This Week in Startups - ANGEL: Laurie Yoler on investing early in Tesla, strategic partnerships, and her VC career | E1701

Episode Date: March 17, 2023

Molly is joined by Laurie Yoler as they dive into her early experiences in VC before discussing how she became the first investor in Tesla (1:45). Next, Laurie talks about her time at Qualcomm and Playground then they wrap with a discussion about AI and how Laurie’s investments were impacted by the pandemic (30:31). (0:00) Jason kicks off the show (1:45) Arriving in Venture (7:36) Laurie’s first investments (13:39) LinkedIn Jobs - Go to https://linkedIn.com/angel and post your first job for free. (14:49) Investing in Tesla (21:21) Prenuvo - Get $300 off at http://prenuvo.com/twist (22:51) Raising money for a car company (26:22) Finding strategic partners (30:31) Laurie’s time at Qualcomm and autonomous vehicles (37:11) Microsoft for Startups Founders Hub - Apply in 5 minutes for six figures in discounts at http://aka.ms/thisweekinstartups (38:42) Joining Playground (41:29) Leaf Logistics (45:44) Benefitting from the pandemic (48:54) Investing in AI FOLLOW Laurie: https://twitter.com/laurieyoler FOLLOW Molly: https://twitter.com/mollywood FOLLOW Jason: https://linktr.ee/calacanis FOUNDERS! Subscribe to the Founder University podcast: https://podcasts.apple.com/au/podcast/founder-university/id1648407190

Okay, we're back today with another episode of Angel. This is episode nine of 10, and the series has been absolutely amazing. Today, Molly interviews Lori Yoler of PlaygroundVC. Lori has been working in startups and venture capital since 1993, and she was actually a founding board member investor in Tesla. It's an awesome interview and a quick announcement. This will be Molly's final interview, sadly here on This Week in Startup. She's decided to move on from the show, pursue some other ventures, and we wish her well. She was such an amazing teammate, and it was awesome to have her on here for just over a year.

Go follow Molly. She's Molly Wood on Twitter, M-O-L-L-L-Y-W-O-O-D. To see what she does next, we're really excited for her future. And it's going to be a great episode. Stick with us. This week in startups is brought to you by LinkedIn Jobs. A business is only as strong as its people, and every hire matters. Post your first job for free at LinkedIn.com slash Angel.

pre-newvo catch health conditions before they become crises with the pre-newvo full-body MRI scan. Get $300 off at pre-newvo.com slash twist. And the Microsoft for Startups Founders Hub helps all founders build a better startup at a lower cost from day one. Startups get up to $150,000 in Azure credits, access to open AI APIs, free dev tools like GitHub, technical advisory, access to mentors and experts, and so much more. There is no funding requirement, and it only takes minutes to join. Sign up today at a.k.a.m.s. slash this week in startups. Lori Oler is a GP at Playground Global, where she's been investing since 2019,

and has been investing in early stage ventures since 2001, and has been part of the founding team at six companies, including Tesla. So that makes you officially not only awesome and a person with a fascinating backstory, but a three cycle investor. Welcome to Angel. Thank you so much for having me, Molly. Tell me how,

I guess I'll just go to the beginning of this amazing career. How did you arrive in venture? So it was interesting. I guess I'll give some context on how it all came about. after college, I actually went into AI, was diving into technology. And I always had a fascination for technology. I programmed robots as a kid. And then when I was coming out of school, AI was the frothy thing back then, the first generation of AI, the more deterministic rather than machine learning version.

And then I ended up at Visa and got really excited about security and fraud detection and all that. good stuff at Visa and then I ended up at Sun Microsystems in the 90s, which was the place to be. Everybody was talking about trading stocks in the hallway. My first week at work, somebody showed me mosaic and told me this thing called the internet was going to go crazy and I'd played with ARPANET and sent messages in university, but it was the place to be. And every startup wanted to be part of Sun. And so I actually was doing a lot of public company investing and trading stock tips in the hallway.

But then in 1996, Sun sent me to Europe to help grow our business in Europe, Middle East and Africa. And I started meeting with all of these startups. And the funny thing is, the index ventures was starting in my building in Geneva, Switzerland, where I was based. So I started hanging out with Neil Reimer and David Reimer and Giuseppe Zoko in the office. And we were talking all about venture investing. And I actually became one of their first LPs and sat in on their partner meetings on Monday. And then started meeting these really great technology companies all through Europe and started making angel investments in them. Actually, and I looked, my first investment was in 1996 in a secure.

company called Brocath in Germany. Wow. So it was actually, I had to look back because I knew you were going to ask this question. I had to look back and think, okay, when was my first venture investment? That is incredible, though. You have just been like a bowling ball through the per, through the exact, you know, it's like every book that's written about Silicon Valley and investing history has L'Oller somewhere in there.

It was incredible. It was just, I mean, a total happenstance that we happened to rent a building and then the Reimer brothers decide to start index ventures on the first floor and I was on the second and third floor. Give us that background for people who don't know the history of index ventures and the Reimer brothers. You know, they started their dad. Jerry had been a very successful investor.

