If I was critical of USV, I would be
critical of the fact that we don't spend
enough time on the founders. I got
really lucky. I backed these two two
founders, Ron Shriber and Jordan Levy.
They were already on their second
company and I showed up at the first
board meeting and I started telling
them, "Well, I think you should do this
and I think you should do this." And
Jordan just like stopped me dead in my
tracks and he said, "If you come up here
and you do every job in the company for
a week, then we'll let you give this
advice, but not until you do that."
>> An investment we kind of we made
recently in FOMO. We first met that
company in September 2025. We decided to
pass. I remember sending them an email
begging them to angel. I think I they
had offered and then I said no cuz I was
a bigger check than I was willing to
write. It it's a hard thing in the
venture business when you miss something
and then you realize after the fact that
you made a mistake trying to get back
into the investment and the company
tripled or quadrupled in size. when we
realized we had made the mistake and
when we actually got to make the
investment being in venture capital for
40 years is I'm used to the industry
working a certain way and when somebody
comes in and disrupts it like Paul
Graham comes in and creates Y Combinator
and you know that's a that was a massive
innovation in the venture capital
industry if you're kind of stuck in your
ways you're going to look at that and
say that's dumb. I grew up in a business
that was a lot more collaborative than
the one we're in today. Now it's not
really like that anymore. And I think
you got to scrap and claw your way into
rounds now. And you can't expect other
firms to help you. I think you have to
treat every single situation kind of
like a jump ball or a rebound. And
you're going to go get it.
>> Yeah.
>> Someone's going to get it, so you're
going to get it.
>> Do you have enough material?
So, Cinnamon sprung this on me, I don't
know, 24 hours ago, and he said, "Let's
just chat with Fred." I said, "Sounds
good. Where do I start?" I sat for
myself with myself for 10 minutes, and I
thought, "Well, you know what? I always
find myself in conversations with
friends talking about a topic. It could
be equity option pools for a new term
sheet. could be topics around where
technology is going. And in the course
of just researching that topic, there's
always an ABC blog post that comes up
and and I'm like, well, I feel like I'm
always sending something. So, I went
through my texts. I literally searched
ABC, looked for the last three things
I've sent in the last week to somebody.
I think the one I sent last week was I
was having a debate with Matt Mandel
about you cited I think this you wrote
this post maybe 13 years ago. It was a
quote of a Don Valentine 2 by two.
>> Yeah. where he had he had difficult
founders, easy founders, and then like
easy to work with, hard to work with,
and then kind of like good businesses,
bad businesses. And the debate we were
having was if you look at like
entrepreneurs today, it almost feels
like tech has softened like it almost
feels like everyone is nice.
>> Yeah. This is you you're referring to a
story that Roloff Boa told me. and
Roloff who ran Sequoia for many years
recently passed the baton there to the
next generation. When he arrived at
Seoia in the mid 2000s, so-called 20
years ago, Don Valentine was still there
and Don walked him into his office and
showed him a 2x two matrix and on one
side it was good founders, great
founders and then easy to get along
with, hard to get along with. And then
he pointed to the upper quadrant which
was great founders, hard to get along
with. And he said, "We make all our
money here."
>> Yes. Um, and and Roloff told me that
story, and I can't even remember why
Roloff told me that story, but I'm sure
we were having a conversation about
working with challenging founders. I
don't think it's really so much about
nice or not nice. It's just that some
founders are stubborn and they kind of
want to do things the way they want to
do do things and they're not inclined to
explain themselves. and you just wake up
one day and they've pivoted the company
and they didn't even bother to tell you
or whatever and you're like well you
know we do own you know 10 or 15% of
this company you know but I think Don's
point was that it's those founders who
often you'll make the most money with
and just last week in preparation for
our CEO summit which we're at right now
for two days we're going to be in a
bunch of different sessions with with
our entire portfolio I was talking to
Mark Pinkis who I'm going to interview
tomorrow And one of the three things
that Mark and I are going to talk about
is what he thinks founder mode means.
And in his mind, founder mode means when
a founder can stay true to their
instincts and not let their board push
them in a direction or not let their
management team push them in a
direction, but they can will the company
to do the thing that they want. And I
think that's kind of the same thing that
Don was trying to to explain to Roloff,
which is that it's those sorts of people
that you make all the money with.
>> Do you think that still holds today?
>> I do. I do. In fact, I mean, if you look
at the the biggest characters in tech,
the ones who are making all the news
right now, they're all like that. I do I
do think that great founders um have
great conviction and great courage and
maybe are not all that great at
communicating. they know where they want
to go and they they go there.
>> Literally, I literally did an iMessage
search and I searched ABC. The second
article I'd sent, this is like maybe
eight days ago, was on types of
investors. It was like career investors
versus founder investors. It's another
decade old blog post, I think. And the
gist of your point was that there was
more and more operator and founder
investors. This is maybe 10 years ago.
Despite that being true, you yourself
were more of a career investor, and
there's still a lot of them out there.
