This Week in Startups - Crypto, the Midas List, and democratizing VC with Delian Asparouhov and Mel Williams | E1952

Starting point is 00:00:00 Well, Jason, looks like you're back in the Bay Area. I am back in the Bay Area, ready to rock and roll. I am, yeah, I am feeling fabulously productive. You know, we're fund four hit our target, so that's great. And I am investing about a million dollars a month, about 100 companies a month. And I've added three researchers and analysts to the team, which has just been great. Thanks for asking, David. How are you doing?

Starting point is 00:00:27 I'm doing great. I met our friend Alex Edelson at his annual meeting, AGM. Do you go to any of your GPs, AGMs? I get invited to a bunch. I get invited to keynote and speak at them now or like moderate. The number of things I'm saying no to, it's a great paradox, Delian, you'll deal with this over the next 20 years because you're so successful at what you do. You know, like when you're starting your career, you're like, somebody pay attention to me

Starting point is 00:00:53 and can I get a meeting? And then over time, you get. the number of meetings and recognition you want, and then you drowned an opportunity. And then when you're drowning an opportunity, you have to change your mindset, which is, you have to figure out what actually you enjoy and what moves the needle for your goals. And I spent the last maybe five years looking at that and getting rid of anything on my schedule that is not my kids and family, recording a podcast, meeting with founders. If it's not those three things, it should not be on my calendar.

Starting point is 00:01:26 and God bless my team for helping me with that. This week in startups is brought to you by Open Phone. Create business phone numbers for you and your team that work through an app on your smartphone or desktop. Twist listeners can get an extra 20% off any plan for your first six months at openphone.com slash twist. Coda. A new doc that brings words, tables, and teams together. All your valuable data, plans, objectives, and strategies in one place.

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Starting point is 00:02:31 I'm really excited. Delian and Mel actually started one of the most successful fund of funds in the world, really, in the VC space. And Delian, you keep you keep busy. Congrats on the $90 million around. I think you announced last month for Varda. And also you're a partner, founder, Spund. And you also have a kid, right?

Starting point is 00:02:50 Yeah, my kid was just born five months ago now. So, you know, trying to balance all three. jobs as best I can, but thankfully Founders Fund's a place where it seems like a lot of the partners like to do a lot of jobs. Great. Well, we have a lot of unpack to unpack today. Can we get started? Yeah, let's do it.

Starting point is 00:03:04 Absolutely. Welcome back to this week's Liquity Podcasts. With me today, I have Delian Asparoho, partner at Founders Fund, also founder of Varda. Next, we have Mel Williams, co-founding general partner at TrueBitch Capital Partners, which tracks the Midas list and is a top venture fund of fun. Of course, we have Jason Calacanus from the launch fund. I'm your moderator, David Weisberg, co-founder of 10X Capital. Today, we have several great topics on the docket.

Starting point is 00:03:30 Crypto funds are back in the game. Companies are ramping up their AI spending. We'll unpack. And our friend Elon, or your friend Elon, Jason, had a fascinating interview at the Milken Conference. We'll end with everyone's latest three investments. Let's get started. Crypto is officially back.

Starting point is 00:03:47 Wall Street Journal is reporting that top crypto funds, Pantara Capital and Paradigm are back in the market. Pantara is targeting $1.25 billion for their eighth fund, and Paradigm, a crypto fund funded by Coinbase co-founder Fred Ermsum, is discussing raising between $750 and $850 million for their next fund. In the first three months of 2024, crypto-focused VC funds closed on $2.01 billion globally, compared to just $1.9 billion in all of 2003.

Starting point is 00:04:21 Deleon, founders' funds reportedly made a huge bet on Bitcoin, what are your views on the crypto market today? You know, one thing that I love about our, you know, sort of crypto strategy at FFF is we allow people to, you know, sort of run with very independent convictions. Like myself personally, crypto is not my area of expertise. It's explicitly an area that I sometimes, you know, critique extensively, you know, sort of publicly on Twitter. But at the same time, I love the fact that, you know, we are, you know, sort of strong

Starting point is 00:04:44 independent thinkers in this area. We don't let basically, you know, sort of hype cycles, you know, really affect our, you know, sort of investment strategy. And so as an example, in the true, you know, sort of, you know, lowest part of the market when everybody was the most pessimistic in, you know, sort of late 22, we actually, you know, ended up, you know, deciding to hire Joey Krug, who is the former CIO at Pantera Capital, who in our opinion is basically the smartest investor in crypto. He joined in April 2023 when, again, most investors were fleeing the space.

Starting point is 00:05:13 Bitcoin was roughly half the price that it was today. And then, again, you know, sort of media has reported that, you know, we've made a huge bet in, you know, Bitcoin and it was reported to be, you know, sort of right around the, you know, sort of bottom tick. And I think a part of it is just we've been, you know, sort of long-term investors in the space and long-term thinkers. You know, there's this old, you know, Peter Thiel, you know, talk that he gave in the, you know, sort of late 90s, talking about the, you know, sort of potential of a digital currency with cryptographic, cryptographic backing. Obviously, PayPal in some ways, you know, the original idea was, you know, sort of digital

Starting point is 00:05:42 movement of currency. And then even as a fund, we actually, you know, began investing in Bitcoin in in 2014. And I think, you know, we've also recognized that, you know, a part of the venture capitalist job is not just, you know, sort of when to buy equities, but it's also when to sell and distribute them. And I think, you know, broadly across the portfolio, I think we've, you know, sort of managed that, you know, sort of quite well. You know, maybe Mel can speak to, you know, sort of the amount that, you know, sort of founders fund returned in Q421. But, you know, we took a very different approach to, you know, sort of other top tier investors that decided to, you know, not give LPs control of those equities and instead, you know, forcibly, you know, sort of hold on to them.

Starting point is 00:06:15 And I think that was not, you know, that was not their, you know, sort of right call. So, yeah, I think it's super exciting to have to see the resurgence of this space. And recently we announced that we led the series B of polymarkets. And so are active investors in this space, both with, you know, sort of tokens and, you know, crypto equities as well. Mel, you have an institutional practice. You have a fund of fund. How do you look at the crypto market?

Starting point is 00:06:39 How do your institutionalities look at the space? Yeah, you know, we're relatively bullish on the crypto or blockchain market as an attractive investment opportunity. A little like Founders Fund, we began taking a hard look. at the blockchain or crypto markets back in 2016 or 2017, when we saw a lot of our core venture managers, including Founders Fund, investing in the sector, and we saw a lot of top technical talent building in blockchain.

Starting point is 00:07:05 We made our first two dedicated manager commitments to blockchain managers in 2017. And in 2021, we raised our first dedicated blockchain fund-to-fund, which invests in both managers and directly in the equity of projects and or private and public tokens. And so we've been in the market for a long time. Clearly, the market is much larger today than it was several years ago. We believe the market has broadened and deepened over times so that while the primary focus remains on Bitcoin,

Starting point is 00:07:35 there are more legitimate and attractive opportunities to invest in crypto beyond Bitcoin today than there were seven or eight years ago. I think the total market cap of crypto peaked in 2017 at just under $800 million. And I think it just peaked earlier this year at just under $3 trillion in March. So you can see the growth of the market over time. We believe the market is more institutionalized today because the investor base is broadened to include, you know, high-quality institutional investors like Truebridge and other high-quality institutional investors.

