How I Invest with David Weisburd - E372: Why the Best Venture Investments Look Wrong Early

Episode Date: May 19, 2026

What if the best venture investments come from ignoring consensus and trusting your own taste before the market catches up? In this episode, I sit down with Maya Bakhai, Founding Partner of Spice Capital, to discuss how cultural intuition, narrative cycles, and conviction shape venture investing. Maya explains how working with Kevin Durant at 35 Ventures gave her access to top-tier deal flow while teaching her to think independently, why “narrative premiums” distort venture markets, and how the best founders build with unconditional conviction long before a category becomes popular. We also explore cultural arbitrage, creator economy investing, and why early-stage venture is ultimately a game of taste, not consensus.

So Maya, you've invested into 72 companies at Spice Capital. You're on your third fund. But before then, you start in 2017 with Kevin Durant on a startup investment. Tell me that story. It was pretty non-traditional of a backstory or entry into investing. I had this crazy opportunity to work for 35 ventures, which was started by Kevin Durant and his agent, Rich Climmon. Rich had the kind of fortitude and I would say the guts to, you know, when Kevin was working for the Warriors, to start making relationships with some of these tech founders.

And it was a really interesting moment in time where side was like the best networking you could ever go to. There were like billionaire CEOs, tech CEOs. Ben Horowitz, Yuri Milner. Yes, exactly. And it was almost like you could run up and down the court and be doing deals. And I think credit to really Kevin and Kevin's agent, they were opportunistic. They took advantage to that. So they were saying yes to meetings.

They were like attending all the things. they were speaking at conferences, like Kevin and Rich were at TechCrunch Disrupt and really putting themselves out there as like open for business in a way that most athletes had not done from an investment perspective. Most of them had done it from an endorsement. And so I got hired to help manage this, you know, deal flow and be almost like a chief of staff. And that's how I weaseled my way into venture capital. And just to take a step back, you make it sound easy. But tell Let me tell me the story about how you actually got hired. I grew up in South Florida.

I really wanted to leave Florida and moved to New York. I went to NYU for undergrad. After undergrad, I was working as a consultant at PWC. And I had formerly interned for Rock Nation, where I overlapped with some of the folks at what became 35 ventures. And I heard about this opportunity, and they were looking for someone to help as a potential chief of staff for Kevin Durant and his investments with the goal of them hiring someone full time down the road. And I heard about the opportunity. I was not even one year into working at

PWC, but this was one of those things where you just kind of have to volunteer yourself. And I always worked in and around tech. I was at NYU. I was interning for different founders, including the Venmo founders. I really desperately wanted to be in that world. And I didn't have the background. I didn't go to Stanford. I wasn't studying tech necessarily. And so yeah, while I was at PWC, I did not tell them, but I agreed to start working with Kevin Grant and his team at 35 Ventures. I did it while I still had a client at PWC. I was even taking calls from sometimes like the client's office, but I would be like interviewing startups and doing founder pitches while I was still working at PWC and kind of running two jobs for as long as long as I could until I

finally got with, you know, was able to get the full-time offer at 35. And it was the best day ever when I went up to all my PWC bosses and was like, I'm quitting. And they're like, what? How are you? Where are you going? I was like to go work for Kevin Durant. And it was like everyone's jaw dropped. And they're like, you know, we can't even say anything. Like go forth. Like we released you. That was kind of that Genesis story. And I was always really, I would say just right place, right time, but also I liked kind of being this outsider entering the world of venture capital. And I even liked working under a celebrity where you get all the best access and brand. But it's kind of on you, the celebrity's team to and people underestimate you constantly, right? People think like, oh, you're just working for a celebrity.

You're not a sophisticated investor. And I think that was kind of my first impression of the Boys Club of Silicon Valley, all the kind of signaling that comes into factors into decision making, perception, how much of investing in fundraising is perception versus reality. And then that's kind of where I got all of my chops, just working for somebody who is so mainstream in a world where most of Silicon Valley is in bubbles, right? Give me a sense for Kevin Durant's portfolio at the time. We had a great strategy. We did a barbell strategy.

We were investors in Whoop, which recently announced a pretty big raise, a $10 billion raise. Yeah, we were invested in Whoop, Robin Hood, Coinbase, and these are all kind of like later stage. Whoop Robin Hood, Coinbase, Postmates, which got acquired by Uber, Rubrik, which is went public two years ago. Skydeo, if you know, the drone company, which was like considered kind of non-concored. consensus at that time. It was American-based drone. That's aging pretty well. Years later,

that's also a multi-billion dollar company. And then on the early stage, we did the hugging face, Mercury's underdog fantasy. What they crossed a billion dollar valuation last year, they're doing hundreds of millions of revenue. That's like a fantasy sports company. And the list goes on. So it's a pretty robust portfolio generalist across the board. And you alluded to this earlier, but this is where you learned that tier one signal isn't all its high top to be. Tell me about When I were talking about this earlier, in venture, there's this belief that when a tier one VC, whether it's Sequoia, Andreessen, benchmark, and these are all iconic firms. Don't get me wrong. I really respect them. I look up to them. I want to build my firm like them. But there is a signal

that if they invest, you have to invest. And I felt that they have a strategy just like other VCs do, where they have a certain percentage of companies that will win, and then they have a whole portfolio that doesn't make it. No VC firm has 100% hit rate. There's this tendency as a new investor or an investor who hasn't had a long track record to just blindly follow what those firms do. And I think I'm very proud of what we did at 35 Ventures and what I've continued to do at Spice Capital, which is have your own guts and have your own conviction because many times you are the exit liquidity. So you're coming into a bridge round. Sure, XYZ, tier one firm let it, but you might be getting access. to it? Why are you getting access to it? If it was really the next open AI, Airbnb, that firm

