WEBVTT

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If I was critical of USV, I would be
critical of the fact that we don't spend

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enough time on the founders.
I got really lucky. I backed these two two

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founders, Ron Shriber and Jordan Levy.

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They were already on their second
company and I showed up at the first

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board meeting and I started telling them,
"Well, I think you should do this

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and I think you should do this."
And Jordan just like stopped me dead in my

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tracks and he said, "If you come up here
and you do every job in the company for

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a week, then we'll let you give
this advice, but not until you do that."

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>> An investment we kind of we made
recently in FOMO. We first met that

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company in September 2025. We decided
to pass. I remember sending them an email

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begging them to angel. I think I they
had offered and then I said no cuz I was

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a bigger check than I was willing
to write. It it's a hard thing in the

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venture business when you miss something
and then you realize after the fact that

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you made a mistake trying to get back
into the investment and the company

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tripled or quadrupled in size. when
we realized we had made the mistake and

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when we actually got to make the
investment being in venture capital for

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40 years is I'm used to the industry
working a certain way and when somebody

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comes in and disrupts it like Paul
Graham comes in and creates Y Combinator

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and you know that's a that was a massive
innovation in the venture capital

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industry if you're kind of stuck in your
ways you're going to look at that and

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say that's dumb. I grew up in a business
that was a lot more collaborative than

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the one we're in today. Now it's not
really like that anymore. And I think

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you got to scrap and claw your way into
rounds now. And you can't expect other

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firms to help you. I think you have
to treat every single situation kind of

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like a jump ball or a rebound.
And you're going to go get it.

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>> Yeah. >> Someone's going to get it,
so you're going to get it.

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>> Do you have enough material?

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So, Cinnamon sprung this on me, I don't

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know, 24 hours ago, and he said, "Let's
just chat with Fred." I said, "Sounds

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good. Where do I start?" I sat for myself
with myself for 10 minutes, and I

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thought, "Well, you know what?
I always find myself in conversations with

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friends talking about a topic. It could
be equity option pools for a new term

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sheet. could be topics around where
technology is going. And in the course

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of just researching that topic, there's
always an ABC blog post that comes up

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and and I'm like, well, I feel like
I'm always sending something. So, I went

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through my texts. I literally searched
ABC, looked for the last three things

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I've sent in the last week to somebody.

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I think the one I sent last week was I
was having a debate with Matt Mandel

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about you cited I think this you wrote
this post maybe 13 years ago. It was a

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quote of a Don Valentine 2 by two.

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>> Yeah. where he had he had difficult

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founders, easy founders, and then like
easy to work with, hard to work with,

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and then kind of like good businesses,
bad businesses. And the debate we were

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having was if you look at like
entrepreneurs today, it almost feels

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like tech has softened like it almost

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feels like everyone is nice.

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>> Yeah. This is you you're referring to a

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story that Roloff Boa told me. and

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Roloff who ran Sequoia for many years

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recently passed the baton there to the

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next generation. When he arrived at

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Seoia in the mid 2000s, so-called 20

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years ago, Don Valentine was still there

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and Don walked him into his office and

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showed him a 2x two matrix and on one

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side it was good founders, great
founders and then easy to get along

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with, hard to get along with. And then
he pointed to the upper quadrant which

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was great founders, hard to get along
with. And he said, "We make all our

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money here." >> Yes. Um,
and and Roloff told me that

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story, and I can't even remember why
Roloff told me that story, but I'm sure

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we were having a conversation about
working with challenging founders. I

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don't think it's really so much about

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nice or not nice. It's just that some

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founders are stubborn and they kind of

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want to do things the way they want to

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do do things and they're not inclined to

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explain themselves. and you just wake up
one day and they've pivoted the company

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and they didn't even bother to tell
you or whatever and you're like well you

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know we do own you know 10 or 15% of

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this company you know but I think Don's
point was that it's those founders who

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often you'll make the most money with
and just last week in preparation for

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our CEO summit which we're at right
now for two days we're going to be in a

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bunch of different sessions with with
our entire portfolio I was talking to

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Mark Pinkis who I'm going to interview
tomorrow And one of the three things

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that Mark and I are going to talk about
is what he thinks founder mode means.

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And in his mind, founder mode means when

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a founder can stay true to their

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instincts and not let their board push
them in a direction or not let their

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management team push them in a direction,
but they can will the company

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to do the thing that they want. And I
think that's kind of the same thing that

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Don was trying to to explain to Roloff,
which is that it's those sorts of people

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that you make all the money with.

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>> Do you think that still holds today?

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>> I do. I do. In fact,
I mean, if you look

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at the the biggest characters in tech,
the ones who are making all the news

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right now, they're all like that. I do I

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do think that great founders um have

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great conviction and great courage
and maybe are not all that great at

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communicating. they know where they
want to go and they they go there.

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>> Literally, I literally did an iMessage
search and I searched ABC. The second

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article I'd sent, this is like maybe

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eight days ago, was on types of

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investors. It was like career investors

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versus founder investors. It's another
decade old blog post, I think. And the

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gist of your point was that there
was more and more operator and founder

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investors. This is maybe 10 years ago.

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Despite that being true, you yourself
were more of a career investor, and

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there's still a lot of them out there.

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You're basically saying, you know,
either can work. The reason I I sent

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that post to someone was I think it
was in the context of myself. I was an

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engineer before I joined USV but uh I've
never been an entrepreneur and you know

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as I plan to continue doing venture
capital for a long time. The thing that

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I it's been on my mind a lot is okay
well what are the things you need to

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really work on if you're coming from an
investor angle and one of them is like

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having that natural both empathy for the

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founder but also uh ability to help
in some way. I I I don't think most

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founders necessarily expect to get
an immense amount of help from their

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investors, but it's nice to be able
to work with an entrepreneur deepway in

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sport. I think that comes very naturally
like when I watch when I observe Mike or

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or Jared, you know, work with an
entrepreneur, it comes from a very

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different angle and there's weight
to what they're saying. Well, over time, I

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imagine like you've been able
to cultivate weight and and good helpful

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advice just because you've been doing
it for so long. You've seen a lot. But

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early on, how did you think about that
relationship? It's a really hard thing

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to do young early in your career when
you're a young venture capitalist and

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you want to give a founder advice and they
look at you and they're like,"Well,

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what the hell do you know?" Right?
And that's where somebody like Mike or

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Jared, our partners who who have been
founders, um, have a lot of credibility

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because when they tell a founder, well,
you know, I had that problem at XYZ

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company and this is what we did.
You know, that's really useful for a

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founder. And if you start in the venture
business, I started in the venture

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business when I was 25. How old
were you when you showed up at USV?

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>> 26. >> There you go.
So, and by the way, I was

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a software engineer before I became a VC.
So, we have the exact same

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trajectory, more or less. Yeah, it's
really, really challenging. I think that

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you have to work a lot harder
to understand the business and gain the

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founders's trust. If you do the work and
the founder sees you doing the work, to

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get to know their team and to get to know
their business and understand their

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products, really use their products, you

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can earn their trust. But it doesn't it

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it's not a given particularly you know
early early on in your career. So I

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think you have to work harder.

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>> That makes sense. Is that is that
what you felt like you did early on?

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>> I got really lucky. I backed these two

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two founders Ron Shriber and Jordan Levy

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when they were uh when I was 29 and they
were maybe 35 or 36 and they were

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already on their second company. And I
showed up at the first board meeting and

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I started telling them, "Well,
I think you should do this and I think you

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should do this." And Jordan just like
stopped me dead in my tracks and he

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said, "Listen,

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if you come up here for a week, this was

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Buffalo, New York, and you do every job

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in the company for a week, then we'll

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let you give this advice, but not until
you do that." So, I got in a plane like,

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I don't know, three or four weeks later,
and I went up there and I I did customer

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support and I sat with next
to the engineers and I sat next to the

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marketing team and, you know, I I I
quote unquote did the work. And then

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after that they uh they were at least
willing to put up with me a little bit

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more. >> You know, as we've kind of worked
on a couple things together, you're not

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always when you're giving advice,
you know, looking to give the answer. But

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what one thing I find that you do really

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well is clarify what people are working

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on or maybe put it in terms that are are
very understandable. So I think one of

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my takeaways from observing that is,
you know, it doesn't always have to be the

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advice. It can always just be, you know,
if if you are doing the work, if you

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understand the business and and you're
just helping talk it through, I think

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you're going to land
in interesting places.

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>> I do think that I have a gift um which

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is I can simplify things. And one of the

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things I can help founders do is is

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craft sort of a a very simple story that

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they can tell when they go out and raise
money. Businesses are complicated and

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founders sometimes are caught up in the
weeds of their business and investors

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really need a simplified version. And so

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I'm pretty good at that. And and as part

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of that skill, I've also got quite
good at really trying to frame what the

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question is that we're trying to ask,
whether it's in a board meeting or just

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a conversation. Sometimes reframing
a little bit for the founder. Oh, are you

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trying to decide whether to do this
versus this? And the founder's like,

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yeah, that's what I've been telling you
for 20 minutes. And I'm like, well, I

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don't think we understood that, but now
that we understand that, we can, you

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know, give you that advice.
>> There's another thing that's been on my

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mind a lot, which is like this whole
concept of of conviction, right? I think

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it's it's it's core to the top
of the funnel, the work we do, which is

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actually making the investment. And you
said something to me the like maybe a

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half a year ago where I was saying,
well, you know, like I've always liked

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investing. I've always been like
a trader and investor. I've made angel

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investments. Um, but you know, that's
like my personal capital just it's it's

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it's different. I'm able to like I'm
more comfortable taking risk. And you

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basically said, well, you can't really
treat it that way. You have to kind of

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just think about it as one and the same.

