Investing Billions - E129: The Number #1 Predictor of Startup Success w/Ken Smythe

Episode Date: January 14, 2025

In this episode of How I Invest, I connect with Ken Smythe, founder of Next Round Capital, to discuss his journey in private markets, lessons from hedge fund management, and the future of thematic investing. Ken shares insightful stories about spotting talent, using key executive moves as signals for investment opportunities, and the rise of AI and defense technology. We also explore the challenges facing venture capital and private equity in today’s market, including liquidity bottlenecks and the hunt for alpha in a rapidly evolving landscape. Ken's personal story of resilience and his passion for innovation shine through in this inspiring conversation.

Last time when we spoke, you told me about the strongest signal that you see for a new company. What is that signal? The signal for us has, especially in recent times, been key executives that leave large private companies to join early stage startups. If the head of engineering at Apple is leaving for a startup and has been there 17 years, we want to know about that company. And because we have the relationship with 17 years, we want to know about that company. And because we have

the relationship with that executive, we oftentimes get introduced to them by the management team and start understanding what that early stage startup is doing and get a very good look inside. Where other investors mainly haven't even heard about the company. And I think the best example of that was in 2019, we were approached by an executive to help him liquidate $35 million worth of strike. We asked them, well, why are you selling and why are you selling this much? He goes, well, I'm leaving the company. I'm joining something pretty exciting called OpenAI.

And at the time, people had not really heard of OpenAI yet. It was a completely new concept. We did some work on it and actually started getting to know what OpenAI yet. It was a completely new concept. We did some work on it and actually started getting to know what OpenAI was all about in ChatGPT. Had we not had that signal from the executive, I mean, VCs weren't even really heavily involved at that point. There was very little knowledge of this company. And due to the fact that we were able to build a relationship over our many month period, we started understanding that OpenAI and ChatGPPT was gonna be a very, very big thing. And the only reason why people would go there

and leave such a successful startup as Stripe would be that they figured this opportunity was much larger and had much more upside than staying where they were. You mentioned that as Sequoia or Andreessen Horowitz may not be as strong of a signal. Why is that? The large VC funds are managing 10, 20, 30 billion dollars.

So to say that you're leading around with, say, a five million dollar check when you're writing many multiples of those five million dollar checks across your portfolio sometimes isn't a strong signal because the VC firms themselves are so over-capitalized. If that bet doesn't work out, it generally does not affect their returns. It's really kind of a drop in the bucket for them. But it's a lot riskier for an individual

who has a very large amount of equity and stock options in a startup to go leave to go to a Series A. And that to us means real risk taking, right? The risk that a VC is taking by leading a $5 million Series A or putting in a $5 million check or $10 million check into a Series A is much, much less than a key executive who owns a hundred million of equity in a very

established corn in many cases to go to a company with a hundred million dollar valuation that's pre-revenue, right? That executive is taking real calculated career risk on that move. They know something that even the VCs don't know. And there's not only the career risk of leaving one company and putting all of your career baskets into an untested company.

There's also the fact that oftentimes that these large companies, you get refreshed in your equity pools, oftentimes every year, sometimes every couple years, so they're giving up this future equity. When we look back historically, those moves have meant a lot more to us than who's actually leading the round.

In fact, many of these executives are leaving to go to these companies before there's even a lead in a significant round. And what we found is those with the engineering background and those that are highly technical people that actually know the technology better than any VC ever will because they're internal and need to understand that the next wave of what they're doing.

