20VC: The AI Boom Will Create Enormous Roadkill: Who Wins & Loses | Why Founders Should Never Take Multi-Stage Money at Seed | Why Triple, Triple, Double, Double is Good Enough

The bubbles get bigger. This is the wave of our lives. Will there be roadkill from this wave? Oh my god, there's going to be a lot. Well, the problem is the mega platforms are taking call options. ProRotters almost like the original Sun. I have never seen secondary markets as liquid. Are we headed for another.com crash? Definitely. If is not a question. When nobody knows. This is 20 VC with me, Harry Stabbing. Now I do the show because I want to learn from the best investors in the world. David Frankl is one of the best from Founder Collective. Why? Well, when everyone else scales fans gets bigger and bigger and bluntly loses discipline, lose the core craftsmen like attributes of venture investing. David has stuck true to what he does best. Early stage, boutique investing. But you know what? It takes a great invest to do really well in one cycle. Yep, he's in coupang, he's in Uber, he's in Pillpack and Seat Geek and Olo. And many great names. It's incredibly hard to move to a second wave. The wave of AI. The dude is in the seeds for shield AI. For soon which now worth $5 billion. He has moved so seamlessly from a pre to a post AI world in a way that very few seed investors have been able to. This was an incredible discussion with one of the true craftsmen of seed investing today. But before we dive into the show today, what do Uber, Curse and Harvey have in common? Well, they made the really wise decision to build on fireworks. Fireworks is the specialized intelligence platform behind many of the world's leading AI products. Companies use fireworks to deploy the latest open models, specialize them with their own data, and run them in production with the speed and reliability modern AI applications demand. But getting models into production is only the beginning. As AI usage scales, the best model for one request isn't always the best model for the next. Well, that's where fireworks nexus comes in. 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You already use like your browser, your inbox, your docs. It handles the repetitive stuff so you can focus on the work only you can do. AI that works with you, not on top of you. Superhuman go keeps up so you can move forward. Find out more at superhuman.com. You have now arrived at your destination. David, last night you sent me a forwarded email and it was my first ever email to you 11 years ago. 11 years? I can't believe that. Do you want to know how funny it is? I just had to have the last night with Mammun. I look at the people who have been kind to me, which is you, Mammun, Josh Krishnan, Neil, and it's just fascinating that the people who were there when there was nothing are also the greats. Maybe that's what made them great, that they give time to people where they just believe with no reason to. Does that make sense? I'm honored to be included in that list. But maybe some of the thing is they're intoxicated and you are intoxicating, in my view. Like there's, you know, you were 19 years old, but you were full on focus, energy. You just brought it. Right? And I think maybe part of the job and part of the fun of the job is just like recognizing that. It's not all it takes, but you kind of, you had it, you have it. It's super kind of you to say, in terms of like having it, obviously we both play at the early stages. And I've said before on social media and on X, that the hardest part of the market is seed in many ways. And the worst performing funds will be the 50 to 100 million dollar funds. I say this to explain because you're too big to be collaborative, to write those 100 to 250 K checks and be a friend, but you're too small to lead at 8 to 10 million dollars a year round. Why am I wrong? And why will this vintage be great for those funds? Okay. There is so much done, Pac-Kir. You've got this narrowing out in venture, where the bigger you get, almost like it becomes like a pyramid. Like I think there is a, the business of venture, which is asset management and this channel, right? So you've got the Cambridge associates and you've got the fund of funds. And all they're doing is selling access and they're fine with it. And if the, you name it top 10 top five names are not in XYZ, great, great company. And I would say at this point, if you're not like in the top five, if you missed the, at a certain level, if you missed the three trillion dollar companies, you're much harder to sell. So it's not trillion dollar or best, but like if you look at the numbers over the last 25 years of how many companies were created that are over $100 billion, they were less than 100 companies over the last 25 years, less than 100 that are sustainably over $10 billion companies. So at that top end, you've got to be in that. The median company, we've done a lot of work on this very recently, of the top 500 companies created in the last 25 years, the median is 2.6 billion. Now, if you own 5% of one of those companies, you return the fund each time. And I would say what's gone on in seed is like, there are a whole bunch of unreasonable bets being taken with loads of funds and loads of money. And it's quick because you've got to get the check in because you've got to get to the next fund. So it's incredibly tougher seed. What makes this still a great business is, it's a little bit of what I said about you is, you can wait and wait and wait and wait if you're patient and then you just see someone, right? You see a founder or you see a team and you just go, I have to be there. And to me, that's code for this may just be another Uber, another Suno, another Shield AI. And I think a little bit, I'm answering this personally, a little bit of this is a drug finding Harry, right? Finding that is a bit of a drug. So I, you know, addicted if that's the case. And I think that that, if you're in early, you still have a chance of returning a fund. I think it's a totally different business. Do you have to be the full eight million, definitely not? We can't be. Can you write a three million dollar check? Can you write a half a million dollar check? Now, valuations and cap notes that's changing the business. But you don't just have to do that. So if you're on piece, and I would say, if you're on piece for the last, I've been doing this for 18 years, nearly, is it was always expensive. It was always tough. But do you find some of the best people off piece? Always. On those rounds, when you look at the eight, 10 million rounds or the large seeds that we see today, are you able to participate, though, with the two to three million? When you have your, the multi-stage products provide such an efficient seed product, that actually you might get 100K. But being a three million check is much harder. Are you able to even do that strategy? You know, I hesitate to say this, Harry, but I think we're being seen. And I could be over extrapolating the last 20 deals that we've been involved in, almost as an insurance policy, where we're side by side, we're putting in 500K or a million, there has been $89 million going in. And from smart entrepreneurs, there's almost this knowledge of they may abandon me. And then having FC in my back pocket could be useful. Sure. And I'll use their brand, right, I'll use their distribution network to go out and say, "That actually don't suck. We're not doing 10 million ARR yet, but like they're more patient and be patient and we're the testimonial sales person." So I think there's some recognition of, wow, for $500 million, not bad insurance policy. By the way, we're not doing that many $8 million arounds. We're still finding $3, $4 million around. - Are you? - Yeah. The valuations there move a lot, right, they change a lot. By the way, the other thing is, there's very little evidence yet that these hot, hot AI companies that are raising huge amounts of money are capital efficient, right? Is there anything but capital of America? efficient. Like the jury's out on whether that's going to work still. Totally get you just before we move away. You said it's not in the hot, hot, hot. You often don't get paid for being a value investor and you can sometimes be criticized for being smarter than the market or whatever contrary and you want to say. My question is like, we do think about like, is this an asset that will get financed in future funding rounds? And if it's not an AI and it's a traditional enterprise HR company, do you think I can't get that funded for a good day? Does that impede your thinking on whether you'll do the seat? Well, everybody's AI, right? Like it's almost like saying that you're not AI today is like, I'm not using internet, right? It's like, why wouldn't you use the most contemporary tools? So everyone's AI, you've just got different approaches where you've got a second time entrepreneur that goes, I know this domain really well. I've been doing SAP consulting for 10 years or 20 years, SAP and I've built a platform, but this part still sucks. And I was playing around with Claude code. This is a real situation. I was playing around with Claude code. My CTO is unbelievable. We're now putting four or five together. Would you be involved? Then it's a 20 million cap. Sure. Right? We see loads of that. So the concept of it's only a 20 something. I'm not saying we don't do that. I mean, you know very well we do that all day long, but we also see other startups in places that feel off-piece and then you look at it and it's got it's worth tens of billions of dollars this time. The statement that is said to me more than ever is price matters less than ever because the only thing that matters is that you're in the true winners of the day. How do you feel when you hear that? I mean, the scale of how much you have to win, right, is different based on your price. It's pure math. So uncapped notes suck at the seed stage. Yeah. I'm not saying we've never written one. Like unfortunately, I've written one and I think the founders are