This Week in Startups - AI investments, VC ecosystem geography, and VC hypocrisy | E1956

Episode Date: May 27, 2024

This Week in Startups is brought to you by… Squarespace. Turn your idea into a new website! Go to http://www.Squarespace.com/TWIST for a free trial. When you’re ready to launch, use offer code TWIST to save 10% off your first purchase of a website or domain. OpenPhone. Create business phone numbers for you and your team that work through an app on your smartphone or desktop. TWiST listeners can get an extra 20% off any plan for your first 6 months at https://www.openphone.com/twist⁠ Lemon.io. Hire pre-vetted remote developers, get 15% off your first 4 weeks of developer time at https://Lemon.io/twist * Todays show: David Weisburd hosts Jaime Matus, Michael Eisenberg, and Jason Calacanis to discuss AI investments and the potential washout of overfunded startups (4:11). They also touch on VC hypocrisy (38:47), and the role of geography in the VC ecosystem (54:53). * Timestamps: (0:00) David Weisburd intros Jaime Matus, Michael Eisenberg, and Jason Calacanis (4:11) Pitchbook data summarizing the total amount of capital invested in AI (12:12) Squarespace - Use offer code TWIST to save 10% off your first purchase of a website or domain at http://www.Squarespace.com/TWIST (16:33) Predicting a washout of overfunded AI startups and sky high valuations (25:30) OpenPhone - Get 20% off your first six months at https://www.openphone.com/twist⁠ (26:57) Discussing Michael Eisenberg's career and investment experiences (37:22) Lemon.io - Get 15% off your first 4 weeks of developer time at https://Lemon.io/twist (38:47) Discussion on Greg Isenberg's tweet about VC hypocrisy (54:53) Fundraising rankings by ecosystem * Follow Jaime: X: https://x.com/JaimeMatusVC LinkedIn: https://www.linkedin.com/in/jaime-matus Check out: https://www.invariantes.com * Follow Michael: X: https://x.com/mikeeisenberg LinkedIn: https://www.linkedin.com/in/mieisenberg Check out: https://aleph.vc * Follow David: X: ⁠https://twitter.com/DWeisburd⁠ LinkedIn: ⁠https://www.linkedin.com/in/dweisburd⁠ Check out: ⁠https://10xcapital.com * Follow Jason: X: ⁠https://twitter.com/jason⁠ Instagram: ⁠https://www.instagram.com/jason⁠ LinkedIn: ⁠https://www.linkedin.com/in/jasoncalacanis * Thank you to our partners: (12:12) Squarespace - Use offer code TWIST to save 10% off your first purchase of a website or domain at http://www.Squarespace.com/TWIST (25:30) OpenPhone - Get 20% off your first six months at https://www.openphone.com/twist⁠ (37:22) Lemon.io - Get 15% off your first 4 weeks of developer time at https://Lemon.io/twist * Check out the Launch Accelerator: https://launchaccelerator.co * Check out Founder University: https://www.founder.university * Subscribe to This Week in Startups on Apple: https://rb.gy/v19fcp * Great 2023 interviews: Steve Huffman, Brian Chesky, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland * Check out Jason’s suite of newsletters: https://substack.com/@calacanis * Follow TWiST: Substack: https://twistartups.substack.com Twitter: https://twitter.com/TWiStartups YouTube: https://www.youtube.com/thisweekin Instagram: https://www.instagram.com/thisweekinstartups TikTok: https://www.tiktok.com/@thisweekinstartups * Subscribe to the Founder University Podcast: https://www.founder.university/podcast

Jason, I know you're in mourning. How are you holding up? With the Knicks, we had a great season. It was a battle of attrition. You know, if we had had our full complement of All-Stars, O.J. Mitch, Randall, at heart, we would have demolished the Pacers. They would have been swept her gentleman's sweep. If we had made it through this series, I was looking to come to a game with you, Jason, when I'm in New York in a couple weeks. But we've got to get deeper in the season in the playoffs. I got lucky I got to go to two of the games versus the 76ers with David Adelman, who's one of the owners and a friend now.

And that was a great rivalry. I'm sure that rivalry will happen next year in the Pacers. You know, now they're on our list. But anyway, this isn't this weekend, Nickerbockers or the NBA. This is liquidity where we talk about. Yeah, we have the conference coming up in two weeks. Yes, we'll be in Napa in two weeks. What's the latest on the conference?

It's just a great group. We got a last-minute surge of people who wanted to come. We tried to accommodate as many as possible. I'm trying to keep it. I was trying to keep it to 100. It's probably like more like a 125 right now. But it's just GPs and LPs, high net worth individuals who are angel investors in LPs and then everybody in

between. And it's just a way for us as a community to get together, have important discussions without founders in the room, without service providers in the room, just focused on that LPGP. startup investing and support system and how we look at the world and it's going to be a lot of like

Sunday, Monday, Tuesday night poker, late at night, you know, activities, incredible restaurants, incredible presentations, and just really like a really well utilized 72 hours of your life. So you get in there Sunday night,

we end on Wednesday with a brunch, it's just really productive in terms of work. So if you're going to take a couple of days off and you're a GP or an LP. This is the event to go to. I'm going to do it twice a year. I want to bring it to maybe L.A., New York, Abu Dhabi, Dubai,

you know, other places in the world where people are getting into capital management. And so, you know, I'm going to be looking for partners around the world to do this. Very cool. People have been asking me what the buy-in is for the poker games.

We're going to have, like, I think, five or six tables this year. There'll be two or three tables dedicated to learning. the big game will probably be $100, $200, and these are all points. We're not playing for actual cash, it's points. It's not Molly's game. It's not Molly's game, low stakes, everything for charity.

Yeah. And it'll just be a lot of fun. Excellent. Well, we have a great show today. I'm excited to get started. Let's do it. This week in startups is brought to you by Squarespace. Turn your idea into a new website.

Go to Squarespace. dot com slash twist for a free trial. When you're ready to launch, use offer code twist to save 10% off your first purchase of a website or domain. Open phone. Create business phone numbers for you and your team that work through an app on your smartphone or desktop. Twist listeners can get an extra 20% off any plan for your first six months at

openphone.com slash twist. and lemon.io. Hire pre-vetted remote developers. Get 15% off your first four weeks of developer time at lemon.com slash twist. Welcome back to this week's liquidity podcast. With me today, I have Michael Eisenberg from Olive. Next, we have Jaime Mattis from Invarientes, a venture fund of funds. Of course, we have Jason Calacanis from the launch fund.

