00:00:00
sax is there something you object to
here the poker one and net worth no i mean that's fine i don't give a [ __ ]
about longevity or quantum computing but
00:00:07
here's the good news david it's not
all about you there's four people you could have two people who like the
topic and then you could just ask them a
00:00:15
probing that's fine it's fine just
tell me when it's over i'll do you know hey everybody hey everybody welcome to the all
in podcast i'm jason calacanis and with us today
00:00:47
again the queen of quinoa david friedberg sans
his dog in the background sorry for those of you
00:00:54
who love his dog he's gonna walk he'll be back in
like 10. he'll be back and he'll be in the seat
00:00:59
uh and the rain man himself david sachs
ultra focused on sas and marketplace startups
00:01:08
and involved in some illegal trafficking of
red pills straight up from honduras to cuba
00:01:15
and then through miami making the red pills making
their way to california and finally daddy's back
00:01:23
the spackmaster himself bestie see
the dictator bank account replenished he'll be rebellionized by firing on all cylinders
oh it's so so you know live by the spec die by the
00:01:40
spec that's what they always say in this
business but you know what we have been
00:01:43
absolutely inundated with i kid you not hundreds
of questions from you our loyal audience
00:01:49
and when this thing is over we are going on
world tour we'll see you in vegas we'll see you
00:01:55
uh in uh at the royal albert hall in uh london
and miami all cities are on the agenda let's take
00:02:04
our first question from you the audience to what
extent are you guys waiting how's everyone doing
00:02:08
all right answer the questions but it has a i mean
look at this guy he got his ass kicked and he's
00:02:14
back i'm doing really really great what about the
rest of you guys you guys played poker this week
00:02:19
who played poker it was a bloodbath well
although you know it's so funny because like
00:02:23
we played i played uh a very big game the week
before and then we step into our game which is
00:02:29
like i think still quite big but i could not
rub two cards together to make a hand and i
00:02:35
uh i went off like a rocket ship i just lost
it somewhere and just despite that despite
00:02:41
that every time i chamath and i were heads up
at hand he just smashed absolutely smashed me
00:02:48
and then i was like you know what i'm not going to
be bullied anymore and then i stand up to him and
00:02:51
he's got the nuts each time uh i was down i did j
cal i did run you over i mean the number of just
00:02:57
complete bluffs i ran on you oh the first and i'm
just like oh he's totally got my number tonight
00:03:03
after bluff after bluff after bluff and then i
showed him the nuts five times in a row it was
00:03:07
beautiful so i'm stuck a model y and i come back
and i win a used prius i'm just leaving it at that
00:03:14
i lost a mid-sized home in phoenix arizona i
think you lost the bentley okay don't cancel us
00:03:22
please uh sex did you play i wasn't there in
that game but i played in uh la game a couple
00:03:28
of nights ago and uh any celebrities yeah me
me sacks and oh god you guys don't count names
00:03:35
or podcasters no there was one there was one
unnamed celebrity we can't say what what but
00:03:40
no we can't say but we all want we'll just give
us a genre politician an athlete okay yeah i
00:03:46
won in in that game but i lost uh i lost in a
different game this past week and it wasn't pretty
00:03:51
yeah wait sexy sexy are you what are you playing
yeah i think he may be playing actually i mean
00:03:57
beep that out would you nick beep it out but we
could all laugh at him for being so precious oh
00:04:04
you i'm sorry do your lps think you're supposed
to be in san francisco investing in startups no
00:04:08
no they they know i go wherever the deals are
oh really miami what did you get a deal would
00:04:14
you get a deal on some croquettes and a cuban
sandwich two for one there's no copies there
00:04:20
when do you think you'll make an
investment in the miami-based company do you think that'll happen any time what's
happened already has it happened are you in
00:04:29
i've invested in a miami company i've got like
six yeah i well there's some companies that are
00:04:35
moving to miami that i'm already in you know
chamath and i are both in pipe right and and
00:04:40
uh part at least the ceo the company just
moved to miami so that's two of four two or
00:04:45
four besties in pipe thanks by the way how
did you miss that j cal they they advertise
00:04:49
on your show and you didn't think to try to
access that the lp beep that we all share
00:04:55
wanted everything and he couldn't fit me in
and i was like how about a slice and he's like
00:04:59
is that lp me no there's another lp that sacks and
i share who got their beak significantly doused in
00:05:07
that one but i'm just gonna i'm gonna get the kid
to give me a 25 basis points and uh advisor share
00:05:12
so i'm getting a slice no matter what yeah good
good luck with that good luck with that good luck
00:05:17
the train's off the station the train's off
the station dude that that company's worth
00:05:21
a couple billion dollars in less than two
years of its existence good luck with that
00:05:25
jason okay well it's right we call it a making
i don't know what you guys are seeing but my god
00:05:31
early stage valuations went bonkers
i had one company that raised that don't run it i have all kinds of
data okay right so today we're going to do
00:05:39
some audience questions and then we're going
to do the state of vc we're running through
00:05:42
a deck we're running through everything that is
changing right now in venture capital and early
00:05:47
stage investing and it is changing very quickly
here's a question from leonard uh oh musics to
00:05:55
what extent are you guys interested in longevity
in your opinion what technologies could help us
00:06:00
live longer and healthier lives freedberg that's
got your name on it why don't we start with you
00:06:04
um on this one i would uh point folks to read the
book lifespan by david sinclair who's a researcher
00:06:12
at harvard and he's done a lot of kind of leading
work on on basically calling aging a disease and
00:06:20
life extension so the book lifespan highlights
i think a lot of his research and findings
00:06:24
and paths forward uh for um for improving uh
longevity and basically you know it comes down to
00:06:32
what he defines as kind of an early switch
that evolved in evolutionary biology
00:06:37
in every cell in every living organism where
the cell is either in growth mode or repair mode
00:06:42
and the trick is can you get the gene to switch
on that puts the cell into repair mode and if
00:06:48
you do that the cell fixes itself and you and the
cell lasts longer and the organism lives longer
00:06:54
and so they've identified a number of genes that
trigger this in a number of compounds that trigger
00:06:58
expression of those genes and there's a
number of things you can do lifestyle-wise
00:07:03
to trigger these genes basically to get
yourself to live longer so fasting is a good one
00:07:07
and then there's a bunch of compounds that you
can take that mimic fasting on a cellular level
00:07:12
like metformin and rapamycin i'm on metformin
i think a couple of you guys are on metformin
00:07:17
right yeah yeah and then and then the nad
plus supplements um which you say mmn subs
00:07:23
yeah nmn nmn and nad plus um so there's two
there's two compounds nmn like nancy mike nancy
00:07:32
and then nr and those you can buy a product
called true niogen on amazon which which has those
00:07:38
compounds and you take about a thousand milligrams
a day and um anyway all of this stuff's laid out
00:07:43
in his books and it supports a lot of the research
that's being done obviously fasting and exercise
00:07:47
also trigger this gene expression and enable
kind of um measures of longevity uh to kind of
00:07:53
be showing up biologically but um i think i think
it's a it's an emerging field and there's a lot of
00:07:58
deep work going on and as people have highlighted
the the process of aging is a biological process
00:08:03
that theoretically we can stop and potentially
reverse and there's a lot of new work that's
00:08:08
being done in stem cell therapy that may kind of
elicit some new paths forward here so arguably
00:08:13
someone is alive on planet earth today that could
live past the age of 200. um so it's an exciting
00:08:19
field and lots of kind of path forward i'll uh
i'll tell you for what it's worth my regimen
00:08:25
um and oh god here we go thirst trap photo coming
in three no uh so so i i i do uh the following so
00:08:36
um i take uh a statin now it was 10 milligrams now
i'm at 20 milligrams um i take metformin and all
00:08:46
of this i take sort of in a preventative posture
um because my cholesterol wasn't super high
00:08:52
but it wasn't super low it's like sort of like
in the 160 170 180 but now it's sort of like 120.