And so his his brothers, his sons had become very excited about investing and they decided to create a firm because there were so few venture investors in Europe. And when I was over there for Sun, my job was Java was very big. The Internet was big. And so my job was to go find every startup in Europe and ensure that they were developing on Sun and to encourage any team that was developing in Java to do so. But as I went around meeting all these companies, they had brilliant engineers and great products, but no venture funding. You know, back then there were a few venture firms in the UK. There was one or two in Germany, but that was it.

And so Index was started to look across Europe, both in life sciences and in technology and to be a strong European investor. So anyway, so got pulled in there and that was, you know, my first gig is an LP and I was an advisor to the fund. But at the same time, I was seeing all these really cool companies all over Europe and was investing. Amazing. And then when did you come back to the U.S.? So came back to the U.S. in 99. I almost decided to stay, but I kept hearing about all these phenomenal companies that were happening in the U.S. I mean, you got to think about the U.S. in 99.

So I came back and I remember it was such a shock of reentry because every taxi driver was asking for stock tips. Everyone was trading stock tips. All anyone was talking about in restaurants were stocks and private companies. And it was insane. Yep. And I came back with, I was actually going to stay in Europe, but I called back to headquarters to say, hey, I think I'm going to stay in Europe. And they said, why? And I said, I'm kind of excited about this investing and venture thing.

And I'm really having fun working with all these startups. And they said, awesome. You can come back and start Sun Microsystems Ventures, write us a business plan, we'll give you money, and come back. So I came back in 90 to start Sun Microsystems Ventures. Wow. Okay. And then, all right. So there you are.

It's 99. Everything. And that, you know, I, that is when I came to the Bay Area as well. Moved here in 99, had no clue that any of this was happening. It was obviously much more removed. And remember that exact same phenomenon. I'm just being like, what jobs are falling out of trees? And everybody's talking about equity.

And it's just, it was absolutely bananas time. It was. All of a sudden it wasn't. Yes. Tell me about, tell me about what that was like. You had a little bit of a double reentry. Yes. Well, we had a good run for a little while, but everything was so frothy. I mean, I was getting thousands of business plans. It was crazy. I saw every startup. I saw every early dating app. I saw Pets.com and went then. I saw everything. And we made some good infrastructure investments, but I kept saying, gosh, compared to Europe, the valuations here are insane. And it's so frothy. And I like to do decent amounts. of due diligence, and this just feels like crazy town.

And there were just too many companies being started. So in 2000, suddenly, you know, being the dot in dot com was not necessarily where you wanted to be. And we'd made some good investments. But then I said, wait a second, there was really good technology, especially in the infrastructure. So maybe I should change hats and look at acquiring companies. So made the move over to corporate development and started looking at. at all these companies that I had really appreciated that I either invested in or didn't invest in

and saw and really made the shift and said, okay, now is a good time where valuations have normalized. And so these companies, you know, we can't invest in all of them. And if the venture market really isn't there, maybe it's the time to think about bringing these in and figuring out how to do M&A very successfully. So I just switched my hats and started looking at that market at the time. Because we were still a beloved company back then. Right. And there were still good investments to be made, but less of them.

And it was kind of a crazy time of consolidation. So you have had so many. I'm taking you through the bio because your LinkedIn is just, again, a romp through like every cool thing that you would ever want to do. So. Yeah. So then what? Like where did you go from Sun? When did you?

Because by 2001, you're back to it sounds like maybe investing in early stage ventures. Yes. And, you know, I still had been investing in early stage ventures at Sun, but I thought, okay, if I believe in infrastructure and I loved security, I thought, okay, maybe the appy part of the internet is going to have to shake out to a few. You know, and I thought there was an overreaction to companies like Amazon. You know, it's not like e-commerce is going away, but there were just too many e-commerce companies at the time. So I thought, okay, I really, really believe in network. work fundamentals. I really believe we still are going to need an internet to do all kinds of things. So maybe I'll go down a layer to the plumbing or maybe down a few layers in the stack. And I had met Judy Estrin who had been on the sun board and had huge respect for her. She'd been CTO of Cisco, who was another company that did very well. And so we decided to create what would now be called a seed stage venture firm, although I don't even think the term existed back then. to invest in internet infrastructure.

And we ended up incubating some of the companies as well. And so we brought in all the smartest entrepreneurs that we knew and network scientists and physicists and started working on the biggest problems on the internet. What was going to break? And, you know, security was a big piece. So we started out with the first, and this is all about market timing, the first 80211B access control company. Now, no one in 2001 knew what 8021 was, which is now known as Wi-Fi.

I was going to say, for you kids who still don't know, it's Wi-Fi. That's what we used to call it, for real. There was A, B, and C. So we ended up creating the first 80-211 access control company, but no one knew what 80211 was yet. And so it was really early. We then get this, created the first anti-D-DOS company. no one knew what a distributed a hell of service attack was.

Now every, wow. Yep, yeah. And then the third company was the first 10 gig Nick. That's network interface card. And our whole idea was someday people were going to stream video over the internet. I mean, you're geniuses. And so fortunately, Foundation Capital, was an investor with a co-investor in that company.

And they said, Lori, we really want you to meet these two guys. We think are great. We've invested in them. You should here come meet Reed Hastings and Neil Hunt. They're doing this DVD service called Netflix. And someday they want to stream those videos into your home over the internet. Oh, my gosh. I'm just going to tell everybody actually that Netflix exists because of you.

