SPEAKER_00: happy monday everybody we've got an amazing show for you today that's right i have the honor the privilege of being joined by the anonymous vc praying for exits mr exits and i kick off the show discussing sunday's episode of secession uh spoiler alert spoiler and our appreciation for mr logan roy and his just absolutely cutthroat winning mentality we discussed the mentality of entrepreneurs today five months into this downturn this incredible tech depression and collapse then we discuss my working theory regarding the backgrounds of text fraudsters from elizabeth holmes to sam bankman freed do kwan and everybody in between i have a theory about who's committing white collar crime today then we talk about where gpt4 ranks in terms of revolutionary product launches like the iphone uber tesla etc and then the impact of ai moving forward and being the arbiter of taste and is that a defensible enough we wrap up chopping it up about the current state of vc and the challenges for fun for fund managers both first time and later stage ones as well as different regions in the middle east like uh the kingdom saudi arabia getting involved in backing venture firms finally he asked me a probing question about mayorjason.com it is going SPEAKER_05: to be a great show so i want you to stick with us this week in startups is brought to you by org space if you're a startup and you aren't building a performance culture your competitors will eat your lunch get two thousand dollars of credits on pro plans with a 30-day free trial at org space dot io twist issue is the all-in-one platform for creating and distributing beautiful digital content get started with issue today for free or sign up for an annual premium account and get 50 off when you go to issue.com slash podcast and use promo code twist that's issu.com slash podcast and use promo code twist and brilliant.org is the best way to learn math science and computer science interactively try everything brilliant has to offer for a full 30 days and get 20 off an annual subscription at brilliant.org SPEAKER_06: slash twist all right everybody it's monday there's a lot of news that's built up uh it's been a crazy SPEAKER_07: let's call it five quarters since the market came apart and one of the great prognosticators one of the great commentators is an insider and he runs uh two social media accounts instagram and twitter on insta it's praying for exit just spell it all out and then on twitter he's mr exits uh he's been on the SPEAKER_08: program a couple times we don't normally have people who are anonymous come on but i love uh praying for exits mr exits insights because he's an insider with a venture fund he invests in companies and he's a little freewheeling welcome back to the program mr exits thank you for having me and that was a great SPEAKER_10: intro need to need to probably get that clipped or something and uh carry that around with me it was a SPEAKER_13: good one thank you you have my permission to tick tock the heck out of it i know that you're i don't i never want to dox anybody especially the pseudonyms but i get the sense you're you know uh not part of gen x you're part of a younger generation correct that is true SPEAKER_08: um so we have a a great back and forth here because i grew up with boomers ahead of me you SPEAKER_13: grew up with the gen x so we get like a nice little view of the world i want to start hey by the way it's monday a spoiler alert here if you're if you haven't watched the session yet go watch it and then fast SPEAKER_17: forward this five minutes but what an episode last night huh does mr exits watch the session yeah yeah i SPEAKER_10: watched succession it was a it was a great episode there's a a lot of uh logan roy to draw inspiration from this week and uh yeah super excited to hit the ground running close some deals exactly and if SPEAKER_13: we were to look at the uh the philosophy of logan roy when you when you look at it what for you SPEAKER_22: what are what's the key to what we can learn collectively from mr roy well i think that this is SPEAKER_24: something that you know has its positives and negatives but one thing that is pretty admirable about mr roy is that you know work and getting the deal done comes above all else and i think that there's very much a certain point in uh everyone's career where that should be the case um you know maybe when you have a family and and children like mr roy does that might uh you know maybe you should take the back seat at that point but i do think that there's things to be drawn of when you're building something important uh you probably have to prioritize in the way that uh mr roy does and so SPEAKER_13: i think that that's important i i agree with you and it was characterized so well in i think the last episode when he made a visit to his children at karaoke yeah it's a good scene it's such a great scene SPEAKER_08: because they're at a karaoke bar trying to uh figure out how they're going to screw up the biggest deal of his career that will set him up in his late 70s it seems like for even more success right he's looking at this deal as in his 70s as a stepping stone and there and he comes to the realization that SPEAKER_13: his children his own offspring are just not serious people and he just tells them outright you're not serious people and this to me was a key key aspect to what we can learn from mr roy which is take it seriously if you're working on something important be serious people put the effort in don't be a goofball take it serious now you are correct from episode three when we when we look at it you know closing a deal or going to your son's wedding you know he makes a decision closing the deal is more important ultimately uh because his kids are not serious people now this is as cutthroat as it gets um and maybe they're trying to show us like how far you can take this uh in the wrong direction but i do SPEAKER_07: think we all uh could use a little more seriousness when it comes to business yeah i agree i think that SPEAKER_10: um if you're working on something important there's no other option but to take it seriously because you know if you're not taking it 100 seriously there's somebody out there that is and you're just SPEAKER_35: losing at that point and it really is like we've lost this concept of what will you do to win this is SPEAKER_07: something the industry in a zerp a zero interest rate um with the zero interest rate program at work SPEAKER_13: where money's free people uh were not really concerned with winning were they they were concerned with raising money get the next round the status the b the valuation but not actually looking at am i SPEAKER_24: winning yeah i think that's a fair point and i think that or maybe the goal post of winning moved for some people instead of actually like building long and enduring and important businesses um the goal post became sort of like this egocentric stroking of like you know look at the public perception of how great what i'm doing is as opposed to the underlying actual value that i'm SPEAKER_10: providing to the world and to my investors and to myself so i think that's well said mr eggs it's SPEAKER_41: because the zerp the zero interest rate policy um led to a lot of people getting funding and funding SPEAKER_13: not because their business fundamentals were so strong or they were so impressive like logan roy but because there was money sitting around and if you're a capital allocator like you and i are uh well the capital needs to go somewhere it would be a shame to just sit it in a bank account so we might as well deploy it and hey this company does not yet have funding and we'll put it to work here SPEAKER_43: now there's a lot of really good concerns growing concerns uh old-timey word for businesses um that SPEAKER_07: are not able to get money and so now everybody is getting stronger everybody is getting more focused and are focused on what matters is that what you're seeing in the market mr exits yeah i think that SPEAKER_24: there's that um adage that you know floats around every now and then when uh you know times get tough which is uh i forget the exact quotation but it's like hard times build strong people strong people build softer times and softer times build weak people and it just goes in that cycle and it seems like you know zero interest rate phenomena was that time of sort of soft people coming into the market everything was easier everything was a little bit more quote-unquote free um and so now i think that you're seeing the cycle switch back to the point that um you know real businesses need to be built you're not going to get anything handed out to you and even on your best day uh there's going to be a lot of headwinds you know facing whatever it is that you're doing and so you have to just be on SPEAKER_13: your a-game at all at all times you got to bring your a-game and this uh you know to to quote peter thiel this uh mimetic theory you know this one where he was sort of obsessed with renee girard uh that everybody is just copying each other and trying to get status and playing status games that was a little bit too much of that and just a lot less focus on business fundamentals hey how much did you spend how much did you make and how obsessed are customers with your product and product market fit it's actually been delightful over the last five quarters to watch a return to the time i started investing which was right after 2008 and 2009 when uber was founded and airbnb was founded what an amazing time travis and joe jebbia and you know these kind of folks these are serious people they took the business seriously what are you seeing on the ground mr exit are people taking the work seriously now or are people still effing off um i think that there's SPEAKER_23: a lot more seriousness to the industry as a whole right now and i think that that's predicated on the SPEAKER_24: fact that you know the bar has been raised on all sides to you know being able to continue to do your work whether you're an investor or an entrepreneur um you know the minimum viable product that gets you funding on either of those uh quantums is becoming a lot it has to be a lot better than it was in the last few years and i think that that's largely because you're kind of seeing the tourist investor and these are people that i deem to be you know people that were just kind of in it for the last couple of years who you know uh thought that this was something that was interesting that they should pursue just because everyone else was doing it okay back to memetic theory right people thought being SPEAKER_50: a vc is cool if i don't have a fund i'm not cool yeah or if i don't if i'm not an entrepreneur i think SPEAKER_24: that there is like this perversion of entrepreneurship that it's like you know it should just be something pursued just for the sake of pursuing it