00:08:58
um and then metformin i take preventatively as
well i'm not pre-diabetic um and then a couple
00:09:04
of vitamin d and some other stuff but then here
are these things that i do that i think could be
00:09:08
valuable for some folks listening uh there are
these places now that exist they're popping up
00:09:15
one company that you can check out is called
pre-nuvo p-r-e-n-u-v-o um they are in vancouver
00:09:23
they're in la they're in redwood city so
mid peninsula for those in silicon valley
00:09:29
and what you can do is you can get a head to toe
uh mri so you know there's no radiation you know
00:09:35
you could do these things you know every other
week if you wanted to it takes about an hour
00:09:40
and what happens is they can basically uh look
through your entire body um your musculature
00:09:46
your organs um from the literally from the tip of
your head all the way down to your ankles and they
00:09:52
can spot a lot of stuff that may not otherwise
uh be seen and so you know every three or four
00:09:58
years to get one of these scans you could see a
lesion um you could see the beginnings of a tumor
00:10:04
you know i did one a few weeks ago touchwood
it was great nothing nothing so much does it
00:10:08
cost um there's a range of prices um and i think
those prices will come down the range of prices
00:10:14
are from like 1500 to 2500 so it's not expense
it's not cheap sorry um but here's what they're
00:10:21
able to do they're building a corpus of all these
images where they're running uh machine learning
00:10:26
on it and they're getting better and better
at identifying anomalies and so as a result
00:10:31
of that they're able to actually take the mri
images and they can do fewer and fewer scans
00:10:35
to get the equivalent resolution so two things
will happen one is the scan time will come down
00:10:40
right so it was an hour and a half now it's sort
of right under an hour it can probably be as low
00:10:45
as 40 minutes which is relatively tolerable for
most people and then the cost will come down into
00:10:50
the hundreds of dollars because you'll be able
to very rapidly assess um so i do that and then
00:10:56
the second thing is for anybody with heart
disease in their family i really implore you
00:11:00
one of my friends actually is flying down from
toronto i'm taking him to my cardiologist in la
00:11:06
and there's a thing called heart flow
and what heart flow is is a contrast ct which basically means they inject a dye and then
they put you under a ct and they they map out
00:11:16
your heart and you can literally see the calcium
buildup you can see the state of your arteries
00:11:21
um and you know what probably people don't
know is when you have a calcium score
00:11:26
you know most of us it's zero but when it
starts to be non-zero it doubles every year
00:11:31
and by the time it gets into the thousands you're
basically guaranteed to get some form of cardiac
00:11:35
issue um and so it doesn't seem like anything if
your cardiac score is 20 except it goes to 40 80
00:11:42
160 and all of a sudden within five six
years you're really in the red zone for a
00:11:45
heart attack or something um i've done it
twice now um every five years i do it um
00:11:50
and touchwood you know my my calcium score is
still zero um but in any event uh that's what
00:11:55
i do for longevity i kind of preventatively
at the cellular level with some drugs and then
00:12:00
just trying to catch cancer and heart disease
on the front end uh otherwise eat three balanced
00:12:06
meals and exercise and sleep a lot sax uh
you obviously don't care about longevity
00:12:12
uh any thoughts here i mean sax has looked like
he's a thousand years old since he was seven
00:12:16
no he was when he was in 12th grade he looked
like he was a vice president united states yeah
00:12:21
guys just just let just let me know when this
conversation is over i've been doing my email
00:12:29
oh it's so great all right end my life now i [
__ ] hate it you don't you guys like i just lost
00:12:36
two years right now sax has got an early spot
both on the rocket ship to mars and he's got an
00:12:44
inside vip to peter thiel's blood boy project
and so either way he's getting off the planet
00:12:50
or he's going to refresh his blood or both so
he's good all right action bias asks please
00:12:56
debate decentralization of monetary value ultimate
threat for insiders power erosion i interpret this
00:13:04
as a as a bitcoin question so yeah i think one of
the most interesting things happening in the world
00:13:11
today is this is what's happening with bitcoin
right it's and and you're seeing the price go up
00:13:16
because a bunch of institutional investors
on wall street are all getting into it now
00:13:20
it's gone from retail to institutional and
the narrative basically it's a really profound
00:13:26
narrative which is it's the separation of money
and state so if you think about like one of the
00:13:32
most important events in human history was the
separation of church and state where we no longer
00:13:37
looked to the state to determine you know what
religion everyone was going to be well what crypto
00:13:43
is introducing is this idea that the government
cannot control the money supply i think that's
00:13:47
what he's talking about with the decentralization
is that you could have a currency that everybody
00:13:52
in the world believes in that no government can
control that's the separation of money and state
00:13:57
now this is just really a narrative right
now i mean and who knows if it will actually
00:14:03
come true but the interesting thing is that if
everybody does believe in it it will come true
00:14:10
and so bitcoin's been sort of described as the
bubble that never ends because if everyone kind
00:14:14
of buys into this bubble it actually comes true
so i think it's very interesting and you're seeing
00:14:20
um because bitcoin is kind of perceived as the
antidote to inflation and money printing by the
00:14:28
government i think you're seeing it take on new
urgency now because the government just keeps
00:14:33
printing trillions and trillions of dollars of of
new money doesn't this threaten government so if
00:14:38
government um doesn't have control over monitoring
financial transactions and have control over
00:14:43
the accounts in which the financial assets sit
which is effectively the notion of decentralized
00:14:48
anonymized wallets then um how does the government
secure taxation which is requisite for their
00:14:54
ability to fund well they're good to fund the
state right and so what happens to the state
00:14:59
well so there's an enormous amount of leakage
that happens today in assets that actually
00:15:04
get financialized but in the gray market and i
think the the beautiful thing is on the one hand
00:15:09
you know we become less focused on like the m1 and
the m2 money supply like the physical printable
00:15:15
distributable money that we can see and touch and
it gets replaced with virtual currencies that are
00:15:19
tied to other things i think what the the the the
person who wrote the question is asking really is
00:15:24
more about defy and what's happening sort of like
on the ethereum you know 2.0 erc20 contracts all
00:15:31
that stuff which is sort of much more next-gen
i think than bitcoin and i think at some point
00:15:36
we should deep dive into it but what i would
say friedberg is all the leakage you have today
00:15:40
goes away in a world of defy because you will
financialize every single asset possible you know
00:15:47
you'll financialize your homes you'll financialize
your cars your watches your jewelry your art
00:15:52
you'll financialize every random thing maybe
even your career and how people will trade it
00:15:57
absolutely your career and and the thing is by
by monetizing it and financializing it you can
00:16:02
borrow against it you can trade it you can pull
forward value into the future against it but it'll
00:16:08
all be tracked and so as long as the government
then says listen we're going to enable it all
00:16:13
but there needs to be an off-ramp to taxation
and that's pretty simple because a physical house
00:16:19
exists in the world you can't hide the existence
of a physical house but it's not anonymized right
00:16:23
chamath and so i you know you want to track it i
mean that's the challenge is if no i'm saying if
00:16:28
it is anonymized then the government uh can't
track it and the government i think these are
00:16:32
these are two separate things some assets will
live anonymously and those are the assets that
00:16:38
don't need to exist in the real world but i
think what this will create is a world where
00:16:42
all of these assets that actually really exist in
the real world it'll be fine that it exists and
00:16:47
that people get taxed on it but it'll be much
more legitimate and i think it'll be simpler
00:16:52
and so i think people will trade off incremental
taxation for incremental monetizability i'll give
00:16:57
you an example let's use real estate there is no
reason why every single piece of land everywhere
00:17:05
around the world isn't written into a ledger with
knowledge of who owns it such that the person
00:17:13
that owns it could trade it could borrow against
it um could sell it uh yeah yeah yeah could it
00:17:20
fractionalize it even if you can't fractionalize
in the real world because your neighbors won't let
00:17:23
you set it up into four lots you could do that
online online and so today what will happen is
00:17:28
that you know that person has a level of wealth
and what they do instead take the united states
00:17:34
is they'd lobby lobby lobby to create all this
convoluted real estate tax law to make their life
00:17:39
simpler but if you actually unlocked the ability
to focus on revenue versus expenses you just
00:17:45
wouldn't focus as much on the taxation because
you'd say well i can make so much more money
00:17:50
if you judge just to you know sort of answer the
question here from the from the reader from the
00:17:54
listener i think you can really judge this based
upon how much it's being pumped by the people who
00:17:59
own it and they are absolutely dogged religious
about this it's like talking to and you know
00:18:06
person who's you know met jesus and now everybody
has to be a christian and you can also look at the
00:18:12
people who are opposing it i don't know if you saw
yellen um and then um christine lagarde she came
00:18:18
out against it yellen's come out against it india
might ban it and then you have obviously china is
00:18:23
coming out they're digital ones so i think it's
gonna be there's going to be a dogfight here
00:18:28
where governments are not going to easily give up
their control of this and there's many ways they
00:18:34
can make a bunch of red tape to slow this down