would be piling as much money as possible, nobody else would get a shot. And that is one thing about the tier ones. When something is working, they're fighting for their allocation, any good investor is. And so there's this tendency to, yeah, overindex on tier ones, but I started figuring out that there was actually opportunity kind of coming in before the tier ones. And especially as those funds started to get bigger, there was this kind of area around what we now call, and the name always changes pre-seed, where you would have a founder who was building something amazing. They were of tier one caliber, but the market maybe wasn't ready for their investment. So it would take them a year or two, maybe 18 months, 24 months, for the tier ones to take note. And that's where I started

finding opportunity while we were working at 35. That's how we were able to invest in some now iconic companies like Hugging Face, which when that started, that was a very non-consensus company, building chat bots. That's how they started. And investors in Silicon Valley would say, like, who's going to talk to a chat bot? That's crazy. And their V1 was a chat bot for our teenagers. And like, look at the companies now. Everyone is talking to chat. GPDs or therapist today. And so I think just being able to have your own conviction, being able to question why things are being sent to you, taking more of a bottom-step approach. Those are all skill sets I learned while working at 35. But then I also got to learn what good looks like, right? So the beauty of a barbell

strategy is you invest in good and then you invest in emerging as well. And so when you see good, you get this great pattern recognition of what is a standout multi-billion dollar founder? What does that team makeup look like? What does it mean to have a monthly call with that? What are their problems at that scale? And when you start investing in early stage, you can start to pattern match over time, right? Like what are some of those attributes that those successful founders have? What are mistakes they made that we can coach our early portfolio to not make? What are lessons we can pass? And so working for the celebrity is the best breeding ground or working for a big brand if possible because I always feel like I got the best of many worlds. I got to see what

good looks like. I got to see a full venture cycle from the 2017 to today era from pre-seed to multi-billion dollar business. And then I also got to see an up and down, right? Like a 2017, 2021, 2022 correction post-ZERP was an interesting dynamic to watch companies now. There was a 13-year bull run from 2008 to the end of 2021. And LP's always asked this question, What was the last market correction that you saw? Or were you investing in 2008? Because until you've gone through a correction, some would argue you haven't really seen the entire life cycle.

You're not a fully experienced investor. Even if you've been investing for 13 years. Right. Bull markets are just categorically different from bear markets. I want double click on something that you said. You saw what good looked like. You've made now 150 investments to startups. How long did it take for you to really get a sense for this is a great founder?

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whiplash, and it's because you're reacting. So you're going top down. You're looking at blog posts. You're saying, like, what are the YC companies to build in Q4? 2025 and you're looking at that list and searching top down or what are categories we should focus on. The irony of tech investing, forget other categories, but investing in early stage companies is the entire, like the alpha is from investing in net new. So there is quite literally no market map. So if you are investing on a market map or a blog post, you're reading tech

crunch headlines and trying to go find those companies, you're too late, ironically. And so I think the beginning stages of my career, the first, let's say, 15, 10, 15 companies, it really was 10, 15 companies because it takes almost 18 months to realize, oh, man, I made a mistake. There's no direct feedback. There's no direct feedback. It's really, but you know pretty quickly, if you talk to any VC, they know within the third, you know, board meeting or monthly check-in, you're like, oh, man, I made a mistake. This is not what I used to ask. I still, I still ask this diligence question, which is, what are you not telling me now that you're going to tell me at the first, at the next board? Yes, exactly. Yeah, exactly. No one ever answers that the right

But it's a good thought experiment. Of course not. There's no incentive, right? It's a little bit of that where it just takes some time to learn how to have your own opinions. And the irony of all of it is the less you try, the easier it becomes. The more you're pretending or trying to be like or emulate somebody else's investment strategy, the less of a unique opinion you have. And the less edge you have when you're pitching a founder. Capital is now a commodity.

If you are in something pursuing something competitive, if you are giving a rehearsed VC take, how are you any different than I'm the other investor? Yeah, the founder should take money from Sequoia. Like, why should they take your check? Right? So it is that unique insight that makes somebody remember you, that builds the relationship, that it is your unique experiences that give you a point of view. And I think leaning into that, it feels almost stupid or it feels less high IQ, right, to be invested.

Actually, I had an LP say that. They're like, oh, so you're doing a lot of gut investing. That's low IQ. If someone said that to me. And they're like, oh, you look at a lot of consumer trends. that's low IQ. So there's this whole concept and finance of like research and thesis. And I do agree you can build a thesis, but you don't build a thesis off of other people's materials. There was an era where you could do top-down investing. You could do market map investing. I think information's so

commoditized now, you actually need to go bottoms up. So you actually need to look at, yeah, you can look at consumer trends and you can look at behaviors and market tailwinds and then come up with an investment thesis around real data as opposed to copy-pacing other people's opinion. So that was really the learning for me. It did take me probably 10, 15 companies before I just leaned back into myself. Maybe you could distill the difference doing this highly analytical, what your investor called high IQ investing versus this bottoms up or low IQ investing. I'll give an example. I'm sure all of us have heard of someone that's gone to Turkey for a hair transplant or Korea for skincare treatments. And so there was a company pitching medical tourism payments payments around

medical tourism. And they were first starting their conversations, a lot of investors, I mean, rightfully so, but felt skeptical, right? They're like, well, there's no public market comp. Who do we point to? Who do we compare you to in our research memo to understand this market? Is it like a Zok-Doc or what are you building? And all you really need to know about this idea is that 1.4 million people went to Turkey for, you know, similar in the millions went to Korea. Like they report the Korea Tourism Board reported that, hey, there were X millions of people that came here and their visa said for medical procedures, right? And so, and people have been doing this for years. People have been going to, my parents would go to India for dental work. Why? I mean, they had

dental insurance, even though they lived here. They would go back to their home country. All immigrants have been doing this. It's really a second order effect of the creator economy. Now, you can have a video that says, come with me to Turkey to get my hair transplant. There's thousands of YouTube videos you can follow. You can see the entire process documented. It creates this comfort. It's just, It's the same way the whole world has globalized, you know, on other in software, physical is starting to globalize as well because people can see it. And so all you really need to know is there's millions of people going. The average spend is $3,000. So it's like a, it's already a venture scale market and there's no public market club.

