Tech Brew Ride Home - (TWTR SPC) The State Of VC And Startups In 2022

Episode Date: January 22, 2022

Weirdly, this turned into a sort of education on VC and startup investing episode? ¯\_(ツ)_/¯ Sponsors: Wix.com Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome, everybody to a. the TechMeme Ride Home Experience. Today is January 20th. We have a bunch of things, as usual, to talk about. And Brian has a little service announcement for those of you who have been listening

to the show on a daily basis. Yeah, the announcement is that we had a guest lined up, and they were unable to get clearance from their employer to actually come on the show, which sometimes happens, but we were trying literally up until about 15 minutes ago to make sure that they could come on. And if they do somehow show up, we will, of course, bring them right on. But this is to say that the guest that I hinted at today on the show. Yes, it is currently not coming on. We're going to still talk about the topic that we had planned. But also, anyone listening now, if you have topics eventually to talk about, we'll do a sort of open book episode after we get through some things. And I will also pin my tweet if people want to reply and send us questions or comments that way.

Awesome. So what we wanted to talk about was the state of. investing and VC and sort of the startup ecosystem in 2022 because I don't know that we've kind of really talked about it on the show, but it's sort of becoming interesting a little bit.

Let me back up and try to bring a little energy to this. Because first of all, well, obviously, none of this should be taken as investment in device, do your own research, etc. 100%. barring that one this is an area that actually um i would never have really felt that comfortable talking about even a couple years ago and yet it's it's sort of become so well one uh everywhere um two

i think it's a little bit bonkers three it's kind of like uh we we tend to like overfit over you know things or patterns or moments that we've seen in the past and so there's you know there was if you remember a moment where VC was going to go into like a VC winter And there was a big blog post, I think either that Sequoia or Andreessen Horowitz wrote that was like, sorry, you know, we're not like investing for a while, like we're closing up shop. And then I believe the pandemic happens sometime after that. And everything has changed. So there's a lot of money out there sloshing around. There's a lot of money seeking a lot of different deals.

And I suppose, you know, Brian, you cover this stuff every day. It's obviously all over the cover of TechMeme. TechM is almost more like a deal book than it is like about tech. Like the innovation in tech is almost secondary in some respects. And so I think it's really important for us to put this stuff in a context and to think about what's happening. And yeah, where it goes, what are we starting? What year is it? 2020.

Thinking about with regards to the market, the marketplace, startups, investing, etc. Is that by the way, yes, that hits it. And I'm still on a daily basis correcting myself from doing 2021 every literally, every time I record the intro to the show. You've got 11 days left to really, you know, have no more excuses. By the way, I invited Emil to come on stage if he wanted to as well, because I think he could speak to some of this stuff. Right on. I have invited him up.

Also, seeing some old friends in the audience, we got R.J., Greg, Morgan, Wesley, my cousin, he's back. Nephew, nephew. Anyways, I'm not going to get into it. So here's my way into this a little bit. Okay. Because it's two-sided, which is number one, and we can talk about this. Funds, venture capital funds are raising more money than God.

I believe that the number was is that last year, 2021, the U.S. venture capital total investment was double last year, and that last year was an all-time record. at the same time, do you remember when maybe it was a year or more ago where I started looking at that stock screener, which was sort of that all-time high stock screener? So actually, before you go into that, because I want to, I just shared a link to Aaron Griffith's great piece that she posted today while she's on vacation, apparently. We tried to get her on, but she declined because she's on vacation. talking about tech startups. And I just want to read some of the numbers coming out of that. And then, Brian, I want you to talk about your, the tool that you essentially kind of commissioned and that was created. So from Aaron's piece, it's all just wild. That's the title. It says, it's so crazy that more than 900 tech startups are each worth more than $1 billion. Whereas in 2015, there were only 80. Then she says that the median amount of money raised for very young startups taking on the first major round of funding, 30% according to Crunchbase, and the value of startup exits, a sale or public offering IPOs, spiked to $774 billion, nearly tripling the prior year's returns according to Pitchbook. And actually, Pitchbook has a big new report out on this stuff, but some other big money

headlines carried into this year. And just over a few days this month in January, three private startups hit eye-popping valuations. First was Miro, which is actually a tool I use today. It's sort of like a, it's not wireframing. It's like layout or, um, Anyways, that's for the tools episode, which is a digital whiteboard company valued at $17.75 billion. That's just insane. Checkout.com valued at $40 billion. And, of course, OpenC, the NFT platform was valued at $13.3 billion. So just a sample of what's in there.

That's insane because of the multiple based on their revenue, which we can go into a little bit. I never know how much of that is to inside baseball or whatever. But to bring it to the stock screener, so when I started using that tool, it was a way of thinking about... Wait, wait. Let's actually describe the tool, because essentially you've been saying, from what I recall, that you wanted to watch, what was it, like the change of the, was a Fortune 500 or... No, it was essentially, it's a very, very basic, you know, if I had a Bloomberg sort of thing. It's like, what stocks are hitting all-time highs? That's right, the all-time high index.

Exactly. And that was a way of learning what companies were sort of on the up. So, you know, if you started using that tool two years ago, you'd been like, oh, hey, what's this Shopify that is hitting new all-time highs every day? Or, you know, you would have seen Zoom go to the moon. You would have seen Peloton, all sorts of things like that. So literally, I believe, like, maybe I'm not. a month, maybe six weeks ago, you would have seen, because I check it every morning just to get a sense of like what companies are doing well. Yeah, yeah, yeah. The, you would have seen things like Asana. You would have seen what's a firm, you know, buy now, pay later. These were these were companies that were hitting all time highs every single day. And essentially what they were, a lot of them were SaaS. companies, software as a service companies, mostly software companies.

And if you look at that tool, especially since Christmas, it's all things like Pepsi, Procter and Gamble. Oh, the basics, the fundamentals. Right. So essentially what we're talking about is rotation in the stock market. Now, why is that important to what we're going to talk about? Essentially, what we've seen since COVID-19. started. So basically two years now is that a lot of the software companies that went public would go public at very high multiples. When I do stories on the show where it's this company had a pop and there worth $10 billion, $30 billion, whatever, those are companies that are still not profitable for the most part, but investors were snapping them up because they're

companies that are growing. And so investors were handing them these huge multiples on their valuation multiples on the cash that they were generating to the degree that they're generating cash. And that has stopped as if someone flipped a switch. Alex Wilhelm at TechCrunch has been covering this a lot. There's an ETF that covers SaaS companies. And it is basically down, I think it's more than 50% now from its highs. Now, why this is important for what we're talking about, which is the startup ecosystem is the last two years, even during COVID times, it's been an amazing time for any startup company to go public. They're going public at valuations that are higher than a lot of

even VCs expected them to go public. So what that means, is if you're a startup and you're trying to raise money, the sort of pot of gold at the end of the rainbow had been so huge for the last couple years that you could

basically could fall down and raise money at incredible valuations and things like that. All of a sudden, if you see all of the tech companies that have gone public in the last two or three years suddenly come back down to earn, that's going to have an impact on the ability of companies to raise money because that means that these companies might not be able to go public.

We already had, I didn't talk about it on the show, and I can't remember the name of the company right now, a company that was going to go public last week that is holding off because of the market issues. You also had last year the sort of the SPAC mania where those blank check companies where even Those have not gone well. Right, right. Basically, the majority of those are trading under their underwater. So what we want to talk about here is number one, is that an issue where, the great times for startup companies, maybe that window's closing. But then at the same time, you have traditional VC and non-traditional VC companies' funds raising more money than God.

More money than anybody has ever thought of. Like, you know, Andresen Horowitz, I think, is thinking of raising yet another. a crypto fund. They just raised one of the largest funds that they've ever done. I think I'm looking at up right now. $3.5 billion is for their new crypto fund. Anyway, so there's two things

that I want to poke at today, which are number one. If we're seeing tech sort of, the stock market's not been great, lately, but one of the things to notice is that tech is leading things down. And historically, that's not a good sign because when the leaders in any bull market are the ones that start to depress themselves.

Again, not financial advice. None of us are experts in this stuff. But it tends to not be a good sign. And then number two, one of the problems with when you have a business, bubble is that you have so much money chasing so many opportunities. So you do have funds raising more money than anyone has ever raised before. I believe that Katie Wan is looking to raise close to a billion dollars for her fund that is targeting crypto. Essentially, and I'm going to stop fompering and please ask me questions.

But you've got on both sides of this, you have signs of a bubble where there is so much money chasing startups. And then if we're already seeing that the public markets, which are very important, ultimately important to the startup ecosystem, because that is sort of the, that's like I said, the end game. Pot of the end of the rain, but right. If the public markets are not interested in tech companies and software companies, then what does that mean? Because there's nowhere for that money to go eventually. Now, on a long enough timeline, it doesn't matter. But that's essentially what we wanted to focus today.

Well, explain that, though, because I do think that there's, I don't know, like the machinery and the mechanics here are changing, right? Like, one of the things that was interesting about Uber, was that it, at least as far as I recall, wanted to stay private much longer than most startups had done before. So in some ways, the pattern had been disrupted. And the idea was stay private, like choose your own adventure, decide for yourself what you want to do. Opening yourself up to public scrutiny is actually a horrible experience. And VCs would actually rather keep you under their control. I don't mean that precisely. But in the sense where those

investors want to be able to have a greater sense of long-term influence rather than opening up the books and the kimono, so to speak, and allowing the public markets and public scrutiny to start to ask questions of your business that maybe you're not quite ready to answer to, or maybe there are regulations that would affect your business, or just parts of your business that are not ready for that kind of external pressure. So what's your take on that approach, that pattern, all that money kind of going into, I mean, in a way, the venture model has proven to be so successful that a lot of money that maybe used to be in the public market now has moved into venture, that the LPs are now actually asking the VCs to place the bets and take the risks because the

VCs were doing so well with that for many, many years, that suddenly a lot of those public funds are actually no longer available in the public markets in the same way. Well, so, right. What we have seen, and and smarter folks than I have said this many times, is that we've been in sort of in a low interest rate environment where it's hard to earn any sort of decent return on your money. Essentially what giant pulls of money needed was somewhere to go where they could sort of jump ahead of things.