Starting point is 00:08:11 You can't ignore the current potential impact of the Bitcoin ETFs and opening a new retail investor base. So, you know, a much broader investor base than several years ago. And then finally, we believe there are more real revenue-driven use cases being developed every day on-chain. If you look at Bitcoin, it's a method of payment in a store of value. If you look at, you know, contract companies like Ethereum and Solana, you know, smart contracts for defi services or NFTs or play to earn games is having a lot of success. If you look at, you know, the staking tokens like Lido and Aethai, I mean, these tokens are generating

Starting point is 00:08:46 hundreds of millions of dollars in revenue each year. So we're seeing, you know, a lot more use cases than we did seven or eight years ago. And so we're rather excited about the investment opportunities we see in the blockchain market. And we're putting our dollars and our limited partners' dollars behind those investment opportunities. Earlier this week, SWIP, state of Wisconsin investment board, a disclosed a large investment in Bitcoin. Do you see that as a watershed moment?

Starting point is 00:09:13 You know, to me, it's a little bit of old news. I think there are a lot of institutional investors that are already invested in Bitcoin. I think your leading foundations and endowments have been invested in directly in the leading tokens for a number of years. It might be the first for a large public pension plan to invest directly on the token. But I think some of your thought leading institutional investors have been there for a long time. Juggling multiple devices and apps to run your business is a mess. Open phone is here to make it simple. by simplifying your business communications with one easy-to-use app.

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Starting point is 00:10:49 Head over to openphone.com slash twist to start your free trial and get 20% off. And Jason, you haven't been the most bullish on crypto. Have you changed your mind at all? Do you see any legitimate use cases or any applications? You know, the way I look at the space is Bitcoin is a completely different animal than crypto. I think it is, it sits as a store of value. value on a global basis like gold that has never existed before in humanity. And the fact that it hasn't

Starting point is 00:11:19 been hacked in any way, except for maybe the endpoints, which anybody can put a gun to your head or hack your computer or phone and steal anything. So it is a perfect piece of technology after 15 years. And I think it's earned its right to have that very important global function. I met in starting in 2009, 10, 11, 12 with all of these companies. And what I realized were, they were a combination of incompetence, criminals, grifters, and delusional people. Now, I like investing in delusional people. I just don't like investing in incompetent people. So delusional competent, great. And I think what we're seeing right now, as you watch the SEC take apart all of the grifts, all of the, you know, illegal securities, whether it's XRP or, you know, or criminal

Starting point is 00:12:14 activity like Tether, which is, you know, a favorite for people doing human trafficking or, you know, other illegal activities. I think what we're going to see, you know, probably in the next decade, is some kind of framework emerge in the United States, which has to happen. You can't have this regulatory environment be so murky. or you're just going to continue to have this very strange dynamic where the SEC won't approve something. And then, you know, visionary people make stuff alongside criminals and grifters and incompetence. And then, you know, they're like, we'll tell you in four years when we arrest you if what you did was illegal.

Starting point is 00:12:54 So there's a lot of blame to go on both sides here. I haven't touched it because I have made a career of, you know, assessing a product. and a customer base. And I have a knack for that. And I have a knack for people who are hard to get along with and extremely competent. And because I'm hard to get along with and I like to think I'm competent. That's my signaling. Great products, consumers who are over the moon, and people who are difficult but competent.

Starting point is 00:13:26 And when I looked at this space and when I looked at it through my personal lens of investing, there was no product and there was no customers. So it made it impossible for me to make an investment decision in place of that. And then when I assess the individuals, once in a while, there'd be a Brian Armstrong. But for every Brian Armstrong, there was a long tale of incompetent people. And so I chose to just not spend my time on it. Now, I probably missed a bunch of great trades, but I didn't miss any great investments. And I think we need to really, we need to hold the SEC.

Starting point is 00:14:02 accountable for making a clear framework. And if the framework is going to be, you know, it's the existing framework, fine, then do that, which is kind of what they've done. But I think that's stupid because there is something here, obviously. So what I've tried to encourage and I've been public about this is what I call the sophisticated investor test. We have qualified purchasers. We have accredited investors.

Starting point is 00:14:26 We say they're sophisticated because they're rich. We never double click on that, right? You know, we're just like, you inherited money, you won the lottery, great. You're sophisticated. What I think there should be as a test. And the test should be, you know, maybe a five-hour course. It should be, you know, whatever, 50 or 100 questions. It should require two or three hours. And then we should let people gamble or invest on these things. And then on the other side, there should be safe harbor in my framework for projects that are small. when they're under $10 million, when they're $10 million to $250 million, and when they're $250 million and above,

Starting point is 00:15:05 there should be like maybe three different rules for the road. You can do whatever you want under $10 million, have that it with sophisticated investors. So that when you're going to go work with that investor, you can say like, hey, do you have the sophisticated investor number? Yeah, put it in here. Just like if you were going to cut hair in California, you need a license to cut hair. But we don't have that.

Starting point is 00:15:26 You know, you can go to Vegas and you can gamble. You can be drunk, they can be feeding you drinks for free, and you can gamble your entire life savings, and there's no repercussions. So now that we have draft kings and sports betting legal, I think we need to address this, because I believe crypto sits between gambling and professional investing, right? Just like stonks do, like these meme stocks or whatever. Just create a good framework. If there was a clean framework, I would feel more comfortable doing it, but I have other

Starting point is 00:15:55 opportunities that are not going to get me pinched and not going to result. in, you know, me dumping my tokens on retail, right? I don't want to wake up one day in a lawsuit because I invested in a company and then that company dumped a bunch of tokens on retail and then everybody's like, oh, did you dump your tokens?

Starting point is 00:16:15 Well, I have to sell my shares from my LPs at some point. And if I was an investor in one of these companies, an XRP or something, I'm not pointing them out, but they've had the biggest SEC battle. Do I want to be in that position of having to defend my investment and having SEC.

Starting point is 00:16:30 I've had the SEC send me a letter or two because I invested in companies that they wanted to know about. Not that we did anything wrong, but it's not fun because you're all of a sudden spending tens of thousands of dollars and in the case of crypto

Starting point is 00:16:42 it would be hundreds of thousands, explaining what you did and never knowing if they're going to show up at your door. So anyway, that's my feeling on it. I wish there was a clean framework and then I would engage

Starting point is 00:16:52 and I like the fact that all these grifters are getting pinched so that we can dissuade them and the SEC drops, to enforcements a month on average. I looked at their enforcement page in crypto. And then that would make all of this easier. But I'm not comfortable in it.

Starting point is 00:17:07 I don't know, Jason, if you saw there's a big U.S. House bill that's going to the vote for this exact issue, which is a lot of the criticism in the crypto industry hasn't been necessarily this rule is good or this rule is bad, but the purposely vague tactics of the current chairman. and this bill is going to the House for a vote to try to really establish a framework, what is legal and what is not legal, and make it in a very American way, you know, clear laws, clear regulations. I think that's going to do a lot to it because I think a lot of people are in the same camp as you, Jason, they might see opportunity to get upside, but they don't want to deal with SEC. They don't want to get raided. They don't want to get called out by their LP.

Starting point is 00:17:50 So I think some of the regulatory framework will take us a big step forward as well. How do you look at it, Mel? I'm curious, you know, when you hear my take on it. I agree with you that the crypto market needs to be regulated. It needs to be regulated. I think it will be regulated. It's taken too long for regulatory agencies to get their act together to figure out where they want to head on this.