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Do you ever feel like that was
something that you wrestled with?

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>> I did. It took me a while to think of

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the venture capital firm's money as my

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money and approach the investing that

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I'm thinking of the first firm I was at,
Uklid Partners, um, approach investing

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our firm's money the way I would invest
my own money because I was in the early

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on in my career was hung up with
convincing my partners to do something

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and you know would they like it
or would they not like it and I I kind of

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ultimately realized I have to like it
first and then I have to convince them

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to like it and that's what it is and I
can't really worry about whether they

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like it or they don't like it. I just
have to decide if I do and then I have

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to convince them. And that's the point
about conviction. And I think you can

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over complicate the investment business
if you start thinking about I'm a

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steward of someone else's capital or I

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have partners. I need them to agree with

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me. And it's really about do I think
this is a great investment. If I think

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it's a great investment, then I'm
going to figure out how to make that

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investment. I'm going to figure out how
to get the people I need uh to go along

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with me. And that's essentially
the advice I was giving you at the time.

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>> There's an investment
we kind of we made

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recently in FOMO. And we first met that

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company in September 2025 and we had
a discussion around around the deal and uh

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it was moving quickly and we decided
to pass because I had met the company and

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around that same week I started using
the app. After that, I kept using the

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app and I kept using it more and more
and then I was like, "Wait a second. I

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think there's really something here that I
missed." And so I I sent uh Paul and

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say an email. At this point, we had
just passed as a firm and I known they'd

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already chosen another investor.
I didn't know which, but I knew they'

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already got the deal done. So I was like,
okay, we missed our chance, but

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you know, I should probably angel invest
in this thing. I I love this app. So I

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remember sending them an email begging
them to angel invest. Cuz I I think I

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they had offered and then I said no
cuz I it was a bigger check than I was

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willing to write. But then I was using
that more and I started begging and then

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it struck me as I was middle of this beg
email. I was like, wait a second like we

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should be doing from USB. like if if I'm
going to get here on an angel investment

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if I have this conviction I it took me
a second to like reframe I should treat it

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the same way at all times right and and
then so I sent a new email that same day

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saying I think there's something here
I think we missed something it's a hard

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thing in the venture business when you
miss something and either you pass on it

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uh and then you realize after the fact
that you made a mistake or you didn't

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even pay enough attention to it and you
missed it and then you realize you made

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a mistake and then trying to get back

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into the investment

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is is very hard. You and I pursued that

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opportunity for probably 6 months before
we got the opportunity to invest in it.

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And the company, I think, tripled
or quadrupled in size between when we

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realized we had made the mistake
and when we actually got to make the

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investment, but I'm glad we did. And and

00:13:04.000 --> 00:13:06.797
I think, you know, credit to you for

00:13:06.880 --> 00:13:10.877
realizing that we had messed up and made

00:13:10.960 --> 00:13:13.997
the wrong call. I think sometimes it's

00:13:14.080 --> 00:13:18.157
like human emotion like, "Oh, I screwed
that one up. I'll go find the next one."

00:13:18.240 --> 00:13:22.877
And like you said, like maybe I could
just, you know, get into the next round

00:13:22.960 --> 00:13:24.717
or whatever it is. And and we did that.

00:13:24.800 --> 00:13:27.517
And I think we are very
pleased that we did that.

00:13:27.600 --> 00:13:30.877
>> Yeah, >> definitely. It was also uh

00:13:30.960 --> 00:13:35.517
>> a lot of fun uh to try to chase
something down. We I don't know if we we

00:13:35.600 --> 00:13:38.637
take that motion with as
as many investments at USV.

00:13:38.720 --> 00:13:41.597
>> Well, it's kind of interesting how we
did it, right? Like we went and saw them

00:13:41.680 --> 00:13:46.077
and we explained to them why we were
convinced that we had made a mistake and

00:13:46.160 --> 00:13:47.677
that we really wanted to get in and

00:13:47.760 --> 00:13:51.277
spent the time with them to con at least

00:13:51.360 --> 00:13:53.917
convince them that we really did buy

00:13:54.000 --> 00:13:58.317
into their vision. We went to their
holiday party. You know, I think that

00:13:58.400 --> 00:14:03.117
was a was a lot of fun and you know,
I think they really appreciated that and

00:14:03.200 --> 00:14:04.717
you know, it was like a lot of that

00:14:04.800 --> 00:14:07.277
right over 3 months, 4 months, 5 months,

00:14:07.360 --> 00:14:11.997
just really, you know, continuing
to build the relationship to the point

00:14:12.080 --> 00:14:13.917
where, you know, we made a couple of

00:14:14.000 --> 00:14:15.517
offers that that they said no thank you

00:14:15.600 --> 00:14:19.277
to and didn't get upset, you know, was

00:14:19.360 --> 00:14:22.317
were were totally, you know, gracious in

00:14:22.400 --> 00:14:24.717
in those those interactions when they

00:14:24.800 --> 00:14:29.757
said no thank you. And you know,
over time, you know, it worked. So I I

00:14:29.840 --> 00:14:33.917
there's a real lesson there. Like I
I don't think that I was good at that

00:14:34.000 --> 00:14:37.597
early in my career cuz I'm pretty
competitive and you know, when I lose

00:14:37.680 --> 00:14:41.197
something, I kind of get a little
annoyed about it. But I think in that

00:14:41.280 --> 00:14:45.437
moment, we really did a I think
a pretty good job of chasing it down.

00:14:45.520 --> 00:14:49.837
>> Definitely. The the competitive comment
reminds me of another thing I've been

00:14:49.920 --> 00:14:53.597
thinking about which is it it feels
like and I could be wrong about this. A

00:14:53.680 --> 00:14:57.677
venture at the early stages has become
less collaborative than it once was. You

00:14:57.760 --> 00:15:00.317
talk we often talk about how we made
this investment unis swap that was a

00:15:00.400 --> 00:15:03.277
great investment for the firm but we
were a minority investor there. A lot of

00:15:03.360 --> 00:15:05.837
people came into that deal. I don't see
as many deals in our portfolio that have

00:15:05.920 --> 00:15:09.517
that structure. And I don't know if that
if you think that should shift how one

00:15:09.600 --> 00:15:14.157
pursues venture capital. Well, you know,
I grew up in a business that was a lot

00:15:14.240 --> 00:15:18.397
more collaborative than the one we're
in today. And so, my natural instinct has

00:15:18.480 --> 00:15:23.037
always been syndicate investments,
share investments, and then the venture

00:15:23.120 --> 00:15:24.477
capitalists that I share investments

00:15:24.560 --> 00:15:26.397
with will share them back with me. And

00:15:26.480 --> 00:15:30.237
that was the business that existed for,

00:15:30.320 --> 00:15:34.397
you know, most of the last 40 years.
But now it's not really like that anymore.

00:15:34.480 --> 00:15:36.157
You got to kind of scrap and claw your

00:15:36.240 --> 00:15:38.397
way into rounds now. And you can't

00:15:38.480 --> 00:15:41.517
expect other firms to help you. one, I

00:15:41.600 --> 00:15:44.317
don't think they can. Uh it's not like

00:15:44.400 --> 00:15:49.197
um a founder is going to, you know,
give an allocation to another venture firm

00:15:49.280 --> 00:15:51.837
because some other venture firm tells
them to. They're not going to do that.

00:15:51.920 --> 00:15:56.077
They're going to allocate it how they
want it. Um but it's also the case that

00:15:56.160 --> 00:16:00.237
venture firms are getting larger
and larger and larger and they just have

00:16:00.320 --> 00:16:03.517
their own needs to put large amounts
of money to work and so the business has

00:16:03.600 --> 00:16:06.157
just gotten much much harder in that

00:16:06.240 --> 00:16:09.757
way. So, you just have to I think you

00:16:09.840 --> 00:16:12.797
have to treat every single situation

00:16:12.880 --> 00:16:16.957
kind of like a jump ball or a rebound
and you're going to go get it,

00:16:17.040 --> 00:16:19.517
>> right? You know, cuz someone's going to

00:16:19.600 --> 00:16:24.077
get it. So, you're going to get it.
You have to win with the founder and they

00:16:24.160 --> 00:16:28.557
have or founders and they have to decide
that they want you in the investment. We

00:16:28.640 --> 00:16:30.877
recently made this investment in news

00:16:30.960 --> 00:16:32.717
research, the people who make Hermes.

00:16:32.800 --> 00:16:36.157
And we ended up not being able to lead

00:16:36.240 --> 00:16:38.477
the most recent round they did because

00:16:38.560 --> 00:16:43.517
they were raising so much money that we
just didn't have we couldn't write a big

00:16:43.600 --> 00:16:44.957
enough check to lead the round.

00:16:45.040 --> 00:16:47.197
>> U we made them an offer to lead a much

00:16:47.280 --> 00:16:49.437
smaller round. They said no thank you.

