitative proof in the beginning, you can make an argument as to why it's good, you can show the value, you can talk to customers, you can see that this seems really compelling, but it's not yet reflected in metrics. You don't have month over month growth rates, you don't have revenue scaling to the moon, you don't have users going up every single month. And most venture capitalists, the people who follow us, they come in at the point when there's enough meat on the bone in terms of quantitative information, enough metrics, that they can convince their partners that they should do that deal. And it's really hard to convince your partners with qualitative information. Like, oh, I feel this one's great. I trust the CEO. But it's pretty easy once you've got that month over month growth rate. And so what I've found is there's this sweet spot where it's pretty clear that the company is doing something awesome, but it's not yet showing up on the Excel sheet. And that's when you can basically show up and write a big check and take some ownership.

SPEAKER_53: This is, you know, this is one of the great things you get a great question from the audience, great job on that great question. But then, you know, Tim Ryan asked such a great question, but we get to jump off and figure that out in terms of for myself, single, double, triple and home run.

SPEAKER_52: I no longer because I've hit so many home runs and not to be obnoxious about it. You know, now I am, I kind of feel like I'm in, you know, maybe the Michael Jordan or the Steph Curry after three rings. After you get a couple of rings, you're not worried about your legacy. You're not worried about paying the rent. You're not worried. Am I good at this or not? I know I'm good at what I do. Zach knows he's good at what he does. We're now in the position, you know, it's a great place

SPEAKER_70: to be. I've been investing for 11 years. And I think Zach, you're right behind me. Yeah, about seven now. Seven. Right. So I'm just a couple of, I'm like, literally a couple years

SPEAKER_52: ahead of you in this thing. And what happens is, all of a sudden, you're like, okay, I'm good at this. I'm good at the game of basketball. I am one of the top, you know, I'm in the top 25% of the league, whatever it is. So I am going to be successful at the game. It's a matter of how successful. So then once you're free from that, you no longer think single, double, triple, or you no longer say, I need to deal with nonsense, or I have to win on every deal, you don't have to win

SPEAKER_55: every deal. In fact, more unicorns, as great as Y Combinators run has been recently with unicorns, more unicorns exist outside of YC than in it. Proving the point that even the most active investor, by far 1000 companies this year or something crazy. I don't know if it's 500 to 1000. They

SPEAKER_57: don't have to hit everything. You don't have to hit everything. So now I play for the love of the game. I enjoy every day. If a founder is a great founder to work with, and we're winning, I want to invest more and more. We just had a company become worth a billion dollars that launched at our festival. I can actually say the name of it, because it's public now density. I don't know if you remember

SPEAKER_53: density people counters launched our event. Again, I had inside information. The founder was brilliant, hardworking. Andrew Farrow was just a I could tell he was like an NBA player. And I said, Listen, you're in Syracuse, or wherever the heck upstate New York, come you're playing in the YMCA come play in the NBA here in the valley. Back when it mattered where you were located. Yeah. And, you know, he took my advice and he came to Silicon Valley. And then Mark Schuster did the A cyan did the B. And now we've got Kleiner Perkins, who did the latest round just so many great investors that companies worth a billion dollars. And, you know, it's just great to be able to keep investing in it. So we've we invested in the last round, it was the largest amount we ever invested in a single startup. So you can either

SPEAKER_52: maintain or keep growing your position in unicorns. And that's a whole different challenge, right? It's a whole different ball of wax. Okay, I think we did 10 minutes on that first question, because we turned it into three. But what a great question. Next question from Twitter is coming up. And then I'm going to go to my live notice. If you're watching live, we got 100 people watching we have 52 thumbs up. Let's get that thumbs up to 75 if we can, and go ahead and tweet it and share it on whatever you're into. If you're into tick tock, you're into, you're in discords, go ahead and share the link and make sure you subscribe and hit that notification bell. Let's give a thumbs up for

SPEAKER_70: your squad for your boys. And the next question goes to the notie gang members. Here we go. Next up,

SPEAKER_52: Todd Foble, hopefully I'm pronouncing that correct asks, Are investors okay with founders that use

SPEAKER_55: no code software like bubble as an MVP, knowing that once it gains traction, it can only iterate scale so much? Will they invest knowing it will need to be hard coded when the funding is there?

SPEAKER_106: Frustrating current issue for me. Todd, thank you for that question. Zach, what's the answer?

SPEAKER_75: Yeah, so the short answer is, sure. It's just a question of the value that you're presenting to your customers. So if you can hack together something with, you know, duct tape and bubble gum and some rubber bands, and your customers are super duper excited about it, and they're happy to pay for it, and it's a huge amount of value, well, then you've just validated that something really powerful could be brought to market. And now the question is, is can you build it? Can you bring the right people together, the right team, the right productive capabilities to make that, you know, duct tape and bubble gum into a real product? And that's kind of our job is to sit down with you and figure out,

SPEAKER_87: you know, where are you and can you pull that off? And if you can, then absolutely. It's a great way to figure out, you know, do you really have something valuable?

SPEAKER_84: I'll even take it further, Zach. I think it is so meaningful that a non-technical founder

SPEAKER_55: or slightly technical founder took the time and had the audacity, the boldness, the chutzpah,

SPEAKER_52: the drive to say, I can't find a developer, but I will just make an MVP. I will have it hit customers.