versus you have a meaningful change that you want to enact in the world SPEAKER_52: um unpack that for a second unpack that for a second what happens when people just do it for SPEAKER_24: the status as opposed to the purpose well i think that you it's much easier it's far more flippant right so it's like you don't necessarily take it as serious as somebody like the people who are willing to you know live and die by this idea that they want to put out there in the world somebody like you know somebody i look at that like is uh brian armstrong right um you know he was these kinds of people are so dedicated to shaping the world in a way that they believe it should be shaped that they're willing to go through sort of like brimstone and fire to be able to get there whereas people are doing it just for the status once the status doesn't you know become real uh SPEAKER_10: they're far it's far easier to push over and far easier for them to sort of fail i would say SPEAKER_56: it's a very interesting point and the name check of brian armstrong at coinbase is a really good one SPEAKER_13: a couple of weeks ago on the program i was looking at all the headwinds and i don't short stocks because i'm like a positive person i like you know making bets for a decade or two and and seeing where it goes uh don't really like the concept of shorting things uh just emotionally or you know aesthetically even like it just feels like so negative and i was looking at all of the headwinds against coinbase and i said if there was ever a time i would make a bet against a company in a sector it would be now in coinbase however when we did our analysis bet the jockey kept me from pulling the trigger because SPEAKER_07: i just said to myself you know what brian armstrong too much pride too much purpose too much performance right three p's there he is just too dogged and this is too important for him that you could ever SPEAKER_13: bet against somebody like brian armstrong which is exactly what i said on cnbc a decade ago in these dips for betting against elon and shorting tessa and i was like the guy just landed two rockets at the same time pick another person to bet against like there's a there's a thousand other ceos with publicly traded companies why would you pick salute men elon musk or even brian armstrong you know a relative newcomer here uh it really just doesn't make sense yeah i think it's hard to bet against SPEAKER_24: somebody who's like really trying to build their life's purpose and i think that we sort of alluded to it that a lot of people weren't really building towards their life's purpose in these last few years they were building towards some level of status that they believed was important to them that they wanted to achieve but i think that people yeah like like you said elon or brian armstrong their actual reason for being here on this earth and continuing to put out a high output of work every day is because they really believe that you know their life is meaningfully important or like an aspect of their life that is meaningfully important is to change the world in a meaningful way and so SPEAKER_10: yeah it's hard to bet against those kinds of people because they tend to just keep going and going and SPEAKER_41: going who else you got in that camp of the the purpose-driven let's call it ceo who do you got in SPEAKER_61: the purpose-driven ceo we'll do our little purpose-driven ceo uh lottery here you pick one i pick one SPEAKER_63: who do you got sure uh next i mean it's you know it's probably not the it's probably a pretty obvious SPEAKER_24: choice but i think sam altman's got to be up there especially not only what what he's doing with uh open ai but also uh like helium energy and even world coin to a certain extent i think that uh SPEAKER_46: definitely a very purpose-driven guy yeah you know who i i um just started thinking about when we SPEAKER_66: started saying purpose-driven is uh the founder of uh starbucks right uh who harry schultz i don't know if you saw him you know getting into it with bernie yeah with bernie sanders i mean it's just so obvious that the guys come back to starbucks what every 10 years somebody runs it he comes back and fixes it and he he got everybody free college healthcare universal healthcare SPEAKER_70: and double triple the minimum wage depending on where you're located uh or much more than the minimum SPEAKER_46: wage i think in some cities that have the 15 one and then i'm watching bernie sanders criticize him with his four or five houses whatever bernie sanders has his lake house i don't get a lake house SPEAKER_61: uh and bernie sanders i'm just thinking is complaining about raising the minimum wage getting everybody universal healthcare and providing free college right this is bernie sanders basic SPEAKER_46: platform in life he's accomplished none of it yet he's got a bunch of houses and then howard schultz has created hundreds of thousands i don't know maybe millions of jobs over the years collectively SPEAKER_41: and he figured out a way in one of the lowest margin businesses ever running a cafe to get people the three things that bernie sanders is not able to provide in a lifetime of service bernie sanders is old maybe you could speak to mr exits and give us some you know uh pump us up here SPEAKER_23: but the power of capitalism yeah i think capitalism is is one of those forces that effectuates the most SPEAKER_24: meaningful types of change in our society i think that the reason that we have great pharmaceutical drugs that cure really unfortunate diseases is because of capitalism i think that the reason that a lot of the most you know important aspects of pushing our society forward happen as a function of capitalism and i think that that's because inherently as human beings we are intrinsically tied to reward mechanisms and um i think that there's no better sort of reward mechanism than capitalism obviously there are places within capitalism that you know people get rewarded for things that maybe provide a little bit less value to the world as a whole but i think that by and large um you know to the victor go the spoils and and the victor in this case uh are people that are really mainly making meaningful impact on the world uh even if it's something as small to your point as a cafe um there's ways that you can leverage things like that in in the vein of capitalism to be able to effectuate change such as raising the minimum wage or providing you know health care to people and etc etc so um i think that capitalism is the probably most important driving force of what makes a good democracy a good democracy and yes we lose that um you know we we've seen many examples in society and in history where uh you know that the things quickly fall apart after that goes away yeah i mean your SPEAKER_46: airbag in your car uh yeah the the solar uh panels uh starlink internet writ large i mean so many things SPEAKER_61: out there it could be even non-profits at times and wikipedia here they're on the margins but it just SPEAKER_46: seems like this capitalism is the greatest operating system capitalism plus democracy remains the greatest operating system especially as we watch things like china just kind of give up on capitalism and then SPEAKER_13: try to rebuild it again it seems uh bezos right there's your purpose-driven uh ceo what are the SPEAKER_81: chances he comes back what are the chances bezos comes back yeah i think that every great entrepreneur SPEAKER_24: um when they've built something that is very intrinsically tied to them um you know when they start to see things fall apart and you're even seeing this to a certain extent with like google for instance right once this whole ai um you know narrative started to come to the forefront you saw what larry and sergey were willing to do which is basically you know open up their code SPEAKER_23: base and start getting after it again and i think that you know once you've built something that's so important and enduring in the world if you start to watch it wither away you have this sort of emotional and parasocial bond to it that uh refuses to let you like those those people are born winners and i think that they refuse to let themselves fail uh when they have the opportunity SPEAKER_24: to not do so and so yeah i think that there's a very high chance that if amazon you know starts hitting more road bumps um that he comes in and starts to rebuild the the amazing company that he SPEAKER_66: built in the first place i know sergey bren is back again i got a number of sources who say he's back SPEAKER_46: back in the office you know doing uh code commits he's engaged larry page unsure i don't have any SPEAKER_61: firsthand reports of hey we saw larry page in the building uh supposedly he's got a great bear SPEAKER_13: beard and a head of hair but i think they gotta somebody's gotta go get him off his island off the beach and get him the haircut take him to the barber tight his right you know a little buzz cut clean SPEAKER_61: shaven and and walk him into the office they need larry page there as well the one two punch okay SPEAKER_00: running a startup it's like being a small market baseball team right you're trying to compete against the yankees or the dodgers and if you want to compete you need to be efficient you got to play money SPEAKER_43: ball right you've all seen the movie or read the book well one thing that startups haven't really had access to until now is detailed scenario planning and you can do this so easily with workspace it's people software basically for software people it lets you create plans for deploying your capital intelligently and then adjusting your headcount based on different scenarios that will occur in the future right because you can make a plan but why not make multiple plans right and if you're watching this video you can see an incredible demo here in the background what if you raise a 10 million dollar series a what if you can't raise it all what if you only raise five seven three okay what if you pivot to generative ai how do you redistribute your talent do you need as many people do you need more people do you need different types of people are you doing this kind of granular planning are you being this thoughtful well you should be okay you can plan for everything from the hyper growth that we're all trying for or regrettably the rifts that sometimes we have to do and anything in between and here's the best part twist listeners can get two thousand dollars in credits on org space's pro plans with a 30-day free trial at org space.io twist that's o-r-g-s-e-a-c-e.io twist go try it out prepare your company and just be sophisticated because when you want to go raise money or you want to hire great people they're going to appreciate that you've done this try org space.io twist today SPEAKER_00: and get two thousand dollars in credits hey i got a