You're basically saying, you know,
either can work. The reason I I sent
that post to someone was I think it was
in the context of myself. I was an
engineer before I joined USV but uh I've
never been an entrepreneur and you know
as I plan to continue doing venture
capital for a long time. The thing that
I it's been on my mind a lot is okay
well what are the things you need to
really work on if you're coming from an
investor angle and one of them is like
having that natural both empathy for the
founder but also uh ability to help in
some way. I I I don't think most
founders necessarily expect to get an
immense amount of help from their
investors, but it's nice to be able to
work with an entrepreneur deepway in
sport. I think that comes very naturally
like when I watch when I observe Mike or
or Jared, you know, work with an
entrepreneur, it comes from a very
different angle and there's weight to
what they're saying. Well, over time, I
imagine like you've been able to
cultivate weight and and good helpful
advice just because you've been doing it
for so long. You've seen a lot. But
early on, how did you think about that
relationship? It's a really hard thing
to do young early in your career when
you're a young venture capitalist and
you want to give a founder advice and
they look at you and they're like,"Well,
what the hell do you know?" Right? And
that's where somebody like Mike or
Jared, our partners who who have been
founders, um, have a lot of credibility
because when they tell a founder, well,
you know, I had that problem at XYZ
company and this is what we did. You
know, that's really useful for a
founder. And if you start in the venture
business, I started in the venture
business when I was 25. How old were you
when you showed up at USV?
>> 26.
>> There you go. So, and by the way, I was
a software engineer before I became a
VC. So, we have the exact same
trajectory, more or less. Yeah, it's
really, really challenging. I think that
you have to work a lot harder to
understand the business and gain the
founders's trust. If you do the work and
the founder sees you doing the work, to
get to know their team and to get to
know their business and understand their
products, really use their products, you
can earn their trust. But it doesn't it
it's not a given particularly you know
early early on in your career. So I
think you have to work harder.
>> That makes sense. Is that is that what
you felt like you did early on?
>> I got really lucky. I backed these two
two founders Ron Shriber and Jordan Levy
when they were uh when I was 29 and they
were maybe 35 or 36 and they were
already on their second company. And I
showed up at the first board meeting and
I started telling them, "Well, I think
you should do this and I think you
should do this." And Jordan just like
stopped me dead in my tracks and he
said, "Listen,
if you come up here for a week, this was
Buffalo, New York, and you do every job
in the company for a week, then we'll
let you give this advice, but not until
you do that." So, I got in a plane like,
I don't know, three or four weeks later,
and I went up there and I I did customer
support and I sat with next to the
engineers and I sat next to the
marketing team and, you know, I I I
quote unquote did the work. And then
after that they uh they were at least
willing to put up with me a little bit
more.
>> You know, as we've kind of worked on a
couple things together, you're not
always when you're giving advice, you
know, looking to give the answer. But
what one thing I find that you do really
well is clarify what people are working
on or maybe put it in terms that are are
very understandable. So I think one of
my takeaways from observing that is, you
know, it doesn't always have to be the
advice. It can always just be, you know,
if if you are doing the work, if you
understand the business and and you're
just helping talk it through, I think
you're going to land in interesting
places.
>> I do think that I have a gift um which
is I can simplify things. And one of the
things I can help founders do is is
craft sort of a a very simple story that
they can tell when they go out and raise
money. Businesses are complicated and
founders sometimes are caught up in the
weeds of their business and investors
really need a simplified version. And so
I'm pretty good at that. And and as part
of that skill, I've also got quite good
at really trying to frame what the
question is that we're trying to ask,
whether it's in a board meeting or just
a conversation. Sometimes reframing a
little bit for the founder. Oh, are you
trying to decide whether to do this
versus this? And the founder's like,
yeah, that's what I've been telling you
for 20 minutes. And I'm like, well, I
don't think we understood that, but now
that we understand that, we can, you
know, give you that advice.
>> There's another thing that's been on my
mind a lot, which is like this whole
concept of of conviction, right? I think
it's it's it's core to the top of the
funnel, the work we do, which is
actually making the investment. And you
said something to me the like maybe a
half a year ago where I was saying,
well, you know, like I've always liked
investing. I've always been like a
trader and investor. I've made angel
investments. Um, but you know, that's
like my personal capital just it's it's
it's different. I'm able to like I'm
more comfortable taking risk. And you
basically said, well, you can't really
treat it that way. You have to kind of
just think about it as one and the same.
Do you ever feel like that was something
that you wrestled with?
>> I did. It took me a while to think of
the venture capital firm's money as my
money and approach the investing that
I'm thinking of the first firm I was at,
Uklid Partners, um, approach investing
our firm's money the way I would invest
my own money because I was in the early
on in my career was hung up with
convincing my partners to do something
and you know would they like it or would
they not like it and I I kind of
ultimately realized I have to like it
first and then I have to convince them
to like it and that's what it is and I
can't really worry about whether they
like it or they don't like it. I just
have to decide if I do and then I have
to convince them. And that's the point
about conviction. And I think you can
over complicate the investment business
if you start thinking about I'm a
steward of someone else's capital or I
have partners. I need them to agree with
me. And it's really about do I think
this is a great investment. If I think
it's a great investment, then I'm going
to figure out how to make that
investment. I'm going to figure out how
to get the people I need uh to go along
with me. And that's essentially the
advice I was giving you at the time.