SPEAKER_55: I am not scared of customer feedback. I will delight those customers. And I'll start getting customer feedback. And then I'll figure out getting a developer. And I could do that two things at the same time. Part of running a startup is being able to walk and chew gum at the same time while

SPEAKER_52: using your phone, while drinking a latte, you know, and everything else. So you have proven to me, if you've done that, that you're impatient. You couldn't find a developer. You didn't have the

SPEAKER_55: money to pay a developer. I'm not going to look down on you. I'm going to look up to you and say, you're fearless about customers. That's a superpower. You want to you're impatient. That's a superpower. Yeah, of course, you can rebuild it. And this is the great way to do it. I mean, I have A B tested

SPEAKER_52: things and done landing pages with a type form with Survey Monkey with Zapier or if this then that

SPEAKER_70: all this stuff is a great way, great way for you to get closer to the customer and learn before you

SPEAKER_112: waste money. Like think of the opposite, Zach, what if they hired, the worst thing would be to give 100,000

SPEAKER_52: or $250,000 to some dev shop and then not be able to do any changes, not be able to learn anything and then have to start over. I'd much rather see you do low code, no code. Totally. Absolutely. The start

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SPEAKER_53: Okay, noties have questions. We have answers. Bobber, who is a notie gang member says rookie question for Zach and Jason, how does a season investor deal with a founder who in their opinion,

SPEAKER_89: headed in the wrong direction? Okay, who's just basically headed in the wrong direction.

SPEAKER_118: You got somebody who's going off the rails. And let's just say I'll make this even clearer. And I'll

SPEAKER_53: refine the question. They're clearly making a huge mistake. It's obvious to everybody, but they're so

SPEAKER_120: ah, you know, strongly. They feel so strongly about it. They're unwilling to change course.

SPEAKER_75: Yeah, I mean, the great thing about our business is that we have enough shots on goal, that it's totally okay, if one of those shots goes far wide. And, you know, one of the one of the most exciting things is sometimes those crazy, wild, headstrong creatures that are going their own direction, end up in a promised land that nobody else saw, and it's full of gold and diamonds, and we're all idiots, and they were right. And so, you know, I think when I spend time with those entrepreneurs, I'm, I want to be as communicative as possible about why I think what they're doing is not right, and share examples and, and share introductions to people that can help them see the past experience, but also be respectful of the fact that they're the entrepreneur, they're driving the car, they have way more information than I do. And sometimes they're right. And you know, if they drive the car into the ditch, they're the one who's going to have more pain than I am. And so they're the one who's got to make the decision at the end of the day.

SPEAKER_53: It's such a great point. You know, if a founder is going to say, listen, I'm going to run

SPEAKER_55: through that brick wall. And you're the investor, and you're like, that's a pretty formidable brick wall.

SPEAKER_52: And they say, Yeah, and I'm going to knock it down. Okay, I'll be here. If you bounce off of it, you get hurt, you get knocked on hunches, whatever it is. But, you know, with some founders, they're going to just do it. And our job is to either clean up the mess, and help them, you know, get back up and get in the game. Or if they break through the wall, and they find like, there's a diamond mine behind it, or a hidden compartment with like, you know, bags of gold, great,

SPEAKER_55: they were right. So it's really about sometimes in this industry, giving people a space to make mistakes, giving people the space to learn. And I just like phrase things as questions. So in the

SPEAKER_52: case of running into that wall, I'd say, how thick's the wall? And have you run into a wall before? And when you ask probing questions like that, sometimes the founder is like, yes, I've run into walls before. That's a thin wall, I can break through it. And if we do break through it, even if it's a 10% chance, my Lord, there's gold on the other side, I am certain of it. So then it's like, okay, do you need anything to help you break through the wall? Can I give you a battering ram? You want somebody else to run through with it? You know, let's have a discussion about that. So

SPEAKER_70: we just like to ask probing questions, right? And common mistakes are common mistakes, you know, the most common mistake for me that they make is they find some little modest amount of revenue,

SPEAKER_52: and they stop drilling for that oil. They stop drilling, they find oil. And then shiny new object happens. And like, you know what, this oil rig sucks. I want to go pan for gold. And I'm like,

SPEAKER_130: but what about the oil we found? What if there's more? That's my we've talked about this before.

SPEAKER_133: That's my pet peeve. What's your biggest pet peeve right now? The founders that like a common mistake

SPEAKER_134: that you're like, Oh, focus to me and just keep drilling is the still top of mind for me. Yeah,

SPEAKER_75: focus is absolutely it. Like focus. And I mean, I think one of the hardest things about being an entrepreneur is like, you're getting punched in the head every day. You're trying to lead your team through complicated and unclear situations. You're, you're battling in the dark and in the fog, and you're knee deep in mud, and you're bleeding out of every hole in your body. And it's like, it's the hardest fucking job in the world. And at the same time, you somehow have to have the clarity to sort of like see the mountain for what it is, and direct your team up the mountain in a way that is going to get you there, as opposed to just sort of like putting your head down and charging against that brick wall when you could just walk around it. And that's, it's just such a hard job.

SPEAKER_87: And it's really, really, really difficult. But

SPEAKER_53: And we've been there. We've both been in the driver's seat. We've both flipped the car. We've both been in pain and suffering. It got put into the founder hospital. And yeah, sometimes you're in

SPEAKER_143: that founder hospital. And it's like, yeah, by the way, you're in here for six months. You're like, really? They're like, Yeah, you got to learn to walk again. And you're like,

SPEAKER_146: I knew I took that turn too fast. But that's all I remember. All I remember is going into the turn. I woke up in the founder hospital and like cast my hand like this. And it's like, what hit me? And they're like, the Google search index. You got reindexed by the search algorithm. I'm like,

SPEAKER_75: I didn't see it coming. Facebook literally like they just gutted me. And my guts were like hanging out down around my feet. And I looked down, I could see them there. The business was still alive. It was gushing cash growing like crazy. But I knew I was dead. And like, and it was like, oh, it's so painful. It was just like, I know I'm dead, but I'm not dead yet. Oh, this sucks.