theory for you i'm watching all these frauds SPEAKER_13: i don't know if you've been watching them uh last week uh this is frank founder accused of lying to jp morgan creating four million customer accounts she had like 300 000 real ones or something which created like four million fake ones with a data science test they sold it for 175 million SPEAKER_61: jamie diamond of course you had elizabeth holmes sam bank run fraud uh carolyn ellison uh do kwan from tara luna you had the kid uh from openc remember the head of product he was front running the nfts um parker conrad to a lesser extent still a great entrepreneur but did some he seems to SPEAKER_46: be the one who learned his lesson he was doing a little bit of insurance fraud allegedly no not allegedly i think he's convicted right the sec behind him um when with the zenefits disaster um SPEAKER_93: when we look at all these i found something in common you want to take a guess at what it could SPEAKER_58: be all these people have in common i'd love to hear it seems like a interesting disparate group of SPEAKER_94: people all right let me see if we can guess this where did elizabeth holmes go to school SPEAKER_93: uh stanford i believe correct where did sam bankman freed go to school i don't know if you remember SPEAKER_96: this where his parents teach it was parents taught at stanford okay and where was he educated do you SPEAKER_13: remember uh was it uh mit it was mit correct there you go uh carolyn ellison right hand lady uh in her case her parents were econ professors at mit but she went to sanford got it uh charlie uh gervais or whatever frank founder upenn parents were father worked at a hedge fund mother was a life coach uh doh kwan stanford there you go uh this kid nate uh chastain from openc front run it harvard parker karnrad harvard huh and i don't even want to go into boomers like trump from yale or jeff skilling from enron going to hbs just as a recent cohort they all seem to have an ivy league trail SPEAKER_41: uh and parents who seem to uh have also gone to the ivy league and have some privilege so my theory is these are nepo babies these are we need a word nepo babies means like nepotism babies we need a word for um ivy league babies these are ivy babies right parents went to ivy league school they went to ivy these are kids of privilege and uh these privileged nepo ivy babies i believe think the world owes them something and like logan roy's kids they are never enough to their parents success and so they're not serious people but they want to be serious people so when they things get hard instead of doubling down and figuring it out and going through the pain and suffering of success and what that entails i.e failure and getting your ass kicked and handed to you regularly they cheat SPEAKER_58: they take a shortcut what do you think of my theory i mean i think that broad strokes you're probably right on point the only person that i would probably push back on is parker because i think SPEAKER_24: that what he's building with rippling is actually like a very meaningful and great company and and what he you know accomplished in the svb bank run for you know bridging the gap for a lot of people's payrolls i think is super important but i think that to your point all the other people that you've mentioned yeah i think that like the the sort of nepo baby thing plays to a good tune here because i think that a lot of these types of people feel as though they're owed something by the world SPEAKER_23: um and so you know they're willing to cut corners to achieve the thing that they feel like they are owed in a lot of instances um and because they have this deep-seated feeling that hey you know i'm like i have i'm the main character of this all and you know i'm important and people should pay attention to me etc etc uh they're willing to go to whatever length um they can to basically prove to themselves SPEAKER_24: that that is true and yeah to your point i think that um going like having sort of a cushier life SPEAKER_23: maybe up until that point uh probably prevents them from like really actually feeling the hard times and instead taking shortcuts to get out of them i think your parker i think that's well said that SPEAKER_13: they will take the shortcut they feel the world deserves something you know the the world owes them something they deserve this success uh i think parker is such a great exception there um he i put in SPEAKER_61: another bucket i think he's so smart that sometimes smart people believe the world is there to be hacked SPEAKER_13: right and he falls into the zuckerberg camp of um being let's say move fast break things cynical version reckless uh but that hacker culture of hey this insurance test that people have to take is stupid why do they have to sit there and press the next key i'll just make a chrome extension to do that we'll get people through this faster it's it's so dumb i i i'm gonna i'm gonna bend the rules here if i get caught i'll pay a fine i'll beg for forgiveness but i'm just gonna zip zip zip and get it done and he has that reckless hacker abandon uh that can lead to faster greater success some might SPEAKER_63: call it like zuckerberg or even yc kind of aesthetic travis to to a certain extent was a great example of SPEAKER_07: that too right yeah i mean i would probably put them in the same bucket where travis said it's wrong SPEAKER_13: that people uh can't pick the hours they work it's wrong that there's a limit on the medallions that's SPEAKER_61: just pure corruption i'm gonna break it uh now the fundamental nature of trying to overturn what SPEAKER_13: you believe are unjust systems in society is you better be working primarily for the people and on a secondary basis uh for yourself like a distant second and i think that's where airbnb and uber and lyft kind of got away with it let's say or were successful is because there's so many people rooting for it like i can't get a cab in brooklyn this is cheaper uh i'm poor i can't you know it's basically i'm either taking the subway and waiting an hour for the subway or i get to take an uber for six bucks i'm this is awesome whereas with parker when he did his little hack it was kind of for him right it was like hmm i'm gonna just get my people through insurance certification quicker right and so i think this is a very subtle difference but i i try to explain this to founders like i'm not saying break the i'm not endorsing breaking the law but if you're going to reinterpret laws and you're gonna try to bend them to your will uh let's say is a generous way of putting it you SPEAKER_17: better be on the right side of consumers that's just my little piece of advice yeah i think that's fair SPEAKER_24: uh but i do think that it's like a very inherently inherent part of kind of like the silicon valley ethos is that you know by and large most people start a company because they feel like they know something that other people don't yeah they have a secret that you know they they feel like there is not uh that can create a lot of value but is not being shared in the world and yeah i think that there's a bunch of different ways to get there and i think that the framework for um how people feel like they can get there is definitely wider than it's ever been uh just in in the sense of uh you SPEAKER_10: know like hacking culture etc um but yeah to your to kind of like the original point that we were sort of discussing here i think that leads to people willing to cut corners um in ways that SPEAKER_13: maybe people wouldn't have in the past if you are running a sales team a design agency or a media business of any kind you know what a hassle one-pagers can be you know what i'm talking about they never format correctly people are pigeoning zooming on their phones it's a disaster right and you have no tracking you don't know if people are opening it which page which section they're most interested in it's a complete mess and there is a better way and that better way is issue issuu.com issue is an all-in-one platform for creating and distributing beautiful digital content it's not just for one pagers but you can create marketing materials of all kinds magazines catalogs portfolios all that great stuff issue has an amazing analytics dashboard and you can see that if you're watching the video right now and that will track reads time spent device breakdowns and more it also works seamlessly with tools that you already use canva dropbox mailchimp and in design and if you're an e-commerce brand you can make beautiful digital magazines and catalogs that evoke those emotions inform people and then get them closer to making that decision to buy your product we are building a one-pager right now for angel summit which is happening in june so you can get started for free or you can get 50 off an annual premium account at issue.com slash podcast and use the promo code twist those two things you need to remember first is the url issuu.com slash podcast and then i need you to remember that promo code twist thanks again to issue for supporting this week in startups and our mission here to inspire innovation and to support founders all right let's move on to our next subject here i want to get your SPEAKER_46: thoughts on ai the potential and the panic kind of going on here uh gpt4 when i was getting ready SPEAKER_61: having my coffee uh and i was thinking about my theory about uh fraudsters and ivy league parents i literally just asked chat gpt4 make me a table individual of the white collar criminals of all time give me their uh name give me their crime give me their alma mater boom all of a sudden it's doing all SPEAKER_00: the work for me now what i love about chat gpt4 is that it is so confident while it's typing the answer to you in real time and i don't think it has to type it in real time just a small little observation here i think that's a device because barr just boom snaps out the answer i think they have it type it out so you think that it's more trustworthy than it is and the absolute utter confidence in which chat SPEAKER_41: gpt4 spews absolutely complete utter and nonsense combined with absolutely scary levels of insights SPEAKER_00: and truth is extraordinary to me and i'm wondering if you've played with chat gpt4 specifically 3.5 a bit SPEAKER_41: and what's your take on this um phenomenal achievement in um quickly answering questions but also SPEAKER_00: the utter confidence in which it spews complete nonsense and lies and sam altman the team over there's ability to release this product and not give two if it is sputter is spitting out utter complete wrong answers because it's a baby just we're just experimenting here SPEAKER_10: your thoughts mr i'm an active user of uh of chat gpt and actually the whole open ai stack um you know SPEAKER_24: i've used dolly and a few of their other products as well i think that it's