That is my new narrative. No, no, no. And I will die on the hill. not at all, but they gave us all the specifications of what they would do someday, but not in 2003. Wow. Right? I mean, that was in 2003 where some people were just starting to, the blockbuster still existed and they were just starting to trust getting a DVD in the mail. So a lot of learnings about timing and how you can't be way too early before the customers are there.

The other thing that happened during that time, and you know, we had the, we had the dot-com. bust in 2000, but some people don't remember right after that in 2002. Don't forget we had the telecom bust where WorldCom went bust. And we were down at the infrastructure layer and you had that next bust, which was, I don't know if you remember, there were oodles of internet service providers in 2000, but they didn't start disappearing until 2002, 2003, 2004. And so you had another downturn at the infrastructure layer then. If you're running a startup right now, this is the best possible time to find amazing talent. We all know what's going on.

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me say that again, better candidates, faster. So go post your job for free at LinkedIn.com slash angel. That's LinkedIn.com slash angel to post your first job for free. Terms and conditions do apply. You know, that is such an important note, too, because that is just as we were starting, we weren't anywhere near super widespread adoption of mobile phones, but we were getting closer and mobile technologies, like the idea that the internet could be somewhat portable, like you said, 802-11.

It was called the telecoms crash, the biggest, and fastest rise and fall in business history. What, well. Yes. Yeah, it was a tough time. It was a tough time in the Valley. Super, super tough time because infrastructure used to be a safe place to go when apps, right? We used to have, you know, consumer and enterprise going like this and we'd have apps and

infrastructure going like this, but to have both of them go through such a significant downturn within such a short time was pretty unprecedented. Yeah. Wow. Okay, so then what did you do? We just keep rolling. And now I know there's another hat. I know another hat is involved.

It just kept going. So I always joke, the fourth packet design spin-out company was a consumer company. So Martin Everhard was head of hardware at packet designs. And Mark Tarpening was head of software. And I kind of did everything on the business and ops. side. So we used to have lunch together most days at Packet Design and they came to me one day during lunch and said, okay, Lori, the service provider thing sucks. We have like customer concentration like crazy, right? We have, you know, we have Juniper and Cisco are the only

networking companies who are going to absorb what we're doing. And then the number of service providers we can sell to has gone from many to very, very, very, very few. You know, we were talking to AT&T back then and Verizon and there were very few companies that we could sell to. And they said, we don't ever want to do this customer concentration thing again. And we also don't want to be too early. So we should do something in Consumer again. And they had worked on the Rocket EBook, which was, by the way, the first ebook out there before the Kindle.

And they said, we like consumer. And I said, okay, you know, we'll see what you guys, you know, come up with. And one day at lunch, Martin said, hey, I just went out to try to buy a new car. and, you know, I want a really cool looking sexy, high-performance car, but did you look at the gas mileage lately on Lamborghinis and Ferraris and Porsches? And I'm like, I have two kids at home, Martin. I am not out looking for a Lamborghini, a Ferrari, or a Porsche, but that's awesome that you're doing that, but I'm not really doing that. And he said, don't you think there are people out there who want a really cool sexy car,

but also don't want to kill the planet and actually care about, you know, oil and gas usage. Yeah. And I said, you know, there probably are, let me go do some research. So I go spend a couple weeks and learned all about the zero emissions mandate that had been crushed, right? And it had gone in and out of fashion

and started talking to all the consumers who I knew. And one of the guys at Packet Design had one of the GM, oh my goodness, I can't believe I'm blanking on the name. What was that one called? All I can think is the name of the video or the documentary, who killed the electric car. Yeah, here, we'll look it up real quick. Yeah, thank you. I can't believe I'm forgetting. He was leasing one and we used to drive it around at lunch.

And I just thought it was so cool to drive. It had great torque. It was kind of cute. It was easy to get around. The EV one. EV-1. Yes, I thought it was the EV-1, but I'm thinking, I'm thinking EVs. I have EB-on-the-B-on-the-B-B-Bring, yes. So he had a GM-EV-1, and we'd all tried it out. And so, Martin came one day and said, don't you think we could, like, take commodity batteries, you know, lithium-ion batteries, and replace the fuel tank in a car and make it electric? You know, just kind of like the EV-1. And I said, yeah, okay. And so he paid to get a prototype developed, and he brought it to my home one weekend, and I drove this thing for it. for the weekend and I was in love. And I was like, okay, I didn't care about driving a Ferrari Lamborghini,

although by that point I had tests driven a lot of cars. But I said, I love driving this car. I love this. I would not have gone for one of those muscle dude cars, but I would drive this. This is so much fun. I can't believe it. I'm not a car guy, but wow, did this make me love cars?

So anyway, I said, okay, now you have something. Let's go. So we, the three of us went from packet design to getting a little tiny office and starting Tesla in late 2002, early 2003 timeframe. I was still trying to figure out how to have a great exit for our portfolio companies in packet design. So I said, you know, I can't, they actually asked me to join as CEO of Tesla. And I said, I can't give you all my time, but I will be your first investor and be on the board. And they said, awesome. But of course, I quickly had an office there and set up there and was spending most of my time there.

