The Infra Pod - How to invest in infrastructure companies since inception stage? Chat with Elliot at Boldstart VC

Episode Date: January 27, 2025

In this episode of The Infra Pod, Tim and Ian are joined by guest Elliot Durbin, General Partner at Bold Start Ventures. They dive deep into the world of inception-stage investing, the evolution of venture capital, and shed light on the complexities of backing infrastructure companies. 00:00 Introduction 00:14 Guest Introduction 00:53 Investing Across Technological Waves 02:02 What to Look for in Founders 29:58 Premature Scaling and Failure Modes 37:54 Future of AI and Venture Capital 45:50 Closing Remarks

Welcome back to the InfraPod. This is Tim of Resonance VC and Ian, let's go. This is Ian, lover of building companies apparently. And I'm so excited to have Elliot Durbin here on the pod, GP at Bold Start Ventures. Elliot, who are you? Tell us all and tell us a little about Bold Start. Greetings. Thank you for having me. I'm super psyched to be here. Big fan.

Boldstart is an inception stage investor for technical founders solving infrastructure problems. And we've been doing it since 2010 as a team. Ed and I got together in 2010 and started Boldstart with a million dollar fund. People thought we were nuts. People still think we're nuts, but for different reasons. And I'm just here to kind of share what I'm seeing. So, I mean, Bold Start, been around for a long time. Been here kind of like on-prem infra, on-prem enterprise. Then you had the SaaS wave, and then you had the cloud wave,

and now you have the AI wave. And you have a super unique formula in terms of how you think about investing. And Ed's been calling this inception investing now, but it really started as seed. I'm really curious to get your perspective. What are things that have been common across all these waves that are just consistently true about the companies you look to invest in and why you like to invest in them? So let me start by saying it was the cloud that gave us the confidence to start Bold Start because the costs were dramatically reduced to start a company.

And when we were coming into the market, I think that was a real gap that we were able to fill. And along the way, I think the wild and crazy ideas that we've had, some of them became more of a best practice, like specialize, focus. When we started, there were like less than 20 seed funds. I think there were probably about 15 at the time. And they were all generalists. I think the world's gone our way that way. But really, at a very basic level, we filter on people. And that's kind of the secret sauce in a way. Because I think people build companies, people hire people, people use products

and ship them and change them and have ideas. So at the end of the day, we have to be there. Ed calls it uncomfortably early. I love that because it is uncomfortable. And we think it's a muscle that we've just had that one kick a thousand times over the years. And we think it's a muscle that, you know, we've just had that one kick a thousand times over the years. And what I look for is a founder who literally is the metaphor standing on the beach with binoculars screaming, there's a huge wave coming.

Everybody's like, you're blocking my sunlight, you know, get out of my way. And they're doing something unconventional, but either that's from an opinion they had, they experienced the pain. And I think a lot of the companies that are pretty notable these days started that way. I mean, Guy and Sneak would be a great example.

He says, well, I think developers are going to be saddled with a lot more security workflow. At the time, that was kind of a very contrarian idea. So we can get into all the, how do they bring it a life, but really I look for, you know, do you have an intimate familiarity with a pain and can you define that problem space in a way that you can deliver a solution on it? One of your previous guests, Mike Malone, I mean, it's a great, another great example of that. You know, he almost knew too much about his market because he was sitting as CTO,

kind of securing things, having to deal with security from the infrastructure side. And it's all about the use case. It's all about the use case. It's your first marketing. It's your first decision matrix, really. Because if you think about the first use case that you have to prove that your solution works, that will dictate so many things. So what I look for is someone who can learn really fast what the decisions are they have to make and make them. And that feeds into like learning curve and then shipping velocity and the other kind of basic tenants of what we look for in a founder. But at a formulaic level, if blank, how big is it? If it's true, how big a deal is that? I'm trying to think what Ed calls it.

He has all these great names for things, but he's like intuitive TAM. Some TAM doesn't exist today. So it's really hard for some investors to wrap their head around things. I love that stuff. Because if you can create TAM with your solution, that's where I think the biggest venture returns are generated. And has that changed at all? Or is that formula that you've developed over the last 15 years stayed the same? No, it's been pretty consistent because when we came out, it was the founders saying there's a better way now that we have cloud and microservices and agile development and even GitHub. I mean,

you think about it, it enabled so many things that create new problems. So what we're looking for is simply the folks that are working through those problems and saying, you know, I think there's a way to do this that everybody would benefit from. It's gotten faster because the access to information, obviously it's much greater, but you can sift through that information much faster. So you see a lot of companies pop up for a problem much faster than you did back then. And it's almost at internet speed. So I think that we're seeing that compress the need for learning real fast and adjusting really fast. And also probably the number of competitors, right?