So when a company was pitching me to do payments around medical tourism, I'm like, yeah, this is a no-brainer. Completely bottoms up. There's so much demand. And guess what? Because of that, even though there might not have been invested. demand right. There were physician demands off the bat. Like every single physician was like, oh, you allow us to pay, take credit card from Americans. Of course. Because right now an American has to bring $17,000 of cash to Mexico to go do their IVF, which is there's no recourse as

something goes wrong. You can't pay by card. You can't do installments. You're legally not supposed to bring that much cash. So you're only supposed to bring $2,000. Yeah, exactly. And so there's all these things that are just. They know that from Wolf of Wall Street. Yeah, exactly. Oh my God. Great movie. So that's an example. Yeah. So send another way. it's common sense. In other words, there is no market mapping. I made this type of common sense investment

about three, five, six years ago in a company called Alto IRA, now called Alto. And at the time, I was a consumer of Pensco IRA, which you can invest into startups through your IRA. Why?

Because I didn't want to invest in the index. I wanted to invest in things that I'm already exposed to. Previous podcast, I talked about my portfolio construction was a 90% of VC startups, which made my wife talk about. But Alto was making it simpler.

And the thesis was very, simple is that if you could bring down the friction and the cost of investing to startups through your IRA, more people will do it. There was no market mapping. There was no industry because the industry was 30, 40 years ago and it cost $500, $600 to make an investment through your IRA because they treat every single investment as idiosyncratic as one of one. Right. Because of that, I think the entire seed round was $2 million. I got like $1.8 million of it. I essentially did the entire seed round. And companies gone out to, I think, their latest valuation was $325 million. They've done well. They continue to do well. They haven't even

had to raise money in a while. And I knew that it worked when I was at a conference and I was talking to them about the company. They're like, oh, that was an obvious investment. I'm like, yes. If you make a common sense investment at some point, the high IQ, the analytics kind of catch up. And it's another way, the spreadsheets, the analytics are a lagging indicator to the investment, which always come about because once an industry gets big enough, now you have all these cottage industries like the consultants, the PWCs. where you worked at making all this market mapping and selling these market maps.

But if you want the real alpha, you have to go before there's that data of it. Correct. And we had another one like this, and it's happening in real time. So we invest in a company called Girl Beer. And it's really as simple as it sounds. It's beer for women.

And alcohol is, or beer is the largest category within alcohol. So it's like, it's a crazy amount. It's like $115 billion a year of revenue in beer, okay, in just the U.S. market. And so this founder was like, there's no, there's a no beer brand market to women. And so she went and did it mass market. And so she went and did it when, you know,

even the way she did the business was so interesting where she talked to a bunch of men and a lot of people in the industry. They're like, you got to go bodega to bodega. Like this is going to be a slog. And she was like, why would I do that? This is a low margin, high volume business. So let's get volume. So she went straight to hold foods and said, give me 15 stores. They were like, okay, we have actually, you're right. We have our beer aisle is not performing well. We have zero options for women. they like sold through one month's quantity in a weekend whole food was like oh wow okay let's keep going and then before you know it walmart came knocking on the door like they'll have almost like their first year of business will be seven million in revenue and then now everyone's like yeah

girl beer makes total sense i mean to get that first round of financing done was just like nobody would take it seriously right everyone had a complaint everyone said no one's drinking alcohol everyone said alcohol is too hard of a market and you're right it's like once it makes sense it's obvious right it's it feels everyone says it's inevitable it's like impossible it's like I always say with my founders, I'm like, everyone's going to think what you're doing is impossible until it's inevitable. That's kind of my framing of your same point. It reminds me of concept market interesting got me on. Yeah.

Hashtag retard maxing. It's one word. I'll just call it idea maxing since we have an institutional LP audience. But the idea is you don't overthink things. If there's a market, there's a female segment of the market that wants to get beer, you create a product for that female segment. You don't have to think about what's been done the last 20 years, how people are consuming. So another way, all innovation is a new behavior, new product line. So sometimes getting in your head and being two pattern matching, it goes against common sense.

And I think there's other effect with, at least with early stage investing around narrative, which we talked about a bit, where the narrative can really swing in and out of favor on any sector. So maybe right now everyone is talking about better for you in CPG. It's like better for you, protein. Now that the response to protein is fiber. Like it's a funny pattern that you can follow. But the irony is like if you wanted to, for example, if you believe in better for you or if you believe that people aren't drinking, which is like a common feedback, you should have invested 10 years ago into athletic brewing and all the NA companies.

Like they're now at billion dollar valuation. So the time to invest in that was 10 years ago. Now you see we're in New York City. People are smoking cigarettes. People are drinking Diet Coke. Like vice is very much back. Maybe it's a response to culture around, you know, like AI and dumerism and young people feeling some type of way, but even alcohol sales were drifting down and then almost 18 months ago

started ticking back up. And so you want to start investing again into Vice as the trend, the pendulum is swinging. And almost in every single industry, there's this, it's a bit of market timing. But being away from it, like stepping back from it and not getting whiplash because you're reading blog post and being reactive, being calm allows you to see these very clearly, these opportunities, right? I think investors get, especially new investors. feel, and I even see it in my group chats with people of all levels where they're like, oh my God, so much is happening. The world is changing so quickly. They're so reactive. And it's because they don't have their own opinions. Like they're getting thrown around based on the

opinion or the tweet of the day. Being rooted in investment. Yes. So underrated. I use the Bitcoin example. If I had known you and I convinced you to just buy Bitcoin at $10 a Bitcoin, but I didn't really explain to you the thesis. You weren't rooted in it. Suddenly goes up to $160, a $16x. then it goes down 20% to 120. What are you going to do? Sell. You're going to sell because you're like, holy shit, I need to lock in this 12x.