I'm your moderator, David Weisberg, co-founder of 10x Capital. Today, we have several great topics to discuss. Pitchbook has released data detailing the breakdown of AI investments by category. A well-known CEO lashes out at VC hypocrisy, we discuss, and we take a look at fundraising by region, Bay Area is in first place, but there are several surprising results. Let's dive right in. Pitchbook has released data summarizing the total amount of capital invested in AI in 23 across several different use cases.

We talk about those use cases, often on the show. vertical applications which have raised 27.8 billion in 2023, with horizontal platforms taking down 27.1 billion, autonomous machines raising 3 billion, and AI and ML semiconductors raising 2.4 billion. Michael, you're right in the thick of the AI ecosystem. What's your strategy at Aleph when it comes to AI? And what kind of startups are you looking at back? So we've actually been doing this AI thing since 2013. In fact, in the original slide, of the first Olive fundraising deck, we talked about it. We went out to pitch LPs.

The argument we made was just like benchmark capital, where I was previously got started in 1994 when the internet came along. So it was time for a new fund in Israel to take advantage of this AI, machine vision, deep learning revolution. That was in 2013. In fact, the first AI investment we made was in 2013-14, which was a company called Winward Maritime AI, now publicly traded in the UK. In 2015, we backed Lemonade.

which is the first AI insurance company. And so what I think is new in the world is actually not AI, but LLMs. And those two terms have become conflated in current discourse. And we have in general avoided foundation models in a big way. I'm in the Gavin Baker camp on that, that this is the fastest depreciating asset in the history of technology. And our focus since day one has been using AI to transform an existing legacy industry. So super vertical focused, vertically integrated focus. And we've kind of attacked this kind of application layer.

We'll talk about it later. We talked about the companies. But we did dream AI, which is building kind of AI to protect critical infrastructure in nation states and spines, which does AI for book publishing and lemonade and insurance, et cetera. And that's kind of been our strategy since day one and we've stuck to it. Yeah, you mentioned that's the fastest depreciating asset. That seems to be a view that a lot of people are having in the last month or so, what made you determine that early on?

In general, when we think about data, we ask the following question, do you have any data that is proprietary because that gives you edge at the end of the day? And so if you look at our, again, early on investments, when we're handled maritime data, and it's paying off in Spain, by the way, because nobody could accumulate that data. Much of it was proprietary, we can do things with it that nobody else can. The LLM race is a race to access all of the world's data. Inevitably, that's not going to be informed by something that's proprietary. So the moat on the business is very low. And I think there's kind of two ways to look at venture back businesses over time. One is growth. That's the obvious one. The second one is kind of

Michael Mobusian's model, which I think Bill Gurley's covered many times before, which is about competitive advantage or cap, as he calls it. And we think competitive advantage comes from having proprietary data and deep integration up and down the vertical stack in this space. And we think, So, for example, if you look at Windward, they started actually tracking ships doing nefarious activity at sea. It was bought by governments. Ultimately, that moved into supply chain because boats move at sea for supply chain. And now it's handling container management using AI and automating the hell out of the way freight forwarders and others handle containers at sea and the ships that come in. So it's super, super, super high moat to this business because it's 11 years of collaboration.

collecting proprietary data and then applying it and integrating it into systems. The same is true of Lemonade, which is we have the super proprietary data around insurance when everybody else is working off the same kind of data that they purchased. And because we built this two interactions, we're just better pricing, better risk management, and our operating costs are significantly lower and it's all proprietary. Hi, me, you're a venture fund of funds, which means you invest in the top emerging managers in the space. We're a really bleeding edge when it comes to AI. What is the next wave of AI startups and where does Alpha crew in the space?

Fantastic. So one thing all the four of us I think agree is this is going to be one of the best vintages in the history of BC and a good portion of it will be the impact of AI

and economy. From invariantes, we puzzle, we build this amazing puzzle of 20 VC funds and 35 startups. We We have exposure with this strategy for more than 600 startups, and we are likely to have exposure to 100 and 100 to 20 startups doing something around AI. So when we focus our efforts in AI through the fund managers we bet on or the direct tickets we do,

we are focused on five waves or five spaces in AI. The first one I think it's hardware and hardware. semiconductors. This is one of the strongest space and we have seen amazing companies like Brock doing something really great. Here we do the picks and shovels bet from invariante side and we bet one good example is Lambda Labs. They are building this amazing GP cloud infrastructure for engineering and research teams and they are doing really great. Then we have the second space for us is the infrastructure or platform space of AI. There are some really great companies doing interesting things besides big LLMs that are more focused on the consumer side of the market. There's, for example, contextual. They are building this enhanced model for enterprise use that is more reliable, more accurate, more secure, has governance and a lot

of stuff for the sector specific. So we are really bullish on that part as well. So 50% of our portfolio will be to those two spaces in the AI ecosystem. But then we have the vertical side of AI, we are betting on four spaces, health tech, fintech, or financial services. I think future of work and mostly with voice recognition has a strong potential for AI applications. And then I think the last sector is still a work in progress. Besides that, we also invests in the horizontal side of AI. Here we see more transversal or more general purpose applications. There's a really cool company out of Colombia operating in the States called DAPTA.

They are building this automation platform that has this quick integration with all the suite of application business used on the day-to-day basis. And they are doing more a solution approach rather than a tool approach. So that's really exciting because it generates faster adoption in the market and quicker product market fit. And then last but not least, I think the autonomous vehicles and robotics, I think it's one of the, with the most potential in terms of AI. We did a strong bet on a Canadian startup whole automotive. They are building this incredible workforce, robotic workforce for extreme environments. So if you see the AI landscape as an ecosystem with our portfolio strategy, we're trying to rely on power load distribution. So to seek that alpha, we are trying to do this really discipline bet across funds,

across direct tickets, and trying to weigh that 20% of our portfolio on this sector. And I think we will be able to find two or three companies, outlying companies gain all those outsides returns we are looking for. All right, startups, you ever notice how successful businesses are constantly evolving, they're constantly adding new features and you get that product velocities? Well, that's why I am all in on Squarespace and you should be too. My pals at Squarespace keep adding new features and revolutionizing their platform all the time. Week after week, month after month, year after year, and they've added AI.

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website or domain purchase at Squarespace.com slash twist. Jason, you just made a big bet on Athena, which is basically outsourcing, and they're using human-in-the-loop AI, so they're not an AI company, but they're using a lot of AI tools to make their EA's, their executive assistants much more effective. Are you seeing these kind of AI assistive startups start to merge that are not pure play AI? Yeah, that investments are our largest investment of the year. Jonathan, the co-founder was the co-founder of Thumbtack, which I was the first investor in, and I'm the first investor in Athena. You can go to Athenawau.com and get like a discount or whatever.