SPEAKER_21: It's like the Facebook zombie horde was eating your innards. And you're looking down and you're like, wow, I'm still alive. And I've got a lot of money in the bank account. But Facebook zombie

SPEAKER_55: horde is eating my innards. They're eating me alive. All right. Luke Skinner, maybe some relation to BF, asks, What is the most common reason that founders flub with respect to their pitch? Not knowing their financials, bad valuations, communicating value. When you see a bad pitch,

SPEAKER_87: what's typically the problem? Zach? Liars. Always lying. Like,

SPEAKER_75: you want it so bad. And you don't know every answer. And it's, for some people, their first inclination is to make something up. And, you know, unfortunately, in this business, I spend all day every day talking to people who are trying to lie to me. And I've gotten pretty good at telling them when they're lying to me. And I've gotten pretty good tricking them into lying to me in a way that I've identified that they're lying. And that like,

SPEAKER_154: Was that just asking tough questions and then see if they know, I find it's actually better to ask

SPEAKER_75: not tough questions that seem really gentle. And then they just walk themselves right off the cliff.

SPEAKER_155: Yeah. And so how do you make money? Tell me about your current customers. Something very basic,

SPEAKER_75: and they just lie. And because it's you'll, you'll identify something that's clearly an issue. And you're like, Okay, there's, this is the issue. And I'm like, Oh, what about this? And then boom. And it's like, Okay, well, thanks for saving my time. By the way, I'm done here. See you.

SPEAKER_52: Well, you're like, Hey, do you have any competition? And they're like, who are your competitors? And they're like, Yeah, we don't have any. And you're like,

SPEAKER_70: I met with your competitors last month. And I just did a Google search for their name alternatives.

SPEAKER_156: And I wound up on a website with six alternatives. So you are either completely clueless to your

SPEAKER_52: competitors or lying, which isn't. In that case, it's like, what's worse?

SPEAKER_160: For me, go ahead.

SPEAKER_66: I was gonna say it's too bad. Because I think oftentimes, if they just sold the truth, they'd be in such a better spot.

SPEAKER_52: David Wright 1 So much better. It's not like what we can't handle the truth. Like, we see constant chaos in this early stage. Yeah, we can handle the truth. It's like, we're the people who can. You know, for me, I think when the deck is not focused on what matters, that I start to get red flags going off everywhere. So what really matters? Okay, your product,

SPEAKER_70: and your customers, maybe your go to market strategy, your growth techniques, etc, you know, how you're going to get this in front of customers, and your team, as a small subset of important

SPEAKER_55: things. And then when the slides include, you know, what competition you want, and what branch you got, and anything that doesn't matter, theories you have about the overall blockchain, you know, something from a Gartner report. You know, for me, team builds a product, product hits customers, customers give money, money goes to build a team, team is bigger and better, they get to build a better product. And that's the flywheel. Team, product, customers. Anything that's not those three things is drifting from what matters, especially at the early stage, when things are not that complicated. You need a great team to build a great product that delights customers enough that they use it and pay for it. Stay focused on those three things. I think you get a lot further and no fibbing. No fibbing, right, Zach? Absolutely. If you have five customers, don't say you have 10, and five of them are on free trials and never use the product. Perfect example. Yeah. All right. Jay Sidhu asks, what kind of indicators metrics do you use for evaluating whether it makes sense for a company to prioritize profitability over revenue growth? Jay, this is a great question. When should you go for top line versus bottom line, Zach? And how do you do that dance? I mean, I think the first thing you have to

SPEAKER_75: figure out is how much do customers want and need your product? Because if you've got a product that customers want and need, and there's a lot of them out there, the first thing you need to focus on is distribution and everything else can come later. So if you're Uber and you've invented push a button, get a car, everybody in the world wants that because everyone else who doesn't have that is like, Oh my God, why is there no Uber here? I want Uber. Yeah. And sometimes when your market is big enough, that's years and years and years of losses to get that distribution out into the market. You know, on the other hand, sometimes you have a product that there's a lot of competition and everybody's already got something and you're fighting tooth and nail for every new customer. Well, now basically like building margin gives you the ability in the war chest to win those battles against your opponents. Because if you're operating at a really low margin and you're barely, you know, barely making anything on each customer, you don't have any money to throw at the next customer and you need those resources and nobody's going to fund you. And so building a business that looks really good through through margin expansion and effectively profitability can often be worth it when you're faced with a really hard, you know, bare knuckle game against competition.

SPEAKER_53: Yeah, I'll add to this. If it's a vibrant funding environment and you have people who want to keep

SPEAKER_55: giving you money at increasingly higher valuations, well, and that would be like the last, let's call it 10 years, or maybe the last seven, where it's just such a tremendously vibrant funding environment, you can say, you know what, we're going to hire an extra two or three customer success people, an extra two or three account executive, an extra two or three developers, and we're going to build our business to be resilient, and to have more cycles to do it better to delight customers more. And we're not going to try to maximize the profitability, we're going to try to maximize the top line growth, and delighting these customers and reducing churn.

SPEAKER_53: And anybody who's a sophisticated investor is going to be able to look at it. And when you explain that, hey, look, we're running this with 27 people, we've got $2 million in annual reoccurring revenue,

SPEAKER_55: this business could run, we both know with 10 people, those extra 17 people are building for,

SPEAKER_52: so we can get to 20 million within three years, we want a forex revenue, and then triple revenue, we're going to go for that big jump from two to eight, and we want to go from eight to 30. You know, you can actually explain that and why you need to be investing ahead of growth. Now, if you're not growing, and you're losing money, that's different. So a low growth rate, you're growing 2% a month,

SPEAKER_55: you know, you're growing 40 50% year over year, and you're overspending, but then we have to look, something's fundamentally wrong here, maybe people are trying the product or overselling it, and they're churning, maybe you're charging too little for your product. And for Amazon and Uber, these are