You alluded to it. There's so much capital and venture capital today chasing, you know, a few really good deals. How do you know that you're not being adversely selected in terms of the companies that you invest in? In addition to tracking fundamentals and metrics and what's really going on underneath the hood, we just invested in an AI chip startup, which is pre-revenue, right? But our leading indicator on that one is key engineer from Apple that was there 17 years

just joined. One of the key engineers from SpaceX that was managing 30 engineers at SpaceX, one of the head of design engineering, just joined the company, and also a key executive from Long. Now they haven't even raised their series B yet, but with that kind of firepower

on the executive team already, we're thinking this is an opportunity that we really need to dig into. And now it's just understanding what the revenue fraction is, what the commercialization is. From a product perspective, we think they're way ahead and that's a very strong signal there. You're a thematic investor. Tell me about one or two themes that you're excited about for 2025. We're thematic, but we also have to be pragmatic that we don't know, you know, the technologies that are out there today. I don't think that we could have guessed three years ago that perplexity was

going to be a $9 billion company. Right. And that's why the signaling that we keep talking about is so important because of the true technology execs at these companies and the people that are actually building these products are the ones that we want to follow. Right now, we think AI chatbot agents are going to be a huge business. And that's where you're seeing executives from OpenAI and Tropic leading to these chatbot startups.

And they get it exactly right, which they're about 80% there being able to actually duplicate what a human does in a certain task. We think that that's going to be a massive, massive business for corporations to reduce costs and increase efficiency. So we're very focused on that. We're also given the new administration focus a lot on defense tech. And we think that that business is just going from a true transformation where you have the old guard of the Lockheed Martins, the General Dynamics, those types of companies

which had old technologies like the F-35, which is basically already on the chopping block by the new Doge administration. And now is really leaning into technologies on the battlefield that are being developed by very innovative startups. I mean, Andrew is obviously the blue chip name in that space, but Shield AI is doing very interesting things and other even earlier stage startups than that, that are bringing technologies that we didn't even know possible two to three years ago.

So we're paying attention to these broad thematic themes, but it all comes down, especially in early stage investing to the people, the team and their track record and what they've built at other organizations as the true litmus test of whether we're really interested or not. We've seen a complete 180 in terms of venture funds investing to

defense tech over the last one, really two years, but in the last year, dramatic change in activity. In terms of the institutional secondary market, who is accessing, you know, the Elon companies or these kinds of companies, who is accessing the Elon companies or these kinds of companies, who is out there in the market buying these shares? It's a wide mix, but I would say it's obviously the large institutional investors,

it's the VCs, it's the hedge funds that are getting- So you have VCs going to you and saying, I wanna buy on the open market, more exposure to my name. That's right. Once they get into a company, they come to us and say, look, we're trying to size up and we're trying to build a bigger position in this company. And we've done that multiple times this year. I think that they also are cognizant of the fact that they use us for liquidity and the other parts of their portfolio. So one of the biggest issues that

VCs are having is DPI, right? So as much money as they're putting into these new LLM companies, having is DPI, right? So as much money as they're putting into these new LLM companies, all the AI startups, the military, the logistics companies like Andriil, and the robotics companies are also trying to exit a lot of legacy things that they invested in from 2017 to 2021, and trying to get DPI for their investors, right? So their investors are saying, look, this is great that you're putting a lot of money to work in AI and names like CO2 have deployed and raised a billion dollars just to focus on AI recently. But they're also looking at the rest of their portfolio and saying, well, what happened to that hot fintech company you were talking about in 2019 and that hot SaaS name that you did in 2020? What happened to those? Because all

of a sudden, nobody's talking about those, So they're kind of forgotten zombies in many cases. The companies have slowed their growth. They had to cut burn during the tech crisis. And a lot of VCs feel a little bit stuck. So a lot of our job has become, help us get DPI on this part of our portfolio. And then hopefully, we can recycle that cash into other AI opportunities or things

that we're looking towards the future on. But it's really become lopsided in that regard. Cash is not the problem for VCs right now, or fresh cash that they've raised. Ideas is not a problem. There's a ton of companies to invest in right now. But it's really liquidity in the rest of the portfolio. So when you're talking to an endowment and they're saying, give me fresh new money, they're

saying, well, we have none yet. And obviously, VC is a big part of the problem. But the biggest part of the problem is private equity So there's a massive liquidity problem right now. It's creating really a bottleneck in the industry But in terms of innovation and the pace of innovation It's faster than I've ever seen it. It is really truly astonishing What's going on and what companies are developing and and how it's affecting society So you see from one side, VCs buying secondary to add to their positions. You see some VCs selling in order to generate DPI.