So that like you're describing how Uber stayed private for, longer than was traditional. And that's been the case ever since Facebook, you know. So essentially what, when you see things like Andrewson Horowitz supposedly raising $9 billion in new capital, which, you know, the fact that any VC fund would have a billion dollars as sort of a metric for a new fund was insane even five years ago. what you're seeing is that giant pulls of money are trying to jump ahead of that, not waiting for companies to go public because by the time an Uber went public,

it had already, most of the growth was already baked in. And as we've seen with Uber stock, like essentially, if you wait for companies to go public, you're too late. The growth has already happened, more or less. Right. No, wait, wait. But I want to put a point on this. and help folks understand.

Like, what we're talking about, it seems is that people are obviously looking for returns and they're looking for outsized returns. And crypto obviously is a place where that is happening and has been happening. I'm going to give you a real quick example. Sure. Super, super quick. So I think, and you can double check me on this while I'm saying it. Like Uber went public at, what was it, a $60 or $70 billion valuation?

Yeah, I'll check. And it's sort of treaded water ever since then. I mean, it's been down a bit. Right. But, you know, it's not like, here's the 82. Wow, and it's got to be down from that one. It definitely is. So here's a, here's a comparison.

We've mentioned Shopify recently. I think Shopify went public. It might have been less than $5 billion. And it has now gone up or, well, at its high, it was like approaching $150 billion. So if you're an investor. It was actually a $1 billion. Really? Wow.

So there you go. Think about that. You could have 100xed if you had bought Shopify at the IPO. That's the sort of return that big pulls of money are looking for. You're not going to get it if you wait for an IPO. If you wait for as much as everyone wants to get in on Stripe, when Stripe goes public, it's going to go public at more than $100 billion. So most of the growth is going to be baked in there.

where you wanted to get your money in on a stripe was when it was valued at $10 billion. So essentially what's happened is the giant pools of money are like, listen, we can't wait in line for this to play out. We need to get in earlier. And it doesn't necessarily have to be getting in at the seed stage or the series A. If you get in on the series C or series D of a stripe, you can still get in at $30 billion, $50, billion so that when it goes public at $100 billion, you've, you know, three-xed or two-xed even your money. And that's better than just waiting for the IPO day. Okay. So all of this money is chasing these companies, hoping for that sort of Shopify 100x, 10x even is fine for people.

Now, what you had is you had companies like, I'm thinking of Asana, Data Dog, A lot of these software platform companies were essentially getting 90x. When you hear about PE ratios and things like that, or 150x or even 150 times sales and things like that, because these companies were growing, a lot of these software companies would go public, And you could still make your 5x or 9x or 10x. And so last year, you saw all of these companies coming to market. A lot of them with SPACs, which is a slightly different story where it's just like, well, even if these companies aren't good enough to do a traditional IPO, we can do a blank check company and we can get them on the public markets.

And if you're an early investor, that's your liquidity of it. If that is not happening, if this entire sector, if this entire profile of a startup is not being rewarded as richly by the public markets, then that means, A, a lot of these startups are not going to be able to go public in the near term. but then B, that will, the knock down effect of that is that where you would, you still to this day right now are seeing companies that are raising, I'm just, listen, 30 and 50 million dollar pre-seed rounds are not rare right now. The reason that you can raise that sort of evaluation before you even have a product, before you even have a minimum viable product, is because people are like,

well, this is a company that eventually one day we can take public at a $40 billion valuation because the public markets are going to value it that way. If that's not the case, then A, all of these companies are not going to be able to raise at those valuations. And B, all of this money that's being raised by venture capital is not going to be able to be deployed. It's going to be sitting there

as sort of unused capital that's looking for somewhere to go. So this could be something where a month from now will be like, oh, remember when the NASDAQ went into correction territory for a week, and it's silly and everything went back to rocketing. But if not, this is the first time that we're seeing things where the good times might be hitting a wall a little bit. Does that make sense? It does. I guess my question is, you know, given obviously, you know, putting your history hat on, are there times where things looked similar, where there was a similar type of, I don't know, you know, a rhyme, I suppose, to financial behavior? It feels, and maybe this is what people always feel like, but it feels like things are different. It feels like the internet now changes the nature of participating in the markets. the way in which, for example, people are trading stocks on Robin Hood or talking about their portfolios on the Reddit, like the amount of public information and the amount of, you know, frankly, people that are not too sophisticated, I include myself in that, who are putting money into these markets, you know, one, because they have it due to pandemic relief and being indoors and not spending money and travel and all those things. And then also just the general, I think, narrative around what investing in startups should offer in terms of returns creates this frothiness. that I suppose I just wonder if it's a higher revving engine that stays at this clip in a way that's just different than it used to be.

We also have, you know, interest rates and inflation happening at the same time. And so, and that could be, that could literally be the thing that's happening is that the markets are anticipating interest rate hikes. Right. Money becoming more expensive, basically. Exactly. And also then if, you know, you know, geez, I can remember when I had a, a savings account that would earn me 5% a year. And that was in 2005. So that's not, I mean, that's 15 years ago, but that's not, you know, ancient, ancient history. But so, you know, by the way, it was Just Works.

That's the company that delayed the IPO. It does, it does rhyme in history because one of the things is the SPAC thing that happened last year. these blank companies. I mean, like, unpack that a little bit, if you can. Like, what was the impact of, you know, the sort of market, right? Essentially, companies were able to reach public markets in a sort of unconventional way. It was like literally almost like a shell game where. But also, it was earlier because these were companies that maybe needed to wait another three or five years before they could do a traditional IPO.

because essentially what you have to do to do a traditional IPO is you've got to do a road show, you've got to get bankers and investment funds to, you essentially have to whine and dine investors. And SPACs sort of short-circuited that whole process. Because essentially what a SPAC was is that it was a stock, something that was trading on the public markets, that was like, hey, the reason they call it a blank check company is because we're going to go public and investors will give us this money and they're going to wait for us to tell them what company we're going to put this money into, as opposed to a company being like, here we are, here's our debut, and this is why you want to invest in us.

Well, it's sort of like without all the due diligence that goes into going public. Exactly. And so essentially it's like a wrapped asset where there's, I believe it's, what is it, one or two years where the money has to be deployed or the capital has to be used or some stuff happens, and I don't know exactly what happens there. But so you got a bunch of money. Return to investors, in theory, but that rarely happens. But the point is, is that this is where history rhymes, is there were a ton of companies

that either they should have waited another three or five years to do a traditional IPO, or they just weren't good enough. Either way, they're out on public markets right now. And that's why most SPACs are underwater is because, it was either too soon for most of them. They weren't mature enough as companies, or it was maybe they're not good enough. What was the purpose?

What was the rush to bring these companies to public market? Was it just financial innovation? Yeah. Yeah, no, financial innovation. The rush was all of a sudden you could do it. Right. Let's not be too cute about the fact that if you can get away with it. Okay.

I just want to make sure. That's exactly what. Okay. This is, I feel like Shemoth, um, yes, you know,

was sort of a big proponent of it. It was like this big financial idea. Let's get these companies to market faster. Like all this regulation in red tape, you know, isn't helpful or whatever. And now we're finding, this was great for the startup ecosystem in a way because,

and I know I said this on the show, there's a whole generation of startups that were able to reach public markets and get their liquidity events way sooner than anyone thought they could have. And so wait, like good for the startup ecosystem in what way? In the way that, well, the early investors get paid, the people behind the companies. Listen, when you, when you reach public markets, you're selling stock. And so that money that you're selling to... Yeah, it goes into the business.

It goes into the business. So let's say you're, and I'm not going to name any names because God forbid we actually shame anybody on this. But let's say that you're a company that is three to five years old, and maybe you should have waited until you were seven or eight years old and had more revenue under your belt or whatever to go public. But you could go public now. And by the way, you could stuff your coffers with $500 million, a billion dollars,

or whatever. So even... I'm going to pause you there because I think I understand what you're going and what you're saying, which is just a way for startups to get money faster. I actually saw a guest in our space, who I brought up as a speaker. Andrew, you want to come up? Andrew has been with us before. You might remember him from actually last year.

Andrew is the, I guess, the browser experience engineering lead, which is what your profile says. But you're at OnePassword. And the reason why I brought you up, Andrew, and I don't know to what degree you can speak to this. But I do think as we're talking about, you know, venture and investing and all that's going on, last year, part of our conversation about one password was the money that you guys had just raised. I think it was maybe $120 million or $100 million at that point. And one of the big questions, you know, we talked a lot about OnePassword 8 and, you know, the kind of evolution of moving over to an electron product, et cetera. But the reason why it's relevant to have you up now is because you guys have just raised another $620 million,

I believe. And that puts you guys in this territory of startups that we're talking about. However, unlike these SPACs and unlike sort of, you know, earlier to IPO type of situations, you guys have actually been out for a while. So we'd love to just hear from your perspective, you know, one, if you can, you know, what the market is kind of like and how the fundraising process has been for you guys, given that I feel like you guys were, you know, kind of quietly plugging away up in Canada for, you know, many years without really raising a lot of money. And now suddenly you guys are kind of like in the big leagues with the money that you've raised.

And Andrew, let me jump in real quick. And I'm going to, because this is an example, and this is, you know, you don't have to speak to this. But literally the series B was $100 million at a $2 billion valuation, and that was last July. And then one password just announced on the 19th, $620 million series C at a $6.8 billion valuation. So where did you develop all that value? Not to put you on the spot, but to put you on the spot. but to put you on the spot. I have been working at one password for almost five years now.