and in countries that are authoritarian they can
00:18:39
outright ban it let's take another question by
the way there's like three outcomes here right
00:18:43
i mean you could either see bitcoin for example
you know being banned and that's going to be ugly
00:18:49
um and obviously there would be significant
financial loss at this point i mean to sax's point
00:18:53
at some point there's so much asset value tied up
in bitcoin it's too big to fail sorry david banned
00:18:59
by who oh that that's chinese government this this
is what they're trying to do on some of the states
00:19:03
right and they're trying to make it illegal for
citizens to transfer money in and out of the asset
00:19:08
class i think i think it's i think it's a bigger
threat to countries that want to impose export
00:19:12
or currency controls and export restrictions
but but frankly if you're a country that's not
00:19:18
afraid of currency movements because you're not
trying to do something oppressive to your people
00:19:22
i don't think you have that much to fear here
i mean there are other ways of trying to hide
00:19:26
assets or hide money besides bitcoin and every
transaction every bitcoin transaction is written
00:19:32
into the ledger i think you have to be pretty
dumb to try and commit a crime with bitcoin
00:19:36
because there's going to be a permanent record
in the blockchain forever of that transfer and
00:19:40
then there's companies that that provide that do
kind of uh sleuthing and try to you know unravel
00:19:48
you think tax evasion in the united states
is going to be difficult um with bitcoin if i
00:19:53
accrue a bunch of value in bitcoin am i going
to be able to evade paying taxes on those gains
00:19:57
and convert that bitcoin into physical assets
by purchasing it from another bitcoin wallet
00:20:01
holder i mean how realistic is tax evasion
going to be uh and how much would because that's
00:20:07
ultimately what the u.s government would mostly
well so you would convert cash into bitcoin and
00:20:11
then you want to sell your bitcoin at some point
you're gonna have to sell it i mean there would be
00:20:15
a uh there'd be a a realization of what i'm saying
transfer to a seller of an asset of another asset
00:20:22
that's willing to accept bitcoin and receipt and
so to anonymize wallets i don't know i mean that
00:20:26
transaction is going to live on the blockchain
forever and it's going to live in the books of
00:20:30
whoever the seller is what are they selling you
a car a house whatever i mean that that transit
00:20:36
a watch i mean look if it's a personal item maybe
but if we're talking about a substantial asset
00:20:41
like a house or a company or
something they're going to need to the other side of the transaction is
going to need to report the realization event
00:20:49
so you're going to have to have two people collude
to engage in tactics seems like a really stupid
00:20:54
thing to do legally incorporated businesses are
going to be mandated to do effectively identity
00:20:59
verification much like we have to do under the
patriot act with all the the financial totally
00:21:03
totally buyer yeah ultimately how the compromise
arises right yeah i'm not i i'm not that worried
00:21:09
about i i feel like this whole like silk
road type bitcoin will be used illegally
00:21:14
thing is like kind of a old meme about it that i
think that the fears are like greatly exaggerated
00:21:21
but the the thing that jumps out at me about all
the critics of bitcoin and i'm i'm not like a
00:21:25
pumper or whatever but i do i do own some um is
that the thing that like all these like critics
00:21:31
don't seem to understand is the technology that's
the common denominator whether it's like howard
00:21:36
marks or warren buffett or charlie munger or
whoever they're they're all like great investors
00:21:39
or whatever but they're not technologists and
blind spot yeah it's a blind spot and the thing
00:21:43
they don't understand about the technology is
that bitcoin is the first digital asset to ever
00:21:48
be created that you can't create infinite copies
of right so think about like a song or a photo or
00:21:56
a video or whatever anything that's digital you've
always been able to make an infinite number of
00:22:00
copies isn't that what the word digital means is
that it's infinitely copyable so how do you have
00:22:05
digital money that can't just be infinitely
copied but obviously that would destroy the
00:22:09
value and that was the genius of bitcoin is
that every transaction's written into this
00:22:15
ledger the blockchain is decentralized and nobody
over the last decade or so has figured out how to
00:22:21
counterfeit bitcoin how to make a duplicate how to
double spend bitcoin as long as that remains true
00:22:28
then bitcoin can serve as money if everyone
believes in it um the day that someone figures
00:22:34
out how to counterfeit a bitcoin how to double
spend it it's all worthless but a lot of people
00:22:39
have been trying over the last 10 years they've
never figured out how to crack it by the way
00:22:42
that's a great it's a great transition to the
next question sorry i don't interrupt you but
00:22:46
no it's a perfect transition and uh next up
adil says can one of the besties explain the
00:22:52
power of quantum computing and how it can change
industries like medical pharmaceuticals any good
00:22:57
companies that are leaders in quantum computing uh
i'll i'll i'll i'll take a cut at this one so um
00:23:04
and the reason um i pointed it out is because
a lot of people do talk about quantum computing
00:23:09
uh potentially being a path to cracking
the hashing functions in bitcoin mining
00:23:14
and potentially overwhelming the network and
effectively counterfeiting the the bitcoin uh
00:23:20
ledger um and so uh technically a quantum
computer is a computer that uses qubits
00:23:27
which is a a storage of a quantum state versus
a storage of a binary state which is a a binary
00:23:35
digit which is called a bit in traditional
computing classical computing a one and a zero
00:23:40
a one and a zero and a quantum or qubit a quantum
state can uh be a much more dynamic function
00:23:46
and so it's a it's a state that is a very analog
and very representative of kind of a much more
00:23:52
kind of broader condition than just a one or a
zero it could be a one to zero or neither right
00:23:57
it could have neither state as well about it as a
wave function and um and so a qubit can only exist
00:24:04
in a in a piece of matter uh where you can hold
the fidelity of a quantum state meaning it can't
00:24:09
be disturbed so right now all quantum computing
gets disturbed it all has some error-prone
00:24:15
context to it and so in order to use qubits to do
calculations we use what's called quantum error
00:24:21
correction on those qubits and so we adjust the
the qubits and the output to try and resolve it
00:24:27
a qubit with no errors is called a logical qubit
and the logical qubit has not been built it would
00:24:34
require very very very low error rates um and
there's a bunch of uh and and there's a bunch
00:24:39
of theories around when this is going to happen
when are we going to have truly logical qubits
00:24:43
um when does the error rate get low enough
that these qubits are are truly kind of useful
00:24:48
now there is an estimate that the number of
logical qubits needed to crack rsa 2048 which is
00:24:55
the big kind of encryption standard um which could
kind of break the whole crypto currency model
00:25:02
um it would require about 4011 logical qubits
um today the largest um the largest quantum
00:25:11
computer has about a hundred qubits that are
very noisy and so it's less than one logical
00:25:16
qubit and so we would need somewhere between a
hundred thousand and a million qubit computer
00:25:21
to be able to have enough quantum supremacy to
be able to tackle a project like cracking rsa
00:25:28
2048. and to and by some estimates and some people
have tried to estimate when this would happen and
00:25:32
the estimate currently by some researchers is that
this there's a less than five percent chance this
00:25:37
happens before the year 2040. so we're talking
somewhere between the year 2040 and the 2060
00:25:42
when we get a quantum computer that has enough
logical qubits to be able to crack a problem
00:25:48
like um you know rsa 2048 and basically make
all crypto fail and between now and then a
00:25:53
lot of people are working on quantum cryptography
which is new methods of encryption that are kind
00:25:58
of built for the quantum era and the quantum
frontier now what's more interesting is that
00:26:02
over the next 100 next 10 years or so the current
super noisy super low fidelity quantum computers
00:26:08
can be used to simulate quantum states which is
the condition of atoms and molecules and use that
00:26:14
to do better modeling of physiochemical properties
of material that's where the breakthroughs
00:26:19
will happen in the next decade so all the hard
discrete problems that we kind of theorize about
00:26:22
cryptography and other stuff that's decades away
in this decade we are already going to start to
00:26:27
see quantum computers have breakthroughs in how
material how atoms and molecules interact with
00:26:32
each other for example finding proteins that can
do a better job of having an enzymatic reaction
00:26:37
in the physical world where we can now
potentially pull nitrogen out of the atmosphere
00:26:41
to make fertilizer or or drugs or um or specific
protein targets that can go in the human body
00:26:48
and have specific functions by modeling what we
can't do with traditional computers today modeling
00:26:52
the quantum properties of those molecules
and how they interact with other molecules
00:26:56
and then building really cool predictive
models that we can then turn into products
00:26:59
and that's going to be chased really hard this
decade everyone's going to be going after it
00:27:04
and we already have enough compute power
i don't think that there's any leader in
00:27:06
quantum computing today these are all still
science experiments they're all breadboards ibm
00:27:11
google microsoft a bunch of research labs a
bunch of startups are all kind of basically
00:27:15
doing the same thing with different types of qubit
technology but they all have very high errors
00:27:19
they all have very low qubit computers and so it's
still unresolved who's going to come out with some
00:27:24
companies two companies to follow are d-wave
which was started in 99 so just to give you
00:27:30
an idea of how long people have been working
on this 22 year old company i know uh steve
00:27:34
jervison's been backing it for now in its third
decade and then ionic is that the other one i o
00:27:40
and q i i think like quantum facts right quantum
computing is like fusion yes it's like it's like