Not realizing if you held for another 10 years, it'd be up another 1,000 X. Right. And it's very underrated. It's very unsexy. It's timely to get rooted in the thesis. And yet it is so fundamental, especially in liquid strategies,

but even in the liquid strategies, you have opportunities to continue doubling and triple down. And also I made several more investments before it became consensus. And HoneyBook, I was in the Series B with Norway, And it was not the most competitive round at the time. Now it's $2.5 billion company.

I got my fill. And then during COVID, there was another round and there was like even more sweeteners, doubled. And then I did another investment, then another investment in that consensus. And now, you know, it's a $2.5 billion company. But it's because I was rooted in that thesis. Right. And I knew that because of the thesis, you have to constantly reassess your prior. So I learned this from Cliff Asnes from AQR.

So he built as $130 billion hedge fund. It's probably bigger at this point. And during 2020 to 2024, value investing was out of favor. Right. So this wave that he was running. And every day he had to reassess. So he heroically traded. He heroically held.

He didn't sell his assets. But every day, he would have to reassess his thesis. And he would have people come in and pitch him. Here's what may be happening. Here's why this might be wrong. And what was so difficult about his position is that he had to hold his position in the absence of data that it was wrong. In other words, he wasn't getting data that it was wrong. right, he was just systematically every day looking at data and figuring out whether he was wrong or not.

And again, it goes back to this through the thesis, having a thesis on something, which, by the way, the opposite of that is chasing a trend. Right. Could be extremely useful. So last time we chatted, you talked about this narrative premium. What is that? It kind of ties back into what we were talking about earlier with my Crox investment and talking about... This is how you made your first million dollars. Yes.

My first million dollars is made in the shoe company called Crocs. Tell me the story. Okay. So the long story short is I was always obsessed with Crocs as a brand. Growing up in South Florida, when I was growing up, they were the hottest shoe in my middle school. Parents got me the Walmart one. So, you know, I had this chip on my shoulder. Like, I want to buy myself a pair of crocs.

Finally had a job, bought them. And then by the time I bought them, I was living in New York and they were very much out of style at that point. And so years later, Robin Hood had actually come to present at NYU, which is where I went for undergrad. And they were launching there. They had a beta program. They were going to a bunch of colleges. And I was on the wait list for Robin Hood. As soon as I got access to the app, the first stock I bought was Crocs.

Because I had this joke with my friends that Crocs would make a comeback. As all things in fashion do, they always cycle back. And so... You put in $20,000. Yeah. Long story short, during the pandemic, when Crox was really, you know, oversold. A lot of the companies were oversold. I noticed that LeBron James, Valencia, like, all these kind of culture movers are wearing crocs.

It was all work from home. The company had cleaned up its access. to speak. They had a domestic factory where they were producing things so their risk of exposure of, you know, COVID was much lower. And things were booming on the cultural side. So on every magazine, every fashion cover, Valenciaga, you name it, every brand was collaborating with Crocs. But nobody in Wall Street was really paying attention to the company. And so, yeah, I put $20,000 of my money, pretty much like my whole paycheck. I was living at home at the time into Crox call options right before earnings because I felt that they would be earnings. I was right. When you find something

that just fits right, you end up wearing it more than anything else. And for me lately, that's been my rag and bone, Miramar jeans. What really stood out to me is that they look like traditional denim, but honestly feel more like sweatpants. They've got that clean, structured look, but with a level of comfort that makes them easy to wear all day, I've been wearing them pretty consistently, whether I'm recording, traveling, or just out there during the day,

and they become one of those go-to pieces I don't really have to think about. Even after long days, they don't feel restrictive, which is something I didn't realize I was missing until I started wearing them regularly. With rag and bone, it's not just about one pair of jeans, It's about having reliable staples in your closet. You could dress them up a bit or keep a casual and they just work. The washes are clean. The cut is sharp and they hold up really well over time.

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N-E dot com with code invest. When you find something that just fits right, you end up wearing it more than anything else. And for me lately, that's been my rag and bone, Miramar jeans. What really stood out to me is that they look like traditional denim, but honestly feel more like sweatpants. They've got that clean, structured look,

but with a level of comfort that makes them easy to wear all day, I've been wearing them pretty consistently, whether I'm recording, traveling, or just out there during the day, and they become one of those go-to pieces I don't really have to think about. Even after long days, they don't feel restrictive, which is something I didn't realize I was missing until I started wearing them regularly. With Rag and Bone, it's not just about one pair of jeans. It's about having

reliable staples in your closet. You could dress them up a bit or keep a casual, and they just work. The washes are clean, the cut is sharp, and they hold up really well over time. It's that balance of comfort and structure that makes them stand out compared to most jeans. If you're looking to upgrade your denim, I definitely recommend checking out Rag and Bone Miramar jeans. You get 20% off sitewide at www. rag-dashbone.com using code invest. Again, that's 20% off at www. rag-b-O-N-E.com with code invest. Support for today's episode comes from Square,

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Roth IRA into Crocs out. He's like, you're crazy. And that was my first conviction, like, that was my first conviction bet where nobody else around me would do it. So I was like, I'm just going to do this myself. I know this company. I've been following every single news article of this company for like 10 years. So I probably know it better than a Wall Street analyst at this point. And I asked my brother who was in investment banking at the time to pull up reports or like, what was the research. And there wasn't any great reports on it. Like there was no great equity research. You could check facts at whatever, Bloomberg, nothing phenomenal, no deep dive. I was like, I could write this.

And so, yeah, I did it. And it worked. And it was even funny. Like, it wasn't just one quarter. Like, there were a couple of quarters back to back where they kept having surprise earnings. And then CNBC, all the analysts started picking up. You start seeing coverage of this company, like, very wide-spy coverage.