So I've actually been able to see it. It wasn't actually mentioned, but we actually raised our series A was 200 million, and that was in the number of 2019. Okay. So if you look at it, we've really actually raised almost a billion dollars. I mean,

all around. You've been accelerating in good time. Yeah. Yeah. $920.1 million in just under two years. years and three months, I guess. So yeah, that's definitely a heck of a time. We're particularly proud because this is the biggest raise of a Canadian company ever. That's right. Congratulations. $20 million. So that was kind of a, our founders, you know, they're very proud Canadians,

and they were super excited to be able to get that going. As for the money, business, and venture capital. I don't think I'm at a point where I can speak to that intelligently. I'm a software engineering manager. What I can say is, you know, we, but one of the reasons why one password, I think, is so, has such a high valuation is we're very late to the game, right? We've been around for over 15 years now, you know, profitable almost the, like the entire time. So these folks that are joining on in this investment round are really, you know, looking at a company that has already proven its profitability for over a decade and a half. And they are the right team of folks that would be able to propel us into an IPO stage. And I think that's what a lot of the

investment has been about is, you know, we're a small company that needs to grow and do a whole lot of things. You know, when I joined the company five years ago, we only have 50 employees. One of the founders was doing all of the payroll, all of the taxes, everything, right? It's not a, it's not easy to go from that to, you know, is this a company that can actually go IPO, right? You need a lot of, a lot of help to do that stuff on the finance side, on the legal side on all of that stuff. And you need, you need money to do all of those things. Yeah, exactly. That as well. So I think, you know, one of the, one of the reasons why I think we I would obviously say the 100 million at 2 billion was just an

hundred valuation that's why it grew so much in that short period of time but also we have been grown ourselves right we're over 600 employees now we are looking at one of the big things that we want to do is we want to you see all of the web authons the SSO providers you know you kind of But in a fantasy world, you would think, hey, now that Google does SSO, all I need is a Google account, I can use that everywhere. But in reality, that hasn't really worked out, right? So I think one password is well positioned to be the aggregator of all of your authentication methods across all of the places you need to use them, as well as things like identity and those kind of things. And what you're describing is sort of the argument that a bull would make for, and most venture capitalists and investors would make in software companies like one password,

which is to say that, well, you know, if software, if public markets are suddenly a little less enthusiastic about startups and software companies, that doesn't mean that the fundamentals are different. That essentially, when Mark Andreessen says software is eating the world, what he's also saying, aside from the fact that any company is now a tech company, is now a software company, he's also saying that software makes everything more efficient, that software companies and technology companies are, the fundamental value that they're bringing to the world is efficiency and unlocking efficiency and making things easier. and so that if you're willing to pay every month for one password to make your life on the internet more secure, there's a value there that has only recently been unlocked. If you see all of these, what's the other one, Bolt, you know, there's a whole bunch of like, checkout.com, there's a whole bunch of these companies that are involved in payments right now.

And it's like, well, wait, you're reinventing the credit card and things like that. But the point is, is that if you can make, and I think we've talked about this on the show, if software and innovation can increase sales for a commerce company by 15%, they're going to be willing to pay 7, 10% to that company that increases their sales, 15%. it's all about efficiency. So it's not like that these things and these valuations are, you know, just people throwing money willy-nilly. Like there is value being created here very rapidly and it's very real value. Let me actually, to build on that point, you know, as you were talking, Brian, I was thinking

about, and of course I've worked in identity and security for a long time. So I understand the value of those things. But I still am always shocked. and impressed, I suppose, by how little penetration, a lot of the technologies and techniques and practices that many of us in the tech world take for granted and think is widespread when in fact it's not. On our last tools show, Brian, you were sort of imploring our listeners to start using two-factor authentication,

for example. Whereas I've been using it for the last five or six years. It's just old hat at this point. You know, the idea of, you know, securing my metamask wallet or things like that are things that I just kind of like assume are necessary. But so few people, actually, one, have those experiences. Think about them on the daily basis. And you're talking about consumer. Yes.

A company like ACTA. Sure. Or, you know, think about securing things on the enterprise where you have. Oh, there's what I'm saying. So my point is actually that as software is eating the world, all the indigestion that comes from that in terms of fraud and lost passwords and account management and managing access to networks, you know, become so much more important that now everyone sort of has the need to harden their networks and make sure that their employees are not, you know,

reusing credentials and then stuff like that. And so whether it's, you know, one password or others or whether it is some of these checkout services, all those things, you know, one require a sales force to go out and sell into the enterprise or sell the consumers. They require so much support, so much care and feeding. I spend actually quite a good amount of time in the one-password forums, suggesting ideas or asking what's going on. And you look at these forums and they just explode with people having very basic rudimentary issues, whether it's, you know, obviously you lose the password, like you're very screwed. But nonetheless, the amount of investment that is needed to support the digital, you know, it's sort of like the 2D Metaverse is enormous.

And I think that that's where a lot of, you know, that investment has kind of gone. And so you just multiply that across all the conventional companies or people having still conventional experiences or using the same password in all these places. And it's still, it's, it seems like there's still so much growth to be had out there in the world. I would argue that there's endless growth still to be had. You know, if you believe in that Jeff Bezos always day one situation, I do think that in terms of living in the internet era and software eating the world, we're still in like the third or fourth inning of a nine-inning ballgame.

But I want to bring this back into this question about, I guess, the markets, because what I was hearing you say at the beginning of the show was that investment actually maybe is you know, starting to, I don't want to say like dry up, but sort of, you know, hitting some turbulence, let's say. In fact, it's not that it's drying up. Both things can be true at the same time and that's kind of the problem. If essentially the giant pools of money, so we're talking about hedge funds and Wall Street money and- Well, I just looked at so iconic, which is the firm that invested in One Password, has $83.5 billion in their family office. to deploy, right?

So that is one of ten, well, I don't want to say tens of thousands, but maybe hundreds or thousands of family offices and institutional LPs, limited partners, that have to deploy capital at that level. And so those are the big giant vats of money that you're talking about. Well, and I'm also talking about retirement funds. Yeah, exactly. So when I say both things can be true at the same time,

it's that all of this money, it's a great time to be a startup because, as people say on Twitter all the time, it's gotten to the point where it used to be that companies would go hat and hand to VCs and say, please give me money. The VCs now are going to companies and say,

this was the thing that was in Aaron's article, which was, you know, for those who are founders maybe are having this experience, not universally, but for those who have product market fit and some traction, now there's sort of a reverse selling process where the VCs are actually doing all this research on the companies before the call even happens and arriving, you know, more or less for the call with like check in hand, like, ready to go.

And so here's totally different. And maybe if you want, we can do like a really, really quick like education on how venture capital works. You know, I was going to say, like, you know, given your experience now with your fund, you actually are so much more close to this. So I would actually be interested here kind of like how that is for you, you know, from a maybe competitive perspective in terms of you getting into deals and what it's like for you to have those conversations.

And if it feels, I don't know, different than maybe it did even a few months ago or how your perception was. Well, you know, I'm going to not give you an answer you're going to like because I think you guys are going to think that I'm smoking my own supply here. But the podcast is such a competitive advantage for the podcast. ride home fund that I have not, no one has turned me down. Good for you. But let me, let me, okay.

Can I mean that? Please. Take that in the spirit it's intended, okay? Let me give you a real quick idea of how this works. There's a power law involved in venture investing. By power law, I mean that you're basically buying lottery tickets every venture capital fund is, if a traditional venture capital fund invests in, let's say, 30 companies, all they need is one or two of them to be big hits, and it returns the entire fund. So if you write 30 checks

and one of those checks becomes a unicorn or better, a decacorn or whatever, you're going to 3x to 10x your investor's money. All of those other companies, some of them can return their money, some can 3X or whatever. A lot of them will go bust or whatever. But you only need those one or two. Someone said on Twitter recently the other day that an entrepreneur has to be right 100% of the time and a VC only has to be right one out of 50 times. It's entirely true.

So essentially what you're seeing is that. you have these giant pools of money that are trying to flood the field of startups to get that one out of 30 that becomes a unicorn. And as we said, there's now 900 or something unicorns in the world. And so when we were talking about how it's bad if the public markets are suddenly not valuing startup companies as well. Because one of the things is that if you can get in on a seed or a series A round of a company that eventually goes public for, let's call it, $30 billion, you will have between 15 and 100 X your investment if you're at that early stage. It's complicated because there's dilution and things like that. But if all, and so one of the reasons why valuations for early stage companies have been going up and up and up and up is because you've been seeing these companies going public for $8 billion, $14 billion, $30 billion. It's not rare anymore.

And so essentially the money follows the example. If that is the universe that we're in where you can write a check for $100,000. thousand dollars to a company at a seed stage and five or six years later that one hundred thousand dollars becomes you know eight hundred million dollars right that's that's essentially that's the sort of money that we're talking about and so the problem is is it's great if you're if you are an entrepreneur right now you can basically people will throw money money at you. It's not going to be great for investors if everybody's getting money because not everybody's good. You can think of the sports analogy where in any, say, NBA draft year, right?

There's only so much talent out there. So if all of a sudden, all the NBA teams had 10 times the money to spend on recruits and things like that. That doesn't mean that the talent is also 10xed, right? So there does become a point where everybody's getting money, everybody's getting money at higher valuations, but that doesn't mean that everybody's idea is going to be. 10x better. Yeah, right, right.

Am I making sense or am I just rambling? No, you're making sense. I mean, it's sort of like just the dynamics of the marketplace, I guess. I think the other thing that might be important to point out or to think about is the way in which the valuation, at least as I understand it, now again, I'm not an expert in any sense, but it's calculated. Right. So when you say that a company has raised $10 million, but it's worth $100 million, you're essentially, you know, the simple math is just you 10x, whatever it is that, you know, the investment dollars are. and there's before money and post money, pre-money, et cetera. And that includes the investment or it doesn't.