It's the number of funders and understanding. And so it's not only just like new ideas come faster, they get to market faster, you know, they find ramp faster if they're going to find ramp in terms of customers, but also the number of people that show up and try to come and compete also is probably a couple orders bigger as well. Yeah. And I think there's a lot of derivative ideas that I've seen lately. And every time there's a major underlying shift, cloud being one, I'd say AI native being the next one.

What I'm looking for anyway, I think is the infrastructure is almost going to start out looking a lot like an app. So it's going to be an application that you use that's going to inform your infrastructure or allow you to design it in a better way. But everybody's trying to figure out what AI native means. Tesla's doing a great job kind of championing that.

And I think that any good new company that starts is going to kind of subscribe and then contribute to that movement. So I'm curious because there's not a small amount of investors that like to back this space. You know, I'm me included, tiny little player, just happy to be around. You do okay Tim, you do okay. Just, just, just trying to barely make it.

And what is in your opinion hard about backing this infrastructure landscape overall? Because I can definitely tell it's not like everybody can do this easily, you know? And I don't know. It's not really just about your background being technical or non-technical. I think there's like definitely some sort of unwilling to go down into the nuances to some degree.

So I'm very curious, how do you think about like, hey, what makes this space extremely difficult and what got you even more comfortable? I feel like I'm actually getting better at this, you know, looking at infrastructure companies overall. First off, I'll say, I used to look at it

in the very early days of Bold Start. I said, we're either going to look like the smartest people or the dumbest. And I think that's where you really need to live mentally, just in your approach to this, because the best founders are irrational in a lot of ways. I say that because usually they're very good at what they do. They can go get another job and pays a lot more money.

You got to believe in the future value of the equity, which is based upon so many unknowns, it's hard to even wrap your head around. I guess, how do I know I'm getting better at this? I'm getting better because things happen at a velocity when you back somebody. Sometimes it doesn't work and that's part of the job. But it's all about shipping really fast and seeing what happens. And so if I look at my personal barometer

and how I'm getting better at this, it's, yeah, they're shipping really fast, but then they learn really fast. And then they're able to keep up with the demand that they create. The market's matured to the point where, okay, maybe you get an A round done. Okay, maybe you can get a B round done. But you still need to deliver on a scalable company that makes money. And I think that the right founders are aware of their strengths and weaknesses. So really spotting that and having someone be receptive to feedback and then learning really fast on that feedback. Look, the best founders, they don't need us. That's the number one lesson. And I think that when you get involved with a

company, you want to figure out what the one or two things that you can do to tilt that company's chance of success in the right direction are. Because at least my view on it is it's not our company. It's not my job to operate. If I'm operating or I'm making operational decisions, there's something terribly wrong with the scenario that needs to be addressed. Best founders I'm keeping up with. So if I get more and more founders that are constantly making me feel like I'm behind to catch up to them that's how i look at it and then eventually it becomes track record and performance right so i think i learned a lot watching sneak that's for sure uh and there were some times along the way i'm sure i mentioned this you know we didn't know

if it was going to work but i I think what I learned from him was, you got to get out and meet your users. And it is going to be a long, tedious J curve in infrastructure versus other areas that you could invest in that may not have the quickest feedback loop. So you're going to have to really take a leap of faith to build anything really hard. And almost creatively, like an artist, figure out how you can shortcut things to get a signal on whether or not it's going well. In the beginning, you might see companies say, ah, 200,000 NPM downloads a week. That's really exciting traction. But then you say, okay, well, why? That's lead gen. Okay, then we can commercialize the product and all

these things. Can that founder form that discussion with, whether it's you as an investor, the employees, potential employees, things like that? Can they tell the story in the sense that they are making progress towards a big goal, but marking it along the way so that everyone can see the progress? It's really hard to do. I don't know if that answers your question really clearly, Tim, but it's a hard job to know if you're doing any well at it really quickly. Let's put it that way. There's a lot of leaps of faith. The other lesson I learned is it's always the one you least expect that

becomes the one that you're like hanging your hat on saying, yes, this is working. So I don't know, I kind of like that chaos. That's why I'm still here. I'm just kind of thriving in it. Startups are chaos. And if you can help the founder frame that chaos. That's why I'm still here. I'm just kind of thriving in it. Startups are chaos. And if you can help the founder frame that chaos, you're in good shape. And what do you think it is about, you know, are there properties that just, you've noticed that other investors fail in the infraspace?