Starting point is 00:18:13 But I think it needs to be regulated. I think it will be regulated. And frankly, I think when it is regulated, it'll be the best thing that ever happened to the blockchain or crypto space because I think it'll weed out all the bad players or a lot of the bad players, and it'll simply bring in another level of institutional capital to continue fueling growth in the space. So I'm very bullish.

Starting point is 00:18:37 Which is what we saw in Bitcoin, right? Once they kind of were like, hey, this is okay, then all of a sudden people start trading it. And all of a sudden it goes from $20,000 back up to $60 or $70. And it feels like a store of value that's safe. Yep.

Starting point is 00:18:53 Daly, and you're nodding your head. What are your thoughts? I mean, I still think, you know, we primarily spend most of our time thinking about, you know, sort of Bitcoin. If you look at, you know, today's gold market cap, it's, you know, 16 trillion. If you think that, you know, Bitcoin can at least get to half of that, you still have another sort of four X ride from here. I think on the, you know, sort of regulatory, you know, sort of front, I think we're obviously a little bit more willing to, you know, sort of bleed at the edge where we feel confident

Starting point is 00:19:16 that our team can assess the technical nature and competence of, you know, sort of things that, you know, regulators may not love, right? So we just led, you know, around in a polymarket. Polymarket was obviously, you know, sort of had regulatory action against it and was effectively, you know, sort of banned from the United States. We still think that's a, you know, sort of a platform that, you know, sort of deserves to exist and one day should be allowed, you know, sort of back in the United States. And so I think we are a little bit more on the side of, you know, sometimes I think the, you know,

Starting point is 00:19:39 sort of SEC can, you know, over, you know, regulate and overact. But obviously, you know, who would have guessed that the, you know, sort of founder's one guy would be the libertarian in the crowd. Well, I mean, I'll be totally honest. I did 506C for our latest fund. I had $110 million in interest. I could only service, and that's all accredited. I could only service 10 million in accredited investors because of SEC regulation.

Starting point is 00:20:04 And so, you know, with qualified purchase, obviously, you can do a lot more. Why can't Americans invest in a venture capital fund exactly? And they've, the SEC has these mandates to evolve, but they are always. slow and they always get extensions because they are concerned with downside protection, right? And if I were running my funds out of Europe or Australia or some other places I'm told where they don't have these frameworks or the frameworks are slightly different, you know, I could just raise a venture fund with a tweet given my following count and let, you know,

Starting point is 00:20:43 I don't know, 10,000 people put in $10,000 and be done with it. That feels great to me to democratize access to venture capital. But, you know, it doesn't work right now. And I would love for it to be tokenized. So if some, you know, middle class person, i.e. like my mom, put $10,000 into a venture firm that was tokenized. And she could just trade it to one of you because it was up 3X. And she says, you know what? I want to take 15K off the table and let the other 15K ride.

Starting point is 00:21:11 And I could just trade it on Coinbase. How great would that be? Instead, you got to do weird things like this destiny, XYZ. I don't know if you saw that. I had the founder of that on the suite of startup. So, like, you bought a bunch of secondary, created a public tradable security, and the thing has been going up and down, and it's worth 20 times the book value. And that just shows how much the public wants to be involved in sophisticated alternatives.

Starting point is 00:21:37 So let's let them be sophisticated and participate in alternatives, which we all know is where the alpha is. I think a lot of these issues are marked by you don't see, you don't see opportunity costs. You don't see what happened to that middle class family that could have compounded their capital 12% versus 6% over a decade. From the regulatory standpoint, nobody loses. Nobody is perceived as losing Jason when 110 million can't invest in your fund because no one ever sees that.

Starting point is 00:22:05 They don't see that opportunity cost. They don't see that upside. So regulations in general have a bias towards solving problems that may not have to be solved. And so we're always having to brush up against that when we think about public policy. And by the way, the unspoken like, you know, sort of side effect of this is that ultimately retail investors really only have access to these public markets, whether it's, you know, crypto tokens or public equities. And fundamentally, when you have a sort of dirt of demand, relative to the supply, the cost of capital of those companies just ends up, you know, sort of being

Starting point is 00:22:36 different. As you end up harming the startup, you know, sort of disrupt your ecosystem where, you know, you always expect, obviously, a later stage company to have a lower cost of capital. But now it's even more so amplified because of the supply of capital that can come into, you know, sort of private. And so I think it does a disservice for the families, but I think it also does a disservice for like the true cutting edge R&D where great, meta could go spend, you know, sort of $10 billion on, you know, metaverse R&D, but obviously, you know, no private company can, you know, afford that, you know, equivalent to a fraction of it. Yeah. Yeah, it's really interesting how this could change for the better. And I hope the SEC, you know, does some interesting.

Starting point is 00:23:10 I think if you want to win the presidency of the United States, you could win it with young people or millennials and, you know, all this new voting group on two things. I'm going to shut the southern border and I'm going to legalize crypto. If you just said that, independent of candidate, I think you get like, you know, single digit, with the border double digit and with the crypto, you might get 5, 10% of the country who loves this stuff to be like, that's my candidate. I'm a single issue voter. So hopefully as people get old enough, like we saw with cannabis, we've seen with abortion, we've seen with the right to choose,

Starting point is 00:23:46 however you want to frame it. A lot of these issues, once you hit 60, 70, 80 percent acceptance, gay marriage, you know, all of that over the last 50 years. When it hits 60, 70, 80 percent approval, then politicians change their position.

Starting point is 00:24:01 I think crypto is kind of headed towards that. Probably 50 percent of Americans want people to be able to buy alternatives and do this. What do they say? People don't change their opinion. they just die. That's scientific progress. Paradigms don't die. People do.

Starting point is 00:24:16 People do. Yeah. So this argument you make about tokenizing a fund is really interesting. I wanted to ask Delian, do you think we will see, you know, fund managers tokenize their funds in the next 10 or 15 years? You have a point of view on that because I definitely think that we're going to see that at some point. Yeah, I mean, you understand these dynamics. A fund never wants to appear, you know, sort of as if, you know, anybody can, you know, access it and there's some level of, like, exclusivity that

Starting point is 00:24:47 provides, you know, branding in the LP marketplace. And so you kind of have this, like, chicken and egg problem where, you know, the first fund to do it will absolutely be a very, you know, sort of bold fund that feels confident that we're providing this access, not because we, you know, sort of lack, you know, capital, but because we do want to democratize this. And so I do think at some point somebody will, you know, sort of make that leap and recognize that, you know, hey, rather than just making money, you know, sort of purely for endowments and especially maybe educational endowments that we no longer agree with their politics on,

Starting point is 00:25:16 we want to instead, you know, sort of make money, you know, for the, you know, sort of public. I can see one of the like, you know, call it top 10 firms in the next like 10 to 15 years, you know, doing that. I think the way that it starts is you're starting to see some of these like tech enabled, like RIA or tech platforms that sell into RIAs, basically trying to act as a bit of that, you know, sort of, you know, matching, you know, sort of provider to let high net worth individuals that don't typically have access into events. you know, get access into these alternatives.

Starting point is 00:25:42 And so I'm starting to see, you know, sort of a handful of those as pretty reasonably sized LPs. I think that's that first step where, you know, you kind of have these brokers that are acting as, you know, sort of retail access. It's not to, you know, sort of middle class family, but it is that first step to, you know, sort of being willing to, you know, provide, you know, sort of greater access even to top tier, you know, top tier assets. Listen, I got a lot of my plate.