00:16:49.520 --> 00:16:52.157
Um and then so then we quickly went into

00:16:52.240 --> 00:16:56.957
we got to get an allocation. And so
every chance we got, we introduced them

00:16:57.040 --> 00:17:00.717
to other investors. We introduced them
to some corporations that we thought

00:17:00.800 --> 00:17:04.957
would be good partners to them. And
ultimately when the round came together,

00:17:05.040 --> 00:17:07.277
we got an allocation. So that's the way

00:17:07.360 --> 00:17:08.957
the game is played now. And you just got

00:17:09.040 --> 00:17:12.397
to you got to prove when the round is

00:17:12.480 --> 00:17:16.077
going on that they want you in on their

00:17:16.160 --> 00:17:20.957
cap table and they want you around the
company because you're going to increase

00:17:21.040 --> 00:17:25.837
their chance of success. And if you can
do that, then you know more times than

00:17:25.920 --> 00:17:29.517
not you can get an allocation. So it's
way way more competitive now. So let's

00:17:29.600 --> 00:17:33.117
let's talk a little bit about you.
So you um have made the decision to stick

00:17:33.200 --> 00:17:39.037
around at USV.
>> I basically three three years nine

00:17:39.120 --> 00:17:43.437
months. Yeah. >> And you
came into USB I guess 26 as an

00:17:43.520 --> 00:17:45.997
analyst and as part of our standard

00:17:46.080 --> 00:17:48.477
analyst program which is a three-year

00:17:48.560 --> 00:17:52.637
program. And at the end of that program,

00:17:52.720 --> 00:17:55.597
we essentially said, you know, do you

00:17:55.680 --> 00:18:00.717
want to stick around and grow into
a partner at USV? And you thought about

00:18:00.800 --> 00:18:02.637
that and ultimately
concluded that you did.

00:18:02.720 --> 00:18:07.117
>> Yeah. Well, was it's a funny exercise
actually because um you know the USV

00:18:07.200 --> 00:18:10.717
program is is known to be a fixedterm
program and it's advertised that way up

00:18:10.800 --> 00:18:14.877
front. So I had no qualms about that or
hesitations and and one nice thing about

00:18:14.960 --> 00:18:18.717
that is everyone comes in very aligned
you know about you hit the 6 month out

00:18:18.800 --> 00:18:21.597
mark or 9month out mark everyone kind of
is talking to you about like what do you

00:18:21.680 --> 00:18:25.197
think about next how can we help you
and because of that process I actually got

00:18:25.280 --> 00:18:28.637
to go through like a like a very
interesting exploration I I talked to I

00:18:28.720 --> 00:18:31.677
think maybe you know 50 other venture
capital firms over the course of 6

00:18:31.760 --> 00:18:35.597
months got to really force myself to like
evaluate you know what is out there

00:18:35.680 --> 00:18:38.877
and every shape and size of firm I got
to see I got to see how they think I got

00:18:38.960 --> 00:18:42.717
to see how they talk and I I learned
a ton. I mean, it just I think I came back

00:18:42.800 --> 00:18:45.437
from that process saying, "Well, here's
what I like. Here's what I don't like."

00:18:45.520 --> 00:18:48.637
A couple things, you know, stood out is,
you know, a lot of firms have fantastic

00:18:48.720 --> 00:18:51.837
investors. Not all of them are
necessarily people you you want to work

00:18:51.920 --> 00:18:53.277
with in work with day in day out.

00:18:53.360 --> 00:18:57.517
Another thing is a lot of teams are more
collection collections of individuals

00:18:57.600 --> 00:19:01.517
than real collaborative team environments,
which is uh not to say one

00:19:01.600 --> 00:19:04.877
is better or worse than the other.
You know, there's firms out there that are

00:19:04.960 --> 00:19:08.877
fantastic and they're they run very
much as solo entities and there's al also

00:19:08.960 --> 00:19:11.757
firms have great returns in the other
direction. So, I don't think one is

00:19:11.840 --> 00:19:14.317
better than the other, but I think it
it took me it was a it was a productive

00:19:14.400 --> 00:19:16.717
exploration to figure out what I like
and what I don't like. And yeah, I'm

00:19:16.800 --> 00:19:18.317
really excited by the opportunity. When

00:19:18.400 --> 00:19:21.757
you first came into USV, you really

00:19:21.840 --> 00:19:24.317
understood crypto, blockchain, stable

00:19:24.400 --> 00:19:29.117
coins, DeFi, that whole world. And we

00:19:29.200 --> 00:19:31.357
really leaned on you to be sort of a

00:19:31.440 --> 00:19:33.277
subject matter expert there in the first

00:19:33.360 --> 00:19:37.277
few years. Um, but we also encouraged

00:19:37.360 --> 00:19:39.997
you to spread your wings so that you

00:19:40.080 --> 00:19:42.317
could be a generalist because at at at

00:19:42.400 --> 00:19:44.877
its core, USV is a generalist firm. What

00:19:44.960 --> 00:19:47.837
would you say are the areas that you

00:19:47.920 --> 00:19:52.557
were able to come up to a level
of expertise in over the last couple years

00:19:52.640 --> 00:19:56.237
to kind of meet meet you where you
already were with crypto? It's a great

00:19:56.320 --> 00:19:59.997
question. The areas that come to mind
the most are honestly areas where USV

00:20:00.080 --> 00:20:03.197
spends time because that's where I've
been able to learn which is one is

00:20:03.280 --> 00:20:07.357
energy. I feel like like my my
understanding of of how a lot of our

00:20:07.440 --> 00:20:10.317
portfolio companies work and how that
space works has leveled up an immense

00:20:10.400 --> 00:20:14.557
amount while being at USV. I was an
engineer before USV still like to play a

00:20:14.640 --> 00:20:18.317
lot with with with uh all the tools
out there. So I think I gravitate a lot

00:20:18.400 --> 00:20:20.557
towards like developerf facing AI tools.

00:20:20.640 --> 00:20:25.037
And the third area which is a kind of a
newer exploration for USV is is biology.

00:20:25.120 --> 00:20:28.077
I've increasingly spent a lot of time
there. That one's a really fun one

00:20:28.160 --> 00:20:32.717
because um I think we all are you know
convinced and convicted that it's an

00:20:32.800 --> 00:20:35.117
important place for us to spend time
but we haven't made that many investments

00:20:35.200 --> 00:20:37.757
there. But you really pushed an insight

00:20:37.840 --> 00:20:40.797
on us that has been helpful, which is

00:20:40.880 --> 00:20:44.797
that biology is really moving from like

00:20:44.880 --> 00:20:47.437
a wet lab type of process where

00:20:47.520 --> 00:20:50.397
innovation happens in in a traditional

00:20:50.480 --> 00:20:53.437
lab to one where it's really more like

00:20:53.520 --> 00:20:57.277
software. There's large models and bi

00:20:57.360 --> 00:21:00.557
biology is effectively
becoming more programmable. Yep.

00:21:00.640 --> 00:21:05.437
>> And so programmable biology would be
maybe the term for the things that we're

00:21:05.520 --> 00:21:07.677
most interested in. >> Yeah,
I think that's right. It's

00:21:07.760 --> 00:21:10.717
becoming much more of an engineering
discipline. And I think we're seeing

00:21:10.800 --> 00:21:13.837
that in in a lot of the entrepreneurs
we're meeting. We're meeting a lot of

00:21:13.920 --> 00:21:16.957
entrepreneurs who don't necessarily come
from traditional bio backgrounds. And so

00:21:17.040 --> 00:21:19.997
I I think it's really exciting. I think
it it in many ways it open up it opens

00:21:20.080 --> 00:21:23.197
up the domain. one, we're just going
to see way more top off ofunnel drug

00:21:23.280 --> 00:21:26.637
exploration as we're moving in into more
of an engineering discipline, but also

00:21:26.720 --> 00:21:30.797
just like way more I think entrepreneurs
will take a stab at building because I

00:21:30.880 --> 00:21:33.757
think it'll be more approachable to them.
Um, so I'm really excited about

00:21:33.840 --> 00:21:37.437
that. For me, you know, I came in with a
lot of knowledge on crypto and financial

00:21:37.520 --> 00:21:40.797
services. Took me a while to build up
that knowledge and, you know, spreading

00:21:40.880 --> 00:21:44.397
my wings into other areas I think
will be a long exploration and a long

00:21:44.480 --> 00:21:49.037
journey. I'm curious how you have
handled that over the years. Well, the I

00:21:49.120 --> 00:21:50.957
learn the most from making investments.

00:21:51.040 --> 00:21:53.677
I don't make investments to learn.

