This Week in Startups - ANGEL: Upfront’s Mark Suster on the power of alignment, setting reality, and raising capital | E1683

Episode Date: February 22, 2023

Jason is joined by Mark Suster of Upfront Ventures to cover raising capital in the early 2000s (1:22), aligning board members (21:19), the three variables VCs need to bet on (40:51), and so much more! (0:00) Molly kicks off the show (1:22) A recap of the previous 3 market cycles (5:23) The hurdles founders will face starting a company in 2023 (6:55) Raising capital in the early 2000s (9:15) LinkedIn Jobs - Go to https://linkedIn.com/angel and post your first job for free. (10:37) Upfront’s strategy and changes to the market (15:35) Misalignment of investors (19:48) Prenuvo - Get $300 off a full-body MRI scan at https://prenuvo.com/twist (21:19) Aligning of board members (29:13) Setting reality as an investor/board member (33:40) Cutting Burn & Mark’s decision framework (39:23) Orgspace - Get $2000 of credits on pro plans with a 30-day free trial at https://orgspace.io/twist (40:51) The 3 variables VCs need to bet on (48:28) The power law and mission-aligned founders (52:13) Feed the family money (58:33) Company killers + Investing in lines not dots FOLLOW Mark: https://twitter.com/msuster FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood

Hey, everybody. We're back with another awesome episode of Angel. Today we have Mark Suster of Upfront Ventures, kind of a friend of Twist. He was the founder of two companies, Build Online and Coral, before becoming a VC 16 years ago. That's right. Three cycles. Jason and Mark have a great conversation with an overall theme of alignment, aligning founders with board members, aligning board members with other board members, and finding founders who align with a mission. It's a jam-packed episode.

It always is every time Jason and Mark talk. You will want to get your pen and paper and slow down to probably single speed for this one. It's going to be a great show. Stick with us. This weekend startups is brought to you by LinkedIn Jobs. A business is only as strong as its people and every hire matters. Go to LinkedIn.com slash Angel and post your first job for free. Terms and conditions apply.

Prenuvo. Catch health conditions before they become crises with Prenuvo's full. body MRI scan. Get $300 off at prenuvo.com slash twist. And by org space. If you're a startup and not building a performance culture, your competitors are going to eat your lunch. Get $2,000 worth of credits on pro plans with a 30-day free trial atorgspace.io slash twist.

All right, everybody. Thanks for joining us. I'm here with Mark Suster, my friend, from Upfront Ventures. Thanks for coming on the pod. so much to discuss. In this series, I've been trying to talk to folks, Mark, who have lived through three cycles. Now, you've been doing venture since. This is my 16th year. 16th year, and we're sitting here in 2023. Yeah. And so you got started. 2007. 2007. So right before the great financial crisis. But the market right before the great financial crisis, correct me if I'm

wrong. It wasn't out of control like it got in 2020, 2021 in this cycle, correct? Let me say it this way. Because I have my annual meeting in just over a week. So I've started gathering data and looking at the past. I think there's a few distinct cycles. Obviously 97 through 2001, we went through one big cycle.com.com cycle. And during that cycle, we, we went through one big cycle. Dot com cycle. And during that cycle, we, We started overfunding, paying really high prices. Things were kind of bonkers. And then it cooled between like 2001 to say 2005.

From 2005 to early 2008, it did start to go bonkers again. But it was in the super early innings of going bonkers before GFC, global financial crisis. And it went off a cliff and it went off incredibly hard. I mean, I think a lot of us were, oh my God, is society going to change? That's how bad it was. And I think people don't understand how bad it felt. And this is the first correction, real big one since then. Yeah, I mean, if you were to look at the NASDAQ during that period of time, I think we had peaked at maybe something like $5,000 and it came back.

And when it went down, boy, did it come down, maybe $1,800 or something. It lost two thirds of its value, the entire index. and there was a sense amongst people who were capital allocators or who, you know, had their net worth or their endowments net worth in the NASDAQ that, hey, this is a great reset. And paradoxically, it kind of ended pretty fast. It ended incredibly fast. And we started a new epoch. And I'd say from 2012 to 2015, you had the birth of a lot of interesting companies. companies in a new EPO. And then in 2015, for a brief moment, it seemed like we were going to

correct again. And just when it seemed like we were going to correct, we had another acceleration. And everybody was calling the top. And then all of a sudden, we had COVID. COVID hits. And everyone's like, okay, it's time to reset. I mean, I think Sequoia did their compulsory. Everything's going to be different now kind of post, which they do every cycle. And then we had this really weird. Rest in peace. RIP good times. And then we had this unexpected new boom. And the boom in 2021 and 2022 or 2020, 2020, 2021 was the biggest we've had yet, I think.

In terms of a quick acceleration of a whole bunch of capital coming into the market with totally undisciplined prices, and that's come off a clip. Yeah, it's fascinating to, look at each of these cycles and the truth is, great founders start companies anywhere in the cycle. The starting point is when a founder decides, this is a great idea, this is a great market, this is a great product, this is a great team, we're doing this. So this is, I think, what you and I have both learned as capital allocators, and let's be

honest, you were a founder before this. I was a founder. You get to choose as a founder when you start. Now, what do you think the market conditions are for a founder starting in 2023 versus, let's say, you started in 2020, 2021? Which founder would you rather be? And what are they going to face out of the gate? They just got on the starting line. They built a team.

They got an MVP. What's life like? So I think people are probably slightly tired of hearing this because it feels like a convenient thing to tell people, but it's actually true. And that's this, Jason. raising capital and building a startup is always better in a more difficult, less capital available market. And here's the obvious reasons why. Number one, it's easier to hire and retain amazing talent.