00:27:46
a technical problem that has attracted people
who've had more money than common sense um
00:27:53
and it's just basically a way to burn an
enormous amount of money over 20 or 30 years
00:27:59
and the problem with that is that you start to
build in technical craft anything that is still
00:28:03
in r d phase 20 years in needs to get scrapped
and rebuilt from scratch because everything has
00:28:09
changed including the people even the 20 year olds
that started are now in their 40s and have kids
00:28:13
and just have a competitive it's a great point
jamaat and so and so like you got to just scrap
00:28:19
these projects and start all over again because
the the problem is you need somebody completely
00:28:23
naive to look at this problem in 2021 and say well
okay how are we actually going to really solve
00:28:28
like the coherence problem i don't know how are
we going to build a gate array uh i don't know and
00:28:34
you have these very um formulaic ways that we knew
based on what technologies were available in 99
00:28:41
or 2000 to start with and i think that's probably
part of why we framed the problem as largely sort
00:28:48
of this thing of like okay maybe there's like a
integer factorization thing you can do and it's
00:28:52
like i don't know i'm uh i'm deeply skeptical
yeah well i agree and by the way this is why
00:28:58
sorry can i just say one last thing this is why
alpha fold beat quantum computers to the solution
00:29:05
of protein folding uh and and the reason was they
were just like ah we'll just take a different run
00:29:11
at it completely different people a completely
different technical framework and modality
00:29:16
and a completely different risk profile and
age as well a company to keep an eye on in the
00:29:23
fusion space commonwealth fusion systems um
wait zach what were you gonna say what i was
00:29:29
gonna say is that the main thing i was thinking
about while you were giving that dissertation
00:29:33
on qubits or god knows what is that is i would
never invest in this that's all i was thinking
00:29:40
is i would never invest in this yes you're exactly
on sas and markets that's exactly what church yeah
00:29:44
that's exactly what jamaa said definitely seven
kings and five aces look these are science fair
00:29:51
experiments you know with indefinite time frames
this is basic r and d that should be done at
00:29:57
universities these concepts are not ready for
commercialization exactly what they said about
00:30:02
uh ai and then now it's infected in every
company so no that's not true no because there
00:30:14
completely disagree with you because okay there
were there was a practical commercial revenue
00:30:19
generating opportunity for ai and machine learning
literally from the start of computing it it took
00:30:24
several iterations there's no use case for fusion
energy i mean of course there is no i'm not no but
00:30:30
it's it's still at the basic r d stage basic yeah
i will i'll partially agree with you jason in the
00:30:35
sense that i was not investing in ai 10 years ago
because i thought at that stage it was still in
00:30:40
the realm of science fiction but we just announced
two deals the last two days two seed deals viable
00:30:45
which is basically an ai voice of the customer
it slurps in all of your customer feedback and
00:30:50
then gives you answers and then the other one is a
copywriting one it's a copywriting ai called copy
00:30:57
dot ai which literally writes your site
trying to get a slice right now yeah now
00:31:01
yeah we we might give you a slice
jason stop being so skeptical but yeah but but here's here's what's changed right
is these are seed companies with just a handful
00:31:14
of employees they're built on gpt3 so you had
this like basic like r d done it creates this
00:31:21
platform called gpt 3. it's like aws that's right
yeah you can now build companies on top of that
00:31:27
so i mean look it you know what i invest in are
the commercialization of of of new technology
00:31:34
waves um those technology waves happen because
of deeper r d what do you think about vr and ar
00:31:39
because it is the same conversation with vr and ar
like are these worthy investments or not i think
00:31:44
i think sax's point is such a good one because
what he's saying is um is what i think has
00:31:49
happened over the last century the government
the best role the government can provide is to
00:31:54
take on that technology risk that large capital
intense technology risk this was the case with
00:31:59
the manhattan project and we got nuclear energy
out of it it was the case with apollo project
00:32:04
we have the space industry as a result now and
it's what happened with the human genome project
00:32:08
and now we have an incredible genomics revolution
and arpanet and and that extensive early stage
00:32:14
de-risking requires an incredible amount of
capital that's very low returning it doesn't
00:32:19
return anything it's what saks is saying is later
is the the commercialization where do we have um
00:32:24
uh a heuristic a theory a best practice around
when something goes from a research project to
00:32:30
being commercially viable they're signals i mean
platform platformification seems like one that you
00:32:36
pointed out david if it's a platform and you can
use it easily yeah i think i i think i think you
00:32:41
can tell when the amount of capital required
to get it off the ground goes to something
00:32:46
reasonable like a few million dollars as opposed
to hundreds of millions of dollars whenever and
00:32:51
jason you've talked about this that any company
that's trying to raise hundreds of millions of
00:32:55
dollars or you know has a billion dollar plus
like evaluation before shipping a product
00:33:01
is presumptively fraud there's still too much r
d involved i mean look venture capital is a miles
00:33:08
milestone based investing model you take a little
bit of seed money you create a prototype you get
00:33:13
some proof then you raise a series a you get 10
million you get some customers then you raise 25
00:33:19
million and you scale the company and it's based
on milestones it's actually a very efficient way
00:33:23
of investing and when somebody wants to skip over
all those milestones they say no we need hundreds
00:33:28
of millions of dollars to launch this thing
you have to ask why is this is this idea really
00:33:33
ready for commercialization what's your mother's
response to that because you've done deep tech
00:33:37
investing and you've done i mean virgin galactic
would fall into that or no yeah so like how do
00:33:42
you think about deep tech investing tomorrow in
like where where like there's a role for venture
00:33:46
capital private market you know dollars yeah i've
done i've done a lot of deep tech investing and
00:33:50
my whole thing was i've always looked at at the
point where something is completely de-risked
00:33:56
technically and it's about then the exploitation
of a market otherwise it's exactly what david
00:34:03
said so i'll give you an example a company called
relativity space is now the second most valuable
00:34:08
private space flight company after spacex okay
yc company i love the series a um what were they
00:34:14
trying to do there they their their stated goal at
the time was we want a 3d print the entire rocket
00:34:22
and the entire engine and i said wow okay well
when we did the math and we tried to figure this
00:34:28
out and have the same launch capability as spacex
all of it comes down to okay well how do you want
00:34:33
to de-risk this and what tim and jordan's first
idea was well first we want to basically prove
00:34:40
that we can actually get a certain printing
capability done because you're talking about
00:34:44
these extremely you know energy intensive
extremely technical printers and effectively
00:34:50
writing printer drivers right and to be doing it
at a scale where you can hand that off to nasa
00:34:57
and they can take that engine literally strap
it down with chains called the hold down test
00:35:02
fire the engine and say it works doesn't blow
up doesn't blow up and i said to tim how much
00:35:08
does that take and tim was like i could probably
do that on 10 million bucks i said you're done
00:35:12
on 10 million dollars yeah and it was 100
million 100 the only person that would have
00:35:17
written a 100 million dollar check to de-risk
that doesn't understand what they're trying
00:35:22
to prove at that point in time because what he
was trying to prove was the the ability to use
00:35:27
the printer he wasn't saying i'm trying to
build a next generation rocket motor right
00:35:34
so similarly with virgin you know virgin got to
a point where it's like it had flown demonstrably
00:35:39
in the air so what did it prove it proved the
flight profile worked it proved the engine worked
00:35:45
it proved all the navigational componentry
worked and it proved the safety envelope
00:35:49
work which means that it could basically act as
a glider under all kinds of boundary conditions
00:35:55
that's an enormous amount of technical progress
and then at that point there i'm willing to
00:35:59
invest billions of dollars and so to david's
point you have to have a new model early too
00:36:03
like that's one of the things about being an
entrepreneur is figuring out how you stay alive
00:36:07
while you answer these questions and you came up
with a brilliant one or whoever was doing virgin
00:36:12
galactic which is people will overpay but virgin
was a 14 year process where richard branson to
00:36:19
his credit did exactly what david said here's
10 million dollars get to milestone one here's
00:36:25
25 million dollars get to milestone two he did
the exact venture capital model it's just that
00:36:29
he did it by himself i think what david is
saying which i agree with is you should never
00:36:34
short-circuit that and say here's 500 million
dollars pre-series a yeah sure you'll be working
00:36:40
at something for 20 years with nothing to [ __ ]
show for it as in fusion as in quantum computing
00:36:46
all right you'll end up with let you end up
with a a magic leap or theranose theranose or
00:36:54
it looks like it's a fraud but magic leap
just looks like it's technically incompetent
00:36:59
or it's too hard of a technical problem to
solve in the amount of time and the amount
00:37:03
right technical incompetence well i don't
know if it's incompetent this might be
00:37:07
it might be a 20-year problem as opposed to a five
but why are you taking this emotionally technical
00:37:10
incompetence is the opposite of technical
competence competence means you can do it
00:37:14
technical income okay okay you were saying that
that group of people is incompetent i'm saying the
00:37:19
word followed by the word incompetence technical
incompetence okay when you're saying it i'm