And, like, that's when I sold them. Like, that's when I'm exiting the position. And that was my first, I kind of made up this thesis called cultural arbitrage. So you're arbitraging your knowledge of culture. It's no different than understanding behavior. And I think this translates to. VC really well because similarly to the equities market where there's there are, you know, areas or sectors that get a lot more attention in certain quarters. It's very similar in venture capital where

I think there's almost a narrative of the quarter. We're talking about this in 2024. There was a JPMorgan healthcare conference and they talked about AI. And like overnight, okay, there was a market map from one of the tier one VCs and a blog post saying healthcare AI is the next thing. Every healthcare I started up six months before that was raising, you know, their first round at a $10 million valuation. All of a sudden, it was a $25, $30, $40 million valuation. So just because the narrative was brought up on LinkedIn and in blog posts, it wasn't like any meaningful change had happened besides the topic was hot and trending, the valuations, two, three, four, X, which just shows like, you know, and the companies that I've been building had been building two years prior.

It was just that it was their time to get that narrative premium. And I'm sure some people were constantly making momentum trade, but most of them were not realizing or didn't realize they were just part of this memetic behavior. Yes, exactly, exactly. It is memetic behavior. And what was interesting to me is in every single quarter, there's some sort of narrative that proliferates in venture capital. And 99% of investors, it's like sheep, they will, or lemmings they call it, will concentrate in that category. And like right now probably the narrative is, oh, Claude is going to take over everything. Like, you know, there's memes everywhere saying, I don't want Claude to come for my company. Please don't come for my payroll company. Please don't come from my fintech company. And then the reality is, like, we have a company that we invested in that where the buyer is not only a big investor and owner in Claude, but what they said was, I don't know if I should go into specifics. But anyways, we have a company that is a applied application layer startup.

And while everyone's saying that no one's going to buy SaaS anymore, SaaS is dead. It's all about horizontal AI. This, you know, they have a pilot, well, they have a pilot with a Mag 7 company. Essentially, that buyer. said, hey, if you go horizontal, we don't want to work with you. We actually want a point solution that works because Claude is great. We almost have to buy it, like from a marketing standpoint, for every single Fortune 500 company, like, Mag 7 company needs to be showing that they're investing in AI. And of course, they eventually will be completely AI first. They're tech companies.

But in reality and practice, what people want is point solutions that actually work. And so if you can give me a vertical solution end-to-end that works, like I will pay for it. And so that just contradicts, you know, SaaS is dead. And I guarantee right now, everyone saying Claude is going to kill all SaaS. SAS is dead. One company in the next month, I would not be surprised. Month or two will do $600, $700, $700,000 a billion of revenue as an application layer startup.

And I guarantee you every single VC will change their tune completely and start doing more of those. And then the narrative will be, no, no, no, AI actually makes so many advancements. It's not about the horizontal models. It's actually about application layer. That's the next investment opportunity. Right. Like whatever the zeitgeist of the quarter is, in 2022, when Chad Chagip first came out and

remember I invested in hugging face in a prior job. So I am of this kind of mentality. Anyone that's a hugging face investor believes that the models will overtime be commoditized. And you could actually argue, this is a bit of a structure, but you could argue they already are. Like they are a public good already. If you think about who's backing these models, it's, you know, they're funded heavily by VCs. The VCs are funded by endowments. There's like sovereign funds across the world that are heavily invested in the VC funds that then invest in the models, which then give you like a free credit tier to use compute. And so you could argue some of the models are already commoditized, but let's say you believe that reality, where does value lie at the

application layer? And I'll never forget that right after Tad GPD came out, all VC said, we don't invest in chat GPT wrappers. Like that was a strong statement. That sounded really good. Like there's no moat here. Yeah, so memeable. There's no moat here. Even, I remember like Sequoia had this big presentation. It was on YouTube, like infrastructure is all about infrastructure. And literally one year later that Sequoia had that same presentation. It wasn't just a quite every single firm, every single tier one saying all value accrues to the application layer because Harvey, you know, there were all these app a cursor, all these applications were taking off. And now you see people swinging right back to saying, oh, cursor, the business model,

the unit economics don't make sense. We're out on cursor. And so how can you have be an early stage investor investing in companies with 10, 15 year life cycles and be this wishwashy on your opinion? It's kind of going back to your point. Like you don't have a strong enough bottoms up thesis on the world to withstand. And it just shows like the state of venture capital today where narrative is driving and it's all reactionary top-down investing. And that's why you see what, in any hype cycle, you see what happens. It's like all the capital concentrates into the winners because people don't have the guts to make their own decisions. And I joke, it's like you're, when I tell my founders, when you're pitching a VC, you're actually pitching their chat GPT.

So like you might as well just put invisible text in your deck that's convincing the VC because they're not reading it. They're putting into the chat GPT take. And that's the state of the world we're in in investing where everyone is just giving us the consensus take. And so, of course, people are getting surprised that all the capital is concentrating in the same companies. Well, if you're putting all your research through your opinions, your chat, GBT, it's going to tell you what has the most data and what's the most the loudest, most memeable thesis.

And that's what you're going to end up investing in. It makes a thought experiment, which is in the world of full AI knowledge and commoditized AI, where is the alpha going to come from? And it reminds me of this dinner. I had a three and a half hour dinner with one of the chairmen's of the largest investment banks. It was off the record. And he said, I like to invest into things that are boring and hard.

And I'm like, holy crap, that is the best definition of alpha I've ever heard. And if you start double-clicking on that, you think, what is hard? Well, hard is anything that's not chat cheap-teable. Mentioned the crocs, you know, knowing fashion, knowing what your friends are doing. It's certainly differentiated and someone argue hard. You mentioned before we started recording that you hang out with people in Bushwick to figure out what the next strand is. I would argue that that's hard. And then two is boring.

in this case, it's very boring to invest in a fundamentally good company that not everybody's fawking around. And it's the opposite of boring is exciting or sexy. And what is the most exciting and sexy thing in venture? It's trying to get into these mega rounds where just having access and getting into these rounds itself makes it a quote unquote good investment, although you'd probably argue that in most of these cases, especially in the very large rounds, that that's just beta. It is beta. And especially if so much of the dollars are going into it, you're probably getting exposure to it in other ways already. That's just a normal retail investor.