What other types of investors, whether institutional or non-institutional investors, do you see regularly in the secondary market? Family offices have been an interesting one. I think family offices are a little bit less self-guided than a VC fund or a hedge fund would or an institution because a lot of times they don't have access to the level of diligence that some of these institutions do so they tend to follow a lot of their managers into opportunities. So what we see sometimes

is hey we own this company through a fund that you know one of the large VC owns but if you offer it to us, we would size up and buy more. You know, we would go into an SPV that has that name because we're really bullish on it. And it'll add to our position, which is somewhat diluted across this fund. So we see that and then obviously, and this is where markets get very frothy is retail, right?

And so the high net worth investor is being pitched a lot of these deals through the through the typical Morgan Stanley, Goldman Sachs platforms, Merrill Lynch, and they're saying, look, buy SpaceX, right? Everyone wants to say at the cocktail party that they own SpaceX. It's a terrific name to own. Obviously, they're doing very, very well. But it shows you that the retail market is focused on several names. And if that name becomes available across one of these back platforms, they're literally devouring it. Interesting, SpaceX used to be strictly a family office trade, almost like a cocktail trade

and then it went to an institutional trade. Maybe again, it'll be so expensive, it'll be a family office trade again. Yeah, yeah, look, institutions are looking at it. Obviously, SpaceX, the business model's an interesting one. About 65% of the projected revenues in communications and the satellite business, which is a $99 a month product, which is focused on the maritime industry, emerging markets, frontier markets, which, to be honest, many of them can't afford a $99 subscription.

So Elon has really built a great business with the military payload business and obviously Starship, which is the best business of SpaceX because it's really long-term government contracts. And that's what everybody wants to see is long-term revenue visibility. And so that's what investors are really focused on, but the communications business, although it will grow very fast,

and it seems to have a trade in an AT&T Verizon multiple. So it'll be interesting to see when these companies hit, or SpaceX hits the public market, what is the public market gonna value the communications communications business what it's going to value the Starship and pay launch business? SpaceX really is and we're shareholders as many different companies in one. Like you said, high revenue, low multiples, low revenue, high multiple never thought about that way. Previously, you were the president of a $5 billion hedge fund. Tell me about that experience. It was great. I mean, we were, you know, this was during a period, uh, that the multi-manager business was really taking off. And this is when really Citadel, Millennium and others were really raising a lot

of capital and really starting to take off. And we were trying to do the same, but it's a very capital intensive business. It's a very leverage intensive business and finding the right portfolio managers is a very challenging thing to do. They expect you know large upfront payouts before they've even generated one dollar and so you know for me it was more of a personal decision that I thought the private markets were gonna generate a lot more alpha in the future. It was a good time for me to segue into private markets. Explain to me as a third grader

why it makes sense to have multiple strategies at a single hedge fund. Thank you for listening. To join our community and to make sure you do not miss any future episodes, please click the follow button above to subscribe. These strategies all trade with different risk characteristics, right? And what we call in the hedge fund world factors, right? And they're all driven by different factors.