pretty much a seminal SPEAKER_23: addition to to like my productivity stack um i tend to ask it questions more often than i ask google questions and i realize that there are some um nuances to the way that the the model is set up such that it doesn't have the most up-to-date information and can sometimes uh you know be a little bit off SPEAKER_24: the mark when providing answers to very specific questions and so google is always like a backup sense check for me just to make sure that you know i'm getting the right information but i think overall the large majority of the reason that um you know answers are a little bit off is because you know these models are relatively new and they have to have uh some level of consumer feedback to be able to weight them in the right direction yeah and so i think that without um i think that you know it's kind of like a necessary evil to put out an unfinished product out there into the world um simply because you know to be able to uh like provide the relevant information for these models to be successful over sort of the long tail of time um it requires this sort of human to ai interaction and so uh yeah i think that maybe it could be that there could be a sort of more proactive uh disclosures about how you know these models aren't perfect and everything that you see here shouldn't be taken as 100 factual information uh but i do think that you know uh putting it out in this sort of semi-finished form is is important for the next versions of gpt that are apparently SPEAKER_123: building themselves let's have a candid conversation here the genius of this product launch i was SPEAKER_124: thinking about the greatest product launches of all time now i'm not talking about the greatest technological innovations i'm talking about like specific products with a name on them right and i was just rattling off the top of my head what i thought were some of the great product launches of all time now some products fail some products succeed like you could take the sidekick or the blackberry that you know nobody's using those uh anymore um but i just thought chat gpt4 3.5 SPEAKER_13: that whole sort of collection of things that they launched over the year this is going to be looked SPEAKER_00: back on as one of the top 10 to 20 it's definitely in the top 20 product launches of all time i also put up there a number of other uh ideas what for you what are some product launches you think SPEAKER_41: we'll look back on 20 years ago that are more meaningful or less meaningful more meaningful or less meaningful okay ultimately like and as a product launch which were more impressive because you know the the obvious one that comes to mind is when steve jobs held up that iphone when he held up that iphone the world changed right and you knew it at that moment that the world had changed so i think for a product launch to be truly meaningful you have to as consumers believe hey the world has just changed i felt that way with uber i felt that way with the sony walkman i felt that way with the ipod uh back in the day when i was a kid i felt that way about the ibm pc i felt that way about my SPEAKER_70: atari 2600 in 1978 i felt that way about microsoft windows when i first played with the 3.1 SPEAKER_43: what what products or services that when you used it for the first time you said this is super meaningful and then compare and contrast to the moment you use chat gpt i think 3.5 is the one that SPEAKER_24: really got people and now 4. i think that the the thing that i would draw the most parallel to is is the apple iphone but more specifically the uh app store that is okay which came in like that came in like the third version i think correct yeah yeah and so i think that the app store was like this seminal thing where you created this application layer that everybody could tap into and many of the you know most seminal founders that we've talked about on this podcast thus far uh you know have built something on that application layer and those are the things that have been these enduring companies over time in in history and so i think that what what i really loved about chat gpt and you know once they opened up the api i think that was like two or three weeks ago at this point now even though it feels like a lifetime um i think that that is the biggest parallel that i can draw because i i believe that the application layer on top of chat gpt and these llm models broadly um is going to be the sort of seminal way that humans interface with ai um and i believe that that's going to be the thing that makes ai the most accessible and important tool for us moving forward in the same way that you know none of us could probably imagine living our lives without applications um and so yeah and then also i mean i think that the first time i used windows was windows 95 um and so yeah i really remember how having like a clean operating system with a variety of different tools within that operating system uh you know really changed my own life as well as the life of my family etc and so um i think that there's also some parallels to be drawn there about how you know using um chat gpt and and broadly artificial intelligence as its own operating system uh becomes like a really meaningful way to participate in the future so the fact that it's a platform SPEAKER_124: in addition to the fact of just how impressive it is is part of this and i think the when a great product is launched the ripple on effects right you you throw the the rock in the pond and you start SPEAKER_61: to see a lot of ripples and chat gpt4 has those ripples okay plugins okay 3.5 to 4 okay uh the api all of these ripples that are occurring all of these new startup founders building on top of it that's when you can tell something is a big product launch because the ripples this is my theory here and i'm developing it with you mr exits and it's a privilege to have you on the SPEAKER_00: program to develop these theories um the the ripples of the app store and the iphone the iphone being SPEAKER_41: launched you know in um 2008 and that was launched i'm sorry july 2008 is when the app store came out but the it was only six months before that that the first iphone came out right and so there's something about when these things launch that there's just other shoes to drop uber had that SPEAKER_61: too because you had uber black and uber x and then you had logistics and uber eats right like it just kept going netflix it was just something about like whoa i can watch anything i want on demand it just kind of blew people's uh mind and just watching uber come to each city or airbnb come to each city SPEAKER_138: had that same ripple like effect right it's just like it's changing every city it goes to la became SPEAKER_61: a different city because uber arrived the boroughs of brooklyn and bronx is that island shout out SPEAKER_46: like it it just changed everything um i think it's a very interesting concept we're coming out here i also SPEAKER_140: feel like the roadster then the model s for also just colossal launches where people are like i don't SPEAKER_24: have to go to a gas station yeah and i think to your point things like uh like the digital service providers like netflix spotify etc were also these kind of meaningful shifts towards you know like like the streaming culture you know youtube i think what i would also place into this category you know like the the effect that youtube has had on just educating the next generation of people you know most people figure out how to do things these days via some small video on youtube and then unfortunately SPEAKER_23: given you know its ownership structure it seems like tick tock is now becoming this for the new generation where like i read some statistic that x number of like restaurant searches are now done SPEAKER_24: through tick tock as opposed to something like yelp or you know uh figuring out how to build a model airplane or whatever these people in these next generations typically go to find this via short form content and so um yeah i think that those are also meaningful sort of i guess ripple contributors if SPEAKER_46: if we're gonna you know put that label on them i my number one use case for tick tock is to uh save food recommendations by city so i have a new york i have an la i have san francisco i've got a tokyo SPEAKER_13: and i just saved the clips there and i haven't done it yet but my plan is to check some of those and just use it as a starting point for things i might want to try when i'm in a city uh because people are just doing a really great job of and i don't know which ones are paid and bought and sold or whatever so i'm sure there's some of that going on just like yelp reviews but it's sort of like when yelp photos and i can see people talking about specific dishes you know which is kind of how i make my decisions on restaurants i'm not going to a restaurant as much as i'm pursuing a specific dish and i'm SPEAKER_147: trying to find the best one of that that's just my foodie sort of culture there if you're listening to SPEAKER_124: this podcast you clearly have an interest in startups and technology but do you have the skills and knowledge you need for a career in tech and if you do have those skills are you still learning and growing because everyone in tech knows if you're not building new skills geared towards the latest platforms well you're falling behind and right now that platform is ai artificial intelligence ai isn't just the future it's the present we see that happening we're talking about it every day on this podcast and to be part of the tech revolution you need to understand the core concepts behind ai you know things like neural networks machine learning these are complex terms you can guess what they are but why not go learn about these concepts at brilliant.org this website helps users learn math science and computer science interactively and right now they feature some amazing courses geared towards ai like an introduction to neural networks 15 lessons in that one and search engines which includes 20 lessons on the core idea behind search engine technology so here's your call to action you can try everything brilliant has to offer for a full 30 days by heading to brilliant.org twist to start your free trial and for a limited time only twist listeners will get 20 off an annual subscription i'm an investor in the company it's a brilliant company and i really want you to try it for you and your company for kids college everybody in between everybody should get smarter let's all get brilliant together brilliant.org twist for 20 off today let's move on to jobs lowest unemployment of my SPEAKER_46: lifetime and yours uh since you are a bit younger than me and then this constant narrative all the jobs are going away because of ai we need to pause ai yada yada i think the pausing of ai was a ceremonial SPEAKER_124: you