When you have a product that starts to resonate, you don't suddenly have six competitors that raise five times the amount of money at you. When you have six competitors that have all raised way too much money and everyone is slugging it out for trying to get marketing dollars, trying to hire staff, trying to win customers. It's really hard to charge a fair price and earn a good margin for your product or service, and it's really hard to retain employees. So paradoxically, if you can raise capital when other people can't, you have the opportunity to build a much better business. And the same is true about venture capitalists, by the way. The best vintages are the vintages where there's not way

too much capital competing with you for deals and valuations. Yes, this is something we've both learned firsthand. It used to take when you and I were kind of grinding it out in the, right after the great financial crisis, that 2009 to 2014 window. How long did, on average, did it take for somebody to raise their seed or series A, would you say, in weeks or months? Well, if I, so seed has always been relatively straightforward, you know, seed investments usually come together in let's say three, four months. It was the A rounds that really accelerated. So an A round might have taken you four to six months before. And A rounds accelerated to two to three months. And then a round suddenly it was you could get term sheets in two to three weeks. And those days are done. Yeah. What is what happens? when VCs are forced to make decisions in a compressed time frame, what happens when founders are trying to pick a VC in a compressed time frame? Obviously, it's great that you can get the

money in quickly. That's not bad necessarily, or on the surface it's not. But what does it qualitatively do in terms of relationships, selection process, etc.? Again, I know this is going to sound counterintuitive. But paradoxically, it's better for entrepreneur if it takes longer. But here's why. Here's why is let's take a typical venture capital fund and let's say like our funds, we do about 40 investments per fund. If I get it wrong because I rushed on two or three founders, I take a $3 million, $5 million write off and in the scheme of $3 to $500 million, that's, it's painful and we don't try to lose money anywhere. But I have a lot of $3 million, but I have 39 other companies.

And that's if I backed the wrong team. Like, you know, we just realized, hey, we should have, like, done more diligence or waited to fund these people. But the flip side is, if you rush and you get a bad investor who either is not supportive, won't follow on, doesn't attend board meetings, loses interest, or is just an asshole. There's no divorce clause. Like, you're stuck with them for the next five to seven years unless you just want to

quit your company and start fresh, right? So, in a way, paradox. toxicly rushing for entrepreneurs is worse. Listen, if you're running a startup right now, this is the best possible time to find that amazing talent. There are hundreds of thousands of incredibly talented tech workers, and they became free agents in 2022, okay? And they're out there and they're waiting for you to give them an opportunity,

and you can find an All-Star right now. If you want to nail your hire, you want to fill that position with an All-Star, you need to use LinkedIn jobs. I'm going to make this really simple. LinkedIn has 875. million users, almost a billy. And all the best people are LinkedIn, obviously, you can add a purple hiring frame to your profile and that increases inbound immediately. Don't I know it? Sometimes I post a job right now and it's too much. I get too many talented people. I mean, I have a lot

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conditions apply. It's so clearly is. It is something where you can't I can't as a former entrepreneur and you're a former entrepreneur. If somebody wants to pay you a high price for your startup and they want to close the deal quickly, those two things are fantastic, again, on the surface. So we can't blame a founder for wanting to get a great price and minimize dilution. In fact, it's good for all the previous shareholders, including investors. And getting things done quickly and getting back to work, that's laudable too. But man, if you make the wrong pick, that's the problem.

So you and I, as we invest in startups, we saw some weird behaviors in the 2020, 21, people coming in, making very quick bets, but not wanting a board seat. And they wanted us, I'm a Seed Series A. Actually, you went back to Seed, but you were Series A. And I think sometimes you'll dab in a dab in a B. Yeah. Certainly go pro rata. So our strategy at Upfront Ventures is we. We have what we call a barbell strategy and a barbell strategy meeting we do seed. When we write a seed check, we're usually the first institutional capital.

Let's call it a $3 to $5 million check. But our median first check is usually around $3.4, $3.5 million. And then we tend to skip the A and B rounds. And then we have a separate fund that does what we call early growth. and early growth is between 100 to 500 million dollar valuation when you have truly found product market fit and we're writing 10, 15, 20 million dollars checks. And there's a reason we skip the A and B rounds or have. I mean, we could adjust our strategy as new information comes out, but let me give you the data, Jason. In 2010, the A and B markets combined were $9 billion. Okay, $9 billion went

into that. Fast forward by 2022, that was $82 billion. It went up 9x. Okay. That's nuts. And then it's totally nuts. And then when you look at the CD rounds, that was 9x capital. The CD rounds also were an increase, but it was only a 6x increase. Now if I give it to you in terms of valuation, okay. So seed investments went up between 2010 and 2022 by 68%. Okay. So what we did it upfront is we raised 50% larger fund size. We went from a $200 million fund to a $300 million fund so that we could write slightly larger checks because valuations were coming up. But check this out. A rounds went up by 260% during that period of time and B rounds were. went up by 431%. And I want to explain to you why that phenomenon happened. It happened because venture capital funds that used to be 300 million raised a billion and a half dollars.

And if you raise a billion and a half, writing a three to five million dollar check doesn't move the needle. There were disciplined people, Josh Coppulman at first round capital, Bill Gurley, who you mentioned a benchmark, like they didn't raise the billion and a half dollar fund. But if you raise a billion and a half dollar fund, you start writing $30 million dollar checks and you can't write a $30 million check at a 15 pre. No. Right?

You buy two companies. Yeah, right. So instead you pay 90. We'll take your next company as well. Yeah, right. It makes no sense. Supply was out of whack. It was just too much supply.

Too much supply. And I'll give, I'm sorry, Jason, just to give you one more data and then I'll stop. The late stage investments went from $2 billion total to $58 billion in that time frame. and by late stage I mean pre-IPO so here's what happened it used to take six to eight years for the best companies to IPO in the era of Google and Salesforce and companies like that eBay and sometimes it were even three years Amazon fast forward it then shifted to 10 to 12 years at a minimum

so when you think Uber when you think Airbnb when you think Dropbox right it started to push out so the public market investors had FOMO fear missing out and they shifted the dollars into privates. So you had mutual funds, hedge funds, sovereign wealth funds, family offices, everybody's saying, hey, we need to get in. But they're not saying, let me go fund some enterprise company I've never heard of. They're saying, we want to be in the top 10 deals. So the money piles into the perceived winners. And then when those companies IPO and they're all up into the right, everyone feels smart. But then the public market corrected. So that 58 billion, Jason,

in one year went to $24 billion. Yeah, and this is the problem, I think, when people are following other people's betting. So said another way, you have to make your own decisions when you place these bets as a capital allocator. I think, you tell me if you believe this as well, or if this tracks with your experience,

but I have been very concerned over my, I'm right behind you as your little brother here with like 12 years, I think making these bets. And it was really troubling to be at times in my career where people said, just tell me what you're investing in and I'll invest. Just tell me what you've invested in and I'll mark it up and I'll do the next round. And I'm like, well, I can introduce you to a founder.

You should get to know them. You should meet multiple founders and you should pick the one that you think has got the greatest chance of getting you a return based on your profile. Please do not blind bet. I've literally had some folks who said, just tell me all your bets. I'll send you a million dollars. Every time you do a syndicate, next 20 syndicates put 50K in. And I said, no, I don't want to have you set it and forget it.