And they are, I think, a company that will be looked at ultimately as an AI company. What they're doing right now is matching you with a virtual assistant in Manila, the top 0.1% of the knowledge workers there. And then as they train them on how to use AI tools and they work with you over time, I think what you'll see is repetitive tasks. Those individuals who are your executive assistants will kind of do the automation for you automatically. And so I think that is a clue as to who's going to be the winner in the AI space. All of these big bets that people made on foundational models, I think are going to be one-x investments in a lot of cases.

And so if you look at inflection getting gutted and bought by Microsoft without getting bought to avoid like FTC or, you know, whatever, FCC scrutiny, they are an example of, I think, people, and Humane AI is getting sold for parts it looks like. I think a lot of those big bets people made, because you have open source, open AI, and just major players building these models, the models are going to be coming down to zero. And then it is a game of data and features and focus around the customer experience, which I think you see in what Open AI is doing right now. Their last announcement for the Omni last week was really focused around user experience and the product itself. Microsoft's announcement was around laptops that have chips that allow you to record your desktop, kind of like that startup rewind AI is doing, I think it's the name of it.

And Microsoft's just building that into Windows. And you're going to need some power, you know, on your desktop to do that, record your entire desktop. That's a whole other ball of wax in terms of privacy. So then if those things all become commoditized built into the operating system, you can kind of look at them like your address book or calculator or your phone or your browser. I don't know that there's startup investing VC opportunities there. But there are definitely opportunities in startups like Athena or you mentioned Lemonade, people with proprietary data sets who can then. and build experiences and products and services for businesses and consumers that are extraordinary. But I think we're going to see a massive washout of these overfunded AI startups.

That will be the theme of the next year. Because if you start raising at a $5 billion, $10 billion valuation, you're raising hundreds of millions of dollars or billions of dollars, what kind of revenue do you need to support that? So once again, there's a huge gap between the public markets, valuation of these companies and the private market friskiness we see sometimes. And we just saw it with crypto. Farcaster, I guess, is the social network that's, you know, permissionless and distributed, et cetera. They just raised $150 million at a billion dollar valuation with

350 paying customers. But I think those customers, at least when I went through the walkthrough, pay five bucks. So that might be a hundred, thousand, maybe it's a thousand times revenue. I don't know if they have a million dollars in revenue or what it is. So you've got to be careful if you start investing at these sky high valuations and have a really good idea of what's going to happen in terms of filling in that revenue. Now, we don't know the terms, David, of those deals, right? There's protective provisions. They might have a 3x liquidation preference on them, participating preferred. So maybe those folks, when they sell, you know, they'll get 2x their investment on a $250 million investment.

But anyway, that's like a very dangerous high-risk area that I think is going to be a lot of washouts. J. Cal and I are around just a bubble in 96, 97, 2000, and he was at Silicon Alley. As a vegetable, there's a lot of eyeball models that seem to be out there right now going back to that time. And not enough people around actually that remember it right now, but it really feels like that again in some of these categories. Explain the eyeball. Or the engineer model. I love that model. Multiply your valuation by the number of engineers he hired.

They were literally comping in the late 90s analysts, like Wall Street analysts, and certainly venture investors were comping using comparables on eyeballs and then assigning them some sort of future dollar value for which you can monetize. And at the same time, by the way, some of the platforms like AOL were often giving out ads and kind of monetizing it with warrants, so to speak, and somewhat of a circular model. not only AOL, by the way, Altavista and others that people have long forgotten dog pile.

And so these became proxy models. You probably remember the globe.com, Jason, which is the New York company. I wrote a seminal piece on them saying it's a bunch of hot air and they put it in their autobiography of the time of how I destroyed the company when I was a journalist because I was like, this thing isn't worth 10 cents.

Yeah. And that skepticism, which Jason is expressing, Express, then is expressing now about these models, is kind of disappeared. And it turns out that somebody, if you want to get out of these as a venture investor and get liquidity at some point, at some point the buy side has what to say about this. And the side buys future cash flows, not future eyeballs or not even, you know, future GPUs that you happen to be running on and paying Nvidia for. You know, you need something proprietary, whether it's data or vertical integration or something in order to be able to generate cash flow

that ultimately generates returns from investors and the buy side's willing to invest. And the great paradox of this, Michael, is when you look at what happened, it turns out eyeballs and attention were going to be monetizable. It's just who had the great mousetrap, the great solution to take that attention and turn it into actually the register ringing. That was Facebook, right? And, you know, Google, you know, they got people's attention when they were looking for information on the web, and they figured out a device, search, put your intent in a box, match that with an ad auction, boom. And then psychographics with Facebook, we know what you're looking at, we know who's in

your network, we know what they're interested in, we're going to use AI machine learning to try to just figure out the next best ad to show you. And so somebody did figure both of those things out, but there were hundreds of companies who didn't figure it out. And those hundreds of companies were collectively worth, you know, I don't know, hundreds of billions of dollars, and then all of that got consolidated into two players. maybe three, Google, Amazon, and meta. And so that's, I guess, the lesson here is where will all this activity get consolidated

down into? And if I were to make the bet, it might be Microsoft, Google, and OpenAI, meta, Twitter, you know, like the people who have the data, people who have existing networks. So I think it's like a big player game right now, and I'm skeptical. Not to overstretch the comparison, Jason. I wonder sometimes whether Open AI is the equivalent of overture, which kind of invented the business model

that Google ended up capitalizing because they had both the eyeballs and kind of the better mousetrap. Yeah, I think there's a chance Open AI might become on an economic basis, a complete washout because they have this like non-profit kind of concept there and then Microsoft has all these desktops and Microsoft seems to be launching

all the same process. products that Open AI is in the same week, Google's doing it in the same week. Google has 5, 6, 7 products with over a billion users, Chrome, Android, Google search, Gmail, YouTube, right off the top of my head. These are services that have one or two or three billion users. What's going to happen when AI is just built into all of those? Well, we're seeing that with meta, putting the AI box at the top. We just saw it last week with Google for some searches, putting the search summary created

by AI at the top. What does that do to Open AI? I think Open AI is going to be the first person up the hill. They get all the arrows. And then maybe they just are a nonprofit again. And all those users who are paying 20 bucks a month wind up moving, getting the same value from their Microsoft Office AI companion, Google built-in AI companion, that's free,

Apple's AI companion, that's free. All that stuff may just be free and built in to those dominant players. So I wouldn't be surprised if Open AI is very, valuation goes down from here. If I owned Open AI stock right now, if I was like an employee, I would sell every share. Every share. Maybe I keep 10%. I would literally, if I'm at Open AI and I had a $10 million package, I would sell nine, keep one million, put that $9 million into those other players.