know signature i don't think anybody expect that to actually happen um but there is going to be some thought here as to what happens to writers copywriters illustrators etc i'm wondering if you SPEAKER_41: think this is going to uh move at a at the same pace it's going which is to say a blistering pace and when chat gpt5 comes out and dolly 4.0 comes out and you know all of these other tools keep and tools that are not yet launched happen are we going to see a swath of jobs and let's say millions of SPEAKER_70: jobs because if it's hundreds of thousands it's not going to be meaningful to anybody other than the people losing their jobs it's not going to be meaningful on a society level because we do retire jobs at some pace but are we going to see millions of jobs go away because of the advancements in ai SPEAKER_58: in the coming years short to midterm two to five years i think two to five years we'll see sort of SPEAKER_24: like the indicating factors of how deep this really goes and my assessment of it is that this will probably go pretty deep and i think that it's because of the sort of go back to what you were just saying the ripple effects that we don't necessarily understand at the forefront of what's going on and so for instance you know like i think that a significant number of the employed people in the in the country right now are literally truck drivers and so how do these artificial intelligence models improve self-driving capabilities such that you know that doesn't become as much of a necessary function anymore i think that what is scary to me is how quickly SPEAKER_23: ai is developing itself and i think in that self-development it's going to start to find all of these pockets of inefficiencies um that we sort of take for granted as jobs in this current market um and find ways to basically you know i think that back to the point of capitalism the sort SPEAKER_24: of performance of capitalism is making sure that you're getting the most money back for money invested right and so i think that artificial intelligence in sort of promoting the capitalism will find all of these pockets of inefficiencies that we just took for granted as regular jobs that we couldn't imagine SPEAKER_95: our lives without um and that will take a meaningful toll on the labor force especially when it comes SPEAKER_66: to unskilled or semi-skilled labor when we look at the concept of surplus elites we can dovetail it with SPEAKER_124: this conversation the rich tech companies were so rich that they hired let's call it indiscriminately they hired in order to have an option on talent to keep talent from working at other places uh facebook SPEAKER_07: and google being i guess the the top examples of that but amazon right behind them twitter right behind them and as we've seen with elon cutting some very significant over 50 of the jobs at twitter and SPEAKER_13: listen the existing twitter regime was talking about cutting a third so it's not like he did something that they weren't planning on doing already he just did it to a bigger degree facebook getting rid of managers uh people getting rid of entire departments that were involved in you know things that were not core to the business coinbase saying listen if you're going to work here we have one mission don't talk about social issues here all of this is dovetailed together and it i think SPEAKER_00: dovetails with this ai discussion there are a lot of people who were in performative or non-critical roles at even tech companies which are supposed to be the dogged uh you know focused folks so and SPEAKER_46: then we have the work from home phenomenon occurring at the same time now my theory is SPEAKER_41: you have elites demanding they can work from home right they're signing petitions at apple what they've done by doing this by refusing to go back to offices this is my theory is they have sealed their own fate because once a manager like myself who was an in-person person and i judged people for a long part of my career could you be at the office as long as i could when i was an editor of my magazine silicon report in the 90s and i was there on saturday and sundays when i came in on a saturday and sunday people knew i was coming in and the rank and file would ask SPEAKER_07: my assistant david is jason going to be in this weekend so yeah it's going to be in he's got two meetings they make sure their asses were in those seats when they knew i was meeting with people on the weekend SPEAKER_61: that was the culture how much time could you put in facetime in the in the office could you get lunch SPEAKER_07: with the boss after work that was the the determinant well if you take somebody like me some old school gen xer and you say hey i'm only going to work from home okay and now i start hiring people in canada and they cost two thirds of what the people in the u.s cost and then i start hiring people in manila or europe and they cost half you just sealed your fate because i can manage a canadian or european eastern european i can manage somebody in manila somebody in san paulo uruguay in slack and with my end of week end of day reporting well then why am i paying you three times as much or twice as much your thoughts on how tech is going to go forward and what happens between this work culture ai efficiency and then people with performative jobs yeah so i'm somebody who's uh generally like SPEAKER_23: an in-person person as well and i think that to your point like a lot of at least in my experience SPEAKER_24: some of the not a lot i would say some of the aspect of being in person was really just performative SPEAKER_23: it's like hey i'm willing to be um consistent in my ability to show up at the place that i'm supposed to show up for the time that i'm supposed to show up and that says a lot about your dedication to the business in a lot of instances but i do think that there is like a secret sauce that comes along with building like really strong teams in person and i think a lot of the best companies that we've seen in in like in history have come from like a work culture where people were really felt like they were building an important team together alongside each other in the trenches not really disassociated and i think that what you're experiencing sort of this disassociation from willing from needing to have people who are necessarily american based and moving them towards just what's more efficient for SPEAKER_24: you and what makes more financial sense for you i think that you're right to the point that um it's like a very slippery slope and once you get used to you know managing someone in canada eventually managing some artificial intelligence companion uh that performs you know some level of the same amount of work for the fraction of the cost uh becomes not something that is even scary or SPEAKER_23: slightly weird to you because we're almost indoctrinating ourselves to become more disassociated from the teams that we're building um moving forward i think this is kind of the key i set up SPEAKER_124: corporations for inside.com and launch in canada i have canadian corporations i set them up once you SPEAKER_07: set them up and you start experiencing how great canadians are and you get the canadian uh currency exchange in other words a 75 000 analyst you know senior person in canada in canadian u.s dollars is going SPEAKER_61: to be 75 of that in u.s dollars and then they stay twice as long because they appreciate the job working for an american company and in uruguay the developer you know instead of being 150k is 75k and it's half price you get two for one and you've got you know uh some of these sponsors like we have on our program like lemon.io and you know some of these sponsors we have they abstracted for you they will hire the people and do all the you know payments and and management and stuff like that i think the world's changed and people just don't realize it yet and you know you you put the 10x ai layer on top of this mr exits and then all of a sudden i think we're going to see the same trend i saw at the beginning of my angel investing career where startups went from being two or three million dollars to get a product to market to being 500 000 to a million dollars to get a product to market and then in the yc sense and and you know techstar sense it all of a sudden dropped down to 150 000 to get a product to market i think that continues where the 10x everybody's a 10x developer now with ai yeah and so the long tail of apps that we talked about are going to be so easy to build i agree and i think that that long tail SPEAKER_23: only gets longer when you realize that ai is fully scalable and doesn't need to take a vacation doesn't need to work a certain minimum amount of hours like if you have 24-hour development and constant SPEAKER_24: engagement with the products that you're building from the quote-unquote i guess virtual team that will come along with ai um i think that not only do things get meaningfully cheaper but they become SPEAKER_46: meaningfully quicker to market as well yes this is going to be the amazing output and this is why i think job destruction which is what everybody is planning is going to be the opposite here in the SPEAKER_61: united states i think it's going to allow more entrepreneurs to make better products faster what that means is more experiments i've been through this i don't think that we're going to run out of ideas for apps to build i think a lot of the quote-unquote silly niche apps which is you know what people thought like a meditation app might be or a working a workout app like a crossfit app we have an app called fitba that's doing incredibly well steezy a dance app com a meditation app people thought like when i invested in those like yeah that's too niche and then all of a sudden they get to hundreds of thousands of paid members millions of paid members you're like oh wow it's not that niche um well if you can hire 10x developers and they're available everywhere around the world well then all those niche apps are going to be possible and they're going to be awesome like all trails i have an app called slopes which is a skiing app that tracks all your skiing and your runs and your speed i just think we go right down the long tail of apps and sas services and you have five person teams building 10 million companies now is that meaningful for a venture capitalist then becomes a question well i can tell you for a seed investor and a pre-seed investor like myself and somebody who's got an accelerator and who likes to put the first 25 to 250k into a company it can be very meaningful because i'm investing at two three four five million dollar valuations 10 million dollar company being run by 10 people man it's got a high margin it's got a super high margin somebody's going to want to buy that business for 100 million for 200 million so i'm very excited about this