20VC: a16z's $15BN Fundraise with Alex Rampell | The Best Companies Have Hostages Not Customers | The Best Founders Materialise Capital, Customers and Labour | Mid-Sized Funds with Die and The Future of Venture Capital

I think you want to invest in people that can materialize labor, capital, and customers. The way that I do it just kind of to be pithy about it is like we either want to buy any percent, any percent, of something that is absolutely working, or high ownership of something that could work. The best companies have hostages not customers. So, probably of the unicorn class, I would bet that maybe 5 percent will ever be able to go public. We were buying out of the money call options and we hoped they expire in the money. You don't necessarily think you could take it as a given that a small fund will outperform in a large fund. $15 billion. That is how much Andreessen Hororist just raised. It is over 20 percent of the entire pool of capital raised by venture firms. Today, I'm joined by Alex Rampel, general partner at Andreessen, where he leads their $1.7 billion app's fund. He's also led deals in Mercury, Playa, OpenDaw, and many more. And this is one of the best shows that I've done in a long, long time. I actually think to one of Alex's statements every single day, it's taught me so much, and it's very simple. Will the startup acquire distribution before the incumbent requires innovation? I have Alex to thank for that, and it always sticks with me. But before we dive into the show today, over 80 percent of Fortune 100 companies are running their businesses with air table. Air table combines AI with the scale of an award winning infinitely flexible no-code system, a platform where you can see all of your data in one place, and use it to make really big picture decisions. Think of it like Mission Control for your company. Air table goes beyond organization and automating repetitive tasks. It lets you use your data to inform strategy, monitor progress, and take action. 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Turing is the research accelerator focused on post-training reliability. They build realistic reinforcement learning environments, next generation data quality systems built from real-world operational traces, and coding data sets that stress models under the conditions where failures matter, state changes, workflow branching, brittle tool tools, and the coding errors that break RL agents but never appear in benchmark reports. In reality, a model may demonstrate correct reasoning in your evaluation setup, yet still select the wrong parameter or mishandle a code update in a realistic interface. Turing makes that failure visible and gives teams the signal they need to fix it. For labs advancing agentec systems, Turing provides the structure required to understand why these failures occur. To find out how, visit Turing.com/20Vc, that's Turing.com/20Vc. Alex, dude, it's been eight years. I'm hoping that my question asking ability has gone up in terms of quality in those eight years. Listen, I want to start $15 billion you raised today, and I was just looking at that, and I was wondering, in an age of venture today, do you have to go really big or go crafts and very small and boutique to win an adventure today? Yeah, I mean, I think this sounds like a bad word when I say death, but there is this kind of death of the middle that happens to a lot of asset classes in general. In venture capital, it was a tiny, tiny asset class at the beginning. Right now, it's gotten bigger, but it's really more of the end state of a lot of these companies is huge. I mean, Sequoia used to brag about, I think it was like 20% of the market cap of the NASDAQ was Sequoia companies, millions of like Apple and Oracle and all of these amazing names. They're very, very big, and companies go public much, much later today, so the ability to deploy more capital, more money, into kind of venture capital, which is no longer, you know, kind of sidetrack your series D didn't exist in like 1992, right? It's like that was an IPO. Companies would go public. I think Amazon went public at like a $600 million market cap or something. Like that was the norm. There was no series I series K series, you know, W you would just go, you'd raise, you know, series A, raise series B, raise series C, then go public, and consequently venture firms back them are very, very small, but also the exits tended to be quite small as well. If a very, very good scenario is you have a company that goes public at a sub billion dollar market cap, it's like, and you get five of those a year, like you can't raise lots of money, but now the opportunity is so much bigger. The five biggest companies on earth, or all technology companies, if you rewind 20 years, I think they were all banks. If you rewind 10 years before that, there were all oil companies. If you write, rewind 10 years before that, there were all Japanese companies during like the Japanese stock market bubble, but you know, the opportunity and technology is so much bigger, especially because these companies, you can, you can keep investing venture capital dollars later. Like I think that's one of the main, if you look at the money that we just raised, you know, almost seven billion of that is for the growth fund. David George has got a big appetite. Well, exactly, but this is the point. It's like, if companies went public after the series B, back in like the 1990s, and like the average IPO was $50 to $100 million of capital raised, you know, the strategy would be a little bit different, but the world has changed dramatically. And the opportunity size is so much bigger. And now you have technology companies that kind of pervade everything. It's like you're either, if you, if you are a large company today and you don't use software at your core, you're going to get eaten by somebody who does use software at their core and then kind of reverse engineers into whatever product or service that you promote. Every LPs as the canonical wisdom and the theory of venture, as you scale, performance goes down, do you legitimately think then that with the expansion of these markets, you can maintain 5x plus net funds at scale? Well, I think the difference, though, is that imagine that you're an LP and you have a billion dollars to invest. Would you rather get, would you rather invest $50 million and get a 5x on that? Or would you rather invest all billion and get a 3x on that? And the answer is you'd rather get a 3x on a billion than a 5x on, you know, 5 million. Or one of my good friends is this guy Mickey Malca at Ribbit. I was lucky to be an investor in his fund one personally. And it's like that was like a 55x fund on, I think it was like an $85 million fund, but 55x, like that's insane. But you know, at some point, you can ask Mickey this too, it's like, you're better off with like a 5x on like a very, very large fund. Like the harder thing to do is you just return gross dollars period. Like that's what LPs actually want. It's amazing to get 100 like, I've had two funds that I've invested in. One is Mickey. This other one is this fund called Angel Pad, which was kind of like a third rate competitor. I don't want to call it third rate. But it was like, it was not, you know, there was wide combinator and that it's like, there was Angel Pad, it was just like this, this small level experiment. That was 120x. I got 120 times the capital that I get, DPI, how big was the fund? I think it was $8 million. But this is the thing. It's like, that's incredible. Your point is very valid. Like, can you get 120x on a $2 billion fund? Probably not. I'm willing to bet you that you can't get 120x on that. But you can return far more dollars if you're very, very good. And this is the question that you originally asked was, and this is why I called it the death of the middle. Like my view is most asset classes, you either have to be a large generalist or a small specialist. And the hard thing is to be like a mid-sized generalist because then you're largely going to lose to like the big generalists or the small specialists. So like, you know, ribbit as an example, like they really focus on fintech. That's how I know them all. Like, that's a specialty. They're not trying to do everything or Kazakh in Latin America, like they are focused on a specialty. And they can be small. Like, they're not trying to do everything across the entire planet. The entire job of venture capital is to find, pick, and win investments. If they're good investments, the winning is very, very hard. And the winning therefore goes to the person that is like the bet. Like, you have to sell. Like, this is a sales job. You know this, right? You have an entrepreneur. They're amazing. They don't come along very often. This is the best entrepreneur you've ever met. You have to convince them to take your money. And how do you do that? You have to say, I am the greatest person in the world to help you, which means I have this amazing specialty. And or I have all these things that I can do for you. I'm connected to everybody on the planet, given the scope and scale of my kind of generalization. I'm like, on the big side. If I'm just like, Hey, I kind of do a little bit of everything and I don't really know that much about your business. And I'm not that big and can't help you that much, just you're going to lose. That's why the death of the middle is what tends to happen for a lot of these asset classes. And then LPs, they want to chase returns. It's also sometimes hard to reach LPs. So like, you know, the big generalists kind of gobble them up or the small specialists that generate very, very good returns. Well, we'll gobble them up as well. I have so many things to say. The first thing I do just want to say is Mickey Malker. You mentioned Mickey when I was 18 helped me and agreed to be a mentor of mine 12 years ago when it was not obvious. I had no idea why he spent time with me and he's been incredible to me ever since. He always taught me. He'll never won or lost. You're only ahead or behind. Keep playing. Yeah. And I love that. You mentioned that about kind of the scale of dollars and actually wouldn't you rather do two five X on two 50, then I don't know, 15 X on 10 or whatever it is. Yes. But there's an opportunity cost of dollars. And for an endowment fund, they are able to put it into the smaller fund. And so do you accept with that them that you just scale out of certain LPs and it's no longer the best risk adjusted place to put money then? Well, but I think it's obviously you can't you can't disprove an unknown future. But I would posit to say that if you were trying to find picking win the best deals and maybe you