I think one of the logical traps that people fall in, VC's fall in is this whole power law outcome where, yes, you could, if you bet on all of them, then you could have a good portfolio. The big logical trap there is that you still need that. If you're going for one out of every 30 companies to really be a breakout, you need to have the right ownership. You need to have the right entry point. If your winner ends up being a 3x, you invest out of $20 billion and it exists at $60 billion, great. But what about the other 29 companies that go to zero or return your capital? So I think there's this backwards. When I meet angel investors, when I meet people who are starting their first fund or I'm LPing somebody's new fund,

I just tell them, entry price does matter. And there's this fallacy, entry price doesn't matter. Well, if you pay, you know, let's just say, Y Combinator prices for C companies. We all know why Combinator companies get a premium. I see Y Combinator companies asking for $20 million valuations with no revenue. And then I see, you know, other non-YC companies that are at,

you know, a half million in revenue, and they want $15 million valuations or $10 million dollar valuations. I would rather invest in two of those than, one YC company. That doesn't mean YC companies are bad. They might be even better teams in some cases. But then if you're building a portfolio strategy, if you can make

three times the number of bets or twice the number of bets and have shots on goals, the chances of hitting the power law go up. And so this is why people sometimes have their portfolios and their first fund go underwater. These emerging managers do not have discipline around price. Yeah, and I agree

with you, Jason, discipline. Is it's the game we need to play regarding AI because there's a lot of asymmetry regarding valuations and there's a lot of noise around. We struggle every time we see a deal coming up in the investment committee. And I think the trick here is to how to choose the winners and to wisely detect which is commodity, which is generating strong value. As Michael said, you need the value of the data set, the mode, the technological edge. And I think that it's back to basics on AI and be really disciplined on your portfolio construction.

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slash twist. And if you have existing numbers with other services, no problem. Open phone's going to port them over easy, peasy, lemon squeasy, no extra cost. Head over to openphone.com slash twist to start your free trial and get 20% off. Michael, you've been a VC for several decades. I'm very curious. Have you made more mistakes overpaying for companies that you got excited for? Or missing companies that because of valuation that you just straight out of us?

Michael's very, very old. I can tell you that. He was like an old man when I met him in the 90s. He had like that old man energy. He's very senior. I'm joking with you. I think we're the same age. I think we're the same age.

I was going to say that. Why do you always seem so much older than me? I'm so much more mature. More kids. I got more kids. That's a recent way. Yeah. My hair is grayer. Look, I got the gray in beard. Yeah. Yeah, I started to see that gray in my beard myself.

Like, what keeps you up at night? Other than my children and grandchildren? Yeah, other than your children and grandchildren. When you get to this age and you've been doing this for so long, this statistics start to get against you. Like the kind of historical statistics in the venture business say that you're in your best years in your 30s and maybe early 40s. And this is a hustle business that you've got to keep out.

every day and be excited and curious about. And so I'm questioning whether I can play at the top, you know, at the top of this business, you know, even though I'm just turned 53 this week. And so you've got to keep at it. And I think you've got to be self-critical to be able to, you know, say, can I do this job on behalf of my LPs and my investors? And together with my partners, can I keep up with them? It's not trivial. And do I have kind of a supple enough mind still to keep making mistakes because if you don't make mistakes in this business, you're not going to hit the big one. And I think that's the biggest thing. You know, I think about that too. I'm 53. We're the same age. And, you know, you can, but I've only been investing this. I'm just ending my

second decade. You've done it a lot longer than me. You do have to think because it's a really important topic. And Jamie, you probably have some stuff to say here. If you don't have the energy, if you don't have the risk tolerance, then you should hang it up. I think that's like a very a mature thing to do, and I think we see that. The problem, of course, is we need people who have battle scars and who can talk about the attention economy from the 90s and what the lessons are from that, because the lessons from that are is somebody will figure it out, most will not. And the person who does figure it out, you can't hold your equity in that company long enough. You know, like I was talking to Freiburg, he sold his Google on the Olin podcast.

He had sold his Google after he left or whatever. And, you know, he's not. had said, oh, I made a calculation about it. He didn't say what it was, but I'm sure it's like painful. And great companies, you know, come along every 10 years. And you get a lot of good ones, but the, you know, the breakouts, the true breakouts that become worth in today's dollars, over $100 billion, are so rare. And your signaling can get broken. And that's why I think you need to do what Sequoia did really well, which is they have

these stewards of the brand. They curate talent. They trust young people to come in and work with founders and do those first round meetings. That's what I'm doing. I have an army right now of researchers, analysts, and associates, an army of them. And people don't know how many I have. I literally, we did 117 first meetings two weeks ago. I had to tell my team to slow down.

I said 117 first meetings in one week. I had this goal of trying to hit that for a while, but these young people have so much energy. They're like, yeah, just five meetings today. I'm like, the VCs I know who are 53 like my going on, like if they do five meetings in a week, it's a lot, a lot of these folks. I got people doing five and a day. Six in a day. It's hard to do.

It's hard to keep your energy up for six meetings, you know, and then also the distractions of life. Kids, you've got, you may have your nest egg right now. You might be managing your family office. All of these things draw your attention away. And so the way I figured out is I have an army of young people. I'm talking like 22, 23, like extremely young, 24. And I didn't hire them based on their age.

I just hired, you know, folks who are just out of school to train them up before they learn the mistakes of venture capital, the entitlement of venture capital. I want to train them in the hustle that I had as an angel investor. And so that hustling of, hey, I'm going to meet with 500 people in the next six months. and we're going to wind up investing in two of them. That ratio is a very hard ratio for people to actually execute on. It's very hard to execute on that. And I think old people can't.

They just don't have the energy for it, especially when they're 30, 40 years in and they have cynicism or, you know, too much signaling. And I had to tell them, what are the weirdest companies? What are the ones you had a hard time understanding? Start with that. Give me the ones that you love the founder but don't understand the business. Those are the ones I'm most interested in.

And that's what you have to really fight against when you're building a firm. Is this codification of ideas? I literally just came from a dinner with founders that we arranged at Olive. I still have my glass of wine here. And I asked it to table, these are second timers. I mean, people have already sold their first company. Yeah. And we had four of them at the table.

And the question I ask is, what is the craziest idea you have right now? That's the question I asked. And nobody could answer the question. And so I checked out and had another drink. Important lesson. It's interesting because if you look, this is historical and it's well known in YC. The top outcomes were not very popular at the round, whether it's Coinbase, Dropbox, Instacart, Reddit. But same thing with the TL Fellowship.