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Starting point is 00:27:19 I love that product. Moving on. Blogger, Eric Newcomer is reporting that AI spending is up in 2024 across the board. If you look at the graph, you'll see that AI spending grew almost identically across small, large, and middle market companies. Delian, a lot of said about how AI companies are attracting a lot of capital. How do you look at AI spending within your portfolio companies? Well, I want to first give a shout out to one of the best AI companies in our portfolio

Starting point is 00:27:48 that generated that report, which is, you know, ramp. And so, you know, I will say at Founders Fund, we generally don't believe in telling our companies how they should run themselves, what tools that should use, you know, what makes the most effective. The one thing that we do tell them is we do tell them to all use that, you know, sort of ramp. But I do want to double click on a couple points in that report. that I think a newcomer didn't necessarily sort of talk about.

Starting point is 00:28:08 The first is, you know, the number of sort of net new ramp customers that are choosing to begin investing in AI rather than currently expanding in it has actually, you know, sort of roughly leveled off. And so to me, that's a signal to the current, let's say, you know, incumbent and disruptor sort of AI startups that they've sort of clearly hit some level of plateau of interest from the, you know, sort of broader, you know, SMB mid-market community. There's not, you know, sort of ton of, you know, net new people continuing to, you know, sort of try. Chat of GPT clearly went on this super viral loop that triggered some level people to explore.

Starting point is 00:28:39 They explored some found tools, those that didn't clearly aren't sort of, you know, sort of reassessing. I think the second point that's really interesting from that report is that the usage in Spain is actually fastest growing in non-tech sectors. And so that means to me is, you know, for companies that are already deeply embedded in tech, they have software engineers that have built internal tools that already automate some level of the work that these companies are going out. and basically like, you know, finding solutions for and are using AI for that.

Starting point is 00:29:03 And so we see it a lot more in like, you know, consulting in professional services, financial services, health care, et cetera, more so than like, you know, software, you know, sort of dev shop that is, you know, sort of significantly spending on AI. And then I think that the other thing is interesting is it's less, you know, usage of these, you know, sort of very broad tools like chat GPT. It's now actually largely dominated by these like, you know, narrowly specific tools that are for their very particular industry and use case. And so, you know, it's going to be interesting to see where basically value accrual happens in the, you know, sort of AI, you know, landscape.

Starting point is 00:29:35 I think it's very clear that obviously Jensen Huang and Nvidia make lots of money. I think that will continue to be the case probably for some period of time. You could maybe make the analogy that, hey, is this potentially like fiber in the mid-90s where we think that there's semi-infantantantant amounts of demand? But then actually once everybody puts in their CAP-X and there's, you know, diminishing marginal returns to increased scale, then everybody actually flattens out. And so you're projecting this exponential growth of, you know, you know, basically, you know, GPU purchases. And it turns out it's going to be exponential and then, you know, plateau. And so, you know, InVidious future DCF looks, you know, sort of very different. The second is I do think you're just going to see whether it's in, you know, sort of, you know, non-tech companies or, you know, tech companies.

Starting point is 00:30:10 You're just going to see, you know, decreased in headcount. You know, I think Sam talked about this at one point where obviously, you know, Instagram back of the day showed that you can build a, you know, sort of billion dollar company with 13 people. I think what you're going to see over the course the next decade is somebody's going to build the 10 billion, $100 billion company, you know, with 13 people because you're going to have such, you know, increased productivity. And then maybe the last question is, you know, outside of NVIDio, who does end up accruing value? You know, I can't claim that I spend infinite amounts of time, you know, on AI, but it's been

Starting point is 00:30:36 interesting to see that obviously, you know, the models were obviously, you know, decent, you know, sort of, you know, sort of investors in open AI, but I think it's been clear to see that their, you know, sort of, you know, gap between them and some of the open source providers and the other competitive, you know, providers has clearly narrowed over the past, you know, sort of two, you know, years. I'd say, you know, when we, you know, first invested or when GPT, chat GPT first came out, it was very clear that they had like a two-year, you know, sort of, you know, sort of, you know, gap between them and the rest of the market, I would argue that gap is now shortened to,

Starting point is 00:31:00 you know, call it 14 months and seems like it's continuing to shorten. And so I see that as, you know, a question of, you know, what is the durability of those margins, even if you have completely scaled revenue? And then on the application side, you know, I think there's like 15 AI for lawyer companies at this point. And so how much adoption is there going to be or is it actually going to be maybe some of the preexisting legal tech tools that, you know, put in a little bit of AI, you know, maybe equip on another, you know, sort of company. One of the, I think, brought us rollouts, in my opinion, of, you know, AI and healthcare is one of our preexistent portfolio company, Sword Health, it's a multi-billion-dollar company now, you know, serves tens of thousands,

Starting point is 00:31:31 maybe even hundreds of thousands of patients every single month. They basically do, like, you know, tech-enabled physical therapy. They send you home with a bunch of sensors. They've been doing AI since like 2017. They had like, you know, more of a rules-based engine. And now they're getting to amplify a lot of that work with a lot of these like new models. But in some ways, I think like the best AI companies in our portfolio are the ones that are not, you know, branding themselves as AI companies. They were, you know, companies that in some ways we're already, you know, sort of using an AI and just becoming even more efficient, you know, maybe Ramp being the same thing of, you know, Ramp has never really, you know, been branding

Starting point is 00:32:01 or tried to make itself an AI company. I think, you know, part of it is other competitors in that space of trying to brand themselves as AI companies as a way to fundraise because their metrics suck. RIP has never really had to do that. And so, you know, they do use AI genuinely because it improves their business, not as a marketing, you know, sort of shit. Mel, you've founded Truebridge in 2007. So you've seen a couple of market cycles.

Starting point is 00:32:21 do you get nervous when so many of your GPs are in AI? How do you look in terms of diversification in terms of portfolio construction? Yeah, you know, it's an interesting question. And Delian's opening comment is indicative of AI across our portfolio. And he may have said this a little bit tongue in cheek, but, you know, he defined or called ramp an AI company. And I would say 100% of our portfolio is AI today because that's how, you know, 100% of the software companies are branding themselves.

Starting point is 00:32:49 And so we have a lot of what I would call, you know, direct AI exposure and then just fundamentally indirect AI exposure. The question of trends and hype cycles and venture and when you see a lot of excitement around specific trends and ventures are really, it's a really interesting question. And when we think about a lot, you know, we typically try not to make sector specific bets within our portfolio. And what that means is if you look at the fund managers in our portfolio, they're primarily generalists and we give them the decision right with regards to which sectors to invest in. We try not to make the sector decision. But if I look back in our history, you know, our first sector-specific fund investment was an investment in emergence capital partners when they were focused exclusively on enterprise SaaS investment opportunities.

