The Pomp Podcast - #1268 Praying for Exits on Investing in Space, AI, and Defense Tech

Episode Date: November 2, 2023

Praying for Exits is a pseudonymous account that is run by one of the most interesting early stage investors in venture capital. In this conversation, we talk about aerospace, artificial intelligence, defense technology, current state of venture capital, media, and why being pseudonymous is so advantageous for this specific investor.  ======================= Base is making it their mission to bring a billion people onchain. But what exactly is Base? It's an Ethereum L2 offering a seamless experience for both builders and users. With near-zero gas fees and rapid transaction speeds, Base is shaping the future of the onchain world. Base is a canvas for everyone, with hundreds of apps in the Base ecosystem, whether you're an emerging creator, a seasoned developer, or someone exploring the onchain space for the first time, Base is designed to bring your ideas to life. So, if you're looking for a platform where the future of onchain is being built daily, Base is your destination. Join in and make onchain the next online. Learn more at ⁠⁠base.org⁠⁠ and follow along on Twitter at @BuildOnBase to see cool things to do onchain, everyday. ======================= Auradine, a leader in web infrastructure solutions including blockchain, AI, and privacy, has unveiled the world's first 4nm Bitcoin mining systems, featuring breakthrough EnergyTune™ technology, setting new standards in performance and energy efficiency. The Teraflux™ product line from Auradine offers best-in-class performance, efficiency, and total cost of ownership (TCO), positioning it as the optimal choice for Bitcoin mining needs. With EnergyTune™, a patent-pending technology, Auradine's Teraflux™ systems enable rapid demand response and optimal energy usage, fostering a symbiotic relationship with electrical grids, and contributing to sustainable energy practices. Designed and manufactured in the US, Auradine's Teraflux™ product line not only ensures cutting-edge technology but also mitigates supply chain risks and provides increased supply chain resiliency. Visit ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠www.auradine.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ for more information the Teraflux bitcoin mining systems. ======================= Pomp writes a daily letter to over 250,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/

What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Today's episode is with Praying for Exits, a pseudonymous account that is run by one of the most interesting early stage investors in venture capital. In this conversation, we talk

about aerospace, we talk about artificial intelligence, and we talk about defense tech. We also cover the current state of venture capital, media, and why being pseudonymous is so advantageous for this specific investor. I enjoy doing these episodes with people who take a different approach. And pseudonymity in venture capital is something that is highly under discussed. Praying for Exits continues to build a great portfolio, and founders are seeking them out, looking for them to invest in their business. So this episode will break down why. Here is my conversation with Praying for Exits. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions

of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. Today's episode is brought to you by BASE. BASE is making it their mission to bring a billion people on chain. What exactly is BASE? It's a layer two offering a seamless experience for both builders and users with near zero gas fees and rapid transaction speeds basis shaping the future of the on-chain world base is a canvas for everyone with hundreds of apps in the ecosystem whether you're an emerging creator a seasoned developer or someone exploring the on-chain

space for the first time base is designed to bring your ideas to life so if you're looking for a platform where the future of on-chain is being built daily base is your destination Join in and make on-chain the next online. Learn more at base.org or follow along on Twitter at buildonbase. Again, that's at buildonbase to see cool things to do on-chain every single day. This episode is brought to you by Auradon. They're a brand new startup led by a number of Silicon Valley legends who just raised $81 million to build the future of internet infrastructure.

You're probably wondering what that means. Let me explain. There are numerous new disruptive technologies that are being adopted simultaneously, from blockchain to artificial intelligence to zero-knowledge technologies. In order to ensure that these technologies thrive in this new world, we need new infrastructure, and that is where Ardine comes in. They just launched their first product line called Teraflux, which is a Bitcoin miner powered by the world's first 4-nanometer silicon chip technology. These air-cooled, single-phase and dual-phase immersion cooling miners have unrivaled speed and efficiency.

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I'm really impressed with them. And if you want to check out more, you can go to Auradine.com. That's A-U-R-A-D-I-N-E.com. Go check them out at Auradine.com today. All right, guys. Bang, bang. I have Praying for Exits.

Yes, it's not his real name, but he is one of probably the most interesting early stage investors in tech right now. We're going to do a little round robin. I figured I'd just throw out a couple of industries and we could talk about what you're excited about, what opportunities you're seeing, and then maybe companies you're not seeing, but you wish that someone would go and start.

We can start with defense technology. Obviously, Anduril is kind of the gorilla in the room. People have gotten very, very, very excited about what they're doing. But defense tech is not just Anduril. There's tons of other companies. What are you excited about in that space? Yeah, I think that like, and again, thanks for having me, Pomp. I think that what's really exciting is, and I guess like it's kind of a fine line here.