exceptional. I think they'll do great. You regret it. I don't regret it at all because I love the relationship. But financially, will we do as well there? That's going to be a hundred to three hundred million dollar price when it happens. Now you're in a year in advance and you take that price from a venture perspective. It doesn't make much sense. And access is being sold. The IV's Stanford's done this forever, but MIT and Harvard doing the same thing is like, you just want to be there, right? Sometimes you really have to think that through and we've said no plenty there. But we'll probably regret the ones that we said no to. We see why see really professionalized startup founding in a way that it turns it into almost a norm for people leaving some colleges in particular and some programs that are certain colleges in particular. Do you worry about how almost easy it is to be a startup founder today in terms of that normalization of it? And what that means for what we do? I do. Yeah. I think there are so many founders, right? It's like Dejure. I think there are fewer entrepreneurs. And when the tide goes out, everybody goes, I knew I told you so and nobody knows when the tide goes out. But what it takes to be an entrepreneur is just, it's just very different in terms of fortitude, in terms of the ability to energize, the ability to go up that learning curve. The number of times I've seen the difference in the trajectory between the CEO and the CTO. The CTO at some point up to 50 people your golden. And then at some point you go, actually we could bring in better, better technical skills. And if you've got a good co-founding CTO, that person becomes like a Swiss Army knife and is deployed in different ways, the CEO goes on this serious journey where the learning curve is steep and they've got to learn to manage and they've got to learn to put bums on seats. And I think of people like TJ at Pillpack or Jack at SeatGeek. And they're changed individuals. I had coffee a week ago, we had an hour Mikey Schoenman from Soono. And I said, what are you doing? And he said, I'm 30, 40% of my time, I'm just recruiting. I had lunch years ago, decades ago with Jeff Bezos. I was invited to a lunch and someone smarter than me said, what do you spend your time doing? And he said, 50% of my time is bums on seats. That's never left me. That's the C.O. journey. That's the entrepreneur's journey. And then many founders that don't cut that. I think one of the biggest mistakes that I see investors make though is when they turn down a company because they don't like the other co-founder. And the truth is, the other co-founder is most often not there in three years. You don't like them because you don't think they're good enough and not as good as the C.O. Will you invest if you think the C.O. is amazing, but you don't think the C.O. is up to scratch. Or the head of sales who's also the co-founder isn't as good. What are your lessons on that? Rarely. We do that less. And I think your logic is correct. But so early on, we're looking for this package. I'm looking for this C.O. C.O. kind of magic. And in some ways, I literally use that word. Like I'm looking for the C.O. to be a bit of a magician and the C.O. to be a good salesperson. That's like my favorite combo. And I agree with you. The C.O. being a good salesperson and being a real entrepreneur is actually more important because the C.O. role can be fungible depending on how complicated it is. But I have said no more times in yes in those situations. And I regret some of them. But the dynamic between those founders matters. Early on, like to me, I look at the dynamic. And in some ways, I think I want to replicate the partnerships that I've loved and go, I'm looking for some kind of alchemy here. You don't have to be identical. You don't have to finish each other's sentences. In fact, I'd prefer that you are different. But how aligned are you? And how much you trust each other's kind of competence and go. And in a career, I've seen alchemy maybe one hand, you know, like five times, four or five times. But when that alchemy happens, it's because of that interplay between those two people. So I'm watching that pretty carefully. Has the type of founder that you like changed, especially in the last few years? I think our team has definitely oriented much more towards like deeply engineering specific. People who come out of deep mind who come out of jam and I. Has that changed a lesson you'd think. So I would say the youth, the energy, the focus, the smarts, you put that package together. And it's an intoxicating package. I look at experience and I go, what are we going to need to package with that experience? There are certain situations, SaaS and enterprise, SaaS certainly looked like that, where you'd learnt the lessons, you understood the market, you understood like who the buyers were. Although that's very fluid too. But did you have the focus and the energy? And I see these 20 somethings and and by the it's a psychographic in a way. So I'm not saying that I don't want to sound ageist. The psychographic of that focus and intensity can last for decades. But there's something about it at that early stage that is just, wow, I want to be part of that. And that still turns me on a lot. Now the theory of, you know, the relationships, etc. go one more time is it's great in theory. But man, you need to go this journey. You need so much energy. When we look at the scaling journey and we said about kind of how founders have changed that in terms of what we look for or not change for you. One thing for me that's changed and I get in so much trouble for this and like VC Brags is Twitter account killed me for it the other day. I very candidly said I turned down a company the other day that went from one and a half and they were going to go to five and then they were going to go from five to 15 and it's just not enough anymore. It's just not interesting. I'm sorry for venture. We have an opportunity cost of capital where we can deploy and that's not fast enough. Has triple, triple double, double gone? Is that still a venture path in today's landscape? One and a half to five billion, one half to five million in error. And so you're looking at this company going, okay, you're going to be one and a half to five, five to 15, 15 to 30. They would four, five years down. We might be at 70. Is that still a venture pathway? You know, these 10 year funds are taking 18 years. The one thing you learn is loads of patients. It's such an opportunity when people go, it has to be one and a half to 10 to 15 and then reality sets in and sometimes it's twice as expensive and it takes twice as long. Harry, we still own every last share in SeatGeek. That was an investment I made in 2010. It's become, it's in the top three ticketing businesses in the world. It just takes a really, really long time. Some of our greatest companies, they were showing tremendous promise, but that one and a half to 10 to 20, I just think, are they executing? And by the other side is revenue the only metric. Sometimes there is traction on dimensions that the market is not necessarily recognizing, but you're an insider. So that account, the retention in that account is really good and that one accounts now spending 4x, what they spent a year ago. And they're more DAUs and there's got to be traction. And frankly, a lot of what we do to try to tell an entrepreneurial story to get more funding is the different dimensions of traction. But I think there's like, go, go, go overnight or your best. I think there's a lot of orphans out there for that. And sometimes, frankly, I look at like those funding rounds and they're called seed plus or seed extensions. And I go, that may be the opportune moment. Like when they're being abandoned and they can't get the capital because the bigger funds have moved on, maybe that's the opportunity. It's not what we really do, but I can see it as a capital markets opportunity. Do you remember Bullpen? Yeah, exactly those rounds. Yeah, I was. I was an interesting business. I don't know how they've done, but they priced those rounds. They priced them for bigger players. I think the thing is you're so paid for the risk that you're taking that. I mean, they really were aggressive in terms of ownership. I think they did EPC, which was a big business. So you have one, and it pays for the rest. When you look at this, David, you've been doing this for 18 years, and you hear people like me say, "Oh, one to five, triple, triple, double, double's dead." Is it really a home run if it's. We need a billion dollars in revenue, Jason Lemkin says on our show, "Billion valuation." Pfff, come on. That's not venture anymore. Is this like peak bubble when you review the 18-year journey that you've had? The historical or anachronistic view on this would be the bubbles get bigger. I feel that way, by the way. If I look at internet, SaaS, mobile, AI, nothing looks the same. And will there be roadkill from this wave? You know, again, you look at those stats of 500 companies, less than 100 over 10 billion in the last 25 years. How many times Harry, over the last 11 years, have you heard this is different? This is different. It doesn't mean that there aren't survivors, and companies are going to change the trajectory of technology forever. And I think in open AI and anthropic and SpaceX, we're seeing that already. Like these are the matters and the Googles of our era, highly likely. But wow, like it's Hollywood, man. Like 95% are not going to be there. And it goes back to why it's seed interesting. I don't have to be in V1. If there were five companies that are worth $5 trillion with exits. So if you look at SpaceX, Tesla, Matter, that's trillions of dollars already. You take them in video. I think in video I started pre 25 years ago. But even if you look at the last 25 years ago, you can add Palantir to that, Palo Alto Networks. That's about $5 trillion of market cap. And then there are the other 495. At a 2.6 billion average. And some of those are, we hope everything looks like shield