But the other way in which a valuation is calculated is based on the sort of cost to acquire the revenue of that company in the future. And so that's very important. Future cash flows. Right. So you're essentially like, how much am I willing to pay at some multiple, you know, in today's dollars for future dollars down the road? And those future dollars... into this idea of SaaS companies because SaaS companies always had, software companies have always traditionally had way higher margins. When you hear about like, you know, Kroger or Walmart

having margins. Like super slim margins, right? One to three percent. It is not rare for a software company to have margins. And by margins, we're talking about literally profit. The money left over after you've spent everything on your expenses, etc. Between like 30 and even 70%. So the public markets, Wall Street, has valued that money greater than a Kroger at a 1% to 3% margin or even a Toyota. So let's talk about this too in a slightly sort of adjacent way, which is how SaaS companies, especially large SaaS companies, and of course, Microsoft was in the news, I believe today or about buying Activision Blizzard, where you're acquiring these other companies actually as a way of either acquiring customers or acquiring subscribers or growing your SaaS business by buying sort of an adjacent product that you want to expand into.

And so you're buying those customers, which are already subscribed, they're used to subscribing. And now either, you know, maybe before their combined subscription fees were, you know, $20 a month, but now combined, now they can actually get it for, $15 a month, and yet you've now increased, presuming there's not a lot of overlap in your customer base, the number of subscribers that you have at that $15 a month, you know, foundation. And you're using the term subscriber because this is something very important that has also happened in recent years that has changed things. When you hear things, I feel like we're doing sort of like an education show right now, but when you hear things like ARR, annual recurring revenue, okay?

So if we've already established that software companies traditionally have, better margins than other types of businesses. In the not too distant past, even companies that were software companies like a Microsoft, it was still, I'm going to create a software product, I'm going to shrink wrap it and put it in in a box and sell it to you,

and maybe you'll upgrade every few years or whatever. The idea that... Now we're talking about Rundles, right? Recurring revenue bundles. Software as a service means you are paying on a recurring. A-R-R-R-means, annual recurring revenue. You are paying a subscription. Every year you subscribe again, or you have your monthly revenue.

If you already had the revolution of software being a better business because it's a fatter-margin business, and now in the last few years you've had the revolution on top of that, where you regularize the customer paying you as opposed to normalize. Well, maybe I won't upgrade until they have new features that. No, no, no. You don't think about it. It's just a billing item that you do every single. I mean, in a way, like the fact that there are these little startups that have cropped up,

or at least that I see on product, they're about managing your subscriptions exist specifically because it has become so automatic. It is literally sort of like these set it and forget-it businesses. you know, as you're saying, right? So this conversion from, you know, buy my software once and then maybe I'll upgrade, maybe I won't, you know, maybe I'll wait a couple years, is exactly, I think you're right, right? So it's compounding. One is the margin upside of software businesses. And then, you know, because their cost of goods is so low. It's just labor, you know, producing new features, you know, through digital distribution, which is basically zero. Now you're moving to a world where we have

recurring subscriptions where the same person is buying the same product over. and over and over again to continue to have access to it. And now it starts to make sense why these companies are so valuable and so interesting. And I do want to bring up Peloton because, you know, today they had this disastrous, you know, result in the stock market. I have a tweet about this. And essentially, I think what it shows is the risk of having a high cost of goods where you have a physical product. I mean, hardware is always difficult. It's always hard. whether it's the supply chain or whether it's, you know, customer fickleness or whether it's just saturating your market, you know, how many times you're going to upgrade your exercise bike? Chris, we should say because I didn't talk about this today.

Essentially, Peloton announced today that they're going to shut down producing their actual bikes and treadmills for two months. My understanding is that they actually have too much supply. And even when they lowered the price of the bikes, they were still not able to sell them to people. because essentially perhaps all the people that were going to buy them during the pandemic bought them, and there really just aren't that many more people to sell them to. And interestingly, you know, they've tapped out their market, and now people are like, oh God, like, what do we do? Now, listen, and again, we're not investment professionals, we're not Wall Street professionals.

But one of the things about Peloton was always that it was this hybrid where they sold hardware, but it was also a subscription business. Microsoft was also that too, but Microsoft is moving actually away from hardware. But what I'm saying is that it's, you know, Peloton's getting killed today, but it's not that people are no longer subscribing to the biking classes, right? They're still making that money. What it is is that sort of the top of the funnel, as it were, which is getting people to buy the bike at the beginning of the process is not happening as much anymore.

So it's not that Peloton's going out of business. It's just that people, Wall Street, is scared that that beginning process of actually getting the bike inside your house is slowing down. Yeah, yeah. Okay, I brought up Jeremy Diamond, who does investor relations at a unicorn, and he thought he might be able to add some color to this conversation. Yeah, I mean, I thought about coming up a little bit earlier when you brought up. the, you know, just the ability to get into Cedar Series A deals and just seeing the absolute,

the absolute figures just ballooning over time. You mentioned, like, the one that pops to mind for me, because I worked, I did a lot of analysis on this one, is last year, UiPath, which you mentioned $30 billion. They did go public at about $30 billion. and the earliest investors, like the first fund, early bird ventures, that one deal 18xed their entire fund. Wow. And so let me, can I, can I, again, we're doing an education show right now. Okay, here's what that means.

Let's say that that fund raised a 10 million, which is a smallish fund, a 10 million dollar fund. So that returned all of their money. All of their other bets could have gone to Z. zero yeah yeah but that one bet that they made what did you say 18x the entire 10 million dollars if we're assuming that that is that yeah that is that is that is my understanding and for for bench parks like three x on an entire fund is thought of generally as like pretty darn good and like four X or five X you're like world beating yeah so continue um the the point being that um if if you can do that and and and and so then think of how the math works where if you're making 30 bets and one of them can return your fund

18 times. And then you live in a world where what if two or three of them do the same thing. That's essentially where the investment world has been at for the last 18 months or so, seeing these sort of companies go public. And then bringing the SPAC thing back into it, where even if your company wasn't quite ready, but all of a sudden you could reach those public markets and get that 18X earlier, and even if you weren't ready for it, it was just like, you know,

it was the best of all possible worlds. One of the ways I frame this is there's now, if you're a founder, there used to be like, quote unquote, like one path you'd start with angels, then you would graduate to the institutional VCs and then raise a few. rounds and eventually go public. Now it's like, hey, if you, if you're a, you know, a hot early

stage company, if you want to go straight to high network individuals, guess what? There's 11,000 family offices. There used to be like in the hundreds. If you want to do like a party round, you can do that or even crowd fund. If you want to go to, if you want to go to the institutional round, you can do that. If you want to go dedicated pre-seed fund or an accelerator, or if you're a teeny bit further along a seed fund, you can do that. There's even studios. And there's just like up here in Seattle Pioneer Square Lab used to coach people on like, hey, you're going to fly down to San Francisco on a Tuesday. They're going to meet with these funds in this order because this is optimizing your time here. And we know roughly in like what order they'll come back to you.

You could come back and you're going to go, you might go down the next week after to have some follow up meetings and then you'll get a term sheet. You don't need to do that anymore. you can basically have you can but like you can have the fundraise that you want i know you uh chris you posted the uh errin griffitt's article like hey you know we we launched the fund we lost the round on a friday it's closed by sunday yeah if you want that and and you are a business of like a particular type that is available to you if you want to like hype it up and do it like a crowdfunded that is that is that path is available to you and is now viable to at least like start funding your operations.

I'm not saying it's always going to be the optimal route even now, but it's there. Let me give you another tangible example, which, by the way, pioneer the boys that we did, the World Cup of Entrepreneurs with are tied into that. So friends of the show there. So Y Combinator, we talked about this on the show last week, made news with the fact that, they're now going to give you, it's complicated, but essentially a half a million dollars for any startup that enters one of their cohorts. Back in the day, back in the day, back in 2005, 2006, when when Y Combinators started

and like Reddit was one of the first companies. Airbnb and, right. The check that they would give you was $15,000, right? And so. And that's a different kind of inflation. The traditional for a seed stage, when you invest in a company at the seed stage, you want to get 7 to 15 to 20% of the company for that money. So think about when we talk about how things are inflating,

it used to be $15,000 you would give Y Combinator 7% of your equity. and now they will write you a check for half a million dollars. And again, it's complicated, so don't at me on this or whatever, but for the 7 to 10% of your equity that you're giving away. So that's what we're talking about in terms of this inflation. As a startup, you can do a lot more with a half a million dollars than you can with $15,000. And by the way, it's way easier and cheaper to start a company now than it was in 2005.

So, you know, I mean, like, you know, AWS, like, you have, like, the cloud, like, you know, you have Figma. There's all sorts of ways of actually building and launching software today that just didn't exist before. So it's a lot of, like, process design and so on. Chris, I'm curious, did you have any thoughts? Not that I'm suddenly not on this side of the table, but, you know, working with startups and things like that.

and also having been in this game, as long as I haven't been being around back in 2005. When you see things like Y Combinator doing stuff like that, there was controversy about that. Do you feel like, do you agree with the general sentiment that this is maybe one of the best times ever to be an entrepreneur to start a company? Like, it's just, it's really founder-friendly right now in terms of the money. Yeah. I guess if we're thinking specifically about the money, the fact that it's so abundant is great. I think in addition, the fact that there is so much more of kind of an understanding of, you know, the founder life and the founder journey and entrepreneurship, especially through, you know, tech, the fact that tech does touch so many people now in all these different ways and the fact that you can sort of, you know, generally allude to a Twitter or Facebook and say, oh, I want to go build something that, you know, gets scale and then sort of. serves everyone is no longer this crazy idea that very few people did and nobody really understood. It's like, you know, you can be a doctor, you can be a lawyer. That's how you make money. I think does create a very different set of conditions for people to be a founder. At the same time,

the fact that money is easier to come by doesn't mean that being a founder is any easier. Just like you said, like just because money is easier to come by, it doesn't mean, or, you know, you can get 10x as much money as before. It doesn't mean the ideas are 10x better. In a very similar way, it's just as hard as ever to recruit. It's hard to get attention. It's hard to break through. It's hard to differentiate. And all of those factors make it so that the money kind of isn't actually sufficient.