But, you know, the macro picture has kind of shown that defense technologies are increasingly becoming more important in maybe our day-to-day lives in a way that most people in the Valley probably didn't think that they would 20 years ago. And I think what's really interesting is there was sort of a lot of brave people like Palmer, the guys at Shield AI, who kind of like pushed the envelope on, you know, developing defense technologies. And for all intents and purposes, you know, this is what Silicon Valley was built on. You know, you have Lockheed and Raytheon and all of these early Silicon Valley companies taking all of the best talent out of valley and building interesting things i think we're coming back to a place where that's reaching

prominence again um i think the shift away from you know defense technologies being sort of like a bad word in the valley to a place where some of the most innovative and interesting people are spending their time has been one that has been really quick and i think the backdrop of the macroeconomic picture has kind of sped that up and so what i'm seeing that's really interesting right now is obviously there's a bunch of offensive and defensive technologies that are super interesting and that have becoming um you know a lot more pushed to more sort of the center of the cultural zeitgeist as it were through people like palmer um but what you're starting to see is a lot of these ancillary technologies that are supportive of um some of these like

larger companies like android um there's one company that i just did that's you know um like infrastructure supporting defense um there's another one that i'm doing that's building a new drone platform um there's another guy that has become quite popular on twitter who's thinking about using weather as a weapon um i think that there's all of these really interesting young kids who are who are leaning into defense as an interesting industry and um it seems really exciting there's there's a lot of innovation and there's a lot of new things popping up and it's a really interesting place to play so defense is one of these interesting industries where you've got to understand kind of what is our current capabilities what is the threats that

we may face uh offensive and defensive uh you know kind of capabilities um and then also how likely is it that one of these crazy technologies can actually be built right and so if you take andrew as an example they're basically like hey we're just gonna build cool shit right it was kind of like an initial pitch that's gonna go solving some of these problems now you look at the team and you've got some of the best technologists of the last few decades and so it's like okay high odds for probability they're going to be successful when you start looking at like using weather as a weapon, which I'm pretty sure I know exactly

which company you're talking about. It makes sense that, okay, if you could do A, B, and C, then yes, you will be able to have this new capability. How do you underwrite? Can this group of people actually pull it off? And what is the technical feasibility of a said technology? Yeah, I think what's interesting about defense is you kind of have to underwrite it

in two different ways at once and try and get a clear picture off the back of that. I think the first way that you have to underwrite it is to your point, is this technology viable? Is the person who's building this technology, the person who can kind of get this to scale and make it useful within the context of the government or private enterprise. And then the other aspect of it that is like a lot more difficult to underwrite, and I think historically has kept people from investing in defense more,

is how do you underwrite the likelihood that the U.S. government plays ball, right? And I think that one of the, you know, it's never really a place that you want to be in sort of like investing is, you know, is the U.S. government on my side with this one? But increasingly, I think that it's important, at least for people, or I think that it's underrated, like an underrated endeavor in trying to understand this better in people who just start out with defense, is that they don't really have a good sense of how the government machine works, how contracts are, you know, won and lost, you know, how lobbying works, how all of these different things affect the outcomes of your investments.

And I think that people like Palmer and somebody like Joe Lonsdale at Palantir, these guys kind of kicked the door down and kind of set the sort of framework for how to do it. And so I think that now more than ever, it's a little bit easier to underwrite, you know, something like how does weather work in a weapons system? Just because, you know, those frameworks were established by companies like Palantir and Endrel. But over time, I think that this becomes a lot easier to understand, whereas right now it's still a little bit obtuse. And I think that there's still value there in understanding what works and what doesn't in that context. On defense tech, it also seems like there's two other components that are driving, you know, kind of a huge influx of successful companies.

One is like tech figured out how to settle the government. And now that's like a playbook and people kind of understand how to do it. And then two is there is like, I think people are calling it the Palantir pack, right? There's like people who went, they're part of a successful company. They start to spin out and start more companies. And so like success begets more success. Some of that is talent. Some of that is the network gets built out.

So you have people to recruit. Some of that is the playbooks. Talk a little bit as to like how you start to really understand like, okay, is this a two, three decades long trend that we're about to see here that really kicks off because some of those people kick down the door. Now there are kind of playbooks and networks that are established. Yeah, I think you see it in kind of different industries with sort of high bars to this intermediation.