Some people factor, some strategies are growth factors, some strategies are the factor, some factors are currency related, and some factors are just unmeasurable. And so you always have to have a variety of factors in your portfolio that you can recognize and hedge. And that's why you want a strategy where you have multiple factors going on

to deliver a smooth return profile on the strategy. A lot of times portfolio managers get very, very stuck in their own strategy. Managers so focused on generating returns from that one segment of the market, which may be out of favor. And so that's why a lot of money has been raised these multi-manager strategies. It's just been able to smooth out the volatility, smooth out the returns and smooth out the risks. Now, that being said, they're telling portfolio managers, please join Citadel or any other

multi-manager fund, here's $2 billion and make 3% and we're going to lever it 15 to 1. And that's how these firms generate a lot of returns. So it's not without risk. Everyone looks at the Millennium fact sheet, punching out a nice 12% annual return. But if you look at the overall leverage that Millennium is managing, it's massive. I mean, it's billions of dollars

when state-of-the-day U.M. is $60 billion. And so it's a very interesting strategy, and I think investors have become very enamored with it. Is that leverage somehow isolated or can one strategy blow up the entire fund? Look, it'll go on name But there was one fund that they generated 60% of their return in 2023 from European natural gas had that trade gone wrong You could have seen a major firm go under when we look at some of these funds

Taking on a lot of risk to generate a small measure of return that then the firm can control At the top level and manage the risk and manage the leverage. And so far, they've done a great job. But who knows what's going to happen if all the factors unwind and everything basically melts down at the same time. It'll be interesting to watch. While you were at the hedge fund, you were recruiting portfolio managers.

You were essentially a scout for talent. What did you look for in portfolio managers? A lot of it was a specific skill in a specific market. You were essentially scout for talent. What did you look for in portfolio managers? A lot of it was a specific skill and a specific market. When you're building a platform like that, you really need to focus on guys that understand a market very, very well. And not only is they understand 220 names extremely well, they understand the industry very, very well.

It was very hard to find a portfolio manager that was good across all industries, geography. You're looking for the best individual player at that position. Really, we're looking for that best individual player that necessarily wasn't the best. He had to be a great stock picker, but he had to really understand and be able to do great research. One of the guys that we interviewed, I remember during the bird flu days, he was literally flying to farms and the egg farms to understand how many clean chickens were being affected by the avian bird flu. It was that type of research,

just getting such great primary data and investing in things that they had only the most granular data in. And that to me is a great portfolio manager. A great portfolio manager these days cannot sit behind a Bloomberg and understand what his portfolio is doing. He really had to get in there, had another portfolio manager. He was an expert in the battery space. He would go to China and translating headset while BYD was presenting because his company in the US, it was a battery

company, was literally about to announce earnings the following week. So he wanted to understand in Chinese, but literally in person and go meet management and sit there with a headset and understand what the dynamics were in China. So before it hit the US market for earnings, he would know how to hedge it and what to do. And those were the kind of guys you were looking for. This is like above and way and beyond what any other it's it's analogous to the high frequency traders that shut up the stops across from the exchange trying to get that data point one second, but this one was doing it through a translator.

And at the end of the day, it all came down to fundamental research. And a lot of these guys were really, you know, some of them were just way above the crowd, in terms of understanding their companies. What were some mistakes that you made around portfolio managers that look like they could be really good and ended up being poor choices? We had one guy that was doing commodities and he was rolling contracts and commodities and it was kind of a year based on buying contracts on oil.

And he ended up just losing so much premium rolling these contracts that his strategy went from being able to deliver, call it 10 to 12% annually pretty consistently to really only delivering 1 to 2% because he was losing so much in the role of the yield and oil contracts. And so his numbers looked great, but when the market changed and volatility got a lot more expensive, the premium he was paying was prohibitive and he was just not able to make money. So when market factors change, a lot of you have to really look, well, how do you actually make money and what market factor is really driving your returns, right? And for him, it was a premium of volatility. And when

you're selling volatility or buying volatility, the cost of volatility is going to affect your returns significantly. And so that's one thing that he thought he was going to be, he said, look, it's not a problem. I know how to adjust to this, but he was never able to adjust to it. So he didn't lose money, but he didn't make any money either. What do you find in terms of clear thinking and the ability to sell a simple story? Is that positively correlated to returns?