SPEAKER_52: the two canonical examples, the penultimate, I believe was Amazon, and I would say, you know, the ultimate was Uber, some people might take that in reverse. But I think Uber was building on top of what Amazon had proven, which is, if there's a huge market, capture the market, don't worry about it burning. I think, you know, Uber had burned total in their life, like eight or $9 billion. And they had created even in the markets where they sold off DD, Grab, and in Russia, those portfolio have that where else to index in those markets, I think they had generated something like $12 billion in value. So if you just look, forget about Uber's core business, where they're number one, in the places where they sold off their interest, because they knew they would be number three or four, they had made more money than was invested in Uber. That was a true statistic at one point in time, I don't know if it still holds. And I would always talk to people, they say, Uber is never going to be profitable. How many rides did they do this last quarter? And they say, Oh, they did whatever, you know, 100 million rides, I'm like, how much did they lose? So like, okay, they lost x amount. I said, Okay, can you

SPEAKER_188: divide these numbers? They did a billion rides, they lost $2 billion. They lost $2. Right? I was

SPEAKER_53: like, Okay, tell me next part. Oh, they lost a billion dollars. And they did a billion two rides. I'm like, Okay, so they lost less than 90 cents a ride or whatever it is. It's like, you think if the rides were 90 cents more, people would stop using the service, people are like, yeah, I was like, Okay, then the pandemic happens. What happens? The rides double. And there's no, with the exception of people not wanting to ride in Ubers, people still use the service, right? They didn't lose, they doubled the price, they maybe lost 10% of the user base, the bottom people using lift line, and Uber pool, right? So you just have to have to have a little

David Friedberg: imagination. And I think Amazon's the other example. If your Amazon cost if your Amazon Prime

SPEAKER_53: cost $10 more a year, or $20 more a year, or $50 more a year, would you actually get rid of it? Zach? No, obviously not. And the introductory price for Amazon Prime people forget was 40 to $50, depending on what city you're in. They tested some bidding ones. But let's put it at 50. Do you know what people are paying now? Amazon Prime is now $150. So it shows you that people were willing to pay

SPEAKER_57: three times as much. Did they charge them that in the beginning? No, they got as many people on. Did they lose money on today? Yes. Did they get people addicted? And now do people see a higher price on Amazon than on the actual manufacturer's homepage, and still buy it at Amazon? Yes. Because they just

SPEAKER_53: want to have their orders in one place. They don't care about the $3 extra, the $4 extra. They just want the simplicity of ordering and knowing it's coming on time. So great question. I love that

SPEAKER_200: question. Okay, Nick asks, Nick Piscotti, not Biscotti, which I love, but Nick Piscotti, who I also love, if VC funds could replace their institutional LPs with individuals. Okay, here we go. Would the average

SPEAKER_52: startup shed 50% plus dead weight at IPO? Would founders prefer value added individual LPs over institutional ones as well? So just to make this clear, the person is asking if VC funds, the funds that Zach and I run, instead of having institutional LPs think, you know, a big retirement fund or a fund

SPEAKER_55: of funds, professional, limited partners, the people who give us the money, and they let it be just

SPEAKER_70: individuals, civilians, citizens of America, would the startup shed 50% of the dead weight at IPO in that

SPEAKER_52: LPs who are institutional might clear their positions at IPO? What do you think? It's interesting

SPEAKER_75: question. It's in the weeds. Yeah, it's not clear to me. All I know is, you know, like on my syndicate, we've got 3600 people now who are part of that syndicate. And it's like a fucking superpower. Like every day they send me deals. Every day, they basically help on diligence. Every day they point out when I'm being stupid. They're really good at that. They're like, Yeah, this is a terrible deal. What the hell are you doing? And like, it's like, I have 3600 people on my team. And like, they get to make money. And I get to make money. We all make money together. And I don't think I would be where I am if I didn't have that those folks with me. And so I think, yeah, the letting individual investors join into stuff like this and be part of the opportunities is I think one of the biggest travesties that the SEC has has ever put in place is you can go buy lottery tickets,

SPEAKER_87: you can go gamble in Vegas, but we're not gonna let you make money on really good startup investing. We're gonna leave that to the rich people. Like, it's just like, drives me crazy.

SPEAKER_53: And now add to it. We're gonna let you do fantasy sports, which is awesome. We're gonna let you do

SPEAKER_55: crypto, which depending on what you're buying may or may not be awesome. But still, if you wrote it in Uber, if you used Amazon, if you did DoorDash, you can't participate. It's like, really? You just ordered

SPEAKER_53: from DoorDash, you drive for DoorDash, but you can't buy a DoorDash share, but you can buy an NFT of a monkey. Okay, this makes a lot of sense, folks. Let's, let's get it together. And you know, it's, it's so great to have so many LPs involved, because in an average deal, I think we're at maybe 150 people, 125 people participate in our average deal. You know, you're gonna have half of them, probably, you know, are not going to provide any value. They're just putting money beyond the money they put in. But the other half, you know, they might know somebody at Disney, or the SEC,

SPEAKER_55: you know, or have somebody who could fill that CMO position. You know, there's so many

SPEAKER_53: opportunities there. So I really do think having more LPs would be great. And I was just doing a tweet storm. I don't know if you saw it. I was so jealous of like, Mac, the VC who built his fund on social media, and he's going to be on season six is going to open season six of Angel.

SPEAKER_55: He was able to just bond with people and he did a 506 C, which means you are raising in public. I Zach and I were old school, we were told not to do 506 C. And we didn't, right, Zach?

SPEAKER_93: Yeah, no. Well, I have a rolling fund, which I think, okay, I think that is 506 C.