disagree with me on like the kind of the small specialist or large generalist. But who wins the best consensus deals? Every now and then there will pop up a non-consensus deal that everybody thinks is terrible. Nobody wants to Sequoia doesn't want to do it. We don't want to do it. You don't want to do it. Nobody wants to do it. And then it ends up being a thousand X and then somebody who is not the best new investor firm, you know, ended up winning that deal or being sold that deal, I should say. And then it ends up with a great return. But a lot of the best deals will go to the best firms. Like that's what's very different about venture capital than like private equity. Like if if you and I are trying to take a public company private KKR and on Blackstone or both trying to take over RJ or Nabisco or something like that, they're just going to sell to whoever offers them the highest price per share. I mean, they have to. Whereas in venture capital as you know, you have to win the hearts and minds of the entrepreneur and win that deal. And a lot of the best deals are somewhat obvious. Like it's not surprise like everybody wanted to invest in Uber. Everybody wanted to invest in Facebook. Like it was self evident that these were very, very interesting companies. Maybe maybe when the price gets high enough, there come some doubts in people's minds. Like, ooh, I don't know if I want to invest at 87 million pre for the series A of Facebook. But everybody wanted to do it at 20 million pre. There are a lot of companies that people don't want to do at any price. But the reason why I'm saying this is, I don't necessarily think you could take it as a given that a small fund will outperform a large fund. Now I think it has the capability mathematically. Like again, if you're if you're Mickey and you invested the series A of Coinbase and you have a very, very, very small fund, of course, you can generate a bigger multiple of that fund. That's just, you know, algebraically true. But the best deals in Fintech, like Mickey gets to do them because he's a great firm. And he has a much, much bigger fund right now. So that's the thing that I think it's hard to know. I mean, it's like, again, I agree with you algebraically. I would put my own personal money and I do it, right? It's like, I invest in our funds. Like, I would put my own personal money in funds that have, you know, kind of the small specialist or the big generalist because I think that's where the best returns will be. Can I ask you, when you think about the best returns, what is the multiple of your best return give or take for a single deal? There's a seed deal that I did probably marked up at like 200 X right now. You said about consensus deals and I immediately thought of actually an Andreessen deal, which is like 11 labs, which was the most non-consensus deal ever at seed, where I was like, you're competing with open AI, you're in London, it's a pre-seed, it was very non-consensus. When you look back at your best deals, have they been consensus or non-consensus? Well, I think, but if you look at 11, the entrepreneur was pretty consensus. Like, it's like, all right, Maddie's super, like that whole team is incredibly talented. Sure, but the pre-seed and the seed, a lot of people turn down. Yeah, but I think our job, that way if you agree with me, is we find the smartest people in the world that have very high agency. Like, there's been this thing going around about agency. How do you define it? People will, they're not going to be told what to do. They just take matters into their own hands. This is a very rare trait, right? You obviously have this trait when you could have just done the normal thing for a 19-year-old to do, or however you were younger than that when you started doing it. Right, it's 17, yeah. It's like, what you did is not normal. You had agency and said, I am going to not do the normal thing. I'm going to go like, email every famous VC to death and get them to talk to me and like, it's pretty incredible what you've done. That's a very rare trait. You find people like that that are hopefully experts in their domain. And I think this is why the specialty thing that I mentioned is very, very important. I believe that there is a certain level of consensus around who has agency and who is an expert in the domain. Like if you talk to an amazing entrepreneur, it's like, wow, this person knows everything about this. They've studied it for decades. They've read every book about it. They've talked to every entrepreneur who's tried this before. You have to give them money. It's our job. Our job is to find these people. Give them money. It won't always work for sure. But I actually don't agree that 11 was a non-consensus deal. Like if it was a high enough price, if it was not a seed, if it was like, okay, it's a series B, they have half a million dollars in revenue and it's shrinking every month. Yeah. Of course, it's not going to be consensus. That was going to be my question, which is like, at what stage does that no longer hold true? The series A partner who leads our series A fund is like, ah, the seed guys have it easy. Right. Amazing founder. Great. Let's roll the dice. For us, it's not quite enough. There comes that series. Is it the series? No, no, I agree. Like at some point, reality, it converges with reality. And if my kids and I have been watching a Silicon Valley of the show, and like there's that famous scene where it's like, wait, you know, they got, you know, the Mark Cuban character is out of the food. He hears revenues. No, no, I can't do revenue. You have to be pre-revenue because then you're a pure play. So there is this element. I mean, the way to explain this financially is we buy out of the money call options. You know what a call option is, right? We were buying out of the money call options and we hope they expire in the money because this is how I explain to people like why it is that a series A that has a million dollars of revenue and is losing $10 million a year is, you know, worth $100 million. Of course, it isn't worth $100 million. What you're doing is you're buying 15 or 20% of the company and hoping that eventually your call option expires in the money. That's the thing that you're doing. So eventually that value converges on like the equity value. It's like, oh, what's the discounted cash flow blah, blah, blah, blah, blah. Once it gets closer there and it's not a binary thing, right? Like at the seed, it's like, okay, out of the money call option, this guy or gal is very, very smart. I want to buy 20% of whatever they're doing and hopefully it expires in the money. And like they're the smartest person I've ever met. Like we do those deals 100 times a day. We will do them 100% of the time. Consensus, non-consensus. Like there isn't really anything to be consensus or non-consensus on, right? It's just like this is a very, very smart person. It only becomes non-consensus to your point when the price goes up high enough because I think most people have the same viewpoint of this is a very, very high agency person who has studied history like there's a, there's a memo that I wrote internally for our firm about how to invest in people. And I think you want to invest in people that can materialize labor, capital, and customers, especially today where people get paid a fortune to stay at OpenAI or Anthropic or Met or any of these companies. If you quit your job to start a company and you can snap your fingers and five people follow you tomorrow for a 50% pay cut, that's pretty magical. Like that doesn't happen every day. So that's the materializing labor. You also want to make sure this kind of goes into the consensus, non-consensus part. Like is this person really good at fundraising? Like are they telling a good story? Can they convince people like me to give the money? Oh, wow, they really can. That means hopefully that N plus 1 N plus 2 N plus 3 rounds will be a little bit easier. They will converge on reality in terms of numbers for sure. But they have the thing around raising money. And then this is more of an enterprise-focused thing. But can they get their first five customers, which is as hard if not harder than getting their first five employees? Because imagine this company toast. You know, toast. It's the restaurant, POS company. Yeah, I love them. I did. I'm a vertical saasner. I know. I love vertical saas, right? But like imagine that you're Chris at toast. You start this company. You go to a restaurant and say, "Hey, I want you to use my products." And the restaurant asks some very good questions. I was like, "Okay, well, how much cash do you have left?" It's like, "I have a week." Okay, interesting. How many other customers do you have? Zero. That's impossible. How can you pull that off? If you are this rare breed of person that can materialize labor, capital, and customers. And then I have kind of two sub appendages after that. I really, really like people that have studied the history of the space. And I say this because the best entrepreneur is that I've met, they have learned everything about the space. To show what a great investor I am when I was running my company, Trial Pay, I met with I think Patrick Callison. I know a lot about payments. I've been doing like payment stuff since 1997 on the internet, which is kind of early stages for internet online acceptance of credit cards. Meet Patrick. And I obviously I passed on doing the seed round of Stripe because I'm a genius. It was called Dev Payments at the time. I was not in the recent Horowitz, so don't hold it against me. Didn't hurt our DPI. And luckily the firm invested in them. But two things. I asked Patrick, "Where are your customers going to come from?" Because everybody uses Chase Payment. He's like, "Oh, my customers don't exist yet." It's like the stupidest answer I've ever heard. But obviously I'm a genius. But number two, what really did impress me is that he knew everything about the history of the payment systems. I think he actually went out to go meet Dee Hock, the founder of Visa. John Callison gave me a book on like one of those Springer, Yellow, you know, academic textbooks on the origins of the payment system. Like just they had studied history so much. Same thing for Vlad, Robinhood. Steady history so much. Same thing for a pervert Instacart. Like you know, went out to go meet the founders of WebVan. This is a very, very classic trait. On the other side, I will meet people that will start a company almost exactly like Trial Pay. Or almost exactly like a firm. And I know a lot about these two companies because I started them, right? And they're like, "Oh, what was Trial Pay?" Or, "Oh, I had never heard of