Like there's not a ton of generalist funds that find real success unless they have like a dedicated infrastructure, their multi-stage dedicated infrastructure subcomponent. Are there things that basically... Are you asking me to be hard on other investors right now? Well, I'm curious, right? Because it's not even necessarily about being hard on other investors. It's about saying, you kind of outlined it, right? There are different properties about

building infrastructure companies. It's a long, big time. And you may not have signal about success that actually anyone really understands for a significant amount of time. Right? Yep. And so for a lot of basic investors, they'd be like, well, it's been a year and I'm going to move on. But a year, you've barely built the first layer. Right? It usually takes 12 to 18 months.

When you invest, when we invest, which is literally at inception, it usually takes 12 to 18 months to get a product out the door in an opinionated way that's been iterated on enough so that folks can actually kind of sink their teeth into it and give you that signal. So first and foremost, one of our early learnings was we had to be built and designed as a firm for that and being patient. And a lot of the kind of muscle that we built over the years is knowing when and how it's going to move the needle to push on certain things or challenge on certain things or not challenged. That's usually the hardest part is not getting in the way because it's very hard to fix things if they're not working. Founder can fix things. Investors rarely are able to fix things. I think that's the humbleness that I see sometimes getting lost in this market. It's not about us as investors in any way, shape, or form.

We can provide accelerants. We can make sure things don't run out of money when it's going well. We can help the founder get ahead of big strategic things that are coming that you might miss when your head's down on product. But we can't, we call it making the magic. Can the founder make the magic? Because then we can do everything else. But without that, it's not going to work. Like, good example. I had a founder this morning telling me all about the great infrastructure they're building. And I said, okay, but where's the GUI? You both know this. It's people buy dashboards. They use infrastructure. But if you don't have that eye candy, almost, it's going to be very hard to get folks

to conceptualize what's coming. And people always ask me, am I a product market fit? I'm like, you'll know. Don't worry. It is going to be the most painful thing that you've ever lived through because everyone starts buying what you haven't even built.

And you have to deliver on that. So I think that if you can get a founder there, I see a lot of investors thinking through very sophisticated theses. And I think that's great because it's a good signal to get the founders that you want to find you in the world to do that. But I think there's a limit. They're aligned to that. You want to be very open to the founder's view of the future

because they're the only ones that can see the future. I can't, I'm very clear on that. It's the line I don't cross. And so would you position your sort of mental model as you kind of have some properties, let's find the best founder, but how do you think about validating what they're seeing through the binoculars?

How do you think about being like, oh, you see a wave coming? How do I know that wave is real and when that wave will arrive? Because a lot of the time, the question here is oh, you see a wave coming? Like, how do I know that wave is real and when that wave will arrive? Like, because a lot of the time the question here is not whether there's a wave. Because eventually we can all theoretically say, yes, this makes sense that there will be a wave. But is this wave going to happen in 20 years, 15, 10, 5, 2 months from now? Like, how do you think?

By the time, so every time I was too early, I would not need my job. Oh, me too. That way, right? I see Tim smiling. Yes. And that's just part of it. I'd rather be early than late, number one. And two, I know how much money I can lose.

It's really simple. So this is a game of upside. So I think that the portion of your question, how do you know? I focus on the eventuality. I don't over-index on the when, because the when will be dictated by factors outside of my control.

Will the founder be able to figure out where they are on that adoption curve and say, hey, I think we're a guy to the market. I think we're a little bit early and we got to just manage our burn and make sure that we survive long enough. And maybe we'll do something that we can meet the users where they are today

right that early iteration cycle and figuring out that barometer is exactly what we're built for if you're too early great means you're probably a good engineer because the best engineers can see farther into the future and if we're too early you can always kind of build in a little bit to where we are so it comes back to the people Can they figure out where they are on the curve? And if there is no curve, that does happen from time to time. Okay. Then you need to call that. And kind of when I'm sitting there talking to founders, I think about, is this the type of person that's going to say, you know, this isn't working. We need to change something and not incremental. We need to change something big and try something new. And that's happened.

I'm all about that because what am I going to tell the founder? No, you're wrong. Keep going. But I at least want to be on the receiving end of that conversation and not having to instigate. And it's so fascinating because what you really are saying is it really doesn't matter what actually the verticals we're backing. It's really about the people. And the people really has to be the core of that decision-making

and the receiving end of information, knowing where you are. And, you know, I think you guys are so good at putting the stamp on inception rounds. I'm really just curious, like, for the Bullstar Trademark's inception rounds here, what are the key things? Is it just 100% people? I don't really care too much

about the timeline of markets at all because we could be all wrong anyways. I think markets are important. They can change any time. But I don't know, how do you think about this? Because market can't be 100%, obviously. And then if it's your founder 100%, that also seems very

