Jason Calacanis: Hey, everybody, it is another Sunday edition of This Week in Startups. First up, everybody's favorite new segment, VC Sunday School.

David Friedberg: And we're going to talk about Molly's question for me, which was, what do people mean when they keep saying, hey, we'll invest after you find a lead or founders say, hey, we're looking for a lead. We've got a million dollars sitting here, but we need a lead. We need a lead. And then Molly has done her first EV review,

SPEAKER_04: something we talked about on earlier podcasts that we wanted to do. And so here we go. We're starting our review program of cars. And the first car is the Audi e-tron sportsback. Great review up on YouTube right now. You can go to youtube.com such as This Week in.

Jason Calacanis: Decarbonization can be sexy. And then finally, on This Week in Climate Startups, I interview Seth Bannon, the founder of 50VC, on investing in climate solutions and taking our

SPEAKER_06: industry to task just a tiny bit. It's going to be a great show. Stick with us.

SPEAKER_07: This Week in Startups is brought to you by

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SPEAKER_12: All right. It's time for VC Sunday School. It's on your mind, Molly. What are you wondering about?

SPEAKER_17: What could you use advice on or mentorship or what do you want to hash out?

Jason Calacanis: I am, I mean, I, by the way, can I just say how lucky I am to have this direct pipeline to this? Basically, I've never really been, I'm not a big believer in the mentor thing, not for any reason exactly, but like this, this direct ability to be like, I don't understand is amazing. Um, and,

SPEAKER_12: and I think for me too, I mean, I, it's making me, as I said on Twitter, really think through and reflect on my own game, right? Sometimes when you get good at something, you don't actually take

SPEAKER_22: the time to reflect on getting better. So it's, I think it's actually making me more considerate better. So thank you for the great questions. Amazing. Plus, I will say that members of our own

Jason Calacanis: staff are like, this is so great. I keep learning so much from this. So because we have a learning organization where a lot of people are new, it is really like, hopefully everybody is finding it to be as much benefit as I am. So here's the question that I have today. I have said this to founders. Now I have heard founders talking about this phenomenon. It's the I read about it. It seems to be a common phenomenon that that a thing that venture capitalists say to founders is we're waiting

SPEAKER_27: for you to find a lead, right? What's that about? Okay. So when you invest in companies,

SPEAKER_12: you want to make sure that somebody has done diligence and that somebody will be minding the store and have so much skin in the game that they will help with the governance of a company, basically shepherd the company. And so there are a lot of smaller investors who put in,

SPEAKER_04: if they're syndicate members five to $50,000, if they're angel investors 25 to 250 K, but typically 25 to 100. And even seed funds that put in typically, as we heard on angel season six, first time funds that those three to $10 million funds to really make 50 to 250 K bets. They are not designed to lead an investment. So what does it mean to lead an investment? There

SPEAKER_12: isn't a technical, you know, a lead does x definition, but I will make it. So everybody

SPEAKER_05: has a definition going forward. I feel like it's like made of honor. Like there are some jobs you do.

SPEAKER_12: But yeah, anyway, yeah. So I'll give a clear definition of what I think a lead does a lead sets the terms for the round. In other words, they originate the term sheet, they say, we want to see you raise $2 million at a 10 million post. So 2 million will buy 20% of the company. And we want to be 1.4 million of the 2 million. And we want you to find 600 K in other investors who would be strategic, or otherwise, a creative to the the the enterprise, the startup. So they set the terms. And then they also the lead should be doing the diligence and reviewing the legal documents. In other words, they've got enough skin in the game, that spending $2,000, reviewing all the documents and making sure they're tight is no big deal. $2,000 on 1.4 million invested is, you know, less than 1%. In fact, 1% would be $14,000. So if it was a price round, or if it was just any round, then they might spend 1000 2000 3000 reviewing the documents making sure everything's tight. And they might spend 10 2030 hours on doing due diligence. Is this company incorporated? Do they have are the founders felons? Background check? Have we seen their bank statements? Are there claims in their deck? Are there claims in their pitch? Actual reality? So broad strokes, term sheet, diligence, legal review, and joining the board in majority of cases is what the lead does. Okay, if you're not the lead, if you're one of those other groups of people I mentioned from syndicate members to seed funds to angels, you're relying on the lead to do all that work. Because you as somebody putting in a 7k or 25k check? Well, you can't justify doing, you know, $5,000 in diligence $3,000 in legal work, because that might be greater than the money you're deploying, or it might be 50% of the money you're deploying in the investment if you're putting in 10 to 25k.

SPEAKER_04: Okay, and you just may not have the time. So founders can do a party round party round was very controversial. Because nobody's in charge, nobody's reading the documents, nobody's joining the board, there's no governance. So sophisticated investors would like to see a lead, who's going to shepherd this company. And I wouldn't say be the adult in the room, because sometimes the investors are younger than the founders, but generally would act as a fiduciary to the investors in the company, just somebody to watch the store along with the founder, that makes sense.

SPEAKER_46: My experience, at least at our firm is that that would not that investing in a company that already has a lead doesn't mean we're not going to do diligence, though. Right? Okay, great. Like,

SPEAKER_49: from our perspective. Yeah, we still do that.

SPEAKER_53: We would do diligence, but our diligence might have been done for us already if somebody was the lead. So if

SPEAKER_12: there is a let's take a later stage round, somebody's putting in 10 million for 20% of the company, and we're putting in 750k of the 10 million. And they've done all the diligence, well, they might give us their diligence. So we don't have to do it. Or they might share with us what they did in diligence. And then we would be relying on their diligence. And we might do a little bit of our own. But we would do an abridged or shorter version of the diligence because you don't want to waste the founders time. And you may not want to burn out customers, right? If you're going to call

SPEAKER_22: customers, the customer, who's their top SAS? If it was a SAS company, and you know, they had, I don't know, let's pick a company Nike as you know, their lead customer. If they had to talk to two

SPEAKER_56: investors last round, and now they're talking to three investors this round, like, is it really

SPEAKER_04: necessary for the sixth investor to say, Do you love the product or not? Yeah, probably not. So we will sometimes lead an investment. Other times we will co lead. And the co leads would probably be putting in the same amount of money. And the lead usually puts in the majority of the capital. That's another good definition of a lead.

Jason Calacanis: And if we, or anybody is saying we're waiting for you to find a lead, is it an indication of it is that an expression of our check size? Like, we're not going to write a big enough check that we are able to lead isn't an expression of maybe medium confidence.

SPEAKER_12: So let's talk about investors writ large. What investors will do to keep optionality, right? Because what if Sequoia decides to lead the round, then you really want to be in because Sequoia joins the board, Sequoia anoints it, they have unlimited capital, the company becomes five times more valuable. The second Sequoia names on it, I had this happen with Mahalo now inside, you just all of a sudden become anointed everybody assumes you're the next Google or Apple or YouTube or, you know, Twitter, or Instagram, because they invested in those companies. And so there you have it. What you're trying to do is preserve optionality. So hey, circle back around when you have a lead. And let's talk and that's really annoying for founders to be in that situation. But it could be a sign of not enough connection conviction to lead or the firm doesn't lead investments typically. So we don't typically lead series B investments, or series A, we're a seed fund, we do early stage. So if

SPEAKER_04: somebody's doing a $10 million round, well, the largest round we ever did was 6 million. And we've

SPEAKER_12: done three, four, six, you know, and the six was a follow on the three and four. I think one was a follow on one was actually I think the largest direct we ever did was maybe three and a half. So putting that all together, when they get to later stages, we're not going to lead those, we're going to lead a seed round sometimes. And other times we would want to see cold food might be cold leads. So it is actually if the firm has if you're in the firm's investment window, their Goldilocks zone, as we've talked about, then it would be a sign of a lack of conviction. If it's outside of their Goldilocks zone and their check size, it would just be to your point, a function of check size.