SPEAKER_118: Yeah. So now you're doing that. And all of a sudden, you can have people participate who you've,

SPEAKER_52: you didn't have a previous relationship with. You developed it when they said, hey, I'm interested in participating in your fund, right? So that's just so powerful. But you could only have 250 of them, or 10 million, whichever is greater. You can't go past that 10 million cap with the 250. Like, I would like to have 2500 accredited investors. I'd like to have 25,000 non accredited investors, maybe capped at $1,000 a year each. And maybe you cap the accredited investors at a million dollars a year, you know, whatever a million dollars, come up with some reasonable caps, SEC, because there's nothing exists in Dow land, there's nothing in NFT land, there's no rules of the road there. And here

SPEAKER_70: we are in startup land, you know, being obsessive about the rules. So just a little more fairness and let more people get involved. I would love to have more people involved in calm, or grin, or density, when we run our syndicates. And I would love to have people who maybe aren't yet wealthy, aren't accredited, and help them become accredited, which is the American dream. Okay, here we go. Oh, gee, Bob G. In the hizzy. Always the best questions. Let's go. Bob G says, What industries would you like to see disrupted, like Airbnb and Uber did? You got it? You got something top of mind. This is a good question. I have to think this one through. What industry? Great question from OG Bob G. Always. That's the first NFT I'm sending out is the OG Bob G. What is an industry I would

SPEAKER_52: like to see disrupted? I have two already. And now I got three. I got three. You thinking about any yet, Zach? I got my three. Okay. Let's go. You first. Give me one.

SPEAKER_223: I mean, I'm desperate, desperate, desperate, desperate, desperate, desperate, desperate, desperate for a carbon tax. Because if we put a carbon tax in place, like literally climate

SPEAKER_75: change, let entrepreneurs will come out of the woodwork and start doing cool ass to basically save our planet. And I love it. That's just one little change in the law will enable entrepreneurs

SPEAKER_87: to like actually move the needle because fucking politicians are never going to get it done.

SPEAKER_21: And so that's what I would love. Imagine that carbon tax existed. And then some crazy entrepreneur said, you know what? People's windows are letting all this energy out. I'm going to make an energy

SPEAKER_57: efficient window and I'll put it in your house and I'll install it for you in order to get the carbon credits for you spending less. And if you prove it's spending less than I get the carbon credits and you pay me back for the windows over five years and I break even whatever. So many examples. So I just came

SPEAKER_52: up with that one off the top of my head because I see people with bad windows and drafty windows. All right, here's mine. I would like to see higher education and perhaps even homeschooling,

SPEAKER_55: microschooling massively disrupted and I think that vouchers are the way to do it. Now, I understand the arguments against school vouchers that all the best students with the best parents or taking the

SPEAKER_52: word best out because I think that's a little offensive. Really, maybe the most engaged parents, in other words, the parents with the most free time who have the most income, maybe they're two parents, one of them works, one of them doesn't have to work or works after them so they have more time to put into school as opposed to the parent with three jobs who can't come after school because they got to work the second and third job. I would love to see those vouchers because I believe that five or six disadvantaged students might take their $16,000 out of the California school system and put that $16,000 to work in total 86,000 to hire a teacher and run their own micro school and get a better outcome. So I want to see education up and down, start to finish the disruptive and I believe you said carbon tax would do it. I think a government's or even, you know, state by state, the old voucher system would actually help. What do you got? What's your next one that you'd like to see

SPEAKER_231: disrupting? I mean, healthcare, like, Oh, my God. That was my number two healthcare. Give me

SPEAKER_106: something. Give me something like off the top of your head. That would be amazing. So here's a good

SPEAKER_75: example. So so with COVID, suddenly, they decided, Hey, we're gonna like, we're gonna change some rules for once, instead of sitting on our hands for like they have for the last 50 years. And so they said, Oh, we're gonna let you do telehealth. And now we have this unbelievable explosion of telehealth. People are getting world class care, regardless of where they live. And so for instance, one of the companies I'm an investor in is called ever now. They do menopause care. And the thing about menopause is really frustrating is if you're rich, you get great care, you go to the doctor, and they they figure you figure out all your symptoms, they give you the right prescriptions, you're totally sorted out. But if you live out in the sticks, and you don't have time to drive into the hospital every week, three hours, two hours, you go through untreated menopause, and your symptoms are excruciating and telehealth solves that problem. But regulations prevented that from occurring. And simply by getting the out of the way, entrepreneurs are able to go in and make people's lives substantially better. And so like, I'm that whole system. Like we got to just we got to just attack it piece by piece and just take it down because it is here. So here's my idea. Mental

SPEAKER_57: health is such an acute issue. Yeah, you got people doing telemedicine. Great. Here's my idea. You ever go to the post office? Zach? Have you been to the post office? Ever in your life? When's the

SPEAKER_52: last time? When's the last time you went to a post office? Be honest, like 10 years ago? I don't even know. I don't even know. It's over 10 years. A long time. So post office is antiquated. No offense. So but we got a lot of them. And we got a lot of people working there. Post office is not in getting postal delivery is not a major issue for Americans. You know, it is obesity and mental health. Let's just take mental health. What if we said we're going to take the budget of the post office, we're going to take the post office down to two deliveries a week, you get your Tuesday delivery, and you get your, you know, Friday delivery. And that's it. Anything else you should get by a private carrier. So now we've eliminated the other five days of the week, because they went to seven days, I think to compete. And we redeploy that budget for free mental health counseling and services. And you could do it at the goddamn post office buildings. Because you could get rid of you say, you know what, no more boxes, no more, no more of a subsidizing people selling at home. Nonsense. We'll just do what the post office did for getting people their posts and their communications, which you get all online. Now anyway, we'll just redeploy that for mental health services. Anybody who's feeling down, blue, depressed, or maybe they want to go do some incredibly violent act or do something, you know, they regret your postal, they can go postal at the goddamn postal service in the form of postal building. Fate loves irony. Let's go. Or we take all the postal services if we want to take another one back to your health care. And we say, we are going to take the post office budget and this other budget. And we're going to pride I know everybody universal health care is too controversial. We can all agree that being fat sucks. And that obesity is the number one risk factor for Americans right now in their health. So we turn every post office into a dietary consultation to help people who are obese, lose weight, just one issue, and you give them that mandate