>> There's an investment we kind of we made
recently in FOMO. And we first met that
company in September 2025 and we had a
discussion around around the deal and uh
it was moving quickly and we decided to
pass because I had met the company and
around that same week I started using
the app. After that, I kept using the
app and I kept using it more and more
and then I was like, "Wait a second. I
think there's really something here that
I missed." And so I I sent uh Paul and
say an email. At this point, we had just
passed as a firm and I known they'd
already chosen another investor. I
didn't know which, but I knew they'
already got the deal done. So I was
like, okay, we missed our chance, but
you know, I should probably angel invest
in this thing. I I love this app. So I
remember sending them an email begging
them to angel invest. Cuz I I think I
they had offered and then I said no cuz
I it was a bigger check than I was
willing to write. But then I was using
that more and I started begging and then
it struck me as I was middle of this beg
email. I was like, wait a second like we
should be doing from USB. like if if I'm
going to get here on an angel investment
if I have this conviction I it took me a
second to like reframe I should treat it
the same way at all times right and and
then so I sent a new email that same day
saying I think there's something here I
think we missed something it's a hard
thing in the venture business when you
miss something and either you pass on it
uh and then you realize after the fact
that you made a mistake or you didn't
even pay enough attention to it and you
missed it and then you realize you made
a mistake and then trying to get back
into the investment
is is very hard. You and I pursued that
opportunity for probably 6 months before
we got the opportunity to invest in it.
And the company, I think, tripled or
quadrupled in size between when we
realized we had made the mistake and
when we actually got to make the
investment, but I'm glad we did. And and
I think, you know, credit to you for
realizing that we had messed up and made
the wrong call. I think sometimes it's
like human emotion like, "Oh, I screwed
that one up. I'll go find the next one."
And like you said, like maybe I could
just, you know, get into the next round
or whatever it is. And and we did that.
And I think we are very pleased that we
did that.
>> Yeah,
>> definitely. It was also uh
>> a lot of fun uh to try to chase
something down. We I don't know if we we
take that motion with as as many
investments at USV.
>> Well, it's kind of interesting how we
did it, right? Like we went and saw them
and we explained to them why we were
convinced that we had made a mistake and
that we really wanted to get in and
spent the time with them to con at least
convince them that we really did buy
into their vision. We went to their
holiday party. You know, I think that
was a was a lot of fun and you know, I
think they really appreciated that and
you know, it was like a lot of that
right over 3 months, 4 months, 5 months,
just really, you know, continuing to
build the relationship to the point
where, you know, we made a couple of
offers that that they said no thank you
to and didn't get upset, you know, was
were were totally, you know, gracious in
in those those interactions when they
said no thank you. And you know, over
time, you know, it worked. So I I
there's a real lesson there. Like I I
don't think that I was good at that
early in my career cuz I'm pretty
competitive and you know, when I lose
something, I kind of get a little
annoyed about it. But I think in that
moment, we really did a I think a pretty
good job of chasing it down.
>> Definitely. The the competitive comment
reminds me of another thing I've been
thinking about which is it it feels like
and I could be wrong about this. A
venture at the early stages has become
less collaborative than it once was. You
talk we often talk about how we made
this investment unis swap that was a
great investment for the firm but we
were a minority investor there. A lot of
people came into that deal. I don't see
as many deals in our portfolio that have
that structure. And I don't know if that
if you think that should shift how one
pursues venture capital. Well, you know,
I grew up in a business that was a lot
more collaborative than the one we're in
today. And so, my natural instinct has
always been syndicate investments, share
investments, and then the venture
capitalists that I share investments
with will share them back with me. And
that was the business that existed for,
you know, most of the last 40 years. But
now it's not really like that anymore.
You got to kind of scrap and claw your
way into rounds now. And you can't
expect other firms to help you. one, I
don't think they can. Uh it's not like
um a founder is going to, you know, give
an allocation to another venture firm
because some other venture firm tells
them to. They're not going to do that.
They're going to allocate it how they
want it. Um but it's also the case that
venture firms are getting larger and
larger and larger and they just have
their own needs to put large amounts of
money to work and so the business has
just gotten much much harder in that
way. So, you just have to I think you
have to treat every single situation
kind of like a jump ball or a rebound
and you're going to go get it,
>> right? You know, cuz someone's going to
get it. So, you're going to get it. You
have to win with the founder and they
have or founders and they have to decide
that they want you in the investment. We
recently made this investment in news
research, the people who make Hermes.
And we ended up not being able to lead
the most recent round they did because
they were raising so much money that we
just didn't have we couldn't write a big
enough check to lead the round.
>> U we made them an offer to lead a much
smaller round. They said no thank you.
Um and then so then we quickly went into
we got to get an allocation. And so
every chance we got, we introduced them
to other investors. We introduced them
to some corporations that we thought
would be good partners to them. And
ultimately when the round came together,
we got an allocation. So that's the way
the game is played now. And you just got
to you got to prove when the round is
going on that they want you in on their
cap table and they want you around the
company because you're going to increase
their chance of success. And if you can
do that, then you know more times than
not you can get an allocation. So it's
way way more competitive now. So let's
let's talk a little bit about you. So
you um have made the decision to stick
around at USV.
>> I basically three three years nine
months. Yeah.
>> And you came into USB I guess 26 as an
analyst and as part of our standard
analyst program which is a three-year
program. And at the end of that program,
we essentially said, you know, do you
want to stick around and grow into a
partner at USV? And you thought about
that and ultimately concluded that you
did.