Or does that mean that somebody's on a strategy that's pretty commoditized? If you look at the top guys, right, it's very rare that you find one guy that's doing one thing very well without a great team behind them, right? Most of these guys have- That's what Ken Griffin will say.

He'll say at Citadel, his number one skill is actually recruiting. Absolutely, because the guy that's really good at industrials, right, or really good at, you know, some subset of industrials, has really or really good at, you know, some subset of industrials has really generally two to three great analysts with him. He's got two research guys, he's got a data scientist. It's very difficult to be good without a team around you.

And that's why it's become so hard to launch these individual hedge funds, right? Because they require so much data, so much risk, so much technology, so much talent to really do it properly, that you as one person, it much risk, so much technology, so much talent to really do it properly, that you as one person, it's impossible, right? And so these guys really have to develop a real infrastructure around them

to deliver market beating returns. And it really comes down to that. And that's why a lot of these guys end up at major pods is because they'd rather have the capital, the infrastructure and the team at these pods rather than go out and try to build it on their own and have to raise the money and deal with LPs and all the rest of the heading. Given the current regulatory climate and hedge funds getting more and more complicated from

a compliance standpoint, what is the true minimum viable size for a hedge fund today? I've seen hedge funds launch it, you know, 100, 200, then it was 500. I really think it's a billion now. Problem is, is that you're trying to attract people from other funds. And generally when you're attracting people from other funds, and you're trying to attract senior investors, the issue is there's got to be enough carry to go around. So if the main PM is getting, call it 40% of $300 million, and the fund is flatish, and there's only management fees to feed the team, you really don't have a lot to work with. Yes, because they know they're not going

to make any money, right? So they basically aren't leaving anything on the table, right? I saw a really surprising move the other day where I saw a pretty senior hedge fund PM go to a large secondary's fund, right, in the private markets. He was a technology investor at a multi-billion dollar fund. And I think these guys are realizing, look, it's difficult right now. When indexes are ripping, when technology in the Nasdaq is up 25, 30 percent, and you're going to your investors and saying, hey guys, we have this short book, we're 25 percent hedged, and a lot of its index hedges and a lot of it's just not attributable to

real shorts because there just isn't a lot of good shorts out there. Investors start questioning, what am I paying you for? I'm paying you 2 and 20 plus expenses plus pass through plus all this and you're giving me returns that are 60% below the NASDAQ. What is this all about? So that's why a lot of investors have gone passive into ETFs and are just saying, look, hedge funds just aren't worth it. The alpha is just not there like it used to be.

There used to be a lot of seams and there was a lot more accounting fraud. There was these big WorldCom, there was Tyco, there was, you know, every year there was like these big blowups, right? And hedge funds would just clean up on these things. Regulation has gotten more stricter and obviously, and much more, andter and obviously and much more and compliance has been so much more of an issue in terms of audits and all of this. You're just seeing

less of that, right? And you're just seeing that shorts are just much harder to find on an individual basis. And so for a regular true hedge fund, where's the short alpha? It's hard for them to prove where it is because it's just non-existent. When you're pulling these, you know, genius level quants and portfolio managers, how much of the time are they leaving for primarily economic reasons versus cultural reasons? They hate their boss or other less rational reasons? You know what? We see a lot of different things. I would say one of them is, at some of these firms, it's very, very difficult to work there, right?

Because single move you make. Is that a feature or a co- I think it's a feature and I think, you know, it's funny because I've talked to a lot of LPs as well and they're like, that's great. I love that they get rid of guys really quickly. You know, this guy, you know, he's not performing, so he's out.

I think turnover rate across the board is the most silly metric for a successful startup. I think a successful startup should have somewhere, should not have, you know, 100% retention, right? I think that's a sign that it's too clear. Yeah, that's right. That's right. And I think a lot of investors are saying, be strict, you know, pull the trigger when you see that something's not working. Now, you know, but when you're the portfolio manager, right, and I know an example of a friend of mine was at one of the multi manager firms and he says, if I and he was a million

dollar industrialist portfolio, says if I went to the bathroom, and they saw one thing in my portfolio, it was already hedged and they would close me out of, you know, 60 70% of my positions. Right. So that's how tightly this is being controlled. Right. And if you got one thing wrong, you know, that developed your returns from being 3% down to, you know, 2.7, you know, that's, that's a factor to get fired.