It's good. And it's certainly better than not being able to have access to it. But it doesn't solve all of your problems in any way whatsoever. I do think that VCs or other funds that provide more services and answer more of those questions or provide you with infrastructure, whether it's HR or whether it's, you know, some of the financial stuff that I think, I don't, I think Jeremy mentioned, is, or actually Andrew mentioned, is super useful to have, right? And as a founder, you want to have fewer decisions to make that are more impactful and important. And I think that that's, that's sort of the context or circumstance that, I don't know, we're, you know, we're seeing that's different now if that answers the question. In other words, like the color of the money is, I think, an interesting thing to consider.

And not all money is the same anymore. And look, let's just do away with any pretense. We are doing an education show. If you're a founder, what you're wanting to do is give away as little equity as possible. Right. So that we'll use my fund as an example. I'm going to write you a $100,000 check, and maybe you're going to vassion. value your company at $10 million when I do it.

So let's just use nice round things, right? And so let's say that you do a two on a 10, which is not realistic right now, whatever. Let's just say that. I've literally seen it in the past month. Yes. Okay, there you go. You've given away 20% of your equity for that first stage, right? when you hear me on the show or people use terms like seed and then series A and then B and then C or whatever.

Every time you do that, you're selling a percentage of your company is sort of Shark Tank style. So that in that first round, you've given away 20% of your equity. The early rounds are when you're giving away or not giving away. You're selling the vast majority of your equity. The idea is that when you finally go to that last. stage where you either get acquired or you go public. As a founder, you still want to retain ideally, and this doesn't always happen. Maybe it doesn't even happen most times.

You want to retain, I don't know, 15, 30 percent of the equity. If you're a Mark Zuckerberg, you still control the majority and things like that. So what we're essentially talking about and why this is good for entrepreneurs right now is that if you, if you, I, you know, there are $100 million seed rounds out there. There, I have seen and invested in 10, 20, 30 million dollar seed rounds. Essentially what that means is you're giving away less of your company. You as the founder, if it all works out, will be richer because you will maintain more of your equity. I mean, again, presuming, and I think this is the important sort of maybe caveat or context, which is that getting to that point, I think is actually

harder in some respects than it used to be. Like going from zero to one where you actually have product market fit, where people care about you, where you've somehow broken out and you're not just kind of like limping along and kind of, you know, sort of making you worry. Like I guess when you imagine that there are like two million apps, I believe that's what the count is, you know, in the app store, right? And you think about the audience for each of those. And you think about how little, I don't know, they're almost like fruit flies. Like they have so little time to kind of make the money that they're going to make before they get replaced by something else or kicked off the leaderboard or whatever or, you know, trounced by a mega, you know, a Snapchat or a Facebook or

whatever, that even though you get a lot more of that money at front to sort of like keep you going and and so on, it's still, it's a hard slog, I think, to break through and to ultimately get to that, what they call is, you know, the liquidity event where you get paid back for all the sort of, you know, money that you took along the way and all the equity that you held on to, et cetera. Does that make sense? Maybe it's because I'm too close to the product hunt ecosystem, and I see so many startups and founders come through that are actually quite brilliant and doing amazing things

and creating good stuff. And, man, they have a heck of a time getting those first five, 10, 50, 100 customers and then keeping that. Right. Now, here's the thing. And I'm not arguing either way, but that's the moment that we're at right now. Is it easier to be successful? Well, how do you define success?

Exactly. But the point is that from the money side of it, when you punch the numbers into the calculator, if it's even 30% easier for the bets you make to be successful companies in the end, that is multiples of return on the money that people invest, right? and if the end of the road, as opposed to five, ten years ago, a successful IPO is a $4 billion IPO. If now a successful IPO is a $40 billion IPO. But I feel like we're not talking about the right end value, which is the number of competitive startups that are out there.

Yes. So how large is the batch size in Wycombinator and then multiply that across all the other accelerators and all the other programs that exist to help startups and founders get off the ground. This is the bullish argument. Because people at Y Combinator are not dumb. In the industry, there's a term for, let's just

write a check to everybody. It's called spray and prey. Which is basically if you're in a bull market and it is even 30% easier for companies to be successful, if it is instead of $4 billion being the possible outcome, it's $40 billion,

then even that tiny amount of it being easier for companies to be successful means your money is better, or your chance of making money is significantly better. The bull argument would be that why Combinator is seeing that it makes sense for them to spray and prey, which they would never use that term. But the more companies that they can invest in, again, it's simple math. I hear what you're saying.

I mean, essentially, if you take more swings at bat, and you're going to hit more home runs. And especially if you have, let's see, a pipeline, you know, like Wycombinator does, a lot of the stuff coming. I mean, the fact that they are more exclusive, at least as far as I know, at admissions than Harvard or other, you know, major universities speaks to the number of founders that they actually turn away. So the people that they bring into their program have to be, you know, special in some way. and they're more likely, you know, if you have a sweet shot, you know, sorry, I'm thinking about like a pitch that's like right down the center, you know, big juicy kind of like lobbed ball. Like you're going to be able to hit a home run more often than not. And if those are the swings that Wycombinator is able to take because of their pipeline, then yes, then I agree with you. Then they would want to put more money out there into more companies because it's just going to work out better for them.

I think one thing that is interesting about this from just an analysis of the marketplace perspective is to look at the, the number of people who are founders who are going into VC or becoming venture capitalists. And then to look at the number of venture capitalists that are going back out there into the world and becoming founders again and driving that journey. And if you actually have kind of, you know, sort of DC style like revolving doors, that may actually be a good sign because that means that there's excitement on both sides and the way that you get rich is by being on either end of the spectrum. It's not just being the VC deploying capital and then having all your bets work out and getting

paid because that isn't one the way that VC is actually set up, given that yet the VCs have to pay their LPs and, you know, they have to essentially put money back into the big vats of money that they took the money from in the first place. So it's a little bit different than if you're a founder and you're able to see the future coming and you go and you build a company because you've seen a lot of other people trying to build stuff and you're like, actually, I can do this better and I have the relationships to go raise money and then you're going to go make money that way and get paid before everybody else. And then that actually works out for you. So that I think is also a very important signal to be observing. And I certainly have noticed a lot of those hashtag

some personal news posts where people are actually going back and forth. Well, no, 100%. And listen, this is a sensitive area because I'm one of those assholes that all of a sudden, you know, started investing again with the actual friends. But, but you, Chris, I know you know this because we've both seen it personally, which is the fact that everybody that is what people call an operator these days, people that are running startups, working in startups, you can be the CTO at a startup or whatever, and you're still running around cutting angel checks to this one and that one and the other. Like, I, I, that's happened in the last five years where everybody is playing those sides

of the table. Yeah, yeah, that's true. That's a good point. I wanted to bring up Naraj, who had a question or a comment from before, but also something about kind of like the, I guess, the founder-investor experience. Naraj, you want to ask? Hey, thanks for bringing me up to stage and allowing to ask my question. My comment was most around Peloton earlier, how comparing them with HP printers in the parlons that if people stopped buying printers, then the whole model that they have with high-margin cartridges actually goes away.

So yes, there is still some margin because people will still continue to buy cartridges, but Palaton is probably kind of realizing not enough people to buy those expensive machines. Well, the funny thing was with HP printers was that they gave away the printer so often as like a lost leader, right? So Dell would kind of just throw in a printer for you, and then HP, of course, would recoup the cost through a subscription to print. Whereas Peloton, although they make a lot of money through their, you know, the rundle, their subscription, the bike itself is so costly as an upfront expense that that actually is, or at least I would imagine, is a very important part of their business model. Similar to Apple, although, of course, now what you spend on Apple services has gone up,

but you buy this very expensive computer or phone or watch, and then you get the services in addition. So it feels like, and I think it's a very apt point, that the economics of Peloton is actually pretty tough because the barrier to getting someone into their substrifice. subscription service could be the price of a bike, you know, which is like $1,500 versus the price of Apple Fitness, which offers a more or less comparable fitness experience without a bike is much more affordable for at least Apple users. And I think, you know, I don't know if Google Fit has their own fitness service or something, but there are other competitors that are out there that are, I think, much more cost-effective.

So I think that's where Peloton minds their challenge. Believe me, the amount of startups out there that are Peloton, but without anything. Yes, without the physical. Right, where you don't have to pay for hardware up front. You don't have to pay. But you know what? Speaking of what's happened in the stock market recently,

you know who the number one, well, what term am I trying to use? But when we talk about buy now, pay later, affirm, a firm's number one thing was Peloton, right? Right. A firm is one of those. Oh, that's very interesting. One of those companies that had been until about a month ago, at the top of the all-time high list or whatever. So if a Peloton goes down, the number one thing on that a firm is.

It takes out a firm too. Exactly. Exactly. Wow. Naraj, you also had a question, I think, about the sort of entrepreneurial founder journey. Yeah. So I'm a founder of a company called Savings Oak. We are building an retirement savings platform for us, our targeted.

small, medium businesses, employers as well as employees. My question is very specific since we talked about how fratty the market is, how much money is available, how easy it is, how fun-friendly it is, and yet, you know, going through the fundraising, we're reading our pre-seed round. What I wanted to learn from you all, from your expertise and from everything that you deal with is what are some signals to watch out for an entrepreneur from a standpoint of that a fund or an investor is going to be keeping you on the books because they're not sure where you actually fit, or they said that, yeah, we are actually seed, but we need these external

metrics of whether sales or this data or whatever, at what point of time an entrepreneur should look at something like this and say, hmm, I'm actually just spending my cycles right now. This ain't going to happen anytime soon. Let me focus my energy on where I will actually have a faster uptake or at least get a no, even for that matter, so that I can move on, continue doing the fundraising. Chris, you're expecting me to answer this one, right? Go for it. I mean, from the investor perspective, sure. Well, but also, have you ever raised money, Chris, for a venture?