00:37:25
think you're describing the person not the problem
it could have been too hard to lift for them
00:37:29
so yeah okay well the last question is about
access to private equity but let's just go
00:37:33
into this stack here now one of the things we
wanted to talk to today chamoth had a good idea
00:37:38
venture capital is changing rapidly um the
last decade has seen more change in venture
00:37:43
capital than i would argue the four decades or
five decades that venture capital has existed
00:37:48
in other words more change um i'm gonna go
through some of those changes how it affects
00:37:52
the entrepreneur how it affects the investor
chamath was nice enough to put a deck together
00:37:57
and then i guess jason will figure out a way
to post this into the youtube or something like
00:38:01
that yeah you know what we'll put in the show
notes a link to this google presentation and
00:38:06
nick can pull up the slides when working and also
i think i think if folks can give us feedback this
00:38:11
is kind of a new thing for us we're trying to
experiment which is sort of this is like a half
00:38:15
teaching half discussion on something we all
wanted to talk about and hopefully you guys get
00:38:20
some value from it but uh tell us if it's not so
uh i i want to thank uh carmen collins on my team
00:38:26
who helped put this together but let me just
uh go through this state of venture capital um
00:38:32
so a couple of high-level points there's like some
really important trends at play the first is that
00:38:37
there really is now underneath a massive
change in the players in this game founder demographics are changing slowly but
surely we're going to go into that in a second
00:38:47
traditional vc investors are getting disrupted
we're going to go that we're going to go into that
00:38:53
and then this model which i love of let me know
how i can be helpful quote unquote basically
00:38:59
eroding um and seeding ground to what we call solo
capitalists and we'll talk about that which is
00:39:04
probably the most disruptive trend in venture
second we'll talk about the inflation in the
00:39:10
amount of money that's going into these companies
which really means more money at higher prices and
00:39:16
why that's good in some ways and actually bad in
some other ways this goes back to david's point of
00:39:21
you know not being forced to generate milestones
sooner uh and then the third is that it's really
00:39:27
now a founder's market and i think this is really
important because you know you've seen an enormous
00:39:31
amount of dilution and lack of control for uh
founders and employee teams and companies and i
00:39:37
think that there are some really disruptive new
ways that completely usurp traditional venture
00:39:43
non-diluted forms of financing we'll talk about
that so let me just level set for you guys i asked
00:39:49
the following question what are the demographics
of the united states and here's what they are in
00:39:53
the united states today 59 percent of people are
white non-hispanic 12 and a half percent are black
00:40:03
5.8 are asian 18.7 are hispanic and 2.3 are
multi-race if you map that to vc founders
00:40:15
77 of vc founders are white 1 are black 17.7
are asian one point eight percent are hispanic
00:40:25
and two and a half are multi-race so amongst
multi-race asian and white you either are at
00:40:31
or over indexing your representative population
and blacks and hispanics this is not anything new
00:40:35
but massively underrepresented if you take it from
a gender females have lower representation among
00:40:41
founders but it's growing so the us is basically
50 50 male female female founded companies were 23
00:40:48
percent of all deal activity in 2019 that's that's
pretty good um up from 12 in 2010 although racial
00:40:56
diversity is still pretty lacking which we know
and then the young tech bro stereotype is cracking
00:41:03
uh which is this is incredible 2019 study in
the times showed that the average age of a tech
00:41:09
founder is david sacks what do you think it is the
average age of a tech founder median or average
00:41:14
mean or a median average average well i saw
i saw your deck so isn't it something like
00:41:19
it was surprisingly 35 40. 42. for example no
i'm seeing a lot i think i don't know just to
00:41:24
pause here for a moment what do we still
found a company you can what do we think
00:41:29
is given we you had the longevity question earlier
and then you have people you know generating
00:41:36
wealth and starting companies in their 40s 50s
and 60s who then underwrite it themselves right
00:41:43
until they get to product market fit and
then raise money what do we think is the best
00:41:46
zone for an entrepreneur in terms of having
a great outcome i've always thought that the
00:41:53
look i when i how old was i i was
31 32 when i started social capital i mean this is a multi-billion dollar enterprise
i feel like i'm reasonably successful at it
00:42:07
but i was preparing for the first 13 or 14 years
of my professional career i learned some good
00:42:12
things i learned some bad things i learned tactics
that worked i learned strategies that didn't so
00:42:18
thirties or forties or well literally in my
50s in my experience for me and i think it's
00:42:23
for personal for everybody i was best positioned
to know what to do and at least iterate in my 30s
00:42:31
and i think in the absence of an idea that has
some network effect or something that's sort of
00:42:38
like supernatural outside of your own control i
think the older you are generally probably the
00:42:43
better prepared you'll be yeah i agree i mean i
did paypal when i was still in my 20s but i wasn't
00:42:49
the the founder of the company i was
recruited to it at a very early stage i didn't really start yammer until well i guess i
started the predecessor company genie when i was
00:42:57
34 and then yammer pivoted into yammer when i
was 35. i mean absolutely that's that's like
00:43:04
that's like a good level of preparation you know
unless you have a spectacular idea for a startup
00:43:11
you should probably get some experience first 100
percent free burger any thoughts there on what's
00:43:17
the kill zone best time to launch companies
in your mind or investing companies or where
00:43:21
founders everyone's got their own path you
know i mean zuck and sergey and larry and uh
00:43:28
bill gates they started right out of college
without any experience but um i mean i worked
00:43:33
at i had two jobs uh in tech before i started
my first company in yeah um and so i had a lot
00:43:41
to draw from and that really informed me but i
think everyone's different i mean some people
00:43:45
if you have the idea if you have the idea by all
means do it in your 20s you know absolutely i mean
00:43:50
by by far the the greatest kind of like measure
of whether and when you're kind of prepared for
00:43:56
this is your ability to continue learning you know
continuous learning to me is one of the greatest
00:44:00
predictors of entrepreneurial success and all the
guys that have lasted for decades from bezos to
00:44:06
zuck to you know larry and sergey you know they
were continuously evolving themselves because
00:44:10
they were continuous learners bill gates is bill
gates is the penultimate example of this right
00:44:15
i mean this guy has reinvented himself a thousand
times that what you said is so important i'm gonna
00:44:19
change my answer i think i started social capital
when i was actually the most able to get out of
00:44:26
my own way and learn continuously yeah yeah you
know one thing i'd add to this is it's so much
00:44:33
easier to be a founder now today then i mean look
i i remember i joined paypal in 1999 that was my
00:44:39
first startup it was like really hard to get into
entrepreneurship in the 1990s you know the vcs
00:44:45
had tremendous power and control they would
routinely replace founders ceos you know
00:44:52
everyone had to go to sandhill road to get capital
it was hard to even know how to network your way
00:44:57
to sandhill road it was just much much harder
to be a founder it was much harder to raise
00:45:01
money it was hard to know what to do and then
i think actually one of the things that really
00:45:06
changed things was with blogging emerging in the
mid 2000s it led to a proliferation of information
00:45:13
where now you know other founders started blogging
investors started blogging and there became a
00:45:19
wealth of information out there so you could learn
how to do it and then of course you had incubators
00:45:23
and so on like yc so there became more of like
a playbook for just like how you actually get a
00:45:28
company off the ground when i graduated law school
which was 1998 i i knew i wanted to get into
00:45:33
business and entrepreneurship i really had no idea
how to do it and if it wasn't for a phone call
00:45:38
from peter thiel i'm not sure i would have gotten
into it you know but now now everybody knows what
00:45:43
to do can i ask you a question then so let me
let me give you a stat and i'll ask a question
00:45:49
what do you think that story would be david for
somebody that wasn't a white man so here's the
00:45:53
step here is the data the percentage of female
vc decision makers has grown by more than 2x
00:46:00
uh what that means is about firms over a billion
dollars about a quarter of them have at least two
00:46:05
plus female decision makers but 61 of them have
zero and 80 of venture firms still have no black
00:46:12
investors how do you correlate or intersect
that idea of ease of starting a company with
00:46:20
the pattern recognition of those folks and
the inability to sort of maybe map to people
00:46:26
with black skin or women i mean i think that what
silicon valley and what venture capital represents
00:46:33
is opportunity right and we have to extend that
opportunity to as many people as possible i mean
00:46:38
that's really the the key here is we do need
to make it as widely available as possible
00:46:43
by the way i mean one way to slice things is the
percent percentage of uh diverse representation
00:46:49
within the ranks of venture and private equity um
but there is a equivalent scaling in the number of
00:46:56
venture firms and the amount of venture capital
since you know saks and and you and i and all
00:47:01
of us kind of entered the technology industry
kind of early 2000 um and the number of firms
00:47:07
that exist today that are kind of micro firms and
scaled firms i think presents um a much larger set
00:47:14
of opportunity you're right there are still uh
standards um and there are still challenges in
00:47:19
diversity and kind of having access but there
is so much more access than there has ever been
00:47:25
um and that's really changed the landscape
i mean folks coming out of college can get