Starting point is 00:33:44 And, you know, that one turned out pretty well as they've had back. active back 15x funds driven by investments in Viva systems and Zoom and other companies. And so it's very clear that, you know, the SaaS enterprise software trend had or has staying power. Our second sector specific fund investments were in crypto in 2017. And those are played out pretty well to date. But if you take a longer view of venture and technology trends in venture, you know, we can all look back at prior trends in the technology in the venture space that didn't pan out. You know, nanotechnology in 2003 and 2004 and CleanTech in 2006 and 2007, which John Dorp proclaimed

Starting point is 00:34:28 was going to be bigger than the Internet. And neither of those turned out too well for investors. And so, you know, what we're looking at is, are there more similarities between AI and, let's say, clean tech or SaaS software? And right now, one could argue that AI has characteristics. characteristics of both. And so when you look back at, you know, why did clean tech fail, you know, high capital requirements, long time required to build a scale, genuine scientific and technical risks that weren't well understood by the venture industry, you know,

Starting point is 00:35:03 low margin businesses, regulatory risks, competition from substitute products, you know, a lot of that sounds familiar when you think about AI today. And then you look at, you know, why as enterprise SaaS succeeded over a very long period of time, is because you have inherently scalable companies, you have recurring revenue models, you have extremely high gross margins. And a lot of that sounds familiar when you think about AI. So, you know, we do think that AI has attributes of both.

Starting point is 00:35:30 It's unclear which direction it's going to head. But we're excited about what we see in the marketplace today and the exposure that we have. I think for the founders of perspective, in terms of actual investments that we've made that are, you know, not tongue-in-cheek AI companies, but truly AI. I think, you know, part of our focus has been when there is a hype cycle, still maintain that same quality bar that we do across the portfolio. And so, you know, pretty, you know, sort of proud of the fact that, you know, the only two AI investments that we've made

Starting point is 00:35:59 is open AI, which is, you know, probably the, you know, sort of best called, you know, late stage incumbent. And then, you know, the second investment after that is Cognition Labs with, you know, Devin, the, you know, basically only, you know, sort of truly functional AI agent to replace software engineers. And so, you know, it's not like we have 15 different investments across the category. It's, you know, where do you actually see, you know, true generational, you know, sort of, you know, founder with an incredible team, you know, building something that stands out from the rest of that market where it's not like, you know, there's 15 other, you know, so Devons on the market. If there were, there'd be a lot more

Starting point is 00:36:30 people doing the types of demos that, you know, Devin's been able to do. Is it overly simplistic to say when it comes to AI, the use cases that require hundreds of millions of dollars, those are the ones that are going to be accrucum value and the ones that have no bearer's century are going to be commoditized away. How do you look at just as a general level, like what you predict to be a commodity and what you can predict will accrue value? Yeah, I think, you know, I'll rely on, you know, sort of Peter's actually AGM presentation, which, you know, Mel Wright remember from, you know, November of last year, which was, you know,

Starting point is 00:36:58 ultimately, it's the, you know, sort of the same thing that's been true across all technologies, which is you ultimately need a moat. It's rare that, you know, there are modes basically beyond distribution, brand, network effects, and, you know, basically, you know, you know, CAPX and cost of capital. And, you know, that last one being by far, by far the toughest ever, you know, sort of proved. So I think that's something that we really avoided. If you look at, you know, sort of, for example, with something like Devin, you know,

Starting point is 00:37:26 sort of moat in the subway where he's there has been the, you know, sort of team and, you know, product they've been able to build before they'd really raised anything, right? Like, you know, that is just a fundamentally different group of, you know, sort of thinkers. You know, I know, I know, Scott and Neil Wu, you know, sort of decently, you know, well. I was, you know, in audience when they were in seventh and eighth grade, you know, winning math counts in front of everybody. And at the time, I was like, I'm going to be a brilliant mathematician. And then you watch them and you're like, that's a brilliant mathematician.

Starting point is 00:37:48 I'm going to do something else in my life. And, you know, that is, I think what is, you know, sort of very, you know, sort of necessary for solving that type of problem. Because it's good enough, if you look at it in the history of most of the, like, sort of IMO and Ioi, which are like the top, you know, high school, you know, Olympiad, you know, both mathematics and informatics competitions, typically, those actually haven't always turned out to be great entrepreneurs, because in some ways they think so academically in a structured way about computer science and math problems that it doesn't necessarily apply to business.

Starting point is 00:38:12 But if you think about the problem of like an AI agent to, you know, do computer science, and actually requires, relies on that exact type of thinking, which is somebody that is world class of being able to rapidly look at a, you know, sort of problem, break it down into a very structured framework and then, you know, sort of go do that repeatedly and have a superhuman ability at doing that. And so that team in some ways has managed to find the one idea that in some ways they are best suited for, you know, in the, in the entire world. And so I think for us, it really comes down to either teams like that or fundamentally distribution. I think a lot of our, you know, sort of conviction around the open AI investment was the fact that they stepped into

Starting point is 00:38:42 this distribution hack of chat GPT. It was totally unexpected, but to have the basically fastest growing, you know, consumer app and human history. To us, it was less of a bet on, you know, how much capital is this company raised? What does the scale of their models, et cetera, is that this is one of the few companies that actually has achieved distribution. And so, you know, anytime we've analyzed these companies, it's analyzing them across the same, you know, sort of exact categories of, you know, sort of emotes that we would analyze any other, you know, sort of non-AI company. And again, that last category of, you know, sort of, you know, cost of capital or capex being the moat, you know, as Mel said, in Green Tech, that did not,

Starting point is 00:39:13 you know, particularly play out, you know, sort of be the case. And, you know, maybe last comment is in green tech, there was actually one company that you could have invested in and you would have made money, even if the rest of the category lost company, lost money. And, you know, that company was, you know, Tesla Motors. run by Elon Musk. And so even in these sort of hyped up, you know, sort of sectors where, you know, there's mass capital destruction, there typically is one generational entrepreneur that still makes a lot of, you know, returns.

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Starting point is 00:41:10 You know, I think that this is going to be the quickest commoditization of a technology we've ever seen, to Delian's point, and we've been having this discussion on All In as well, and on the speaking startups. You have this open source movement that's going really fast. that Zuck is backing, and he put on the top, and he's in wartime mode right now with the gold chain, he just put a search box at the top of every app. Like, this is a shot across the bow of Google, open AI, and everybody that he's just going to commoditize this. He made it open source.

Starting point is 00:41:42 You can use his models. Anybody can search any time. And so then what's left is what you have to ask yourself, right? And what's left is the user experience and the extreme focus and understanding of a particular consumer base by a particularly passionate and competent group of founders. And so will you be able to do anything with ChatGPT or will you be able to do anything with Zox version? Of course, you can ask it, hey, write a screenplay.

Starting point is 00:42:09 But there will be a screenplay writing piece of software where that team focuses only on that experience and they will delight screenplay writers and producers to make a product that is just, you know, 10 to 20% better at 50 different aspects of writing a screenplay. and producing a movie, then ChatCTPT is, right? And you can use the Microsoft Office collection to do many different SaaS things, right? In fact, if you look at CRM, 95% of the CRM market is what we call spreadsheet CRM.

Starting point is 00:42:41 People open a spreadsheet, the most flexible tool ever created in software, I think. People use it for CRM, they use it for trip planning, they use it for spreadsheets. But then you'll have somebody create a CRM system, whether it's HubSpot or Salesforce. course, that does a lot more than Excel does, right? So I kind of look at this model as we're just overbuilding at an absurd pace. It's one of the great things about capitalism in America and why we still remain dominant in American exceptionalism remains unchallenged, right? Even by China, I think that they're in like a really bizarre moment where they're just not even competing. Where are all those great big companies that were going to crush ours go? I mean, where are they?