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SPEAKER_12: don't like to turn down founders. It's really hard to do. And part of the job is like, you're going to turn down the majority. And we've actually been doing training internally of how to do this properly.

SPEAKER_22: And you were in on some of those. And we're going to be doing some role play. I'm going to actually do role playing with people as a little test where I'll be like an angry founder or a founder who's

SPEAKER_04: trying to convince you to invest even though you said no. So we'll do a little of that role playing.

SPEAKER_06: We might have to record that people are going to do it on air. Jason plays angry founder. Yeah.

SPEAKER_79: All right. Actually, we can do it right now. Okay. You know, no, no, I'll be the founder. You

SPEAKER_04: turn me down because we don't have our growth is 5% a month. And your reason is you want to see a little more growth and a couple of more customers to say, Hey, listen, we decided not to invest in

SPEAKER_22: this round. Because we're looking for more consistent growth and a little more land and expand for your SaaS products. So go ahead and say that to me or something like that.

Jason Calacanis: So listen, I think you're great. I've enjoyed talking with you. I think we're going to pass this time around. We're a little bit worried about the growth metrics and the rate of growth. And we'd like to see a little bit more than that. Please, you know, keep us updated on what you're doing. Updates at launch.co.

SPEAKER_12: Yeah, but you know, listen, we were seed company and we've slowed down. We're, we're purposely only growing 5 10% a month because we really want to take our time and focus on the product and making sure we have tight product market fit. So actually, you're wrong. Our growth could be much greater, we've just chosen to slow it down. So you're making a mistake, Molly.

SPEAKER_46: I mean, I always have to accept the possibility that I'm making a mistake. I stay humble in this

Jason Calacanis: business. But the truth is, these are the benchmarks that we have always followed and believe in.

David Friedberg: Okay, great. So not bad. But you can see how it can get a little tense and founders have no problem with a little tension. I think your answer was pretty good. The notice, by the way,

Chamath Palihapitiya: would like to see me make you cry. Good luck with that. So I don't think you're going to play it

SPEAKER_95: like the last 15 minutes of the return of the king. It's not gonna work. But when I when I see the hobbits going with the elves, that always gets me. But otherwise, there's a way but this is not that definitely a way if you get me, you know, to the final scene of gladiator or some movie like that or black hawk down or some violent movie where some hero dies tragically. Yes, I will cry.

SPEAKER_05: I'm kind of amazed. I haven't cried on the show yet. I'm a crier.

SPEAKER_104: Are you really? Oh, my God, really emotional commercials or thinking about my son's got anything like just really crier. Totally.

SPEAKER_106: So if your son, don't graduated, and then said, Mom, I couldn't have done this without

SPEAKER_108: your support. Been such an amazing mother.

SPEAKER_110: I just had to like, wow, now I know how to do it. Oh, you would get me to if you did my

SPEAKER_112: daughter saying that exact same thing script to me, you would get my cheeks are all big. I

Jason Calacanis: mean, it takes nothing. It's very embarrassing. And everybody in my family is like when there's like, you know, a sad commercial or movie, they all look over at me. You're crying.

David Friedberg: Yeah. Why do you have to ask me? No, I just pretend I'm yawning. Like if I'm in the movie

SPEAKER_115: there, I'm like, oh, I'm so tired. My eyes tear when I yawn. My eyes tear when I yawn. So my

SPEAKER_95: wife doesn't see me crying at Lord of the Rings or some romcom. The romcoms get me every time. Yeah. Notting Hill. That's the best romcom ever.

SPEAKER_120: Don't shame in my game. I'm a weeper. Oh, it's one more thing. Would you ever see yourself with a, uh, I just love that

SPEAKER_121: Hugh. Uh, what's his name? Hugh, not Hugh Jackman. Hugh Grant. Hugh Grant. Uh, that's the

SPEAKER_122: best romcom period. So anyway, that's what, so anyway, we're finding a lead is about.

Jason Calacanis: Yes. Okay. So finding a lead, sometimes function of check size, sometimes a function of just like, you know, I like this, but I'm not sure if the market loves it. Right. Sometimes it's testing a market.

SPEAKER_12: I would say it's your conviction level, right? And so we might be interested in

SPEAKER_04: investing to start the relationship with you as a follow on as a follower. We might fill in the round just so we could build the relationship and get to know you, but we're not ready to take a board seat. We're not ready to lead around and give you that time commitment. And that's reasonable. Some firms only do series a and only join the board. Like I think benchmark is that way. They won't put in small seed investments, other firms separate into groups. So Sequoia has a C group and a series a group and other firms have started to split it up like that, or they create scout groups to make the small investments. Um, and so, you know, there are people have been trying to figure out ways to make small bets without being a lead, uh, and not create what's called signaling risk.

SPEAKER_12: So one of the issues in our industry is something called signaling. And you'll start to hear this. It's less of an issue. Now when the industry didn't have a

David Friedberg: lot of players, if Sequoia made a seed investment of 500 K and then didn't do your series a, everybody would say, what's wrong with this company? Yeah. They put 500 K in for 5%, but they don't want to own 20% or 15%, like they did in all the other big winners. So they would

SPEAKER_12: taint the company, Scarlet letter, the company. And that's why they created the scouts program. And the scouts program was, Hey, Sequoia's network makes these investments. And it has, we have, we don't decide. Jason gets to make this, uh, Sam Altman was a scout. He famously did stripe, uh, as part of the scouts program. And so does not reflect on Sequoia was the concept.

SPEAKER_05: Interesting. So they just tried to abstract it out a little bit,

SPEAKER_53: basically, and use their network to make small bets, to get to know companies and have skin in

David Friedberg: the game. Yeah. So what I like about what we do is we have the accelerator where we make that

SPEAKER_12: a hundred K bet. And now with founder university, I met with the top companies and actually became an episode of this week in startups. I think it was last week. And I think we're going to place maybe five to 10, 10 K bets on the best of those. And that's another experiment for us. We're going to do that for people. 1% for 10 K maybe I get to know you bet a little skin in the game, but I'm not

David Friedberg: ready with all of them to put a hundred K or two 50 or 500 in there. They don't even have, you know,

SPEAKER_12: products in market in some cases, or they have one customer beta testing and MVP it's super nascent, but the earlier you can get to companies and having a little skin in the game does increase your odds of building a position later. And that's really what seed investing or seed funds are about when they're

SPEAKER_22: at their best is, Hey, we, we, we own 1% of the company. Now we know it's a breakout. Maybe we can get to 7% ownership. Maybe we get to 12% ownership and ownership percentage is what drives returns in venture capital. Yeah. It's not just how big did the company get in the multiple, but the multiple on

SPEAKER_12: what number. So in the early days, you know, 25 K 50 K investments I made in Ubers and Robin Hood, oh my God, they're so dramatic, but nothing like, you know, soccer, who put 250 K and I believe to

SPEAKER_22: the Uber seat around 10 times as much as I did, or, you know, Bill Gurley, who put whatever into the

SPEAKER_17: series A and owned 10% of the company. So that's the thing we're doing here at launch is trying to

Jason Calacanis: build positions. Well, and what's interesting, what I find actually really interesting about what we do at launch is that we have a lot of more ways to say yes, than other firms do. Like sometimes we might have to say, we're waiting for you to find a lead, a maybe and sometimes there might be a no, but it sort of feels like we can, we rarely have to give a no, because we have a whole funnel.