And as things started winding down in Pack of Design, I started spending all my time at Tesla and going through the fundraising shuffle during a fascinating time. I mean, I am just having a multiverse moment right now and imagining a parallel universe where you were the CEO of Tesla. I don't know. was so funny. We don't have to go all the way down that road, but man, but man. Yeah. And so you were a board member for almost a decade, right? After that? Yeah. So I was on, I was officially on the board of directors until, I want to say late 2008, but then I switched to the advisory board because at that point, we had taken in an investment from Daimler and Toyota who wanted board seats. And Larry Sincini was helping us on the legal front. And he asked for a board seat. And the board was

getting huge. And so I, at that point, I said, hey, I'll be on the board of advisors and still do everything that I'm doing for the company, but I don't really care if I'm on the board anymore because I'm still going to have all the conversations and access about strategy and be involved. So, yeah. So I, but was still very, very involved through 2013. Listen, everybody, you've heard me talk about pre-newvo a ton of times on this week in startups and all in. What is pre-newvo? It is a full body advanced MRI scan. Okay, they're able to detect cancerous tumors at stage one and about 500 other conditions.

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20 years ago. You can get $300 off at P-R-E-N-U-O.com slash twist. If your city isn't on the list yet, the $300 dollar credit will still apply for when Prenuvo opens in your areas. Get yourself taken care of today. That's $300 off your pre-newvo scan at pre-newvo.com slash twist. Wow. I mean, I have a million questions that I probably don't want to put you on the spot about. But man, it's like your origin story is every origin story when it comes to Tech in the Valley. And I wonder like before we talk about playground, which of course I want to do, what do you see commonalities? Like as you look back at this string of origin stories, do you see commonalities in how bubbles are formed or how people act or how hard it is to fundraise for a truly revolutionary idea like a whole new American car company? You know, having gone through all of those downturns and, you know, the trying to raise money for a car company when one had not gone public since Ford in, I think, 1954, it was impossible.

I mean, having the door slammed in your face every day, metaphorically, and having every VC say, that's, Lori, that's so cute that you think you can do this. But, you know, if you get out now, no one will ever know you were involved. So just get out quickly because this company is such a dog. Wow. I must have talked to 100 of my VC friends because I had met them all through both at Sun Microsystems and then at Packett Design. We worked with a lot of VCs as well. And so I had all these guys who I really respected and respected their opinion. And all of them turned me down and just said, this is the worst dog ever.

And so persistence in all of this and being able to rationalize. say, for example, wait, our market timing, we're a little early here and the market timing's not great. Or, hey, we're in a frothy period. Doesn't mean we're all horrible humans or that this wasn't a good idea. It's either at the wrong time or at the wrong time in the cycle. And let's make sure and take the learnings. But if we truly believe in something, which we did with Tesla, I mean, I just thought this is going to, I mean, I really every day thought this is going to be the greatest product of all time, not just car of all time, but greatest product. And the innovations like being the first to do over-the-air updates.

I mean, most car companies still don't do that. In fact, I'm trying to think of any that are still, that are doing over-the-air updates. I mean, we invented that way back when the breakthroughs of coming up with a new architecture and a great product and a stellar team, you know, was amazing. And so certainly persistence and patience and not listening to all the naysayers, you want to listen to helpful input, that, oh, that's data I didn't have before that, gosh, I'm going to take into account. But if you're doing something radical and new, everybody's going to tell you it's crazy. However, if you run out of money, you don't get to see that come to fruition.

And so raising money is something you have to get really, really good at, get really creative about and be willing to think hard about when you need to bring in strategic investors versus financial investors or other kinds of partnerships that are going to get you where you need to go. It seems like that experience. I mean, you have always done more difficult things, right? Like, it seems like every time that you... I pick the hard stuff.

Could have taken the easy road. Yeah, you were like, no, thank you. And clearly that has informed what you decided to do with Playground Global. Yes. So tell me about that. So at Playground, I had not known the partners before. It was pretty surprising. And I was just finishing up at Zooks talking about doing hard things, autonomous vehicles.

Let's go back. I skipped like, I skipped like four chapters. Okay, yes. I know. So all of that is happening. then you're like, cool, cool, cool, did a car company. By the way, on the side, while I was at Tesla,

I also started an investment bank with four partners called Growth Point in 2006. I mean. Because I know, it's a little crazy. Because I saw all these great companies that hadn't been able to raise as much funding as they wanted to, but still had incredible technology and incredible team

and they didn't know what they were going to do. So I thought, you know, there should be an investment bank out there. that helps all these great founders that maybe they're not going to IPO, but if they can cut the burn a bit and if they can find some strategic partners and grow their customer base, maybe they can continue to build a company and either get more strategic funding or perhaps merge with another firm or get acquired.