Starting point is 00:43:20 Where's by-Doo? Where's Ali-Bob? Weren't these going to crush Google and Apple? And nope, because democracy plus capitalism plus capital markets being efficient to our crypto discussion equal just massive amounts of innovation and you know i i think this is going to be the greatest vintage of venture capital and you know our lifetimes uh i really believe that because i've seen this movie now three cycles dot com i was a journalist building publications then i was building myself as an entrepreneur during great financial crisis. Then it became an investor after that during the ZERP era. And now I'm looking at this going, wow, what a setup.

Starting point is 00:43:55 Cloud computing, chips, sensors, storage, bandwidth. It's all set up. And then AI. Reusable rockets. Reusable rockets. I mean, it's nuts. Like, the setup is so complete that, you know, a 10-person team focused on a deep vertical who understands their customers, you'll find.

Starting point is 00:44:16 So I see all day long people taking some, you know, vertical and taking these either open source products or, you know, paid, hosted products. And the great thing is these tools are so malleable that I've seen people start on chat GPT, move to Claude, move to an open source one. And then they're like, yeah, I'm using three right now. and whichever one gets cheaper. You know where I saw that as well? People started on Amazon, Azure game free credits, they moved to Azure.

Starting point is 00:44:51 Then Google Cloud was like, wow, we're far behind. We need to give some startups 100,000. Now Oracle's got incredible hosting. Now they're getting in the mix. If you're a startup, you could use Oracle, you could use Google, Azure,

Starting point is 00:45:05 or Rackspace, everything in between, and that's what's going to happen in this space. I think, you know, Della and I had used that five, we had a discussion on All In about it.

Starting point is 00:45:17 I think that that's going to turn out to be pressing. I think a lot of the jobs being given to AI can be done with, you know, this years and next years and the year after's technology.

Starting point is 00:45:29 And that's what I'm seeing entrepreneurs do. They're like, you know what? I'm going to just go use CHET 3.5. It's cheaper than four. I don't know if you're seeing that as well, Delyan, where the developers are like,

Starting point is 00:45:38 yeah, we don't need that. We're just putting tags. Like I had a discussion with the developer who was tagging content. saying who's in this new story, the who, what, when, where? Who are the principles in it, whatever? And they're like, yeah, we can do this cheaper.

Starting point is 00:45:50 With this open source, we don't need to pay for it anymore. We're just going to run our own instance. Just for that one function. That's going to be this long tail of it. Just like with storage, like, do you need the fastest storage or the cheapest or something in between? So this is going to be amazing. And for what I think it means for what we all do in terms of investing for a living,

Starting point is 00:46:10 is that if you're a late stage investor, founders may not need your money. They may be so capital efficient. You know, that last round of funding, you know, the way Uber and Airbnb use capital as a weapon, like,

Starting point is 00:46:23 is it going to be necessary? I don't know. I don't know that there's going to be founders coming to market for seed extension, Series A, a plus, B plus.

Starting point is 00:46:33 Maybe they'll just be more capital efficient. That's a thesis I'm watching right now because... That would certainly buck the historical trend, wouldn't it? It would, yeah. Yeah, in terms of just the way the cycles work over time and venture or have worked historically, yeah. It's a part of my like, you know, at least personal investment thesis. And obviously what I'd like about founders, we can all kind of run with our own sort of the thesis. You talked about that

Starting point is 00:46:54 with, you know, sort of Brian on an invest with the best. And at least on a personal level, part of, you know, what I'm really excited about is I think as you start to see that capital efficiency and some of these like, you know, AI companies, you got these, you know, sort of first handful of outcomes. I think a lot of these will actually look more like, you know, sort of lifestyle businesses because there's be so many AI for lawyers, for plumbers, they might get to 30, 50, 70 million in revenue. They're not necessarily going to generate massive venture returns. And so as capital starts to seek out, you know, sort of where is the, you know,

Starting point is 00:47:18 sort of next, you know, place to generate returns. I think it's going to be reindustrialization of the United States, things that happen actually in the physical world that an AI cannot do, right? AI is not going to be, you know, sort of making drugs in space and reentering spacecraft anytime soon. It's not going to be, you know, operating robot arms at there. It's not going to be, you know, sort of moving, you know, satellites around with next generation propulsion.

Starting point is 00:47:36 We're operating CNC machines down here. And so I think one of the things that. we all take for granted on this panel is, how difficult it actually is to raise a seed round to go out and convince somebody to give you a million dollars on your idea. If you think about, you know, you meet a thousand people on the street, maybe one is capable of that, probably one out of 10,000. So second order of facts of having AI be able to do something and being able to start a company for 50,000 versus 500,000 can really transform the economy to your point and really could lead

Starting point is 00:48:05 not only to more shots on goal, but also more businesses, because if you don't need venture capital, not every company has to return a billion dollars or even $100 million. You could have a bunch of smaller, smaller companies. And ultimately, that'll be great for everybody because smaller niches and smaller customer bases will have more problem solved. You have no idea how right to what is. I literally ran a test on this. Are you working on something?

Starting point is 00:48:29 Well, I ran a test a year ago. So we, about half the applications to our accelerator were people who were in the ideation phase. They hadn't yet incorporated, but they had a, you know, like they were had a side hustle. They built a website, they built an app, whatever. And so we started a program called Found University. We're on our eighth cohort. I just kicked it off on Monday in person at Goodwin's offices in Redwood City.

Starting point is 00:48:51 And we accept 250 people into it. It's 12-week course. We teach them all about starting. And the key device of the course is every week you give us your progress on Monday. We fill out a form, hey, what did you do? What did you get done? What are you going to get done next week? Like an accountability thing.

Starting point is 00:49:06 So I said, put on the form. I would like Jason and the launch fund to be my first investor, friends and family, $25,000 at a $1 million valuation. So 2.5% for 25K. So like think about like even before Y Combinator and TechStars. My team told me this isn't worth the legal issues. It isn't worth. How do we manage all these companies, all the stuff? And I said, well, let's just put in the document that we get to invest in the next two rounds, 250K.

Starting point is 00:49:32 Right? So we get a little option. And now, you know, we'll figure it out. Let's see if 10 people do it. We've made 80 of these investments. 80 in just over a year. And about 60, 70% of people each week check off that box. And so you're exactly right.

Starting point is 00:49:47 To start a company, and these are people with two or three developers who you think would be able to get 25K around. And then about a third of those wind up going to our accelerator where we put in the classic 125. So I think there are some new models here in venture where, you know, we might even get into companies at inception and give them the 25K. and we have one company, Podcast AI, that has done extraordinary, been oversubscribed.

Starting point is 00:50:13 We gave them the 25K check. They came to the accelerator. We gave them the 125k check. And then we made our third bet like a seed investment, which is the funnel of our firm. It was the first one where we did all three investments. And we did it all in a year. And they have massive outside investors.

Starting point is 00:50:27 And we hit our ownership targets. And they're so appreciative that we supported them each step along the way. Now, this is a lot of work. I can tell you. I have 22 people in this firm, which for a $50 million fund doesn't make a lot of sense to people, but it takes a lot of support. And I think this is the future, smaller amounts of money earlier. And I think it's great for the economy, great for society.