I want you to make decisions. And I think that is one of the reasons we've gotten ourselves in trouble here, because the founder is rightfully, you and I would do the same thing. You want to give me money? You want to give me a money out of 10x my last valuation? Great. I'll deploy it. They all say the same thing.

Rainy day fund. I'm going to save it. I'm going to deploy it slowly. you know, it's not going to be a distraction. I can have $100 million or $50 million or $25 million sitting in a bank house. It's not going to distract me. So I got to take it. And you're like, yeah, 10x.

Pretty good. Let me give an example, though, Jason. Again, these are the things that only come with age when you've sat through the investment cycles. And I'm sure you've seen this yourself. Let me give you a real world example, but I have to mask the name of the company and an investor. Yes, please. Make a composite, as we say in the business. of fiction and nonfiction.

I had written a check along with a seed investor, let's say a dozen years ago, maybe 10 years ago. We each wrote, I think, $3 million in the first round. Then along comes an investor. The company's trending up into the right. They wrote like a $12, $15 million round. We wrote another $3 or $4, so we're in for $7 million. That investor's in for like $15.

Then a super late stage multi-billion dollar, very respected name came in. and just says, I want to take the deal off the table. Here's $30 million. And we said to the founder, actually, we liked that investor, but like run a process, get to know multiple people he didn't want to because the price was so high. So what he did was, he went back to that investor and he put a FU price up there and said, this is the price I want. And that investor said, sure, I'll take it. Right. He got it. He got it. He's already a great deal. And he said, let's just see if I can goose it even more. Now let me tell you what happened.

Okay, like I have to fast forward time. So then all of a sudden, our business started to struggle. And it happens in the course of business. It's a struggle. Come on. Okay. So what that late stage investor said is I paid such a high price. I don't think I'm going to get a return on my investment.

So they started agitating at the board to sell the company. And here's why. They had senior liquidation preference. So they're like, we don't want you to run out all the money on this company. We want to sell it today for whatever we can get it for it and get our. our bait back. And it became a real distraction at the board. So you have early stage investors who are saying, I want to go along here. Like, let's cut costs, let's lengthen runway, let's fix our problems, let's get through this. And late stage investors saying sell. So we would get in board

fights and, you know, you had agitation and we couldn't get aligned. That board member started not coming to board meetings. We were doing like emergency weekend meetings like you do as an investor, right? And I have all these early stage people showing up for these calls on weekends saying, what the hell are we going to do about this company? Because it's a great technology, but the market moved. When you get misalignment of investors, it will affect you. It will affect you. And so, like, just be careful. Pre-newvo. Oh, my Lord, pre-newvo. I just went. You know why? I care about my health. This is my time to get as healthy as possible. And my bestie Chimoth was talking about pre-newvo.

It's spelled P-R-E-N-U-V-O. What is it? It's a full-body MRI scan. And so many people have been telling me, oh my God, you know, I heard Chimoth, J-CALs mentioning it, and they said to basically save their life. That's what people have been telling us. So I had to try it for myself.

I took out my credit card and I paid for it. And this is one of the most elegant experiences I've ever had. It's like going to an Amman hotel. like literally a six-star hotel. You walk in, they greet you, you put on a nice little outfit, there's cookies, coffee. It's just, it's kind of like a spa, if I could say that. And then they screen you for over 500 conditions. Cancer's aneurysms.

It all takes less than 60 minutes. And it's no contrast and radiation-free. This is proactive health care rather than reactive. Then I get all the information. I sat there with my wife, we went through it all. Listen, I'm in great shape, obviously. Things are going fantastic. There's a couple of things going on on my shoulder, my knee, and they said, hey, this is something

you should monitor. Renouveau, thank you so much for making this easy-to-use service. They're in a ton of cities right now, and they keep adding more cities. They love this week in startups. They love the all-in pod. They said, hey, we want to give a great offer to your listeners. Get $300 off at pre-newvo.com slash twist, P-R-E-N-U-O-O-com slash twist, and start taking care of yourself today. You know, it's really, you start thinking about the beauty of Silicon Valley

and this, the beauty of what we do, and I know it's criticized, and I know capitalism is imperfect. But there are a couple of things I've learned as I've gotten older, and we're old now. You're 54 on 52. I'm so young. I feel, you and I lost, like, I lost 30 pounds, you lost 50. Yeah. We lost 80 pounds. We're the best shape we've ever been. We're ready to work, people. Don't put us out to pasture. We're talking about this earlier. I hope we kept that part of the show. But like Bill Gurley is like not a benchmark and then, you know, Jeff Yang is still

at red point, but maybe not as much. What's going on? These are people at the top of their game. They should be fully engaged. Stop with this early retirement for VCs, man. One of the beautiful things that happen is you start to become Obi-Wan Jedi level Jedi. And you can start to see the patterns in the second decade. decade, the third decade. And one of the beautiful patterns I've seen and tell me if this tracks with you is when things are aligned with a cap table properly, everybody is incented on a milestone-based funding environment that keeps employees, founders, and investors, and hopefully the full course of investors, align and rowing in the right direction. And when everybody's rowing in the right direction and the founder says, hey, I need help with something. And an angel

investor and a series B and a series A and employees and past employees who've left but were given their stock options with a reasonable window and they were people were laid off but they were still and a beautiful thing happens. Everybody's rooting for the company. And then in the situation you bring forth, now all of a sudden somebody on the plane is like, this is not working for me and they open the goddamn exit, you know, emergency exit. And everyone in the plane's like, we're going to coer. Why? It's going to be great. We're going to Fiji.

It's like, no, I'm out. And he starts fucking with the yoke. No, alignment. Maybe you could speak to the beautiful alignment in Silicon Valley when it does work. Because what you've just described is when it doesn't work. Oh, I got the 30 million overhang. Sell this for 31 million. I don't give a crap what happens. I just need my 30 back, so I don't look stupid to my family officer partners. But talk about alignment and the beauty of this system that emerged over the last 50 years in Silicon Valley.

What's interesting when you talk about alignment because some of the advice that I give founders, Jason, and you'll know this through our own personal relationship and the times that we interact. I always say it's incredibly important as a CEO to help your board build personal relationships with each other. Yes. So I often recommend people do dinners. You do a board meeting, let's say from 1.30 to 4.30, have a little break and then have a dinner from 730 from 730. six to nine. So great. The reason is, I mean, obviously you can have conversations that came out of the board meeting. You can get to know the broader executive team. But, but having VC to VC relationships and or VC to independent director relationships, it's so critical. Because for the

most part, like, you know, they say about flying. Like they say, if you're a pilot, it's a really boring thing because you have hours and hours and hours of like boredom of nothing happening. Yes. And short moments of complete panic. And that's like when you hit windchairs or bad turbulence or flying the clouds. Right. Yep. Engine goes out. And that's what like boards are like, you know, we might spend four years being cheerleaders.