>> Yeah. Well, was it's a funny exercise
actually because um you know the USV
program is is known to be a fixedterm
program and it's advertised that way up
front. So I had no qualms about that or
hesitations and and one nice thing about
that is everyone comes in very aligned
you know about you hit the 6 month out
mark or 9month out mark everyone kind of
is talking to you about like what do you
think about next how can we help you and
because of that process I actually got
to go through like a like a very
interesting exploration I I talked to I
think maybe you know 50 other venture
capital firms over the course of 6
months got to really force myself to
like evaluate you know what is out there
and every shape and size of firm I got
to see I got to see how they think I got
to see how they talk and I I learned a
ton. I mean, it just I think I came back
from that process saying, "Well, here's
what I like. Here's what I don't like."
A couple things, you know, stood out is,
you know, a lot of firms have fantastic
investors. Not all of them are
necessarily people you you want to work
with in work with day in day out.
Another thing is a lot of teams are more
collection collections of individuals
than real collaborative team
environments, which is uh not to say one
is better or worse than the other. You
know, there's firms out there that are
fantastic and they're they run very much
as solo entities and there's al also
firms have great returns in the other
direction. So, I don't think one is
better than the other, but I think it it
took me it was a it was a productive
exploration to figure out what I like
and what I don't like. And yeah, I'm
really excited by the opportunity. When
you first came into USV, you really
understood crypto, blockchain, stable
coins, DeFi, that whole world. And we
really leaned on you to be sort of a
subject matter expert there in the first
few years. Um, but we also encouraged
you to spread your wings so that you
could be a generalist because at at at
its core, USV is a generalist firm. What
would you say are the areas that you
were able to come up to a level of
expertise in over the last couple years
to kind of meet meet you where you
already were with crypto? It's a great
question. The areas that come to mind
the most are honestly areas where USV
spends time because that's where I've
been able to learn which is one is
energy. I feel like like my my
understanding of of how a lot of our
portfolio companies work and how that
space works has leveled up an immense
amount while being at USV. I was an
engineer before USV still like to play a
lot with with with uh all the tools out
there. So I think I gravitate a lot
towards like developerf facing AI tools.
And the third area which is a kind of a
newer exploration for USV is is biology.
I've increasingly spent a lot of time
there. That one's a really fun one
because um I think we all are you know
convinced and convicted that it's an
important place for us to spend time but
we haven't made that many investments
there. But you really pushed an insight
on us that has been helpful, which is
that biology is really moving from like
a wet lab type of process where
innovation happens in in a traditional
lab to one where it's really more like
software. There's large models and bi
biology is effectively becoming more
programmable. Yep.
>> And so programmable biology would be
maybe the term for the things that we're
most interested in.
>> Yeah, I think that's right. It's
becoming much more of an engineering
discipline. And I think we're seeing
that in in a lot of the entrepreneurs
we're meeting. We're meeting a lot of
entrepreneurs who don't necessarily come
from traditional bio backgrounds. And so
I I think it's really exciting. I think
it it in many ways it open up it opens
up the domain. one, we're just going to
see way more top off ofunnel drug
exploration as we're moving in into more
of an engineering discipline, but also
just like way more I think entrepreneurs
will take a stab at building because I
think it'll be more approachable to
them. Um, so I'm really excited about
that. For me, you know, I came in with a
lot of knowledge on crypto and financial
services. Took me a while to build up
that knowledge and, you know, spreading
my wings into other areas I think will
be a long exploration and a long
journey. I'm curious how you have
handled that over the years. Well, the I
learn the most from making investments.
I don't make investments to learn.
>> Um I think that's a bad reason to make
an investment. But if we make an
investment in a company in a relatively
new area for us, like when when I
invested in Coinbase back in 2012 or
whenever it was, you know, that was
>> basically introductory class in crypto
for me. and you know at at a time when
the industry was still pretty nent. And
so I I got to know a lot of the people
who were sort of the the leading
entrepreneurs in the sector and all of
the the key sort of technologies and
market opportunities. And so that was
very helpful to me. And so like if we
wanted to get deeper in programmable
biology, I think one thing that I feel
like we need to do is to to make some
investments and then that'll just
naturally lead to more or more
knowledge. We'll just get we'll be we'll
just we'll just start to learn more by
working with those companies and those
founders. I guess there's sort of like a
you know a bit of like a catch 22 which
is chicken and egg a bit when there's
areas that you know you knew when you
made for example like some of your early
investments in in energy. Is there like
an extra leap of faith there where
you're like I don't necessarily
understand all the aspects of this
domain but I'm I'm willing to take I'm
willing to like uh you know be
comfortable with those unknowns.
>> Yeah I I I I think sometimes it's better
when you know a little bit less because
you can take some leaps of faith. Like
if you think about radiant which is a
nuclear reactor company that you know I
led our I led the first round in that
company the first venture round in that
company and the idea was to make really
really small nuclear reactors 1 megawatt
nuclear reactors and to massproduce them
literally like make a factory that's
just spitting out nuclear reactors and
you know if you need 5 megawws well then
you just stack five 1 megawatt reactors
and and it was just a a very radical
idea um And you know when I talk to a
lot of sort of people who had spent 20
30 years in the nuclear industry they're
like that's but that's crazy. That's not
how reactors are built. You know we
reactors are these huge construction
projects that last you know a decade
long and they're regulated and it's it's
a very like this is just crazy idea.
But, you know, my my career is a career
where I watched, you know, computing go
from these huge mainframes down to like
phones in our pocket or, you know,
networks go from super large networks
to, you know, super micro networks. And
I just seen again and again and again
that these large centralized systems
eventually get broken down into really,
really small, much less centralized
systems. And I just thought, well, why
wouldn't that also be true of nuclear
reactors? And so I was drawn to this
idea that I think maybe had I known more
about nuclear energy, I would have
talked myself out of. So I don't think
it's necessarily a bad idea to come into
a sector a little um naive. I think too
naive is a bad idea.