00:47:29
a million dollars that was kind of unheard of back
in 1999 or or the reality is like there's so many
00:47:35
incubators i mean it's not as if jason or yc or
any of these folks give millions of dollars right
00:47:40
jason like these checks are still really small
so the point is you can build something if you
00:47:45
have the skills to build something the the the the
gap right now is that there's a lot of people who
00:47:50
have ideas about what they want to do but they
have no skills and i think what we found in a
00:47:57
vibrant market like today i mean this is the most
vibrant i've ever seen it there's at least three
00:48:01
or four times as many startups to choose from
at the earliest stages and what we're seeing is
00:48:07
the number of vcs has not grown at that
level it has grown the number of players
00:48:10
has grown but not at that level therefore
the average quality of a deal has gone up
00:48:15
the average quality of a funded deal has gone up
but the average quality of a startup has gone down
00:48:21
does that make sense yeah so the ones that
get funded are better than ever but the one
00:48:26
the average is lower because there's so many doing
it and then just the best piece of advice i have
00:48:30
is when we talked about continuous learning is
if you are not building the product in some way
00:48:34
or selling the product in some way then what are
you doing at this startup like you either build
00:48:38
it or you sell it like there really isn't much
more there and a lot of people just have ideas
00:48:43
and no ability to execute you really have to be a
developer designer ux person marketer something uh
00:48:49
in terms of getting this product out to the world
what uh what do you guys think about this other
00:48:54
trend which i think is really important which is
the atomization of these firms so you know we're
00:48:58
moving from a world where people used to care
about name the brand sequoia excel uh and then
00:49:05
now they they named the person right and they'll
probably follow that person wherever they are
00:49:12
so what do we think about that there's a really
interesting tweet from eric taurenberg he said
00:49:16
founders don't want to raise money from
institutions as much anymore they want to
00:49:20
raise money from individuals and then if you marry
that with what's happening with angellist and
00:49:24
all this other stuff isn't that the trail of
breadcrumbs for how like vc just kind of in
00:49:30
some ways just kind of gets blown up the way
that it's normally been done i remember as a
00:49:34
founder um when i started my company in 2006
there was a lot of this conversation in as
00:49:42
sax pointed out in the blogger community blogging
community and with like various websites that
00:49:47
rated vcs and there was generally a trend in
the support network among ceos adventure firms
00:49:53
of talking a lot about make sure you
pick your partner don't pick the firm and so this i don't know if this is necessarily
a new trench moth it's certainly something that
00:50:01
i remember being top of mind 15 years ago when
i started my first company and so much of it
00:50:07
was about make sure you have the right partner
because that's who's gonna be on your board that's
00:50:10
who you're gonna spend time with that's who's
going to recruit executives with you that's who's
00:50:13
going to be helpful in finding your next round of
funding for you um and i feel like that's that's
00:50:17
always been the case but you're right the brand
value of a firm has certainly become less useful
00:50:23
and folks have struggled to kind of figure out
i think a solution here i mean you see what
00:50:27
andreessen horowitz did they launched in 2009
and really focused on trying to be this kind of
00:50:32
full service provider to startups and i don't
know how much that matters as much anymore
00:50:36
as much as making sure you've got a great
partner from the firm that's helping you with
00:50:39
your business i i don't know it's actually you're
right freeberg that's a continuing trend what i'll
00:50:44
say is the top firms are still as attractive or
more attractive to founders the loser in this
00:50:50
i believe is the mid-tier firm or the lower tier
firms that actually none of the partners there are
00:50:56
all that great the performance is not that great
their value-add is not that great but when you
00:51:00
do get a sequoia or an andreessen when i put craft
in this as well when you get one of those all-star
00:51:06
vc firms to join your board specifically that is
the key when they join the board they own over 10
00:51:12
you are anointed in a way that is transcendent
you will get pounded with inbound from the
00:51:18
second tier and third tier firms who want to
triple your evaluation and give you 20 million
00:51:22
bucks it happens like clockwork in fact there
were a couple of firms like was it dag the one
00:51:28
sacks that would always follow on sequoia deals
and so there were firms that were built around
00:51:33
that was their lp pitch dags lp pitches we just
we will mark up every sequoia deal exactly so
00:51:39
i mean one you know it was one page so it's like
if you can't get into sequoia and you're willing
00:51:43
to wait an extra round don't invest in tag well
and then now i think the big trend here is those
00:51:48
firms in dreesen and sequoia are now full stage
where they have the late stage growth they have
00:51:55
a scout program they have a seed program they have
a series a program so it's a full life cycle it's
00:52:00
not those guys also it's just it's all these other
big crossover guys that have come down tiger co2
00:52:05
durable i think that's the biggest trend of the
last uh 15 years chamac and i think it is what has
00:52:10
enabled the proliferation of early stage
startups and enabled the valuation increments
00:52:14
and the capital that flowed in the early stage
is the um is the scale down from the big guys
00:52:20
i just want to kind of do a quick walk down
memory lane because when you guys said you
00:52:24
wanted to talk about this i kind of remembered i
got my series b term sheet in 2008 i guess it was
00:52:30
and um and or 2009 and i had three venture firms
uh andreessen was one of them that gave me a term
00:52:36
sheet uh and the interesting thing about at that
time with andreessen was they gave me a term sheet
00:52:41
i was trying to raise 30 million dollars and they
said we want to give you 40 million and they up
00:52:44
the valuation significantly and um and there was
a i ultimately went with coastal ventures but
00:52:50
there was this trend um that andreessen was kind
of imparting and i heard about it a lot from other
00:52:56
entrepreneurs was that they were going out and
offering more money than the founder was asking
00:53:01
for or seeking at higher valuations and it was
this trend towards saying like go grab the market
00:53:06
because the interesting thing about web scale
economics and um you know web scale businesses
00:53:11
is you get so much leverage and you can get
extraordinarily rapid growth i mean the rate of
00:53:16
growth could be infinite um and and the leverage
could be infinite and so if you do it at the right
00:53:21
round i think that's but so much of this was and
then obviously that so that was a huge step up and
00:53:26
i remember andreessen horowitz beginning 2009 kind
of started to build a reputation for doing this
00:53:30
of of kind of you know putting larger checks out
and saying go scale and then the big crazy thing
00:53:35
was the crossover guys started coming in and
offering bigger checks in kind of this proven
00:53:40
stage growth stage kind of funding and then
obviously the big step up with softbank and
00:53:44
softbank with the 100 billion dollar vision fund
and and ultimately what exactly did that disrupt
00:53:50
freeburg just hang on so when all these things
happened those large chunks of capital became
00:53:54
available and the valuation step-ups were so
significant for these later stage startups
00:53:58
that the money flowed down and more money was
raised in earlier stage venture that enabled this
00:54:03
proliferation of capital in this proliferation
of new startups and enablement of startups at the
00:54:07
earlier stage because of all the crossover money
that started to come in and the blitz scaling of
00:54:12
proposals and lots of money that was being thrown
at the later stage that to me felt like the reason
00:54:17
all of the earlier stage stuff proliferated
was because of the the amount of capital
00:54:21
the later state you're absolutely right and now
ten years later here's where we are in the early
00:54:26
specs are the next step champ because like totally
i think what you did is you know we pre-2009 there
00:54:31
was 10 billion dollars a year in specs then when
you started this in 2009 it stepped up to 2019 it
00:54:35
stepped up to 13 billion last year 80 billion was
raised in specs this quarter 100 billion in specs
00:54:42
and stacks are that you cross over investing it's
taking you know growth stage private equity style
00:54:47
risk in the public markets with this proliferation
of capital and we're seeing the benefit in the
00:54:51
early stage and founders and entrepreneurs are
seeing the benefit because there's so much access
00:54:54
to capital on the back end you can take more
risk on the early end and you can make more bets
00:54:59
and and i think you know i think it's the next
step up and we just keep seeing these step ups
00:55:03
yeah i tend to think that the growth stage is the
most troubled and challenged because at the early
00:55:08
stage you can get a guy like saks or jkl on your
board and you can grind and i think that that's
00:55:12
really important to get the product market fit and
at the public stage you can get somebody like me
00:55:17
and you know we can help transact and actually
help optimize and run the business for scale
00:55:21
and value but in the middle you have all these
weird dynamics that no longer maybe not don't
00:55:26
make as much sense so just to give you a sense of
it the average deal size okay so the typical round
00:55:32
is up 3x over the last 10 years 3x that that
is absolutely anecdotally in my experience
00:55:40
uh in late stage investors are doubling and
tripling down on these mega deals so that that
00:55:46
average round size is up 5x in the last decade
um the the typical pre-money on a growth stage
00:55:53
deal in 2010 was 100 pre this is for the top
quartile uh and it's now or sorry for this is
00:55:59
for the average it's now this is for a growth
stage yeah growth stage 100 pre is now 570 free
00:56:08
wow yeah it's getting crazy it's really it's
really really getting crazy tiger it says here
00:56:13
in the notes tiger global has announced the deal
according to pitchbook every 48 hours in 2021.