And then all of a sudden it's like, holy fuck, you know, we rip cord like the doors flying open, whatever. And when people have personal relationships, they work through those difficulties together on the same team aligned. And when they don't, sometimes they work against each other. Yeah. People, it's really interesting to me what happens when, and people have this thing, hey, the tie goes out, you see who's not wearing shorts, whatever. Okay, great. We know that one.

The thing I find is when it's a storm, you know, like we're talking about and you're on the plane, you find out who can handle this kind of adversity and who's not built for it. Totally. Everybody's high-fiving when it's up into the right, when all of a sudden you'll lose the top two Lighthouse customers, you lost the CTO, you got six months of runway. You know, people start losing their minds and they lose their composure. And then there's finger pointing. And then you and I are on boards.

We've worked together, you know, countless companies. And it's great. Like, when people have been through it a number of times, I find now at this point, you tell me if this tracks with your experience, I have a certain sense of calm when really intense things happen. It's almost like time stands for me. Okay, the engine's on fire. We're losing altitude.

Three people are screaming. Okay, that's natural. Okay, what's the procedure here? Okay, we've got to put the fire out. We've got to get some altitude and let's find a landing strip. And we all just start getting to work. Navigator, find us a landing strip. Okay, what's the procedure to turn up on?

And that is, I think, what time does for you, you know, when you've been through a couple of these and you're like, you know what? And if this plane crashes, unlike an actual plane crash, we can shut it down in a classy way and start over. and what's your next best idea? Now, of course, for the founder, that's harder than for capital allocators who get many bets. But I find that over time, my blood pressure goes down. And in some ways, I almost look forward to the chaotic moments because it's an opportunity to be of true service, right? Yeah, I will say.

So as a starting point, I think the best CEOs and founders are calm in a crisis. and they tend not to get too exuberant when things are going well, and they tend not to get too panic when things are going shi, and they always hit that point where they're going shi. I just did an interview, Jason, with a journalist who wanted to ask me about ADHD. You know, I've talked publicly about having ADHD, and he was asking me about crises and how I deal with crises, and I said, look, my brain is chaos.

You know, I'm, my brain is, is always chaos and I'm always trying to bring order to this chaos. And I think somehow with how my brain is wired, um, for whatever reason in any sort of crisis, even a real world emergency crisis, I tend not to get too worked up. And I just go into problem solving mode. Like what is the most important critical path issue we need to get done, boom, boom, boom, boom. And so what I tell founders, Jason, is when you're deciding which VC to work with or which seed investors or angels to work with, reference your VCs for companies that didn't work.

Yes. The ones that didn't work. Because if you ask anyone who invested in, I don't know, Stripe or Airbnb, where it was kind of up into the right, everybody loves their investor when it's up into the right. Sure. But in a crisis, how did they turn up?

I mean, you and I, like I can think of at least one board that we've been involved with before, where, like, early on in the company was like, oh, we're in a crisis, and I'm kind of stepping in saying, well, here's the steps and sequences to solve the crisis. We got through it. Then everything was up into the right again. Then we hit another bump in the road, and what are we going to do about it? And being predictable in a crisis is a huge asset. I had somebody, I'm trying to remember who it was. They said, the best VCs, the best board members, act as shock absorbers. And the best founders act as shock absorbers for the company.

Hey, you got hit. It's really hard. You got to take the punch. You got to take this, you know, bad beat. You got to get back up. And you got to set reality for the team. So let's talk about setting reality. Last year or two, what has life been like?

Setting reality and being a good board member, being a good investor, we described, hey, in an up market, got to be thoughtful. Sometimes people are, sometimes people aren't both sides of the table, the name of your amazing blog. Now let's talk about it in a down market. What have you been trying to do? What is life than life from Mark Souser, Up Front Ventures, and the portfolio over the past 12 months? So, thank you.

Look, if you think about people like Sequoia writing RIP Good Times, if you think about David Sacks and the information that he put out when COVID first happened, like wartime CEO of Ben Horowitz, I think the service that VCs can provide to founders when the crisis period starts is this. Not just age and experience, but when you're dealing with 20, 50, 100 companies, you see the patterns before an individual entrepreneur. So an individual entrepreneur, let's say you raise money and you've got two and a half years capital. You may not quite realize just how permanent the capital markets have changed and how it's going to impact you and evaluate. perspective, we realize it because we have three companies raising capital today. And so we're like, hey, we see the trend. We know what life looks like for you in 15 months.

And so we want to bring that forward. And so I'll just give you this, Jason, which is if I take SaaS companies, SaaS companies we're trading at in November of 2021. Not that long ago, 26 times next 12-month revenue, 26 times. And again, when you're a founder and let's say, you know, you're a first or second time founder, you don't even know what that means. Like, what do you mean, 26 times next 12 month revenue? Like, why is that relevant to me?

I'm a startup. And you say, okay, look, eventually you're going to either IPO or be purchased. And the person who's going to purchase you is going to have a public equity price most likely. If not, you're going to IPO and you're going to have to face public investors. And they're going to care about metrics. So one of the metrics they judge you by is either EBITDA, earnings before. for interest in taxation and depreciation, or they're gonna judge you by revenue.

Okay, so let me give you some context. We hit 26 November 2021. Today it's at 6.2. That's how far public markets have come down. That's why late stage capital markets are going down so much. So you're like, holy .2, that's terrible. The market's surely gonna double or triple, right? because we were at 26.

Well, let me give you the data. Over the last 20 years, the average is 6.3. 20 year average. The 10-year average was 17 and a half. So it had gotten out of whack. And it's probably not going to stay at 6.2. So somewhere, we think,

somewhere between 6 and 9 times NTM is where it's going to, settle out. And then late stage investors, if I think I'm going to exit at, let's say, seven times Ntm, I'm only going to pay 15 times Ntm if you're growing so astronomically quick that I pay 15 to get in. I sell at six and I still make money, right? So David Sacks said publicly, I can't remember where I read it. He said, well, if your last round you raised it a hundred times Ntm. Next 12-month revenue, you've got to grow by 7x. You've got to be seven times bigger than you are today to raise it 15 times Ntm.