AI, you know. But if you have 5% of a 2.6 billion outcome, you've returned your fun. If you have a $500 million outcome, it's incredible still. And that's why I think seed isn't dead. I think seed is crowded to some degree very commoditized. I feel commoditized. I've said this many times. I feel like brand and in some regard distribution as in your portfolio and people saying nice things about you get you to the table. But if it's commoditized, it's price not just become the separator. And if price is the separator, the mega platforms win. Is this good for the mega platforms? Is this good for the LPs? Or is this good for the entrepreneurs? Well, probably for 95% of entrepreneurs, it's not good. Why? I grew it with you, but I'm just playing devil's advocate. You get more money at a higher price with mostly a more junior VC who'll let you do your work and not get in the way. Isn't that what a entrepreneur wants? I mean, sounds amazing, right? Yeah. The more junior entrepreneur moves on, right? You're off-and. The more junior invention, the more junior the principle at that big fund moves on. They start their own fund. Yeah. The fund happens all the time. So the person who invested doesn't have mandate. They consider round with the partnership and say, "Look, let's just put another 5 to 10, like let's turn over another card, because your champion's gone." Yeah. By the way, I'm being contrary in here. This does not always happen this way. I'm just giving you the other side to this. And then you haven't made the kind of 1, 5, 10, 15, ARR or whatever you want to call it. You just haven't made that. So it's like, you're overlooked because it's like, let's focus on our real winners and that things with two or three billion dollars. So 95% is mandate for further funding is dead, is gone. Now, this is the beautiful thing about most entrepreneurs is they just don't think about themselves in that category. I'm the 5%, I'm the 2%, and that's why we love entrepreneurs. But the stats are so far against you. It goes back to, I hate to think of ourselves as like their insurance policy. But I think a few entrepreneurs have thought about that. And I think there's a little bit out in the zeitgeist going, "FC is a great insurance policy. You want them in the round." And it's cost very little to have Harry or David in like for 500K or a million. Are you really not tempted to raise more? Every single constrained fund, including benchmark, historically the central figure in discipline in venture. It has raised a billion and a half growth fund. I was with another great growth fund that is very disciplined as well, but we're raising billions too. Everyone who was, it's like, no, we realized the game on the field is you need money. Are you really not raising more? It would be disingenuous to say to you that we don't have the discussion, that it isn't attention, that we go back to it. It's hard to be contrarian. When there's so much money going around, it's hard to say no. And then here's how we come out. Is the GP has been the biggest LP and we're greedy for returns, not management fees. What percent of the fund are you now? We're certainly in the last few funds, the largest LP. There's no LP that is bigger than the GP. We're seriously aligned with LPs, but what are we seeking? This is not a two question. It may be wrong. Literally, if you do the analysis, you may go like that was crazy. You left so much on the table. We've been very disciplined about strategy and very disciplined about DPI. But if I just look at you, I'm sorry, I'm turning out to devil's advocate again. I'm just like, you know, you had coupang, you had Uber, you had trade desk, you've got a shield, you've got, soon, no, tack on another three to five hundred million dollar vehicle and keep going, I'm sure you knew Mike he was amazing. I'm sure you knew TJ was great. I'm sure you knew that these were great on. Surely that is a conversation that has rationality. Because it's a rational conversation, it comes up. And then you come back to saying, okay, who wants to do this? You're an offsite for the partnership and says, who wants to do this? And I go, oh my, like, I love the early stage, right? Like I kind of may do it, right? And by the way, I am an opportunist as well. I think of myself as some kind of value investor. So the interesting times for that for me have been when nobody's funding why. And I think that person's great. Or it's a consumer play. And I know consumer multiples are lower. But this is a internet acquisition device. And these founders are better at acquisition. So it's not in the high pipe, high pipe, go, go, go. I'm kind of immune to that. I'm in pain. I love you so much because you're so much shorter me. But I'm just like, the market can stay irrational longer than you can stay solvent. And when I look at like a wix today trading at 2.1 billion on 2.1 billion of revenue, it's a great example where like, there's obviously rationality at play. But it doesn't matter. The market's the market. And if consumers say is getting the pricing that it's getting, I can't change that. No matter how good the acquisition machine is. And so I don't fight the tide that's against you is my thesis or ethos. I can swim in the swim lane that's swimming in your favor. Am I wrong and I'm just missing a contrarian beat? No, there's so many ways to do this. And people have done so well. There are big fans that have returned very well. You've got to be in the right vintage. But if you look at like thrive or a 16 Z, they've had some big fans that have returned very, very well. Yeah. A little less since 2020. Like if you look at the DPI analysis, the jury's out from 2020 onwards. Now, of course, if you're like Josh and you're in SpaceX and OpenAI, that's going to be like the most ridiculous fund. But wow, you are in the most rare air. And then there's just something that's competitive and unique. And it is economically irrational, potentially. That is, I was in that company. I was first. I wrote the biggest check. Somehow for me being competitive with me, that is the biggest thrill. I was with that founder from the beginning and we literally reversed the truck and gave them everything they wanted. And by the way, does that mean that we're not writing three, four million dollar checks now? We are. Right? Because if you want to get a percentage ownership in something that you think is extraordinary, you're writing much bigger checks. And we wrote before. So the fund is going faster than it used to. What is your average ownership now? Is it gone down over time? Because I look at ours and our biggest mistake and I can look at deal 11 labs, I can look at Greno, I can start cloud, fractile, could have done them all, but we would have had one to two percent. And all of them we turn down purely for ownership. That is hundreds and hundreds of millions of lost returns for ownership. I've never thought about that. I mean, all things being equal, I'm a capitalist, right? So all things being equal, like I'd love to own more upfront than less, but it wouldn't be the reason you turn it down. I've never turned it down. Never. And Mikey, I wanted to give him every last cent. You know, reached a point where he said, look, that is the dilution I'm willing to take. I'm not willing to take another Iota of dilution. We gave him what we gave him, which was literally every single cent in his first round. We showed it to other people, by the way. I showed it to you. Nice David, nobody. We were going to bring it up. And then when Matrix led, which was not, it wasn't a popular round. Lots of people said no in that round. We asked every last cent, but would I have said no to Mikey because of percentage ownership? Like when you meet the right people and you're all in, you get what you get. And so you will do the 1 to 2% and you'll take it even though you can't size up in next rounds. Well, you know, again, I think pro-rata is almost like the original sin. But if others have it, I don't think that we should be excluded if others have that pro-rata. We're seeing rounds now where there isn't pro-rata for anyone, but the lead, but the most major share. So it's not a pro-rata for all major shareholders, it's for the lead shareholder. I'm not sure I agree with that either in this environment. I kind of think that there should be a universal approach to treat your investors equally. But I think pro-rata is generally not great for entrepreneurs. It's a call option against you. We feel like we've had to work every time to put in a bit more money. We've never, ever led another round. So we have this view of like it would be negative correlation bias. It would be unfair to everybody if we didn't be somewhat kind of uniform. Do you think it's harder than ever to accurately concentrate dollars effectively given the rise of such preemptive rounds? We've had them where we haven't even wired the money and there's a new term sheet. At different valuations. Yeah. And that happens quite often now. Is it harder than ever to concentrate effectively when it's just so fast? Some kind of framework is really, really necessary. And I credit my partners over the years with that of saying we may be writing bigger checks, but above that post money valuation, it's really not our opportunity anymore. And you can look in the rear view mirror and say, man, I should have done it. I should have done shield. I should have huge kudos and power to the people who did. But a framework lets you act very quickly. And I would say credit to Eric Paley in this case is he always created some kind of discipline. So the post money went up and up and up as rounds and the momentum and the size of money in the environment changed. But we would never lead another round. We've never done that in our entire history. So we haven't been preemptive and we haven't been like, we'll lead your series A and we like you more than others. But our ability to participate has always been there. Peter Teal said before, if he'd just done every round that anyone else had done at a not-prone and it was a good