SPEAKER_53: Yeah, so we could say yes to founder University, if we meet a founder who we think has potential,

SPEAKER_12: we could say yes to the accelerator. Now, some people might say, I don't want to do the accelerator. So we might, you know, be able to put 100 K into, you know, the launch, um, accelerator company, get to know them on 6% and then build from there. So yeah, we want to have ways to say yes, and get to know companies. And I think that's good for companies to you get to know the investor, are they helpful or not? And if you're successful, you'll have your

SPEAKER_95: choice of investors. So you can then pick which ones you want. Yeah. And it seems like there's a lot

SPEAKER_46: of value in being really upfront and saying we rarely lead.

David Friedberg: I think yeah, if you tell people how you invest, then it creates efficiency. And that's why you'll

SPEAKER_04: see seed funds say we put 100 K and we don't care about pro rata. You'll see other firms like our say, we take pro rata. And if we get above 5% or 10%, we want to have a board seat. And we want to be more involved with the company and really help you meet other investors, etc. And so then somebody who's a founder who's like, I don't want any governance. I just want blind money at a high price can say, you know what, I've heard Jason, I heard Molly talk there. They don't want to do blind investments,

SPEAKER_22: you know, pre product being launched. I can go talk to somebody else about that, right?

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SPEAKER_75: R-E-V-E-L-O dot I-O slash twist. Okay, before we get to the interview, Molly, you were driving that

SPEAKER_04: Audi e-tron. You got a little demo of it and you wrote a review. Tell us the reviews on YouTube, obviously, but maybe you could tell us a little bit what were your general impressions.

Jason Calacanis: Yeah. So, I mean, this is perfect timing because you have been embroiled in some Twitter back and forth about the question of like, why haven't people bought EVs? Why are they not buying more fuel-efficient cars? And I think there's a really big knowledge gap about the availability of these cars, what they're like, what they're capable of. There still is a sense that there's sort of only Tesla. And so, I kind of set out to find a Tesla killer, but also show people what else is out there as other car makers get in the game. So, the first one I got to try was the Audi e-tron Quattro, which is, you know, very similar to the Model Y. Same price range, kind of that SUV, all-wheel drive, sporty vibe. Yeah. And it's also like a really good example of a car maker making an electric car versus a real tech company making an electric car, right? So, they've nailed the like, what one of my friends calls brilliant basics of being a car. Got it. And then there are some things that Tesla's really spoiled me about. Like, why do I still have to turn this car on with a button? That's so stupid.

SPEAKER_79: So, yeah, it's got all, yeah, like, the great example would be like, those companies, Audi,

David Friedberg: Mercedes, even Ford, you know, they do great things with their dashboards. They figured a lot out about human factors. And some of those things go away. And it's a good thing, like a power switch, and then

SPEAKER_12: some things go away. And I watched the review already, but the heads up display that I used to have in my Corvette, that would show you the speed. And you mentioned that explicitly, like on the Tesla, you do have to like glance down to see your speed. I mean, Tesla's got to get that heads

SPEAKER_05: up display display. It's so delightful. In a $70,000 car, the fact that that is missing is actually kind of absurd. Are those now standard in most cars? Yeah, the high end cars have the high end

SPEAKER_46: car. Yeah, heads up display. Absolutely. I mean, I had a high end. I had a heads up display in a 2013 BMW. Yeah, there's no reason for it to be missing. I think my Corvette was the C6 in 2007 or

SPEAKER_17: eight. And it was amazing because you could see your gear, what gear you were in, if you're using

SPEAKER_04: the tip tronic. So and this is going to be the start of many reviews, we want to kind of build up our review muscle here. Yeah, whether it's cars or gadgets. So you'll see some more of these and they'll be standalone on their own on our YouTube channel, youtube.com this week in, and they'll be

SPEAKER_05: embedded in the pod. Great job on the first one. Thank you. I got another car showing up on Monday,

Jason Calacanis: the Mustang Mach E GT. Oh, really? Yeah, I'm really fascinated by that car. I mean, that's the one that just in consumer reports beat out the Tesla Model three as a top. That's fascinating. Yeah,

David Friedberg: I think it's gonna be interesting to try. I think. I think they made a really bad decision there to make it look so funky. Yeah, I really don't like when they're like, it's an EV. So it has to look

SPEAKER_63: crazy. And I have heard that it's a great car in terms of how it drives. Yeah, very controversial

Jason Calacanis: because they gave the Mustang badging and it does not look like a Mustang. It kind of looks like a futuristic little SUV. And maybe that's fine if you didn't call it a Mustang. But now they have to get over that. But I hear great things. I'm excited to try it. If you are, if you work at Hyundai or Kia, like, you know, I've got connections enough to keep some of these going. But if you are a car maker making an EV, especially the less expensive models, right? Right now, they're all priced. You know, like, every single smartphone was $549. Yes. For like the trio, the iPhone, they were all priced the same. And they kind of are still now all of these are 50 to $70,000. But they're really 70. Let's be high range ones, but they're really 70, which is obviously, way, way, way out of reach. But you know, I'm, I mean, look, we've been through enough tech cycles to see that stuff starts expensive, and then it gets affordable. So

SPEAKER_04: this was the crazy thing, you know, and I just want to touch on gas mileage because we were talking about it vis a vis, what's going on in the Ukraine and Russian dependence on oil in the EU. They are,

SPEAKER_167: you know, their fleets are in the 40s. And the new cars are hitting standards of 54 on average miles per gallon. Yeah. And I started looking the US and we're at like 24. And we're hitting like 26. We're

SPEAKER_04: literally half of what's happening. And you know, I basically wrote like $5 gasoline in America has been really good for driving consumer behavior. And I got ratioed both ways. I had people who were like,

David Friedberg: go, you're totally right, retweet, give me the quote retweets. But then I had people like, you're out of touch, rich guy. And I was like, Okay, perhaps true. But you know, like I grew up poor, like, I understand the value of a dollar. And I started looking just to educate myself. And I started

SPEAKER_04: looking and I found this Hyundai Elantra HEV. And then I found the Honda insight. And I was shocked to find that the Honda insight is $25,000. And it's 55 miles per gallon, the Hyundai Elantra HEV,

David Friedberg: which I believe is a hybrid EV. I think that's what HEV stands for. Somebody could fact check me, it's not a pure EV, obviously. And that gets 53 miles to the gallon 56 highway and costs 23,000. So this idea that you can't get a five seater, that gets literally three or four times the gas mileage, and people were fighting me on it like in the confounding thing, Molly, thank you for you gave me a little tweet cover there. But

SPEAKER_12: the part that I found very strange for people was, they, if they're paying four times as much for gas, or three times as much for gas, in a $25,000 pickup truck or SUV micro SUV, whether they call it like

David Friedberg: the crossovers or whatever. And they're getting 20 miles per gallon, they're going to pay more money.

SPEAKER_56: Ultimately, because they're gonna spend extra $1,000 a year on gasoline.