So what he's saying is cut your costs, lengthen your runway, and make sure you have the time to grow to seven times bigger than you are today, or you're going to raise a down round, okay? And I'm telling you 15 is still fucking amazing relative to what. The markets are valued out. But that's also bigger than what the markets pay. Yeah. It is, I guess there's this concept in behavioral psychology and in cognitive,

how we cognitively interpret the world of anchoring. What was something worth previously? And maybe you could talk a little bit about how you've thought about thinking. Because when you get into this game and you're making decisions, much like poker players, gamblers, or anybody taking big risks, and listen, the risk we take compared to the risk founders take is much different,

but we have to take many risks over long periods of time on many different companies. So in fact, you really start to have to think and analyze your firm and individuals risk taking and how they make decisions.

Maybe talk a little bit about how you think about and you've gotten better as a decision maker. So let me first talk about the conversation that I have with founders about alignment of interest

between investor and founder, and then I can talk about my own decision framework. So the conversation I normally have with people goes like this. You have nine months runway today, as things stand, you're burning $1.2 million a month. I'm making all the data up. You raised last round at make it up 120 posts. I can tell you that with market comps, where they are today, your next round, if you were to raise today, would probably be at 30 to post, okay? So what's going to happen? Either you're going to run out of cash trying to raise and people are going to say, I don't really feel like doing a down round because I don't want to

piss off all your investors, so I'll just wait for the next deal to come along. Or you're going to raise money and people are going to cram you down. When they cram you down, they're going to look at me and say, Mark, are you writing a check? So I will write a check. So let's say that I own 20% of the company today, I can always write a check to fix my ownership. But if you're the founder, you can't write that check. Well, you could theoretically, but most don't have the capital to do it. So I always say to people, I'm not telling you to cut your burn from $1.2 million a month to $250,000 a month to benefit me. No. It benefits you. Because if your runway can go from nine months to 23 months or 27 months, that gives you the time for two things, either to grow into your valuation or three

things, grow into your valuation number one, or wait until there's a better capital market environment, number two, or number three, when people go to fund you, when they make the investment decision instead of burning $1.2 million, by then maybe you're burning $80,000 a month, right? Because you've kept your costs low, your revenue grows, your burn rate goes down. So instead of writing a $20 million check, they only have to write a $5 million check, and that's much easier to raise. So it's in your interest. Now, you asked me about our decision framework. Let me tell you about our decision framework. We've been around for 26 years. Okay, so I'm not the founder. I've been running up front since 2011. It was founded by my dear friend and still colleague,

Yves Cisterone, in 1996. And we... did A rounds. You already said that. Our average check was probably four to five million dollars in the past. Somewhere around 2015, 2016, when A and B rounds started getting so large, we had a choice to make. And the choice was, do we do one of three things, either write bigger checks, 10, 15, 20 million checks into A rounds? Do we be, write the same size checks at the same stage but own 10 or 11% instead of our target, which is 18 to 21%, or do we still try to get 18 to 21%? Our strategy is defined by doing 40 deals where we own 18 to 21%, our median ownership is 20% on our first check.

And so how do you square this circle? What we decided was we would get religiously focused on just one investment thesis per partner. Okay. So we're eight people writing checks today. And each one has a swim lane. My swim lane for the last 11 years has been computer vision. That's why we work together on density.

That's why we work together on Vade. Like it's how does the world get interpreted through cameras or lasers or sensors or sensors are infrared? It's why I funded Ring. It's why I funded NANET, a baby camera. But I have another partner. And that partner is doing video game infrastructure. I have a partner doing healthcare. I have a partner doing fintech.

I have a partner who's doing cybersecurity. I have a partner who does AI and logistics. Sorry, not AI. Robotics and logistics. Which partner does robotics? I'm curious. So I actually have two partners who are doing it. My partner, Stuart Lander, does it at growth.

And my partner, Kevin Zeng, does it at seed in A, or seed mostly. Now, by getting in our swim lane, what we started doing is saying, We still want to own what we want to own. We still want to write smaller checks, three and a half million dollar checks, maybe four, maybe five, but on average three and a half. It meant that we had to move earlier in the cycle. Instead of waiting until you have product market fit or, you know, customer references or, you know, whatever, I have to back you usually when you finish the product, but haven't yet hit revenue.

Because if I wait until you have some element of product market fit, someone else was lined up with a $20 million check and I wouldn't win that deal. So we moved to fund companies earlier and faster to maintain our ownership and to get in to the deals that we wanted to get in. Running a startup is like being a small market team and you're trying to compete against somebody with unlimited resources like the Yankees and the Dodgers. Well, if you've seen Moneyball, one of my favorite films, you know that using data correctly can help you compete against those big incumbents who have seemingly unlimited resources.

One thing that startups haven't really had access to until now is detailed scenario planning. This is stuff that big companies get to do. There really haven't been tools that are affordable or elegant enough for us in the startup crowd where you can do this easily with org space. O-R-G-S-P-A-C-E. It's people software for software people. Basically, it lets you create plans for deploying the capital that you just raise and money you're making and then adjusting headcount based on different future scenarios.

For example, what if you raise your Series A? You get $10 million in the coffers, right? And you got to deploy that. What if you can't raise right now and you got to make it work with your $3 million seed round? Whatever your revenue goes up 20, 30% next month. With OrgSpace, you're going to be able to plan for hypergrowth, you can plan for riffs and everything in between. Things like cost, skills, DEI, all that is in context so you understand the impact of your decisions. This is the thoughtful way to do it, folks.

Twist listeners get $2,000 in credits on OrkSpace's pro. plans with a 30-day free trial at org-space.io-slash-twst.org-O-R-G-S-P-A-C-E. Dot-I-O-S-T-T-S-E. Get those $2,000 in credits. It's really interesting with this cognitive biases we start to have in the signaling. What signaling do you have right now around AI, generative AI, the meme of the moment, the focus of the moment. And what signaling did you have around Web 3.0 and Crypto? Did you get it right? How do you look at it going backwards? Do you regret things or do you felt like you had good decision-making process? And then... Here's where age helps, Jason. Yeah. Of course. Sorry to jump in. This is where age helps. Okay.