Yeah. The company that I took through Y Combinator, which was... Exactly. Yep. So we can speak to both of these things. I would say that at this point, especially right now in time, if you're raising money and you're getting the runaround from... from people that those are probably not people that you want to work with.

It's one of the, it's one of the, that's very glib to say because, oh, everybody's throwing money at everything right now. But like, there's a term that is thrown around a lot in investment circles, which is conviction. Like, if people don't have conviction to even give you an answer as to whether or not they want to work with you, then what do you imagine that the next three, five, five? eight years of working with that person will be like. Total ambivalence.

Yeah. So I would say that, yeah, this is not to say that every investor is going to give you a yes right away. You know, you have to do due diligence. You have to think things through. And especially at big firms, like, there's actual, it's decision-making by committee. You know, there's not one person that can sign off on an investment. So it can take time. But I would say that if you're a founder and you feel like you're getting the runaround,

that's maybe the worst signal that you could get because you want to have a relationship with somebody for many years. And if they're not even convicted to give you an answer yes or no of jumping on board with you, then I don't know. Yeah, I mean, I think the way that you kind of want to think about it is, I mean, to Brian's point, yes, conviction is important, but also sort of like understanding and enthusiasm, wanting to bring something to the game more or less. And the way that you also want to approach it is to have some kind of leverage, you know, whether it's, you know, additional interest or having traction. I think traction is probably the best or most important element of being able to either say no to some investors, right? to say, actually, you know, I really appreciate the time and this is really great, but in terms

of where we're going, you know, we actually know that we can keep going, but we want to have the right fit with the people that we're working with. And knowing your worth and knowing your value is incredibly important. And traction is one way to validate that. I think against, you know, someone saying, you know, I'll put in some money, but I'm really, I'm just not sure, you know, get back to us next month or something. It's like, you really want, if you can, of course, and finding product market fit is very, very hard to be having people come to you. because they see or hear about what you're doing sort of organically.

And some of the worst nightmare stories that you hear about, if you're in this game long enough, are those stories of we had bad investors. And the company didn't work out because, geez, these guys and gals were just sort of lukewarm, didn't return any emails or whatever. They just wanted to get their check in then there was nothing else. There was no relationship beyond that.

Like that can, when you hear about companies that die because of that, it's kind of the most heartbreaking. It's hard enough to make a company. It's hard enough to make a product that people want. And if a company dies because the money folks on that end of it, kill it, that's really the most depressing thing, really. Yeah. It's so hard. because you are the captain of a ship, and you've got to get everybody rowing in the same direction, you know, from whether it's co-founders or whether it's employees, but it's also your investors. They have to know where you're more or less heading.

They have to be willing to support you. You have to be willing to have open and frank conversations with them, at least, you know, in terms of my value system. And like, they should want you to succeed by kind of, you know, knowing what you're going through and supporting you. So if they're jerking you along, like that to me is pretty disrespectful and it's wasting your energy. It's wasting your attention. And so, you know, if they're using you as a pawn to like hurt other investors, like that's obviously super shady and not cool. But generally speaking, like, why would as an investor you do that, right? I mean, the whole VC model, at least as it tends to be in Silicon Valley and I think elsewhere, is it's built on a number of relationships because you're going to have several goarounds with several founders.

at least you would hope so. So for Brian, right, and I've done some angel investing, if somebody's company fails for any number of reasons, could be market conditions, could just be wrong tech, could be wrong co-founders, whatever, you may still want to actually go on and follow on and invest in their next venture. So you want to be building up a relationship over time,

and I think it's super important for founders to be actually quite conservative, as much as they can be, to not just take whatever money is lying around and to get to a place where, you know, you have some, well, primarily you have conviction about what you're doing based on the adoption of the product that you're actually putting out there, and then you want to bring people along to co-invest alongside all the investments that you're going to be doing. Well, and more importantly than that conviction in you, because, you know, there's famously

those mythical pivots where audio becomes Twitter or some dumb video game becomes Slack, you know. Game never ending. The best investors are the ones where, when, and biz or whoever it was goes to the investors and says, we're going to give your money back. They say, no, no, no, we don't want it. Go do something else.

Exactly. Yes. I brought up RJ. RJ, I believe, has just either finished or gone through his own fundraising experience. And so, RJ, why don't you first introduce yourself? Tell us a little bit about what you're working on, which I think is super cool. And then, you know, feel free to share. Yeah, sure.

So first things first. I'm RJ at Ruggles. I am the CEO and founder of Homer, which is. the world's first Discord Community Management Agency. That's the fun little tagline I like to use, but we actually do... Wait, wait, I want to unpack that because I was having a thought earlier back when I was talking about how not everyone is on two-factor authentication yet, and I was hanging out on Discord today, and, you know, I hit my 200 server limit at some point a couple months ago, and I was thinking

about how there is so much activity going on on Discord that, like so few people on the planet actually have any knowledge of or any awareness of. It's sort of like this underground, you know, it's like sort of ants. Like ants maybe have these crazy disco parties or something, like in their holes, hills, whatever, that you never know about. And yet it's going on. And I felt the same way about Discord. I was like, here I am.

There's all the point being that. So I met RG actually at an NFT Bay Area meetup. And what he's doing is he's building, let me, let me see if I get this right. Like, it's a Discord talent agency or, or, I. I just forgot. Tell me again. What we're doing is basically building the software layer on top of Discord to make it not only a more functional platform, but to allow organizations to gain true value out of it by providing software solutions. So you can blend operations, talent management, insights, and building on the platform a lot more efficiently.

So it's sort of like, I'm going to totally butcher this, but I'm trying to make this accessible to a broader audience. but turning Discord into kind of like, what's the Microsoft Metaverse thing they have? A Minecraft. It's sort of like turning Discord into a Minecraft where you can build shit and like have people show up and now I'm not really ruining it for everyone. No, no, I think that's a very fair comparison.

Essentially, basically allowing Discord to operate in a much more effective manner where people are able to utilize it to have their own small communities. I think I use the Minecraft analogy because it sort of allows you to understand, that here is these primitives, which are, you know, it's more or less like Slack, but you want to add more stuff to it, whether it's bots or whether it's member management or whether it's roles. And so you're providing the software that'll essentially allow you to do

that. 100%. We actually are going to be releasing one of our first product features here in about two weeks. I'm super excited about it. You need a product hunter? I, I'm excited to DM you about that. We'll talk about it later. Do you need a seed investor? Oh, shit. Well, okay.

Yeah, where are you at, where are you at, OJ? We are in the middle of our pre-seed. We have our leads. The vast majority of it's been raised. We're now only focused on angels. So just putting that out there. But with that said, so, okay, you got my mind raising, Chris. I got to go one by one.

Sorry. So first things first. I want to touch on something that you guys talked about in a second, then I'll come back to the fun stuff. So one thing I wanted to call out, Brian, and I also want to say this to Chris, that it's really important to mention as you talked about how easy it is to raise.

It's easy for white men. Yep. I was just going to point that out, actually. If we look at the numbers, 2020, we raised $170 billion, and only 0.6% went to black founders. That's horrible. In the first half of this year, we raised almost double that, and 1.6% went to black founders, just as give you some numbers. And I believe that female founders are 2%. Chris didn't use somebody.

Yeah, yeah. Yeah, I, you can't tell him the numbers guy. And so I think it's important for us to call it, to pay attention to that. If you're a white cis male, thank you for calling that out. If you're anything else, it's a lot more difficult. But with that said, I do think it is important to recognize that, you know, those numbers might be small, but that's still almost a billion dollars in VC that was raised by Black Founders on the first half of 2021, which is the very first time this ever happened in history.

So that's a really, you know, we've got to celebrate the small wins, right? Yep, yep. So I just wanted to call that out really quick. But moving on to the more fun topics. So I love that you use the Minecraft analogy, Chris, because the thing that people don't get about Discord, and this actually relates to why their NFT teams that Jason did wasn't so received, is the internet niche fandoms all have lived and existed and grown

and thrived on Discord since its inception. Yeah. Hurries, anime, comics, gamers. All of those communities that basically run the internet, let's be honest. You know, the joke is that furries run the internet. I did not know that, but okay. Yeah, the inside joke. What is the percentage raised by furries?

I might. I'm not going to make a joke about me being the first. So I think it's important to recognize that, like, that is what Discord has been for a while. And now people are desiring to have the tools. necessary for them to build in the ways that make sense for the communities, right? So we have bots that allow you to build entire text-based games for people who are super into, like, D&D and tabletops. You have a ton of bots that have the ability to search and immediately provide you with, like,

various anime pictures and things of that nature. You can do Pokemon games, scavenger hunts, all of this built on software that's just sitting on top of Discord. And that's something that Slack really can't offer. You know, they're primarily focused on enterprise. Their pricing model is completely prohibitive, especially to early stage startups. And so that's just something I think is really cool about it, which is part of the reason I'm so fascinated by it. RJ, RJ, I'm curious, because you're, to the degree that you can talk about this,

what has your pre-seed and seed fundraising experience been right now in 2021, 2020? too. Has it been not easy is not the word I'm looking for, but what's it been like for you right now? I guess I'll put it this way, maybe this gives you the picture. My team and I had been working in the background on this for a number

of months, and we finally went public about what I was doing in September of 2021. I put out two tweets that day. Well, I'll go one Twitter thread and I replied to a single tweet from Tiffany from Islands, who she has a podcast with Alexa Zahani. about community management. In the span of three hours, we were completely booked on consultations.