But there were so many companies. Think about all the companies that were created then, both at the infrastructure layer and at the app layer, that we're just going to go poof. And so given that only one out of 10 deals typically goes IPO and the IPO window opens and closes, what do all those other companies do? Right? And the more technical they are, and I've always loved deep tech, the more technical they are,

they're probably not all that great at fundraising or building partnerships and relationships. But that core technology is critical. So anyway, we dealt with technology companies where there was, extraordinary technology, often IP and team, but they had either didn't know how they were going to do their next big fundraise and they probably weren't going to IPO. So I got to work with lots of VCs looking at those kinds of companies. And they tended to be very deep tech. Yeah. And what did that look like? Did it look like investment? Did it look like venture debt? It sounds like there were help, like you said, with M&A and fundraising overall. It was fundraising and

M&A and really just finding the best strategic partner. You know, it was really saying, okay, your technology is really, really, really valuable. The broad market doesn't see it, but there are a few companies who probably would love it. I ended up doing a lot of digital media deals. One of my favorite clients was Crunchyroll. Do you remember Crunchyroll that was doing anime? Yeah. And fortunately, brilliant technologists, they'd come out of PayPal.

Absolutely phenomenal team, great service that everyone loved. But it was the digital media industry was, you. you know, to grow bigger, they needed to either create content or do all kinds of really interesting licensing deals around the world. And the guy said, hey, we're great technologists. And we love to start doing deals with studios to create content and license more content, but we're not as good at that as we are technology. And I said, okay, so who tell me who your dream date is to learn licensing from.

And they said, Peter Chernin. And I said, okay. So I went and stalked Peter Chernin. He was speaking at a conference at Hong Kong that I was attending. And so I go and stalk him and I'm like, Peter, I am going to make your world. You know, he'd done Hulu. And I said, you got to, you got to take this company, which he brilliantly then immediately got a whole bunch of money from AT&T to do a venture.

But anyway, it was so fun to see those marriages where I could take this entrepreneurial team who said, if only we had, you know, this. Right. And to go find them that, which made, let the company. just survive but thrive and continue to grow and build. Incredible. Everybody listening, please don't worry. I also feel like a huge loser.

Okay. And then there's more. Then we go founder, managing director. And then you go to Qualcomm. So the mobile thing seemed like it was catching on back then. I mean, you must have such a good eye. Like, is there something?

Do you read everything? Do you get it like a tingle? Like what is it that makes you see that? Because even if you're too early, too early is still like smarter than too late in some ways. You know, it still means you had like the right kind of instinct. I am just, I'm a total geek. And so, yes, I, I, my, my dad was a physicist and my uncle was a biochemist and my aunt was a geneticist. So, I mean, the, the conversations around the family gatherings were all about science in the future and what could actually happen.

and what could technology bring and what was science doing? And so it was just normal for me to be in those scientific circles and technology circles talking about what was possible in the future. Interesting. You grew up in like the world's fair. And it just became like a mindset. Yeah. Okay.

Incredible. All right. So you're thinking mobile going places. So I'm thinking, you know, okay, if we're going to look at something that's really important and continuing to grow globally, it's mobile. And actually Qualcomm had acquired. three of the companies that I was working with at Growth Point. And I had a lot of respect for the management team and how much diligence and how thoughtful

their diligence was on deals. And I thought, wow, these guys are really thoughtful. They look at the technology. They look at the IP. They look at the team. And then they go make something huge with it. And, you know, mobile is going to be one of those very lasting trends because, of course, we have to have our mobile phone.

And, you know, this was in 2013. and I also thought, you know, cars, and because, of course, at this point, I've spent a lot of time in the automotive world with Tesla, I thought, you know, cars are really kind of, if you look at a Tesla, it's kind of like a next-gen mobile phone on wheels. And so we're going to have to get more and more. All the other car companies are going to have to get more and more technology into the car. And they're going to have to have chips, right? It's going to have to be semiconductors and they're going to have. to be more and more of those going into the car. And so Qualcomm had, you know, extraordinary cash balance sheet and understanding of technology. And I thought, you know, the next generation of mobility is probably going to be some merging between the car and the car in the phone.

So went there, you know, Qualcomm was an early investor in Ways in Mobili. They were an investor in Cruise. And they were really, it was a great place to say, okay, what is actually possible with the future of mobility? And back to my AI days, it's like, and what can AI and machine learning do this next generation of AI do in the car? And so it was a perfect place to have that catbird seat and to just look at mobile really broadly and look at, you know, again, a different layer of the infrastructure and figuring out how that was going to help the technology world. So I was there for three years, and as I was out searching for the coolest autonomous vehicle company, I ran into Zooks at its very earliest days when it was literally five guys in a garage.

Wow. And Zooks, of course, we should say, for people who don't know, went on to be acquired by Amazon in August 2020. You were with them kind of that whole time? The whole time. And I don't know if you saw they just had their first fully autonomous. ride or drive on the streets of Foster City, California. So very exciting and are continuing to grow. But that was kind of pulling together all these things I was interested in,

mobility, new vehicle architectures, AI, sensor fusion, which I'd spent a lot of time looking at Qualcomm as well. And so I love those really big, hairy problems. So in 20-night, so it was, I started hanging out a little bit at Playground in early 2019. And we were we were talking to many companies at that point because of course, autonomous vehicles are quite capital intensive. And so once again,

we were back to the fundraising all the time mode that I had learned before. But it was once we imagine a heavy dose of this also is never going to work or we thought it was no work, but it's taking too long. I feel like that was a big part of the autonomous. car development narrative is it's here wait it's not quite here well and look at evs right i mean we the concept for tesla was 2002 we started the company in 2003 and now the major oems are doing evis and how many years you know 20 years later so things take time and i'm i'm okay with technology taking

time if I think it's truly impactful and breakthrough. So I, in 2019, a bunch of folks introduced me into playground. There were a lot of folks here. Somebody I'd worked with at Zooks, who I had tremendous respect for. And there were a number of folks who were in the building who I had intersected with at some point in my career. And I thought, wow, these guys are doing cool things. And I looked at their portfolio.