The way I frame it is early stage investing. I mean, I love that. So boring and hard. And I've definitely done all of those. I mean, girl beer is, it's so hard to do a beer company. You're selling to two buyers because you have a distributor and a retailer. It is do not recommend anyone jumping into that business. So like investing in those types of companies, those founders work really, really hard.

They can't even compete. I mean, you have to travel around the country, meeting with distributors, people who don't have college degrees. Like you are really all kinds of characters. There's a full stack of people. You still have to maintain an online presence and brand and pitch VC, so you're kind of wearing a lot of hats. It's very difficult. So yeah, I do agree hard and boring.

You'll never have competition there. The way I think about it is early stage and it depends, but early stage venture to me is all about taste. Now even the tech bros have like memed that word to, you know, which sucks because it's a very good word, but let's rephrase it as you need to have your own point of view. Like that's really it. Who are you paying to get a point of view from, right? And then on the late stage, it's about sales.

So it's access sales, right? So working for someone like Kevin Durant does give you that access because you reverse pitching. 100%. 100%. We're re-hunter in Anthropic, Open AI, SpaceX. None of these companies go out and pitch VCs. They all get pitched. Correct.

So one is sales, one is taste. So if you're going to play, and I think the biggest challenges happen, or at least when I see my peer group struggling, it's because they're not playing the game they're supposed to be playing. So they're playing the sales game in early stage venture, which means they're concentrating in like really kind of like overhyped deals trying to play a sales game where there's no reason for that company to be valued the price. You don't want to be in a bidding war with something just because there's a bidding war. You want to be in a bidding war because it is actually outperforming or actually something amazing. It's the other side of that JPMorgan 2024 trade, which is two weeks before the conference.

It was the same exact company. It was valued at $10 million. Now it's valued at $30 million. Two weeks later, there's more hype around it, but that doesn't make a fundamental different business. So you're either underpaying or overpaying depending on when you're invested. Right, 100%. That goes back to this narrative premium, like thinking about where you are in this. If you had to have a chart overlay being like, where is the narrative on top?

of this business and are we at the top of it? Are we at the bottom of or are we at the top? And there'll be ups and downs at every company, right? Like there's times where sectors go. I mean, in the public markets you see it, you'll have companies taking a hit for three years, everyone writing it off. Google is a great example of that, right? So many people wrote off Google, I wouldn't bet against Gemini, right? Like, let's see what happens. And so I think, yeah, on the VC side, there's sales and taste and taste is really where there is alpha, where there is edge. And you get the taste, at least in my opinion, from really investing bottoms up, but then investing early.

So when you're somebody's first believer, you get this insight, and this is what we like to do. It's very similar to what you said in the beginning with Stanley, his quote of putting 20, was it him? Yeah, Stanley Drunken Miller, invest in and investigate. Right, invest in investigate. So it's like you put in that early stage checks. You have street cred for the life of the business.

You're taking the risk. And then when it's working, or actually the second time I like to invest, I like to do two investments. First is, you know, first money in. And the second time is every single company has this inflection point when something goes wrong. So it's like, I mean, in the most tragic of cases, somebody passes away. A co-founder passes away. In a more mild case, you know, or a co-founder split. I'm in a more mild

case. It's like the market is reacting. There's a political thing that happens. There's a scandal. There's always something or some technology trend comes and that nobody believes that the business can, you know, whether it's like what happened with Salesforce and all the AI, all the AI narrative. And there's always an opportunity to double down when again, nobody is believing in the company. It's no longer hot. It had its golden moment. It became a unicorn and people forgot about it. Although I'd argue. In many ways, there you're re-underrating. So yesterday I had an interview with Hans from a notable capital.

And he invested into Anthropic, which I'm also an investor in. He invested two weeks after Deepseek. So if you rewind back to Deepseek, people like, holy crap, do the large LMs have no value? Right. And he invested two weeks after that. What does that mean? He had a fundamentally rooted thesis, now including the emergence of Deepseek, he and his team had to fundamentally re-underwrite is Anthropic valuable.

Now, obviously, it's become extremely valuable since then, but it wasn't obvious at the time to anyone that didn't do that work there. Yeah, you're right. Hunter and Satya from Homebrew, they told me this a while ago. I'll always remember they're like every round you need to ask yourself of a company, are you a buyer or seller? And to your point earlier, I think you are right that even venture, though it's not liquid, there are still a lot of opportunities to continuously re-under, right? And the only way you can actually ask yourself, are you a buyer-seller is one if you have enough information on the company, which I would argue. you only really get unbiased information if you're there from the beginning. Otherwise, you're always getting some, you know, some sales pitch, some version of it. And even though, no matter what, when you're an investor, you're not a founder. So you're still getting some, but that's the closest you can get to source of truth.

And I think that's what I realize about myself. I love, like, I really, really love being at that source of truth. Like, I want to be, I will never pay for something where I don't really understand. I would rather sit it out. And that's like something I feel strongly about as I build my firm and just my, own investment philosophy. Is there an opposite of a narrative premium? It's a narrative discount.

It's a company that's fallen out of favor in a way. An example of that. Yeah, one of our, actually our first, first company that we invested in out of spice, that was the formation check almost, was into a startup called Beehive, which is a creator economy startup. And they're now, you know, they are a newsletter platform. They work with some of the biggest publishers in the world. They have raised capital from light speed, N.E.A., you name it.