I think the early great first example of it is sort of PayPal, you know, financial services were these sort of Byzantine, very difficult process that, you know, had a high bar to entry back when Peter and those guys tried to do it. And I think that, you know, defense is now this new one where sort of the bar has been quite hot, been raised quite high or was quite high originally. And now, you know, to your point, the doors have been broken down a little. And what you're starting to see, especially in Los Angeles, I think, you know, in South Bay, there's a Cambrian explosion of people who used to work at the large defense companies. So whether it's Anduril or, you know, I'm not saying SpaceX is a defense company, but aerospace defense, you know, they kind of exist within this paradigm of like a new company that's sort of breaking things and sort of paving the way. And then they see all of these interesting pockets of value that other people from the outside looking in might not see. And then they tend to start companies around them. And so, yeah, there's like, for instance, there's a really popular deal that was just done not too long ago that focuses on wire harnessing, which is running wire cables through all the hard tech, you know, that's happening out here.

And so, yeah, I think there's a Cambrian explosion of interesting things happening in Los Angeles specifically to that point that you made, which is, you know, these companies have great employees that work there early, find these pockets of value that nobody are really thinking about, leave and start new companies. you're starting to see that at andreal you're starting to see that at spacex you know people who've been there for five ten years best at all their equity now have this you know new idea that they want to pursue and and they're going out to start a company around it and you know uh it's one of the hottest sort of sectors in our in our market that we play in and you know there's a bunch of like really young sort of sub 30 year old kids who are building really interesting things right now through that context let's talk aerospace as a second industry uh there is some overlap with defense obviously but there is a whole sector of it that has nothing to do with dispense what are

you seeing in the aerospace industry that's exciting or areas of opportunity yes i'm an investor in companies like barda um you know do do some work with with the spacex guys um i think that again i think that aerospace is a little bit earlier along the defense curve um or a little bit or a little bit less developed in the defense curve right now and why i say that is you know there's a ton of satellite companies coming out satellite bus companies people like barda who are doing interesting things in low orbit space um i think that in the way that defense wasn't necessarily clearly established on like what are the platforms that have scalability uh over the long term i think aerospace is kind of reaching that moment right now you've seen a bunch of

companies that have raised large amounts of money to you know launch like satellite buses or do these things um to me it's very difficult to tell which of these platforms ends up with high scalability because a lot of these things like varna for instance barb is making factories in low orbit space you know like the total addressable market for that is probably quite large but i think that that market is probably pretty uneducated on you know how to utilize that technology to its max potential and so i think that we're still in the learning curve section of aerospace specifically where you know a bunch of people are trying things they're raising a bunch of money around it sending things into the space and you know or doing things like mock um

Or like, you know, doing electric planes and all these different things. And I think it remains to be seen which one of these is the sort of paradigm that really becomes valuable from a monetary standpoint. But I think that there's a bunch of really interesting people trying a bunch of really interesting things in that space as well. And the overlap between defense and aerospace seems to be tightening quite a bit, or at least returning to where it used to be back in the, you know, like Howard Hughes kind of days. And so, yeah, I think there's a really a bunch of really interesting stuff happening there right now. And it's a place I spend quite a bit of time. When you look at the aerospace industry, it seems like there's a technology component. I think of like Boom Supersonic and some of these companies that are really trying to push what is possible.

I think Varda is in that category, et cetera. There's also a layer of like regulation that seems to be a little bit more onerous than maybe some of these other industries, maybe even more so than like the defense industry. How do you think through a team and kind of the dynamics of like, hey, we need some technologists. We need obviously people who can kind of manage and do operations. Do we need people in the beginning who know how to work around regulation and kind of interact with these regulatory bodies? Or is that something maybe investors could help with and make it a little bit easier for some of these teams as they're really focused on kind of going from zero to one on the technology side? Yeah, I think that it either

has to be somebody on the team or an investor. I think that in the same way that you have to build something from the ground up very intentionally in any industry, aerospace is one where you have to do that with a special amount of care. I think that to your point, people like the FAA and some of these other three-letter industries are very difficult to deal with. And I think that they're extremely difficult to deal with retroactively, unless you're building proactively towards a place where you know that they'll play ball, I think that you run the risk of basically gambling on whether or not something will work. Well, not even from a technical standpoint, this kind of goes back to understanding both technical and sort of just sort of like government feasibility.