SPEAKER_57: post office. I'm not saying people who carry the people who carry the post are not fat, right? You ever see a fat post a postal delivery person? I don't think so. They walk too much. So they know what

SPEAKER_53: I'm talking about. All right. I just want to let people know, you know, we beep out the curses,

SPEAKER_146: Zach. And I'm looking at the slack right now because they have to write down when we cursed. And it's literally like we're starting out like, it was like, eight minutes in curse word, 24 minutes in curse word, 25 minutes in curse word, 40 curse, 40, 37 curves, 43 curves, 43 minutes in curse, 44 F bomb. They can't keep up with the curses. You started talking about health care.

SPEAKER_93: Health care is so frustrating. I'll tune it down. I can be a little.

SPEAKER_53: No, no, it's okay. It's okay. It can be passed. It's great for the show because you get the beeps

SPEAKER_55: in there. I'm going to give one that's a wild card. I feel like I am, you know, as a cinephile, really, really sad at the funding of independent films. And I, you and Sachs can go,

SPEAKER_249: go, go, go do some work together here. You know what he had, he, it was so painful for him to do.

SPEAKER_21: Thank you for smoking that. I think he went back to the technology industry. He was like,

SPEAKER_55: That makes sense. I can't do this. But I think film funding and ownership of the films could be solved with syndicates. So imagine we emailed our syndicate

SPEAKER_53: and we said, Hey, here is a documentary film director. And they have this great idea for a doc.

SPEAKER_55: In fact, they have three docs they want to do. We're going to give them, we're going to raise $5 million. And for that $5 million, we are going to get 50% ownership in these films,

SPEAKER_53: and they're going to get 50% ownership. And however, it's monetized from this point forward, we will get our $5 million back and then split 50-50 from that point on. And we're going to basically agree to put these films online, you know, and make them accessible to people,

SPEAKER_52: whatever, so they get seen. I think this could be an incredible way to bring back the or tour, you know, that really considered independent filmmaker, whether it's documentary or otherwise. And I would just like to see more interesting films in the world. So I think it's and I think you could do that with music and other art, if you like, because you would align the incentives around the creators and the backers right now, the backers always got screwed in films. Yeah. In fact, I was like, I invested in one film because a friend of mine, Nick Tarecki. And I think we made our money back, whatever. I didn't do it for that reason. I just did it to support him. But when I looked at how people were doing it, they're like, Yeah, you can get back one and a half times your money. And that's it. Like they literally capped the money you can get back. It's always been a terrible deal. So I was thinking about a way to do a studio or a platform that would back these things, but they don't have the tradition like we do of not screwing each other in the tech business. You know,

SPEAKER_70: and you still have to be vigilant in the tech business because people can do all kinds of crazy things. Like issue more shares in a company. Yeah. But you know, in the film business, they're like, Oh, yeah, no, no, we're going to screw you. Like, we're going to do crazy accounting. And if you try to audit it, you can do that. But you'll never work with us again, unless you're Robert Downey Jr. or whoever, and that will let you audit us. And maybe, you know, and you're up against Disney, who has 20% of the 25% of the box office. Now they're basically movies are Disney. Okay, James asked how much of an impact does bad reputation have on investing in superior technology? Example of a company's mismanagement. Companies management has a bad reputation, but the technology behind the product is superior. I'm not sure about this question. But what do you

SPEAKER_272: think, Zach? I don't reputation. I don't work with people who suck. Like, yeah,

SPEAKER_75: made like, I think it goes back to what you were saying earlier, like, you got three rings on your fingers. And it's just not worth it to like our deal with like holes of losers and people got like, because the problem is people who suck, they're gonna try to you and you got to keep an eye on them. And that's just a huge amount of time and wasted cycles. It's the worst. Yeah. So no,

SPEAKER_180: I run as far and as fast as I can. Most people. I mean, that's, that's, I mean, there's rumors that

SPEAKER_53: Newman from WeWork fame is Adam Newman is going to do a new company. Obviously, if Theranos gets out, he's going to do it, she's going to do another company at some point. Yeah, it's just not worth. It's not worth it. Because you have other options. That's one of the great things about our industry. You don't need to hit every single unicorn to have a successful career as an angel investor. So why deal with people who are of low moral character? If they show you that they're going to do something horrible, you can be sure they're going to do it again. All right, OG Bob G, always with the great concise questions, the great, you know, I call him the fourth producer

SPEAKER_55: of This Week in Startups. OG Bob G, our fourth producer coming in hot with more great questions. When you attend shareholder or board meetings, they'd be called board meetings. What insights

SPEAKER_280: or questions do you look for? What's your approach? What's your approach to board meetings? I'm sure you're doing some boards now. Yeah, I don't take board seats.

SPEAKER_205: Even when you get to 10%? Don't you need to? I do not take board seats. I've got a couple companies

SPEAKER_75: where I'm deep enough and I own enough that like they kind of treat me like a board member, but I'm

SPEAKER_174: So do you go to some board meetings then? Yeah, I do. I do sometimes. What's your approach to being

SPEAKER_21: productive in a board meeting? What if you're if you're an angel investor now and you get invited

SPEAKER_52: to be on a board? What's productive in a board meeting versus unproductive?