difficult to navigate because there's a lot of great founders sometimes are very open to feedback but doesn't really even have a way to put any sort of things down. Is there a balance or are there particular maybe even a specialty trait that kind of breaks through

within this to say, hey, okay, market side timing, we can figure out, but we need to be able to be comfortable enough. And in some sense- Let's talk about AI agents. When we met João, the founder of Crew, I didn't even know where an agent was. He taught me where an agent was,

but the way that he did it, number one, he was plugged into a wall outlet. Like I swear to God, I thought his foot was like on a cord and he was like electric because he had so many things on his mind. You know, I don't want to use the word obsessed. It was more just like so much happening with this framework that he open sourced and what it could be. And he had great questions. And he was shipping things so fast in response to those questions. I realized how he thought. He thinks in product. It just immediately hit me. And I said, okay, if agents become a thing, and I immediately went and researched it. I think Ellen was on the

phone with me. So she actually went to the repo and set it up. And she's like, oh, this is delightfully easy. I'm like, great data point. But at actually went to the repo and set it up. And she's like, oh, this is delightfully easy. I'm like, great data point. But at the end of the day, when I looked at it, it was just obvious to me that he was seeing something happening that was really exciting. And he was shipping into it. He was building things to contribute to it. That's a muscle.

You can't train that. You implicitly... Some people do things differently. So when I have a problem, I pick up the phone. When some people have a problem, they go to a spreadsheet or they open up Jira. What's that initial reaction in your gut? And if it's ship something and create something, build something, that's obvious, number one. The other trait is, can you conceptualize the user and their experience? So are you talking to me as an architect, telling me how your technology is going to fit into the stack?

That's great. Very important. But in the beginning, at the earliest stages, especially in new markets that don't exist, like agents, I'm not so sure it's the skill that I want to bet on because there is no positioning. You're going to have to share your market vision with the world, and they're going to have to agree with you. And the easiest way to agree with someone is if you empathize with them. I always tell our founders, listen, don't worry about marketing.

Just go to your users and get them to describe your product in a way that they would tell their friend about. And then put that on your website with a superlative or something. Can they empathize with the user and can they ship behind it? Those are the two traits that I look for. I think you'll get a different answer when you talk to other investors, especially at different stages, because I think it's a different muscle when you get up into more scaling rounds and you kind of hit the fit with the market and it's growing really fast. But when you're evaluating a person, it's how energetic are they about what they're doing? Because starting companies, I mean, the most rational, painful thing you could do,

you both know this. I mean, You have to be kind of crazy. So really, the nuts and bolts answers, they kind of look for a little crazy. I often tell people, why do you want to potentially throw five years of your life or more away on something that doesn't work out? That's the question.

That's the downside worst case scenario. Actually, there are worse worst case scenarios than that. But that is the worst case scenario. We don't have to go into those here it's kind of yeah we won't go into those here but there are worse worst case scenarios but most people don't go there um i i'm curious you know we've talked a lot about like different things that have always been true across different waves we've talked a lot about like what you look for in founders and how you decide market opportunity. One of the things I also often question, and I see founders now, because there's so much capital

in the market, the seed, that they get really confused about what they should raise and who they should raise from and how much they should raise and how to navigate that. And I often find myself personally giving them feedback on... You know, you see like crazy term sheets, like any decent founder oftentimes will end up with, and especially if they're a second time founder, will often end up with like many term sheets if they have something that seems reasonable. And so how do you think about that problem space?

Which is, you know, Boltshire is someone who thinks it's inception investing, but our inception round could be anywhere between a million bucks to like today, 25 million in some ways. And sometimes we call that, we still call that like a seed

or an inception round. So how do you think about that? We're calling that the jumbo inception. The jumbo inception. Well, I think 25 million dollars is like hyper jumbo. Little transformers, you know. I think there's three buckets that we see,

and this is an observation, right? And we've kind of designed our operations around it. So you have a discovery round and that's, you know, maybe a first time founder that has a direction, but not yet a defined product. And you want to raise as little as possible, you know, crew being good example, their first round was a discovery round because, hey, I open sourced this thing. It's growing really fast. And you figure out what the product is. Then you have the board of $6 million, usually $5 or $6 million, we call it classics. And that's probably first, second time founder with a little bit more meat on the bones. They have a defined use case that they want to try out and they want to raise enough to prove it out and have enough leverage for mistakes

and a little bit of margin of error. And then you have the jumbo rounds and that's usually a multi-time founder that has a very clearly defined track record of handling that much money. And that's anything kind of above that classic round and they can get really big. I mean, as you're seeing now,