I think that, you know, I think that you have to start building from the point of view of like, hey, I know exactly what is going to work, or at least have a high confidence interval of what these people are going to be willing to see. And if you don't sort of build it from the ground up in that way, I think that you run the risk of, you know, two years down the line, you have a technology that's technically viable,

but not practically viable. And so I've seen a lot of companies raise a bunch of money and build beautiful, technically beautiful things. But then they get to the point where they have to sell it to somebody. And, you know, it's for one reason or another, you know, blocked or pushed down

or you know slow down um and that can be kind of like a death knell for for an early stage company and so i always recommend to just build with the intention of like hey we are interactive with you know these regulatory bodies from the very beginning um even at the pre-seed and so you have to build the company in that way so that you know two years down the line you don't have to sort of reverse engineer how to make something successful instead of you know building it building towards it that makes sense artificial intelligence another industry that seems to be getting tons and tons of interest right now uh one camp is artificial intelligence gonna change the world it's the most disruptive technology since the internet uh another camp is like you guys are

all idiots and this is the most overhyped overblown thing in the history of technology uh where do you kind of fall on this and how do you tell maybe both are true and you gotta go through the noise to find the companies that aren't going to be overhyped and will actually create value Yeah, I think that I'm not like an absolutist in that way. I think a lot of people on the internet seem to be, though, in the sense that, you know, most people either think that this will be the greatest thing that's ever happened to us in our lifetimes, or it's kind of this overhyped space that maybe is like akin to, you know, like how people talk about a crypto or to me, it seems a lot more like, and I

have nothing wrong with crypto. I think it was a paradigmatic change. I just think that it got kind of overrun by sort of people who, you know, didn't have of the best interests of the platform is at heart. But I think that it's clearly a paradigmatic shift that's gonna change a lot of the way that people conduct business. I don't know, I think that like the application layer

is what's most interesting to me, but it also seems the most scary because anything that you do in the application layer seems as though it can be disintermediated by open AI at any point. And it seems like there's been a variety of there's been a variety of companies that seem to go out of business every single day that open AI releases a new update like for instance two or three days maybe earlier this week they released

the pdf reader you know and they released open AI voice and each time they release one of these things you know like 25 startups die or at least are forced to sort of aggressively pivot and so to me I think that like you know the model at the model layer it's going to accrue to like a couple large players in my opinion it's just very tough to keep up to their you know gpu capacity their talent levels their ability to hire that seems like a pretty strong moats um at least on the model on the model side uh but i think at the application layer um there's a lot of things that we're probably not even thinking about that are going to increasingly be useful whether it's on the generative side whether it's on the llm side and so to me what becomes interesting is

like it seems like another app store kind of moment where it's like it's very clear the app store is going to usher in you know a new paradigm of like value um but what are the apps on the app store that end up working what are the airbnbs what are the um ubers etc and so i think that right now we're in the very early innings of like figuring out what are the next great quote-unquote apps built on you know the the platform of ai how do you think about where value ends up accruing right obviously there are uh these very large companies that seem to jump right in i think adobe was a perfect example. Generative AI comes out. All of a sudden, there's 20,000 startups who are all like, oh my God, we can do generative AI and photos. And here's my twist on this.

Some investors poured capital into these companies. Other investors were like, ah, I don't know. Adobe comes out and they're like, well, we have distribution and we already have a great business. And now we're going to take these same technologies and we're going to roll it out. In those scenarios, there's a lot of people who are like, oh, Adobe just killed, you know i don't know hundreds of startups uh we recently saw this with uh chat gpt and open ai and they launched the pdf uh kind of the ability to to communicate back and forth i saw one of the founders talking about well actually he's not going to kill our business because we have all these you know unique features when you're investing how do you understand opportunities but

try to depict do the big guys come in and crush these you know smaller companies by just flipping on these features or can these smaller companies use the same technology create actual moats and in the early days you're looking at a pitch deck you're having a conversation like there's not much to evaluate so what's your process to unpack that so i think that like my personal perspective is that um at the model layer it's probably the winner is probably going to be a small group of people it's going to be open ai it's going to be maybe anthropic it's going to be like these large companies that have raised a ton of money and have a ton of gpu capacity to basically build the best and build and train the best models i think and i think that that's more of a zero-sum

game than most people think i think that it's gonna be very difficult to compete with somebody like an open ai on that just at scale um and so where i think becomes interesting is like building on top of these platforms and where i think the moat uh becomes useful is like um what's a good example of a company that has a great mode maybe like mid journey right um it's like mid journey is built on top of a bunch of models i actually don't have the specific models that it's built on top of but it's clearly like an application level um sort of thing that is becomes super useful to people and i think that even though something like open ad comes out with something like a dolly 3 which is very very interesting very useful i think people still tend to lean

to mid journey because um you know whether they like that specific art style or whether they uh find the process to use mid journey you know super useful and they can prompt the models in a in a way that feels natural i think that there's going to be a lot for uh consumer usability um and so i think that people who can sort of like skin these models in a way that you know my grandmother could use for instance um like to me that becomes like very interesting and creating like a bunch of different sort of application level technologies that just make the average person a little bit more useful with these technologies seems to be the initial note that becomes interesting i think it's very hard to compete and say hey we will train the best models