this." And it's like, "Come on, man. Like how are you going to spend 10 years of your life building this thing?" And you really should study history. Brian Chesky at AirBnB studied everything about you know, bad and breakfast in hotel industry in the 1800s. Right? So, let me just finish with this. So, again, labor capital customers, study history. And then my favorite book of all time is the Kahnemana Christo because it's a story of revenge. And the reason why this is so important, if you know the book, it's by Alexander Dumas. Edmund Dantes is wronged. He's sent to prison for, you know, bogus reasons for supposedly being a Napoleon supporter for like 17, 18 years, eventually gets out, becomes the richest person in the world, but doesn't give a fuck if I can use that language. Just does not care. He wants revenge. Like he wants to destroy his enemies in just like conquer the world or just really destroy his enemies. And you need that kind of motivation because going back to fun size, if somebody offers you $100 million and you're an 18-year-old kid, that is transformative, you'd have to be an idiot to turn that down or you have to want revenge or redemption. Revenge redemption kind of same thing. And I find a lot of the best entrepreneurs, they have that going. Like they want to prove they're better than everybody else. They had some childhood chip on their shoulder or, you know, they were wrong at their last company, you know, like Dave Duffield has this hostile takeover of people soft. Of course, he starts work day and he's like, fuck you Larry Ellison. Like there's always that kind of energy. So the kind of monochristo thing, I don't know how to describe it, but like the motivation has to be beyond, I want to make $50 million because if that's the motivation, like it's not going to work for our fun size. I love seeing that, that fire and again, like a lot of the most successful companies that I've seen, they always have that, like Renault Laplac starts lending club fired from his own company. He's made tons of money, doesn't give a shit. He starts a competitor called upgrade, no, no accident that the company's called upgrade. It's like an upgrade over UMFers, right? Starts upgrade. Upgrade has a multiple of the market, it's probably like worth 10 times more than lending club now. So that's a very, very classic commonality. I want to stage the questions like because there's so much to unpack. You said there about kind of you love them studying history and you said about passing on stripe. That was my concern, which is there is a level where you can know too much. I think I know quite a bit about landing. Now I know beginners, beginners compared to you, but I know quite a bit about landing where it's quite easy for me to stay to see a landing business and go, ugh, fucking horrible. It's a hard market. I don't want to be there. Look at landing club. Look at the market cap there. Very dismissive. As many were with stripe when they knew payments. How do you prevent yourself knowing too much that it's a negative? I think this is a great question and this is the number one thing that, so I do a couple things. Number one, if it's like an ad tech company and a lot about ad tech, I know a lot about payments. I will force somebody else to join me for the pitch that is like a beginner's mindset mind. So I think that's one is just like have a sparring partner internally that has that, you know, what if it works? You always have to be like, what if it works? That's number one. Number two is I like to ask the entrepreneur is like, what is different? And the thing that's different, like the reason why Patrick and John made stripe work partially is it's like they just believed that a great number of new companies will be created and they're going to pick the best product and they're going to have the best product. And actually, this informs a big part of my investment thesis now. I mean, I call it Greenfield, but there's a saying that I use a lot, which is the best companies have hostages not customers, right? It's like, you'll appreciate this if you're an enterprise sass guy, right? It's like the best companies have hostages not customers. So if there's a company that has something marginally better than work day, right? They're not going to go like work day has hostages. They don't have customers. They're not going to go be able to sell GE and say, oh, wow, I love you to YC kids. Like, I'm totally switching my HRIS from shitty work day to amazing, you know, AI, whatever YC Silicon Valley HRIS never going to happen. But if the rate of new company creation is high enough, those new companies will pick the best product and they're like, oh, wow, I could use work day, but I'm not a hostage. So I'm free. I'm going to pick this other thing, like I was the first investor in Mercury, the, you know, SMB bank. And like, until SVB failed, they never stole a customer from SVB. But if you're a brand, as long as the rate of new company creation is high enough, you can play this game that I called Greenfield Bingo, where it's just like you pick every software category, you build a better version of that. And then you've got a shot. And that's what stripeless. I mean, like, that's why it worked. If the rate of company creation is very low, like if I build a better EHR like electronic health records company, it's just not going to work. Because the rate of new hospital creation is too slow, right? It's like you can't just, you can't just sell to the new companies, but you can do that for payment processing, right? You can do that for ERP. You can do it for a bunch of other categories. So you will look for Greenfield Bingo markets where the rate of net new companies being created will supplant the slow, slow sales cycles of the larger enterprise customers who will eventually switch. Or maybe they don't, right? It's like, who cares if they switch or not? Like it's like, they'll hopefully die because they're using shitty software. Like the fact that they won't switch is actually indicative of like their mantra on everything. Like they want to use old technology or their hostage to old technology. Let's just sell into the future and you know, betting on the future is more fun. I mean, like one of the things that's very, very challenging is you go start a company. You recruit 10 hot shot people from meta, Google, whatever. And then they're bored to death. Why are they bored to death? Because they can't do anything. It's like they were used to making little tweets that a billion people experienced every minute every hour. And now they're at a startup. And the startup, it's been one and a half years and they've made one sale. That's quite, and then like you end up losing your talent because it's boring. Like you can't actually do anything. So, you know, it's nice to have these markets that can ramp quite quickly and you kind of want the market to be a tailwind for you. It doesn't mean that there's not value in kind of creating big companies that sell big, you know, startups that sell big software products to big companies. You can do that. It's just, it's a much, much harder thing culturally for Silicon Valley, I think shows are a bit like venture, which is the majority that you do are actually not very good. And then you get the once in a while episodes like this, which reminds you why you love what you do so much. You know what I mean? When you meet that special founder. Oh, 100%. So great. When you have a show like this, my question to you is you said hostages not customers. How should I think about that then in a world of cursor or any of the foundation models to anthropics or your open AIs where they are customers, not postages, they can switch very easily. The promiscuity of customers has never been higher. How should we think about that? It's, it's a really good question. I mean, this is where behind every technology revolution and kind of go back to like Silicon then the personal computer, then the internet, then kind of internet 2.0 where you could write to the internet things like things like Facebook and YouTube, then mobile, then cloud. There's always been infrastructure layer and an application layer. So you know, you go about like the infrastructure layer for PCs was, I don't know like Microsoft and Apple like the operating system players, the infrastructure player for the internet was like Cisco and Akamai. The infrastructure player for everything AI are all of these backend model providers. And then there's the application layer on top. So if I do something, you know, we were talking about ask Leo, right? Like that's an application layer company. If I were a lot, I would love to be promiscuous with all the backend models because I should be. And then the infrastructure players are like, oh shit, you know, all of our customers are being promiscuous. Let's figure out how we specialize in a particular area. Imagine that, like, that's why I am anthropic. I imagine has gotten very good at coding. But it's kind of the application layer tends to be a little bit stickier. But the problem is you might have 9,000 competing companies at the application layer. In which case you'd rather be the infrastructure layer. So the infrastructure layer is pretty hotly competed as well right now. So I don't know. I mean, it's the more relevant question for me is in 2025, the ability to go create a software product is so easy. I published this chart with the help of my friend, Shatchy PT, of how long it took Vizekalq, which was the first spreadsheet that came out in 1979 to lose to Lotus 123. And then how long it took Lotus 123 to lose to Microsoft. But it took about five years from Vizekalq to go from 100% market share because there were 100% market share because they were the only one in the first to 50% market share. It took about 15 years after that for Lotus, which had, you know, 70% market share in 1986 or something to almost zero. These, this would normally take a long time. In 2025, this can take weeks, which is bonkers, right? Because all of these layers of past innovation have kind of, like, almost like a Russian nesting doll, kind of concentrically grown against each other. So because you have cloud and because you have mobile, everybody in the world has a smartphone in their pocket. All of those smartphones are connected to, like, you know, infinite computing in the cloud or near infinite computing with, with like a, a dearth of energy in the cloud. And now I build something marginally better. I can get into the hands of a billion people overnight. And that's just so, so different. But I think on the hostages point, if you build a system of record, right? Like it's just so hard to switch that that has not changed. But