brand, he would have done much better. Have you found that to be true? Given the era, like this has been the golden, golden era. It's probably from a data-driven approach. It's probably true. Like if we'd followed on in Uber, coupon, shield, you name it sooner. If we just followed on, probably the data would show that we've done pretty well. Our view would be we would have had to have followed on in everything. And I think that the absolute return would be better. I don't think that the multiple would necessarily be better on the fund. I'm not being rude. A framework is not the enemy of this venture cycle. I think it's so easy to be rigid in your mentality around, oh, we won't do any of that over a billion. But I admit you're going to absolutely win this at me here. So are you ready for a real show? I think a billion dollar valuations the new series A and you're like, whoa, Harry, whoa, kiddo calm down, listen to the facts. We used to do a 50 million post and hope it would become a billion, 20x without dodging a blunt. Now you enter a billion and you hope it becomes 20. You know, we have mccourt 20. We have cognition at 26. Curse that got sold for 60. Sold. This is liquid. Well, maybe a billion. The new series A, no. I think you may be looking at the top two or 300 companies. Is that not our business? I don't think so. I think that that's the momentum business. And I think knowing how and when to get out quickly with some of those really, really matters. And that's not really my business. So my business is value is getting involved early and trying to find value opportunities. There are times again where it's an intoxicating founder and being on that journey together. But I'm not sure that those are your fund returners. The difficulty with some of those momentum assets is it was what we were talking about earlier is you've got to be able to like run for the exits when you can. It's exactly what you were saying is you didn't think that founder was all that great or you thought that like the valuation was so far ahead of the reality of the business. But you're asking a question. You're asking a momentum question. Yeah. And is it all momentum? I've got to be careful not to be too anachronistic in this because we have invested in momentum. There's just no. It would be so disingenuous for me to say that we haven't. When you say that, like what do you mean we have invested momentum? I need your tends to be when this has gotten across a certain point like we're out of here and credit to Eric at a point for going like we've captured 80% of the value. We could capture another 20% if we did Uber at Series A or if we did Suno at Series A. And by the way, it's not just on paper. I think there would be buyers for that position. So in hindsight, I look at that and I go like were you anachronistic? By the way, we didn't we didn't even seek to participate in that round. We kind of go we built our ownership position and we're done. Like this is not the kind of investors we are. We're looking for the next seed stage round. And I think Harry what we've done is we've drunk the Kool-Aid to such a large extent now. You and I are so different that you're going this is hot. Let me go go go. I'm going. I've got a smaller fund. Where else can I really ex my ownership versus you know getting a I know five X or 10 X. But of course the environment makes you look quite silly in retrospect. The question is how long does this environment go on? And it's also about how and this is that you have unbelievable returns and you've made a phenomenal amount of money for your investors. But the quantum of cash that you move matters and Josh and E lad and the multi stage funds moving hundreds of millions and billions. You make a larger quantum of cash. And so I get you with the in terms of your your multiple goes down when you lead the Series A. Look there's so many different ways to play this. And I think when you talk about Josh and you know a handful they've killed it. They've absolutely killed it. A lot of our piece very wrongly I think don't like the large platforms and always just come back to this very kind of I think basic rudimentary thought that as you scale fund size returns always get worse. Always whenever someone says always be careful. But I think with the outcome expansion that we've seen cursor at 60 billion trillion dollar companies in a matter of years with open-air and philanthropic you will see venture returns with mega platform sizes. Do you agree? Largely no. So largely I would say who are their LPs who are they working for and in some of these cases not even down months anymore. It's sovereign wealth funds and sovereign wealth funds and public investment corporations are looking for IRR. They're not measuring this in how many times do you ex the fund doesn't mean that a 16z and thrive have an extra few of their funds really really nicely. Again subsequent to 2020 like the TVPI is there and some in some cases they're on steroids. The DPI is less there if you look at the actual stats but they're working for the sovereign wealth funds and they're giving great IRR and some of the endowment some of the biggest endowments are like rounding errors now. The question is who you're working for and I again obsess with this alignment with the entrepreneur and like we're working for ourselves as well right and we're working for DPI and the bigger we make the fund the tougher it is on the DPI like what am I doing this for? Fund off the fund off the fund if we look back on fund to it's all about applied AI I mean that's really what the fund if you look at the winners in fund to it's shield AI which by the way in 2016 was called shield AI it's Vakada it's Woop now all of these things are commoditized all of the hardwares commoditized video cameras are commoditized drones I mean I you can buy a drone for you know forget DJI you can buy a drone for $20 now like $50 it's about putting AI around these completely commoditized platforms it was 10 years ago but it wasn't the theme so the one thing that you're talking about is momentum around a theme and I'm going in 10 years time or in five years time there will be a new theme the job will have been to get into that theme ahead I don't even know what it is I hope I've got some on goal and those weren't the expensive ones though those were not they never are so using AI is really important I guarantee you all of these things are called applied AI businesses today or physical AI physical AI is all the job is to be in their five years or 10 years ahead and it's not where the momentum is it never is when you look at you said that kind of fun too and you said a couple of names there with Vakadas and your whoops and your shields how concentrated are the returns in your funds I spent time with her now I'm from Althos and he's spoken about that return concentration with roadblocks mind blowing to me how concentrated are yours and what lessons you have from that the amazing thing is they've been way less concentrated than you would expect look at fun too forget fun one now fun to vakada shield whoop pull pack in and for the most part one off or the single largest investor in the first institutional round it's not concentrated if you look at fund one we always talk about the trade desks and the ubers and the kupangs fun one still has air table in at the very beginning challenges in the sess environment but simply some please the biggest piano teaching and and music instrument teaching company in the world seat geek haven't sold a single share in seat geek that's still in fund one why haven't you sold a share in seat geek I think it's spirituals this point it's a religion beneath the shirt you've got jack's face right that would be an epic I did that I did that in my LP meeting that would be very fun before jack jack and mickey both presented and I literally said to them get me t-shirt and I had ripped open my shirt. - But I'm actually worried about this, which is, you know, I'm not positioning this at AirTable at all, I think how he's wonderful and brilliant and brilliant product team. But like you're seeing the cannibalization of leaders in a space like AirTable respectfully and like Sneak, the cybersecurity company, which in a similar vein is going through challenging times two in terms of growth rates and everything involved. Well, there hasn't been an liquidity event, but the cannibalization has already started. It's like the innovation cycles taken steroids and gone too quickly to allow liquidity events to even happen. Does that worry you too? - I mean, by now, Harry, it's very hard to play around with Claude or something like it and not have the revelation that we've all had. But then you look at some of these SaaS companies and you look at the SaaS apocalypse. When we were on the Olo board, when it was listed, we'd look at companies like Viva, which is I think at a $30 billion market cap now. It's come down at least 50% or more. And we'd go, this is the most perfect, like we want to be this company. It's hard not to look at some of that market cap erosion and go, is the baby being thrown out with a bathwater. And it's about the last 5%, I think. And I would say if your AirTable and Viva or Olo look very different, the more embedded you are, like the more difficult you are to dispense because real time, thousands, billions of orders of being run in your system or like mission critical biotech research is being run in your system. The more embedded you are, I think the more overdone that SaaS apocalypse may be. The less embedded, clearly, the easier you are to kind of turf out and play around with Claude, you name it. But I think we're underestimating that last 5%. The contrarian in me, this is not what I do, would say buy a basket of like the top SaaS stocks that have all lost huge market cap. You're going to do OK. You are an raw-earred risk of who we do the show with every week has done that. And I put my money into Palantir and said, I'm a momentum surfer. I did better. And that's the hard point, which is the opportunity cost of cash is