Starting point is 00:50:47 I went undergrad to Indiana University. I went from Masters for Harvard University. And when you look at the construction of people, it's not a 10x different in talent. Some of my smartest friends at Indiana are smarter than some of my less intelligent friends at Harvard. So I think expanding that opportunity and making sure that more people are included, in capitalism is really important. I think one of the things that we're seeing in society is this disillusionment, right, of the younger generations and they're turning to things like radical political ideology. So I think if we could use AI and bring more people along in our economy,

Starting point is 00:51:23 I think it's going to have orders of magnitude effects across the entire ecosystem. Jason, I think where AI is going to have the biggest effect on capital formation of venture, not at the growth stage, but it is at the seed stage. And, just as web hosting services really is dramatically lowered the cost of starting a new company. We saw, we saw frankly an explosion of new companies formed. And the rate of new company formation went, if you just look at the slope, went way up when that happened. You can see the same effect happening now with AI. And it's just low, it lowers, it makes individuals more productive.

Starting point is 00:51:58 It makes it much, much, you know, more cost effective for them to get to a minimum efficient product. And we could see, likewise, another. change in the slope of the rate of new company formation in the U.S. I think that's where it's going to have the biggest impact. You're 100% right. It literally is the same as hosting. We see it all the time. Like people who, we used to, I remember like the tail end in 2004 or 5 when companies would

Starting point is 00:52:30 buy servers and rack them and the first portion of your funding, the first million and a half, 500,000 of it went to finding a knock, a sysadmin, putting up one rack. Then you got your series A, and it was like, yeah, we're going to get two more racks, and we're going to go from a T1 to this, and we're going to have redundancy and more storage, and now that's all abstracted away. So it's working really well. It confuses the hell out of LPs when we tell them this $50 million fund's going to have 200 names in it.

Starting point is 00:53:00 They're just like, what? And I'm like, 200 names. historically I hit a unicorn this often and you can look at it in these funds and if we hit one to four unicorns out of those 200 and then we own 10% of it this is going to be a 5x plus fund

Starting point is 00:53:17 that's how I pencil out the math for a seed stage fund and we just had one of our companies that went through Found University get accepted to Y Combinator so exactly as I predicted we'll get to these companies in year zero

Starting point is 00:53:31 help them get formed to help them finish their product get the first five customers. And then Gary Tan met with the company. He loved it. And I'm like, wow, great. You know, I think the Y Combinator, friends in family space, seed, pre-seed, these micro funds are going to do amazing. And I, my family office, which is a fancy way of just saying me, I've done 20 firms and I'm doing five, 10, $20 million funds.

Starting point is 00:53:56 And I put in, you know, whatever 1% is. So it's a $20 million fund. I put in $200, 10 minute, I put in $100. and I'm watching them. And then I watch Sophia Amorosa or whoever's company, you know, investment of 2550K, then result in a seed round, result into a series A. And, yeah, it's just confusing, right, Mel, to LPs when they see this, like, at-scale, large investment small amounts of money?

Starting point is 00:54:20 It is, it is. And it becomes overwhelming for institutional limited partners to track. Yeah. Yeah. So what do you suggest I do? You keep doing what you're doing. Yeah, ignore the fact that they can't understand it. Absolutely. Keep doing what you're doing.

Starting point is 00:54:35 Yeah. Literally, I had this conversation with my team. They're like, this LP doesn't understand. They're going to the data. And I was like, just give them only the companies that pull through. So like some LPs get the list of the 200 companies in real time. And then another group will just show them the one in four as they close their seat rounds. We'll just show them the pull-throughs.

Starting point is 00:54:54 And then we'll show them the ones that we're doubling down on. And that seems to have helped. But yeah. Yeah. I mean, LPs are not, you know, I think LPs, my perception now, after having many of them, who it's their first time in a fund, and then many who have many funds, is like, it's up to us as GPs to figure out the future and explain it to them. That's why we're here, right? Absolutely. Absolutely. I think it's overfitting pattern matching, right? They've seen hundreds of funds. Somebody like a Mel might see 500 funds per year. So he has to create some kind of patterns.

Starting point is 00:55:31 And then once trends and merge, once funds like Jason, like your fund starts to produce with different portfolio constructions, people start focusing on that. But you have to kind of create your own luck sometimes in different industries. Moving on. Elon Musk was just interviewed at the Milken conference by Michael Milken himself. Elon mentioned many interesting topics, including low birth rates, Starlink's ambition to increase worldwide GDP, legal versus illegal immigration, and many other interesting topics.

Starting point is 00:56:02 Jason, I want to give you your red meat. You briefly touched on illegal immigration versus legal immigration. What are your thoughts on this? Yeah, and I've had many conversations with Elon about this over the years. Just to be clear, he is a strong proponent of legalized immigration and believes, like I do, that we should be doing global recruitment. And 80% of Americans think that have an open border is a problem. So back to, you know, the getting to Denmark, which is a fancy way of saying that our elected officials are doing the work that the people want them to do and they're in sync.

Starting point is 00:56:39 80% of Americans don't want the border open. They consider it a problem or a major problem for obvious reasons. It's unfair. And who do we want in the country? Random people who are willing to break the law or people who have a business idea or have a skill or a trade that matches where we need people. So I think we've got this all backwards. The border needs to be shut, and then we need to increase legal immigration. We need to increase it.

Starting point is 00:57:05 We should have two teams. One team is doing external recruitment, like an NBA scout, like an NFL scout. Where are the smartest people on the planet? Who's scoring highest on these standardized tests? Who are the mutants? Like in the X-Men, we need to put on Cerebro, like Professor X. Find the mutants in Pakistan, in India, in Philippines, in South America, Ecuador. they are, and then tell them actively, we have a visa for you. And if you hit these notes,

Starting point is 00:57:34 you know, we're going to give you your passport and citizenship, which by the way, is what they're doing in Doha, in Abu Dhabi, and in Riyadh. When I visited those places, I literally had them say, we'd like to give you a golden visa. Have you ever thought about having a passport in this country? They're trying to recruit me to be a national. Like, think about that. And that is one solution, I think. And then there's when the unemployment rate lowers to a certain percent, like we're with historical unemployment, low unemployment here, look at what trades, what we don't have. We don't have plumbers. We don't have electricians. And we don't have people to work in restaurants. And we don't have people to work in health care

Starting point is 00:58:19 and to work with the elderly. Very simple solution. If you want to work with the elderly and you want to work in health care, we can take 450,000 each year for the next three years based upon our population and apply and apply on a website that says, here's what America's looking for. Computer scientists, unlimited. PhDs, unlimited. People who work in nursing, 450,000, people who are doctors, this amount, people who work in restaurants and hospitality, this amount. And let's have those two things be the focus, not this insanity of an open border and not. And not. knowing who's coming across it and then, you know, having to fund people who don't speak English in the country to learn English.

Starting point is 00:59:02 Like, that's not sustainable. And the Nordics went through this. And I've spent time there, man, they're very sensitive about it because they don't want to be perceived as xenophobes. But the fact is, you can only incorporate into the great American melting pot a certain amount of people who don't speak the language. And you don't want people who are criminals or who are uneducated to flood a city. That's a recipe for chaos.

Starting point is 00:59:26 And Finland, Sweden, Norway, they all have dealt with this. You can just look up the stories about how they're dealing with immigration right now. And so I believe in it. I know he believes in it. I think people are misinterpreting and politicizing this issue in a way that is not helpful. We need independent of party, a very thoughtful approach. Recruitment, needs-based, compassionate, but not illegal. Very simple. I get off my soapbox.