00:21:53.760 --> 00:21:55.757
>> Um I think that's a bad reason to make

00:21:55.840 --> 00:22:00.717
an investment. But if we make
an investment in a company in a relatively

00:22:00.800 --> 00:22:02.637
new area for us, like when when I

00:22:02.720 --> 00:22:05.917
invested in Coinbase back in 2012 or

00:22:06.000 --> 00:22:08.077
whenever it was, you know, that was

00:22:08.160 --> 00:22:11.117
>> basically introductory class in crypto

00:22:11.200 --> 00:22:13.677
for me. and you know at at a time when

00:22:13.760 --> 00:22:18.237
the industry was still pretty nent.
And so I I got to know a lot of the people

00:22:18.320 --> 00:22:20.637
who were sort of the the leading

00:22:20.720 --> 00:22:23.277
entrepreneurs in the sector and all of

00:22:23.360 --> 00:22:25.917
the the key sort of technologies and

00:22:26.000 --> 00:22:29.197
market opportunities. And so that was

00:22:29.280 --> 00:22:31.757
very helpful to me. And so like if we

00:22:31.840 --> 00:22:34.077
wanted to get deeper in programmable

00:22:34.160 --> 00:22:37.437
biology, I think one thing that I feel

00:22:37.520 --> 00:22:41.597
like we need to do is to to make
some investments and then that'll just

00:22:41.680 --> 00:22:45.277
naturally lead to more or more knowledge.
We'll just get we'll be we'll

00:22:45.360 --> 00:22:49.357
just we'll just start to learn more
by working with those companies and those

00:22:49.440 --> 00:22:53.917
founders. I guess there's sort of like
a you know a bit of like a catch 22 which

00:22:54.000 --> 00:22:58.237
is chicken and egg a bit when there's
areas that you know you knew when you

00:22:58.320 --> 00:23:01.597
made for example like some of your early
investments in in energy. Is there like

00:23:01.680 --> 00:23:03.917
an extra leap of faith there where
you're like I don't necessarily

00:23:04.000 --> 00:23:06.717
understand all the aspects of this
domain but I'm I'm willing to take I'm

00:23:06.800 --> 00:23:09.197
willing to like uh you know be
comfortable with those unknowns.

00:23:09.280 --> 00:23:13.197
>> Yeah I I I I think
sometimes it's better

00:23:13.280 --> 00:23:17.917
when you know a little bit less because
you can take some leaps of faith. Like

00:23:18.000 --> 00:23:21.837
if you think about radiant which is a
nuclear reactor company that you know I

00:23:21.920 --> 00:23:25.357
led our I led the first round in that
company the first venture round in that

00:23:25.440 --> 00:23:28.797
company and the idea was to make really

00:23:28.880 --> 00:23:33.437
really small nuclear reactors 1 megawatt
nuclear reactors and to massproduce them

00:23:33.520 --> 00:23:38.157
literally like make a factory that's
just spitting out nuclear reactors and

00:23:38.240 --> 00:23:39.997
you know if you need 5 megawws well then

00:23:40.080 --> 00:23:42.877
you just stack five 1 megawatt reactors

00:23:42.960 --> 00:23:46.077
and and it was just a a very radical

00:23:46.160 --> 00:23:51.357
idea um And you know when I talk to a
lot of sort of people who had spent 20

00:23:51.440 --> 00:23:54.797
30 years in the nuclear industry they're
like that's but that's crazy. That's not

00:23:54.880 --> 00:23:59.437
how reactors are built. You know we
reactors are these huge construction

00:23:59.520 --> 00:24:01.677
projects that last you know a decade

00:24:01.760 --> 00:24:04.637
long and they're regulated and it's it's

00:24:04.720 --> 00:24:08.157
a very like this is just crazy idea.

00:24:08.240 --> 00:24:12.637
But, you know, my my career is a career
where I watched, you know, computing go

00:24:12.720 --> 00:24:15.037
from these huge mainframes down to like

00:24:15.120 --> 00:24:17.837
phones in our pocket or, you know,

00:24:17.920 --> 00:24:20.157
networks go from super large networks

00:24:20.240 --> 00:24:22.717
to, you know, super micro networks. And

00:24:22.800 --> 00:24:25.437
I just seen again and again and again

00:24:25.520 --> 00:24:27.757
that these large centralized systems

00:24:27.840 --> 00:24:30.797
eventually get broken down into really,

00:24:30.880 --> 00:24:34.317
really small, much less centralized

00:24:34.400 --> 00:24:38.077
systems. And I just thought, well, why

00:24:38.160 --> 00:24:39.917
wouldn't that also be true of nuclear

00:24:40.000 --> 00:24:42.797
reactors? And so I was drawn to this

00:24:42.880 --> 00:24:45.997
idea that I think maybe had I known more

00:24:46.080 --> 00:24:48.637
about nuclear energy, I would have

00:24:48.720 --> 00:24:50.237
talked myself out of. So I don't think

00:24:50.320 --> 00:24:53.837
it's necessarily a bad idea to come into

00:24:53.920 --> 00:24:57.917
a sector a little um naive. I think too

00:24:58.000 --> 00:25:01.597
naive is a bad idea.
>> Um but a little naive sometimes I think

00:25:01.680 --> 00:25:03.117
can be a good idea. And I think some of

00:25:03.200 --> 00:25:06.797
the computer scientists are coming into

00:25:06.880 --> 00:25:09.837
biology now who are not necessarily

00:25:09.920 --> 00:25:13.757
biology majors or biology PhDs but are

00:25:13.840 --> 00:25:16.477
bringing a knowledge of, you know,

00:25:16.560 --> 00:25:21.117
artificial intelligence and how you
create models and how you train models.

00:25:21.200 --> 00:25:24.557
They're going to bring some
breakthroughs into the area of biology

00:25:24.640 --> 00:25:29.597
that biologists couldn't have
gotten gotten on their own. Because

00:25:29.680 --> 00:25:32.957
when you worked in an industry for 20
or 30 years, you kind of get caught up in

00:25:33.040 --> 00:25:37.517
the way that the business works and you
it's hard for you to kind of imagine

00:25:37.600 --> 00:25:41.597
these radical things. I mean, venture
capital for example, you know, one of

00:25:41.680 --> 00:25:45.597
the disadvantages I have of being in
venture capital for 40 years is I'm used

00:25:45.680 --> 00:25:47.597
to the industry working a certain way.

00:25:47.680 --> 00:25:50.077
>> Yeah. And when somebody comes in and

00:25:50.160 --> 00:25:52.717
disrupts it like Paul Graham comes in

00:25:52.800 --> 00:25:57.517
and creates Y Combinator and you
know that's a that was a massive

00:25:57.600 --> 00:25:59.197
innovation in the venture capital

00:25:59.280 --> 00:26:01.917
industry that happened in like 2006 or

00:26:02.000 --> 00:26:06.397
2007. Um and it really kind of reshaped

00:26:06.480 --> 00:26:10.957
how the earliest stages of company
formation happens. You know if you're

00:26:11.040 --> 00:26:14.157
kind of stuck in your ways you're going
to look at that and say that's dumb.

00:26:14.240 --> 00:26:19.117
Like >> we don't want to touch that. Yeah.
and and a lot of people that were in the

00:26:19.200 --> 00:26:22.877
venture industry for a long time
looked at that and felt that way. But

00:26:22.960 --> 00:26:26.957
fortunately, you know, we didn't and we
embraced that. Um, and now, you know,

00:26:27.040 --> 00:26:29.437
there's a lot of new stuff happening in

00:26:29.520 --> 00:26:34.637
venture as well. It's important
to be um open-minded, I think.

00:26:34.720 --> 00:26:37.917
>> I mean, speaking of that, I would say
there's a couple major shifts that have

00:26:38.000 --> 00:26:42.557
happened in the last 10 years. Um I'd
say andre was probably the first to do

00:26:42.640 --> 00:26:46.717
it which was really pursue venture
capital as a business really scaling to

00:26:46.800 --> 00:26:50.317
touch every part part of the stack
of business and uh many people would say

00:26:50.400 --> 00:26:54.557
that you know that trend of larger
firms more capital has created sort of a

00:26:54.640 --> 00:26:59.197
bifurcation where it's really hard
to play in the middle in maybe the middle

00:26:59.280 --> 00:27:02.637
looks like not to put a number on it
but like you know you're not a small fund

00:27:02.720 --> 00:27:05.597
but you're not a mega fund and the mega
fund can kind of throw their weight

00:27:05.680 --> 00:27:09.997
around in in unique ways and small funds
can stay small and and USV you we're

00:27:10.080 --> 00:27:13.277
we're, you know, gravitating not exactly
to the middle. I'd say we're still on

00:27:13.360 --> 00:27:15.677
the smaller side for a lot of the
industry, but I'm curious kind of how

00:27:15.760 --> 00:27:18.557
you you think about when these
innovations come. You're trying to stay

00:27:18.640 --> 00:27:21.517
open-minded. Uh but you also don't
want to play everyone else's game.

00:27:21.600 --> 00:27:24.157
>> The institutionalization of venture

00:27:24.240 --> 00:27:27.597
capital that Andre Horowitz, you know,

00:27:27.680 --> 00:27:30.797
really led um is a fundamental change to

00:27:30.880 --> 00:27:33.357
the business and one that I think, you

00:27:33.440 --> 00:27:36.397
know, is going to be long lasting. And

00:27:36.480 --> 00:27:39.117
I'm not convinced that any

00:27:39.200 --> 00:27:42.237
there's any size venture firm that isn't

00:27:42.320 --> 00:27:44.637
at some level at risk because there's

00:27:44.720 --> 00:27:47.597
nothing stopping, you know, a firm that

00:27:47.680 --> 00:27:50.477
manages, you know, 50 billion or 100

00:27:50.560 --> 00:27:52.637
billion from making a seed investment.