so real. That you can be in one and try and be smart, but you're probably right long term, or you can just be momentum trader. And you'll be right actually in the short term. And if you can time it well, it makes a difference. The difference between in a way between our styles is every single company I invest in. And it comes back to concentration. Every company I invest in, I invest in with the hope that it could be another sooner or Uber. I literally do. I don't invest in companies and go, I'm investing in you, Harry, because I think you can be a 10X outcome. I don't do that. You don't? No. Well, every company we're investing in, we think, wow, this could be ginormous. Jason Lampkin just told me a very simple one. He's like, I'm not smart enough to predict the future. What I look forward is can I get a three-axe on my next funding round? And if I can get a three-axe on my next funding round, I really believe in a great entrepreneur CEO and a great CEO, I'm in. So we use the same logic, but it's always been 10X. I will not invest in this if I don't think, if I'm not sure that there's a 10X. We have at our team meeting, I love it because. If you can't complete that sentence, you can't invest. That's how we start the team meeting. That's how we start talking about a portfolio company. What's your greatest ever answer to that? So in more recent times, I've gone, I love it because I'm obsessed with Harry. Every question I ask, I get a better answer than I expected. Every time I press, there's no evasion of the facts. He never says to me, oh, we're the only one in this business. He always says it's so much harder than you think it's going to be. It's so much tougher. And like this person's leaving me. And I love it because they're obsessive. They're all over it. They're so deep in this. And I just can't get this out of my. I will not say I love it because of valuation, but that we've always come to valuation last. We've always gone opportunity market founders, founders first and foremost in our name. And we come to valuation last. And I cannot say that every single time we've invested, we've gone, this is a perfect valuation. In fact, rarely is. No, it rarely is. The best deals both sides feel uncomfortable, I find. Of course. Yeah, of course. Exactly right. But it can go, I love it because of insight into the vertical. I love it because of an edge that nobody else can match in a commoditized business. I'm writing this piece on nepo babies. And I'm going, I love to find nepo babies. What? I'm writing this piece right now. Why do you love to find nepo babies? So, TJ Parker working in his dad's pharmacy when he was 15, 14, 16. He has got more edge in that vertical than he knows. Mikey comes to voice AI, to music, to audio, right? They've come out of Ken show. That's all they did at Ken show. So you take Mikey and Georg and Martin Camacho. That's all they did. Martin was the CTO of Ken show. Now they're not the nepo baby, but Evan at Rebar. So Evan at Rebar is HVAC preparation and HVAC quoting. There are over 100,000 mechanical engineers in the US that are making 100K each, at least when they graduate. And all they're doing is sitting with this blueprint process so that they can quote on new commercial and Evan sitting there. And by the way, he did work for his uncle's company. That was rolled up in a P 10 of these things. And they said, God, and find the AI for this. And Evan goes out and goes, there's no AI for this. And he goes, I'm starting Rebar. And I go, there are folks who have been in these verticals since they were kids. He watched his uncle in this verticals like there's nothing else he was going to do. I go like, they have more edge and they know what to do with. I get you, sorry, just to be clear for you. Nippo baby where I'm from is Trust Fun Baby who has billions of dollars. I was like, dude, I do not want to be funding the kid who's at Scorpios in Miquenos, spraying Dad's money. We're using nepo babies with different definitions. Very different definitions. I'm talking about folks who've been in a vertical. Yeah, I have lots of edge in that vertical. That I totally get. You said you haven't sold the show of SeatGeek. The timing of when you get out matters a lot. Do you have any lessons on when to get out given? I think this generation of seed managers will be defined by their ability to access and navigate secondary markets effectively. So it's interesting. You're asking this at a time where I have never seen secondary markets as liquid. It's probably not that surprising given fewer IPOs, fewer M&A up to the moment here. An IPO market that will probably be open for the remainder of this year. And then these IPO markets always close. So in the top 100 names, wow, the secondary liquidity is incredible. And you can price your position. I would say reasonably efficiently. You can look at around and go, okay, the secondary markets and offering me at 25% discount is probably worth 7.5.10. And then you can look at a number in the top 50 at least where you're being offered at least the price per share of the last round. 100%. Because loads of folks, loads of big folks, Blackstone didn't get their pro-rata and then they're sucking it up. Most I'm seeing do not have a discount for sure. Yeah. We've seen a premium where insiders know there's another round talking to your point about momentum. Right, you were talking about momentum in the early stage. We've seen situations in our multi-billion dollar names where the round goes down in December and the boards are already talking about the march around. And we kind of see it sometimes when we're not on the board, but we just see it in the momentum in the secondary market. Now Harry, you're in very rare air there. Let me just say I don't want to in any way make it sound like we're in that with all of our companies. We're in that with at any one point, a handful of companies. But in those situations, I think the difference in fund management is when you take secondary and the ability to give DPI. Even in your top names, sometimes taking 20% off the table, if you can return 25% of the fund, particularly if it's a new-ish fund. So if it's a 2024 fund and you can give back 25%, why wouldn't you do that? And you're still long. You still own 80% of their company. I just think we don't think about the velocity of cash enough. And what I mean by that is yes, there might be another double. But if I have to wait five years and then the IPO and then an 18 months lock up, Jesus, give me 50% of that now. And I'll way rather have the certainty and the DPI now than there may be a double from here with six and a half years. This is not a precise science. I have looked back in every direction. And we've gone by the best is you sell 20% and you were wrong. Awesome. You had a good job of sell down on Uber. You know, in retrospect, we probably sold a little too early. This was early on, you know, this is a business that's getting close to $10 billion in valuation and there's an option to take some off the table and you're very new. Also, at the time, I'm so sorry, it sounds awful and again, it just dies me. 10 billion at that time was so much more than it is today. Yeah. Did you sell all that 10 billion? No. Definitely not. No, we were net long at the IPO. One thing that's very sad or challenging is when an exit event happens and then you look kind of the number that comes back to you and you're like, what? Where did it go? And I think you're having this normalization of incredible levels of dilution today, more than ever before. Do you see that in more? Yeah. Look, dilution, it's interesting. Like I look at Woop the sooner. Like we're so proud to be in both. But sooner is being a very quick journey. So if you look at how much lower the dilution is, part of it is just how quick the momentum of that has been versus a whoop, which is hardware, took a long time, like raised a lot of money along the way, like unbelievably proud of this company. But some of these companies, it's incredible how little dilution there is because the pre just goes through the roof. We're seeing also a lot of very low dilution but large rounds. You're like ramp raising like 500 million at a 40 billion price. And actually, going to seemingly no 50 million rounds at a billion dollar price. How do you think about and reflect on those just a brilliant product for founders that they should absolutely take advantage of? A normalization of continuous funding because they do more more frequently. How do you think about those? And this goes in every single direction. You've got to be producing and you've got to get into the rarest of air there. And probably there's a secondary opportunity in that kind of situation for us. So we look at that and again, we're in so early that at those kind of numbers, that kind of momentum, like we're trying to sell a little bit of our position. Do you find LPs have changed? And what I mean by that is like, I speak to a lot of LPs now. At your level, honestly, we can say what we want. They've gone back to wanting TVPI. They've gone back to wanting big numbers. And yes, they want DPI, of course, they always want DPI. But they are still very impressed by TVPI. And they're very impressed by, oh, wow, you're in this glossy name, lovable, lagoura, macaque. They're still that. Do you find they've changed? Are they still the same animal? There's lots of change because of who was doing this 15 years ago and who's doing it now. You have to have some allocation. And the big fans provide these containers for the large endowments and the large public investment corporations. If I think of the same LPs that have been with us for a long time, a lot of them like have minimum size checks now. So we're too small for quite a few of them. It's like if I can't put $50 million to it. And I think there's, it just reflects the inflation of the entire environment. They're a bunch that really do need the TVPI, particularly the fund of fans because of who they're selling to. By the way, we've seen fund of fans do secondaries of their entire fund. So