now I can go compete. I could build a software product in like two weeks that would have taken me two years. So that's going to massively increase the pressure on the application layer. So the best thing that you can do if you're an application layer company is hopefully, you know, have something that, you know, I hate to say it, but it's like, you want to have hostages. You want to have all of the data in your company. You want to have all of the data of your customer in your, in your product. And then just make sure that, and this is, I think, the thing we talked about last time was on your show. It's like, you know, the battle of every startup versus incumbent is whether the startup gets the distribution before the incumbent gets the innovation, right? So what do you do? You go boring. You build the most boring thing possible. Nobody really cares about it. Nobody's that interested. I mean, it's quite a lot of loud it, you know, ask Leo is like, who cares about procurement? It seems kind of stupid. It's not attracting 9,000 competitors. But hopefully you get all of the data in there. And then you can build these interesting things on top and you're not going to attract that much competition. And even once you do, it's just, it's, it's kind of hard to switch. So I don't know if that answers your question. It totally answers my question, but it leads to several more questions, which is a theme of this discussion, which is the speed with which it takes to compete with the incumbent has reduced. And you are able to take customers or market share quicker than ever before. With the extension of private markets, do we not have a liquidity problem then? When we look at, I don't want to pick on anyone, but fuck it, I will say like a company like Sneak in the cybersecurity market, which has been going, it's now getting eaten away by new incumbents before it's had the chance to return shareholder money, liquidate. And so do we not have a fundamental challenge here where companies that have not gone public yet or not provided returns to investors are already getting eaten away because that compression time is shorter. Yeah, I think this is a big challenge. I mean, if you look at all of the unicorns and how many conform to rule of 40, it's pretty small. Many of them are shrinking. So probably of the unicorn class, I would bet that maybe 5% will ever be able to go public, which is kind of shocking, right? And then because so much money has gotten into venture capital, you have this problem of, I mean, I will say on the record, I hate massive secondaries because it kind of turns you from the kind of monochristos to like the, you know, whatever the opposite of that would be like the, I'm now going to go vacation in the code desire or something like that's going to now say, I am now at a fundamental disconnect from my employees and my investors because I'm rich and they aren't. That's not a good setup. You kind of want everybody to be in the same boat. The reason why I mentioned that is like you have some companies where it's like, you know, founders take out a $50, $100,000 secondary. That's fine. If they just turned down a $10,000,000 acquisition from Google and they're the kind of monochristos and they want to go for it, like, okay, that that can make sense to me. And if you offer that to all employees and all investors and everything else, I don't love the idea of it's like people are looking at this as spreadsheets. There was a, there was a fund in 2021 that did like a massive secondary into one of my companies and I was really against it, which made me super popular with the founder. You can imagine. They were like, oh, we own 4% of the company. We want to own 8% of the company because 8% is more than 4%. I'm like, dude, I totally agree with you. 8% is more than 4%, but you have now introduced moral hazard into the equation because if you give somebody generational wealth, you can hope that they're going to kind of make it like that the upside would be like, they're going to swing for the fences and go for it because otherwise I would be happy selling for a billion dollars now. It's like, fucking, I'm going to go for 100 billion. Okay, that's great. Now we're all aligned. But the other option is now they don't care about getting liquidity for investors. They don't care about getting liquidity for employees. They're quite comfortable. Like, you don't want to have that set up. I don't think that's actually the problem. I mean, this was a greatest of respect. I think we assume the next strategic steps will be the same with that money versus without that money. I think what we've both seen is the foie gras of startups and then they do 10 things, not two things. None of them work. The team is disincentivized. They break up culture sucks. Moral hazard. That's the economic framing. It's moral hazard on both primary and secondary to your point. Necessity is the mother of inventions. If you have 100 billion dollars in the bank, when you really should only have 10 million dollars in the bank, you're like, ah, I'll do 50 things. I'll have multiple layers of people that I don't need. It's interesting. I find that a lot of people, when I think about like the difference between conservatives and liberals or people that believe in big government, small government, a lot of it comes down to the disconnect between more input is better output. Like a lot of people just believe this. It's like, okay, the IRS, the internal revenue service, like, oh, you know, there's a lot of tax fraud. We need to hire more people. And if we have more people, we're going to do a better job of catching tax fraud. Or like, oh, the military. We should have more people in the military because that way we're going to do a better job. Whereas actually, as you know, it's like sometimes there's addition by subtraction. Like if I have a smaller team, there's less communication necessary. You're going to come up with more creative ways of actually solving the problem. You're going to solve it with technology. Whereas if you just say I'm going to solve it on the input layer, I'm going to like address my constituents by saying, I'm going to just allocate more money to this thing. You're going to get a worse outcome versus I allocate less money with great people. This is the key. And you can't just say like, I'm going to allocate less money and give you the worst people on on earth. And then no, but it's like, you know, take, take tax fraud. I would rather have two people at the IRS than 80,000 people, but have those two people be the gnome Shazir and some other like super genius. Because if Jeff Deane and gnome Shazir are running the IRS, like, oh my god, like that would be so much more efficient. But the input cost would be like one 100th as much. And there's always that disconnect. I actually am in trouble with my team because I just tweeted today series a is the worst place to be investing company progression is minimal prices four to five X to seed price. And we're paying a hundred and fifty to two hundred XR with little signs of product market fairs. Do you agree with me is the worst place to be investing? Well, I think the problem is that there's the nomenclature, which kind of varies company to companies. So like when I started trial pay, we raised our series A was 3.1 million on 9.5 million pre. And that was expensive. I remember like arguing with the partner at battery, it's like, this is the most expensive deal we've done. This was 2006 at side advisor. I think we raised 2.7 on 2.7 pre. So even lower heads. Hence, he was right. So now you have a pre-seed a seed, a seed extension, a seed extension to like it. What is a series a right? There's not like this, like normally a series a would be like the first institutional round of money. Now there's so much variance because like, oh, there's the series a where it's like five superstars out of open AI and they need tons of money for compute. No moral hazard on that. You're not going to go spend money on people. You're going to spend money on GPUs. That's one form of series a and other form of series a is like, I just did a series a where the company had like $10 million of AR when I invested in it. So it's just all over the place. So I think it's just hard to kind of cast a generality. There are certainly ones where like I used to call this the series B trap. But again, I think the nomenclature is shifted. Like I would have agreed with your team if you called it the series B because at that time there was a seed, there was a series a and the only difference between series a and series B is that you increased your burn and built infrastructure and kind of scaffolding. So it's like, I have a company. I have customers. I have signs of product market fit. I know now I should hire an HR team and a marketing team and all this other kind of shit that doesn't actually have any kind of impact on the metrics of the company. And that was the series B, right? And then it's like, why would I invest in a series B because I get half as much ownership and nothing has changed vis-a-vis the series a. So yes, there's a class of series a is that look like that. But I would say like of the series a is that I personally did in the last year like most of them have been like holy shit like revenue is really scaling and these numbers are insane. And you know, those were those were series a is that I get very excited about those. But I think your mileage varies because the nomenclature is all over the place. Do you worry about the quick succession rounds? When you look at companies like a Rillit or a TACTO, there's just like a week later there's another term sheet for a series B with literally no change at all and it's buying the cool option. Do you worry about those rounds? Well, I did one of them, right? Like I'm on the board of Rillit. I did the series B and it was 60 days after the series a and that's unfortunate. I would have rather done the series a or rather done the seat of course. But if you find the winner, it's also very expensive not to do that deal. So that's so interesting that I'm so pleased because I'm so sorry, dude. I totally forgot that you did the Rillit B, but like you got to pay up for that. Going to the point you've got to assume that the next strategic steps will be the same and be as focused even though you have just for a guard the company. Sorry. Well, but this is where I think the motivation of the founder is very, very important. So going back to, like I mean, Nick, who's the CEO of Rillit, I mean, I think he does have a bit of the countermod of Christo and him, like if it's like, he doesn't want to go take this money and go spend it on extravagant things. So I think