00:56:22
that's fabulous that's [ __ ] fantastic
what tiger i think has figured out is there
00:56:27
they started as public market investors
and worked their way down the stack right
00:56:30
so they're very familiar with the public market
valuations they're seeing that these sas companies
00:56:35
are you know we i remember 10 years ago when i was
doing yammer we thought that the best outcome that
00:56:40
you could have as a sas company was like a one to
two billion dollar exit that's why when microsoft
00:56:45
offered us 1.2 billion in 2012 we took it right
we're like we could work five more years maybe get
00:56:50
to a two billion dollar outcome well now you're
seeing what slack just got acquired by salesforce
00:56:55
for close to 30 billion it's pretty routine to
see sas companies ipoing it now 10 20 30 billion
00:57:02
and up and so the exits are just so much bigger
than anybody thought 10 years ago and we were the
00:57:09
optimists by the way there's a good tweet on
this by um it was jay malik basically he gave
00:57:14
some stats he said that uh if you're wondering
why everyone wants to invest or be a vc today
00:57:20
the stats from pitchfork provide an answer we had
43 billion in exits in 2010 we had 290 billion
00:57:27
in exits in 2020 so we had about 7x roughly
greater exits over the course of a decade now
00:57:34
the average deal size has grown 3x and there's
a lot more money going into venture capital
00:57:39
but the reason why you're having all this money
go in and all these new players is because
00:57:43
the outcomes are so much bigger and then he said
and i agree with this wouldn't be surprised if vc
00:57:47
hits 1 trillion by 2030. so we're seeing just the
i mean i remember 20 years ago when i first got
00:57:53
into the business you know like silicon valley
was a small little um concentric circle around
00:57:59
stanford and now it's spread to san francisco
and the entire bay area and to other cities
00:58:05
and it just keeps getting bigger and bigger it's
the digitization of every market right i mean
00:58:10
every traditional business every traditional
industry is being digitized in some way or
00:58:14
another and so it's no longer a tech enabler
of other industries it is the industry itself
00:58:18
we know that this the brand really matters in
the early stage because they anoint you and
00:58:23
they bring so much value in terms of working with
you to solve problems we know with spax whoever
00:58:29
and ipos whoever is anointing that really
matters right the sponsor but in the middle
00:58:34
is all that cash now move to a a game of who will
pay the most for the least rights in other words
00:58:41
series b to you know when you get involved
tomorrow is that just it's such a good point
00:58:46
you're so what you're now teeing up jason
is this next big category which is if it's
00:58:51
undifferentiated capital at some point you're
going to go to the logical conclusion which is
00:58:57
i don't want any dilution from this i'm happy
to take dilution in the series a when i get you
00:59:02
know craft or sequoia or benchmark i'm happy to
take dilution in the ipo because that's sort of
00:59:07
the necessary process of you know diversifying
the stock ownership getting you know my users
00:59:12
and my customers to be able to own the stock etc
etc but in the middle now you have these companies
00:59:17
like pipe and clearbank where now all of a sudden
you can grow jason in your bcd rounds and you have
00:59:23
zero dilution so if you're a founder you know the
best formula is going to be take series 8 and seed
00:59:29
capital from an expert single you know gp brand
person who knows that business category so well
00:59:36
right if you're starting a sas company you
should probably get your seed from saks you
00:59:41
know raise your a from some expert or what let
me say differently seed from j cal a from sax
00:59:48
and then go to pipe and clear bank and fund it
all based on your recurring revenue growth and
00:59:53
then go public via spec so just to give you some
uh data that i got from piping which means you
00:59:58
would just to give people an idea of what the cap
table would look like there you would dilute ten
01:00:01
percent in your your seed round twenty percent in
your a now you still have seventy percent of the
01:00:06
company and you just sell your yearly contracts
ahead of time to pipe and you're done by the way
01:00:10
can i can i tell the story about pipes so pipe um
yeah that's kind of grateful thanks for including
01:00:15
free break david david can i can i give the stat
from pipe and then tell the story go ahead sorry
01:00:19
you guys are all investors in this company
no not me and you david they let us our beaks
01:00:25
my beak is so wet can we get a profile
that beak let's see i don't know why it is it is oh my lord it is people don't realize
it really is hold on let me compare it to this
01:00:37
okay it's a beautiful pretty i'll tell
you let me tell let me tell the pipe beak
01:00:40
wedding story because harry harry the
founders told the story he came in to meet with me my office at kraft this is pre-koved
when people actually met in person um our our
01:00:51
principal who's based in la michael tam you knew
harry from his previous startup and brought him in
01:00:55
i i heard the pitch which is basically to advance
the the full value of these contracts for sas
01:01:02
companies and others but it was so obvious right
because if you're a sas company you spend roughly
01:01:08
about a year of of uh revenue on cac customer
acquisition costs but the customer only wants
01:01:15
to pay you monthly and so you have this huge
negative cash flow cycle so what if you could
01:01:19
just take that contract and monetize it right
away get the full value of the contract advance
01:01:25
then you can plow it into the next the next um
you know customer acquisition cost and you don't
01:01:30
need to dilute yourself with venture capital
i said yes to harry in like 15 minutes i think
01:01:35
it's the quickest i've ever given a term sheet
we invested 2 million in the company in a 12 cap
01:01:41
and we did the deal that day so within
nine months of launch pipe has connected
01:01:48
3 500 customers and over a billion plus of ar
to investors willing to purchase that revenue
01:01:55
uh to be clear it's a marketplace they're not
buying the debt anybody can go on the marketplace
01:02:02
and say i will buy slacks revenue for 91 cents
on the dollar but something more speculative they
01:02:07
might pay 85 so this is a brilliant thing
is that they're not they're not providing
01:02:11
the lending off their own balance i suppose a
clear bank which does in charge of six percent
01:02:14
i'm talking about your book unless you
guys share it i'm going to go to the video
01:02:24
yeah let's do it freeburg hey freeburg
let's launch a bio company together and we'll block out these beaks go work on
your life extension we're working on
01:02:32
our monetary extension right here yeah
you need more money you need more money so clearbank works with e-commerce companies so
what you do is you stitch in your connections to
01:02:42
shopify and stripe etc they're able to monitor
how well you do and then they'll basically help
01:02:47
finance you again non-dilutively so clear bank
companies captured 55 more growth in 2020 than
01:02:53
the prior year so even in the midst of
covet these companies did really well they have revenue based financing they've invested
a 1.6 billion dollars to date and it turns out
01:03:03
that you know their investor composition eight
times more women funded than traditional vc by
01:03:08
the way i want to be clear i was also a series a
investor in clearbank i mean i am such a believer
01:03:14
in this middle section of venture disappearing
like when you have these growth rounds they're
01:03:20
undifferentiated and they shouldn't be dilutive in
any way shape or form the founders should figure
01:03:25
out how to grow non-dilutively the minute that
they have some semblance of product market fit
01:03:30
so then the dilutive the dilutive points are
the bookends yeah this is kind of the idea with
01:03:34
like indiegogo and some of the gofundme types or
not gofundme the other uh things where you could
01:03:39
basically pre-sell consumer products too right
where you could get funded in a similar way and
01:03:44
you could see the same transitioning into kind of
hardware businesses and other and other consumer
01:03:49
businesses right there's an even bigger there's an
even bigger trend that happened that i can talk to
01:03:54
which is equity crowdfunding cf but i don't want
to take you off your deck so do you want to keep
01:03:57
going on the deck or you want the only the only
last thing i say is that uh the other big thing
01:04:02
as friedberg says is like um so let me just
summarize so it's kind of like i think where we're
01:04:07
all going to is we see the venture capitalists
changing the financial stack yeah um it's going
01:04:14
from organizations and these amorphous amorphous
financial orgs down to individuals as that happens
01:04:21
i think what we're all kind of stating is it's
incredibly valuable at the earliest stages to
01:04:26
align yourself with a person that knows your
business or your market right and that's
01:04:31
worth some amount of dilution it's almost like
getting a quasi co-founder right so in the seed
01:04:36
in the series a but i think so that's one really
important point of what's happening in the market
01:04:42
the second thing that i think we're all saying
is why are we deluding ourselves to grow in
01:04:47
these middle rounds if you don't have to it's
unnecessary and there should be really clever ways
01:04:53
of non-dilutively financing yourself and as as the
market becomes more and more sophisticated there
01:04:58
will be more companies beyond pipe and clearbank
to be clear but the point is that every kind
01:05:03
of company that has product market fit should be
able to finance themselves non-dilutively in the b
01:05:08
all the way to the d and the e and then the third
thing which is sort of what friedrich says is this
01:05:13
last book end is then you have sort of the path
to going public and this is where the spac makes
01:05:18
a ton of sense because you have a very certain
cost of capital you can now architect a cap
01:05:23
table where the founder remains in control where
they and the employees are still more than 50
01:05:28
and you pull in the time of the ipo why is
that important typically today these companies
01:05:33
were taking 12 plus years to go public now with
spax they've come back in and they're closer to
01:05:38
seven and eight years the reason is back to that
argument of like if you want to be a winner take
01:05:43
most outcome the most important thing you need at
scale is money and the way that you get money is
01:05:50
by opening the kimono on your finances and showing
people who have lots of money why they should give
01:05:55
it to you and not something else and so by going
public in years six seven and eight that's where
01:06:00
you pull in the billions of dollars so you can
dominate what we're seeing is massive competition