So the advantage of youth is their peer group are the people creating companies for the most part, right? Like some people create companies at 48 or 52, but for the most part, it's younger people. And when you went to Stanford or Yale or Princeton together or Michigan State or Washington University, wherever you went, but when you went together and that was your peer group and then you all got jobs together at Google or Facebook or Stripe or Dropbox, right, you have meaningful relationships and they're more likely to want to raise money from you. So we have gone out and hired younger partners. I have Aditi Molly Wall. She's much younger than I am. Kevin Zhang is much younger than I am. Kobe Fuller is much younger than I am. So they run in different circles and have different networks and crowds,

and that's a huge benefit to me. But I'll tell you what happened in the crypto craze. I said to people, that's not our swim lane. If anybody wants to drop what you are working on and go super deep in crypto, then we can have a discussion. But until such time, we're just going to skip that. It's okay if Chris Dixon and Fred Wilson make a ton of money on that because they were early. So to be right about venture, to be good at venture, I think you need to have three things right. You have to believe in a trend that's going to happen in three to five years that most people don't see yet. Okay? You need to be correct about the timing of that. If it's eight to ten years, as you know Jason being too early

as the same as being wrong. Yep. If you're reading about it today, you fucking missed it. Yep. It's okay. The next trend is coming. But if you pushed your whole pile in,

if I take your poker analogy, if I pushed my whole pile in on crypto in 2020, and I wasn't doing it in 2013, 14, and 15, like chances are, you know, like it was, you know, your old pal Tony Shea said, like,

that his thesis in Las Vegas was not to be the best poker player at the table, but to sit at tables with the worst poker player. Yeah, for sure. Or if you don't know who the sucker at the table is, it's you. It's you, for sure. If you push your pylon in 2020, you're probably hurting right now. So in 2020, 19, 20, 21,

I was under a lot of pressure from some of my colleagues saying, we need to pay more. It needs to be 40 pre. We need to do NFTs. We need to do crypto. And I said, well, I think you missed that trend. And there's some great people who caught it and understand it better than you do.

If you want to drop everything and go deep, I'm here. Nobody wanted to do that, right? So we didn't do crypto. We skipped that. Why be tourists? I mean, why come in last? You're the sucker at the game.

You know, I looked at it, and I made the assessment with crypto, that I like to talk to customers and or talk about the product and how it was constructed. And I consistently got told, have fun staying poor. You don't get it.

Okay, boomer. and I said, well, this white paper has spelling errors in it. Anybody could have written it. I'm sorry, I'm not the right investor for you because I like to look at the product and talk to you about why you put the buttons in certain places, the workflow and how it's going to sort of hit customers. And you can't explain that. So find another investor. There are some really smart young investors who just were passionate about it, Mags being one, Gabby Goldberg being another. there's money to be made in Web 3.

We know that this distributed infrastructure will produce some interesting things, but I'm not the expert in it, and so we chose not to go along. On the other hand, we bet really big on computational biology and on healthcare, and we started doing that like eight, nine years ago,

and we have some really interesting companies in the category now, and back then everyone's like, what the fuck are you doing? So, but let me say this. So first of all, you need to be right about the trend. second, you need to be right about the timing.

And third, you need to back the right team. So I found this great trend. I had just moved from Europe and Japan back to the United States. I lived in Europe and Japan, as you know, came back to the U.S. And I said, I don't understand why there aren't text messaging companies. There's going to be something big in test messaging. So I went out and I met a bunch of teams. And I met a fantastic team based in L.A.

they had built and sold their first company for $580 million. And in mobile game 1.0, they were the winner in the category. They built a company called Jamdat. And Mitch Lasky, who went on to Benchmark was the CEO of that company. He didn't found it, but he was the CEO, and he's incredible. And actually, the people who built it were incredible. And they built a company called TechPlus. And it was up into the right.

And there were four or five up into the right. But the problem is there was one winner. And that winner is called WhatsApp. Yeah. And I could go back and I could. They took, I don't know, 99.9% of the value. And I could go back and say, why didn't we win and we could second guess and all the things. It was a great team that we backed.

We just didn't end up backing the winner. And that's a hard thing about being a venture. You have to be right about the trend. You have to be right about the timing. And you have to back the right team. I mean, look at Uber, right? There was Lyft and Sycar. And I met both those companies before Uber.

I knew the founder of Uber longer, but I took a sidecar after I had invested in Uber, and I was in a sheer panic. I mean, I called Travis, and I was like, I just got it in sidecar, and it let me pick the price I wanted to go Palo Alto. And he's like, well, take a couple rides, let me know what you think.

And then I took the Lyft ride sharing, and I was a sudden, a total panic because we were only doing Lincoln Town cars. And I said, well, with sidecar, I offered somebody $25 to take me from San Francisco to Santo Road. And Uber would have been 75. Lyft was like 60 or 50. And this guy did it for 25, but I felt like I was going to die because he was leaning back so far in the chair that I was having like a face-to-face conversation with them.

Car smelled like weed. It was like scary. I was like, so that one's definitely not going to win. People should not be auctioning off the lowest price for a car. It doesn't feel safe. But this Lyft thing with the Prius, I kind of like the Prius better than being in the SUV because I don't feel as douchey. And he's like, we've already got it built. I said, what do you mean?

tell anybody it's built. We're just going to press the button at some point. We're just going through some, you know, scenarios or whatever. I was like, okay, great. Back the right guy. You don't want to go to war with that guy. And then I subsequently met the DoorDash team. And they said they would wake up in cold sweats. Okay, Travis. Travis. You know, and it just is the nature of it. You're right. Some founders are so transcendent. They're just so good at winning. Yeah, you can get everything else right.

The great thing about being a capital allocator, you need only hit one per fund. Is that true with the power law? And explain the power law to people who maybe are new to venture capital and or new to startups because that does affect. And you've written about this a lot of times. Again, the blog is both sides of the table. So you can understand both sides of the table.

What do founders need to understand about the power law and how that impacts behavior of venture capitalists in terms of outcomes. So let's say you raise a $300 million fund and let's say that you're investing in 40 companies. And let's say that you own 20% of a company, you gave them $3 million, and then they turn around and get offered to be acquired. Like quickly. And you're like, dude, I just made you three times your money in three months. Okay.

that $3 million, three times my money is $9 million, so I make a gain of $6 million. And even in three months is a total loss for me because $9 million, I got to return at least $900 million. So you've returned 1% of the minimum expectations that my investors have. So if you think of 40 shots on goal, I just wasted one of them. you're thinking, I got a huge victory for you. I got 3x and I'm like, that's a f***ing waste. Now, that doesn't mean that I'm not happy for you or, you know, whatever. I don't move on in life.

Like, we're not dicks. Like, if that's the thing you want to do. But I'm trying to back people who aren't looking for a quick exit but really are driven by some bigger mission. Like, I don't know what drives Elon. You obviously know better than I do. But something more than money drives that guy. and you want to find somebody who they're driven by some other thing.