Our wait list hit 100. And I had three different investors who, two of them were like, where do I sign, and then one who ended up being our lead. And that's from essentially two tweets. And we just passed 20,000 MRR two days ago, and we've been in business essentially four months. If you can see in the room, there's a bunch of 100s popping up in. We both want to say that too. Congratulations. Let me ask you one more factor on this. Geography.

Are you Silicon Valley based or can you now raise money from anywhere? What is your experience with regards to that? Yeah. I definitely, and Chris will probably is giggling because he knows a little bit of my background. I have a very non-traditional entry into this space. I was a sex worker and a makeup artist for a number of years, and then in 2019, I decided to start my first startup, which I ended up bootstrapping myself 100% while living in Columbus, Ohio.

We got it to 53K, our first year, and then I continue to scale it, and I actually turned it into a community-operated model. I don't run the day-to-day. I do probably about it two hours of work on it per week, and community members of our audience actually run our social media, our marketing, our Shopify, what have you, which is pretty cool. That's something else that was in that, whose article was it, Chris, from the New York Times,

the one about the craziness. Oh, Aaron? Yeah, Aaron, Aaron's article about how it used to be you had to go to Sand Hill Road. You had to literally, I think it was Kleiner. The old saw was his Kleiner. wouldn't invest in you if they couldn't bike to your offices. So the idea now that you don't have to be on a coast, you don't have to be on a big city. Like that's something else that is, is changing the landscape. And so if there's money flooding in and the money is also willing to

go anywhere and hopefully go to anybody now increasingly, like that's, something that has changed the landscape entirely too, is that Sand Hill Road does not exist as an actual... Well, actually, I mean, and this sort of circles back to RJ's point, which he, I think, made very importantly, which we had not talked about in terms of diversity and inclusion. Like, the opportunities, you know, the growth, like, the internet is so... How do I put this? Maybe vastly inclusive.

Infinitely large. Very large. Yes. It's very large, inclusive in the sense that anybody can sort of get onto the internet. But once you get onto the internet, it can be very hard to find your people because the money has not gone to the plurality and diversity of the people that exist. And so if you are looking for growth, you would want to put your money into projects that are supporting the plurality of people that exist. And so that means going outside of the sort of white hegemonic place that is called Sand Hill Road. Well, and even, take it even further, I think what's really important to recognize, too, is, you know, I ended up moving to from Columbus, my hometown to San Francisco in February of last year with my husband.

Don't move in a pandemic, by the way. And it's been a wild experience. I live in Emeryville, so I'm like right across the bay. Oh, you're like down the road for me. Oh, my gosh. We got to get coffee. Anyways. I love living here.

It is incredible. And especially coming from the Midwest, it's made me realize how many people. people in the West Coast are completely, like, completely unaware of how privileged their life is. Art is incredible. Wow. For someone who lives in San Francisco, it's like, but compared to everywhere else, totally. I mean, I was in Pittsburgh and the buses were not so great. Pennsylvania, that is.

And that's just one example of many. Like, I can walk out my door and go to a dispensary. I can walk out my door and go to Trader Joe's. I can pick up healthy. And you won't get arrested in either place, possibly. Yes, exactly. I won't get arrested and I'm not worried, you know, in a queer, interracial, polyamorous relationship. I'm not worried about, you know, getting chased down the street.

And if I go outside of my city, you know, and that's a privilege to have, which is really nice. But it is really eye-opening because as I've been in this space and have met with various people who are from organizations that I never imagined I would have met, or various investors, individuals that I've been able to connect with, it's helped accelerate my growth. So I definitely think there is benefits to, there is a certain benefit to being in these spaces. But I think COVID kind of was the catalyst towards people realizing that proximity isn't all that matters. It's about intelligence. It's about ability. It's about ambition.

It's about drive. It's about capability. It's about so many other factors. And if we look outside of San Francisco, Miami, New York, and we look at Columbus, Ohio, Memphis, Tennessee, see, Austin, Texas, these areas where people lack the options that they see on the coast, and as a result, start to innovate and come up with incredible ideas of how they can improve the areas around them and the people around them. We have millions of unicorns waiting to be born in the middle of this country is basically my point.

And it's exciting to see that starting to take hold and take place. One of my favorite examples is Overlooked VC, which is a, run by Brandon and Janine, they're a VC firm based out of Columbus. I was so excited to see it because up until last year, the only one that existed was Rev 3, and they only invest in organizations

based in Columbus, which isn't to say that's a bad thing, but that's just very limiting. And so it's exciting to see these other areas that have been so ignored for so long to finally get that attention. So, I mean, where do you think you're ultimately going to be, you know, based or like as you said on the one hand like location doesn't really matter quite as much as anymore

people are starting and choosing to work in lots of different areas and places clearly you came out to the west coast do you think you'll stay you know now that you're in the process of you know fundraising and i i definitely see myself staying here one because i love it i just absolutely love living here um but the other reason is is that at the end of the day i do eventually imagine myself transitioning it to be an LP, and I really want to improve San Francisco. I was just going to ask that question. But I want to improve San Francisco as a city. You know, I don't like that I look out my door and I see people literally starving on the street.

It's terrifying to think that one of the wealthiest cities in the country could have that happening at such a large scale, especially given the amount of wealth that sits here. And so if I can take the privileges that are human to me, you know, turn home room into a, a unicorn, which I know I will. I just know it. But, and then take that money and then be able to do good with it, that that's going to make me really happy. And so I think I want to be here for a long time. But I think it's important to mention that you don't have to be here. And that's what we're talking about when we said a minute ago, Chris, that like, you know, people are, the operators are also the angels and the investors. And listen, how many checks have we written now?

nine checks, and I've met in person only one of the founders that we've invested in. I was on a call today with founders in Poland. Wow. You know, so it is another thing that has completely changed is that I do think the idea of it being geographically based was also one of those things where it was one of the things holding back inclusivity was the idea that, well, I need to sit down with you in person and you're someone that runs in the same circles that I do. And like that that's completely out the way.

Well, not as much as it should be, but that is going out the window right now, I think. I want to call out something really quick. I'm sure probably everyone here at some point has used loom by now. I am a firm believer and I'm really hoping. I'm going to talk to Vinier soon and see if he's maybe there's a way to run a study on this. I would really love to know how much money has been raised because. of LUM as a platform. LUMM is the reason I got my job with LOLITA TOW.

LUM is the reason that I was able to land pretty much all of our clients because we have a LUM video on our website. LUM is the way that I was able to raise from one of the institutional VCs that we have now on our-R-J, RJ, do our tools thing and explain what L-L-L-UM is and how you've used it. Yes, absolutely. So for those who've never heard of it, you can check them out. It's just at L-O-O-W-S-A. OOM, but essentially it is an application that allows you to record your screen and your webcam and instantly upload it to the cloud.

And it also works on desktop and mobile. So one of the things that's really powerful about it is one is a perfect asynchronous tool. So my team is actually completely across the globe. My EA, she's in the Philippines. My ops manager is in Austin, our podcast editor and producer. He's in the UK. So we're all over the place. And actually one of our biggest clients is in Hong Kong.

So, like, it's wild. And so Loom is amazing because rather than me having to give these long text explanations or sitting for 30 minutes in a meeting at midnight because that's the only time I can meet with them in Hong Kong, instead I can pop open Loom, record my screen, talk through what I'm talking about. I can have my notes up in Notion. I can have a bullet, you know, a bullet. I can do a presentation, whatever that looks like, provide full context. And once I send it, there's an automatic transcript of my entire text, which is really awesome.

for accessibility. There is the ability for me to trim and edit the video in the cloud. And then I can copy the link, I can share it in a Gmail or an email, I can share it on Twitter, I can share it on Instagram, and anyone clicks they can instantly watch it. It's an incredible tool.

And it sounds like a small thing, but if you're raising money and you have to take 30, 50, 90 meetings, essentially what you're doing is running people through your deck. You're essentially giving a presentation every time, right? So instead of doing that.

It's even more, I think, profound than that. And I don't want to oversell, but I don't want to undersell either. Where the model for this whole, it's sort of like a type of dating, you know, where, you know, the marketplace is people who have ideas that want to be funded. And then there's sort of like a few attractive people that, you know, have the money. And of course, that's what you're going after. And so you'd sort of play this dance where you'd have different versions of your deck and different things that you might show or say and, you know, reveal.

some of your trauma, but not all your trauma. Okay, I'm like getting too personal now. But like the idea being that you would sort of hold more of that process more tightly because there were such a small number of, you know, candidates to, I guess, try to, you know, get that money from. And so now, whether it's Lume or other tools that allow you to record visual motion content and explain what you're actually building and just show people. And the fact that the technology works in the browser, works on your phone, works, like cross-platform, the fact that video technology has come as far as it has, the fact that people are now not offended by you sending them a link to go look at something, changes the whole dynamic and the speed with which capital can be deployed based on seeing even like a Figma demo, demo, for example, that is actually recorded in Loom. So it's sort of like a walk-through experience. And what used to be these very formal kind of webinar experiences that you'd pre-register for and many businesses still do them and it's lots of pomp and circumstances. and nonsense. You can create casual, like, conversational videos that you can literally, that are, like,

disposable. I think, you know, in some ways, like Snapchat kind of set that model by saying, these things that we create don't have to be precious. You can just create them, throw them away after they're done. And you can really, you know, communicate something very, very important about where you're at. So I think it's a very, actually useful point for founders that are, like, overthinking, making this perfect deck when really you might just show them, you know, like a walkthrough of your product. To bounce off of that, Chris, the other thing, too, is a lot of early-stage startups are leveraging Looms SDK.