And I was completely blown away. you know, really cool stuff in AI, in robotics. They were looking at all kinds of automation. They had invested in Cy Quantum in Quantum Computing, which we hope is the biggest and best company in quantum computing. They were starting to look at engineered biology. They had a really cool cybersecurity investment. And I just started calling all their portfolio company CEOs and looking at what they were doing. And I thought, okay, these are all the really cool, hard problems.

and I really, really like this team. So, uh, joined in 2019 and got to, you know, started looking at the stuff that I loved in cybersecurity and AI and automation and, and even, uh, you know, looking, looking, trying to understand all the stuff in engineered biology and MRI and RNA structures that my, uh, my colleagues in life sciences are diving into, but thought, these guys are really tackling the really tough stuff. the really interesting, tough stuff that could be very transformational and long-lasting. All right, everybody.

I wanted to take a moment to thank our friends at Microsoft. Today we have Lahini Aranachulam with us. She's a senior director of platform and growth at Microsoft. She actually created the Microsoft for Startups Founders Hub. Welcome to the show. Thanks, Jason. Thanks for having me. So tell us a little bit about the Founders Hub.

Why did you create it? Yeah. So we built Founders Hub based on the feedback from hundreds of founders. We spoke to founders at all stages of their journey, so ones that were just starting out with an idea, to those that had actually built successful companies, just to better understand what their challenges and pain points were as they were building their businesses.

And we found three challenges that kind of rang true regardless of where they were in their journey. The first one was that founders need access to coaching and advice to get to that next milestone. The next is that they need to accelerate the time it takes to actually build an MVP or their second pre. product or their next set of features. And of course, founders need capital to actually keep them afloat as they continue to build their companies. And so Microsoft for Startups Founders Hub is a digital

platform built to help founders with these challenges. Thanks so much, Lahini. If you would like to check it out, go to the Microsoft for Startups Founders Hub and they have no fundraising requirements open to anybody. If you're a founder, they want to support you. It takes five minutes to apply and startups can get up to six figures of benefits instantly. Sign up for the Microsoft for Startups Founders Hub today at AKA.m.S. slash this week in startups. So play, right, so Playground already existed. I wonder, you definitely seem to be a person who follows the smart people and the big

idea and not necessarily the like the money or the easy choice. But I do wonder a little bit, why not start your own fund? Was Playground just that compelling? You were like, all right, I've started a lot of things. I, you know, all the way through I've been angel investing on my own and I've made probably close to 50 angel investments. You know, Tesla was my certainly my biggest check and investing in every round meant more checks. And so I really loved angel investing and I became part of Broadway Angels, which is a whole bunch of female angels in the Bay Area and loved hanging out with them and

also invest with health tech capital. So I do a bunch of health tech investing with my husband. And so that kind of autonomy was fabulous. But if you can find a team that compliments you perfectly that you have so much respect and trust in, you know, wherever they happen to be. And I looked at these guys and thought, okay, I would not have seen Psy Quantum and been able to figure out which quantum computing company was going to be. much better than others. And I, you know, although I read stuff on AI meets biology, I am not

a brilliant life sciences investor, but I believe it's the future. And so if I can find the absolute best team to be looking at engineered biology, which I think we have a phenomenal team here. And then we were even doing stuff in space. You know, we've got a number of space investments that my colleague Jory Bell has led relativity space, which is doing fully here, mostly 3D printed rockets, and, you know, really exciting Velo 3D, which is also doing very, very advanced 3D printing. You know, they were investing in areas that I cared about, but I'm not the most brilliant technologist in. You know, I can hold my own in cybersecurity and AI in automation, but they were areas that I really cared about investing in,

but wanted to be working with the absolute best partners who could do the very thorough due diligence, stayed up all night reading the white papers in those areas, and could really pick the winners. Amazing, yeah. So there, you're focused on automation, AI, and logistics supply chain. Tell us about some of the investments. And cybersecurity, and cybersecurity.

Tell us about, I mean, so let's see, Lacuna Technologies, Leaf Logistics, Saltbox. Like, who do you have a favorite? Do you have one you really want to peek out on? Leaf is a, we'll start with Leaf. So Leaf Logistics was my first investment at Playground. And I had spent a lot of time at Qualcomm looking at, well, certainly mobility broadly, but actually the very first product that Qualcomm sold was called Omnitracks,

which was putting in basically communication software into trucks to enable truckers to basically communicate where they were and do some of their basic communications technology. And as I had looked at the freight market and the trucking market, I thought, wow, this is a really inefficient market. And a guy that I had worked with at Qualcomm was saying, oh, my God, you would not believe there, you know,

there's no software, there's no automation, everything's still done over the phone and the facts. And so this is a market that needs to be optimized. And so fortunately met this bright entrepreneur who had come from AT Carney where they're all about optimization and efficiency. And he was very strong in their supply chain team. And he said, you know, there are all these huge shippers on one side and there are all these trucking companies on the other side, and you kind of need a marketplace for tradable contracts