you have to make sure that there's kind of like founder capital fit. Nobody ever talks about that. It's like, okay, if I give you a billion dollars, what will you do with it? And 99 times out of 100, the answer is going to be bad news. And not even bad news around waste, but just bad news in terms of mindset. Like it's another form of moral hazard where it's like, I'm never forced into making hard decisions because I have infinite capital. And you kind of want to force people into making hard decisions. And like I live this. I mean, I've tweeted about some of these things during my, my painful existence of trial day where, you know, I think we had a layoff 70% of the company and then we eventually turned it around and sold it to Visa and there are all sorts of tough times therein. But you run into these like very, very challenging scenarios and it's like option A is bad, option B is bad. You have two choices. You're at a fork in the road. And there's a funny expression by Yogi bearer, this famous baseball player in the US, when you come to a fork in the road, take it. It's like, what does that mean? He said all these things that make no sense. But what a lot of entrepreneurs don't realize is that the worst option, you think you have two options, but there's a third option, which is making no choice at all. That's the worst option. You're better off like just choosing something and both of them are bad. This option is very bad. So therefore, I don't want to make any choice at all, but you're better off making a choice and committing to something. And if you have infinite capital, you could just kind of continue this. I'm not going to make any choices. I'm just going to sit here and just like, all right, well, I have more money. You know, my ARR is more driven from the interest on my my giant $100 million cash reserve. If you, if you, sorry for rambling on this, but like this kind of goes to like founder capital fit, there's a certain type of person where it's like, I give you a lot of money and I know you're still going to make decisions very, very quickly. I know it isn't going to distract you and really it's just benefiting me. I hate to say it selfishly, but it's benefiting me is in that now I'm on the cap table. I own part of this amazing company and it's not going to fuck up the company. The moral hazard is the number one thing. It's like, now it's going to fuck up the company, either with too many, too much primary or it's like, oh, I know, I won't, I won't mess with the primary. I'll just buy a secondary. It's like that also has, you know, existential risk. As I mentioned, for a certain class of person, there are other CEOs. They're like, you know, one of my, one of my CEOs did a very, very big secondary in 2021. Like he and the company is, is hit on some tough times, but like he is stuck it out and like he's doing a phenomenal job. How do you get comfortable about growing into that price that you have well overpaid for? So again, we're super candid and this is where I love where I'm had in my stage of life now versus where I was like eight years ago because it wasn't coming the same. I lost to Seamer on your team for our SLEO. These amazing, you guys are amazing, hugely well-deserved. You guys did not pay more than me. I hate this bullshit VC thing where I was like, oh, there it was like the same. You just beat me far and square, well done. I reflect on that and I'm like, you idiot. You should have paid 300 and doubled them because when I map out 18 months time, I looked at their revenue projections and in 18 months time when they need to go raise, their revenues would have been so much that I could still see a 3X on that 300. That's how I get comfortable with paying up for something. How do you get comfortable preemptively paying up so much? I mean, I think it's the same, it's the same math, but it's dangerous on both sides, right? It's like, I always have this speech that works, you know, maybe one time out of a hundred that I give it, which is kind of like the Spider-Man speech of like, with great capital comes great responsibility. And if you raise it too high of a prize, you're fucked because I live this. Let me tell you my story. I raised it this price for my series C. Then I had like Google that wanted to buy me, but it was like at the same price. So therefore, it tanked the thing. And then my next round, everybody asked me what was the price of my last round and nobody wants to invest like, I go tell this story. I can introduce the founder to 10 other founders that that have lived the exact same thing. It's like, I wish I hadn't raised my round in such a high price, but who starts a company? Let's just think about this for a second. The people that start a company are irrationally exuberant. Like if they thought that the company was going to fail, if they thought they had a 0% chance of raising a series B, they wouldn't start the fucking company, right? So that's why the speech doesn't work. Because I always tell people like, Hey, the reason why you shouldn't raise your series A, like there was a deal that I guess we should have done candidly because like this company just raised it like a billion dollar plus valuation, but we turned it down. Company had like less than a million dollars in revenue and they wanted like a two hundred million dollar, whatever post money series, it was just so crazy. I was like, look, you guys haven't started the company before I have not to like pull the old bald guy card, but like your series B, like even if you have $20 million in revenue, you're fucked. Like you have to be able to walk into a room. The number one question you're going to get is what was your last round price? And people should be wanting to compete to pay three times that price. Like they were like, Oh my god, what will it take to do this deal? And if you say like, Hey, my lap, my series A was raised at a billion and I have a million dollars in revenue. You have ended the conversation. Nobody want the psychology of that round is all wrong. So I give this speech and it just doesn't work. Unfortunately, but but I think the smart entrepreneurs, they kind of have this risk balancing thing. It's like they're irrationally exuberant. That's why they put their job and started the company, but they realize, Oh, wow, there actually is a good point around like my whole team now says we have a hundred million dollars in the bank. They're going to be wasteful. That culture is something that I don't want. Yeah, I guess I would want the option of maybe selling the company for a billion dollars and having, you know, sales force come in and say, what would it take to buy the company? What was your last round price? Because I will tell you 100% of the time in every M and A conversation and every fundraising conversation, the number one question, the first question is what was your last round price? And if it's like insane, they're like, Oh, that's not good. Hi. And then as an entrepreneur, you're like, Oh no, no, but I would take a discount because my company sucks. You can't say that. It just destroys the entire conversation. It just game over. Can I ask going, there's just stage conversation, although I was going to lose the thread here of what I want to ask you. We mentioned kind of the, the real adamant and the successive rounds. I hope it's not too forward. And you can say, dude, don't want this in there, but like, you do the successive B because you lose the A. When you sit down and we're sitting down as a team, how do we reflect on that? When you reflect on like a really review, what was the takeaway from that when you sat down? Well, I mean, there are a lot of deals that we lose because we're not willing to kind of go the distance on price. That is a common thing where it's like, do we really lose it? Like this has happened to us a number of times. It's like, all right, we want to do the deal. And this is again, like consensus and non-consensus. A lot of times the difference is just on price or ownership. If we had shown up and said, Hey, we'll do 10% of this company for an A route. Like we could win every deal. It's actually, I think one of the, one of the competing elements that is shown up, I'm interested to watch how standard capital does. This is kind of the YC offshoot. I'm going to take 10%. That's very, very bad for big funds because in order to make the math work for a big fun, you have to have high ownership and you know that your ownership will get depleted or will get diluted over time as option pool expansions happen, even if you take your pro route and every single successive round. So, I mean, we can win all these deals, but a lot of times, you know, I am much more preoccupied with ownership at the A because we're buying it out of the money call option. And the reason why I kind of tell this story is because there's something that I've used as a benchmark, which is if you're hiring people and 100% of the people say yes to your job offer, what can you infer from that? Number one, you could infer that you're the greatest hiring manager of all time. But number two, you might be overpay. Would you agree with that? Like, if you only get 50% or 20%, like, how do you know to test this hypothesis? And if you win 100% of the deals, that's a very, very good sign. You should try to win 100% of the deals that you want to do. But if you're winning them with very low ownership, you're probably not testing like this kind of efficient frontier of like how far you can go and you want to have more ownership, right? That's our objective. Like the founder wants less dilution. The investor wants more ownership. The two are like kind of perfect compliments of each other. Eventually, you realize, like, I don't want to be a fucking idiot. Like, this is the answer to your question, right? It's like, all right, I wanted 20% in an A round for a company. It doesn't have that much traction because, you know, I'm at Andreessen Horowitz and I've got this big fund and everything else. And then it's like, no, no, they're going to do a 15% round or whatever. It's like, oh, fuck that. I don't want to do that deal. And then it's like, holy shit, they've run away with the market. This is the market leader. I'm not going to be stupid, right? I'm not going to just say that this is why actually, by the way, I love talking to investors because investors like most humans do not have the capability to admit that they were wrong. Like, they just want to like say, I'm right, I'm saying, I'm right. I say, well, if you're an investor, you're just going to lose money all the time. The most valuable insight that you can have as an investor is the self-reflection to say, I'm an idiot. And if I'm a hedge fund