Jason Calacanis: Yep. And so these cars pay for themselves tolls in places where you can go, you know, through the bridge crossing for free. Yeah, it's a weird argument. And frankly, I found that a lot of the I mean, there were, as I tweeted, plenty of people seem to be saying that if even one person

SPEAKER_18: cannot afford these cars, that no one should buy them. And there are plenty of people in your comments who I think could probably quit yelling at you and go buy one of these cars because adoption brings

SPEAKER_75: down prices. Yes, stop. That's why Android phones are 100 bucks or Chrome, you can buy a Chrome laptop now for 200 a full on laptop capable of doing anything you need to do at school for 200 bucks, like full stop $200. Yeah, a laptop. Yeah, with a great screen. So no excuses, America. Let's

David Friedberg: there's no excuses. Get to get to get to yes. I don't know just also understand like why these car companies are not making three row cars, because that also seems to be the valid that was the most

SPEAKER_12: valid one people were like, I have four kids. You know, we're two adults. And sometimes we have a dog and it's like, Okay, yeah, five seat is not gonna work. Where are the third row cars station wagons,

SPEAKER_95: hybrids, whatever, you know, crossovers that also get 40 miles to the gallon that seems to be missing

SPEAKER_04: from this. And it seems like it would be possible. Because they would they would weigh 20% more, maybe and so therefore they would be 20% less. So if they were 54, they would be down to 43 miles per gallon or something. So how did they get on that? Yeah, that's a huge market. I mean, it's,

Jason Calacanis: it's definitely possible in the Mazda five, I think it's pretty good, relatively good gas mileage. It's just that we haven't made them. We just haven't made them. You know? Yeah, we have not made that a rule. And Americans love big ass cars. We do. And we have not done anything to break that addiction with either gas taxes or mileage requirements or, you know, even just culture, like, I am so heartbroken to discover that Honda is taking the Honda fit out of the US market.

SPEAKER_01: What? Yeah, the Honda fit was like the most affordable car. How could Honda do that fit is go.

SPEAKER_18: And like people can't, they don't, they don't want these cool, small European hatchbacks, like the

Jason Calacanis: Audi A3 hatchback, I think is like one of the coolest, sexiest cars ever came in an awesome five speed. And they were just like, Americans don't want that. They either want like a big dumb sedan or a big huge SUV or truck. So Honda is like all about the CRV. Crazy.

SPEAKER_06: It's true. I mean, the RAV4 hybrid, that is the car. Actually, that's like the envelope.

SPEAKER_05: 35 miles to the gallon, I think. Yeah. But even that is like, for a hybrid is pretty low. Yeah. RAV4 and Prius, this is one of our noties. And yes, Justin, the big cars are all the profit.

SPEAKER_95: Ravi Shankar. Ravi Shankar. Ravi Shankar. RAV4 and Prius hybrids get around 50 miles per gallon.

SPEAKER_12: Yeah. Yeah. Absolutely. A no brainer. It would be nice if, and by the way, I don't know if you remember when guests hit $5 a gallon. And that's when the Tesla Model S was coming out. And a lot of

SPEAKER_04: the discussions around it works. It would you would save, you know, whatever $1,200 a year. And so over seven years, you could take another $7,500 on top of the $7,500 EV credit. Yeah. So people started in their minds doing math and then Prius started selling out the Honda insight, the old one that got 60 miles per gallon. That was a really futuristic looking one. Yeah. Like people really started changing their behavior because I remember young people working for me and they were all trying to find Prius use Priuses and used Honda insights because of gas mileage in Los Angeles. And they

Jason Calacanis: were traveling so much. My uncle in Montana bought a Prius because he was like, I commute and I just don't have the money to be paying for gas. Like that's why I have a Prius in Montana. It's like when you really, I mean, there's a reason that just about every Uber on the road is a Prius, right? I mean, this is a, it is a real cost. It's not in some for, for a certain swath of Americans is not as big a cost as they seem to think it is compared to like their Starbucks or their streaming bill or whatever

SPEAKER_53: things, you know, people pay for, but if gas is $2 a gallon, you don't even look at it. It's like an

SPEAKER_12: it's like, oh, it's $2 a gallon. It's, it's the same way people look at water. You know, they don't because water coming out of your sink is like a dollar, maybe it's a penny. Like if it was five cents, you'd be like, ah, you know, this is adding up. And I think that's why we should have a minimum gas price and then take the difference. And we could do this very slowly. We just add 25 cents to a

SPEAKER_04: gallon of gas for 10 years and then take that money and pour it into subsidies of the lowest end hybrids. So it's not for rich people for model, you know, X and S's and Audis. They can literally just take that money, Molly, and say, this is going to subsidize only under $30,000 EVs and hybrids.

SPEAKER_12: Yeah, so we'll give an EV hybrid credit and the gas money will pay for it, which would then mean

SPEAKER_43: poor people, middle class people would get with the only beneficiaries of that.

SPEAKER_04: Yeah. Or the majority beneficiary. All right. Anyway, 100% common sense solutions that nobody wants to accept. Nope. And who's on the show today for climate Sundays?

SPEAKER_18: We've got Seth Bannon, the founder of 50 years BC, which is which is, oh, they're a super interesting.

Jason Calacanis: They were small when they first started, I interviewed them way back in the day at marketplace tech. They were very early to sort of come in and say we are doing climate solutions and it's a husband and wife team. And they're just like super duper go getters and has a great thesis in terms of just boiling down climate investing and has kind of taken the industry to task for being a little bit risk averse when it comes to climate solutions. It's a it's a it's a good interview.

SPEAKER_198: Yeah, wait to hear it. All right. I like it. There's a lot of people getting into

SPEAKER_04: climate investing. And if you want to join us on that adventure, starting in March, I think, March or April, we'll probably have our first deal on the climate syndicate, you go to the syndicate.com slash climate. And Molly is taking the lead on that. And we'll be finding great companies to invest in and take really hopefully big risks to try to get big rewards and help the planet at the

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SPEAKER_18: Seth Bannon, founder, co founder, really. And I assume general partner at 50 years. Welcome to the

SPEAKER_82: show. Thanks for having me, Molly. Tell us about for those who aren't familiar, and I hope that they are if they're listening to this particular segment. Tell us about 50 years. What's your deal? How long

SPEAKER_212: have you been around? How big is the fund? Sure? Yeah. So 50 years very simply is early stage VC firm. We back companies at the pre seed and seed stage. So typically, it's a few founders of the janky

SPEAKER_213: prototype. And we like to back teams that are at the intersection of three circles on a Venn diagram where one circle is deep tech simply means you probably need a PhD on the team to pull things off. Circle number two is path to $1 billion a year in revenue if things go really well. And circle number three is path to massive positive social or environmental impact if things go really well. So another way of saying that is things that are really hard to build that can make a ton of money and do a lot of good in the world. And we have now been around for about six years

SPEAKER_212: and are now supporting over 90 teams. That's great. Congratulations. How? I mean, you know,

SPEAKER_82: that sounds like a lot to me. I'm assuming that's a lot. It's a lot. Tell me about how big is the fund?

SPEAKER_213: If you don't mind recent fund is a $90 million fund. Yep. And that is that your second fund? That is our third fund. Yeah, it's our third fund. And yet we're, we're more so than the size. We, uh, we like to talk about the people that contributed to it. So our, our sort of first core value as a firm is founders first. And then we have this joke that we're founders all the way down. So we have a bunch of founders on the team. We back founders and, and now our LPs are founders. So, um, supporting that $90 million are our 44 founders of a billion dollar tech companies. So we have the founders of GitHub and Dropbox and Snowflake and Spotify and Skype and Minecraft and

SPEAKER_226: Supercell and Klarna and just a bunch of really, really amazing entrepreneurs. Full disclosure.