so that everything's not a one-off. So today, I have a whole bunch of dog food that I need to send from California to New York. And so I, you know, might fax my favorite person at a trucking company to come pick up the load and take it to New York. But after that, that's done. It's a one-off. So somewhere between 40 to 70% of trucks come back across the U.S. empty to pick up another load because nobody has coordinated that maybe they should pick up something in New York and bring it to California. And maybe there shouldn't be all these empty miles as they're called in the industry. So 40 to 70% of trucks are carrying empty miles and wasting fuel and wasting

drivers' time and wasting, wasting, wasting. Right. Unnecessary emissions galore. Yes. Yeah. So these guys put almost, I think it's 450 different shippers routing information and data into their system so they can look at, okay, what does the whole map look like for trucking that's going across the U.S. at any time? And then be able to reroute around weather, but, you know, being able to bring data, analytics, and AI into the trucking market.

And then to have tradable contracts, to have reliability, to be able to schedule stuff far in advance to say, hey, they just added a new product that is called a Flex Fleet to be able to say, hey, we can ensure that since you know that you've got to get all this stuff

to Walmart every week, we'll combine you with some other shippers and give you basically a dedicated, kind of like a dedicated fleet for what you need to do and make sure that you've got the predictability to know that those trucks will always be there without you having to put out the capital yourself to have this trucking fleet.

But it's really bringing software and data and advanced analytics to long-haul trucking. Yeah, which is so, which is it's so interesting because logistics is infrastructure. You're creating infrastructure for logistics. And I just, you know, your whole career kind of makes me wonder about like this is what I think the outside world thinks that venture is doing

is like tackling really hard problems and taking on big risks and being like yeah new car company let's go we're risky capital we're going to do this when in fact a lot of you know I say this with love for my newfound profession a lot of VCs do all the same stuff instead of finding these other ways or digging down four more layers to the thing that's actually the shovels of the gold rush. And as we enter kind of another downturn, I wonder how you're thinking about the ability to cut through that, the ability to go those couple levels steeper. You know, I have a huge belief that fundamental technology, and if you invest at the early stage, you're not really, you're not really pushed.

into those waves. You may not have as many customers and your revenue projections may be a little bit lower than what you expected, but if you have solid fundamental technology and can raise the capital to last, and fortunately, most of our companies raised quite a bit of funding over the last few years, you know, COVID was a really tough time, but we were, most of our companies were COVID beneficiaries. You know, we've invested in a lot of robotics companies. And initially, when we made the investment, we were getting a lot of articles saying evil robots, taking away jobs, you know, taking away logistics jobs. Well, gosh, now, you know, and during COVID, automation and robotics saved the day in those factories that were making vitamins or trying to get their e-commerce packages out or groceries out to consumers.

and suddenly robotics and logistics optimization became hugely important. At the same time, we invested in an MRNA company called Strand Therapeutics before COVID. And trying to tell people what MRNA was before COVID was funny. But during COVID, suddenly people learned. And so it was, we were, you know, the new education of the public during that time, frame was helpful to many of our companies, but at the time we made them, they seemed like extremely contrary in bets and extremely early bets and high risk. But fortunately, the market did catch up to some of the bets that we were making, or hopefully most of them. Yeah.

Timing, of course, a huge part of this. I think a little bit of contrary nature seems to be a big I make quite a few contrarian bets, yes. I don't know how to follow. I mean, how do you follow the crowd and go in all these competitive deals? And then what, you know, I guess it's based on your personality of your firm or your brand of your firm. But it gets really competitive there. And they're, you know, amazing investors who I've had the privilege to work with over my career. But when things get that frothy, it was like when I moved out a venture at Sun and thought, this is just too frothy.

You know, everything is getting funded and they can't all win. You know, it's just not going to happen. You can't have that many players in a market. But there's some fundamental technology that will last and there will be some winners out of that. But I think I'd rather go in really early and find an extraordinary team and help them build a company by providing all the operational resources around them that they're going to need and hopefully be, you know, be able to help them through all of those different ways. How are you thinking about speaking of waves, this current kind of new AI bubble that seems to be inflating? I mean, you're O.G. AI. Yes. It's so funny. Wow. I saw a tweet today, I think something to the effect of like,

I've never seen this level of uniformity in terms of what everybody is rushing to right now. Are you going to go a totally different direction? You're going to go like ag. You're going to be like, Nope. Well, we are, fortunately, we have already made a couple of really great AI infrastructure investments that play right into this. Yeah. So we invested in Mosaic ML in 2021, which was working to significantly reduce the cost of training neural network models. So knowing, you know, at the time when they were talking to customers, there weren't a lot of companies. other than the huge tech companies that were actually building models, right?

You called your typical Fortune 500 enterprise company and said, how are your neural network models coming along? And most of them did not have a group working on AI. They may have had a data analytics group, but there wasn't a lot of knowledge of ML and AI. Now they are getting, their phone is ringing off the hook because it's very costly to train those models, right? and very costly both in terms of compute and people time and data time.