>> Um but a little naive sometimes I think
can be a good idea. And I think some of
the computer scientists are coming into
biology now who are not necessarily
biology majors or biology PhDs but are
bringing a knowledge of, you know,
artificial intelligence and how you
create models and how you train models.
They're going to bring some
breakthroughs into the area of biology
that biologists couldn't have gotten
gotten on their own. Because
when you worked in an industry for 20 or
30 years, you kind of get caught up in
the way that the business works and you
it's hard for you to kind of imagine
these radical things. I mean, venture
capital for example, you know, one of
the disadvantages I have of being in
venture capital for 40 years is I'm used
to the industry working a certain way.
>> Yeah. And when somebody comes in and
disrupts it like Paul Graham comes in
and creates Y Combinator and you know
that's a that was a massive
innovation in the venture capital
industry that happened in like 2006 or
2007. Um and it really kind of reshaped
how the earliest stages of company
formation happens. You know if you're
kind of stuck in your ways you're going
to look at that and say that's dumb.
Like
>> we don't want to touch that. Yeah. and
and a lot of people that were in the
venture industry for a long time looked
at that and felt that way. But
fortunately, you know, we didn't and we
embraced that. Um, and now, you know,
there's a lot of new stuff happening in
venture as well. It's important to be um
open-minded, I think.
>> I mean, speaking of that, I would say
there's a couple major shifts that have
happened in the last 10 years. Um I'd
say andre was probably the first to do
it which was really pursue venture
capital as a business really scaling to
touch every part part of the stack of
business and uh many people would say
that you know that trend of larger firms
more capital has created sort of a
bifurcation where it's really hard to
play in the middle in maybe the middle
looks like not to put a number on it but
like you know you're not a small fund
but you're not a mega fund and the mega
fund can kind of throw their weight
around in in unique ways and small funds
can stay small and and USV you we're
we're, you know, gravitating not exactly
to the middle. I'd say we're still on
the smaller side for a lot of the
industry, but I'm curious kind of how
you you think about when these
innovations come. You're trying to stay
open-minded. Uh but you also don't want
to play everyone else's game.
>> The institutionalization of venture
capital that Andre Horowitz, you know,
really led um is a fundamental change to
the business and one that I think, you
know, is going to be long lasting. And
I'm not convinced that any
there's any size venture firm that isn't
at some level at risk because there's
nothing stopping, you know, a firm that
manages, you know, 50 billion or 100
billion from making a seed investment.
They they may talk themselves out of it
because they're like, well, how could a
million dollar seed move the needle for
us? But, you know, they could have scout
programs. they could they could do seed
in ways that maybe is a more scalable
way to do it. I think it's it's the new
normal and that's how the venture
business is organized and the largest
players and the largest platforms have
the most market power and I think that
for a smaller firm like USV I think we
have to be honest with ourselves that
we're at a competitive disadvantage with
them in many ways getting bigger
probably is a logical move but it's hard
to get a little bigger right cuz they
raise capital at a scale that we don't
raise capital at and they, you know, are
organized at a scale that we're not
organized. So, you know, I don't think
it would be simple for us to to to copy
what they've done. And I'm I'm not sure
it would be healthy for us to do that,
but I do think it's it it changes the
competitive dynamic in a way that
doesn't necessarily favor us. And do you
think like if you were, you know, if
you're USV or advising a manager and you
take this dynamic and you want to create
an advantage position for yourself, you
know, one thing that we've found, I
think at USV, we we find ourselves going
earlier.
>> Right.
>> Right. Do you think that's that's
probably the main answer?
>> I think go earlier,
domain knowledge, become a recognized a
recognized expert in a domain. Um, so
that founders look at you and like, oh,
I want that person. They really know my
market really well. And I think also
maybe willing to deal with some things
that you know maybe have a few
complications on them. You know that
could be a regulatory complication or it
could be you know a geographic
complication or something where a big
platform might struggle a little bit uh
cuz it's not you know a strike right
down the middle.
>> Um so we you know you mentioned APD
>> uh they've rebranded to Panandina.
>> Panandina they changed their name. Well,
the the P uh the P in Pandino APD was a
Torid Pandina. They dropped they dropped
the A.
>> So, it's Pandina. Y even I can say that.
Um so, that's a company in Colombia. I I
think the there's plenty of large
platforms that would be comfortable
investing in Colombia, but you know,
maybe not, you know, in the trenches
kind of work in the market quite the way
that you know, we we have now in that
company we have Audi, we have Somos, and
we have Penadino. We had three companies
in Colombia. Now, you know, I don't
think we're going to be opening a a a
Medaheen office, but um you know, uh I
think geography of that sort can be a
little bit of an advantage, too. The
geography piece is really interesting to
me, you know, because we're going
through a period of immense uh price
inflation uh valid or not in the venture
industry. And uh it's largely centered
around very known pockets of talent. Um
I think you know people will cite if you
just look year over year and just if you
use YC as kind of a you know a market
benchmark we're like 3x the seed prices
we were about 2 and a half years ago
maybe even 4x now. And so the geography
is interesting because there's I think a
lot of people are looking around
thinking okay this math pencils if if
you know if your business is a trillion
dollar outcome.