Jason Calacanis: I talked to Seth, I talked to you back when I was at marketplace tech, which was now several years

SPEAKER_82: ago. And I think you had just raised $20 million and we're raising your second fund. I mean, it seems like things have been escalating quickly and tell me how much of that has to do. I mean, obviously it's got to do with you and Ella and, uh, who you are and the choices you're making, but tell me how that

SPEAKER_211: gives you, how that validates your premise, you know? Yeah. So our first, our first fund was a $5

SPEAKER_231: million fund under 5 million. And it took us a year and a half to raise, uh, and you know, it took us

SPEAKER_213: a year and a half in part because one of our core theses. So we have two core theses. One is that now's a really great time to back a lot of deep tech companies, the pre-season season. We can talk about that if you want. And the second thesis is that is that entrepreneurs that are tackling these big global problems like the climate crisis or disease or malnutrition or connectivity will outperform all else being equal ones that aren't on a purely financial basis. Um, and I would say neither of those were very popular. There was a lot of skepticism about, uh, deep tech because people said, Oh, this seems hard and expensive. Why wouldn't you just, you know, back a SaaS company. And there was probably even more skepticism that you could combine doing good with doing well. Mark Andreessen is famous for saying that this kind of investing is like a houseboat, not a great house, not a great boat. Uh, and so obviously a pretty pithy turn of phrase, but you could say we couldn't disagree more. Uh, back then we had to make sort of theoretical arguments about why these companies would have an advantage, right? So we could make an argument about a theoretical machine learning engineer that they were both trying to recruit. And we'd say, imagine that there are two companies and they're equal in every way, but one. So they literally, they, the same growth rates, same revenue, same profit margins, same team, same, are the same size, equally charismatic founders. They're literally headquartered across the street from each other. There's only one difference. One of them is, uh, developing, uh, app that lets people buy sneakers online. And the other one is curing cancer. And they're both trying to recruit the same machine learning engineer. Which one do you think has a better chance of recruiting them? And when you put it that way, people go, Oh, obviously all else being equal to the cancer, you know, curing one, but there was still a lot of skepticism. It was all theoretical now, six years in, um, we'd like to say our founders have, have made us look smart. Um, so our first fund is, is, is, uh, over 10 X. So that's pretty good, uh, in, in the venture world. And so we now have, you know, sort of evidence that we can point to our, our second fund is also doing equally well. Um, and then there has been, I would say a very general macro shift in the way people think about these things. I think more and more people realize that there are two entire generations of talent, um, that really want to align their careers, uh, with their values, you know, millennials and, and even more extreme Gen Z. And so I think the macro environment has come around to the fact that things like solving the climate crisis or disease or connectivity or inequality, um, these are excellent places to build businesses that create real economic

SPEAKER_82: value in addition to social value. Yep. I do want to, uh, ask you about investing in deep tech, but before I do that, you took on several of these, uh, sacred principles, if you will. And then the other one is sort of baked into your name, right? Like certainly you're doing funds, I assume on a 10 year cycle, but talk to me about the theory behind the name, because I always thought this was,

SPEAKER_224: you're talking about changing the timeframe, right? About thinking about these issues.

SPEAKER_238: Yeah. So, uh, we, we do a heuristic. We often ask ourselves as if we sort of project 50 years into

SPEAKER_213: the future, could we imagine that this company we're thinking about partnering with is one of the most important companies on earth. Like, you know, it was fundamentally important company that everyone says, my God, so glad that company exists. Um, uh, that, that though, we've sort of adopted, uh, in retrospect, the, the actual origin of the name, uh, is a tip of the hat to a Winston Churchill essay. Winston Churchill wrote an essay in 1931, where he predicted, uh, synthetic biology, genetic engineering, satellite telephony, nuclear power, uh, just crazy sort of deep tech insight. And then in the entire second part of the essay, he talks about how, because the pace of technology is advancing so rapidly, it's more important than ever that a technologist to take a principled approach to their work because otherwise we might end up accelerating really fast, but in the wrong direction. So he kind of combines deep tech insight with principled approach to your work. So for the type of things we like to back, it's the perfect essay. That essay is called 50 years, hence.

SPEAKER_212: Uh, and we actually did consider calling the firm 50 years, hence, but we thought the hence maybe sounded a bit too old school. So we just dropped it. Yeah. It's kind of a long URL too.

SPEAKER_211: Pretty long URL. And also who knows how to, hence, I don't even know, I wouldn't even know how to spell

SPEAKER_82: it. Um, yeah, I mean, I do, but I'm just being snotty. So, so let's talk about your investments. It seems like there's quite a few meat alternatives, meat alternative tech. I know you're not sort of a pure play climate investor, but that's sort of where we're focused this segment. You're on this week in climate startups. And, um, I think it's been interesting to watch investors over the past few years, not just broaden their sense of what they should be investing in or what they could be investing in, but also the sense of what is a climate company, right? Like, I don't think that

SPEAKER_244: even six years ago, we would have been thinking, Oh, meat alternatives are a climate forward investment.

SPEAKER_213: Yeah. Climate used to basically be renewable energy. Um, and that was it. Um, and now I think as the awareness of all the ways in which varying industries or behaviors contribute to the crisis that we're in, um, uh, and, and our ability is to basically decarbonize all of those sources. Um, we now realize that there's a myriad of ways of addressing the climate crisis. And so, yeah, I think the food system was not on the top of many people's list. And in part, because I think there wasn't a huge awareness, but in part, because it didn't feel tractable, right? You know, we, we've been making meat and milk, uh, uh, the way we are now for 4,000 years, literally 4,000 year old production technology. You know, we, we, right for disruption, as they say, right for disruption. It's kind of crazy. There aren't that many industries that touch our lives in such a big way where we're using 4,000 year old technology, right? So, you know, the Mesopotamians 4,000 years ago is a years ago, domesticated goats and the scale has increased, but the basic formula, like inseminate a mammal, have that mammal give birth, raise new mammal, you know, take its milk. And then at some point, you know, kill it, cut it up and take the meat. That is exactly the same as it worked back then. Um, and, and, you know, now, uh, we've realized that a, there's just a huge amount of inefficiencies, uh, in that process because of it, it's 4,000 years old, right? Like there's, it requires a huge amount of land, a huge amount of energy, huge amount of feed. You literally have to tend to the medical condition of the mammals that you're using. And then B, that we can just make the things we want directly using either biology or using plants or mycelium or other approaches, right? So, you know, we were super fortunate to be able to see at a company that was previously called Memphis Meats, now called Upside Foods. And basically what they realized is that if what you really want is the meat, um, which is literally specific cells inside of the body of a cow,

SPEAKER_246: why are you growing a whole cow just to then go and try and cut up the meat? Why not just grow the meat? And so they've literally taken the exact same biological processes that happen inside of a cow and brought it outside of a cow. Uh, and it turns out it works and I've had their beef and they make

SPEAKER_213: duck and chicken and it's all delicious. Uh, we have a company called Nobel foods, which, uh, realized that the reason that plant-based cheeses, I don't know if you've ever had plant-based cheeses, but I've been a vegan for now six or seven years. You're not missing anything. They're awful. There's no good, there's just no good plant-based cheeses. And the reason is that the, the flavor and a lot of the function, the way it melts in the mouth comes from the proteins and cheese and plant-based cheeses don't have the right proteins. And so they realized that you could literally go into a cow, find the genes that cause a cow to produce casein, which is the most important protein, put that gene into a plant. And it turns out you can get plants that actually make real milk proteins. And now we can make plant-based cheeses that have the exact same functional and flavor profiles of real cheese. And it's delicious. It works. We have a company doing this for gelatin and meat and chicken and all these other things. And so, uh, this, this field called cellular agriculture, I definitely think is one of the most exciting, uh, ways of, of attacking the climate crisis. And, and, you know, there's been a lot of life cycle analysis on, on these companies, uh, on upside foods in particular reduces the land use by 99%, the energy use by like 60%, the emissions by huge percentages, the water use by 98%. Um, so this is just a radically more sustainable, radically more humane

SPEAKER_246: and likely much more efficient from a cost basis way of making these products that people love.