with the most parameters with like i think that that is is a losing game that probably the big guys will continue to win and i think that it becomes interesting what becomes interesting is not trying to build the next app store but really trying to build you know the next Robinhood or whatever. Let's talk about the state of venture capital today. You've very focused on the earliest stages. How do you think about check sizes and valuations where we are at the moment? Yeah, what's interesting, and I'm sure that you've seen this as well, and feel free to chime in on your own views on this, but I think that what you're starting to see is seed is becoming quite a lot more competitive. And I think that it's because a lot of these later stage funds have

realize that you know it's it's pretty hard to do an a it's almost impossible to do a b and then anything at growth is like you have to be really really careful you're probably putting a bunch of structure in it um you're you know protecting your downside risk all these things and so it seems like the late mid to late stage game has dried up quite a bit and you see a bunch of these firms you know like 80 billion dollar aum firms now trying to be competitive at seed um which is kind of like a new development and so obviously you're seeing seed valuations push down you're seeing sort of later stage valuations normalize a bit um and so it feels like there's you know a war zone kind of happening at seed um it feels like every single person is chasing every single

hot deal the biggest funds in the world are spending their time on two million dollar checks um you know it's it seems super super hyper competitive at seed right now and i think that's trickling down even into pre-seed um pre-seed seems to be a lot more getting a lot more institutionalized before it was a bit of the sort of wild wild west people were just kind of you know doing what they uh were just kind of like firing off checks with valuations that were just kind of like done back back of the napkin math and now it's a lot more it seems a lot more structured and like a lot more people participating in a formulated way um so i think that i spend most of my time at Pre-Seed and Seed. And yeah, it feels like to really win the best deals,

you have to be very articulate and about real value that you can provide rather than, hey, I'm a seed investor and there's not many of us. So you better take my money until you wait for the bigger guys to come along. When there is this more competition, I think it just forces people earlier and earlier. And one of the things that has been happening simultaneously is that there are more and more individuals who can now write checks similar to what we would have historically called a super angel. And you almost get this kind of weird dynamic where you have individuals who have become the sizes of small seed institutions, and they're able to write checks at the size and velocity

at those institutions. So it begs the question, who ends up winning on brand, right? The individuals versus the actual institutions themselves. You operate under a pseudonym. And so you almost are living kind of in this like third bucket. How do you just think about, okay, somebody starting a company, it's obvious that there's a higher probability of success. It's not about picking, it's all about access. What are the pros and cons of the individual versus the institution versus maybe this like pseudonym, which kind of blends the two? Yeah, I think that's a great question. I think that what you're increasingly finding is the most discerning founders, even at the institution level, are still pursuing specific people in those institutions. And so it's not

like, hey, I want just Sequoia, but it's, hey, I want Sean McGuire at Sequoia because Sean, you know, worked at DARPA, has all these connections, you know. I think that increasingly the advice that you're seeing these young kids get from people who've done it a few times before is, hey, make sure that the person within the institution that you want is the person that is going to be leading this deal and doing this deal. And I think that with that in mind, the individual is kind of prioritized in a lot of ways even if they have the platform of a large institution behind them and so to me what's great about being pseudonymous is the reason that i've done the pseudonymity thing for so long is because to me it allows the only surface area for anybody to interact with

to be my ideas or previous work that i've done that is knowledgeable through the lens of the pseudonymity and so um what i increasingly find is like uh to win the best seed deals you have to be very very clear on and articulate on what the value that you are providing to these founders are at a granular level and it's not like these kind of like pie in the sky oh later on down the line when you're at series a i'm going to help you raise no it's like very very practical needs that are like immediate um and so i think that the feedback loop for like who are good seed investors that provide value whether it be hr whether it be you know any of these other things the feedback loop is much tighter um than it used to be it used to be you invested in something in

seed and you had like two years to before the a to like kind of prove your worth as a seed investor now it's like um hey great we took you wired last week um let's start branding kind of thing um and so to me uh being sued anonymous has allowed me to really just focus on the work and less so i'm like hey look at me i went to this school i did these deals back in a previous job or whatever to me that's all kind of like stupid and irrelevant um it's it's you're really only as good as your last deal that you've done in my opinion and so um yeah i think that being pseudonymous allows a one thing that it also does is it allows me to play in a place that is like uh uniquely kind of like um you know friends with everybody enemies with nobody um and so