I mean, some of these inception rounds are wild. Yeah, I do think it's driven by a lot of the money in the market, but I also think it's driven by, you know, the whole market being a lot more mature with a lot more founders in it. So I think you're starting to see the second, third, fourth, fifth time founders come back to the market because there's a huge new wave. So I think you're going to see this kind of tale of three types of rounds keep playing out. I don't know when it ends, but we had to really look at that as it was forming, especially over the last couple of years. And we've designed our fund around it because we need to be equipped to move really fast in each of those categories, especially with the larger

multi-stage funds. They're big and they're all doing seed rounds. Well, you walk up and down the streets of SF and you say, hey, you just raised five on 15 in 2010. What do you call that? I guarantee you 10 out of 10 founders you meet back then are gonna say that's my A round. So the bars just literally reset and seed is what the A was 10 years ago.

And I think that it's pretty logical that the large firms that have been established for decades will assert dominance in market on that first kind of round because fundamentally the same thing they've always been doing. So we just adjust and we're adjusting right with it. We're not a seed round, it's an inception round because I think there's a very different skill set that's required. The other thing, and Tim would know more about this than me, in this market is how do you get ball control when you have all these big name firms coming around? Those brands are very powerful. And I think, you know, just reaffirms, at least with Ed and I, we're like, okay, we've just got to stay as early as we've always been and adjust accordingly

to maintain that swim lane because that is our advantage. That was the first lesson I learned in this business. Be first, because if you're not, it's really hard to be smarter than everyone. Yeah. Yeah. So, so difficult. And take risk. I mean, sometimes these firms don't want to take risk. They'll look for a pedigree team with an established ham and that's cool. Not going to knock that at all. But I guess I'm not assuming that my bread and butter is going to be that. It's going to be backing someone who gets missed in that formula. And they will be looking at starting companies. And usually every new big hype trend, let's just AI agents or whatever, there's going to be some other AI something. There's going to be a lot of people

all going after the same thing, right? And in your position, you have to also sometimes pick which ones. And I'm real curious. I think we talked about the people choosing. Is there also like markets choosing? Like I don't really want to back anything in this space now. Maybe because I've done it before or I'm predicting this is just going to go nowhere. Or I've just done three of them and gotten beaten down and I don't want to do it right now. Yes. works is like i'm willing to try every market that i think it seems like to be large somewhat large or something like that but or until i've done it and there's nothing there and i think i just i'm not going to try again in the short term like how do you think about like even market

choosing or just this doesn't exist at all i think it's talking to the engineers in the audience i'll say anybody that tells you they know the future is lying to you right because they don't actually know what's going to happen. So I think everyone will have opinions and opinions are formed with biases. Those biases are formed in a thousand different ways. I think that I would think twice before doing something for SREs because I've just done it so many times because I'm just fascinated with the problem space. But the issues are the budget is slow and the audience that you're selling into

is risk management oriented. And that can be a challenge. Does it mean that I won't back a founder that has this amazing approach to it that I hadn't thought of? No. A lot of, I guess, my own personal cadence and just trying to be better and better every day is blushing out those biases and almost neutralizing them because that is what will kill you. Relying on the past for what's going to happen in the future is very difficult to do. I don't think you make very good investments that way. With this new capability, you can create things that look like magic. So I've done a lot of things that I thought I would never do, like back a company that was enabling ad creation. Well, that's also known as kind of ad tech, which is kind of like a bad word in VC. I kind of like that because if they can

prove it's possible to create a hundred X efficiency gain in that market, you can stand out really fast. My new thing has been, how quickly will we fail? I ask founders that. How quickly can you fail? Because the best founders fail really fast. So fast, in fact, you don't even notice that they're failing. And they make it look like a win. If you think about the best founders, they almost test things out without knowing it and then adjust on the fly. So how quickly you can fail in a market will impact how you can succeed overall in redefining it. But yeah, there are some markets that I just look at. Another one that I thought I'd never do would be the SOC. Go into the Security Operations Command Center and do anything. It's like the road into a war zone.

You got burning Humvees and dead bodies along the way. And you got to be kind of crazy to walk down that road. Well, that feeds back into the person. How crazy are they? And if they're crazy enough, that could be super interesting if they have something that stands out and that folks can maybe buy in a different way or use in a different way

or creates a new way of doing things that will impact stuff we can't even predict. This particular company, I said I'd never go into the SOC. Well, this founder had a view that I had never conceptualized before. And they had the option to go the traditional route and they didn't. And everyone said, I don't think that's very smart. And they had so much conviction. And I just said, you know what? I'm with you because we'll be able to know if that works or not really quick. And if it doesn't, you can take another route.