00:27:52.720 --> 00:27:55.917
They they may talk themselves out of it
because they're like, well, how could a

00:27:56.000 --> 00:27:57.917
million dollar seed move the needle for

00:27:58.000 --> 00:28:01.277
us? But, you know, they could have scout

00:28:01.360 --> 00:28:03.277
programs. they could they could do seed

00:28:03.360 --> 00:28:08.317
in ways that maybe is a more scalable
way to do it. I think it's it's the new

00:28:08.400 --> 00:28:12.317
normal and that's how the venture
business is organized and the largest

00:28:12.400 --> 00:28:14.077
players and the largest platforms have

00:28:14.160 --> 00:28:17.917
the most market power and I think that

00:28:18.000 --> 00:28:22.477
for a smaller firm like USV I think we
have to be honest with ourselves that

00:28:22.560 --> 00:28:24.317
we're at a competitive disadvantage with

00:28:24.400 --> 00:28:26.797
them in many ways getting bigger

00:28:26.880 --> 00:28:30.717
probably is a logical move but it's hard

00:28:30.800 --> 00:28:34.157
to get a little bigger right cuz they

00:28:34.240 --> 00:28:39.037
raise capital at a scale that we don't
raise capital at and they, you know, are

00:28:39.120 --> 00:28:40.557
organized at a scale that we're not

00:28:40.640 --> 00:28:43.277
organized. So, you know, I don't think

00:28:43.360 --> 00:28:46.557
it would be simple for us to to to copy

00:28:46.640 --> 00:28:51.037
what they've done. And I'm I'm not sure
it would be healthy for us to do that,

00:28:51.120 --> 00:28:55.277
but I do think it's it it changes
the competitive dynamic in a way that

00:28:55.360 --> 00:28:58.877
doesn't necessarily favor us. And do
you think like if you were, you know, if

00:28:58.960 --> 00:29:02.237
you're USV or advising a manager and you
take this dynamic and you want to create

00:29:02.320 --> 00:29:05.437
an advantage position for yourself,
you know, one thing that we've found, I

00:29:05.520 --> 00:29:07.997
think at USV, we we find
ourselves going earlier.

00:29:08.080 --> 00:29:10.557
>> Right. >> Right. Do you think
that's that's probably the main answer?

00:29:10.640 --> 00:29:13.357
>> I think go earlier,

00:29:13.440 --> 00:29:16.397
domain knowledge, become a recognized a

00:29:16.480 --> 00:29:20.557
recognized expert in a domain. Um,
so that founders look at you and like, oh,

00:29:20.640 --> 00:29:24.637
I want that person. They really know
my market really well. And I think also

00:29:24.720 --> 00:29:27.197
maybe willing to deal with some things

00:29:27.280 --> 00:29:30.077
that you know maybe have a few

00:29:30.160 --> 00:29:34.237
complications on them. You know that could
be a regulatory complication or it

00:29:34.320 --> 00:29:36.637
could be you know a geographic

00:29:36.720 --> 00:29:41.357
complication or something where a big
platform might struggle a little bit uh

00:29:41.440 --> 00:29:44.237
cuz it's not you know
a strike right down the middle.

00:29:44.320 --> 00:29:48.877
>> Um so we you know you mentioned APD
>> uh they've rebranded to Panandina.

00:29:48.960 --> 00:29:50.877
>> Panandina they
changed their name. Well,

00:29:50.960 --> 00:29:56.637
the the P uh the P in Pandino APD was a
Torid Pandina. They dropped they dropped

00:29:56.720 --> 00:29:57.197
the A.

00:29:57.280 --> 00:29:59.837
>> So, it's Pandina.
Y even I can say that.

00:29:59.920 --> 00:30:03.757
Um so, that's a company in Colombia. I I

00:30:03.840 --> 00:30:07.117
think the there's plenty of large
platforms that would be comfortable

00:30:07.200 --> 00:30:11.357
investing in Colombia, but you know,
maybe not, you know, in the trenches

00:30:11.440 --> 00:30:13.677
kind of work in the market quite the way

00:30:13.760 --> 00:30:18.717
that you know, we we have now in that
company we have Audi, we have Somos, and

00:30:18.800 --> 00:30:22.477
we have Penadino. We had three companies
in Colombia. Now, you know, I don't

00:30:22.560 --> 00:30:24.157
think we're going to be opening a a a

00:30:24.240 --> 00:30:27.837
Medaheen office, but um you know, uh I

00:30:27.920 --> 00:30:32.957
think geography of that sort can be
a little bit of an advantage, too. The

00:30:33.040 --> 00:30:36.077
geography piece is really interesting
to me, you know, because we're going

00:30:36.160 --> 00:30:39.517
through a period of immense uh price

00:30:39.600 --> 00:30:42.557
inflation uh valid or not in the venture

00:30:42.640 --> 00:30:45.677
industry. And uh it's largely centered

00:30:45.760 --> 00:30:50.557
around very known pockets of talent. Um
I think you know people will cite if you

00:30:50.640 --> 00:30:52.077
just look year over year and just if you

00:30:52.160 --> 00:30:54.637
use YC as kind of a you know a market

00:30:54.720 --> 00:30:57.997
benchmark we're like 3x the seed prices

00:30:58.080 --> 00:31:02.957
we were about 2 and a half years ago
maybe even 4x now. And so the geography

00:31:03.040 --> 00:31:05.117
is interesting because there's I think
a lot of people are looking around

00:31:05.200 --> 00:31:09.997
thinking okay this math pencils if if
you know if your business is a trillion

00:31:10.080 --> 00:31:12.477
dollar outcome. >> I I I I
know where you're going with

00:31:12.560 --> 00:31:16.477
this. I'm going to interrupt you because
um I wanted to share with you this thing

00:31:16.560 --> 00:31:18.157
that I was thinking about. So, we have

00:31:18.240 --> 00:31:20.717
two companies that are existing USV

00:31:20.800 --> 00:31:23.917
portfolio companies that recently gave

00:31:24.000 --> 00:31:26.797
us updates and they have businesses that

00:31:26.880 --> 00:31:30.237
are growing very quickly now. And when I

00:31:30.320 --> 00:31:34.797
asked them, you know, what kinds
of margins were they making, you know, on

00:31:34.880 --> 00:31:38.797
like 30 million of revenue, they were
producing like $25 million worth of

00:31:38.880 --> 00:31:40.957
profit. Like I cannot remember a time

00:31:41.040 --> 00:31:42.557
when we had companies who were

00:31:42.640 --> 00:31:46.637
generating like EBIDA profits not not

00:31:46.720 --> 00:31:49.597
gross margins not even like contribution

00:31:49.680 --> 00:31:51.837
but like Ebida margins of like 80 or

00:31:51.920 --> 00:31:55.277
90%. Now part of it is that they don't

00:31:55.360 --> 00:31:57.197
have to build large software engineering

00:31:57.280 --> 00:31:59.837
teams anymore because they're using uh

00:31:59.920 --> 00:32:02.557
all the gentic coding techniques and you

00:32:02.640 --> 00:32:04.717
know marketing has become maybe a little

00:32:04.800 --> 00:32:09.597
bit more automated. you know,
they're not don't have large sales forces.

00:32:09.680 --> 00:32:11.357
Customer support now is largely

00:32:11.440 --> 00:32:13.437
automated. You know, if companies truly

00:32:13.520 --> 00:32:17.917
are a multiple of cash flow and we just

00:32:18.000 --> 00:32:21.037
saw an order of magnitude growth in how

00:32:21.120 --> 00:32:24.237
much margin a company can generate out

00:32:24.320 --> 00:32:26.477
of revenue, then maybe an order of

00:32:26.560 --> 00:32:29.357
magnitude bump in valuations

00:32:29.440 --> 00:32:31.757
does make sense. That that's very fair.

00:32:31.840 --> 00:32:35.437
the in one of those examples you gave,
you know, when you have these businesses

00:32:35.520 --> 00:32:39.277
that are cash flowing really well out
of the gates, uh, one of them is actually

00:32:39.360 --> 00:32:43.357
debating whether or not they should
even raise equity. Um, and I think

00:32:43.440 --> 00:32:47.597
historically, you know, we've had
an aversion to companies taking on debt

00:32:47.680 --> 00:32:51.517
unnecessarily. It usually, you know,
tends to be tends to cause a lot of pain

00:32:51.600 --> 00:32:55.917
down the line. Do you think more
entrepreneurs should or will uh pursue

00:32:56.000 --> 00:32:58.397
different equity structures?
>> I think it depends on what you're going

00:32:58.480 --> 00:33:01.357
to use the capital for. If you if you're

00:33:01.440 --> 00:33:07.117
not losing money and you don't have
any losses to fund, there's there's a

00:33:07.200 --> 00:33:08.157
question about why should I raise

00:33:08.240 --> 00:33:12.077
capital at all? But companies do want to

00:33:12.160 --> 00:33:14.237
um get rerated from a valuation spec

00:33:14.320 --> 00:33:17.837
perspective from time to time um because

00:33:17.920 --> 00:33:21.357
they might want to do acquisitions
or they might want to make some hires and

00:33:21.440 --> 00:33:25.917
they want to be able to, you know, have
valuable stock to recruit to attract the

00:33:26.000 --> 00:33:28.077
right people. To me, it's not so much a

00:33:28.160 --> 00:33:30.477
question of debt as coming up with new

00:33:30.560 --> 00:33:34.077
ways to raise capital that maybe are not

00:33:34.160 --> 00:33:38.317
as dilutive. So, you know, maybe more

00:33:38.400 --> 00:33:41.437
kind of secondary uh transactions, get

00:33:41.520 --> 00:33:46.157
new names on the cap table, get,
you know, a new valuation, but maybe just

00:33:46.240 --> 00:33:49.357
raising a bunch of money to just have
it go sit in a bank doesn't make a lot of

00:33:49.440 --> 00:33:51.357
sense. So, I I do think we're going to

00:33:51.440 --> 00:33:54.077
see that change over time if these

00:33:54.160 --> 00:33:58.637
companies can just produce, you know,
a lot of cash flow. Like, they're going to

00:33:58.720 --> 00:34:02.797
we're going to have to rethink financing
markets. I was talking to a friend of

00:34:02.880 --> 00:34:06.077
mine who's the chairman of a company
that's about to go public. I can't say

00:34:06.160 --> 00:34:10.157
the name of the company because it's
in its quiet period. He told me the entire

00:34:10.240 --> 00:34:12.877
IPO is going to be secondary. >> Wow.