guy, it's like, I get to sell. It's like, oh, I thought I was a genius, you know, buying herbal life blah, blah, blah. Like, oh, wow, this company's not good. I'm going to sell everything versus, no, I want to prove to the world that I'm right. Well, I'm going to lose all my money. So it's the same thing here. But for upside, we can't sell. But we can say, like, this is the winner. I want to be in the B at a lower ownership because like, this is the fucking winner. But if I was your partner, I would be pushing you with all my might to take the 10% at the A and have a higher win rate, specifically with your profile of fund because I get it in other funds where you don't have the ability to follow on and lead the B, the C, the D. You may even not be able to do the pro riders in which case, I get that thinking. But when you can, why are we not having a higher win rate and doing 10%? Well, I mean, this is actually one of the things that we looked at because I kind of feel like my job here is kind of quasi portfolio manager. So I run our apps fund, seven different funds. And my job is to make sure that like that fund is as successful as possible. And, you know, we're winning the right deals that we, if we just say, Hey, everybody win every single deal. Just win every deal doesn't matter. That's all I'm going to optimize for. And we end up with 5% checks in every series. Yeah, like, you know, that's not going to work. Right. You win every deal that way. What is the front? How far on this curve can you go? And it's the, again, it's the exact inverse conversation that an entrepreneur is having where it's like, I want a tier one investor. I want, you know, an amazing specialist. I want whatever I want to on, you know, this person I want on my board. What is the least amount that I can give up to get an amazing person? And they would love to get 5% around deals done. But they're like, Oh, wait a minute. Like, that's not going to work. And like that, that's the tension between the two. So I, I, I agree with you. But I think, you know, where do you, it's like Zeno's paradox, you know, that is right? It's like, you will never get to the destination if you go halfway each time. Like, is it nine percent? Well, why not just do it at 9%? Why not do it at 8? Like, where do you draw the line on that? I would, I would do the simple mass of where do I think? And this is a very dangerous and bad answer to your question because the biggest mistakes in that you have been when you underestimate market size and you don't see what it can be. But I'd sit down with you and I'll go, okay, 10% and three, 5% on access, assuming a 50% dilution. Do we think this can reasonably be a 15 billion dollar company? If so, that is a number that returns the fund with comfort. I know, but the problem is it's kind of garbage in garbage out. It's like, you could always say that for something because otherwise, you're like, Oh, wow, I underestimated the size of the black car market. It's hard. I mean, the way that I do it just kind of to be pithy about it is like, we either want to buy any percent, any percent of something that is absolutely working or high ownership of something that could work. If you really kind of draw a line of like that, you have to buy and forget the market. It's like Facebook. If you look at that round, I think graylock put 25 million into Facebook. Actually, I think the route was maybe 25 million at 500. I think that was the B round for Facebook, but it's between Maritek and graylock. But that was absolutely working, right? So it's like, are they getting 10%? No, are they getting 5%? No, like, but it's like the market winner and things can go wrong. But like, holy shit, it's absolutely working. And like, I don't see that many things that look like that. But when they, when you do, you throw away all the rules or it's like this is not working, but this person looks like a super genius. They have high agency. They can get, they can materialize labor capital and customers, but it's not working yet, right? So like, I have to have high ownership in order to take, to correspond with that level of risk. And those are the two types of deals to do. The danger is you say, every, you can say, oh, well, this has a million dollars of ARR and they're ahead of the number two player that has 900K of ARR. Therefore, it's absolutely working now. You have to have a high bar on the absolutely work. Like, this is, this is crush it. This is the fastest growing company we've ever seen. It probably comes around once every decade, throw away the entire rule book. And you should be fine owning 5% of that company because it's, it's an absolute winner. I'm so pleased that you said about the fastest growing company that we've seen. We've never seen growth rates like we have today. I'm a little bit stuck if I'm honest. And so I'd love your advice. When we look at companies going from one to 20 to 30 to 40, there's actually quite a few that do that today before that was completely unheard of. How much weight should we place on revenue growth today versus not? And is there a world where these companies that are going from one to three or four, three or four, I used to be good? I'd laugh behind. If you want to know that the three investment DCs that I have for our fund, I'll tell, I mean, this is exactly what I told LPs and it will answer your question in a second. I think we have, we have three. We have one, which is we invest in Cystia, like I call it Greenfield Bingo. And most of the green, like these are existing software companies, but selling to new companies as opposed to selling to the hostages that we'll never leave. They tend to be systems of record or vertical operating systems. So like the reason why I drill it, I love that company so much that's never going to grow like zero to 100 in like a month, but it is very, very sticky revenue. Like once you're on, like NetSuite has hostages, not customers, they're not going to leave. You know, if this can, if, if real it can sell into every new company, like they're going to do great, the revenue growth will be slower but it will be so sticky and they have infinite option value and adding like, hey, do you want to have a collections AI agent that runs on top of, you know, overdue invoices blah, blah, blah, blah. And that's like optionality on top of your sticky system of records. And number one is Greenfield kind of systems or record number two. And this goes to the fastest growing companies in the world that you're talking about is like software that does the job of labor. Like these are new. This is like, I mean, example, like we have a company called Eve, they sell into plaintive attorneys. What is the dominant software product for plaintive attorneys? It's called Microsoft Office, right? Like there isn't one. There's so many categories like what's the dominant software for like manicures? Like there is, you can pick all these areas where there's no green field, there's no, there's just nothing. But because the thing that you're selling is effectively, effectively in lieu of labor, the way that Eve works is if you're a plaintive attorney and you get paid on contingency, you're not charging by the hour, you have a case where you will with 100% certainty win a thousand dollars. Will you take that case? The answer is absolutely not because it's not worth your time. So you turn down all the small ticket cases because you want the big ticket cases. But now you have a software product that can do all the work and help you win all the small ticket cases. Like you're absolutely going to do that. These are the things that scale like crazy because instead of hiring somebody for $80,000 a year that I cannot hire, I can now hire this software product for $20,000 a year. And before I was paying $0 a year for software, those are all the things that are hyper scaling. But to your point, if they don't eventually back into a system of record, like if it's something that just does like outbound phone calls with an AI agent, it's a thin wrapper on, you know, open AI or plus 11 labs, plus something else, it will attract so much competition. It won't be sticky. The conversation that I have with every entrepreneur that has one of these companies is like, how are you going to make this sticky? How are you going to, you know, part of my language, get the hostages? How do you hold these customers and make sure that if, you know, if you are, I'll give you an example, like I'm an investor in a company called Salient, which is probably the market leader and kind of outbound loan servicing for autos. And this is the conversation I have with Ari. It's like, what if talent shows up, you know, the competitive salient, the make believe competitive salient, how do you keep your customers? And they say, Hey, we're going to do it for 50% cheaper. And I loved his answer, which is, I'm, this is my wedge, right? I recognize that this is, this is, you know, not super sticky. If we're just making outbound phone calls and combining these, these different layers of the stock abuse, not the infrastructure layer, but we are going to back into a software product. And that's, I love that answer. And it's true. Like, that's what they've done. So that's, that's my answer to your question is they might not be able to pull it off. Like every company that says they're going to do this, they might not be able to pull it off. But you have to back in this mega revenue growth that largely is predicated on doing the job that people would do before. And that's why you can grow so quickly into sticky software product that is not that dissimilar from software products of yesterday here. So it's like number one is, you know, Greenfield Bingo, number two is like software that does the job of labor. And number three, I wrote a post about this, but I called it the walled garden. And I'll give you two examples of this. There's a company in Europe called V Lex. And V Lex was started by this entrepreneur basically bought up every legal record in Spain, physical legal records at the courthouse, put them into like digital form and then started selling them to law firms. And I think he got this to like something like 20 something million dollars of ARR after 25 years. But then added AI and it grew like something like five acts. I mean, something crazy. Why? Because open AI, let's just say open AI is purely set. It's a sentient being. AGI is here. Open AI has done it tomorrow five GPT 5.5 is here. If they don't have, if you say like, hey, help me draft a response to this like Spanish court case, but they don't have the data. They can't do that or open evidence is done this for for health data. Like, you know, AGI is here. Open AI has it