And I will bet on you to figure that out. So it's almost like you really have to bet the jockey. And yeah, you have to think about the market. Instead of deciding whether or not a market is one I want to avoid, it's one in which I would want to know at what point we're going to switch. You have to build in some sort of a safety valve because when you're building product, you're just going to build.

You're just going to go. So my job is saying, hey, maybe we can figure out a point at which in the future, if we haven't achieved this, we're going to reassess things at a more order of magnitude level. I think we talked a lot about about how to find or filter through to what are the worthwhile bets.

One of the things you just mentioned is basically if it's net new and then net new changes your perspective in the view of the market, then it's probably worth the bet. What are common failure modes where it's like over 15 years, it's like we've tried this 17 times and every time i see this it almost never works like there are definite patterns i have some in the back of my head but i'm kind of curious what are the common patterns it was like this doesn't seem to work and you should not do this well i call it the cave that's first and foremost go into the cave build a bunch of stuff that you don't have any external inputs on, that's a real easy way to fail. I've had more than one. I could probably count them on one foot, two fingers.

At times, I've actually had that fail because we had a super great idea that the founder then took away, built a whole bunch of things that no one ended up caring about because they built way too much and they built in the wrong direction. It's all about shipping it out there and getting that feedback loop started. The other failure mode I've seen is, especially in infrastructure, because of the money in the market, you can get a lot of money early. But the number one cause of failure, talk about failure modes, is premature scale. That is the number one lesson I have relearned over and over and over. And no one ever means to prematurely scale my company. So you can imagine

how many heated conversations I've had where I think we're prematurely scaling the company, or I didn't even notice it. And then somebody else says something and I realize it and I go, oh my God, pull the e-brake. Because it is the easiest way to fail is if you think you've got product market fit, you scale up, your burn rate goes up. Then you've got a nine-month sales cycle. And you won't know if all that extra burn is going to work for nine months. That is the most terrifying position for me to be. The artful science here is to figure out cues on making sure you're not prematurely scaling.

I think 90% of the times a startup doesn't work out, it's that. It's, I don't have the signal that I should scale up now, or I think I have the signal that I should scale up now, and it turns out that wasn't correct. The customers don't convert. It's a unique thing for infrastructure, specifically because of that J curve.

It takes a long time. So open source is great for stuff like that. That sets up new challenges. The other one is I've open sourced my product and I gave away the store. Everyone's like, hey, I love your open source tool. No, I'm good on the commercial version because I got what I need and I'm operating it. It's great. Thank you. Well, you die that way because you don't make any money. So I think that understanding what to open source to generate the awareness and the leads that feed into your product is right. And again, back to the founder filter, I actually look at founders and say, are you the type of person that is going to think about this and bring it up to discuss?

That's the first part of the challenge. It's knowing that that is an issue. So before you give everything away, open source, think about what is the most valuable part and what people can get started with and then need your product even more. Those are three. But I could fail your modes all day long.

All day long. I think a common value of a good investor. They just know. I mean, I'm a big believer. This is a business that is stay standing and fail as much as you can so that you can warn founders on the next term about what doesn't work. And delivering that message, I think, in a positive way is important as well. So you start a company, chances are you're going to fail.

Accept that. And I think that's the first step. Well, you kind of build your own immune system over time, right? You see what doesn't work and why it doesn't work. And those things don't work independent of market and independent of founder, independent of all these different things. Yeah.

And it's how you handle that. I mean, the other thing I love about infrastructure is, you know, one of the early days I was thinking, well, consumer, enterprise, infrastructure. If you start an infrastructure company, chances are you're going to start another infrastructure company. It doesn't you're going to start another infrastructure company. It doesn't work like that in other markets.

You know, you catch lightning in a bottle on a consumer app. Cool. But like, you got to make that one work because lightning in a bottle is hard to come by. You see that in security. You see that in developer tools. You see that a lot of areas where you can almost start to see the future. And each company is like a successive part of a connected mission in a way.

Could you talk a little bit about repeatability? Because a common pattern I've seen founders failure is, you know, I think this is very much more common sort of the last wave of like founder rollouts from like a Fang. So, you know, they come out of Facebook or they come out of Google or they come out of Netflix and this thing worked or was this way at Netflix and they raise a big round and then they go like, can you talk a little bit about that failure mode?