00:34:12.960 --> 00:34:17.037
>> No primary whatsoever. Now, we played
around with direct listings for a while

00:34:17.120 --> 00:34:20.157
that were a version of that. But there
was a bunch of things about direct

00:34:20.240 --> 00:34:22.637
listings that I think have created some

00:34:22.720 --> 00:34:24.397
issues. So, this is going to be a

00:34:24.480 --> 00:34:28.637
traditional IPO, but all the capital is

00:34:28.720 --> 00:34:33.037
going to go to selling shareholders
who are going to be listed in the S1 as

00:34:33.120 --> 00:34:37.197
selling shareholders. And so,
it's it's just going to be pure secondary.

00:34:37.280 --> 00:34:41.277
You used to never see that, you know,
and still I think it's kind of rare, but

00:34:41.360 --> 00:34:44.877
maybe we'll see that more over time
as we get these kinds of companies.

00:34:44.960 --> 00:34:48.957
>> This has popped up another question
in my head which is uh you're on a number

00:34:49.040 --> 00:34:51.837
of public company boards and have been
and you also see in late stage private

00:34:51.920 --> 00:34:54.317
companies. There's an ongoing debate
really, you know, the last couple

00:34:54.400 --> 00:34:57.197
decades around the trend line in terms
of companies going public, staying

00:34:57.280 --> 00:34:59.757
private, right? >> Um there's
a side discussion probably to

00:34:59.840 --> 00:35:03.197
be had here around everything coming on
chain, but we don't we don't want to get

00:35:03.280 --> 00:35:06.477
there right away. question in my head
is where do where do you think the

00:35:06.560 --> 00:35:10.077
incentives are going over time?
You know, you have folks like Stripe who I

00:35:10.160 --> 00:35:13.277
don't really see them ever going
public or at least not anytime soon. And

00:35:13.360 --> 00:35:15.837
they've been able to demonstrate
that it's created a lot of advantage for

00:35:15.920 --> 00:35:18.797
them. And then also you have you have
companies like SpaceX coming out and and

00:35:18.880 --> 00:35:23.677
able to pay, you know, instantly 60
billion for an asset. Uh and in my

00:35:23.760 --> 00:35:25.997
estimation, a lot of that market power
came from the fact that they were public

00:35:26.080 --> 00:35:28.397
and had liquid liquid tradable shares.

00:35:28.480 --> 00:35:32.397
like the price you can wield for um
acquisitions probably shifts when people

00:35:32.480 --> 00:35:36.877
are getting liquid stock. I'm curious,
you know, in your view if you have if

00:35:36.960 --> 00:35:41.357
you care at all with the companies you
work with about whether they, you know,

00:35:41.440 --> 00:35:44.637
go public or not, when they're at when
they're ready for it. Um if you think

00:35:44.720 --> 00:35:48.077
it's healthier to be have more companies
in the public markets. You said an

00:35:48.160 --> 00:35:49.117
important thing when they're ready for

00:35:49.200 --> 00:35:53.437
it. And ready for it means that they can

00:35:53.520 --> 00:35:56.557
>> deal with the burdens of being a public

00:35:56.640 --> 00:35:59.517
company, which is um there's a bunch of

00:35:59.600 --> 00:36:01.837
legal and financial obligations that you

00:36:01.920 --> 00:36:04.877
have to your shareholders that require,

00:36:04.960 --> 00:36:09.437
you know, beefed up systems, you know,
certain kinds of people that in the

00:36:09.520 --> 00:36:14.477
accounting and legal department and just
a just a way of running the business.

00:36:14.560 --> 00:36:18.077
you know, a lot of the companies in our
portfolio who are here this these two

00:36:18.160 --> 00:36:21.677
days, they can't do that. But I think
when you get to that point, I think

00:36:21.760 --> 00:36:23.597
there's a real benefit to being public.

00:36:23.680 --> 00:36:28.397
There's downside, of course. Um,
there's shareholder lawsuits and there's

00:36:28.480 --> 00:36:31.917
regulation by the SEC and a lot
of things that, you know, some founders

00:36:32.000 --> 00:36:36.797
maybe don't want to deal with. But I
think the benefit of having a very broad

00:36:36.880 --> 00:36:42.077
and diverse shareholder base where
anybody could wake up today and say, "I

00:36:42.160 --> 00:36:46.077
want to buy SpaceX." and they could
go buy SpaceX. Um, in the same way that

00:36:46.160 --> 00:36:50.317
anybody who wanted to buy Hyperlid like
you did convinced us and we went and

00:36:50.400 --> 00:36:53.037
bought it, right? Boom. We were
a Hyperlid shareholder. We didn't have to

00:36:53.120 --> 00:36:57.357
convince anybody, right? We you don't
have to go to Elon Musk and say, "Let me

00:36:57.440 --> 00:37:00.957
buy some shares of SpaceX." No, you just
go to the public markets and buy them.

00:37:01.040 --> 00:37:04.957
>> I think that's really powerful and that
way anybody can be a shareholder in your

00:37:05.040 --> 00:37:07.117
company. >> I think that's better.

00:37:07.200 --> 00:37:11.517
>> I'm biased to think so as well. the you
know it's it's been interesting to see

00:37:11.600 --> 00:37:15.597
more and more businesses you know
we've gone we've seen every side of the

00:37:15.680 --> 00:37:19.917
experiment in crypto right where people
you know issued tokens which which um

00:37:20.000 --> 00:37:23.757
you know were meant to give ownership
to more participants in in a network and

00:37:23.840 --> 00:37:26.317
we've seen when that works well
and when doesn't work well and it'll be

00:37:26.400 --> 00:37:30.317
interesting to see you know like what
types of businesses are able to wield

00:37:30.400 --> 00:37:33.757
the advantage of hey I actually want
to bring more people around the table I

00:37:33.840 --> 00:37:36.957
don't know I think a lot of consumer
businesses I think will probably

00:37:37.040 --> 00:37:39.597
continue to do so >> I think I
think it's really important as

00:37:39.680 --> 00:37:43.917
a consumer business. It's a big branding
moment. It's a big coming out moment.

00:37:44.000 --> 00:37:48.477
And you got to have a really good reason
not to do to not do it. I mean, Stripe

00:37:48.560 --> 00:37:50.797
obviously has some good reason that they

00:37:50.880 --> 00:37:53.197
don't want to be public. I I can't

00:37:53.280 --> 00:37:58.637
fathom it, but I'm sure they must have
one. If I was the founder and CEO of a

00:37:58.720 --> 00:38:01.517
company, I think I would be inclined
to take it public. talking about market

00:38:01.600 --> 00:38:02.957
shifts a second ago. The other market

00:38:03.040 --> 00:38:06.957
shift I want to touch on was in my view

00:38:07.040 --> 00:38:10.077
the pace at which AI has changed and how

00:38:10.160 --> 00:38:14.077
much dynamism it's created in the market
has led to a market that I think always

00:38:14.160 --> 00:38:17.357
at the early stages of venture capital
majority of venture capital firms that I

00:38:17.440 --> 00:38:20.397
interact with have a lens on the
business on any business that is very

00:38:20.480 --> 00:38:24.717
very founder centric to the point where
you know when I speak to people about

00:38:24.800 --> 00:38:29.437
discussions like amongst firms inside
the firm a lot of air time is spent

00:38:29.520 --> 00:38:31.917
dissecting the qualities
of an entrepreneur

00:38:32.000 --> 00:38:34.237
It's not something we do a particularly

00:38:34.320 --> 00:38:36.797
a whole lot of at USV and we have a lot

00:38:36.880 --> 00:38:41.437
of maybe two decades of muscle memory
of really spending immense amounts of time

00:38:41.520 --> 00:38:45.597
dissecting businesses, markets, themes
and it's hard for me to say it's a shift

00:38:45.680 --> 00:38:48.877
because you probably have a better lens
on that whe that's changed over time but

00:38:48.960 --> 00:38:52.317
the three years that I was in venture
capital I felt like it was more

00:38:52.400 --> 00:38:55.677
founderentric than ever in terms of how
people approached making investments

00:38:55.760 --> 00:38:59.917
thinking about businesses. If I was
critical of USV, I would be critical of

00:39:00.000 --> 00:39:01.677
the fact that we don't spend enough time

00:39:01.760 --> 00:39:05.517
on the founders. I I actually think that

00:39:05.600 --> 00:39:08.797
the magic happens when you get the right

00:39:08.880 --> 00:39:11.357
market and the right founders.