And so it's a, it's a really cutthroat world. So a lot of guys are saying, look, from a lifestyle perspective, this is a lot of pressure. This is a tough way to live. And so they, they decide to want to go out and, and I think people will live in that tough way while they're there. And the moment the money goes away, they're like, why am I doing this? But you are seeing a lot of spin outs now, you know, because once they build that reputation, the track record, and the, you know, the celebrity around what they're a lot easier to go out and raise, not 1 billion, but, you know, 5 billion. I have a big thesis on spin outs, and I think spin outs will continuously produce a lot easier to go out and raise not one billion, but you know, five billion. I have a big thesis on spin outs and I think spin outs will continuously produce

a lot of really interesting opportunities. And a lot of people say, well, what about consolidation and when will spin out stop stopping a thing? And most people don't realize spin outs are an arbitrage between talent and economics, so you might be at firm, the top talent, the top two PMs might have 90%, maybe they founded the firm. In some cases they're providing 90% of the value and 90% of the alpha.

In most cases, they are not. So the question is how uneconomic could it be before the top talent decides to move out or how much money do they need for cushion in order to have the comfort to spin out? It is the age old question. And I think, you're dealing with some massive egos. I just had a firm the other day, it's a $3 billion technology hedge funds on the west coast.

And one of their main producers since they launched in 2018 was let go. He was a significant partner in the firm, the main partner, let him go. He had, you know, gotten a couple of ideas wrong. He always wanted to get paid pretty much the same as the founder, and they pushed him out. Kind of that cutthroat. Now, he obviously made a lot of money during the last five years. But this was an example where they were up 50% in 2020.

The Nasdaq was up 50%. They all took home several hundred million dollars, and investors were like, well, gee, that's great. But I didn't even beat the NASDAQ. Yeah. So investors are, you know, kind of pushing. Hey, look, you had to diligence a lot of portfolio managers that may have had egomaniacs at the firm. How did you go about referencing? Do you all did

you ever give them both benefit of doubt? Or did we say, you know, if the previous term didn't like the manager, there's probably something wrong with them? You know it's pretty interesting we would back channel a lot and I think back channel is always the best the references they give are not the ones that you want to speak yeah it's the off list right it's LinkedIn it's asking people about the firm and one guy he was ultra successful was running three billion dollars at one of the big multi-manager firms I mean the guy was guy was a rock star. And he just said, every single

person we spoke to, he is the biggest jerk in the world to work for. And if he comes to your firm, he's going to ruin your culture. And you know, so you can have everything look perfect on paper. He even interviewed well. And he was very charming in the interview. But then when people are like, literally, there was a rumor that he like tried to stick a pencil through one guy's hand because he was so upset that he got something wrong. And so you know you have these stories and you're like oh my god you never know that if you just called standard references. Thank god for references. So tell me about Nextround Capital. What do you guys currently do and what's the future for Nextround? Yeah so we're really you know we're very very busy right now. I'd say 50% of what we do is on the secondary side.

The other, you know, call it 40% is on co-investments. And then 10% is really kind of very niche, sometimes even credit-oriented or ideas that we get, that we work on, and that we'll invest in ourselves. So, you know, on the co-invest side, a lot of it's technology, a lot of it's AI. We're working on a data center deal that we're launching in a few weeks. And here you're following Andreessen's doing the round, you're co-investing alongside him.