That's why I always talk about wanting to back passionate entrepreneurs that are like really driven by a mission. Like we talk about missionaries versus mercenaries. Excuse me mercenaries. And the missionaries are the ones who can get through crises. Yeah. And so like the math just doesn't work. So when you think about a $300 million fund and I write 4D checks, what we know across more than 11 funds is that, and you know, it's the power law, 20% of our investments, usually it's

less than 20%, return 80% of our total returns. So in a $300 million fund, it's usually five or six deals that return 80%. And it's usually one or two that disproportionately return the fund. Yeah, and this is very important, I think, for founders to understand. And it's it's great that the missionary approach, as opposed to the mercenary approach, what's really interesting about that is we're trying to get an outlier. We need you to swing for the fences. Mercenaries, they don't swing for the fences. If they get that 40 million, 80 million exit, they own 60% of the company.

Hey, it's life-changing money. They're going to pull the rip court because they can imagine themselves not working on that mission because they did it for the money. And the challenge in the alignment, and this is one of the few times where there's like a misalignment in venture is, yeah, sometimes that early sale comes, and I had it happen two or three times where I begged the founder, keep going. And the problem was in the early part of our careers, the concept of secondary shares did not exist. So the founder was going to get a zero or whatever early exit they could get. And when the early exit comes, well, you know what? Getting $25 million, life changing money.

You say it yourself like, hey, I'm happy for you. But it's, you're sad for you. The mercenary versus missionary is a great way to look at it. But maybe you could unpack why secondary kind of corrected this one of the few misalignments in venture, which is, hey, the quick exit is really good for the founder. And it's a disaster for the VCs. Well, I don't want to pat myself too much on the back, Jason. but I think I was the first VC to publicly speak out in advocacy for founders on this.

And this is already, I think I wrote my blog on this in like 2008. It used to be the mantra of our industry that founders can't sell secondary until the whole company is sold because every dollar, all the capital should go towards the success of that company. and the reason I spoke out was I had like you, you know, in your founder days, I had been that guy who had a startup and my VCs all lived in Atherton or the equivalent in London, Belgravia. And, you know, I have my wife saying, why are you working for this small amount of money? I was earning a lot of money before I did a startup.

Yeah. And, you know, I had a little kid. I had a second on the way. and, you know, we're living in a shitty house, and it's a struggle. And I'm like, you know, if I could just make a little bit of money, that would change how my wife felt about her own sense of security and why I don't come home on weekends or, you know, why I'm flying on weekends to meetings and staying late every night. Yeah. So I coined this term, feed the family money. And I started talking about feed the family money.

And if I could just get founders enough where their family. metaphorically, right? Like, where you take that pressure off you. And the hard thing is when is it okay? It's obviously not okay before your company is a success. So when you have your company as some level of success that you can feed the family or put aside money for your retirement or for purchasing your first ever house or whatever it is, once you've hit that little bit of success, what it means is we have aligned

interest now because you're not playing small ball. And now you're saying, I really want to do something extraordinary. And I still believe that today, but I will tell you, secondaries are really hard to come by these days. Yeah, secondaries, I haven't seen many of those recently because people are trying to, I guess, fix their portfolio construction. But I, you know, I think when people figure out who the winners are, they'll be a, hey, this company has a good cap table. companies growing? Sure, I would love to add to my position in it. Because I got to put the money somewhere, and this feels like a safe haven for the money, and I've already vetted the company. But yeah, the hardest thing that people have with secondaries today as we sit in 2023, early 23,

is how to value them. Because if the public markets are paying 6x forward for a SaaS company, if your last round was at 18x or 24X, and you don't want to sell at a huge discount, to that, you know, why would an investor go in and pay 12 times or 13 times for your supposed discount in a stock that is not top of the preference stack and doesn't have downside protection? I'm not arguing against founders. I'm just telling you how investors think these days and why it's harder to come by. Yeah.

It is one of these systems where it did get abused. I remember seeing some deals where the VCs were being selected. by the founders, by which VC was offering the most secondary. This felt like a huge conflict of interest. I said, hey, maybe we should separate these two things just for hygiene. We raise around. Then we do the secondary. But are we picking the partner for this next round based upon who's putting the pot sweetener?

It happens in every cycle and every boom market. Again, I don't really blame market participants like the money and the temptation. were too big, but it really drove some absurd behaviors. And what people often don't understand, Jason, is that sometimes it's a founder, CEO at odds with their company and the company doesn't even realize it, right? Like, so if you take $15 million off the table in a company that's not profitable, not really guaranteed success, and the CEO takes 15 off, rank and file do not, and you ended up picking the wrong investor just so you could pocket your 15,

Rank and file don't even understand what happened to them. They're not in the loop. Should there be more transparency for the rank and file? Should any of these secondaries be pari-parseu? If the founders participate, everybody else should participate, what's your position on it? Everybody looks at it differently, but really, I think the easiest way to make it work is if a CEO wants to sell, they probably should offer it to rank and file. Now, you could, you can slice and dice your data differently, Jason. You could say, for example, anyone who's been at the company for four years or more can sell.

You can say, I'm making up the date. That's like an individual decision. It could be you can sell up to 15% of your position, but I, the CEO, I'm not going to sell more than 15% of my position either. So it could be relative. Like, it's okay to have some slices and dices because, like, you don't necessarily have someone who's joined three months ago cashing out. right they haven't really contributed to the success that makes a lot of sense to me an orderly process it should be an orderly process i think this double dealing i see we we know those famous instances of this but you know like some founder yeah they know somebody

who's a you know some crazy billionaire they sell a you know a third of their shares before the IPO everybody's locked up ipo price was a little too high the price before the IPO was a little too high and they get to clear a third of their position and then everybody's locked up ipo price was a little too high and they get to clear a third of their position and then everybody hates them. So you got to really be thoughtful about this. Because again, alignment does matter. You need to everybody align. And if everybody's not, hey, we start having these bad feelings, it gets toxic. Maybe you could give us an example. I know we're getting close to the end here. Some examples of things that were company killers and some things that were, hey, really profiles and courage, things that really got the company

aligned. And you can composite it, obviously, unless it makes everybody look great. But some thoughtfulness around things you've seen that have crashed the plane that didn't need to and what you took from it. Well, mostly what I should tell you, Jason, is my philosophy and going back to psychology where you were like earlier in the episode, which is there's no such thing as a good or bad VC. The pool of VCs and their behavior is just maps what there is in the general population. There's amazing VCs who are really hardworking, thoughtful, earnest people not in it for the cash that are show up and be dependable. And there's assholes. And the same is true of founders. Like there's not a larger proportion of altruistic founders than there are VCs, then there are investment bankers, then there are lawyers, then there are lawyers.