SPEAKER_82: I mean, when you look at impact, that's just staggering, right? Like those are, those are breathtaking real numbers. And it does make me curious, like what other sectors you're seeing or that we're not thinking of, or that you might be investing in that, that w that just don't immediately come to mind as again, a climate investment. Um, but that can really like, if you talk about 59 to zero,

Jason Calacanis: right. In terms of our emissions gigatons, they can really make a big dent.

SPEAKER_231: Yeah. We're, we're super excited to like decarbonize the construction industry, um, which is an industry that many people don't talk about when it comes to climate, but there are many

SPEAKER_213: elements that go into it. So I think we all know concrete, obviously really bad. Shouldn't, shouldn't be made the way it's made. If we can figure out a way of, of decarbonizing that, or even better sequestering carbon in, you know, some cement replacement, that'd be really great. But just the general housing industry is also massively wasteful. I don't know if you've ever seen, uh, or built a house or seen somebody build a house. There's always this giant dumpster out in front with just loads of like wood and waste materials, because the entire process is just incredibly wasteful. The materials that we use haven't changed in a really long time. And so we think there's, there's a lot of opportunity across the construction stack to reduce waste, uh, and, and decarbonize, uh, materials and also implement sort of smarter solutions at the residential level to radically lower water use, uh, energy use, things like that. We have a company called cover, which we're really excited about, which is sort of building, uh, 80 use. So, you know, homes that literally can go in someone's backyard, uh, that take this approach. But I think there's

SPEAKER_246: uh, opportunity to apply, uh, techniques like that across the residential construction sector.

SPEAKER_82: So, I mean, look, when you say it, obviously you are a charismatic guy with lots of energy. It makes

SPEAKER_259: perfect sense the way you're saying it. Should I minimize my energy? Am I using too much? I want to

SPEAKER_244: be very sustainable here. Keep it up. Keep it up. Energy is infinitely renewable, um, with enough

SPEAKER_82: sleep and water, apparently. Um, what is so hard about this? Because I do see a lot of people coming into climate tech investing and saying, like, I'm just going to do the software part. And I see a lot of pitches that are like, we're, you know, a dashboard for emissions and it's a SaaS service.

Jason Calacanis: And sure. That's going to make money probably, but it's not, it's not a, like, it's not a big dent. How do you optimize for the big dent and why is it so hard to do?

SPEAKER_224: Yeah. Right here.

SPEAKER_231: And go.

SPEAKER_213: Yeah. So I, I think I think the startup ecosystem, uh, investing in general and VC in particular has really just like completely lost its way over the last few years. Um, you have a lot of super short-term thinking, a lot of speculation, a lot of looking to like, you know, get rich quick, a lot of flipping. You literally have, you know, venture used to be about, um, giving people money to de-risk things that had huge technical risks, but if successful would just be massively valuable over the long term. These days, you know, you have VCs that are almost acting more like hedge funds where they want to kind of like take something that kind of sort of works and hope it works a little bit better. You have literally, you have some of the top VC firms investing in NFT collections. And I'm not even talking like NFT technology. I'm talking like NFT collections. Right. I was talking to an investor the other day, a, uh, uh, smart investor, great track record. And we were talking about company that he had just invested in. I couldn't for the life of me figured out like where the value came from. And so I was just trying to ask much questions.

SPEAKER_259: Like, where does the, like, how is this creating value over time? And then at some point he stopped and said, oh, you don't understand it. It there's, it's creating memetic value, memetic value. So it's a meme stock, literal meme stock. Meme, like value through memes, memetic value, memetic value. It's literally a stand in. We used to call this speculative value. That's like literally the name for it, but now it's not speculative value. It's memetic value. And you have, you have literally VCs going on Twitter. It's like, oh, power of memes.

SPEAKER_213: Memes are the future. And it's like, it's quite horrifying. Um, and so I, I don't think it's

SPEAKER_246: gonna, I don't think it's gonna end particularly well. I hope when it does not end well, it drives

SPEAKER_213: a lot of enthusiasm back towards the sort of roots of venture, the roots of a lot of this entrepreneurship, which is doing the really, really hard things that derive long-term sustainable value. Um, but I think people, you know, at some point, the hard problems that are still in front of us are in front of us because there are no easy solutions, right? Like if there were easy SaaS startups to get us out of this crisis, they would have been built. Um, but, but, but like, these are big, you know, uh, complicated, hard problems. And, and a lot of solutions that they require are really hard. I'm not saying that like software alone doesn't have a role to play. It certainly does. There's some great startups that are addressing this, but it's, it's certainly not going to be enough. A lot of the solutions that we need are synthetic biology solutions, their material science solutions, their hard mechanical engineering solutions, electrical engineering solutions. Um, and so my, yeah, my concern is that people have gotten so hooked on the easy win and, and the, the easy, like multiple and growth rates that the entire sort of ecosystem has, uh, been warped in a way that tends to, um, make people shy away from the really, really hard, hard things. And we need to, we need to go into the really, really hard things. They're

SPEAKER_271: really, really ambitious things, both, both, both VCs, but also, uh, entrepreneurs.

SPEAKER_82: Is the early stage, the place where some of that can happen more? Like, I wonder, I mean, it's all supposed to be risky capital, right? In theory. And you're clearly saying nobody wants it to be risky anymore because when you win, you win big. Um, so you don't really want to gamble as much as you used to, but I wonder if there is an opportunity for earlier money to place those

SPEAKER_114: seemingly riskier bets. Or does it matter? Or does it have to be the whole system?

SPEAKER_216: Earlier and bolder money. It's like, we don't want to gamble, by the way, what people are doing now, it's more akin to gambling, like the, the, the sort of memification or everything that's gambling.

SPEAKER_213: It's like, uh, early stage venture should be very comfortable with taking huge amounts of risk. It's not gambling because it's like smart risk. Right. Um, but you know, if you look at the roots of venture capital, uh, you know, back in the days of Silicon back in the days of Fairchild, um, the, the, the, the money was meant to take on huge amounts of risk for things that could generate massive financial returns over time. And yes, we absolutely need, need more of that. Right. So, you know, at 50 years, I think we're a bit unique in that when we look at a technology from, you know, three PhDs that are spinning out of some, uh, university, um, we do a deep technical diligence, but then all we want to know, assuming that the market is amazing and the team is amazing and everything else checks out on the technology side, all we want to know is that there's a 15% chance or greater that they're going to be able to build what they want to build for the amount of money they think it's going to take in the amount of time they think it's going to take. In other words, we're very comfortable taking on a massive amount of technical risk because we think that's the role of venture capital, right? Is to give the founders the money they need to de-risk some of that technology such that they can then bring a really important thing to market. And yes, I do wish that more investors thought that way, because I think it is a bottleneck in the ecosystem. I also think that it's unfortunate in that a lot of a lot of investors that are rightly enthusiastic about climate tech have not yet built out the capabilities to do a proper technical diligence, right? Unlike software, in software, if you have really charismatic, energetic, seemingly talented founders, like they're going to be able to build it, you know, it's not like you don't have to do a big technical diligence. It's like, yes, I know you can build a SaaS app. They can learn it on YouTube. Yeah, learn on YouTube, like copy paste, stack overflow, you're gonna be able to get it out there. That's not the case. If you're talking about making clean hydrogen using some new technique, right? It might not be doable. And therefore, you do have to work, like, you have to develop the ability to do enough of a technical diligence such that you realize, you know, is this a 20% likelihood of success or a point 2% likelihood, because the point 2% ones, yeah, probably venture shouldn't be taking that much risk, right? That maybe that is something that still should still be developed a bit in academia, and then be brought out into the world. And I think a lot of firms that are that are really excited about climate tech, and that want to be excited about some of these deeper tech approaches