amazing. I tore my Achilles. What do I do? I'd rather have GPT 3.5 plus infinite data of everything around medical science, which is walled garden that open evidence has versus like sentient being that has no data whatsoever. So that's also a very, very powerful way of building something sticky. So if you if you find a company that is grown like this or grown like this, but just cannot be removed either because of the data that they have that is unique to them, which is, you know, honestly, my hope with Ask Leo or has, you know, kind of sticky system of record like it's just not going anywhere versus other ones like you may take a flyer. It's like, wow, this has grown from zero to 100. They make outbound phone calls and they're like, you know, 11 labs plus this plus that and it was all built and lovable and it's amazing. That's a harder pill to swallow. I'm so honest these days, dude. I'm too old and ugly to not be honest. We're in this business called Aloe and Germany. It's like a toast for Europe, but a little bit better, specialised to European market. They've got great numbers and I have five acts from like 500 K to two and a half million, raising their series A like, you know, eight or 10 on 50-ish memory, so I mean, correct. Was a bear was fucking horrible. And I was just like, oh my god, the triple triple double double is so dead. Like we're in loveable as well. That obviously is a completely different fundraise journey. Is the triple triple double double dead? I don't think so. No, I think, I mean, it might be harder for a certain set of people that are maniacally focused on like growth over everything else, but like what really matters is growth and stickiness. And the triple triple, if you're a triple triple double double with like terrible retention data, that's going to be very hard. But if you actually have, you know, again, system of record or in that case, you know, it sounds like vertical operating system, that should not be hard. I would do I love those things, right? Like I would much rather have a slower growing, you know, permanent system of record that will never get ripped out than the fastest growing thing on the planet that has 9,000 competitors that are all built in loveable by 17 year olds. I think there's no comparison. I mean, there are plenty of people that would be attracted to both would be my answer. I'm surprised that it was as challenging as you as you portray it. We got it done, but I was surprised to buy it by how challenging it was because you mentioned about selling companies that I spoke to David George before the show. And he said, one thing he's never talked about publicly, I didn't think that he's a phenomenal master on his advice on selling companies. Ask him about that. I know it's a bit broad and random, but I do want to touch on it because David said I had to. What's your biggest advice from selling companies having seen so many and living it yourself? Yeah. So I'd say a couple of things. You know, this is a very highly choreographed dance. So you can't just say, Oh, I should say if you're raising money, you're like, Oh, I should raise money. I have the best metrics ever. I'm going to talk to five firms and they're going to compete to the death over winning my deal. Like that was my experience with my series B at trial pace. So it's like, so it's like and kind of corp dev is like, I'm either raising money or selling my company. It's the same thing, right? No, it's completely different. If you're selling your company, you have to spend, you know, in many cases, years getting to know people at the potential acquirer, it's never the CEO unless you're like, you know, what, you know, Yan Kuhn at WhatsApp. Like let's just say that you have a company, you do something amazing. Somebody at Salesforce should buy it. You would rather go public, but you're like, Ooh, you kind of see the running on the wall, like I'm going to hit a wall in a year and a half. What you should start doing then is I kind of call it a background process. Like if you know what Cron is in the Unix terms, right? It's like you should have a little Cron job where it's like five percent of your time to CEO should just be like getting to know people at the three or four companies that might buy you. You never go say like, please buy my company. That's DOA. You don't want to spend time with the corp dev people. These most people like, Oh, corp dev buys companies. No, they don't. They execute transactions. If Salesforce buys your company, you're not working for the head of corp dev. You're working for like this, this SVP who needs, who has some hole on their personal, or you know, needs like revenue growth in order to get their bonus, there are all sorts of internal mechanics that are going on there. So it's just this highly choreographed dance of just like making sure that you get to the right people in the company, hopefully doing it years in advance, not just going to them when you need to sell your company because there are two independent variables here. It's like when your company is doing like the best time to sell, by the way, so your company is doing great. This is the like the rocket ship is like a hundred X year-over-year growth and they want to buy, but rarely does that intersect. A lot of times like, Oh, shoot, we started going like that. Now we want to sell, but nobody wants to buy this falling knife. So it's hard to perfectly choreograph this, but like the main piece of advice, spend time with, you know, three or four companies, not under the guys, because honestly, like when I did this at a trial pit, I wanted Visa to be a partner of mine. I wanted PayPal to be a partner of mine. It was not wasted time. It's like, hey, you know, PayPal, you should put, you know, on your receipt page, you should put coupons that we do for this post-transactional product that we have, and just spend, like I was spending so much time, because if I got that deal, right, I didn't give a shit if they bought us or not. If I got that deal, it's worth so much money to us, it's worth so much money to them. Unfortunately, or fortunately, depending on your point of view, they're like, oh, wow, this is so valuable for us. We have to buy that company, but it's like that movie, my favorite movie is Inception. How do you incept this idea? And again, in that movie, it happens overnight on like a flight, whatever from Australia or something. It really needs to happen probably like a year and a half, two years in advance. A lot of entrepreneurs, they make the mistake of I have to go impress the corp dev person wrong. I have to only interact with the CEO, you know, sometimes right? Like, you know, we hosted a dinner for the CEO of Visa, and I sat Zach at plaid right next to Alla Kelly at Visa. Okay, that worked until it didn't, right, because of the the Justice Department or something. But like, that can, if it's sufficiently strategic, you know, these five billion dollar acquisitions that don't happen very often. But like, you know, a 500 million to a billion dollar acquisition, that can happen at not the CEO level. And you just have to spend the time and invest the time and resources. Like, in by the way, this is the same advice that I give people on fundraising, right? It's like, this background process, if you're the CEO of a company, your number one job is don't let the company run out of money, which either means you become profitable, which is great, or you raise more money, which is, you know, not as great, but like, hopefully leads to to being profitable and or you sell your company. So you probably should spend five to 10% of your time, you know, meeting investors in a very casual way, so that they know you and they know that you're a very strong entrepreneur and they can like, just invest on the spot versus, like, this is how I raised my series, Dio Trial Pay. I'd spent so much time with the gray lock guys, as an example. I pitched them, like, after I met Reid, like, 20 times, and it's like, he knew me. So he knew that he trust, like, you know, he's investing in me as opposed to like a random dude that shows up, you know, oh, I should raise money because I'm running out and I'm growing. Let me go pitch five part, like they would ever would have done the deal otherwise. The background process is key. Before we do a quick far on, I just have to ask, you mentioned one element being the labor displacement in the kind of one of the three kind of pinnings that you have, completely agree. My friend Jason Lankin said, this year will be the year where we see the demonization of technology leaders and that we see labor displacement materially shown up in labor markets. Do you think that's true and what we see labor displacement in labor markets materially show this year? I'm not sure about that. I think in certain areas, for sure. I mean, in general, I could even click up a notch, which is if you think about SaaS, broadly speaking, I think there are kind of three types of SaaS companies right now. There are the ones that are almost impervious to everything that's happening with AI. If anything, it's a huge tailwind because they're going to start being, they have the distribution. They're going to start adding features and that's things like Workday and NetSuite and these things where it's like they have the hostages never going anywhere on the other side of things like Zendesk, right? Where it's like how many licenses per seat do you need a Zendesk? If now every customer support ticket can be answered automatically, you need zero license. Their revenue could go down 100%. These are very, very different and then you have things in the middle like Adobe where it's like, "Ooh, maybe I, now whenever I want to logo, I just go to chat GBT. I don't go to the graphics team." So maybe you'll need fewer graphics designers. Maybe you'll need Zendesk, you'll need fewer customer support people. That probably is true, right? They're going to be certain areas that will get hit harder than others, but what technology has always done is people shift into other jobs where maybe some people will be 100 times more efficient. I think you'll have some cases where laborer, like now that, you know, take the Eve example that I gave you. Wow, now I can do 100 times as many cases or five times as many cases as I did before. I'm going to hire three more people. Or I can now be in business by myself because the software helps me do X, Y and Z. I think a lot of that stuff is going to start happening. I do. I so respect you, but when you look at like a DACA gone in the customer's port, it's clearing out. When you look at like a Harvey, another business that you're in. I don't disagree with that. I'm saying it's not, you know, like that's why I kind of gave the example of like the three types of SaaS, right? It's like, you're going to have some totally impervious, and I'm talking about SaaS not people. If you flip that to people, it's like, all right, the users of Zendesk are probably going to go away. Therefore, that labor market might get decimated. 