Like, we're all just human. And so I will tell you that there have been some bad behaviors for CEOs and these things never get public. And in a bull market, what we saw a lot of CEOs doing is pushing really hard for personal top-up in their shares. So let's say you did a round and they come back to the board and they say, I want to own 6% more of the company. And the board might say, but you already own 18%. And the rank and file each own less than a half a percent. So we'll take dilution, but it really should go to rank and file. And by the way, you already sold $10 million a secondary in the last round.

and that's why you own 18 and not 24% or whatever. But in a booming market where they had a million options, what happened was founders who found someone who was willing to let them top up their personal shares and they didn't always look after their staff. Now, again, I don't want to suggest that there's not VCs who do self-dealing. There are.

How do you start to see the predatory terms, the three-axis, the two-axis, is the crammed down. Is that happening now? I just read last night a data set that was put out that maps across a whole bunch of terms, whether they're founder-friendly or investor-friendly, and the nadir, the low point of investor-friendly or the peak of founder-friendly, no surprise was 2019 to 2021 for the last 20 years. and it's a sharp trend up

towards investor friendly right now. So I wouldn't say 3x participating preferred, but you are seeing participating preferred coming back. Okay, I get my money and then I get my percent ownership. You get a double dip.

Double dip. You're seeing dividends going up. You're seeing, you might see a 1.4x liquidation preference. You're not actually getting the cash back. You're getting what? Well, you can have things like a pit. You can have things like a pick, which is a payment in kind.

So it basically says you accumulate a dividend and then you get it in equity later. So it's just a way of getting more ownership. So you feel like you sold 18% of your company, but one day when you sell it, you really sold 23% of your company because a dividend builds up that gets paid in kind. So I put in 20, the investor put in 10 million. They get 6% dividend. Every year they get another $600,000 on that $10 million. that gets put on top.

And they can put it, they can either have it stack up onto their liquidation preference. So that's downside protection. So if my liquidation preference builds, which they typically do, they typically increase over time, or I can actually have a payment in kind, which means that I get equity cumulatively

and I get it paid later. At that, whenever the evaluation was at that time. You also see things like full ratchets that come to play. in a market like this. And honestly, the pendulum hasn't swung fully, Jason, right? Like, there's still an oversupply of capital. So the terms are relatively favorable to founders, but it is changing quickly.

I think, yeah, if you're a founder, the best advice is to build as much runway, so you have as many options as possible. A founder with 24 months of runway right now can turn down deals. A founder with five months of runway, six months of runway, they reasonably can't turn down a deal, which means we know how that dynamic's going to go. It's going to go down to the wire, and you're going to wind up taking a really bad deal. So be thoughtful. Mark, as always, our conversations so candid and so insightful. It's great to work with you. If you're a founder, read Mark's blog, both sides of the table. And if you're a seed founder, you're not going to do much

better than Mark in terms of somebody who's going to work hard for you. So go ahead and pitch him your company, the best way to do that is? Well, I still believe the best way to get a hold of us is to get introduced by somebody we know, which is usually the founders that we've backed. Oh, that's the best way, for sure. I do read email. Yeah. But like I get so many like you, so many inbound that how do you know which one of those

things to really focus your time and energy? So, you know, getting a friendly intro. And like, I know people get outraged by this. Like, why should I have to get an intro? But actually, the skill set that it takes to get an intro to a VC, it's pretty easy to get introduced to a VC. Like, we are predisposed to want to meet people. But that's the same skill set you're going to need to sell your product to enterprise clients, to get journalists to write about you, to do business development deals, to persuade people to join your company.

So it is a bit of a test that's the first test is how do you get access and what do you do with it? Yeah, that is one of the first test. I have one test right before that I always saw people as the first test. My first test is, can you get a co-founder? I get a lot of emails because I tend to invest a little bit before you. We overlap, obviously. But I can't find a co-founder. I'm like, failed the first test.

Can't get an intro. Failed the second test. The first two things I look for in any company is cadence of recruiting. Obviously, quality matters, but cadence of recruiting and cadence of shipping product. Because people who can't hire and can't. either because you don't have access or you don't dedicate time or you're just slow in decision making,

they're going to be like that for the next 10 years. And people who can't ship product regularly, it's a bad pattern. Yeah. I agree. The second one is my first. I look at that product velocity. I just love product velocity.

And you describe this in probably your most famous blog post. Invest in lines, not dots. Explain to people as we end here. This philosophy you came up with, and do you still... believe in it or have you edited in anyway? Completely believe in it and I think it's a two-way process. Okay, so the idea is think X-axis, Y-axis, where X-axis is time and Y-axis is performance.

However you want to measure performance, okay? When I meet you, you're a dot. We either had a great meeting or a bad meeting. You either were on a high because you just got a bunch of wins or you're on a low because you had a bunch of losses or whatever, but you're a dot. And the next time I meet you, that might be up to the right or it might be down a little bit. But over time that I connect those dots and I see a pattern like you got kicked in the nuts or, you know, kicked in the shins or whatever metaphor we want to use. I guess gender neutral. You got kicked in the shins.

You got knocked on your ass. You got knocked on your ass. And how did you get back up and did you dust yourself off? Were you resilient? Did you have good follow up? Are you good at recruiting? Can I see what's changed in your product? Can I see what's changed in your forecast?

Did you get pressed? Did you whatever? And over time, if I've met you four or five times, I start to detect a pattern of what it's like to work with you. And the same is true of a VC. They might show up their first day and be super charming, but then they never really follow up on things. And, you know, if they don't follow up when they are supposed to be in the courting phase of you,

well, that might mean they're not interested. That's true. but if they say they're going to do it and they don't do it, imagine what it's going to be like when they're on your board. So like it's a two-way street. And like someone who is thoughtful in the first meeting with you and has all sorts of ideas, but the second meeting they don't remember even really what they talked about the first time. Yeah.

Like that's probably what it's going to be like when they're on your board. I mean, you need people who can actually on the founder side produce a product. And I just love that product velocity. and, you know, hiring velocities when I haven't thought of, but boy, is that that one's going to sit with me. All right, Mark, great job, and we'll see you all next time on this week's startups. Bye-bye.