00:39:11.440 --> 00:39:15.597
I've been in the right market with the
wrong founders, bad place to be. I've

00:39:15.680 --> 00:39:19.517
been in the wrong market with the right
founders. That's not a good place to be

00:39:19.600 --> 00:39:22.397
either. Some founders can pivot out of

00:39:22.480 --> 00:39:25.037
that into a good market and I have seen

00:39:25.120 --> 00:39:29.517
that. But many times they they just say,
"You know what? I'm done. This wasn't

00:39:29.600 --> 00:39:33.357
the right market. The Farcaster founders
would be an example of that." You know,

00:39:33.440 --> 00:39:37.197
I think Dan's a really high quality
founder, but he was working in a market

00:39:37.280 --> 00:39:40.237
there was no there there. And he's now

00:39:40.320 --> 00:39:45.197
working on Tempo, which maybe is going
to be a better platform for him. So, you

00:39:45.280 --> 00:39:49.677
really got to get both right. And when
you get the market right and the founder

00:39:49.760 --> 00:39:51.837
or founders right, that's where the

00:39:51.920 --> 00:39:54.157
biggest outcomes are. I think you're

00:39:54.240 --> 00:39:57.517
right. USV has traditionally been very

00:39:57.600 --> 00:39:59.997
good at getting to the right markets and

00:40:00.080 --> 00:40:01.917
also the right sides of the right

00:40:02.000 --> 00:40:04.877
markets. So, it's not just right to go

00:40:04.960 --> 00:40:07.677
into e-commerce, but the best businesses

00:40:07.760 --> 00:40:12.237
in e-commerce were marketplaces like
Shopify and Etsy. And so, not only did

00:40:12.320 --> 00:40:13.757
we get to e-commerce correctly, we got

00:40:13.840 --> 00:40:16.317
to the right side of e-commerce, but I

00:40:16.400 --> 00:40:20.237
think that we have

00:40:20.320 --> 00:40:23.917
maybe a little bit less great of a

00:40:24.000 --> 00:40:26.557
record on um getting to the right

00:40:26.640 --> 00:40:29.357
founders. Um, and I think some of it is

00:40:29.440 --> 00:40:33.757
that we for a long time would only back
one founder in a market. And I think

00:40:33.840 --> 00:40:35.517
that's not good. And we've made that

00:40:35.600 --> 00:40:38.237
change now. So that typically if we like

00:40:38.320 --> 00:40:43.117
a market we want to make five or 10 bets
that I think frees us up to maybe pick

00:40:43.200 --> 00:40:46.477
more founder teams and then you know
more likely that we'll get with the

00:40:46.560 --> 00:40:49.277
right one. Yep. >> On that theme,
another thing that's been

00:40:49.360 --> 00:40:53.197
in my head is USV sort of became
synonymous in an earlier era with the

00:40:53.280 --> 00:40:56.237
concept of network effects, which is sort
of an emerging property of internet

00:40:56.320 --> 00:41:00.797
businesses. And it's become
an organizing principle for for us. Not to

00:41:00.880 --> 00:41:04.797
say every business we invest in has
network effects. We often use that lens

00:41:04.880 --> 00:41:09.517
of how can this be really long-term
defensible and grow organically. Uh and

00:41:09.600 --> 00:41:12.557
network effects are a great way to have
both of those things. Eli Gil once made

00:41:12.640 --> 00:41:14.957
a comment in some post a long time ago
where he said there's three types of

00:41:15.040 --> 00:41:18.477
founders. I think he said like there's
two types who are basically you know

00:41:18.560 --> 00:41:22.557
like maybe like a um a missionary um you
know some other great type founder and

00:41:22.640 --> 00:41:25.197
then the third founder was a network
effect founder and I don't know if he

00:41:25.280 --> 00:41:29.357
meant that in a positive or negative way
but uh basically the implication is you

00:41:29.440 --> 00:41:33.677
know certain businesses can support
themselves or maybe you know the the

00:41:33.760 --> 00:41:36.957
profile of founders doesn't need
to be the same uh for a business

00:41:37.040 --> 00:41:38.797
>> well you don't need
like a hard charging

00:41:38.880 --> 00:41:43.837
enterprise salesoriented CEO to build
you know an internet marketplace so I

00:41:43.920 --> 00:41:46.877
think he's right about that and
the right kind of person to build an

00:41:46.960 --> 00:41:50.317
internet marketplace might be very
different than the hard charging

00:41:50.400 --> 00:41:53.037
enterprise sales type person. So I think

00:41:53.120 --> 00:41:55.197
that's true. I would challenge you to

00:41:55.280 --> 00:41:58.477
find um a great exit that we've had at

00:41:58.560 --> 00:42:01.517
USV that didn't have network effects.

00:42:01.600 --> 00:42:04.877
That doesn't mean that there aren't
great companies that don't have network

00:42:04.960 --> 00:42:10.077
effects, but I think most of our great
successes at USV have some form of

00:42:10.160 --> 00:42:13.517
network effects in them. >> I think
that's probably right. Uh, and I

00:42:13.600 --> 00:42:17.437
I honestly think they're often more
emergent than we realize. You know, we

00:42:17.520 --> 00:42:21.437
have businesses like even like
a Duolingo that looks like a single player

00:42:21.520 --> 00:42:24.957
app, but the network effect that ended
up being they have this immense learning

00:42:25.040 --> 00:42:28.637
loop that they're on. And I don't know if
that always presented itself on day one.

00:42:28.720 --> 00:42:31.197
>> Well, I mean at our CEO summit three or

00:42:31.280 --> 00:42:33.117
four years ago, someone asked Luis Vanon

00:42:33.200 --> 00:42:36.397
how much AI they use in the product and

00:42:36.480 --> 00:42:39.037
he said, "Well, really only one

00:42:39.120 --> 00:42:43.117
algorithm. We just look at what is what

00:42:43.200 --> 00:42:45.837
is the most likely thing to make the

00:42:45.920 --> 00:42:50.237
user get the next question and then
the next question and the next question

00:42:50.320 --> 00:42:54.397
right to retain them as long as possible
and whatever that is that's what we do

00:42:54.480 --> 00:42:58.397
and the point is the more users they
have using the product the more accurate

00:42:58.480 --> 00:43:02.397
they can be in that prediction so it
is it is ultimately a data network effect

00:43:02.480 --> 00:43:05.517
as Brad would say >> and and it's
it's likely I mean another

00:43:05.600 --> 00:43:08.557
thought on that theme is I've been
thinking okay well network effects are

00:43:08.640 --> 00:43:11.437
so powerful right we've seen You know,
Twitter's like a cockroach. You can't

00:43:11.520 --> 00:43:15.357
kill that thing, right? That also means
that as we build as we built out the

00:43:15.440 --> 00:43:18.317
early internet networks, it's hard for
new networks to form, right? They crowd

00:43:18.400 --> 00:43:22.797
out other networks because they're so
strong. And one thought is, okay, have

00:43:22.880 --> 00:43:26.637
we built all of the key networks is is
one thought. The other thing is maybe

00:43:26.720 --> 00:43:32.157
maybe every business is an AI business
and AI the fuel for AI is data. So it's

00:43:32.240 --> 00:43:35.517
just a new form of network effect,
which is every business will have either a

00:43:35.600 --> 00:43:37.277
strong or weak data network effect.

00:43:37.360 --> 00:43:40.877
>> I don't think so. Because if you look
at if you look outside of AI, what are the

00:43:40.960 --> 00:43:44.077
some of the most exciting companies
that have kind of broken out over the last

00:43:44.160 --> 00:43:48.957
two or three years? Calcy and Poly
Market network effect businesses. Any

00:43:49.040 --> 00:43:52.237
any financial marketplace is a network
effect business. It's a liquidity

00:43:52.320 --> 00:43:54.477
business, you know, and so those are

00:43:54.560 --> 00:43:56.477
network effect businesses. I don't think

00:43:56.560 --> 00:43:59.517
we've seen the last network get created.

00:43:59.600 --> 00:44:02.557
I I I think it may be harder. Well, one

00:44:02.640 --> 00:44:06.957
thing I think we have learned the hard
way and just to what mistakes have we

00:44:07.040 --> 00:44:09.037
made in the last three or four years. I

00:44:09.120 --> 00:44:14.317
think we thought that AI or crypto or

00:44:14.400 --> 00:44:17.677
some other new innovation would undo the

00:44:17.760 --> 00:44:19.597
network effects that were built by these

00:44:19.680 --> 00:44:23.037
large web 2 um success stories like

00:44:23.120 --> 00:44:25.677
Twitter and Facebook and Tik Tok and

00:44:25.760 --> 00:44:28.077
whatever. And I think that has proven to

00:44:28.160 --> 00:44:31.277
be incorrect. those businesses are not

00:44:31.360 --> 00:44:34.077
going to get killed so easily

00:44:34.160 --> 00:44:38.317
>> when you're constructing a new network
like where I'm and this is really kind

00:44:38.400 --> 00:44:42.157
of key to how we're thinking about a lot
of AI these days which is like we've had

00:44:42.240 --> 00:44:44.157
almost exclusively single player

00:44:44.240 --> 00:44:47.277
products to date got to a billion users

00:44:47.360 --> 00:44:51.517
being entirely single player and we're
seeing you know maybe new surfaces pop

00:44:51.600 --> 00:44:53.997
up that can become more multiplayer and

00:44:54.080 --> 00:44:57.197
the question in my mind is like um what

00:44:57.280 --> 00:45:01.757
does it look like to either bootstrap of
another network, take on another network

00:45:01.840 --> 00:45:04.637
in this new age. >> Well,
if you think about, you know, what

00:45:04.720 --> 00:45:06.557
is what is a what does a multiplayer

00:45:06.640 --> 00:45:09.757
agent look like? So, it's not I mean, at

00:45:09.840 --> 00:45:12.557
USV, we have multiplayer agents. So, you

00:45:12.640 --> 00:45:17.197
know, the agents that we use at USV,
Parker and Ruth and Penny, you know, we

00:45:17.280 --> 00:45:19.357
we give our agents names and email

00:45:19.440 --> 00:45:22.637
addresses. Um, you and I use them in a

00:45:22.720 --> 00:45:27.357
multiplayer, you know, uh because we're
all connected to these agents. And so I

00:45:27.440 --> 00:45:30.957
could ask Parker a question and when
Parker responds you see the response and

00:45:31.040 --> 00:45:32.557
then you could reply to it. So we're

00:45:32.640 --> 00:45:35.677
using email or you know messengers

00:45:35.760 --> 00:45:39.677
effectively as the way to have
a multiplayer relationship with an agent.