They have tons of celebrities writing newsletters. They do B2B. But anyways, that founder was from Morning Brew. So he was a CTO of Morning Brew. Tyler Dank. Yeah, Tyler Dank. He's amazing. Also, pretty interesting just to double click on like, why did Morning Brew and

newsletter company have a CTO? Well, that's how they scaled so quickly and sold. Like they applied a lot of automation techniques from day one at a time where people weren't applying tech to newsletters and media. So they were ahead of the curve, took that playbook and said, let's build it for everyone. Let's make this company called Beehai. Great idea. I mean, killer founder.

If you guys know Tyler, he's amazing. If anyone meets him, they're like, this guy is just like the, the one of the you know he's like a tier one of one founder is that something that you ascertained very quickly it's like they have this unconditional love for what they do as opposed to conditional so it's just like in love or partnership or anything they're missionaries not they're missionaries yeah 100 percent and i like the word unconditional because i think in today's world you can you can build conditionally and 90 percent of 99 percent of pitches i get are and especially you're talking to early stage founders it's like i'm working at bane you know i'm going to try to raise

three four million dollars if i can raise it i know this Guy and Dresen, if I can get that round done, I'll probably quit my job and start experimenting ideas. I'm like, what? You're taking no risk. Like, there's nothing on the line as opposed to the girl beer founder, Tyler. It's like it's, you know, from Beehive, it's happening with or without me. If you're not funding this, I'm taking out a credit card loan. Like that's the kind of level of this is meant to happen. I'm building this unconditionally, not when every single situation is perfect. You need that because in if you're starting your company that way, there's going to be ups and downs, but you've already trained yourself to build unconditionally, as opposed to if you

started in a really cushy way, when something inevitably doesn't work out your way, I see those founders who got it, who had it really easy off the bat, struggle in the middle. In the middle is when it's boring, there's no hype, you're no longer the darling, no one cares about you, like what is driving you to push forward? So you need this, yeah, mercenary style focus. And you can read that very quickly, especially for me, working for a celebrity, actually the best secret is people are trying to get something from you all the time, right? Like everyone is trying to get they're only friends with you because they want access to the celebrity or they want money from you. They're always pitching you. They're always an alter your motive. So why celebrities are so cynical.

They're so cynical, but they're very shrewd because they know, I mean, they're not dumb. They know, hey, this guy's probably ripping me off, but like it's okay. It's worth it. It's cost of doing business. I'll take the 20% cut. He's definitely ripping me off or this girl is definitely ripping me off. But they know, you know, they're not idiots. And so anyways, taking all this back to like the narrative discount with Beehive specifically, they were building in the creator economy, which year over year has exploded. I mean, we're doing a podcast. I mean, we're doing a podcast right now. Like you, we see the value of distribution and content. That was my, I guess, unconditional love. And speaking of Beehive, actually had a newsletter on Beehive. Got to about

a thousand subscribers and great platform have nothing negative to say, but my heart wasn't in it. And at this point in my career, something that I've learned is all the value and anything you do has to do with compounding. So if my heart wasn't in it were a downstream consequence of that, I'm not going to do it for 10 years. If I'm not doing it for 10 years, I should quit. So I quit like two months into it. Wow. There's this idea that you shouldn't quit, that quitter, you shouldn't be a quitter. You should absolutely quit very quickly in order to make room for other things. What's the other thing?

For me, it's a spot cast I do it five times a week. I've now done, this is roughly episode 370. I'm going to be doing this probably for the rest of my life until AI replaces me. It's not even hard for me. And I know that I could build this compound advantage in this specific thing because I love it. I have what you call this unconditional love. I love it. And you could tell.

I mean, that's a high volume to do five days a week. Yeah, it would be very difficult to push through that. Although as I know your second generation. immigration and first generation immigrant, we kind of thrive in these difficult and impossible things, this kind of grunt work. Sometimes, by the way, that could be a downfall. A downfall. Correct. Sometimes, why are you grunting? Why are you grunting on the newslet? Oh, well, my heart isn't in it. Well, you're going to be losing to the people where the heart is in it. They're going to be running circles on them, just like I run circles around people that just today decided to do a podcast.

100%. And that's how I really felt when I started my fund. I felt like I had very strong opinions in a way that others didn't and that I could outwork anyone. And at least in my fund, one, I was really trying to prove my value to the founders. And it was just that, like, immigrant hustle where I felt so confident. And I will. I was like, I will outwork you. Nobody else is going to be staying up this late. VC is supposed to be a cushy job.

And I'm going to make it really hard. It's so interesting because I thought about the downstream consequences of loving what you do in this, this intrinsic love for it. And they're oftentimes very tacit and very powerful. So right now in emerging managers, you see this extinction level of that. Yeah. So there's roughly 3,000 managers, by some account, 50 to 75. percent of them are on their last fund, which begs the question, why aren't 25 to 50 percent

of the managers on their last fund? Now, some might just have good traction, might have gotten lucky on some investments. But a lot of them are going to keep on grinding, keep on hustling. Why? It may not even make financial sense. They may be a CMO at a top pre-IPO company make money. They intrinsically love it. And the downstream consequences of that are actually quite powerful. They start to problem solve around what you need to do to stay in this business. There's so many examples of this at Eric Bond from Hustle Fund. He created this whole media and network. They make millions of dollars because they're fun. They want to keep their funds size small. They want to have a great fund for LPs. They build these ancillary businesses. There's other investors that I know that

are now doing partnering with people on secondaries. They're offering co-invest to their LPs at discounted terms so that they stay around fund their future funds. But the more love you have for something, the more your ego goes down, the more you go from victim mindset or passive into problem solving inactive. And it becomes a self-fulfilling prophecy where the people that are, their heart is in it, they're missionaries, not mercenaries, they're able to figure out the things that need to happen in order for them just to keep doing what they're doing. That's a great point. That's a great point. Someone, Brian from Starface, do you know that company? It's the Pimple Patch Company. I had, I had like the first time I had a call with him. He said this to me, I'll never forget it. And at the

time, this was in relation to nothing to do adventure. I was producing like a short film. And then he was like it's always fun to do it your first time when you don't really know what you're getting into. But the real test of like entrepreneurship is, will you do it the second time when you know how hard it is, but you still choose to double down. I think like between me starting my fund one and going into fund two, but I didn't really have any results and like some of that high wear is off. That is it is the love and it is the creativity that pushes you through, right? Alex Hermesie, two-time podcast guests and a mentor of mine just consume all of his content, which is contrarian for space. I love it. He talks about this concept.