100 percent agreed. On the other hand, it's like, if I'm United Airlines, and now I don't need as many customer support people, because now every answer kind of auto answers itself with AI, well, you know, I should probably take care of my best travelers better and give them like a personal human that will be really nice to them and remember their birthday, and then they're going to buy more first class tickets for me. I might reallocate some of that labor to other things because I'm making more money and I no longer have this cost. I mean, Tony Shea, who, you know, sadly departed, who ran Zappos, you know, he had this whole thing, which I think is actually correct, which is I'm going to turn, most people think of customer support as a cost center. They should think about it as a revenue center. You should love your customer and make them love you. There's the story that he would tell around like, you know, there's somebody who had something really bad happen and was on the phone with the customer support person, I think her husband died. Something bad that had nothing to do with the shoe order. Zappos sends that guy, oh, that woman flowers. Doing things like that, making your customer love you is something that you can now focus on once you take away the cost center element of something like this. Or if I'm a law firm, again, I agree with you. Like, you probably don't need people doing this tedious work. And the number of people doing the tedious work will fall off a cliff, no disagreement. But I would not be surprised to see smart companies start reallocating them. Like, I actually gave a, I give a talk to the exact team at JP Morgan about this, right? They're like, what part of our business is going to be, you know, at least touched by AI? And I said, you know, wealth management. Because what is wealth management? It's, yeah, yeah, it's like, hopefully, like, getting good returns for the, the dollars that you have with us. But it's really like that relationship guy or gal. And like, the woman that was running wealth, she was like, she like stood up in the audience, like, yeah, yeah, yeah. But it's true. It's like, if you have a high EQ and you're good at playing golf with people, like, you're going to start hiring more people like that because that's how you get more customers. And you, you kind of read sometimes there will be an opportunity. The upscaling is not like, hey, everybody should learn how to code. The upscaling might be like, stop doing tedious work, like answering, you know, like looking at knowledge base and then, you know, typing that back with lots of typos into like the, the email response and Zendesk, but actually start going into like, you know, send customer flowers, like, do get to know that customer really well. Go visit them at their, like, whatever for the high value customers that you just couldn't do before. Alex, I could speak to you all day. I know you do actually have to work as well. I want to do a quick far round with you. I'm just giving you a couple of quick statements. What if you changed your mind on most in the last 12 months? I've probably changed my mind. Well, as I mentioned, you have to be able to change like, it's more of companies where we didn't do the, we didn't do like the early round. And then it's like, I'd rather be rich than right. That's, that's what we often talk about. It's like, all right, I want to be right. So we've probably done a couple deals where it's like we passed, you know, around n minus one, we end up doing around n. But I don't think I've changed my mind on that much. Maybe I would say like this idea of private equitizing venture capital. I wrote a piece. I was probably the first one to talk about this in 2023 around how what you're going to start doing is you could buy a company and then add AI to it. I think general catalyst is now like a bunch of firms are now doing this. I was the first person to talk about this. And I, I called it barbarians at the gate with an AI. I'd probably become more bearish on that just because it feels like just a founder market mismatch. So that's probably the thing that I've changed my mind on the most. What product does Andrews and not have today that you would most like Andrews and to have? You mentioned GC having like the fund there that does that roll up play. They've got the like consumer performance marketing fund. They comment what that's cool. But what product do you not have that you most like to have? Something around credit for a lot of our companies. So, you know, we have equity products, but we don't have debt products. And they have very different return profiles, obviously. But every one of our companies they need, you know, general catalyst actually has one of these. They have a credit fund. So either for customer acquisition or if you're FinTech and doing lending. So that would be interesting. But in general, we just kind of we listen, we don't want to be at odds with our entrepreneurs. Like there's a very solid reason why we don't have that, which is like, oh, you didn't pay back the bill. I need to go for clothes. Like that's a as a venture capital for I'm like, you can earn a thousand X on a on a winner. You don't really want to like kind of beat up the the companies that are struggling. And that's kind of what the credit instrument needs to do. But I think it's a good product. What piece of investment advice has most stuck with you? So like Josh Trishner once told me, if you're willing to take glass, don't do the deal. If you're willing to go from 10 to 7% like, yeah, sure. Yeah, why not? Don't do the deal. What would yours be? I think it really is find high agency people that know the history of the space that can materialize labor capital and customers that are the catabonic crystal and don't second guess anything. Give them money, be their best partner and go versus, you know, question the market, question the this. I think it really is. I've just become 100% convinced this is entirely about people. 100% every round, by the way, it can be a D round, it can be an E round, it can be an A round, it can be a seed round. And you please know Martin Cassardo because he tweeted and then took the piss out of me because as this, you know, the graph first, like it starts here and then goes up here and then goes down here. And it's like, you start here. It's all about founder and then you end here. It's all about founder and here is when you think you're smart and no market and product. And he was like, you're an idiot. It's not that. It's all about founder. I mean, you have to again, it converges on reality at some point in time. Like this is going to be a public company. You can't like tell everybody in the order book of the IPO that's under subscribe. Like another founder is really good. Like, yes, of course, he asked you to converge on reality. But I think it's like, it is like materialized labor capital customers like that. That's that's kind of it for me with the right motivation, which is the kind of monocrystial. penultimate one. What's your biggest miss and how do you reflect on it? Like I miss deals seed round another one of yours. I reflect on that. So it probably was one of the first rounds of plaid, which I subsequently corrected myself for by doing the series C of plaid. So I think we invested at 2.4 billion for the series C. And I was debating a $5 million difference with Zach for the series B. I want to do it at 130. He wanted 135. And I think golden was going to pay 200, but he was willing to work with me because of, you know, my fintech. And it's like, no, now, I find like, that was just so stupid, right? And luckily, I was willing to admit that I was stupid and did the next round. But you can see the difference on this is why it's so important to do two things to correct yourself if you're wrong and not be proud about it. But also, if you really believe that this can be a huge company. And I was I was burdened by what has been to quote the great Campbell Harris of, oh, wow, Yodley, which had predated plaid, that went public and had a terminal valuation of $600 million. So like, of course, this like 130 versus 135 or whatever the hell we were talking about was very material, but it was so stupid. I love that unburdened by what has been memo that is the final one for you did. What is venture like in five years time when we look at the $15 billion that you raised today? I mean, it is obscene to even think that would happen five years ago when we go back. What does it look like five years out? It ends up eating even more of the world. This is kind of going back to to Marx's essay around software eats the world that that largely has happened. As I mentioned, like the five biggest companies on earth, their technology companies, which was like unthinkable in 2005, like technology companies were a little service providers to big companies like banks and oil companies, right? I think this momentum of kind of everything becomes a software company. It kind of goes into this like thesis too that I mentioned around software does the job of labor. You're going to have all these areas where it's like there is going to be like, you know, toast vertical SaaS prove this or kind of V1. It's like, oh, how is toast worth 20 billion dollars? You're going to have a lot of things like this where it's like brand new markets that have grown like crazy. AI is now allowing software and technology to do so many things that it didn't do before. This is before even things like robotics. If robots actually work, wow, like now you've expanded the market like another hundred X. I'm just so bullish on the ability of technology to create enduring value. So, you know, my guess and my hope is that it's going to go up into the right. Dude, I told you this is like Banscher. You have most shows which are like fine and then you have the once in a while which is truly special. Thank you for being my truly special show. It really is rare to have one like this. All right, and hopefully I'll see you in London soon. But before we leave you today, over 80% of Fortune 100 companies are running their businesses with AirTable. AirTable combines AI with the scale of an award winning infinitely flexible no-code system, a platform where you can see all of your data in one place and use it to make really big picture decisions. 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