we go, oh my god, you're in fund two or you're in fund four. Like you should never sell, right? Like this is what's and it's like it's not about you, right? Like you're a rounding era in this fund and it's got three or four good names. And I think what they're trying to do is give liquidity to their LPs for the next fund. So we've seen, when I talk to you about secondaries in a particular name, we've seen an entire fund, billion dollar fund, easily just sell the, sell the whole fund or sell a vertical slice of the fund. What's going on here is the finance around VC has become so much more sophisticated. I don't know if this is good for the entrepreneurs. It could be because it just means there's way more liquidity in every direction. And I think there, if you're a winner, it's great because you can manage the secondary to some degree. And if you're not on the winning side in terms of the entire ecosystem, it can be very tricky. By the Harry, I talk to you about this on this podcast. We spend other than thinking about some secondary in our very mature portfolio, I spend very little time on this. The beauty of this is I am not a financial animal. Ultimately, I'm much more of an entrepreneurial, curious animal. I'm looking again for these wizards. I don't know, these wayfinders. I'm looking again, and this is the problem for me in a way, is I'm looking to repeat a success. I'm looking for the next high. I'm looking for a noir gloss. I'm looking for someone who is that focused on and has a vision and will not take no for an answer. That's time spending 90% of my time. I'm not spending much time even on LP management. Do you think we have less loyalty than ever? You said focus there on the founder side. You see founders have angel investment portfolios that are as big as our fund portfolios. You have them doing side funds. You have them doing two companies at once. You have them leaving very quickly often in six, 12, 18 months. Is there less focus/loyalty than ever? We've definitely seen evidence of that. We've also seen people who stick it out way beyond what is rational, just because they're obsessed. I think on the margin, you see some of these actors. We've seen founders, so-called founders, and they were the founder, but they got a CEO involved, and then they became exec chairman, and they used their brand power. I think shame on us for-and we did get involved in some of these situations where we were dazzled. And it was like, you know, second time around, is that person going to stick around? And some of it is, just didn't get big enough fast enough. So there's some abandonment. I still see that the vast minority of the time. Like, I think it's easy to extrapolate and go that's a trend, and I could be very polyanish about this, but for the most part, like, I see founders wanting to make it work. Second time founders is a little bit embedded in that question, and the question is, if you've done really well, what is it take to move the needle? And I think overall, we've done a little better on second time founders who didn't do that great upfront. They did okay, right? It's life-changing. Like, the first million dollars is so life-changing. But they're really hungry. They've learned some lessons. They've got one or two people that will join them on the next journey. They've learned some lessons, and they are hungry. They're in a hurry as well. We've done better there than generally with folks who had great outcomes. And kind of said, let's go again, because those are the folks who got bored and went like, "Mmm, not big enough, not vast enough." What does no one know? You've been very successful. What does no one know about making money that you wish you've been told earlier? You kind of start to go, "The stuff that really matters is kindness and how we interact with each other and how I left you, how you made me feel." And all the rest is fluff. At some level or another, we're like, our phones have become these remote controls for our lives. Actually, the entry price to get what you want, when you want. If you want a vehicle there, if you want your food there, if you want to book a flight or a train ride earlier last week, the plane is delayed, literally on the Amtrak app, two seconds later, ask the Uber to go to Amtrak, go to Penn Station instead. The degree to which we can get what we want when we want at any level, you don't have to be that wealthy to get it, is insane. So what's happened is our level of expectations have just gone up through the roof. I don't think that's just about you and me. I think that's the perennial equation of like satisfaction equals perception minus expectation. So it's just much easier to not be satisfied anymore because our expectations are so high. So our perception, it's one thing when you go into a five-star hotel, you have this huge expectation, you walk into a three-star hotel, you have a much lower expectation, well extrapolate that equation for life now. So it's easy to get pissed off. The antidote to that is stopping for a second and saying, how Harry feel when I left him today? Did he feel like I gave him a real hug and I was kind and I think that's going on in my fifties now, is how do I leave people, how do I leave the world, how do I leave the entrepreneur? Was it like we squabbled over the last, you know, percentage point or it's like just this journey's been awesome. I always think there's energy drains and energy gains and how you leave someone is how you're remembered. Go ahead and just get back before you do a quick fight. You have to ask, how does this landscape change with open AI and anthropic? They are so size making terms of just sheer size, both will be trillion dollar plus, potentially close to two trillion. How does that change the landscape do you think? For the better, I remember the Microsoft Google case going on forever and gates going, you know, we are disruptable at the time going like who could disrupt Microsoft and turns out, you know, Google was Google and then you go, who can possibly disrupt Google and then you look at open AI and anthropic and you go, wow, if nothing else and there's so much else, like if you look at the top of the funnel in terms of where you start your search, when did you last start a search on Google? Right? Like it's just mind blowing that displacement and the good news in this environment and the ecosystem is that they will too to be displaced. So the platform has changed tremendously. Do you think Google has been displaced? No, I don't. I think Google's a net winner. Do you think Microsoft has been displaced? I think Microsoft have done a crappy job of AI, generally. Google is actually, if anything, in pole position because they come from that environment and the ability to search with context, the ability to apply AI with context is just like incredible, but they're having to fight like crazy for it. Microsoft, it's not clear to me that they can get back because their AI feels second rate compared to the top three or four. So there's a platform change. There's always been a platform. You could argue that radio, television, internet was a platform. Can you do well in that platform? Oh, hell yes. Do you think it will lead to a ton more venture money coming in with a huge amount of money going back to LPs from the returns that are generated? They'll plan those back into venture. So the returns of the top are going to be incredible. They have to be. And I think that that capital is going to spill over into venture and all sorts of investing. You alluded to the earlier angel. I think luxury, right? Like I think if you own a luxury property, I think, like-- - I think it's a luxury property prices. - Oh my God. Like San Francisco's Rome, I was there like six weeks ago. Like San Francisco and the Bay Area is like, and it's more San Francisco than the Bay Area, is back on steroids, right? It's like going to Rome. When people write off the United States, which is to me, still the greatest country in the world for venture capital, I got like, when we lost in San Francisco with the Bay Area, because it is insane at the moment. What's gonna happen is there's always boom and bust. So, a lot's gonna come out of the system at some point. Definitely. If is not a question, when nobody knows. But is there a lot of capital, a lot of gain coming out of the system and that will be reinvested in venture, and it may not be in classic kind of structural venture. It may just be in like angels putting money all over the place. And some of those angels are gonna know people that worked with them or for them, and they're gonna, I think you can bypass traditional venture to a great extent, and that's the challenge for us. That's the challenge of how do you stay relevant in this environment when there are so many alternatives? - Final one for you to equip. I'd you buy the commonly stated concern about smaller teams, job displacement, and a concerning future for human participation in labor forces. - The underpins to endeavor are getting better and better and better. Like, I remember when we went from servers to cloud, and that was like, wow, like, I get all of this for free, right, like I don't have to do any of that, right? Like security and servers, like, forget that, I just do cloud. If you look at like where AI and where this foundational platform layer kicks you off, it is incredible what you can do with very few people. And we are looking at certainly sub 10 people companies achieve a lot. Do I think that we're gonna have mass unemployment because of AI, and you're seeing a lot of leadership now agree with the viewers? No. I think we're gonna see tremendous productivity gains. I think like every wave there, there are the haves and the have-nots, and if you're not training and playing, it's a little bit why youth has an advantage because out of college, and that if you're tinkering and playing, right, like, you are familiar with the tools. You can use the tools. And it used to be the haves and the have-nots will like have data. I talked about this with Noah Glass and Olo all day