i think that that's really helpful at seed um just because there's so much to see and so having a good network of people to parse you know at least the first level of things for you is really helpful too. And so, yeah, I think that, you know, my perspective is that even at the institutional level, the individual and what the individual value that that person can provide is the most useful thing in winning seed deals. And if you can't articulate what that is, you probably aren't offering enough. So what is the thing that you, you know, present in terms of the value proposition initially? The thing that I present in the value proposition initially, and I think that this is something that you're quite good at as well is like i kind of frame it as like hey i work with

a bunch of really technical people who build incredibly incredibly technical things i'm not the most technical person myself but what i am very good at doing is capturing and retaining attention and i think that there's a few useful pillars where attention has become sort of like increasingly a valuable sort of currency in the world that we operate in one is obviously like hiring right so it's like hey we have a really interesting company we have a great mission we been well capitalized why do you want to come work here how do we capture the attention of the best engineers or the best uh hard tech guys or whatever uh to basically come in and work here uh leave their jobs elsewhere to come and like believe in the equity that they'd be getting as

opposed to you know the salary that they'd get so that's one is like how do you capture the attention of ar like in from an hr perspective two is um how do you capture and retain the attention of investors right it's like how do you build sort of like this pedigree around yourself so that by the time that you go out and raise, you're around and basically already accounted for as opposed to you sort of going and kicking the tires on a bunch of firms and taking six months of a process to basically see if people are even interested. That's the other side of it. And then the third side of it is like, how do you just get attention on the things that you've built? I work with a bunch of people who are like extremely technically proficient, but when it comes to getting people to

care about this beautiful thing that they've built, it's not their core competency. And so finding unique and interesting ways to leverage the distribution mechanism of the internet and you know all of these different social platforms that increasingly playing an important role in the lives of venture capitalists and founders like how do you just get people to say holy shit this guy's building something incredible i can't wait for it to come out and or i can't wait for you know this to launch um i think that that becomes like a really useful thing and it doesn't seem like there are many groups there are some and i respect them all by the law but there aren't that many groups that focus on this specific segment of it all which is

you know like go to market and in in kind of a different sort of way and so um the value proposition that i provide is like hey let's capture as much attention as possible for you and modulate it into the most useful function of it um to to get your business to where it needs to go talk a little bit about um why the media landscape allows you to do this today right like it used to be that you would have to go on television or talk to a newspaper reporter. You, for all intents and purposes, in the most loving way, you shitpost on Twitter and are very good at it and are able to capture attention and drive people to take action. What is it that is different today than maybe five or six years ago that has allowed for an opportunity for someone

like you to kind of slip in and now provide this value to founders? Yeah, I think it's anybody who has a voice on the internet probably notices this, is that mainstream media has become increasingly less useful. It's become increasingly obvious that there's an agenda behind most things that are shared by mainstream media. And I think this kind of goes back to something we touched on earlier, which is like the individual versus the institution. I think people are increasingly more willing to believe the individual because the levers behind why an individual does something is probably a little bit more obvious than the levers of why a large media institution might do something so to say that you like understand you know like what the purpose of a new york times

article is like where what what you know like the the the editors and what the different people within the new york times were all trying to accomplish by getting this across that's a lot more obtuse than saying like who is this guy or what is this person what do they believe in and how does that tie into my own personal beliefs obviously it's not a perfect science and people can kind of like present themselves and whatever they want but i think that like social media twitter and and instagram these things specifically have kind of given people a um a distribution mechanism to have them have them understood um in a way and so you know when you're spending all day on on x.com and you're providing context about a bunch of different topics i think it allows people

to paint a picture of you that's a little bit more um easy to understand and maybe honest than you would get from like a mainstream media platform. And so that's allowed these voices to become a lot more powerful, these individualized voices to become a lot more powerful than they used to be. And I'm sure that you've noticed it too, like how many times you created value for yourself just by expressing your opinion on one of your various platforms. I'm sure that, you know, what you found is that it magnetizes the kinds of people that you want towards you because you find people who see things the same way as you do, or can at least, you know, combat the way you think in a way that seems valuable to you over the long term, right? And so, yeah, I think that

having a strong individualized voice in this landscape becomes this really useful and functional tool. What's interesting about it is most people think when they're running a business, hey, I should not say anything that will offend someone, right? And they very much want to be kind of cautious and walk on glass. What you find is the people who are the best at it, like Elon must piss off a lot of people. But he also pulls this huge magnet of talent and capital towards him. Palmer Lucky, another great example. We can just go down the line. There's a bunch of these people. And so in some weird way, I think my advice has morphed over the years from like, oh, you should try to build an audience to like, you should just say what you believe. And if you actually believe it