SPEAKER_251: to it, don't feel comfortable backing teams in the space, simply because they haven't built out the ability to do those sort of deep technical intelligences. Yep. Okay, so tell me how you do that,

SPEAKER_18: right? Let's, let's like, see if we can't make this more accessible to everybody, how are the

SPEAKER_213: friends you need to make? Yeah, come talk to 50 years. So I mean, we literally, we literally launched we were so this was such a common element of frustration for us that we literally launched a program called PhD to VC, that literally takes really talented PhDs for 10 weeks trains them for free on venture, you know, like, hour and a half long lecture assignments, weekend workshops, everything from how do you develop innovation flow to how do you diligence to how do you win to how do you support panel with LPS panel of founder panel of VCs panel with support staff at VCs, and then we graduate them. And then we introduce them to other firms that might want to hire them. And like, literally, the reason we're doing this is because we were so tired of having so many of our teams talk to another firm that would that would say, Oh, man, I love everything about it. Love the team, love the market, love the impact. I don't know how to think about the technology. So we were literally training PhDs, and then just helping other VCs hire them. So if you're interested in that, we've got we literally have these PhDs that are that are that are looking to do that. And we're gonna we're gonna keep doing that. But I think the key is just to build out a network of people that you can lean on. Unfortunately, you can't fully build the expertise in house. So you know, we have a few PhDs on our team. But they they can only do a technical diligence in their very specific area of expertise. And it needs to be very specific. So for instance, if you're looking at a synthetic biology company, right, so say you're looking at a company that's making cell grown meat versus one that's using enzymes to make carbon negative chemicals, versus one that's using some protein engineering or to dissolve plastics, there's no one PhD that can diligence all three of those. And the first one, you need a PhD cell biologists, and the second one, you need an enzymologist, and the third one, you might need a different type of engineer, right. And so the key is to build out a network of people that you can then bring in and call upon to help you run that kind of technical diligence. And so yeah, we're happy to help anyone who's interested in this space, like, develop that network, because we definitely need more VCs that are able to make sense of the technology so that their capital gets unlocked for these entrepreneurs.

SPEAKER_82: On the other end, how are you thinking about contributing to the ecosystem of entrepreneurs, because they also have to take those risks. And that's a, I mean, that seems like a million

SPEAKER_18: layer deep question all the way down to education in the United States, no big deal. But still, right, there should be some brilliant people that we could direct to rest and 80% of what we think

SPEAKER_213: about at 50 years is how do we help the entrepreneurs, right. And in particular, I think the type of entrepreneur that we're most excited to help that we're best at helping is is the great scientist or great engineer that's trying to become a great entrepreneur, right. And it's a very hard transition, because the things that you learn that make you a great researcher that make you a star in academia, make you a terrible founder, you know, literally in academia, for instance, you are taught to communicate with data, data, data, data, data, and then to immediately list the five ways that your data might be wrong, right. And if you communicate that way, in any other setting, you know, people's eyes glaze over, and you've lost them. And so there's this process of almost unlearning a lot of the habits of academia, a lot of the muscle memory first, and then learning the habits of entrepreneurship. And so one of the things we like to say is like helping great scientists become great entrepreneurs, like that's our jam. And so we we do that one on one, obviously, with our own founders that we support, we actually have some programs that are meant to help PhDs that are in academia, and thinking about how might I spin this out, spin this out someday, like figure out how to do that. And so yeah, so that is, that is incredibly important. I think it's also an area of phenomenal leverage. And like you said, part of it involves cultural change. To date, if you are a star in academia, and you went into industry, and starting a startup is going into industry, it was considered kind of dirty, it was considered a failure, right? Like, you know, if you're if you're a PI, one of these labs, primary investigator, person who runs a lab, success for you is if your star PhDs and postdocs also become PIs, and anything else is a failure. And that's unfortunately, largely still the case. There are a few labs like the George Church lab at Harvard, Francis Arnold's lab at Caltech that are starting to shift the way they think about it, where they say, actually, if one of our star PhDs and postdocs takes the technology they developed, and brings it out into the world in a startup, that success too. But there's probably literally six or seven labs like that, in this, that think about it in that way. And so I think we need a lot of sort of culture change in academia, to enable more PhDs and postdocs to have an easy off ramp into the world of entrepreneurship.

SPEAKER_294: Yep. How are you thinking about metrics? Like, as you measure, clearly your IRR,

SPEAKER_82: are you also measuring? I don't know, your gigatons? Like, how are you thinking about impact in the world? Does he make these investments?

SPEAKER_213: Yeah, so we spent a lot of time when we started 50 years to try and figure out a super robust impact measurement framework. And we looked at all the ones that are out there, we were not super happy with any of them. For us, it's a little bit harder, because though, you know, climate is a plurality of what we do. You know, we also backed companies addressing health or inequality or connectivity. None of the frameworks were very good. And so then we said,

SPEAKER_251: okay, great, we should just build our own. And then we realized that like, that's, there's a

SPEAKER_213: reason none of the frameworks are good. This is really hard problem. And then on top of that, because we're backing teams at the precedence seed stage, we always want to be taking things off of our founders plates, right? Like the nature of being a founder is that every week, you have 10

SPEAKER_246: things that have to get done that week, and you have enough time to do five of them. You're always behind, you're always underwater. And so as a partner, right, we always want to be making things

SPEAKER_213: easier, and not adding more things to our founders plates, and any measurement framework that we could imagine would require input from the company. And so basically, what we said is, we're gonna wait until we get to the stage where some of our companies have VP of operations, and those VP of operations have a few direct reports, and then we're gonna work with them to figure out how we can measure what they're doing, both to make sure that they are having the impact that they want, because all of our founders really care about that. And to make sure that we are able to sort of gut check our thesis of the impact that we're having. The climate companies are just the easiest because you can literally just look at like, what are they displacing? You know, if they're sequestering, what are they sequestering? And so yeah, we're now at the stage where we have a few startups that have sort of grown up to where they have a VP of ops and the VP of ops has a few direct reports. And so that now that's a conversation we're starting to have with our more mature companies, but we're only ever going to do it for companies that have the capabilities to think about those things without it being an

SPEAKER_244: existential threat to the founders time. Yep. I like to refer to time as unobtainium, the most valuable substance in the universe that cannot be created, you can't make more of it.

SPEAKER_82: Yeah, it's not renewable. Yeah. Energy is personal energy. Yes. Time. No. Yeah, exactly. That's sure. Are you in any life extension companies? Because that weirdly seems to be the memetic move

SPEAKER_213: of the Yeah, we are. I mean, are you a big? Yeah, we have a couple companies that are working on ways of extending healthspan. So for sure. Yeah, isn't that potentially also awful for climate? So, I mean, if all that happens, if all if everything else stays equal, and people start living longer, yes. But I think there's an interesting philosophical question here, which is like, why do the people in power not care so much about the impending climate crisis?