You know, choose your heart. Right. Everything's hard. Grass is not green anywhere. Right. So choose your heart. Right. It's not about whether something's hard or easy.

Everything has competition, everything has friction, especially if it's profitable. But where do you want a slave away? Where do you want to have all the highs and lows? Make sure that's worth it. It goes back to this missionary drive. I love it. I love it. To close the loop on the kind of like narrative premium or narrative discount with Beehive,

you know, talking about the creator economy, which we have, I have so many thoughts on that whole space, but the interesting thing there was, when Beehive was starting, it was right at the end of 2021, and Clubhouse had just imploded. The creator economy, which was this like big thesis that many funds co-opted quite quickly, you know, there were a couple other startups, like Patreon raised a big round, and there was, there were recaps in certain companies. And so there's this whole belief in Silicon Valley all of a sudden that 18 months after the creator economy started, it was over. You know, like Clubhouse died. That was the peak of it. It's over. And I guess everyone's going to go back to coding. I don't know what their thesis was, but just completely fell out of favor.

Like, if you were doing a creator economy deal, you were considered low IQ and you were considered, you know, like, you didn't get the memo. You didn't get the memo. Like, oh, we don't look at those deals anymore. And so when Beehive was raising, that's how they started in that environment. And, you know, like the first few rounds were people who didn't believe that, who actually, it was a lot of creators, actually. I think Scott Galloway participated. So there were all these participants that didn't come from the traditional VC world that all actually made their investing career off of Beehive, including myself. Like that first investment ended up really appreciating.

It was like a pretty fast 10x for an emerging manager where I was pounding the table around this thesis and talking about how the next gen the next gen of consumers is like on Robin Hood and they're all trying to be influencers and everyone thought that was low IQ. But then if you look at how that translates to real life, I mean, decisions are driven off of distribution now. even people really, you know, look over influencers, but influencers are driving like trillions of dollars of consumer spending, not billions, trillions, okay? It's like totally gnarly. But and creative economy revenue year over year is growing. Like it was like a hundred percent year over your market,

but not a hundred percent year over year. If you track that with VC funding, it's been declining ever since 2021. And so, you know, I think there's, that's a great example of narrative discount. Whenever you're investing in a company in a sector that's fallen out of favor, it's similar to what we talked about with, of, you know, loving what you do and being unconditional in your pursuit where when you fall in out of favor, you're just not able to raise as much money. So you're not going to get the $10 million seed round. You're going to get a $1 or $2 million seed round. And so the irony of that, and it's great for actually early-state investors is you better be capital efficient because you don't have leeway to mess up. And as soon as you run out of that money and you go back to market, you better have results because your category is out of favor. So you're not getting any. handouts, you're not getting the narrative premium. In fact, you're held to an even higher standard. So as a result, the founders that start that way, at least in our portfolio, have wildly outperform on revenue because they have no other, they have no other option. They have the right DNA from the start. Yeah, they have the right DNA from the start. They are capital constrained off the bat. And typically, when something's out of favor, that is the right time you should be building.

So they have a ton of demand. So they end up building a great business. These narratives and these memes are so powerful. They're so intrinsically linked in how Silicon Valley is run, that they're invisible and they're almost assumed two most famous ones. The two most joked about companies in the dot-com boom were Webvan and Pets.com. Webvan became Instacart, not literally, but the reincarnation of Webvan, but Instacart, obviously fatly-sacusessel. Great. Pets.com, chewy, multi-billion dollar company.

So if you just keep on, if you just focus exclusively on memes, narratives and all these things and doing what you know you're supposed to do and not doing what you know you're not supposed to do, it could lead to whatever. for the opposite of first principle's thinking is this this momentic type of copying. You've now, you're approaching your 10th year as a VC next year, 150 investments. If you could go back and give yourself one piece of advice before you made your very first investment, what would that be? To trust your gut more. It's an obvious piece of advice. Even at that time or trust your gut today? No, to trust my gut at that time. One of my biggest misses was whatnot. And the reason, and I passed

on that in multiple rounds. And I actually looked yesterday at the app store, like the top apps on the app store just to see what was going on. And of course, it's all the AI labs. It's like Dunkin' Donuts, Monopoly. Like, it's so funny. But then whatnot was creeping up on that list. And it was a live shopping app. I didn't invest in that because I asked other VCs. I was junior in my career. I was like, hey, Asia is always ahead of the curve on, you know, like consumer in general. They have, in many different ways, right? They had the super app. They were head on kind of like messaging, all these different things. So Asia's always behaviorally advanced on digital culture. Let's say that. And there in Asia, live shopping is a big thing. This is like a reincarnation of QVC for modern

era. It totally makes sense. And everyone was like, no, that's not going to work here. It's been tried before. There were a bunch of zombie companies that didn't work. And I really was out, kind of was like, okay, they must know more than me. And the people who had sent me that deal was a Yeah, anyways, long story short, I relied too much on other people's opinions thinking when I was young that they knew so much because they had done all this research. Not understanding the reality, which is that research was like regurgitated slop, pretty much. And I was the recipient of it. And so I made an investment decision off of other people's opinions. And I think that is what I would coach anyone to do.

If you don't have a strong opinion, don't participate. Like wait to form an opinion or don't participate. Well, my, thanks so much for jumping on. Looking forward to doing this again soon. Yes, thank you for having me. This has been awesome.