And so Mosaic was a founder who we had back before his previous company was Nirvana Systems. And so we were very excited. So we thought training large language models is going to be really important and really helping do it incredibly efficiently is important. We also made an investment in very early 2021 in D-Matrix, who also did. just raised a significant up around. And we invested alongside M12, so Microsoft's Venture Group. And this one is focused on the compute side. So this is focused on inferencing and significantly improving the performance of inferencing. So after your model's trained, then you're actually doing inferencing. And so that's it's inferring results from the data it

has ingested. It's like, okay, I've taken in all of this data and I have determined that the correct answer or the output necessary is X. Yes, but the cost and power required for AI compute is completely unsustainable. And so both of those are saying, okay, we believe AI is going to be there. Don't know which model and which company is going to benefit. They'll probably be a bunch of winners, but everybody's going to need better plumbing and more efficiency. So back down to the infrastructure level, Mosaic's going to help tremendously on training

large language models, and then D-Matrix is going to help for optimizing inferencing and significantly huge step change in performance and reduction in power required for inferencing. So we had made those, you know, I'm watching and smiling. It was very funny because I, when I first came to Playground, I wrote a hundred page presentation called AI for Enterprises and Boards. And I kept being asked about AI and trying to explain to my non-technology. just friends and I've served on boards of large companies that are not technology companies. And I kept trying to explain why they should care about AI and what actually it is.

And so I put together this 100 page presentation covering different industries and why should you care, what is it, and why should you get involved? And, you know, I tried to explain perception on autonomy on one hand and then what was what could be done in chat and with natural land. language processing and text to speech and, you know, put all this together. But I still found that most companies were like, yeah, but I don't even know how to start. I have a, you know, I have a couple of my data analytics guys and they're kind of playing with this demo and they're using a little bit of computer vision maybe to do some kind of barcode scan in one of our apps. And, you know,

it was very basic what we were seeing. You know, the legal, some legal firms were ingesting lots of cases to be able to automate. But, you know, what we really saw was more robotic process automation types of tools that were automating manual typing tasks. But it wasn't really significant AI using machine learning except in the largest companies. And so that kind of bum me out because I thought, okay, only the large companies that also have a huge compute farm cloud infrastructure are the ones who get to play. in AI. And so the big tech companies just keep getting bigger and everyone else is scratching their head saying, what is that AI thing again? So the interesting thing is with GPT3 and and with chat GPT,

of course, now I call all these companies and my friends who are non-technologists saying, hey, have you played with chat GPT? And now they can actually try it and say, wow, this seems like a way better way to search for things because when I use existing search engines, I get all this stuff and I have to spend an hour going through it. But here, this seems like a much better way to search for things and get information. And then, of course, I got all my Christmas cards that were written by ChatGBT. And so now I think what has really happened is you've seen a proliferation across Enterprise is saying, hey, maybe we could actually do something. And you're seeing, you know, starting with the marketing industry, the legal industry,

finance, you know, so, so yes, it's exciting. But for me, I don't see it as this explosion, aha. I see it as the next evolution of the tools that were already there and large language models were being built. But suddenly there's an interface that's available to the public. Now, one could say when the Google search bar first came out, it was, you know, there had been a lot of search engines before then, but this made it very simple for anyone to go in there and run a search and get results that look kind of fun and sexy. So it feels to me like the next generation of that where more people have access to those large language models that are being built. But, you know, the data accuracy is still pretty scary.

Yeah, not great. it is interesting if you look back at kind of the it's always that presentation layer that makes the next leap possible right? From the internet to the worldwide web, the worldwide web to Google, Google to AI and then chat GPT to access AI or even Google Maps or ways to access AI, right?

Like it's that intermediary. Right, but it seems like you have an uncanny ability to ignore the intermediary and look at what powers it. which will always still be there, or that that's what builds to the next big innovation. The intermediary is an iterative step that's really important. Right. But like, it's seeing all the stuff that gets built as a result of that step.

It's like layer cake on layer cake on layer cake, went straight to baking. Don't know why. You know, where is the foundational technology change? Right. And all the, I mean, the last 10 pages of my 100 page AI presentation is, is bias in the data, right? I mean, okay, this is great. We have all this AI stuff.

But, okay, what data is being used to train the models? Because, you know, you've seen all the stories. And even, you know, we saw this in medical research where, hey, if every, if every piece of medical research is done on 50-year-old white males in the U.S., those drugs are not necessarily going to work for a. everyone else. And we're seeing the same thing, I think, in these large language models is if it's trained on the internet, the internet is unwashed mess, right? It's like, it's bad. Okay, this is not a, this is not the best data source for this. So, um, I look forward to, you know, someone creating a large language model that is everything that's ever been written in science and nature. Right. You know, that, that one I'm going to be really excited about or, you know, all of the. best medical diagnostics information that's up to date. That's exciting. But what we're seeing right now is a little unfiltered. Yes.

But exciting that the general public is now talking, everybody's talking about chat GPT. Oh, for sure. When my friend who does staging and interior design asked me, have you seen this chat TPT thing? I was like, okay, fine. We'll keep talking about it. But I will tell you, anybody who,

who's out there listening, do what Lori says. Ignore the rest of the crowd. You're so cute. And do what Loriola says, Lori. Thank you so much. This is an absolutely amazing hour. This is incredible. This was so fun.

I love it. Thanks. Thank you.