You had Ethereum that, you know, some people believed in, but a lot of people thought would never work yet, Figma. So, yeah, it's these companies that did not get as much heat during the time, but they ended up being the biggest outcomes. Obviously, Airbnb, the people that invest in Airbnb, I think only, they said only one investor, Keith Rboy, invested because he liked the idea. Every other investor invested because he liked the founders. That's telling, yeah.

And it was a pivot, right? They had different ideas. They pivoted a little bit along the way. They were selling cereal boxes. And Jaime, you see hundreds of fund managers every year. What's the sweet spot for motivation, fun size? What gets you really excited when you meet an emerging manager? We analyze between 200 and 300 emerging managers each year.

So we are very good fund manager picker rather than startup pickers. What excites us about a fund manager, first, I think their unique deal flow. I think having a unique deal flow is something that resonates on us. We always analyze their grid, their hustle, how they work, their craftsmanship around their portfolio strategy. For us, it's something that we double-click on every manager that we see. we measure that they're skin in the game because we all agree that VC is a long-term game with long-term people. So when we pick an emerging manager, we try to get this sweet spot between a $30 million fund all the way up to $100 and $150. Because playing in our early stage play field, we see a lot of misalignment when there's $200, $300, $500,000,

a billion dollar fund trying to play on the early stage game. So we prefer or we tend to favor more emerging managers with small funds, but they are more aligned with the performance and the carry, rather than the management fees. So we look for not only a strong team of complementary skills in the managers, but we know that it's a really hard work to invest in early stage and pre-seed and seats. So we always analyze the team below them as well because you need a strong team in order to win in BC. So I think those are the things that we always analyze the fee structure.

As you get more sophisticated in the space, you understand as well those things. But I think having that magically weird craziness of understanding BC and knowing that it's art and science and it's a people's game. So we tend to see those characteristics in our fund managers, and that's what's excited us. And what we build, because having 20, 30 funds begins to get complicated, trying to measure the overlapping, we build this amazing puzzle of funds, and we're almost near to zero overlapping. So that's an extreme work for us as well. How do you manage all those, if you have 30 or 40 portfolios, or fun? funds, how do you track all that?

Do you have like an intern or an associate, just put them all into a Google sheet and consolidate them? Is there software to do that to figure out how much you own if like three of us invest in Athena and then you're trying to figure out what you own in Avena? It's crazy, Jason. It's a working progress. Actually, the last three, four years, we have been trying to build our own tech stack because it's difficult to have everything in different places.

So we built on our table, our tech stack to handle all the portfolio management, because we have these 20 fund managers that we have a strong cadence with them, alongside the 30-40 companies we manage from the direct ticket side. And being our third vintage, now it's a really big portfolio. So having a strong leverage on technology, the four of us, we are four partners and one director of operations. the four of us, we are all hands-on into the fund managers and portfolio relations. So it's almost a daily gig, and it's really hard.

I won't say we do it perfectly, but we have been refining the process in the last three years with a strong focus on how can technology help us on being more efficient and relying on AI applications as well and being every day a better VC. But it's complicated. Right now, startups have to do more with less. We all know that, and founders have to be smart with how they deploy capital. Investors are very tuned in to being capital efficient. So, if you need great tech talent, but you don't have the time to interview dozens and dozens

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A SAP. A couple of launch founders have worked with lemon.com. I. And they've had great experiences. So here's your call to action. Go to lemon.com. to find your perfect developer or tech team in 48 hours or less. And Twist listeners get 15% off their first four weeks. Stop burning money. Hire developer smarter. Visit lemon.i.o slash twist. Hey, you know, we should talk about this tweet by Greg Eisenberg. Speaking of the tweet, Greg Eisenberg, CEO of late checkout, had VCs on X all riled up with a tweet he shared highlighting the hypocrisy in what VCs tell founders and what they actually do. Some of the highlights, including telling founders to dedicate their life to the business while taking August off and maybe December, telling founders to go big or go home while utilizing a portfolio strategy and telling founders, it's all about the team while firing management. Okay. Michael, what do you think? It seemed like the common criticisms of VCs. I don't know that any of those are like too new or interesting, to be honest. It feels like a rehash.

He's missing the last name. I don't know. The job of the venture capitalist is to be the stagehands and the job of the board is to hire and fire the CEO and be supportive and ask hard questions. That's the job and kind of encourage the founders to make the hard decisions. Candle, I think if you take August off, off your LPs should fire you. That's the truth. And if I'm not working as least as hard as my founders, I'll get out of their way. And probably I should hang it up as well. And so the other point he makes, which is like they have a portfolio, you may want 3x, they want 30x. That's the business. Venture capital is a home run business. If that's not the kind of outcome you want, then you shouldn't take venture capital. There are plenty of great technology businesses that aren't venture capital suited because they're not swinging for the fences. And I'll say very openly and candidly, I don't care about the one and a half and two X and three X's. I'm interested in the one

that becomes the power law, so to speak. And so if that's not what you're looking for, don't take my money. And you know, you should reference and see if I work hard. And if I don't, don't take my money either. And you're easily referenceable at this point in this business. everybody knows who Jason Calcanus, everybody knows who Peter Fenton is and Bill Gurley and probably know who I am. Do your reference check. Ask my founders.

I've worked with tens of founders over the years. If you think I don't work hard, don't take the money. And if I don't work hard, my LP should take away my money. I hope Jaime, if it was my LP, would take my money if I didn't work all of August. I agree with Michael.

You know the rules of the game. And yeah, in every market, in every ecosystem, there will be a lot of well-intentioned people and nice guys and doing the right things. and every market will be the greedy guys, the sharp elbow guys. It's part of it,

and you need to deal with it. You are used to deal with no. You can deal with this kind of stuff. And yeah, it's a game where the founders and investors are in the game of doing big outcomes of it. And if not, you have any other alternatives to that. I think, and quoting about it, it's a long-term play with longer-term people

and long-term games, they are challenging in every stage of it. So I think also this tweet has some mixed feelings between what happens in growth stage and what happens in early stage. So in early stage, we have a lot of the dynamics around collaboration, trust-based relationship between investors and founders.