>> I I I I know where you're going with
this. I'm going to interrupt you because
um I wanted to share with you this thing
that I was thinking about. So, we have
two companies that are existing USV
portfolio companies that recently gave
us updates and they have businesses that
are growing very quickly now. And when I
asked them, you know, what kinds of
margins were they making, you know, on
like 30 million of revenue, they were
producing like $25 million worth of
profit. Like I cannot remember a time
when we had companies who were
generating like EBIDA profits not not
gross margins not even like contribution
but like Ebida margins of like 80 or
90%. Now part of it is that they don't
have to build large software engineering
teams anymore because they're using uh
all the gentic coding techniques and you
know marketing has become maybe a little
bit more automated. you know, they're
not don't have large sales forces.
Customer support now is largely
automated. You know, if companies truly
are a multiple of cash flow and we just
saw an order of magnitude growth in how
much margin a company can generate out
of revenue, then maybe an order of
magnitude bump in valuations
does make sense. That that's very fair.
the in one of those examples you gave,
you know, when you have these businesses
that are cash flowing really well out of
the gates, uh, one of them is actually
debating whether or not they should even
raise equity. Um, and I think
historically, you know, we've had an
aversion to companies taking on debt
unnecessarily. It usually, you know,
tends to be tends to cause a lot of pain
down the line. Do you think more
entrepreneurs should or will uh pursue
different equity structures?
>> I think it depends on what you're going
to use the capital for. If you if you're
not losing money and you don't have any
losses to fund, there's there's a
question about why should I raise
capital at all? But companies do want to
um get rerated from a valuation spec
perspective from time to time um because
they might want to do acquisitions or
they might want to make some hires and
they want to be able to, you know, have
valuable stock to recruit to attract the
right people. To me, it's not so much a
question of debt as coming up with new
ways to raise capital that maybe are not
as dilutive. So, you know, maybe more
kind of secondary uh transactions, get
new names on the cap table, get, you
know, a new valuation, but maybe just
raising a bunch of money to just have it
go sit in a bank doesn't make a lot of
sense. So, I I do think we're going to
see that change over time if these
companies can just produce, you know, a
lot of cash flow. Like, they're going to
we're going to have to rethink financing
markets. I was talking to a friend of
mine who's the chairman of a company
that's about to go public. I can't say
the name of the company because it's in
its quiet period. He told me the entire
IPO is going to be secondary.
>> Wow.
>> No primary whatsoever. Now, we played
around with direct listings for a while
that were a version of that. But there
was a bunch of things about direct
listings that I think have created some
issues. So, this is going to be a
traditional IPO, but all the capital is
going to go to selling shareholders who
are going to be listed in the S1 as
selling shareholders. And so, it's it's
just going to be pure secondary.
You used to never see that, you know,
and still I think it's kind of rare, but
maybe we'll see that more over time as
we get these kinds of companies.
>> This has popped up another question in
my head which is uh you're on a number
of public company boards and have been
and you also see in late stage private
companies. There's an ongoing debate
really, you know, the last couple
decades around the trend line in terms
of companies going public, staying
private, right?
>> Um there's a side discussion probably to
be had here around everything coming on
chain, but we don't we don't want to get
there right away. question in my head is
where do where do you think the
incentives are going over time? You
know, you have folks like Stripe who I
don't really see them ever going public
or at least not anytime soon. And
they've been able to demonstrate that
it's created a lot of advantage for
them. And then also you have you have
companies like SpaceX coming out and and
able to pay, you know, instantly 60
billion for an asset. Uh and in my
estimation, a lot of that market power
came from the fact that they were public
and had liquid liquid tradable shares.
like the price you can wield for um
acquisitions probably shifts when people
are getting liquid stock. I'm curious,
you know, in your view if you have if
you care at all with the companies you
work with about whether they, you know,
go public or not, when they're at when
they're ready for it. Um if you think
it's healthier to be have more companies
in the public markets. You said an
important thing when they're ready for
it. And ready for it means that they can
>> deal with the burdens of being a public
company, which is um there's a bunch of
legal and financial obligations that you
have to your shareholders that require,
you know, beefed up systems, you know,
certain kinds of people that in the
accounting and legal department and just
a just a way of running the business.
you know, a lot of the companies in our
portfolio who are here this these two
days, they can't do that. But I think
when you get to that point, I think
there's a real benefit to being public.
There's downside, of course. Um, there's
shareholder lawsuits and there's
regulation by the SEC and a lot of
things that, you know, some founders
maybe don't want to deal with. But I
think the benefit of having a very broad
and diverse shareholder base where
anybody could wake up today and say, "I
want to buy SpaceX." and they could go
buy SpaceX. Um, in the same way that
anybody who wanted to buy Hyperlid like
you did convinced us and we went and
bought it, right? Boom. We were a
Hyperlid shareholder. We didn't have to
convince anybody, right? We you don't
have to go to Elon Musk and say, "Let me
buy some shares of SpaceX." No, you just
go to the public markets and buy them.
>> I think that's really powerful and that
way anybody can be a shareholder in your
company.
>> I think that's better.
>> I'm biased to think so as well. the you
know it's it's been interesting to see
more and more businesses you know we've
gone we've seen every side of the
experiment in crypto right where people
you know issued tokens which which um
you know were meant to give ownership to
more participants in in a network and
we've seen when that works well and when
doesn't work well and it'll be
interesting to see you know like what
types of businesses are able to wield
the advantage of hey I actually want to
bring more people around the table I
don't know I think a lot of consumer
businesses I think will probably
continue to do so
>> I think I think it's really important as
a consumer business. It's a big branding
moment. It's a big coming out moment.