long going like, the value of having data and using that data. And by the way, it's yours to lose if you don't enrich that data. Now the value of having these tools, it's becoming more and more binary. But I do believe you'll see swaths of people retrained on this. And I think you're seeing it globally. I think you're seeing it as a opportunity in low cost environments in places that are not Europe, not the US, not the North, where you can skill people up and you can provide these skills to the rest of the world at tremendous cost advantage. My wife is as much easier to train than it is retrain. And actually the 22 year olds coming out of university who are tinkering in dorm rooms with Claude. And kind of, they're not. Super AI pill, but they're mentally plastic to it. And they're going to be pretty good versus Simon or Claire, who are 45. They've always done their job in accounting and they just are not so mentally plastic. The only advantage that Simon and Claire have is they are very vertically knowledgeable and relevant. So sometimes in terms of sales, like if you're selling to yourself, there actually be very good salespeople. This is a theme that I'm kind of interested in services business where you won't buy that from you, you want to see your auditor at some point. You're prepared to say, "I know AI will do an amazing job." But at some point you want me to come see you and just kind of like go, "You know, I haven't left this whole thing to AI." Like actually know what I'm doing. So I think there'll be people who are vertically relevant to be able to sell. And there are many industries where the relationship still matters. At a certain point, if you've got litigation and a hundred million dollar, you can get AI to write that little contract for you where it's a thousand dollars on the line. But you've got a hundred million dollar litigation. You want to look at me and say like, Dave, your 10 years of experience, I need it right now. So I think there are times where knowing a vertical being relevant in that place and the service industries, I think it's good for the UK, by the way. I think there'll be a ton of people who are still needed for the human interface. That's not going away. I think that a lot of the work that was grunt work and human work behind it going away. On the services side, I think it's just the time it's banishment play, which is like so much of the things that you couldn't afford a lawyer for. You'll use and you'll get great benefits from. That is just the time it's banishment play. I think insurance, lots of admin, like lots of life insurance. So I want to, there's been a lot of direct life insurance sales anyway. But I think that in bigger ticket items, having a human who gets it as the interface, there's still place for that. There was something interesting. I had this incredible founder, June, who's a founder of a company called Simly, which does simulation markets. And he was like, we will have companies spend 100 to 200 million on one model result, because that model result is so important. Like the output of one query. And I was like, wow, that's a really interesting model, where you will spend 100 million on anthropic telling you the answer to one question. What's the size of that organization that will spend that kind of money? PNG, Coca-Cola, Nvidia, Visa, you name it. Is it worth us sponsoring the World Cup for a 10 year exclusivity period visa? Right. I think that governments and defense organizations, some kind of speculation with data of the future, I think that's a very interesting play. Do you worry that Trump's been good for business, but bad for everything else? Is that a hard balance to hold in your head? I ask as an outsider, genuinely curious. I think you have to hold many truths at one point in time. The question is, did Trump create this environment or is he presiding over this environment and getting credit for it? I think with all presidents, they arrive, and they get credit for the environment as it is, and yet it was created many years ago. And letting AI thrive in the US has generally been a good thing for the tech industry in the US. The level or lack of safeguards on that could well be problematic, but net net, like if it's good for business, it's good for the US. I think Roozerfeld said that. That's what these administrations have said. And by the way, I think that a lot of the tech backlash around Biden was for this reason, whether it was true or not. A lot of insiders say to me, it was BS. That for the most part, Biden was super pro business. And if you look at the subsidies for energy, if you look at a Tesla today, this is the thing that kind of, I don't really get about Elon is the non-dilute of government funding that Musk got for Tesla from the Biden administration was huge. So without being political, net net, like government in the US has been pro business for a long time. And I think that the country is really reaping the rewards of that. There are two AI superpowers in the world. By the way, what's so fascinating is in the 1820s, China was the economic superpower of the world. I don't know if you knew that. No, I didn't. Yeah, so Great Britain displaced China. And with a lot of it was industrial revolution. And then the US displaced Great Britain. In the economist, there was a chart on this. But in the 1820s, 25% of the world's global output, economic output was from China. It was the biggest economic machine in the world. And really what you're seeing is two superpowers emerge for sure. And I think a lot of this is going to be about AI. AI flows into not just industry, but in terms of what's going on in defense, having been very, very early the first check in shield AI and watching how that's played out. The US needs it. Like our enemies have access to all of that on steroids. I'm terrified about China right now, to be honest, when you look at the power and strength of their open models. But that goes back to thinking about Microsoft and Google being disrupted. What could possibly-- you know that anthropic and open AI are going to be disrupted. It's like unequivocal. Like our whole careers are about disruption. Those platforms never ever stay forever. Where is it going to come from? Excellent chance it comes from China. It's coming. 100%. God, we haven't had enough time for them to establish their income and see yet before they're already being taken down by Chinese open source models because of the point on the speed of innovation cycles. By the way, we haven't even touched on and the line computing. So if you look at photonic computing, if you look at what's coming down the line now, so you looked at Intel at a point where like that, that could never be disrupted. And then Nvidia, it's just like mind-blowing. What's coming to get Nvidia? Like the photonic computing plays right now where it's not electrical anymore. It's photons. So if you look at the data centers where everything that can be optic fiber now is, so every single connectivity piece of hardware is fiber, the only thing that has not been nailed is the chip. You're going to see optic chips, which are very, very energy compliant. So when people talk about the data centers and the energy sucks, that's going to change. In my view, if you say in 10 years time, and I am not a thematic investor, but I am such a deep believer in the status quo being changed always. And like nothing stays the same. I think photonic computing is coming down the line. And I think that's going to be the Nvidia disruptor, or Nvidia is going to buy those companies. OK. And the capital intensity required to build a photon company. I think, or an energy company as we're in some, is just dramatically more capital-intense than prior technology. Again, go back to my point. You need more money. Well, this is where the US could be deficient. If you look at the amount of money that's being spent in China on energy efficiency and energy research now, I don't think we're spending enough. And by the, that's a negative of the Trump administration is we need much more money being spent on R&D. And I think there was a view that the universe is squandering it to a large extent, I agree with that. But I think that we tapped off a lot of DARPA R&D that finds its way into every nook and cranny of the economy. And we need more of that R&D. We see some of it. I live in Cambridge, Massachusetts. We have some of the best R&D organizations on the planet. If you look at MIT, Harvard, Northeastern, BU, BC, what's going on there, and cutting that spend, which goes back into society, I think, is problematic. Totally get that. Another one though that is more challenging, I think it's changed its policy and regulation. Like Chinese approach to policy and regulation is almost none. It's none. And it means that you can bluntly build and deploy so much faster. I mean, Europe's the worst. But US is-- - Deaf too. - I'm not in biotech. But when I talk to friends who are in biotech venture investing, they're all flying to China all the time. Because they're going, look, in terms of R&D and in terms of licensing and in terms of anything goes. And fairness is not a totally anything goes environment. But there's so much more grassroots activity. And a lot of it has to do with regulatory environment. - What would cause you-- Final one, what would cause you to increase fun size? - Oh, I would say if I am honest about what we did early on is as an angel, I had said the risk premium for the seed stage was way overstated. So the premium for experience, right? Like, I couldn't get that. A lot of the folks that I got involved with very early were graduating. They were Noah Glast, Jack, a you name it, Eric and Micah. There was a dislocation between the perception of value later versus earlier. And that has been largely narrowed and crowded out. So if there was some kind of arbitrage. Harry, we didn't come at this going. I'm obsessed with economic arbitrage. We came at this going, I'm obsessed with great founders. And I want to vicariously be on that journey. But if you had to look at this