00:45:39.760 --> 00:45:41.597
So I actually think that probably does

00:45:41.680 --> 00:45:44.237
exist in a lot of enterprises you know

00:45:44.320 --> 00:45:47.117
particularly like maybe more cutting

00:45:47.200 --> 00:45:52.317
edge techcentric or finance centric uh

00:45:52.400 --> 00:45:54.317
small businesses like ours. But on the

00:45:54.400 --> 00:45:56.397
consumer side,

00:45:56.480 --> 00:45:59.677
it's not obvious to me exactly how you

00:45:59.760 --> 00:46:03.837
and I would share an agent and why
and would that actually be be a good idea.

00:46:03.920 --> 00:46:07.357
It's pretty obvious to me how my wife
and I would share an agent. That is an

00:46:07.440 --> 00:46:11.517
opportunity. Now, the question is,
is that just an opportunity for WhatsApp

00:46:11.600 --> 00:46:13.837
and Facebook Messenger and Apple with

00:46:13.920 --> 00:46:17.197
iMessage? Um, where most most husbands

00:46:17.280 --> 00:46:20.637
and wives have a preferred vehicle to

00:46:20.720 --> 00:46:24.637
communicate you and your girlfriend.
Do they do you use a preferred app to

00:46:24.720 --> 00:46:27.117
communicate? >> iMessage. Yeah.

00:46:27.200 --> 00:46:30.557
>> So, it would seem to me if I owned one

00:46:30.640 --> 00:46:32.397
of those things, I would try to figure

00:46:32.480 --> 00:46:34.957
that out. That's a little surprising to

00:46:35.040 --> 00:46:38.877
me why Facebook and Apple and and, you

00:46:38.960 --> 00:46:41.997
know, Telegram haven't figured that out.

00:46:42.080 --> 00:46:46.797
That's a big opportunity for them.
Now, someone could come in from some other

00:46:46.880 --> 00:46:50.477
angle and get there. It's a little
harder though because my wife and I

00:46:50.560 --> 00:46:55.117
already have a place where we communicate.
So, the most obvious place

00:46:55.200 --> 00:46:58.237
for this agent that we're going
to share would be right there.

00:46:58.320 --> 00:47:00.797
>> You know, you're
a Hermes user, >> right?

00:47:00.880 --> 00:47:03.757
>> Um, and you probably interact
with it through Telegram.

00:47:03.840 --> 00:47:07.437
>> I do. >> Do you give
it most of your data?

00:47:07.520 --> 00:47:10.317
>> No. Um, I don't. I'm a little paranoid

00:47:10.400 --> 00:47:13.197
about this. So, I I have I don't have

00:47:13.280 --> 00:47:14.797
Hermes running in the cloud. I have

00:47:14.880 --> 00:47:17.357
Hermes running on a essentially not

00:47:17.440 --> 00:47:20.397
really an airgapped Mac Mini, but let's

00:47:20.480 --> 00:47:22.637
just call it a factory reset Mac Mini

00:47:22.720 --> 00:47:25.277
that I've been very careful about what

00:47:25.360 --> 00:47:28.157
services it has. And that way I know

00:47:28.240 --> 00:47:33.437
exactly what of my data my Hermes agent
has and what it doesn't. And I, you

00:47:33.520 --> 00:47:34.957
know, I'm just a little paranoid. One

00:47:35.040 --> 00:47:36.877
thing that crypto has really taught me

00:47:36.960 --> 00:47:41.277
is that bad people can get into your

00:47:41.360 --> 00:47:46.157
really easily if you let them. Like
I'm really lucky that I've I mean, you

00:47:46.240 --> 00:47:49.677
know, but one time I got hacked
because you helped me get unhacked.

00:47:49.760 --> 00:47:52.797
>> But the total amount
of financial losses

00:47:52.880 --> 00:47:55.117
I've been hacked like four or five times

00:47:55.200 --> 00:47:58.477
for me has been in the singledigit

00:47:58.560 --> 00:48:02.957
10,000s, right? So maybe I've lost 10
or $20,000, which is a lot of money. Like

00:48:03.040 --> 00:48:06.157
for some people it would be like their
entire life savings. I I I I don't want

00:48:06.240 --> 00:48:07.917
to trivialize that, but but it has

00:48:08.000 --> 00:48:11.677
really made me kind of I wouldn't call I

00:48:11.760 --> 00:48:15.757
wouldn't say I'm paranoid, but I'm
really well aware that like I got to

00:48:15.840 --> 00:48:20.157
lock my down. >> Yes. Well, the the reason
I ask is because, you know, I've been

00:48:20.240 --> 00:48:23.117
interviewing a bunch of people uh
talking to people who are playing with

00:48:23.200 --> 00:48:26.077
all these agents. You know, we've been
playing with Instinct and Tesla in our

00:48:26.160 --> 00:48:29.837
portfolio in town and and the thing
that keeps coming up as people border onto

00:48:29.920 --> 00:48:34.477
personal use cases is is this data
question, right? And I think people have

00:48:34.560 --> 00:48:38.237
a lot of a lot of fear. And someone said
to me yesterday, you know, the the thing

00:48:38.320 --> 00:48:41.197
I want really is for the people who
already have my data to make the most of

00:48:41.280 --> 00:48:43.917
it. >> Well, this is exactly right.
Right. Like

00:48:44.000 --> 00:48:49.277
why do I want to give some random agent
access to my Amazon? Why wouldn't Amazon

00:48:49.360 --> 00:48:53.437
just give me an agent that does that for
me? Right. Like and then Coinbase gives

00:48:53.520 --> 00:48:56.877
me an agent for my Coinbase and JP
Morgan gives me an agent for my JP

00:48:56.960 --> 00:49:00.317
Morgan. And then I don't have
to permission any agents to those things.

00:49:00.400 --> 00:49:03.037
Yeah. Yeah. I would feel
a lot safer in that world.

00:49:03.120 --> 00:49:06.477
>> And then you you also want there'll
need to be some connective tissue here

00:49:06.560 --> 00:49:09.837
because you'll want your Hermes or other
agents to be able to communicate with

00:49:09.920 --> 00:49:12.237
those other >> But that
that to me seems like a nice

00:49:12.320 --> 00:49:14.557
abstraction layer, right? So my in

00:49:14.640 --> 00:49:16.797
theory the Amazons and JP Morgans and

00:49:16.880 --> 00:49:19.357
Coinbases the world will

00:49:19.440 --> 00:49:22.317
architect their agents that they know

00:49:22.400 --> 00:49:25.757
not to give out any of my stuff but they

00:49:25.840 --> 00:49:30.637
can at least report up to some
agent and at least give them data.

00:49:30.720 --> 00:49:33.117
>> Yeah. >> You know
and then I could have like an

00:49:33.200 --> 00:49:36.717
agent that manages all these sub agents
for me but does doesn't actually have

00:49:36.800 --> 00:49:38.477
access into my systems.

00:49:38.560 --> 00:49:41.037
>> That's right. um that feels a little

00:49:41.120 --> 00:49:44.077
complex and like what something someone

00:49:44.160 --> 00:49:48.077
like me might want. But I don't know
that that's mainstream. Like there's a

00:49:48.160 --> 00:49:51.437
part of me which says like the mainstream
person doesn't have this problem.

00:49:51.520 --> 00:49:53.597
>> Yeah. >> Yeah. Yeah.
The main person might not

00:49:53.680 --> 00:49:56.397
even have this fear. I mean I think
over and over time and time again I think

00:49:56.480 --> 00:50:00.797
people will will jump over any hoop if
they if they have magic at the other end.

00:50:00.880 --> 00:50:02.797
>> People will do
the most convenient thing.

00:50:02.880 --> 00:50:06.557
>> Yeah. Yep. Yep.
>> Do you have enough material?

00:50:06.640 --> 00:50:12.157
>> All right. Uh we got 100 plus CEOs
out there uh wanting to network and schmoo

00:50:12.240 --> 00:50:14.637
for the next two days.
I think we got to get going on that.

00:50:14.720 --> 00:50:18.440
>> Awesome. Let's wrap.