SPEAKER_75: I mean, I think the most important thing is you got to remember that like dealing with investors is a cost because you've got to educate them. And so the more you can get up to speed when you show up to the room, you know what's going on and you've read the materials and you're prepared. I mean, that's just like it seems like such low hanging fruit, but having seen so many board meetings where the VCs did not do that, it's like that's just like it's just critical. And I think I think the the second thing to go back to what you said earlier is just, you know, not it's not about you telling them what to do. It's about you asking them what they're seeing. You asking them how you can be helpful. You asking questions and those questions can go a long way to helping them understand the truth because I mean, it's it's we're so removed from having our hands on the metal compared to the it's like literally like somebody sitting in the stands yelling at, you know, Lewis Hamilton when he's running the race telling him how to drive. You just can't do it. Like, he can't hear you.

SPEAKER_66: Anyway, they don't care. And like, you just got to try to stay out of the way and be as useful

David Friedberg: as possible without getting in the way. Here's my three tips. Number one, I think it's important to

Chamath Palihapitiya: be relentlessly positive as a board member. You have to be calm, positive, even in the face of

SPEAKER_55: problems. You're supposed to be elder statesman, unflappable, I come to these things with the

SPEAKER_53: seriousness of, hey, you know, a general or a general who, you know, is now working up on the hill, maybe not, you know, a sergeant on the front lines. But I like to be relentlessly positive, whatever challenges are there are, we can face them if we define the reality here by looking at the truth. And we can all be in this together by being candid. And let's stay positive, whatever the problems are, we'll get through them, even if that means shutting the company down and then starting another one in a couple years. Number two, you said this yourself, Zach, be prepared. You should

SPEAKER_52: have used the product read the materials. Sometimes I have not been able to read the materials and get on a call. I'm always honest about that. But you know, be as prepared as you can. And then I would say three, be concise in your feedback and questions. Do not ramble. Do not have a question on everything. Be concise. What I do now is I write my questions. And now that we're in the age of zoom, I write the questions. And I'll just put minor question. And I'll put it in the chat room. So I don't disrupt the flow of the founder. And I tell the founder, I'm going to put some questions in the if I have any questions, I'm going to put them in the chat. If you see them, you can answer them in line or you can wait. And then I take notes. And I take notes on notion. And then I'll cut and paste them into the chat. And I say here are my notes from the meeting. These are things I was wondering about. And one of them might be I saw we had a monthly chart and we had our yearly chart. I would love to see a nice quarterly chart. Oh, all right, let's get a couple more questions in here. Follow up from Zen profit. The Zen profit Zen profit and Bob G tag team him and this is like Stockton Malone

SPEAKER_70: here like this is like two of our greatest node members. As a VC, is it better to stay off the board from a liability standpoint? What a great question. What do you think, Zach?

SPEAKER_75: I don't think so. I think it's just a question of your business model. If you're if you're in the business of owning a large percentage of the business and being able to spend a huge amount of time with each business. And I think, you know, the VC that I have the most respect for that I've

SPEAKER_87: heard talking about this is Peter Fenton over at Benchmark. Like when he talks about his board work, I mean, he talks about it the way a founder talks about being a founder. I mean, he's just

SPEAKER_75: deeply in the game and he's there and he's just like, it's all he thinks about. It's all he does. And his business model is, you know, once or twice a year, he'll find a company that he can get that level of engagement with and he can take them to the next level and be a superstar on that team. Whereas my business model is more about a larger number of bets across, you know, less clear opportunities. I don't have to be 1000% sure this is the right thing. I can be 75% sure because I've got enough of them. I've got a very different diversification. And they're taking

SPEAKER_87: board seats just wouldn't pencil. But it's just what's best for you. Yeah, it's a great question.

SPEAKER_55: Here's some things to know. Very rarely does a board get sued. A company can get sued. But you know, piercing the veil going down to board members, it generally does not happen. If it does happen,

SPEAKER_53: all companies have something called directors and officers insurance. This provides a massive amount of legal resources to those board members. So if they do get sued, they don't have to pay for their own lawyers. So now, you know, you have to have a company get sued, and then they have to go

SPEAKER_52: after the board members. And then you would have to have the insurance not be online or, you know, unless you're committing some really crazy self dealing. Or you've you're really done something crazy, you I think you're going to be just fine. You but you can get sued, it does happen. It just happens very infrequently. But it is some liability. I like to be on boards that you have a different approach than Zach, which is for our big winning companies. I like to have a seat at the table. Because I like to be super helpful. And I made this commitment that some of these companies, you know, like density, I want to beat or grin, I want to be there when they when they ring that bell, you know, at the at the stock exchange. And if TK was still the founder of Uber, when they went public, I would have been there, he was gonna have me there. He in fact invited me to come to have

SPEAKER_70: dinner with him. But he wasn't allowed to go up and ring the bell because of things. I wish I was, I was such a travesty. I didn't mean to do that. But it was good. It was a Travis T. Yes, it was. But it is what it is. We move on. Okay, Christian J Hoffman, we're gonna gonna wrap this up, I think with two more Christian J Hoffman. And thank you so much to Zach. Let's everybody give a thumbs up for Zach and everybody follow Zach Colias on Twitter. Let's get him like a couple 100 followers. Let's give a thumbs up for your squad. And if you ever want one of the greatest investors I've ever worked with on your team, that's Zach. Get in there and email him.

SPEAKER_57: Thanks. Might be over playing it just a tad, but I'll take it. Listen, you and I, we've got to pump

SPEAKER_55: each other up so that we can get this deal flow. Christian J Hoffman says, great show so far. Can you talk about current seed stage valuations? I see, I see currently valuations of 20 to 30 million prestige companies. What is too expensive these days for US based early stage sharps? Thanks for narrowing the field, Christian. What do you think, Zach? We are seeing these 30 million dollar valuations, maybe sometimes even higher for a seed stage companies before Series A, you know, and they basically have a product completed, maybe a couple of customers or

SPEAKER_53: maybe not even product and market. What are you thinking about these valuations?