retrospectively and say, what did we do in economic terms, there was an arbitrage. There was a real arbitrage because the risk premium at the seed stage was way overstated. That has changed completely. What would cause me to raise a bigger fund? If I looked at Series A or Series B or Series C and went like, there is such a value opportunity because everybody's abandoning this. I don't think it's true at the moment. I think just capital and money finds its way to everything. But if you went so many Series A companies are orphaned and there's amazing value, there hasn't been one to 10 to 20 and ARR increase in one year. But wow, they're on track and that looks like it smells like oh, look like SeatGeek. I think that would cause me to say, we should be investing $10 million at that stage. So it's not momentum. It's a sense of wow, like I can't believe that others. And I have been very tempted there. I've been very tempted to say this company is doing incredibly well on the revenue side and it's being undervalued. - Final one, I promise for the graphite. You say that, but oh, I love it. I think there was one of the great, awesome human dude. It's 17 year journey to a 1.6, 1.7 billion dollar. - 2 billion x2. - 2 billion x2. - I love, no, I love, oh, it's an amazing business. This is an amazing journey. But when you think about like utilization of cash, most optimally, 17 or 18 years, 2 billion dollar x, the IRR is not amazing. How do you reflect on that and just find that versus maybe hot arounds? - Yeah, I mean, the outcome was, it's publicly known eventually, Toma Bravo, we took the company private for about a $2 billion valuation. So not bad for a few years of work. And if you take a IRR basis, you're probably right. The journey and the fun of it was just enormous. So being involved with nowhere, where it was nowhere, a few other founders, and me from the beginning and being on the board until that sale was just the right of a lifetime. Okay, listen, quick fire round time. What have you changed your mind on in the last 12 months? What's been surprising and what I've changed my mind on a little is where AI should have impacted like crazy and I've seen lesser impact so far, with all the hype, with all the momentum, like AI changes so much in terms of software and enterprise and SMB other than the models themselves and some good stuff around human interface. So a lot of stuff around the voice has gotten a lot better. I don't know about you, but I would have expected much more around consumer AI. So I've seen sooner, but like in terms of changing how I do stuff, I type much less. I'd like I speak much more in terms of communication. I would say there are so many kind of consumer areas that I feel are not yet played out at all. When you're doing sooner, a five billion, what are you underwriting it to? I think that the folks investing at that level are going, this is a Spotify disruptor, that's Spotify and Apple music, it's a big bet that because some creation tool to consumption tool. Oh, totally, totally. That's why Jack from Snap was brought in. Interestingly, I was at a conference with Martin. Martin Kammacher, who's the CTO of Suno. He was asked a question, if a large language model could do what you do better than you do it. Like would you slot that in? And you're talking to the CTO, the guy who's built the whole model. The entire Suno model is from the ground app. And without missing a beat, Martin goes, wouldn't think twice about it. It goes to your point of, this is a consumer product. The experience, the interface, think Spotify, that's what we offer. How we get there is obfuscated from the user, the user couldn't care less. Like whatever gets you there, did you ever predict the speed of that? No, definitely not. 'Cause I remember the days when Slack, one to 10 in 18 months was like, the gold standard. I mean, Suno is multiple hundreds of million, I mean, half a billion or whatever it is now, is nuts. No, it goes back to Uber. You know, when Eric asked, how did you know? How did you know? And Eric goes, I didn't. He said, the company I saw before, the company I said so afterwards, like we underwrote those in the exact same way. Anyone in my seat who says, I knew, is just full of shit. (laughs) I absolutely love that. What has been the most controversial deal that you've done internally? What can become controversial is the what or the where? So certainly Kupung was like, got back, I said to Eric, career, and he said, you know, do you even know if it's North or South? But the magic there is I am based in Harvard Square. So people go, how do you get to career? Like how do you get to all sorts of places and the answer is Harvard Square? So bomb drops out of HBS after his first year and comes to see me. And another controversial company was probably shield in terms of the what it does. So I would say the whole partnership didn't necessarily love defense drones. And early on it was like, is this only defense? So I love it because there's certainly taken us to some very controversial geos and controversial watts. - Our prediction marketplace is just legitimized gambling. It has to be. I mean, if you look at like Kelsey and Polly Market, what's the difference there between Draft Kings and Betway and they seem very similar to me. But by the way, this will be controversial. TVPI versus DPI. The one looks like a prediction market, right? And the one's real. Like I could say the same, you know, TVPI looks like a prediction market, right? - But I mean, candidly, when they're doing two billion in error who gives a shit. The one thing that you worry about is that Trump change in administration and what that does to regulation around them. - That's a different game. What do you know now that you wish you'd known when you started Final Collective? - So for the most part, frameworks have saved us. It's also the place where if I look at some of the deals that we didn't do and we just went, we used valuation as shorthand to say no, terrible mistakes. So Clavio, Loved Andrew, Loved Ed, came to me first, came through Hugo Funfiren who also sent us sooner and didn't do it because of the framework. And the framework allowed me to easily say no. So we'll miss a lot, we'll make plenty of mistakes. I think I freed myself like you a little more in that area and just go there extraordinary. But the frameworks have saved us as well. - Penaltyment one. The biggest advice on a happy marriage in relationship. - Kindness and being present, being present with each other. Like I think of this at dinner, at dinner time, no phones are allowed anywhere near the dining room table and I don't take my phone to my bedroom. Like my phone is never alongside my bed. Here's the rub, doesn't, I don't need my phone to be distracted. Here distracts me perfectly. How to be present and involved and look you in the eye and kind of make you feel with my body language that I'm hearing you, that I'm invested in you. I think the same thing that we think of in founders. Like happy life, your kids, your wife, your siblings, your parents. And this is the lifelong goal. Like I don't, I have not got this nailed. But how do you show them your present? You're there. They matter to you and that's the quest. final one, what are you most excited for in the next 10 years? I look at like me, you know, my mother and I wore marathons, she's got amass. I think I'll be amazing discoveries for chronic conditions, which we wish us to seem would be forever. And that could change millions of lives. Super exciting. What are you most excited for? - I mean, you're leading the witness in a few ways here, but I would say that each wave brings things that we couldn't imagine. And I look back to driverless cars, and there was a promise that that was like five years away. And it turns out like 20 years from now, I saw Waymo driving around London, I think it's coming here soon. We're not quite there. And yet we're back in the, it's slow, slow, slow, and then it feels like overnight. And of course, if you're involved, and this is again, the intoxicating part of what we do is, you know before the world knows or the world cares, but you know that it took a long time. And yet I think we're on the threshold of a lot of really interesting stuff. Like I think that you and I could be buying the very lost driven cars. Like I think that in five to 10 years time, like our kids will not need to drive. And I think with AI, we're on the threshold of a lot of that. And there's a lot of doom saying there always is, but in terms of discovery, in terms of what we know about the world, in terms of health, right? In terms of, you know, you look at Kimo, and the number of friends of mine who have been treated or have passed away, and you look at Kimo and you go, that is like prehistoric. And I think that we are with AI, with the amount of compute going on in healthcare and other realms, like there are solutions coming through, not fast enough, but I think it's so exciting. What we're involved in. It's very exciting for me too to hear you say that because I don't actually have a driver's license. And so you could sway me or relieve that necessity. Harry, you live in the most walkable, the most in summer, the most walkable, wonderful city. You don't need a driver's license. Oh my god, dude, I never ever need to drive. Thank you so much, Dean, and thank you so much for 11 years of friendship. Honestly, it means so much to me, and you've always been so kind to me. Harry, you've gone from strength to strength, and that's my wish for you. Keep going from strength to strength. You've been a great, great voice in this environment, a great voice in the world. Thank you so much. Thank you. But before we leave you today, what do Uber, Curse, and Harvey have in common? Nexus connects to the AI coding tools and harnesses your engineers already use and intelligently routes each request to the best model for the job, helping you optimize for quality, latency, and cost without changing how your engineers work. 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