And you got to have a really good reason
not to do to not do it. I mean, Stripe
obviously has some good reason that they
don't want to be public. I I can't
fathom it, but I'm sure they must have
one. If I was the founder and CEO of a
company, I think I would be inclined to
take it public. talking about market
shifts a second ago. The other market
shift I want to touch on was in my view
the pace at which AI has changed and how
much dynamism it's created in the market
has led to a market that I think always
at the early stages of venture capital
majority of venture capital firms that I
interact with have a lens on the
business on any business that is very
very founder centric to the point where
you know when I speak to people about
discussions like amongst firms inside
the firm a lot of air time is spent
dissecting the qualities of an
entrepreneur
It's not something we do a particularly
a whole lot of at USV and we have a lot
of maybe two decades of muscle memory of
really spending immense amounts of time
dissecting businesses, markets, themes
and it's hard for me to say it's a shift
because you probably have a better lens
on that whe that's changed over time but
the three years that I was in venture
capital I felt like it was more
founderentric than ever in terms of how
people approached making investments
thinking about businesses. If I was
critical of USV, I would be critical of
the fact that we don't spend enough time
on the founders. I I actually think that
the magic happens when you get the right
market and the right founders.
I've been in the right market with the
wrong founders, bad place to be. I've
been in the wrong market with the right
founders. That's not a good place to be
either. Some founders can pivot out of
that into a good market and I have seen
that. But many times they they just say,
"You know what? I'm done. This wasn't
the right market. The Farcaster founders
would be an example of that." You know,
I think Dan's a really high quality
founder, but he was working in a market
there was no there there. And he's now
working on Tempo, which maybe is going
to be a better platform for him. So, you
really got to get both right. And when
you get the market right and the founder
or founders right, that's where the
biggest outcomes are. I think you're
right. USV has traditionally been very
good at getting to the right markets and
also the right sides of the right
markets. So, it's not just right to go
into e-commerce, but the best businesses
in e-commerce were marketplaces like
Shopify and Etsy. And so, not only did
we get to e-commerce correctly, we got
to the right side of e-commerce, but I
think that we have
maybe a little bit less great of a
record on um getting to the right
founders. Um, and I think some of it is
that we for a long time would only back
one founder in a market. And I think
that's not good. And we've made that
change now. So that typically if we like
a market we want to make five or 10 bets
that I think frees us up to maybe pick
more founder teams and then you know
more likely that we'll get with the
right one. Yep.
>> On that theme, another thing that's been
in my head is USV sort of became
synonymous in an earlier era with the
concept of network effects, which is
sort of an emerging property of internet
businesses. And it's become an
organizing principle for for us. Not to
say every business we invest in has
network effects. We often use that lens
of how can this be really long-term
defensible and grow organically. Uh and
network effects are a great way to have
both of those things. Eli Gil once made
a comment in some post a long time ago
where he said there's three types of
founders. I think he said like there's
two types who are basically you know
like maybe like a um a missionary um you
know some other great type founder and
then the third founder was a network
effect founder and I don't know if he
meant that in a positive or negative way
but uh basically the implication is you
know certain businesses can support
themselves or maybe you know the the
profile of founders doesn't need to be
the same uh for a business
>> well you don't need like a hard charging
enterprise salesoriented CEO to build
you know an internet marketplace so I
think he's right about that and the
right kind of person to build an
internet marketplace might be very
different than the hard charging
enterprise sales type person. So I think
that's true. I would challenge you to
find um a great exit that we've had at
USV that didn't have network effects.
That doesn't mean that there aren't
great companies that don't have network
effects, but I think most of our great
successes at USV have some form of
network effects in them.
>> I think that's probably right. Uh, and I
I honestly think they're often more
emergent than we realize. You know, we
have businesses like even like a
Duolingo that looks like a single player
app, but the network effect that ended
up being they have this immense learning
loop that they're on. And I don't know
if that always presented itself on day
one.
>> Well, I mean at our CEO summit three or
four years ago, someone asked Luis Vanon
how much AI they use in the product and
he said, "Well, really only one
algorithm. We just look at what is what
is the most likely thing to make the
user get the next question and then the
next question and the next question
right to retain them as long as possible
and whatever that is that's what we do
and the point is the more users they
have using the product the more accurate
they can be in that prediction so it is
it is ultimately a data network effect
as Brad would say
>> and and it's it's likely I mean another
thought on that theme is I've been
thinking okay well network effects are
so powerful right we've seen You know,
Twitter's like a cockroach. You can't
kill that thing, right? That also means
that as we build as we built out the
early internet networks, it's hard for
new networks to form, right? They crowd
out other networks because they're so
strong. And one thought is, okay, have
we built all of the key networks is is
one thought. The other thing is maybe
maybe every business is an AI business
and AI the fuel for AI is data. So it's
just a new form of network effect, which
is every business will have either a
strong or weak data network effect.
>> I don't think so. Because if you look at
if you look outside of AI, what are the
some of the most exciting companies that
have kind of broken out over the last
two or three years? Calcy and Poly
Market network effect businesses. Any
any financial marketplace is a network
effect business. It's a liquidity
business, you know, and so those are
network effect businesses. I don't think
we've seen the last network get created.