SPEAKER_70: future now if you're a late stage investor maybe you're not as excited your thoughts well i i guess SPEAKER_23: the way that i would push back and i would love to understand your thinking here is what how do you think about it if the artificial intelligence is the one that starts to pontificate on all of these pockets of value and start creating it itself this is very interesting i had this discussion just SPEAKER_147: yesterday i had a little egg hunt at the house and a great entrepreneur and i were debating this SPEAKER_61: what if ai just starts making apps and they're just commoditized and you know it reminds me of making movies in the late 90s a camera came out i think it was the sony uh vx 1000 uh yeah vx 1000 it was a SPEAKER_46: digital camera and um guy named wayne wang did a movie called center of the world with peter sarsgaard i was in it for a brief time kind of playing a character like myself another guy named bennett miller made a film called the cruise uh and i hosted a a screening for him when i was doing silicon alley reporter in new york city this two thousand dollar or less camera became the workhorse workhorse of digital filmmaking mr exits and in that time everybody said at sundance and i was hosting a panel with these type of people and they said um you know anybody can make a movie now these digital SPEAKER_61: cameras can blow up to film and we could make film out of digital so what they would do is they would take the digital print and then literally make film out of it but then they were like well we'll have digital projectors eventually now all theaters are digital projectors obviously um and we can take as many takes as we want so the actors are more freewheeling the script can be loosey-goosey we can film five endings because we don't have to worry about having a script we can just improv everything and it's going to cost nothing to edit these because you can edit it on your macbook pro SPEAKER_00: all of this was true but yet we didn't see a massive proliferation of film and actors in some ways and we did in other ways and the reason we didn't see all these extra films coming is because it's hard to want to make a film it didn't take into account motivation so could the ai just make SPEAKER_41: thousands of films that are random and we could all just sort through them sure i guess that's a possible future but i think having somebody lead and want to be the figurehead the director if you will the orctor is still necessary and will be necessary for some time somebody still has to want to make an app for meditation for fasting for uh skiing for tennis players and they're going to want to sit there and study it build the brand and so i don't think we're even close to the ai wanting to go out there and just populate the app store i think you still want to have somebody being the curator the SPEAKER_61: director it's just that you won't need a team of a thousand people to make a film you need a team of SPEAKER_07: ten that's what i think our lifetime will be about yeah i get that and i think that uh like one of the SPEAKER_24: most defensible things in the face of ai is being the arbiter of taste you know like um ai can provide to you a lot of factual information but having a level of taste and culture is something that's uniquely inherent to human beings at this current point in time and so i do see that as being one of the most defensible things i would say the the sort of pushback that i would have on your um sort of parallel lines drawn between the film industry is that one thing that the film industry was hampered by large by and large is distribution right even when these cameras came out if you wanted your film to be seen you still had to get it picked up by a certain distributor who would allow it to be played in movies etc i i wonder and the thing that i sort of pontificate on is what happens when distribution is completely open and everybody is on the level playing field with distribution including the ai SPEAKER_23: and the ai can go and parse large swaths of data and say hey you know there's a bunch of skiers out there that don't really have an app that suits their purposes very well we've looked at the data behind these apps and we've looked at the data behind how many people are skiing and and how much SPEAKER_24: money is being spent on the ski industry as a whole and we realize that there's this large gap between what skiers have available to them as an application layer to be able to enjoy their experience more versus what's currently on the market what are the things that we could do to fill that gap and then the thing that becomes sort of i guess something to think about for me is that they have unlimited distribution to be able to put that in the hands of as many people as possible SPEAKER_23: given the tools that we have available to us and so um yeah i just wonder if open distribution SPEAKER_177: makes this a little bit more of a challenging premise it does uh because there was this concept SPEAKER_61: that the great stuff will rise and in some cases they do open platform like podcasting on open SPEAKER_124: standards or youtube which is open to almost everybody you have to be a little bit of a slave to the algorithm but it's free and anybody can post any length video up there tick tock instagram you know you have gatekeepers they could kick you off of course but you do have a lot of options there of where to put your content the app stores it's a duopoly but you can still get it out there um with rare exception uh will you be stopped uh it's probably and maybe a little bit of taxes on the margin if you want to make money uh but certainly it's a lot more open than the studio system or getting your software in a box on shelves at comp usa which was how software was distributed before the app store so it's going to be a brave new world i think we've hit on something here which is the orator the person the director the conductor still has to be you know in some position of taste making and refinement in this did you see the movie tar i did not oh well this is your homework you have to SPEAKER_147: see him mr exit is going to love tar i believe this is going to be right up your alley it is about SPEAKER_124: it true no true true uh and here is all you need to know about our future um by the philosopher king SPEAKER_187: mr rick rubin do you play instruments barely do you know how to work a soundboard no i have no technical ability and i know nothing about music you must know something well i know what i like and SPEAKER_189: what i don't like and i'm i'm decisive about what i like and what i don't like so what are you being paid for the confidence that i have in my taste and my ability to express what i feel has proven helpful for artists your reaction mr exits i think that's a great parallel and rick rubin is SPEAKER_24: somebody that i look up to quite a lot for you know the meaningful um additions that he's made to the music industry through a variety of different genres but yeah i think that that goes back to the point that i was making that i think that the arbiters of taste people who have really understood at an inherent level what the what society and culture needs um those are some of the most defensible people in the world and i think that that is going to be the last thing that ai disintermediates is the ability to be an arbiter of taste in the truest form that reaches people at a human level SPEAKER_46: i think this is just so on point as to where we're going uh and shout out to my guy rick rubin he sent me uh he sent me his book with a very kind note in it and he's a big fan of all in and uh i'm gonna go hang with him he said hey i'm gonna have him on too i think that would be an SPEAKER_147: interesting conversation i i would really love to have him on all in uh i gotta talk to my besties because we'd have we have a no guest rule right now no guests but i think we should make an exception per mr rick rubin um let's uh wrap here as we talk about vc funding right now i could give you a ton of statistics just to tee this up global vc funding has dropped 50 over the past 12 months it was seven hundred seventy six billion dollars in q1 or it is 76 billion q1 of this year that's down SPEAKER_07: 53 percent from 2022 and um two major fundraisings in that accounted for 20 of the total open eye raising 10 billion from microsoft and stripe raising 6.5 billion uh to cover those expiring rsu's in other words pretty dark out there it's pretty thin without those transactions q1 would have been the worst SPEAKER_70: quarter for vc funding since 2018 took a five-year step back basically six-year step back tiger SPEAKER_124: global major investor in both vc funds and startups is reportedly exiting the market they're trying to sell their positions in vc funds in the secondary market um so it's all coming apart and then it's SPEAKER_07: created a bit of a vicious cycle all of these funds were all these venture funds or venture firms were creating multiple funds crypto fund this growth fund that early stage this seed stage this yada yada classic fund etc but all these funds are not doing distributions no distributions then they ask for more capital calls and then they have fewer distributions because the market's still on the floor and then all these tvpi markdowns have to happen lps are balancing uh the balance sheets are just totally out of whack but they're asking for more commitments to funds to do more capital calls and the lps have said no mas i can't take it anymore they're tapping out so vcs are looking for international lps and SPEAKER_41: the kingdom saudis uh their public investment fund listed all of their vc firms uh last week on their website this is something that lps never do they don't feel any obligation to tell people we're invested in these firms unless maybe they're doing a pr campaign which the saudis obviously are doing they want to get more involved so let's talk about the state of being SPEAKER_61: a fund manager what is the state of fund managers today uh and then how do we work out of this indigestion SPEAKER_23: mr exits yeah i think that um the state of being a fund manager today is pretty pretty tough um i SPEAKER_24: think especially at the seed stage which is where i play out and i know where you play at as well you have all of these entrants that uh we're typically doing sort of later stage stuff but realize that that game isn't a winning game right now and so we're moving earlier along in sort of SPEAKER_23: the funding cycle to be able to participate in things that they feel like are a little bit more fairly priced and present larger upside you see even some of the largest hedge funds and crossover funds in the world starting to participate in deals and doing stuff out of y combinator which SPEAKER_24: you know historically wasn't necessarily a thing so i think that that's