01:06:06
in the financing of massively competitive
startup scenes in other words the entrepreneurial ecosystem has never been this
vibrant and i want to point out one thing that the
01:06:19
sec has done that has is going to change things
dramatically i believe when syndicates first
01:06:25
came out everybody said they were stupid nobody
would ever do it first one we ever did famously
01:06:29
was com.com we put in 328 thousand dollars became
worth over 100 million we're on track this year to
01:06:35
do five deals a month 60 deals and we'll put 50
million to work this year at the syndicate.com
01:06:41
think about that my fund is 44 million that's over
three years so now the syndicate's gotten so big
01:06:46
um that she's just on the syndicate well exactly
so i i'm gonna tell my lps the next time around
01:06:51
let's have a discussion about this but anyway i
want to point out what republic.co happened this
01:06:55
week republic.co is equity crowdfunding this means
civilians can invest there used to be a cap on an
01:07:01
equity crowdfunding of one million dollars every
year and there's a lot of auditing and financial
01:07:07
review you have to do and you pay six percent to
whoever raised the money but it's it's um there is
01:07:13
no sponsor involved in this so as an investor you
don't get me as a lead or chamath as your sponsor
01:07:19
or sax on your cap table but you can go on
to republic now which has a hundred thousand
01:07:27
investors on it and gum road which is doing 10
million a year just raised 5 million in one day
01:07:33
sahil who was also running a rolling fund with
angellist and he has 8656 investors which means
01:07:41
people are putting in under a thousand dollars
each amazing and it's capped at 5 million now
01:07:47
then arlen hamilton who runs backstage capital did
a very non-traditional i'll say raise she's not
01:07:53
raising for her fund she sold 10 ownership was in
the process of selling 10 ownership in her venture
01:08:00
capital fund startup studio at a 50 million dollar
valuation she's selling 10 of it if you buy shares
01:08:06
in that you don't get carry but you get 10 of her
carrying management fees forever so it'd be like
01:08:12
buying 10 of craft or whatever the point is you
the vcs get uh boxed out of this and this imagine
01:08:20
if airbnb or uber decided [ __ ] it we're going
to let our drivers buy shares through this and
01:08:27
they said we're starting this crowdfunding for 5
million and they did it every year because you can
01:08:31
do the 5 million every single year so every year
you just allow folks who are in your stakeholder
01:08:37
pool you email them and then they buy in it's just
absolutely extraordinary can you explain the arlen
01:08:42
thing so she's sorry she sold 10. it's a little
complicated if you page down future earnings
01:08:49
yes so if you go to the flow of funds and that
link i sent for public.com backstage she is
01:08:56
took all of her different funds and said you can
buy ten percent for five million dollars you own
01:09:02
ten percent of essentially sequoia capital or
y combinator whatever you want to refer to her
01:09:08
um you know company as her holding company then
every time she gets management fees every time
01:09:14
she has distributions from her carry she's
going to give 10 of that to these folks forever
01:09:19
i don't know if that's a great idea but it's a
a new idea um i don't know if the investors in
01:09:25
that are going to get a massive return or they're
doing it because they want to support the cost
01:09:28
that's that's incredible my gosh it's so weird
it's so disruptive it's so disruptive wow it's
01:09:34
incredible well because it lets anybody really
spin up a new venture firm basically because
01:09:38
there are some startup costs to spinning up a new
venture remember she's been in it she's been doing
01:09:42
this for 10 years and really has gotten good for
have to say not a lot of traction um you know from
01:09:48
the the classic lps of the world um but now just
like we saw at gamestop just like we see with
01:09:54
bitcoin just like we see with nfts and robin
hood day traders there are new entrants here
01:10:01
and i think there's going to be a world
where i will be able to fire up a syndicate
01:10:06
and say i would like to raise 10 million but i'm
limiting it to 1 000 per person and 10 000 people
01:10:13
invest or i'm limiting it to five hundred dollars
so instead of you know going away for the weekend
01:10:19
or going to vegas and blowing a thousand dollars
somebody could say you know what i'll go to vegas
01:10:23
and blow 500 but i'm gonna put 500 in the next
startup i see and this is a democratization that
01:10:28
could change everything and make america so much
more competitive with what we're seeing in china
01:10:32
with jack ma disappearing and looking like i've
said i've said this before like like what's what's
01:10:37
crazy is like if you talk about like systemic
inequality and poverty it's like the government
01:10:42
loves to give poor people casinos sports betting
and lottery tickets yup but the idea that they
01:10:49
could invest a hundred dollars into a startup
is illegal even though startups generate 15
01:10:54
of your caker so even if what you did was you
gen you invested in the market beta of startups
01:10:59
let's just say that degrades it would still
probably be close to ten percent and the markets
01:11:04
yeah you'd be you you'd be out of the s p returns
you know over many many years eight percent so
01:11:10
25 percent better it's it's it would be incredible
with by the way 25 better chamath with the outside
01:11:16
chance of hitting a home run a grand slam and and
that's why i love this um all right so do we want
01:11:23
to wrap here or anybody have any closing thoughts
well i just think it's like if you think of like
01:11:27
that thing of like all the money flows changing
the other thing is like all the people are
01:11:32
changing and then what sac said before it's much
much easier because the technologies are changing
01:11:37
you put these three things in a soup and it
just seems like our best days are ahead of us
01:11:43
i think it's going to be amazing for
entrepreneurship all the answers are out there if you want to start a company all
the skills are freely available to you uh you
01:11:52
can learn anything online i think the message
i really want people to understand is you know
01:11:58
you may you may believe that the world is filled
with inequality and racism and bad actors and you
01:12:05
would be right but what's also right is that every
skill can be learned capital is available now more
01:12:12
than ever and there is a clear path for you if you
just stop watching television and learn to be a ux
01:12:18
designer a sales executive a marketing or growth
executive or a developer you can change the world
01:12:24
and change your lot in life and be really [ __
] rich don't buy into this victim mentality it's
01:12:29
complete utter nonsense that crazy lefties are
saying everybody's stupid and nobody can learn
01:12:36
and i got a bag of red pills here and i have been
pounding them the world is a giant opportunity for
01:12:42
all of you i just i think it's time to announce
friedrich and i would like to announce that um
01:12:48
we've started a combination uh incubator and uh
early stage venture firm we call it paunch draft
01:12:55
and uh it's play on the words launch and craft i
think the punch is the punch is more just a just
01:13:01
what do you want so when we're going to launch
our first syndicate we got to get a deal here
01:13:06
somebody's got to find a deal i just i i never get
a million dollars you guys are doing deals left
01:13:10
and right jason you need to assign somebody to
figure this the [ __ ] out because i think there's
01:13:14
there are people there there are there are
there are folks listening to this podcast
01:13:18
who have great businesses what we should commit
to them is we will help you be the least deluded
01:13:26
and we will try to share the beak wedding amongst
all the other folks listening to this so if
01:13:31
you have a great company and you're thinking of
raising capital come to the one of the four of us
01:13:36
and we will hand roll a solution for you yes okay
let's just do it it's like it doesn't just do this
01:13:43
go to wet your beak okay hand roll hand rule we
will handle a solution that will allow the four
01:13:49
of us plus everybody else in the syndicate to
invest and then we will help you non-dilutively
01:13:55
grow your business for as long as possible
and then take it public okay i am setting
01:13:59
up wetyourbeak.com which is currently redirecting
to the all-in podcast it's going to be a typeform
01:14:05
and the typeform is going to let you i will dilute
your business but uh the rest of you guys can do
01:14:10
it anyway go to wetyourbeak.com and fill out the
form tell us a little bit about your business
01:14:16
and what and it will go to all four besties in
the database we'll share it what your beak is
01:14:20
the new database i bought the domain but your
beak.com from one of the yeah just said it now
01:14:24
this is the tenth time you've said it i get it we
can collectively we own it i i sh this podcast is
01:14:30
rapidly turning into a commercial for uh i think
we have good information now this is this is jay
01:14:35
cal's attempt to divert and steal my deal flow
yeah so it's talking about we're partners you're
01:14:45
who did i just bring six seven companies to the
other day craftventures.com do not that's the
01:14:52
that's a website that's the website all right yeah
okay don't email me give me a break man come on
01:14:58
man we're gonna go how many deals are we in back
all right listen we love all of the audience and
01:15:04
uh we love our besties love you bestie chamoth
love you guys love you free birthday i gotcha
01:15:11
love you sexy poo when are we playing cards come
on let's play cards every monday it's monday done
01:15:16
done i'm sending the invitation alright everybody
it's another all-in podcast if you want to rate
01:15:21
and subscribe or do anything like that sure why
not uh and uh shout out young spielberg thank
01:15:26
you for making all of our great tracks uh do
a search for young y-u-n-g spielberg in europe
01:15:32
uh in spotify buy his songs like his songs and uh
he's the greatest uh if you want series a funding
01:15:40
or seed funding david sachs if you want a spec
chamoth and if you want to fold some proteins and
01:15:47
um qubits yeah you want to do some cubits
uh get email freedberg somebody told me
01:15:53
that the quality of the show he calls it the
friedberg index if freeberg talks a lot it's
01:15:59
a great episode when freeberg demers and
doesn't talk a lot it's a [ __ ] episode
01:16:09
it's french for sleep it just means your wet
took a nap you're just it's french for sleep
01:16:15
you're just such a heathen more as in more
day a day as in sleep day more you could say
01:16:22
demure yeah he demured okay everybody we'll see
you next time on the olympics i love you guys
01:16:40
and they've just gone crazy with it we need to get