Yeah, I mean, either Andreessen's doing the round or somebody that we've been introduced to. Again, there's a lot of connectivity between the network that we built in Silicon Valley and some of the rounds that we participated in. One example is Drizly, which got her, they had a group of executives that just lost. And the guys that built the whole logistics network around that just left and started a new startup.

And I was extremely interested in what they're doing. And so we're gonna invest in that. And so we get these ideas and some of them are great. Some of them are, hey, this guy's got this great new AI idea and he's using very differentiated sources and asking, well, what's that source? He says, well, Wikipedia. And I said, well, Wikipedia is really a source for XAI and OpenAI and Anthropic. So why is it unique? Well, we can scrape it a lot more efficiently than they do. And so you have to start to wonder like, you know, what's really the edge here? Right? Cause everybody right now is really, you know, we're in the days right now of the Netscape browser, the AOL Lycos, when, you know, everybody sort of was trying to build the technology and these companies and everyone was just pouring money into

each technology. If you think about it, that's where AI is right now. It's really a money loser and the technology is just being built to make it the most efficient. The next wave of this is going to be the monetization. How built to make it the most efficient, the next wave of this is going to be the monetization. How do you make money from it? Right. And it really wasn't until Google figured out how to make money from search. The search really took off. And that's really when the internet and e-commerce took off is really

because you were able to search and you would see ads and they were able to make money from search. And so that's what we are today because the only way you make money right now is open AI is saying hey pay $21.99 for open AI plus great. That's not gonna create a massive business right while you're still losing eight billion dollars So until the enterprise side is figure out how you can charge companies a lot of money to to use your service That's when AI will become really really valuable today It's valuable because we've discovered the technology, but there's gonna be so much more money lost and VC money burned during this period while everybody figures out, okay, so what's the business model, right?

How does this actually generate a lot of revenue and how do you actually get profit margins out of it, right? I made a comparison yesterday, Tesla versus Ford. Tesla in 2010 was worth a billion dollars. Ford was worth $44 billion. Today, Tesla is worth a trillion. Ford is worth $56 billion. Right? Why? But Tesla is not the only one EV maker out there. There's Lucid, there's Rivian. Well, Tesla figured out a way to make each car profitable. So Tesla makes $9,000 per vehicle, 9,200. So it's profitable unit economics.

Rivian loses $37 per vehicle and Lucid loses $137,000 per vehicle. So it can be a great idea, but it's the business model because Elon integrated production, he integrated acquisition and streamlined the manufacturing process. He created gigafactories. He did things that he knew would create a business and that he could make money from

it. So futures just went bankrupt because it's all a great idea. And that's what we are today in AI. It's a great idea. It's going to revolutionize everything. But the problem is people have to figure out the business model first so it survives. At the end of the day, investors are going to one day wake up and say, I'm no longer But the problem is people have to figure out the business model first so it survives. At the end of the day, investors are going to one day wake up and say,

I'm no longer going to fund these losses. And that's where the rubber is going to meet the road. What would you like our listeners to know about you, about Nextround Capital, or anything else you'd like to share in a little? You know, just have a lot of fun what we're doing. We're always looking to see what's next, obviously, in the name. And we're really excited about what's coming in the future. I got to tell you, when I started the business in 2020, just a few months before I launched,

my brother had been diagnosed with pancreatic cancer. And so for me, it was always a goal to have my own firm nameplate on the door. We brought him to treatments around the world, trying to really see what we could do for him. And unfortunately, he passed away in 2020. And that's where I really felt like life is, you know, you gotta take the opportunities that you see now, because it can all end in a flash.

And that really taught me that life is very fragile and, you know, thank every day that we're here and, you know, enjoying what we do. Absolutely. Well, we've known each other since 2016. We partnered together on DraftKings and it's been great to partner together and look forward to continuing the conversation. Great. Thanks for having me, David. Thanks, Con. since 2016. We partnered together on DraftKings and it's been great to partner together and

look forward to continuing the conversation. Great. Thanks for having me, David. Thanks, Con. Take care.