one thing the second thing that i think is that the lp market is very very fragile right now to your point um a lot of especially like domestically on the endowment side the foundation side etc um a lot of those types of entities are experiencing the denominator effect right now where they're over indexed to venture capital and haven't really seen uh the markdowns yet and so are kind of in a gray area as to what their total actual venture exposure is at the current point in time and so you know a lot of them are waiting to to basically come on into funds either on follow-ons or new funds until they get that sort of accounting sorted out and then even internationally i think that um you know saudi had been i think that a lot of people especially the most discerning managers saw the writing on the wall and made their trips to saudi you know six months ago almost a year ago in some instances and so i think that saudi is very SPEAKER_23: very very conscious and not saudi but the region in general is very very conscious that they're one of the last games in town and so even there uh you know whereas they would be willing to take flyers on maybe some less um you know less well-known funds uh in the past and you know i've been visiting SPEAKER_24: that regions in sort of 2015 2016 so it's been interesting to see the shift but um i think that yeah like now all of the best you know the pif and mubadala etc all of these you know uh governmental SPEAKER_23: funds and quasi-governmental funds now have exposure to the best funds in the world they're SPEAKER_24: in andresen sequoia founders fund um thrive etc etc and so even there the bar has become extremely high to be able to you know get any of their money and they're inundated with requests such that it's hard if you're a new manager to even get a meeting over there because they're already dealing with the best exposure in the world and so to really hop over that bar and and you know become interesting to them has become a much much higher hurdle so that's how i've been seeing it yeah and it does seem like SPEAKER_124: uh it's we're going to see a lot of these first-time fund managers maybe two funds in uh they're not going to be able to raise funds and so i think or they're going to raise very modest funds the folks who started investing in 2018 19 20 21 22 that five-year period those vintages i think are going to be super challenged especially if people didn't take speaking of exits uh any chips off the table if you were marking up your fund two three x every year for two years and you had a five six seven eight x fund SPEAKER_61: which some people who i was even an lp in were telling me that we had an 8x fund and i'm like wow we have an 8x fund maybe we should return 2x now but they didn't now i think those 8x funds are going SPEAKER_70: to be 2x funds now uh or 3x funds or maybe we'll just get our money back which is fine and you know if you're an lp i'm in 20 funds i'm okay with some of them being just i made a bet and i didn't even double my money i just got my money back or i got half my money or i tripled my money whatever it winds up being uh you know i'm going to do a blended portfolio against the 20 but what do you think of some of these um newer funds during that window of the last the third act let's say of the boom cycle SPEAKER_180: are they just going to quit it's too hard game on the field too hard yeah i mean i'm interested to see SPEAKER_58: where it happens what happens i think that the venture capital industry in that sense shrinks SPEAKER_24: quite a bit you know you had a lot of these funds basically um doing all different types of strategies all over the place some in crypto some in elsewhere and i think that you know like the net new funds to the ecosystem is probably going to shrink quite a lot and i think that even if you're a great manager over the last couple of years on paper you're going to find it quite hard to continue to be able to do so um but i they sort of like kind of uh karmic irony of all SPEAKER_23: of this is that i do actually genuinely believe that 22 23 vintages are going to be quite good especially because you're experiencing this sort of anytime there's this like paradigmatic shift right SPEAKER_24: where you know app store for instance when the app store came out there were all of these amazing funds in the uh years after that where you know they took advantage of this shift and were able to capitalize on some really meaningful additions into the world as far as uh interesting companies go and i think that you're going to see the same thing here off the base of ai i think that you're going to see a lot of companies that are leveraging it in interesting and unique ways that will be able to provide SPEAKER_23: value and i think that you know the large enterprise um companies of the world have yet to position themselves very well against ai or for ai unless you're like microsoft or um you know google etc a lot of these companies are kind of been caught wrong-footed in this instance and so i think that there's a lot of exit opportunities actually for good ai companies uh moving forward uh to be able to you know see some distributions if you're on the venture side um so i think that 23 and 22 vintages are SPEAKER_24: actually going to be meaningfully interesting uh but yeah if you're a new manager it's going to be really tough to get that ball over the line um for that paradigmatic ideal uh these will be ideal SPEAKER_218: vintages i'm seeing it now in my own portfolio i am making a lot of 25 000 bets on two or three developer product managers who need a friend and family check just to incorporate and try to get into an accelerator i'll make those quick 25k bets in one meeting try to make a hundred of those this year put 2.5 million on the streets just letting people get in business and then put 250 in the best 20 of those uh for another 5 million it's a nice nice little portfolio you can build um very quickly right now because people are afraid to write those first checks and everybody's trying to fix their existing portfolios and work out uh some you know semblance of a return for those previous portfolios SPEAKER_124: which is noble to do but man i am meeting with so many great founders right now at reasonable valuations with the notable exception of yc companies a lot of hand wringing there 15 20 25 million dollar valuations for companies without customers yet or maybe just mvps your thoughts on the um the two-time of your hand wringing uh i know you're early in your venture career but how do you look at even in a market like this outrageous valuations coming out of yc yeah i mean i SPEAKER_23: think that that's not uh the onus there isn't necessarily on the companies but more on the SPEAKER_24: institution i think the yc kind of pushes people that direction um and that's totally fine uh they're they're willing to set whatever valuations um they believe that the market can bear but i think that that's indicative that the market is still willing to bear some level of inflation especially at the seed stage specifically because it's become uh to my point earlier a much more competitive game right um you know you have a lot of funds that weren't necessarily doing before um that are now trying to get in and so they're willing to pay to play in that instance especially when they don't have like a history or track record of really spending a lot of time there so yeah that's i SPEAKER_23: think that it'll it'll be interesting to see how those valuations end up playing out but for the time being it seems like that's just kind of the new standard it's very interesting to me people SPEAKER_70: complaining about it here's what i'll tell the people complaining i did a whole episode on this but i'm interested in your reaction if you don't like the valuations that you see at demo day whether it's SPEAKER_124: tech stars or my accelerator launch accelerator or y combination at mine i advise people to just clear a market quickly at a five to twelve million dollar valuation that's standard to not try to go for 15 or 20 and do some unnatural exercises because you could be getting a valuation trap where when you raise your next round there's no way to go up and you have no lead investor so you're kind of trapped right um maybe even having to have a down round and now you're unintentionally putting yourself in a in a debt spiral where people have to get warrants or something and it just gets messy uh like when SPEAKER_07: your contact i literally have people contacting me right now saying we're raising at 15 20 25 we'll give you a side deal jcal we want you on the cap table we'll give you a better deal than everybody else and i'm like do people have mfn and their side letters you know it just gets it gets so messy and i'm like i just don't want to be involved in messy on a cap table putting that aside for a second SPEAKER_124: i'll get your reaction to that in one minute a very easy strategy for the dentist or the new fund manager who's at a yc demo day and objects to the 20 million dollar valuation is to do three meetings a day over zoom for 30 minutes each 90 minutes of work let's say you put in another 90 minutes writing your notes or setting up those meetings or even an hour or two okay it's a five hour day do a five SPEAKER_56: hour day meeting three companies a day hour and a half for each company two hours for each company whatever it is let's say two hours for each company six hour a day do that for i don't know SPEAKER_225: uh let's say um 60 days and you will now have 180 companies you've met with SPEAKER_124: and those 180 companies will be non-yc demo day companies at a five to twelve million dollar valuation pick the 10 best and uh you know over that six month period or four month period make your 10 investments but do the work if you're going to a sorting mechanism like yc and they charge you triple the valuation of non-yc companies well you get to screw around for the other five months of the year and go skiing or whatever you want to do and then just have them be your outsourced uh workers and you're just putting money to work without any thoughtfulness or any actual work so you pay the SPEAKER_23: price am i crazy or on target mr yeah i think that i mean yc has a history of presenting game-changing companies to the landscape and i think that the best a lot of the best entrepreneurs are inherently attracted to yc simply because of the pedigree and the types of companies that it's shown to SPEAKER_24: put out there into the market in the past um but i do think that yeah that to a certain point uh there are a lot of funds out there that just rely on uh y combinators ability to pick and choose and attract great founders such that they don't have to go and do that themselves however this kind of goes back to a little bit to what we were touching on earlier where it's like you know