SPEAKER_75: I mean, the range is pretty broad. I mean, I just did a deal, seed deal, just a team founder that we had backed before we had a successful exit. So, you know, somebody we'd made a good amount of money with before. So, and all of the previous investors just re up when it was, you know, 40 pre. Okay, but what you said there is important. This is a seasoned founder. Seasoned, seasoned pro. I mean, this, and he's going for the moon. Like this is, this is,

SPEAKER_87: they're, they're shooting big. And so I felt very comfortable paying that price. And then I just did one at 12 pre with, um, a strong founder, but last experienced as a, um, Silicon Valley founder, no big exits, uh, interesting market, relatively unclear. Um, and then everything in the middle.

SPEAKER_75: But yeah, I mean, 12, 18 months ago, prices would have been half that. So we've seen some pretty significant appreciation in pricing, but the upsides, you know, we have, you know, companies going public for 10 plus billion dollars so that those are up even more. And so as long as, um, and when you think about it, well, not the way I think about it is when I invest, we're looking 10 years out. So like I invest today and the exit is not today, it's 10 years from now. And so if an exit is a multi built multi-billion dollar exit today in 10 years, it's going to be even significantly higher. And if you factor inflation into it, it'll probably be even more. And so, um, I feel pretty

SPEAKER_87: comfortable that pricing has gone up, but it's still reasonable relative to the outcomes that I'm,

SPEAKER_53: expecting. Uh, I mean, I think this is a great answer. I don't have much to add here other than entry price does matter. Um, except in the case of a serial founder who's, you know, uh, can command a higher valuation two or three times what a new founder can. I think the valuations, um, are going up because the exits are going up and the opportunity is going up. So if we used to invest that four to 12 in the early stage, if it goes up to seven to 20, is that such a big deal? Probably not. But if

SPEAKER_55: somebody wants 30 million and their products not in market, there really is no reason to invest at that point in time as an angel in my mind, because they will be raising more money when they get their product to market. And when they get to a million dollars in revenue, they're not going to get more than 30 times or 40 times that number. In other words, their, their valuation when they get to a million in revenue will be 40 million, maybe 50. And now you've proven a massive amount that they got to a

SPEAKER_53: million in revenue. Am I directionally correct there, Zach? Absolutely. Totally agree. So you can get to know the founder and say, Hey, this isn't a fit for me right now. But I'd love to be, uh, you know,

SPEAKER_55: in touch with you. I'll use the product and you say, you know, put on your calendar to reach out to them in six months. Pretty easy. Okay, here's our last question. Kind of a weird one. Uh, so I'll expand

SPEAKER_53: it. Beard Script says, how should you handle a large competitor getting weird, we're defined as offering you a job and then infiltrating your company? Oh my God, this is crazy. Undermining you, etc. How should I read this? So I'm going to just say, okay, they offered him a job, I guess. Uh, and then maybe try to infiltrate the company. Um, and you know, just some general thoughts, Zach, on if you're attracting a ton of attention from a big competitor. What do you think?

SPEAKER_75: I mean, I think everyone forgets that business competition is a war and they're trying to steal your milkshake. And some people are going to play fair and some people aren't going to play fair, but you're still at war and you've just got to fight. And there's a lot of ways to fight back when big companies do stuff like that. You know, oftentimes I think it's your advantage of your small company and a big company is doing all sorts of nefarious things. Go public, be loud about it, because it's very difficult for a big company to respond to a loud, like competitor who's pointing out all of their dastardly deeds. And it gets you a lot of exposure. The press loves those sort of dogfights. And so you got to be, you know, oftentimes you got to counter position against the way that they're trying to up your business, but that's what it is. It's war and you got to fight it.

SPEAKER_53: Yeah. Yeah. Please remember, this is a war and you do not want to, uh, you know, if you're, if you're the underdog fight up, you never fight down, but you will fight up. In other words, if I'm competing with launch accelerator with Y Combinator, I was very clear, Hey, we're a side, we have seven people, they have 200, you're going to get lost at Y Combinator, it's going to be a more intimate experience at launch accelerator. So I would fight up and criticize Y Combinator and mix up, mix it up with them. But I wouldn't, if there was some new, you know, accelerator, and they were throwing rocks at me, I would ignore them. So you ignore down, and you engage up. So if you're 37 signals, remember, hey.com was getting into it with Apple, they were fighting. And Apple's like, I don't even know if Apple ever responded, which is the right move for Apple. But if Apple wants to get into it with a peer like Facebook, you know, they'll, they'll even do it in a more subtle way, like, we don't store your information. And we, you know, we'll obscurify your email address and put you

SPEAKER_52: through basically a VPN or a, you know, a relay, so nobody can track you. And we're going to stop tracking of your phone. That's how Apple fought with Facebook, they never mentioned their name. They just said, we're the privacy company, we don't make money from advertising, we think that's evil. That's like high level Kung Fu here, you're not, it's not even worth mentioning Zuckerberg or

SPEAKER_53: Facebook's name. So anyway, this has been great. Zach, you're awesome. Thanks for spending an hour. You're always so generous with your time. And to the audience and all these great noti members,

SPEAKER_55: give a thumbs up, subscribe, hit the bell so you get the alerts get in there because the noti NFTs are coming. And I need some feedback. What do you think the noti NFT should be? Should it be you come 10 times you get one, maybe you distinguish yourself with great questions,

SPEAKER_52: you get one. And then maybe we have to give you a nickname. And then we make a graphic and then we we put it out there, we gift it to you. And then hey, listen, maybe you can resell it down the road. But this week in startups, noti gang NFTs are coming. If somebody will do the work and come up with a good

SPEAKER_208: idea. You can follow Zach Colis. It's C O E L I U S. Zach Colis, my guy. Thanks so much for your time. My pleasure.