SPEAKER_307: Right? Like we have a ton of people in Congress, because it's someone else's problem. And I hate

SPEAKER_213: to say it, they kind of know that. Why do the young care a lot, even though the young don't normally care about these things? Because they're like, this is, we're gonna face this, this is our problem. Oh, my God, like, what's the world gonna be like in 50 years when we grow up, it might be a disaster. And so I do think that there is something to the argument, where if you if you can go to someone who's in their 60s in the halls of Congress and say, Hey, guess what, like, you might have another

SPEAKER_226: 100 years in front of you? I bet they might start caring about some of the problems that they don't

SPEAKER_18: seem to care that much about right now. Right? It's like a little bit of gymnastics, but I'm gonna give it to you. I'm gonna give it to you. Because it's true. I mean,

SPEAKER_82: nothing else has worked in terms of getting them to care. But that does raise a question that that someone actually asked me when I said I was coming to do this job, which is like, we have seen unintended consequences galore in the tech industry. Now we are going to see money go into synthetic biology and like, big bets and, and, you know, geoengineering, right, or carbon capture and sequestration. And we don't necessarily know the long term impacts of sequestration. Like, do you? Are you ever kept up at night thinking about creating more problems than you solve?

SPEAKER_213: I wouldn't say kept up at night. But yes, it's something we think a lot about, literally, and that we have had some teams that we've loved. And we did not partner with them, because there were some secondary or potentially even tertiary issues that we either felt very concerned about or didn't have enough clarity on. Yeah. It's always always a concern. I think it's a little bit assuaged when you're working on things that are solving such a massive immediate problem that, you know, you're almost like, wow, the secondary tertiary impacts would have to be like, wildly bad. And like, I can hardly even imagine what that could be to make this not worthwhile. You know, if you're developing a social media, whatever, or an NFT, whatever, it's like, the secondary impact doesn't have to be that bad to make this thing like a net negative. Because like, the net good is not, you know, it's like, maybe a little bit, maybe you're amusing people a little bit, right? When you're talking about, you know, decarbonizing industry, when you're talking about early detection of cancer, when you're talking about radically driving down the cost of food for people who are malnourished, when you're talking about connecting people don't have access to the internet. Like, are there some secondary third, like, yes, but like, the problem that you're solving is so massive, that you don't have to worry that much about those things. So we do think about them. But I think if you if you back teams that are solving important enough problems, it doesn't play into the calculus as much as otherwise might.

SPEAKER_104: Like, we should be so lucky that we run out of the algae cells that you need to create the,

SPEAKER_212: you know, yeah. There's a category of problems, we talk to our founders about them all the time, the great problems to have, right? It's like, oh, man, wow, we'd be it would be such an amazing world

SPEAKER_216: if we had that problem. And so like, let's not worry about that too much. Yep, totally. All right,

SPEAKER_82: in our remaining time, can we geek out briefly about synthetic biology? Because I do think this is like, just been bubbling up in the past couple years, there are plenty of people who are not familiar with this field, like, what are you seeing? And what is the promise? What is the biggest promise that you're

SPEAKER_211: seeing? So first, maybe we should say what is synthetic biology? We definitely should have a

SPEAKER_213: definition that we really like, which is generally synthetic biology is about taking the design, build, test, and then iterate cycle of the design of biological systems, and speeding that up, speeding that cycle up using engineering best practices. So that's that simple, right? So making engineering biology faster, using engineering principles. And why is it very exciting? It's very exciting, because it feels a lot like the internet in the mid 90s. So why do we see this explosion in internet innovation in the mid 90s? Well, it was because we had, you know, TCP, IP, FTP, we had the browser, we had a lot of fibers that were laid. And so these core infrastructural things getting put in place, made it radically easier to launch and deploy cool things on the internet. And so we just saw this explosion of innovation. A similar thing is happening right now in synthetic biology. So the core sort of components of synthetic biology are read, write, edit and design. Read typically means the genome, but it can mean other things like the proteome or the transcriptome or a bunch of cool different stuff. But if you look at the genome, which is the most important, you know, the first human genome that was sequenced cost $3 billion to do. Research scientists from 22 universities, you can now sequence full human genome for about 500 bucks, you don't need any scientists. That's pretty cool. So that's on the read side, the right side, right means, you know, typically writing DNA, you just need a team of scientists that like stitched together oligo by oligo your DNA, like literally by hand. Now you can write your DNA in code, click order and a company like twist will literally just deliver it to your door. Right. So that's been abstracted away. Edit, you used to need to, again, get a team of scientists in your own wet lab to carefully try and make a genetic edit. And you wouldn't even be sure that you made the edit that you want to make you'd be kind of a black box. Like I think I hope we made it. Now thanks to CRISPR cast systems for which Jennifer Duna won the Nobel Prize, you can very quickly and easily and accurately make edits to genomes, it's actually so easy that high school students are learning to edit yeast genomes with CRISPR kits that their teachers bought online. Wow, pretty cool. Wow. Now on the design side, a lot of what used to be in a medicinal chemist brain or biologist brain can now be done in silico cannot be done with computers. We can now take massive amounts of high quality biological data feed it into these ML algorithms and derive insight that would take a human hundreds of years to drive, which is all to say, in the last 10 years, there have been huge advancements that have reduced the cost and complexity of launching synthetic biology products and building static biology tools and products by an order of magnitude or more. And typically in any space when you reduce the cost by an order of magnitude and the time and the complexity of by an order of magnitude, you see an explosion of innovation. And that's exactly what we're seeing. And I do mean that, by the way, like, you can for what it used to take $20 million, a $20 million raise to do, you can now do in a $1 million pre seed round, they can get to the exact same result 10 years ago, 20 million now 1 million, you can get the exact same result. And so we see this as having an impact across just across every basically industry that you can imagine from food to constructions to chemicals, obviously to health. And so we have companies in our portfolio that are making carbon negative chemicals. We have companies that are that are literally developing mRNA vaccines to prevent cows from emitting methane. Like there's so many exciting things that synthetic biology can contribute, not only to health where it's, it's sort of, I think, had its heyday so far, but in terms of decarbonizing industry. So yeah, I would say we're super, super excited about synthetic biology.

SPEAKER_82: I mean, if I could take away anything, if I could distill this entire interview down to one thing,

SPEAKER_18: it would just be like, be bold, be bold. It's not that hard. You can learn it or you there's somebody out there who can learn it for you. Like my reporter brain is like, come on. Yes. No one, no one ever

SPEAKER_259: felt really bad being bold. You know, it's like at the very worst, you have a really great story.

SPEAKER_46: So I have a pitch I'm going to send you because I've been asking this exact question of like, how do I even find out if this is real? Because the technology? Yeah, the technology. Yep.

SPEAKER_213: Yeah. Oh, I think I told you we're always happy to be the outsourced sort of technical,

SPEAKER_18: you know, brain. Well, I love the 15% metric to like, that's so great. It's like, look,

SPEAKER_244: it might not work. But if it does, it changes everything. So what is the baseline for whether

SPEAKER_231: it's going to work? Exactly. And every I think it's important for like, you to really like define

SPEAKER_213: what level of technical risk you're comfortable with, right? Because like, for different VCs, it's different. Some some say like, you know, some literally have like, oh, they're like, I don't want to take any technical risk. I'm only interested in business model risk, right? Others say, actually, we don't like business model risk, but we're very comfortable with technical risk. And so it's important to get a sense of like, what level are you comfortable with? And then you just need to make sure that there are enough known unknowns that you can quantify that. Because the scary thing is when something's a science experiment and not an engineering problem, right? Science experiment. It's like, there's so many unknown unknowns that it's impossible to tell the difference

SPEAKER_216: between a five month $500,000 problem and a five year $50 million problem.

SPEAKER_242: Right. Seth Bannon, founding partner at 50 Years, an early stage VC firm based in San Francisco,

SPEAKER_35: which I'm sure all our listeners already know about. Seth, thank you so much for the time. Thanks, Molly.

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