being the arbiter of good curation will consistently provide you more value than not being able to do that and so because you built a brand name around being a good curator there um it becomes meaningful and you know people are willing to pay for that good curation to a certain extent yeah and listen they have SPEAKER_124: invested in 4 000 companies right and they've had maybe 70 unicorns or something in that range and the unicorn would represent a 25x 50x something in that range return if you were investing at a 20 million valuation so you know if uh one percent of the companies maybe two percent of the companies become unicorns well let's just say two percent of them i'll be generous become unicorns and one percent of them you actually can exit uh yeah you know the question is can you pick the one percent and the the one thing i'll tell you that's going to be challenging is that the top companies at yc this is a secret they'll deny it but i know it's the truth um the top companies don't present at demo day they elect to opt out of the demo day so what you are seeing at y combinator typically has a dentist or angel investor or seed fund going to demo day and i think it's well worth going and i think SPEAKER_218: it's a if you could be an lp in y combinators venture fund you would do it because i think it'll be a great fund uh or maybe above average fund let's say the truth is you may have seen all the aces SPEAKER_07: and kings remove them the deck and taken by the yc partners and the people in their orbit so when the next airbnb coinbase or cruise or doordash or dropbox go through yc people know it they get a sense like hey this might be one of the winners those people raise before demo day they're over subscribed why all the partners all of the internal lps of yc they cherry pick them and this cherry picking has been denied but i know it to be true because the founders email me and say hey we're not going to be at demo day but i wanted to meet you because you're jcal and i would like to you know be on the pod or just have you on the cap table because i think you're cool um and that is i think the danger as an investor is you think you're swimming in the pool with those 70 unicorns i would think at least a third of them get taken out before they go to demo day so you're not SPEAKER_116: actually getting a chance to invest in this yeah i feel like that's a fair that's a fair assessment yeah SPEAKER_07: does it mean yc is not awesome anybody who i invest in who wants to go to yc i do a waiver for so if we invest in them at six million or ten million and they tell us they want to go to yc and give them seven percent of the company for 125k at a two million dollar valuation you know what i say go for it yc can get a better deal than me because ultimately when they graduate it's going to pop up to 20 million they're going to get three million dollar value you know and only dilute 15 so i'll still be ahead of the game that's my philosophy on it i think it's a great program if you get in you should go anything i missed on today mr exits that is on your docket things that you're thinking about SPEAKER_09: no i mean i have to hop in a little second but i would like to hear about uh the mayor jason campaign SPEAKER_07: a great question um i have thought uh noodled on public office because i think it would be fun entertaining and i might be good at it uh because i would be solely focused on the top two two or three issues i need to learn a lot more about politics i need to finish up my venture career so i don't think it's a short-term thing but it's an ongoing joke because at a poker table the origin story is we were at poker and you know the suspects uh and somebody said uh if trump can be president jacal could be mayor uh and everybody laughed and then somebody said i will put up 250 000 for your SPEAKER_124: fund to be mayor and then somebody else said i'll put up 500 and then somebody incredibly high profile SPEAKER_07: said i'll put up a million uh and i will introduce you at every event so all of a sudden two or three million dollars in funding showed up at a poker game for me to become mayor so i did what any normal person would do is i got the domain name mayor jason uh and thought about it and counsel with my spouse SPEAKER_218: and my family i thought hmm what i want to do this i'm 52 at the time i was probably 46 or seven i said uh SPEAKER_124: i feel like i got a little more work to do as an investor but i do think in five or ten years i might SPEAKER_07: want to try that so my current plan is to learn and be vocal and you saw me be vocal trying to get SPEAKER_218: chessa boudin out or you see me tweet about stuff um and i'm in learning mode i don't understand this but i'm going to have the grow sf founder on this podcast i'm going to talk about how the supervisors SPEAKER_225: work and i could be mayor of austin new york la or san francisco before i'm gone if i live long enough SPEAKER_218: and i think i do a heck of a job uh and yeah i might be a bit of an interloper because i've lived in a bunch of different cities but i think i could be a common sense joyful mayor i think of like mayor koch when i was growing up it's very joyful mayor of bloomberg uh listen giuliani before he went crazy SPEAKER_212: was pretty effective um and you know i i i think i might have a good time it might be fun for me and intellectually stimulating so that's my only thought on it uh i'm not like making some immediate plan for SPEAKER_124: it but it's not a it was a joke so between an absolute joke at a poker table and absolute definitive reality it sits equidistant between those two well i'm uh wishing you all the best i SPEAKER_10: think that uh that would be definitely an interesting thing to see and uh there's no way that uh anybody could do any worse than what we have going for us now so i think there's a ringing endorsement for David Friedberg: mr exits yeah yeah i am backing jake out because it can't get any worse and i think that's actually SPEAKER_23: there's something true to that yeah i think that yeah i think that yeah by all intents and purposes you seem like you have a good grip on what san francisco actually needs and so yeah i hope that uh SPEAKER_57: i hope that you know this joke turns into something a little bit more real here's my pitch we are going SPEAKER_222: to get one thing done at a time here okay the first thing we're going to do is anybody who's a violent SPEAKER_124: criminal or who is selling fentanyl and that's the only drug we're going to have a zero fentanyl policy SPEAKER_204: and a zero violence policy you can't hurt anybody you can't steal from anybody and you can't sell fentanyl you can't do fentanyl on the street that's it we're going to work for a year or two on that SPEAKER_124: everything else we'll make progress on sure but those are going to be the non-negotiables we'll just start with the non-negotiables you want to sell fentanyl you're going to jail we catch you doing fentanyl you're either going to go to jail or rehab or we're going to give you a bus ticket home which is what we used to do is just give people a bus ticket home you can't have every single junkie down on their luck person go to one place and then create a dystopian neighborhood for them to uh you know enable their addiction it's much better if all of those people addiction issues stay in their own hometown and everybody in their hometown deals with their own homegrown addiction SPEAKER_41: addicted individuals as opposed to sending them all to one place because it's got the cheapest fentanyl you know this is an economic issue from everything i've learned if you don't the number of reason to police something like fentanyl is so that the price goes up and if the price goes up consumption goes down and if the cost of selling fentanyl is you might go to jail for a year and you might have to spend five or ten thousand dollars on attorneys then people uh go find another place to sell fentanyl or they stop selling fentanyl and they sell some SPEAKER_46: other drug and i think that's actually a pretty good path because fentanyl is a super drug right it's just it's so obvious that this drug is different than every other drug if people are taking psychedelics or doing cannabis or even stuff that's a little stronger it doesn't seem to have SPEAKER_212: the same dramatic effect as fentanyl in these crazy opioids i don't know is that too common sense to SPEAKER_24: say out loud no i think that it's it's definitely needed and uh it seems ridiculous that it you you even SPEAKER_57: have to question if that should be something that's that allowed so yeah why can't you say that shift SPEAKER_124: on that yeah it is literally a super drug manufactured in china that comes in through the cartels in mexico and then hits the streets in like three or four major cities that allow it i just think you have to look at and say well if this drug is resulting in nine overdoses a day and all of these other drugs you know people are taking molly or lsd or mushrooms or peyote peyote or cannabis or even you know cocaine or meth and they're not overdosing at this level and they're not breaking into people's homes and they're not killing people this level okay let's just look at each individual drug and work backwards for the ones creating the most harm internal harm for the individual and external harm there are people who are like you know what heroin wasn't so bad there are literally people saying like you know SPEAKER_23: people didn't overdose at heroin at this rate yeah yeah which is a wild thing to say to be honest it's SPEAKER_13: a wild thing to say when i grew up they were like if you take heroin philip seymour hoffman you're going to die right like it's just it's a path to death and it's like is it a path to death at the SPEAKER_259: same rate as fentanyl it's like oh no those things are not even close this is a thousand times more powerful than uh heroin or whatever it is 500 times i mean i guess it depends on the lot you get so anyway uh it's it's uh it's interesting to me mr exits uh you are a great guest i would like to encourage everybody to follow at praying for exits on instagram and then on twitter mr exits uh one of SPEAKER_41: the great uh parody accounts run by somebody who's on the inside and who does an amazing job on this SPEAKER_259: program just chopping it up well done mr exits another great appearance thank you brother i appreciate it SPEAKER_58: and uh yeah we're always happy to have these conversations anytime there's some new paradigmatic shifts happening so hopefully we can do more of these in the future we will we will do it every six SPEAKER_259: months i have you on the six month rotation officially here at this week in startups and i will SPEAKER_70: look forward to us having some ramen or sushi or something okay we'll see you all next time everybody bye bye bye