Because I think it's also one that is very common for engineers to fall into. My favorite is when people say, well, I shipped a product at Google, so I'm really good at shipping products, you know, or something like that. And I don't want to knock shipping a product at a big company. But if you're shipping with lots of resources or even a captive audience, it's totally different than doing it on your own in the wild. The second thing I see a lot of founders realize is the sophistication level. People don't care about infrastructure when you're bringing your product to market. They care about the outcome of using infrastructure. And I think that's the other big kind of evolutionary step that I see a lot of founders make is, what do they care about and how do I map that to my

infrastructure technology? So if you're building infrastructure, it's all going to be about how the apps perform on top of it. No one ever buys infrastructure for infrastructure's sake. I mean, you both know that better than anybody. But if you're coming out of a big company, I think that might be harder to parse. So what I look for is, hey, if you're uncertain if that is going to work outside of a big company, you can test it. It's hard to peg it on a particular case. But I remember backing someone that came out of a big company. And the first thing they realized was that the right hires were going to

need to be the ones that valued the equity over the cash, that they didn't have the cash to compete with their old employer, that you're going to have to sell that vision so that people will literally take a huge pay cut to get more equity because they see the value of the future. They're like different planets with different gravitational pulse. You just got to make sure that you're properly balanced, if that makes sense. Well, let's jump into, I think, something that makes even more sense, which we call a spicy future. Spicy future. Yes. And you're going to be the very first VC to tell us about some spicy future here.

So what is something you believe that you think most people don't believe yet? And it really could be anything. What is that for you? Well, first and foremost, I kind of work backwards from someday my kids are going to be sitting in a class in elementary school. And they're going to say, you know, 20 years ago, human beings kind of wrote code and everyone's going to go, holy moly, that's crazy. Because everyone will have these components that they can put things together really fast. And you won't need to have that underlying knowledge, similar to the way we look at, you know, the way the cloud runs in a lot of ways because of all the work that's been done. So I think that one thing I believe that others may not is, I think the labor displacement,

this is becoming a more popular view, so it'd be a little boring, but the easiest thing to sell to an enterprise is service, right? They'll buy services a lot faster than they'll buy a product. So what if you went in and said, just buy my service, but that service is delivered with these autonomous agents that have checks and balances and everything else, but can go in a much faster, easier route to market. That's what I get really excited about is how quickly can we kind of package things up to be adopted? Because, I mean, I'm in this for one reason. I saw how fast things could grow on internet when I was very young, so much so that it like forced me

into one of the more traumatic experiences of my life. And I want to find the opportunities for things to grow that fast again. And I think this is the opportunity to do that. That's what gets me up in the morning. I get so excited because, wow, we could deliver stuff that humans used to have to do in a less friction distribution channel and insertion point.

So software services, I think, is the buzzword. So you think basically the future is building enterprise SaaS, go sell services, build agents. Does agents take over what once humans inside? I'm watching it happen. I'm watching what happened when Clay put Clay agents into their offering. The agents go out into the web and they fill the software with even more data.

We're in a data-centric period right now where you can do so much, but you need to get the data into the software system. So if you add agents to do that for you and to help organize a lot of the things that the human beings needed to process manually, you can get better utilization on your software if you're

an existing company. But even more exciting is you can eat the lunch of a company that cannot do that because it would cannibalize their own business model. So we're back to those days of like, wow, why doesn't SAP do this? Well, they would kind of kill a lot of their revenue. That's your advantage. You can literally go in and build something from scratch that other larger, more established companies cannot do because they are reliant on an old business model. You can take bigger risk with those agents, to answer your question. That makes a lot of sense.

Do you think this upcoming wave of AI is one that is a win for the incumbents, or is it actually going to then result in deep consolidation? Or is this an opportunity to build new companies with an enduring advantage that will make, that become generational? I think that's the right question.

I think about that every day. And I think it's going to end up being both. I think some companies, you look at Salesforce, Salesforce going all in on these agents because they know that those agents are going to make their database very valuable. And I think that that's how they, you know, they'll be great company for a long time.

They're not going away. But do I think that if you're not adopting these things into your design, I don't think you're going to be around much longer. And then, yeah, I think there's going to be some, I'm seeing the most sophisticated companies really focus on their own practices internally so that they can be developing in an AI native way so that they can compete. And so from an early signal perspective, I think there's going to be both. But I think that the companies that go AI native right away are going to grow faster than any company has in history. And that would be the, you know, history rhymes. That's going to be how it rhymes. We will see the fastest growing

company in history continually keep coming out with AI as it gets more mature. And I think the biggest blocker right now is the cost of that. Every company that has scaled a product with a lot of AI embedded is suffering from the cost right now. And that sounds a lot like the cloud in the early days, right? And I think it's going to open up a whole new set of problems, which I'm kind of learning about right now and trying to play some bets because I think that's the best way to learn is just, you know, grab the ball, get on the court, and get a bloody lip. Or get lucky and win.