Starting point is 00:59:56 Thank you for my red meat. It's delicious. Yeah, I think. You're welcome. I'm passionate of this issue. Hopefully you didn't ship a tooth there. You know, one of the interesting things about immigration, especially legal immigration, is it's seen as a zero sum. You know, this person's not getting let in. If you haven't looked around, you know, if you fly over, fly over states, you see we have a lot of space in the United States. So it's about bringing in the right people. And one of the most no-brainer policy, policies, foreign policies we could possibly have is just increasing H-1B. It's one of those things that I've never heard anybody with a brain or with data ever argue

Starting point is 01:00:32 against it, but yet we're capping it. And I think it's really a shame. And it is in many ways a bipartisan shame that's driven by very far left, far right forces in the country. And I think Silicon Valley is really abdicating its role here and really needs to push. If we want as a community for an issue to coalesce around, it is H-1B immigration. We don't have to create a new framework. And it's, you know, you don't have to look further than the top 10 companies in Silicon

Starting point is 01:01:02 Valley realize 50% are foreign board. I was a refugee from Russia. I know, Daly, and you're from Bulgaria. You know, we typically have on this podcast three foreign board today. We're less diverse. But I think it's one of those things that no one's really talking about, although it's almost so obvious, no one brings it up. Mel and I are seventh generation, by the way, we've been here for a I found out I'm seventh generation Irish. We were like immigrated into Brooklyn and then into the

Starting point is 01:01:27 five points of Manhattan. We all hold that guys, you guys. Well, my Greek grandfather was, yeah, so I guess I'm second generation on that side. But yeah, what do you think, Mel, about this? I think, I agree with you 100%. I think it's hard to have a strong country without strong borders and where we are right now. It's just, it's just a mess, an absolute mess. And it's over-politicized. And I think, you know, David, to answer a little bit your question, I think the reason why it's hard for Silicon Valley and others to get involved is the fact that it is highly over politicized. And the cost of, you know, the cost of being on one side of a political argument in today's society, if it ends up being the wrong side of the political argument can be dramatic. And I think that's why you don't have people out front on this issue. Yeah, I mean, I'm obviously a product of, you know, the, you know, sniping of, you know, sort of top-tier ability and, you know, allowing those people to come into the United States.

Starting point is 01:02:23 You know, my dad was a, you know, gold medalist at the International Mathematical Olympiad, did incredibly well, you know, sort of undergraduate at the University of Sofia and then ultimately, you know, we, we are, you know, far better off to, you know, Caltech and was, you know, accepted there and was able to, you know, live in the United States on a student visa. And then ultimately, you know, became a citizen when I was about 12 years old. And I think, you know, we are, you know, far better off as a country. for my family being here. My family is far better off for, you know, sort of being here. But there, you know, so many examples that I can point to of, you know, sort of people who'd equivalently contribute to our country that, you know, we're not allowing here. And so it feels like, you know, sort of complete no-brainer to increase the legal immigration. And on the southern border, you know, it almost is, you know, certain that there is a lot of, you know, military age men from our adversaries that are, you know, sort of forming splinter cell,

Starting point is 01:03:08 you know, sort of units of the United States based off the fact that they know that they can get those types of militants in, you know, as a piece of cake on the border. Canada's really dialed this in. They have a points based system, New Zealand, Australia, points based system. And every time I meet with people, you know,

Starting point is 01:03:25 from Canada, and including people in the government, they're like, yeah, have any of your companies have a problem, this is literally somebody in Vancouver said, anytime you have a problem, getting somebody into America,

Starting point is 01:03:34 email me. This is somebody in Vancouver. I will get them a visa into Vancouver. We'll house them and hold them here until they can get into America. And I'm like, I see what you're doing there. Like, yeah.

Starting point is 01:03:44 we're getting your developers to live in our country and pay taxes. I'm like, well played. We're idiots. But here we are in this political cycle, which is so dumb and so polarized that we're taking issues that we have consensus on and then we're turning them into a distraction. We have consensus on this. It is not a controversial issue. Not at all.

Starting point is 01:04:05 It should not be. Not at all. And I don't understand it. And I don't know who's advising each side on this issue. but, you know, this is why we need a different type of political class that's working in Washington, not these geriatric lunatics who are polarizing the country to get to foment anger between people who are not actually in disagreement. I don't know how everybody here affiliates, but we all agree on these issues.

Starting point is 01:04:35 80% of people agree on immigration, they agree on cannabis, they agree on gay marriage, They agree on abortion. Everybody agrees that we're made to feel like we don't agree. It's a recipe for distraction. And we don't need distraction when we've got this much deficit. We need entrepreneurship. We need talent. I'm Jason Calcuttis.

Starting point is 01:04:54 I'm voting for president, 28. I mean, I don't know why it's like so simple to, it's like the most... I'm voting for you. I mean, if you literally just said the most logical thing, people would be like, I'm sorry, what you said makes complete sense. Why aren't you running? And it's like, I think it's interesting that you have to have in this country $100 billion to speak your mind.

Starting point is 01:05:16 I think that's the new standard for, you know, in order to say many common sense things. I think it's a sad state of affairs. In some ways, I think it's why I'm so grateful that Elon bought X. It's like, I think, you know, we should generally always be expanding the origin window. You know, I do my best part to do that on a regular basis, even if, you know, sometimes upsats, you know, various, you know, folks. but I think since he purchased it, it's clearly shifted. Like, people are so much less scared to, you know, share unpopular opinion, right?

Starting point is 01:05:44 Like, you know, the information just did a whole piece on like Sean McGuire and his, you know, sort of pro-Israel anti-Palestine stance. I think in a, you know, sort of pre-Elon Musk, you know, owning X world, I think Sean would have been silenced or he would have been fired. Like, there would have been a different outcome, you know, in the world. Yeah. And it only costs $44 billion to open the origin window. Now we actually know how much it costs. I was joking with him about that recently. He's like, you're welcome.

Starting point is 01:06:06 I was like, oh, gosh, you're $44 billion. But it's true, you can talk about things. You can challenge this stuff. And I had a couple of examples. I won't talk about them here, but just, you know, I had a couple examples of things we're talking about that I was willing to tweet now that I wouldn't have tweeted during that, like, crazy period where they would have deleted my account because I needed my Twitter account.

Starting point is 01:06:27 It's like an important part of my business to have a Twitter account with a, you know, half million followers. Like I can't risk having it deleted. So I wouldn't say things there, right? And I can't have my podcast delisted from YouTube because I didn't agree with like the Wuhan virus. And I got a bunch of warnings about that. So anyway, I think it's great that the Overton windows open. I was born communist Russia and my parents think they are still alive telling me stories.

Starting point is 01:06:52 And, you know, there's so many different tactics that people with control have on their population. And it's not always these large demonstrations. It's not always worse. Sometimes it's a knock on the door. It's intimidation at your work. It's a deliance point. somebody getting canceled for a political view. That has nothing to do with their work.

Starting point is 01:07:09 So it's scary. And the further we go towards a free society, it helps everything because what happens in free society is that the best idea win. And the marketplace of ideas is positive for everybody, even for people that you disagree with. It's been a great episode. I like how you formatted it, David. You got us to talk about really important issues of investing, technology companies,

Starting point is 01:07:35 formation and then a little bit of like political, you know, global issues. Well done. Great time, David. Well, thank you, Jason. A great panel leads to great discussion for Jason Kalakanis, Daly and Asperov, Mel Williams. This is your host, David Weisperd. Thanks for listening.

This Week in Startups - Crypto, the Midas List, and democratizing VC with Delian Asparouhov and Mel Williams | E1952

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