and are willing to say it out loud, there's some degree of you're willing to defend that idea in public, which you will be shocked at how many other people believe the same thing and are impressed that you said it and so then they will come and they will find you right and it seems like that's exactly what you've been doing as well and yeah totally and i think that the person who like set this playbook up before anybody else and was like the most honest version of this is probably peter zeal um you know peter has had these contrarian views for you know decades now and he's never really been shy of you know like even when the trump thing was going down he was very vocal i think that like peter is a great framework for this because he has constantly

spoke in his mind and if you look at teal fellows you look at founders fund or you look at any of the companies that are quintessentially telian um you know they all have this kind of through line of of um you know just like personal and and professional beliefs and i think that if you can establish yourself um in a very strong way with that kind of voice you know to your point uh the right types of people will come or not not the right types of people but the people you probably want um coming towards you are are uh that's just a good way to attract them so totally on the same page if we were to take that framework that he has in terms of his personal beliefs uh he also has turned that into very contrarian bets uh in terms of investments

themselves how do you think about consensus versus contrarian when it comes to early stage investing in one regard uh you maybe want to do something different and be right very early on but the whole you know uh a framework of asymmetry is that eventually the contrarian thing has to become consensus because that's where the value ends up coming so how do you kind of think about uh you know hey i want to do something that is different and find these outsized returns but also it has to be something that maybe eventually gets to a consensus belief sure yeah i think that you have to just have like a really strong um perspective on the macro and micro and be willing to take your take like strong bets on that to your point like the only value that's

really accrued like to me i every time i raise a fund and deploy it i want to raise and deploy a 10x fund right and there's no way to get to a 10x fund purely off consensus you have to take these kind of outsized weird sort of like non-obvious bets because if you're going to only take the obvious bets you know the market is pretty efficient and they're probably priced pretty well and so you're gonna see much less of like this outsized return to you and your investors and so for me what i always try to balance is like hey uh there's a certain amount of things that i have to do that just has to make sense like it has to fit the boxes check the boxes because my lps are institutions and you know like me doing these random one-off things is

not necessarily what they put money for me what they put money into me for and i think that that's also a thing that like you have to be very respectful of is like at the end of the day if you run a fund you are like beholden to you know uh endowments and pensions and all of these different things and you have to respect that you can't just like all of that off with you know just created the ideas and in some instances that works you know but in most instances i think that there's a fine line of balance between taking these early bets on these non-obvious people while also being able to be somewhat clairvoyant into the future about like hey if they hit if they get to zero to one and they hit x y and z milestone this actually does probably become interesting

for a founder's fund or this does become interesting for sequoia or andreessen or whoever else and so it's being sort of like having some level of premonition of hey do i think that um x founder with that y idea can basically get um can basically become a little bit more consensus over time right and so i think that understanding what becomes more consensus over time and who does it become more consensus to um becomes like a very important framework to have as a seed investor because you're really betting as a seed investor you're really betting hey this idea becomes more consensus to these large institutions over time and so um and at a point like it goes from uh consensus to like a sequoia to like a consensus to a co2 to a consensus

to like a t-row price right and every step of the way you have to understand like hey does this make sense for them and so you know i think half of it is coming up with these new and novel ideas and trying to capture value early and then the other half of it is understanding how do these ideas evolve into something that's more palatable over time to a larger audience. When you see these consensus, or I'm sorry, the contrarian ideas, they are usually started by people who wouldn't pass a normal job interview. How do you kind of separate out who's crazy versus no, who's just different and is necessary to build the company? And I say that because through the years I've met and sometimes even invested in people who had these kind of insane

idea is that you're like, man, if this works, this would be highly, highly valuable. But then six months, a year, two, three years down the road, you're like, okay, but this isn't the person who's going to be actually be able to pull this off versus other times it is the person who can pull it off. And it's one of the hardest things I think to do early on when you don't have a huge data set to kind of evaluate, how do you do it? The way that I do it is like, and to your point, I like to find people that are unhirable in other places, like could never work at like an insurance company or like a law firm or whatever specifically because they're so obsessed with the idea that they're working on that they just would never be able to work anywhere else

like for instance we kind of touched on it a little bit um earlier uh you know i have a friend named augustus dorico he's building a company that's supposed to like uh be a platform for weather and modulate weather in a bunch of really interesting ways you talk to augustus and you talk you see how passionate he is about things like rain and things like hurricanes and you realize like this there's nothing else for this guy you know what I mean like there's no other thing that this guy could do this is kind of like this is it you know if this doesn't work for him like it's you know I don't know what happens next because he's so passionate he has so much knowledge and I don't know where it's you kind of like look at these people who are like oh you're