And then you're just like a genius forever. It's my favorite part about this business. If you're really right once, it's huge. So I think the biggest thing we can all do right now is just take a lot of big swings because it's the incremental that will hinder progress. So that's the biggest thing that I see in the market today is a lot of incremental improvements on the way that things used to be done. I don't want to back those

because we won't know if they're right or not for a while and they won't succeed or fail really fast. And that's what I think this is all about. You know, just to go back to the old, you know, hey, it's 2010. Hey, let's fail really fast. And if it doesn't work, try something else.

Cool. You know, and it's that level of speed that is needed to kind of build new stuff. But I think it's bigger than cloud was. But I think that cloud established a lot of practices that are going to make incumbents a lot more competitive than they were 10 years ago, 15 years ago. DevOps exists.

There are CICD pipelines. So we're going to have to kind of merge those in because big companies with a lot to lose aren't going to have to kind of merge those in because big companies with a lot to lose aren't going to change their infrastructure, but they'll definitely build new stuff and they'll want to control it, but that's going to take time. So where's the action? The action is in building the apps that can grow really fast, that can become a best practice that will then be instituted by the largest companies in the world. And we saw this with everything from Snyk to GitHub.

I mean, Snyk didn't start out in a very... I remember having to have the conversation with Guy. Like, hey, maybe we should think about doing Scala or Java. I just, I don't think he's ever looked at me like that with that much of a discerning face. He's like, no, right? But no, I mean, no JS. It was early at the time.

And that eventually led its way into the enterprise. Same with GitHub, right? Sorry, Ruby eventually made its way into the enterprise. But I think that the best engineers will create the best practices with the products that will eventually kind of, this won't be any different. It'll happen faster, but it won't be any different. The last thing I'll leave you with is look at the core infrastructure of a lot of what was built on the internet.

It was the Netflixes. It was the hyperscaling consumer apps that were forced to build the infrastructure that we all use. I mean, a lot of it came from a guy who sold books. So I think we're early in the days of needing a lot of infrastructure because there's really been a limited number

of hyperscaling apps that have required that infrastructure, but that will change very quickly. And my last question in the spicy future, what do you think this does to the VC market? That's a really good question. Now, this is going to be, yeah, not surprising, but I think that startups are based on human beings. And I don't think that human beings on a biological level evolve as quickly as technology. And I think that it's really hard to build a really enduring huge company. So I'm not sure there are more founders.

I think they're easier to find. So there will be more initially because it's not just the Valley anymore. And there's a lot more places to look. But I think that you got to put your pants on one leg at a time. You've got to do all these things to start a company that I'm not so sure everyone is going to have the patience for with all this money in the market. There's a lot of money chasing a lot of deals with a lot of expectation. Anytime you get a lot of money into a market, it's a lot of expectations. And all I know is it'll be messy. I'm planning for a lot of expectation. Anytime you get a lot of money into a market, it's a lot of expectation. And all I know is it'll be messy. I'm planning for a game of attrition.

You've got to be patient with founders. And I think that eventually the biggest firms will go back to doing what they do best, which is scale companies after they've reached product market fit. And the specialists like BoltStart will help get the companies there and then be a good source of options and leverage, which is our job going forward.

But 18 months of building, you got to be a pretty strong founder to make sure that everything stays status quo while that's happening. Because you start to feel a lot of pressure, monetize, maybe take the wrong customer early. I think the way that plays out will be exactly like it played out 15 years ago. Founders will realize, okay, I think I want to take as little money as possible, or I want to raise a reasonable amount so I can keep my options open. And I'm not so sure that lends itself to a lot of VCs doing inception stage stuff. I think it's a means of production, just like anything else. So our specialty is that first leg. And I think what it does to the VC market

is it forces everyone into their swim lane again. But that will take a lot of time because there's a lot of money, which is good for founders. So it's kind of like a great thing. But you have a lot of options. You're just going to have to navigate through them. You know, Crimea River, you have a lot more options than we did 15 years ago.

So it's a net good. And it forces VCs to be a lot more competitive and upfront with how they can help you. And that's a net good too. Awesome, sir. Well, you're already super well known. But still, if any engineer doesn't know about the Bullstart, Inception Rounds, and the Mr. LRA. Even if you don't have a company, if you have an idea, bounce it off us. No problem.

But guys, I wanted to say thanks for having me. It's such a great knowledge base that you're building for everyone. And I was really just honored to be able to put a brick in that wall. Thank you. Yeah, it's always great to have you. And where can people find you? Where are those engineers I want to get in touch right away?

I am on x at etderbin. You can find us at boldstart.vc. We even have inception.vc now. E-L-I-O-T. At either one works. Very amazing. Awesome. Thank you, sir.

This was great. Thank you for having me. This was so much fun.