And as the startup grows, dynamics begin to change and I think incentives and time time horizons as well. So it's really difficult. This is chaotic, and you need to know how to handle that, and it's part of the game we are in. Yeah, I mean, looking at the criticism,

it's, yeah, of course, it's a portfolio strategy, so that means less stress than founders. I think everybody knows that. I think it's a link-baiting tweet, to be honest. I mean, there are obvious points we've discussed many times, and you do see there are VCs, I think who work as hard as founders, but those tend to be the people who are the founders

of the fund, the principle of the fund, the people who have to go out and raise the money. I think a lot of this, and what I've learned over time is like, there are people who joined venture capital firms. They join them. They work there, but they don't have to go out and raise money from the LPs. And that's a totally different mindset. When you're responsible for the LP relationship and the founder relationship, you're a and the hiring and firing of the team in the venture firm, you have a different level of anxiety,

of vigilance. I am super hypervigilant about our fund and our firm. The people who work for me and who I've hired, even if they're partners, even if they have carry, because they don't have to face the music with LPs, they don't have to explain, you know, where the DPI is and why they didn't make a certain trade, why did they didn't exit a company when they had secondary opportunities, why it's taking long to get returns, all of that stuff, those are the hard conversations. And so those are the folks, you know, when you're Doug Leone or Ruloff and you have to face the music, Mike Moritz, with the LPs, and you have to deal with the founders, that's when you are very similar to the CEOs of the company. But that's maybe 5% of the people in venture capital.

95% of them are working at a venture firm. So they're kind of like, like the employees at a startup. They might care deeply about the startup, but they don't, they aren't the owners of the startup. I think that's probably what he's getting, which is a fine, fair point. And VC is a very emotional game. You need a strong stomach to do VC when you have skin in the game,

as you mentioned Jason. And, yeah, it's really, you have to, you need a strong mindset and a long-term mindset in order outperform and eventually win on this game. I hadn't thought about Jason's point, I have to say, because I spent almost my entire career in an equal partnership with no analysts and no associates. So we were always the owners of the fund. I think Jason's point is a really good one and a new insight for me. I'll tell you, if we're talking about August, we had a distraction here.

You know, war broke out in Israel on October 7th. And we had not just keep the lights on. We had to keep the ecosystem and technology system. We did six investments post-October 7th until like mid-February. When we had our annual meeting. And there was tons of distractions. We had to work doubly hard. That's just part of this game.

There's always something going on. And you're responsible to the LPs and you're responsible to your founders and you better be in it. And you better be working your ass off. And you're committed in the good times and in the bad times. Might be something to do with all of these new venture firms, David, that have popped up over the years or during this era. I think they, the classic structure was five partners who went out and raised the fund together,

you know, four partners, raised the fund together, invested the money and, you know, there weren't associates or, you know, second, third tier people at the firm doing work. You know, and, you know, that may have lowered the sort of perception of VCs in the market that they were playing a certain role, almost like cosplaying. like they're pretending to be VCs, like they're pretending to be Michael or Bill Gurley. And, you know, like, it's something very different. It's, I did a short for All In this week about, you know,

all these people who work at, um, big tech and they were doing during the ZERF era, a day in the life of and like, oh, I went and I had like a stay. I had some breakfast and, you know, then I went to the yoga lounge and then I had lunch with my friends and then I did some meeting. I did an email. then we had a volleyball game, and then I went out for drinks, and you're like, I think you did three hours of work. All of those perks that Google gave people were because they were working 12 hours a day, and they're like, you know what, if you're at the office 12 hours a day,

least we can do is have a cafeteria with three meals for you. And you know what? Yeah, we'll try to come up with other ideas. We'll have a cafe so that you stay on campus and do more work. All of those things were designed by management to reward hard workers and to keep people working. They weren't designed to create a resort lifestyle for entitled millennials. And when management saw the abuse of those perks, that's when the layoffs begin. That's when people were like, you know what? Let's get fit. Let's get rid of 10,000 people and see what happens. That's when Elon got rid of 80% of Twitter. That's when Zuck was like, you know what? Oh, he got rid of 80% of Twitter, a couple thousand people. I'm going to get rid of 10,000 people and see what happens. Oh, you know what?

Nothing changed. Let me get rid of another 10,000 and see what happens. And now these companies are realizing, and it goes to this expression about like hard times, create strong men, strong men, create good times, good times, create like weak, whatever. Michael Hoff, yeah. Yeah, and that's the origin of it. I don't actually know the origin of the quote. But that's what I saw in tech.

Hard workers solving hard problems created perks. perks created weak people who didn't solve problems. They've all been laid off and now we're back to hard problems. And I think it's the same thing in venture capital. Zerp era created too many venture funds, too much effing around, and now we're finding out because the returns are here. If you want to be in venture, you're going to try to put in 60 hours a week. I tell people coming to work for me, if you want to succeed in this business, I expect

you to return my tax and emails within minutes, 24 hours. a day, seven days a week. And they're like, are you serious? I'm like, I do. I mean, if I'm asleep, it's different. But, you know, like, if I'm with my kids or I'm in a movie or, you know, I'm out and about, I'm skiing, like, I will be on the ski lift checking my messages, you know, before the next run. I don't unplug, you know, a hundred percent in that way, because my job is too important to the LPs and the G and the, and the founder. And I think a lot of people were like, yeah, I'm going on a 10-day silent retreat. There's no 10-day silent retreat in venture capital.

Your founders need you. It's enough. Venture capital never sleeps. I agree. Exactly. Exactly. Like, it's a very, it's a finance job. It's a very important job. And I agree with your point, and that's a really great example of what happened.

And we saw a lot of emerging managers doing their first five to 10 to $20 million fund with no investment backing expertise, no prior BC expertise. They did a company, they'll fail, and they have like two, three, five year experience operating a company that wasn't successful. And then now they decided to build a fund. So during that syrup time and after that, I think that a lot of the VC's emerging managers that we saw were washed out because the timing on the market corrections didn't play to their favor as well. So I think that that was necessary because we need a healthy ecosystem. them and if you're going to be in BC, you need to be all in. 100%. So, you know,

everything's a pendulum. I think is probably the reason that we got a lot of attention is because people, it resonates with some founders. The criticism probably resonates. Pro founder tweet. Yeah, I mean, it's always, there's a bit of pandering that occurs in our business. Like, by the way, you know, sometimes founders do really stupid things and need to have

their board members tell them like, hey, this was insane and is like, you have the risk of ruin here. You might flip the car. Like maybe we shouldn't spend all this money like crazy. Like sometimes founders need a check and a balance. Like that's like a healthy thing. Now, maybe a founder sees this and it's like, oh, I don't want Jake Hal as an investor because he believes in governance. You know what? Great.