You know, now you can take it and embed it in your application, which is even crazier to imagine that, you know, asynchronous tools that people are building or podcast editing tools. There's so many various project management tools. Like, there's so many applications for that ability, which I think is a new tools episode last time. I was not. So I need to go back and listen to that.

We'll bring you back on for maybe the founder's tools guide. That actually could be pretty good. Oh, please. Yeah. Okay. Well, we'll book like that and think about that. With my team and advisors, I have a visual head. So like if I see a tool, I'll associate it with something and just remember it.

So the joke is like our advisors and my team, they'll like come up with a problem. Like, oh, I know a tool for that. And just like immediately have it. It sounds like me and Brian, honestly. All right. we're going to wrap soon. I did. I brought up Christopher. What would you like to say? Whoops, sorry. Only second time on space as I was in Clubhouse before. So excuse my figuring out the mutes and stuff. So this is a really interesting topic, the dissemination of geography in venture.

And I kind of come almost from the opposite direction. First of all, I'm not a venture investor. I'm an angel investor. but I've created a platform, in fact, one of the founders I see in here, Boyday. But I am very geofocused on Chicago. And I'm having a bit of an existential crisis now, because what does it mean to be a Chicago startup now? So this is actually a really interesting. If you're, like, wrapping up, then I don't want to. Please, go ahead. Go ahead.

Okay, well, so the goal that I've had with lofty ventures, which is the platform that I've created to support our 67 companies and 121 founders, 93% of those startups are in Chicago. And the way I define that is at least one of the founders currently lives in Chicago. And it's becoming much more fluid because of COVID. And that's good and that's bad. And let me give you a small, like I'm probably a new. more of the edge case. But why it's bad is part of why I'm doing this, and I'm very focused on Chicago, is because I love Chicago and I'm trying to help the city in an economic impact, right? So if we can support at the earliest stage great founders like Boya Day, we can help him get to

amazing exits. He then takes that capital that he's creative for himself, that generational wealth, and then starts to fund other founders that are in Chicago, we can build more jobs, we can create, like, we can solve a lot of the problems that exist in Chicago and exist in other parts. But I don't know how to do that now. So, you know, there's good, there's good and bad for Chicago. It probably nets out bad, I would say, in the negative side, because the weather sucks here. We're having more problems with crime and like our fiscal slash, you know, like, so I think more people are going to leave Chicago than come. But it's good for Chicago founders because now they can hire people, they can hire people all over the place.

So anyway, it's just an interesting, like, wrinkle in this whole thing. And I totally agree. Like, it's very interesting what's how COVID is evolving the world. We were already moving this direction anyway. Yeah. But, but it's, you know, it's accelerated to the end degree. So anyway, that was part of what I wanted to say. No, but I think like one of the other things that's actually very, like, interesting and challenging about what you're bringing up, you know, is two fault, right?

What will determine what makes places great? you know if people don't need to sort of live up like in a place and put down roots and stay there either through generations or even through their own lifetime because they can just flit around to whatever is giving them the best tax break or happens to have a nice you know quasi Airbnb set up or something and they can just like move around into these private enclaves then the kind of connective tissue of cities and urban environments or even towns and wherever will continue to sort of be neglected because that common. currency, that common bond that used to be created by the need to stay physically located in a place or just the lack of mobility, because we didn't have internet and digital communication technology as widely distributed, makes it even harder. It's interesting, I suppose, to even consider what's going on now with the infrastructure bill around high-speed broadband being brought to more and more places. Will that actually encourage people to stay put? Or will that actually take the best talent from those places and connect them to the urban centers, which will then draw that

talent out of those places. And so they'll be left even more, you know, derelict than they were before, even though now they have, you know, fiber, for example. These are big unknown questions. So it'll be curious to see if there is sort of a drain in Chicago or other places for some period of time, if that'll also create kind of preconditions for people to realize that actually the cost of living maybe go down. And then there's an opportunity to get involved in those communities and to build them up. And I guess I'm specifically thinking about my friend Alex Hillman in Philadelphia who started the co-working, you know, in the early days of the co-working movement, he was so instrumental in, one, sort of putting roots down in Philadelphia, building up his community,

inviting lots of people to sort of understand aspects of what was happening in Silicon Valley, but putting it through the lens of, you know, the Midwest. And he built up an amazingly resilient and vibrant community there that I think persists to the stay and probably has a lot more capital going through it and so on. So I think it is possible, but you almost have to have kind of a clearing out, you know, to allow for maybe some new ideas and new opportunities and people to, you know, start to invest in those ecosystems. But I think, you know, the problem that you raise is a very interesting one where I don't know if you'd want to, I mean, I suppose you could attach any of the funding that you're providing to staying or maintaining.

some amount of presence in a place. I know some cities do that, and it kind of like ends up with these, I don't know, drive-by, you know, sort of citizens that stay for whatever the minimum number of days of the year is, and then they just live in Montana the rest of the time or whatever. Actually, I think Montana is where they do that. But anyways, I take a point. Yeah, that's, so there's actually, it's like something related to this. There's this thing in Illinois called the QNBV, which is a qualified new business venture tax credit. Okay. And like this topic has just come up on a Twitter thread like last week.

Like they require in order for an angel investors to get this tax credit, which is actually very significant. If you get, if it's a qualified company, an angel investor will get 25% of whatever they invest in that company credited on their income tax by Illinois. That is massive. So if I write like a $100,000 check, $25,000 of my income, income tax for Illinois is wiped out. That's insane. It is. The problem, though, is that they require 51% of the employees to be in that state over the next three years. So you understand why they're giving you such a, you know, a great discount, so to speak.

Right. But like, is this a good, like, in good faith now, like should I be advised? Because I'm a first check investor, right? So should I be advising my founders now to not do that? Because it could create like, are they doing it? I guess like the question then is on both sides, right? Like, yes, the money, the monetary discount is nice. But it may not be sufficient in terms of making sure that there's enough infrastructure being put in place to support startups, where there's enough talent being generated out of the school system, where the things that the government is kind of putting in place to solicit the best talent is also happening.

You can lower the prices as much as you want, but if it's still a shit, I'm not saying it's a shitty environment, but if it's still a shitty environment where there's not enough investment being put into the infrastructure around the startup ecosystem, then ultimately, it's not going to work. No, you are 100% spot on. And this is like, there's an organization in Chicago called World Business Chicago, which is kind of, it's like quasi-government. It's like a government, private, partnership,

nonprofit. I'm deeply aligned with them and do a lot with them. And I'm trying to help them get the ear of our city and state representatives and elected officials to understand if we don't solve these problems right now, Illinois and Chicago will go in a death spiral. Period. End of story. Because the people that can leave will and the people that can't are going to suffer and it's going to keep

getting worse and worse and worse. So anyway, we don't have to go down that rabbit hole. I did want to say just one other thing because I loved what RJ said about how he wants to get involved with nonprofit. So there's something else that I'm pioneering. And if RJ is interested or anybody else that's around VCs or investing wants to learn more, you can reach out. But over the past two years, I created a model that I want to open source called Invest it Forward. And it's basically a a way that I give my 120 plus founders the ability to quickly and easily get involved with local nonprofits. And this works really well because we're geofocused in Chicago. So each year we collectively find a nonprofit that we want to support. Lofty Ventures writes them a check for $10,000.

I tell the nonprofit, do not solicit our founders. They're eating ramen. They don't want to be bothered with the money and stuff. But then it gives opportunities for them to jump in and do mentoring and stuff. So we've done this with future founders, which helps underserved kids in Chicago through teaching them entrepreneurship and lean methodologies and building services and then this last year with the Chicago Innovation Foundation, which does something similar. Anyway, that's not meant to be like an infomercial. I make no money on this. I think it's a great way for us to get our founders involved with nonprofits earlier than they

would normally think about it because... And where can people find out more information about that if they want to get involved? I have nothing public. I still have to document all this and whatever, but it's something we've been piloting and the goal is not just to do it with our founders and, you know, this one-off. I want to share this with other investors because I think this is something that we could really, like, like RJ could benefit by doing this right now, like one hour a month, one hour a quarter, one hour a year, or not at all, right?

Like, you know, it's totally opt in. But I, anyway, I, like, I really, really appreciate what RJ said. Can you DM me some of those details? Of course. Just for context, my partner's husband, I love my life. Abundance. Right. He actually is part of one of the, I got, VP, I can't remember, but he is part of the

industrial union and helping running union organizations, and he lives in Chicago. And I know that he would be interested in that. I will be interested in that. So please send me the details. Absolutely. I will DM you right now. Amazing. I just pinned a tweet with some of the, whatever I could find online on Lofty Ventures for that

program. So hopefully you guys can connect and report back. You know what? Chris, Chris Deutsch, tell us your Twitter handle so that if anyone's listening later on, they could just follow you and DM you as well, too. Totally. That's really nice of you. I have the worst last name, so I don't know if anybody's getting old. Chris underscore Deutsch, D-E-U-T-S-C-H. That's very nice.

Awesome. Well, you know, Brian, I think this is actually a great way to bring this conversation to a close. started out talking about money and all this, you know, pools and vets of money being around. And now we're talking about fixing and saving the world, especially starting at the local level. So I'm, I feel complete. I'm good. Awesome.

How do you leave stage? You know, I will close the space in a second or I think there's a button. Anyways, I don't know where it is. I'll just end it and it. Tap your own icon and then hit switch to listening. Oh, there you go. Pro tip. That's clubhousey.

Okay. Thank you. Yes. Thanks for coming. Chris. Thanks, guys. I appreciate you bringing me up. Yeah. And thanks Jeremy. Thanks, RJ. Thanks for all the other folks who came up and talked today. This is really great. And, you know, this is a very new format, I would say, for Brian and I. So we're always open to feedback and ways to improve. Let us know.

But this is another episode of the TechMeme Ride Home Experience. Thanks, everybody for joining us. I will talk to you later. Later. Bye, everybody.