I I I think it may be harder. Well, one
thing I think we have learned the hard
way and just to what mistakes have we
made in the last three or four years. I
think we thought that AI or crypto or
some other new innovation would undo the
network effects that were built by these
large web 2 um success stories like
Twitter and Facebook and Tik Tok and
whatever. And I think that has proven to
be incorrect. those businesses are not
going to get killed so easily
>> when you're constructing a new network
like where I'm and this is really kind
of key to how we're thinking about a lot
of AI these days which is like we've had
almost exclusively single player
products to date got to a billion users
being entirely single player and we're
seeing you know maybe new surfaces pop
up that can become more multiplayer and
the question in my mind is like um what
does it look like to either bootstrap of
another network, take on another network
in this new age.
>> Well, if you think about, you know, what
is what is a what does a multiplayer
agent look like? So, it's not I mean, at
USV, we have multiplayer agents. So, you
know, the agents that we use at USV,
Parker and Ruth and Penny, you know, we
we give our agents names and email
addresses. Um, you and I use them in a
multiplayer, you know, uh because we're
all connected to these agents. And so I
could ask Parker a question and when
Parker responds you see the response and
then you could reply to it. So we're
using email or you know messengers
effectively as the way to have a
multiplayer relationship with an agent.
So I actually think that probably does
exist in a lot of enterprises you know
particularly like maybe more cutting
edge techcentric or finance centric uh
small businesses like ours. But on the
consumer side,
it's not obvious to me exactly how you
and I would share an agent and why and
would that actually be be a good idea.
It's pretty obvious to me how my wife
and I would share an agent. That is an
opportunity. Now, the question is, is
that just an opportunity for WhatsApp
and Facebook Messenger and Apple with
iMessage? Um, where most most husbands
and wives have a preferred vehicle to
communicate you and your girlfriend. Do
they do you use a preferred app to
communicate?
>> iMessage. Yeah.
>> So, it would seem to me if I owned one
of those things, I would try to figure
that out. That's a little surprising to
me why Facebook and Apple and and, you
know, Telegram haven't figured that out.
That's a big opportunity for them. Now,
someone could come in from some other
angle and get there. It's a little
harder though because my wife and I
already have a place where we
communicate. So, the most obvious place
for this agent that we're going to share
would be right there.
>> You know, you're a Hermes user,
>> right?
>> Um, and you probably interact with it
through Telegram.
>> I do.
>> Do you give it most of your data?
>> No. Um, I don't. I'm a little paranoid
about this. So, I I have I don't have
Hermes running in the cloud. I have
Hermes running on a essentially not
really an airgapped Mac Mini, but let's
just call it a factory reset Mac Mini
that I've been very careful about what
services it has. And that way I know
exactly what of my data my Hermes agent
has and what it doesn't. And I, you
know, I'm just a little paranoid. One
thing that crypto has really taught me
is that bad people can get into your
really easily if you let them. Like
I'm really lucky that I've I mean, you
know, but one time I got hacked because
you helped me get unhacked.
>> But the total amount of financial losses
I've been hacked like four or five times
for me has been in the singledigit
10,000s, right? So maybe I've lost 10 or
$20,000, which is a lot of money. Like
for some people it would be like their
entire life savings. I I I I don't want
to trivialize that, but but it has
really made me kind of I wouldn't call I
wouldn't say I'm paranoid, but I'm
really well aware that like I got to
lock my down.
>> Yes. Well, the the reason I ask is
because, you know, I've been
interviewing a bunch of people uh
talking to people who are playing with
all these agents. You know, we've been
playing with Instinct and Tesla in our
portfolio in town and and the thing that
keeps coming up as people border onto
personal use cases is is this data
question, right? And I think people have
a lot of a lot of fear. And someone said
to me yesterday, you know, the the thing
I want really is for the people who
already have my data to make the most of
it.
>> Well, this is exactly right. Right. Like
why do I want to give some random agent
access to my Amazon? Why wouldn't Amazon
just give me an agent that does that for
me? Right. Like and then Coinbase gives
me an agent for my Coinbase and JP
Morgan gives me an agent for my JP
Morgan. And then I don't have to
permission any agents to those things.
Yeah. Yeah. I would feel a lot safer in
that world.
>> And then you you also want there'll need
to be some connective tissue here
because you'll want your Hermes or other
agents to be able to communicate with
those other
>> But that that to me seems like a nice
abstraction layer, right? So my in
theory the Amazons and JP Morgans and
Coinbases the world will
architect their agents that they know
not to give out any of my stuff but they
can at least report up to some agent and
at least give them data.
>> Yeah.
>> You know and then I could have like an
agent that manages all these sub agents
for me but does doesn't actually have
access into my systems.
>> That's right. um that feels a little
complex and like what something someone
like me might want. But I don't know
that that's mainstream. Like there's a
part of me which says like the
mainstream person doesn't have this
problem.
>> Yeah.
>> Yeah. Yeah. The main person might not
even have this fear. I mean I think over
and over time and time again I think
people will will jump over any hoop if
they if they have magic at the other
end.
>> People will do the most convenient
thing.
>> Yeah. Yep. Yep.
>> Do you have enough material?
>> All right. Uh we got 100 plus CEOs out
there uh wanting to network and schmoo
for the next two days. I think we got to
get going on that.
>> Awesome. Let's wrap.