Go with somebody who's an investor who doesn't believe in governance. I believe corporate governance is like, cool. it actually creates alignment and protects all shareholders, the largest of which is the founders. And if a founder doesn't have a ton of experience and their company gets big and they decide like, yeah, I'm just not that interested in like my accounting. Well, that's where the board can come in and be like,

you know what, we're interested in the accounting. We'll help you get this fix, right? Or like, yeah, I haven't really been looking at the cap table and, you know, the legal issues over here. And it's like, yeah, I've seen legal issues kill a company. I'll help with that. And that's healthy. But for some reason,

it's called hygiene. Yeah. There was this whole thing. And I think Y Combinator kind of created a little bit because Paul Graham had bad experiences with VCs. And they created this like, oh, it's cool to be anti-VC. It's cool to be. I've been on both sides of the table. I can tell you like, yeah, there's bad founders, bad VCs, great founders, great VCs, and everything in between.

It's this idea that you're like, trying to, I don't know, the VCs are not an essential part of this process. They actually are. The milestone-based funding system in Silicon Valley is so impressive to me. It really does a great job of creating a high-performance environment in order to hit, in order to clear market with an accelerator, a seed fund, a Series A fund, a Series B, a growth fund, to go public. All of those benchmarks are so robust and dynamic and well executed on that it really does become a great sorting mechanism. It's not perfect. No system is, but I think it's like

the greatest capitalist ecosystem on the planet. Obviously, it's created all the top companies, of the 25 companies in the world by market cap. I think like 18 of them are a product of the venture capital ecosystem. So yeah, this whole like anti-Visa thing I think is super low. lame. The anti-governance thing is super lame. And it's just a way for people to pander to, like, win deals. You don't need to pander to win the deals. You can just explain why corporate governance is smart. Michael, how do you tow the line between telling founders, maybe what they don't want to hear, but also building the relationship with the founders? I think you can tell founders what they don't want to hear if you've already built the relationship. And that's the key. You have to spend time with them. I almost care less about the business plan than I care about having the beer. with the founders. And I'll ask hard questions before I invest because you have to ask hard questions after you invest. You build trust in the process of going to invest with someone and then in your early moves. And if you are consistent in your behavior rather than erratic, I think that wins people over. And to Jason's point about, you know, they're good founders and bad founders.

I keep finding that the good founders want to get that feedback. They thrive on it. They respond to it. And so some of the hardest conversations I've had are with my best founders who have done the best. And sometimes I'm wrong, sometimes I'm right. But generally we have a conversation and we both get better for that conversation. Do you test that while you're making the investment? I like to push founders see if I could trigger them, see if they're willing to take feedback. I wouldn't say that I proactively or consciously test for it, but you're in a conversation with people. And I think part of this job is being able to quickly assess people, assess their instincts, assess what they care about, assess what they're prickly about. And so I just, I think that's just a core part of the

job, but I wouldn't say there's like a tactic to elicit a strong response or see if they take the feedback well. You can generally figure that out. I tend to, yes, send them away to do a complicated thing. I was looking at a deal right now. I thought his idea for the business bottle was totally backwards. So I sent them away to make 10 calls. I gave him a you know, like 10 names. I said, call these 10 people here, their phone numbers. See if they'll give you $50,000 each for your service. I actually just want to see if you'd make the calls, not whether they'd say yes or not. Moving on, Carter has released the fundraising ranking by ecosystems with the Bay Area leading

the way, New York edging out Boston by a little bit for second place. Bay Area doesn't lead in every category. However, New York FinTech is dominating, raising more than twice the amount of Bay Area Fintech startups. We were promised really a flat structure following COVID and the introduction of remote work and Zoom, but it doesn't seem to have played out that way. And today we have a couple of guests that are actually in foreign countries.

So curious to see how much is geography play a role in the VC ecosystem in 2024? So it's a very important role when you are located outside the US for us. 80% of the investments are made in the U.S. and then 15% of them we made it on Latin America in our emerging markets just to grab a portion of that potential market. But double-clicking in the U.S., I think it is important to understand

where the outlying companies are being built consistently. And for us, 65% of our investments goes to the West Coast, 25 to the East Coast, and then we leave at 5%. percent to the rest of the USO. We rely on that because for us trying to get that alpha and because of our portfolio

construction, having this fund of funds profile and then the direct side of our fund, we need to geographically analyze all the tickets we are going to make and that are in our

control, let's say in some sort of way. And we have seen that 60% of all U.S. exit unicorns have come from California. Then if you at Boston and you add New York, you have 70% of all the U.S. exit unicorns. So there are strong facts and numbers that tell us that we need to deploy into those geographies and the probability of finding those outsized return is going to be there. This is not an exception that we can invest in some more ecosystem, but when we measure and analyze that and specific ecosystem, there are three criteria that we use first, and the most important is density for us. Density is the relation between

a group of great founders and startups related to the capital players. I think Jason mentioned a little bit earlier. You need this ecosystem of friends and family, syndicates, angels, accelerators, family offices, CDC, early stage funds. And, and this group of money and the greater the relation, the greater the probability to have this vibrant ecosystem. And a good example is the Bay Area around AI, New York, around fintech. So that's the first criteria.

The second one, we try to measure in some sort of weight interactions between all the players. You see a lot of interactions between government, academics and universities, corporate startups, and investors around the Bay Area as well. So that's a good and clear indicator that things are going to happen there. And there are some emerging ecosystems, Florida, Denver, Austin, that we are interested in, but it's a long-term plane.

And it takes some time to have the dynamics that we have in this. I won't say perfect, but the best in class ecosystem, and that's what we are looking for in our geographical focus. Yeah, this shows me the rise of the rest. Steve Case would say, if you add markets two through six together, they now equal the Bay Area. And so that's super impressive to me. New York, Boston, L.A., San Diego and Austin put together equal the same funding dollars as the Bay Area. And the thing to keep in mind here is there's an overhang here. The trend has been that Silicon Valley's playbook is now spread out across the rest of the world, not just the U.S., but the rest of the world. Obviously, we're going to lead the rest of the world in the U.S. collectively. But founders do not feel the same allegiance or the same necessity to be here. And I think the Bay Area's percentage of dollars is going to keep declining because you'll see the larger companies start emerging from other markets. Like I saw,

Andrell is raising at $12 billion or attempting to raise at $12 billion. If they raise a billion, you know, if they raise a billion dollars, like that skews a whole bunch of this, right? Because I think they're in San Diego. And so one or two large companies being in New York, Boston,

San Diego, L.A., Austin, just changes this whole dynamic. And I can tell you, founders who are second-time founders, are likely to consider other GOs to put their companies

because they know how hard it is to attract talent here. And then first-time founders, think should come to the Bay Area or one of those top six markets. If you're in the top six markets there, or even the top 10, I think you're fine. The biases towards the Bay Area is totally gone now. And that's changed just in the last 10 years. I think since COVID, it got accelerated. There's no VC who's like, you're not in the Bay Area. I'm not investing. That is at, and that 20 years ago was exactly how they thought. And I doubt that it's an advantage for a second.

time founders. I think being in the Bay Area is a disadvantage for second and third time founders who know how to do this. I think it's an advantage for first time founders. That's just my candid assessment of it without an allegiance to any of these markets. If you're a first time founder, it's great to be here. You're going to meet more VCs. If you're a second time founder, it's great to not be here because the cost of living is going to be lower and you can be the number one player in a smaller market, which means you get the bulk of the talent, which is why Tesla moved to Texas, I think. And then oracles now officially in Texas or are they in Nashville now?