clearly taking it all in bed on this like everything that you're teaching yourself your network that you're building you know the things that you spend your day-to-day on are clearly oriented in such a specific way that it's like there's no like plan b it's literally just you are doing this and if you're not doing this you're finding a completely new planet you know like you're scrapping everything that you have going for you and like really literally starting all over and so i think that i love those people who seem all in on ideas who are like yo if this doesn't work i have no idea what else i have left for me there's no like i just ended up at a law firm somewhere doing like corporate law or whatever it's like you know either this is going

to work or i'm back on my buddy's couch figuring out the next idea and i really like people who are all in like that and i think that if you really have sort of an outsized idea that you want to run with you kind of have to operate in that way otherwise you know you're hedging yourself at a time where you should be all in the last question i want to ask is kind of internal uh when it comes to these uh early stage venture capital firms how do you think about portfolio construction some people want to go spread as many small checks as possible and just kind of build this massive index other people are like i want to take eight to ten bets and be highly concentrated what's your strategy i think it's probably somewhere in between i don't love the

idea of like having a bunch of and i think that like if you're honest with yourself um at seed and you really want to do you really do want to be helpful to these companies um you have to be honest with like how much work you're actually able to do um and so to me it's like much less useful for me to do 150k checks um and just sort of index the market because at the end of the day you're you'll get a market return you know like there's there'll be nothing special about your return you know you'll basically just be kind of like in the median of whatever that that return profile is right i think that to be really effective especially at the seed stage you kind of have to take bigger bets with a smaller amount of total bets um and and for me that allows

you to work closely with these companies in a way that you can see value outsized value returning to you as an investor and your investors in your fund um and so to me the right number i have a 20 million dollar fund it'll probably end up with 30 to 35 companies at a median check size of called 600 to 750k um and that'll probably be you know uh where i net out and and i think that that is enough ownership up front where you're not getting, I mean, you probably still get crazy diluted, but at least through that dilution, you'll still end up with a healthy amount of percentage. And you're not spreading yourself super thin where you're trying to help 50 companies every week, you know? And when you see, you know, we talked about the media stuff,

but I guess like also if you're writing those size checks early on, you're below the threshold where it's highly competitive. How much of the deal flow is coming inbound on Twitter versus personal networks of individuals versus large institutions, other VC firms that are sending you deals? Yeah. I think I'm really lucky in the sense that I seem to be pretty neutral and most people find working with me totally fine. And so I'm lucky in the sense that... And I'm sure you have this too since you have quite a big platform yourself. I just have an email that's latently available for founders to send me whatever. I probably get anywhere on the order of 75 to 100 deals a week uh maybe four to five percent of those are really interesting and worth diving in

more um what's also great about having a platform as i'm sure you know is that the cold outreach uh conversion percentage is quite high you know i can reach out to founders and at the very least they'll be like who the fuck is this random meme page uh you know should uh asking about my company i might as well see at the very least what's going on here and then when you can articulate like hey I actually take this quite seriously. I'm a student of the game. I have a lot of value and people that I think that I could be able to provide to you. Then it becomes a little bit more of an interesting conversation. And so, yeah, I think that what's the right balance for me is working closely with a bunch of the funds in the Valley who I'm very lucky to work with

quite closely, as well as trying to find net new things so that it never seems one-sided in that exchange right so it's not like oh i'm just taking deal flow from sequoia every single day and they get nothing back it's you know i give them one thing i i send them one thing they send me one thing and we just go back and forth until you know hopefully we've done we've cross-pollinated a bunch of stuff and i'm really into being collaborative in that kind of way i think that there are some people who are like weirdly not weirdly i understand where it comes from but they're very focused on just accruing all of this stuff to themselves. And to me, I think that over time, you are going to have to work with these people in some capacity. So it might as

well be earlier than later and making sure that you are sorted in a good way when that time comes. That makes complete sense to me. It sounds ridiculous to ask, but where can people find you if they want to send you deals? Yeah, you can just any social media platform. You just type in Praying for Exits. I'm sure I'll pop up. And if not, GP, like general partner at Praying for Exits is another great place to reach me. I'm very active there. So yeah, reach out. Awesome. I appreciate you doing this. I learned something which always makes these great. And I think that you are helping to pioneer a whole new model where your identity doesn't matter nearly as much as the quality of your work and your kind of value of the pseudonym

actually is driven by the word of mouth, right? You help one founder, they go tell everyone else. And then all of a sudden you became known as a super high quality, high value kind of addition to a cap table. And then there's this element of like, everyone's still a kid at heart and likes the idea of let's get the pseudonymous VC

on the cap table as well. Awesome. Well, all right. Thank you so much. We'll do it again in the future. Yes, sir. Thank you, man. I appreciate it.

We'll be right back.