People keep moving their headquarters. So I think this whole Silicon Valley bias is changing rapidly. I think you bring up a really interesting point. And the number one career advice I give to people is you have to be in your mecca when you're starting out. And there's so many things that go into that. That's obviously tech for San Francisco. That's finance for New York. You really need to instill that level of hardcoreness that you see around, you know, one ecosystem that I think doesn't get enough credit is actually invest in banking ecosystem. Obviously, there's a lot of criticism of it. But if you're in that ecosystem, I did a summer at Jeffries, it's so hardcore. You're there 14, 16 hours a day. And it

just changes your brain, your brain chemistry. And seeing other people, do it live in front of you is really powerful. Same thing in tech. When you're walking around and you're just literally at a bar and you're just talking to somebody that just raised $10 million from Andreessen for their Series A company and you have a 20-minute conversation, you realize they're not that much smarter than you. And then these conversations keep on happening many times over. It's very powerful. You kind of create this reality distortion field where I started my first startup right out of undergrad. I was 22 years old. I raised venture funding. Nowhere else in the world, would that even be an option, let alone a possibility? And I think being in that ecosystem is

absolutely powerful until you basically internalize that thinking, the talking, all these things that lead to success in the industry. So I think there is something to start there. But to your point, some of the best companies in my portfolio are able to recruit because of their location. You have a company better than Jake Paul's company. And they recruit people out of these markets like New York and San Francisco, I want a different lifestyle around them in Miami, still want to work hard, but want to have something different, want to live in a different ecosystem with maybe different values. So there is a way to actually turn it in a significant competitive advantage as well. Well, Michael, Israel is, I think, the startup nation, like the highest number of startups

and investment per capita of any nation. And unicorn is probably per capita highest along with Sweden. it could be. Our view on this is actually back to the old Sequoia model, which is they used to say that if they can't ride their bicycle to the company, they wouldn't go there. And I think J-Cal is 100% correct when it comes to the U.S. that you've got a bunch of cities to go to. We invest here just in the local Israeli ecosystem, which is a big enough pond to fish in for

us and think that our advantage is we don't have to fly in here to do it. Although many foreign investors are flying in here. the hotel up the block, which is where most of the venture guys stays, has been the only hotel full around here for the last a bunch of months because people are still flying into due deals and Sequo was in here and Axel was here, an index was here. But, you know, that actually brings something up, which is, what I think is really interesting is that this region for the first time, Israel was like an island here. It was Silicon Valley and Israel or Tel Aviv and then New York. And now, like Jason and I had dinner together in Abu Dhabi a few months ago that we ran into each other there. And that's becoming the beginnings of a hub also.

So many Ukrainians and Russians have descended on Dubai. And Abu Dhabi started as kind of a place people went for money. But there's the emergence of a technology hub there as well. And we kind of think about this region as it extends from Tel Aviv via the Emirates, the UAE to India. It's going on in the Indian stock market that not enough people are paying attention to. like software companies and tech companies are going public there. This is becoming like a regional hub that I think could emerge pretty extensively and it's a big deal. Crypto, by the way, in Dubai, it's become the headquarters for crypto, the U.S. has kind of gotten behind it. Maybe the last

24 hours has changed that with the new kind of White House letter to the SEC. But this is becoming a real interesting. And the other thing going on is because tech has gone into so many industries that have been previously regulated. Regulatory arbitrage is a big thing. And so, you know, the UAE, which is a well-governed country and could also be helpful in regulatory arbitrage, Israel, which is, you know, both innovative and helpful on that, I think is really important. And you can get to see people in person. And just to the last point you're all talking about, which is you have competitive advantage if you set up, I'm making it up in Denver, and you're the biggest dog in Denver. Part of what that comes down to is the thing that promised us in COVID that actually didn't come to be,

I think, is remote work. And we actually need people to get a, in the office together and interact and, you know, banging to each other. It's like you said about working at Jeffries that summer and going 14 hours. You know, there's a vibe. When I was younger, I studied in the Yeshiva. It's a house of Tom was study. You knew where everyone sat. And if someone wasn't there, you knew they weren't there. And there was like this intense, subtle pressure that if you left early, you know, you weren't studying as much. And I think startups are the same. And so you need people in the office and need the interaction and to No, Bounce Ideas. That's how excellence is created, so new ideas are created. And by the way,

how you stay optimistic? I think a lot of people staying at home or lonely. They get pessimistic. They look at their Zoom and their Slack all day. And optimism is what creates companies. I've started a panel a week ago, a week and a half ago in a different country. And I used the phrase that optimism is a weapon of mass creation. And I really believe that. And you kind of need that interaction to get the optimism. Otherwise, you kind of get lonely and pessimistic. and get people in the same place. It's exciting. It's exciting here in Tel Aviv.

We have all these people out all night. Yeah, it's definitely, I've spent more time in that region in the past year than I did in my entire life. So, yeah, I think it's something big happening there, especially if LPs want to back venture firms that kind of drives the VCs to come there, the VCC, the startup creation there, they're like, oh, there's also startup creation here. Maybe I should look at some of these companies while I'm here. That's what I did. And I was like, huh, this is impressive.

And so globalization is continuing, yeah. Jason packed the house, by the way, at what's called Hub 971 in Abu Dhabi. He packed the house. Yeah, the podcasts are pretty popular there. Both of them this week in startups and all in are super popular over there. By the way, kudos to Ibrahim, the team is at Bubaala in all those places. They're making a real dent. It makes me hopeful very much about this region and optimistic.

And again, that's a weapon of mass creation. Yeah, I'm going to be involved in the region. next year, I think, a little bit more. Yeah. Well, it's been another great episode of the liquidity podcast for Michael Eisenberg, Hami Maddis, Jason Calicanis. This is your host, David Weisberg. Thanks for listening.