This Week in Startups - E1070: The Power of Accelerators E7 Ravi Belani, Managing Director of Alchemist Accelerator on why the best entrepreneurs love the process, risk-taking, sourcing & investing in Justin.tv at DFJ & more

Episode Date: June 3, 2020

0:20 Jason intros Alchemist's Ravi Belani 3:41 Why is Alchemist named after Paulo Coelho book? What is the biggest benefit of Accelerators? 5:47 Ravi's background at DFJ, sourcing the Justin.tv investment 15:02 Why Ravi left DFJ to start Alchemist 21:52 How many companies have gone through Alchemist and what is their standard deal? 28:21 Why accelerators take more risk than VC firms 35:07 The best entrepreneurs love the process 38:35 How are Alchemist's programs structured? Did they have trouble transitioning to remote? 44:38 Have virtual meetings been resulting in checks from investors? Dealing with investing in competitive companies 49:59 What is Alchemist's diligence process like? 55:01 What does venture capital funding look like in the medium-term

This Week in Startups, the Power of Accelerator series, is brought to you by LinkedIn jobs. A business is only as strong as its people, and every hire matters. To post a healthcare or essential service job for free, visit LinkedIn.com slash power. Hey, everybody, welcome back to this week in startups. I'm your host, Jason Kalakannis. You can follow me on Twitter. I'm at Jason or Instagram at Jason or Tumblr. Jason.com. That's just me showing off. have the first name on a lot of these services. I don't have the first name on Clubhouse,

though, unfortunately. We have been cooking with oil with our power of accelerators series. And accelerators and incubators are a very important function in the ecosystem. If you're a new founder and you're starting your first company, you probably are wondering, why would I go to an accelerator? Why would I go to an incubator? Well, they really serve a small number of There's a small number of reasons of why people go to them. Number one, it's to raise money, both from the accelerator itself, which usually accelerators give you 25K to 150K. Second, they introduce it a lot of investors, so that might help. They also give advice. But what they really do at the end of the day, according to venture capitalists and downstream investors, is they act as a

sorting function and an anointing function. The people who run an accelerator typically get 50 applications or 100 applications for every person they accept. So when we accept seven people to the launch accelerator, you can be sure we're going to have, you know, over 700 people apply. And we'll probably interview 75 of them in person or we used to. And so that means that the downstream investors from us, whether it's Sequoia Capital or Kraft Ventures

or Chimov Poly Hopatia or benchmark, they might look at it and say, you know, I trust that accelerator to pick the best company. So now I am picking a company from the bushel as opposed to from the orchard. That's what we do. We tend to an orchard of a bunch of these really promising beautiful apples. And then we bring them out in a bushel and say, hey, here are some really polished apples that you might want to consider for your VC firm or your seed fund.

And we decided we'd start this accelerator series. We've done six episodes so far for those of you who have been paying attention. And they really have a lot of differences in them. Some of them are incubators where people figure out their idea. Other ones are accelerators where they figure out how to grow the product. Some of them are verticalized. Some of them focus on consumers. Some focus on enterprise.

Some focus on China. Some focus on biotech. You get the idea. And some of them don't put capital in. You remember the mass challenge was more of a contest. We had those on episode. We had mass challenge on episode 1054. We had Star-Dex from Stanford on episode 1050.

in the series, Dream Adventures on episode 1048, Capital Factory, my friend Josh on episode 1063 recently, and TechStars, the other David, David Brown, on the podcast, and that's actually the most active one today. We have Ravi Balani, and he is the creator, founder, and managing director of Alchemist Accelerator. And if you're wondering where he got that name from, it's from the famous Paulo, what's his last,

name. Colo. Colo. Polo's the Alchemist. What is that book, The Alchemist? And why are people so crazy with it? Welcome to the program, Ravi. Is that the first question? Thank you, Jason. Yeah, I'll make that my first question. Yeah. I'll make that my first question. Yeah. What is the Alk, for people who haven't read The Alchemist, you named your, you know, accelerator after it, your incubator after it, or the accelerator. what was it about that book that spoke to you so much that you branded yourself with the title? Well, so I should say that the precursor to the accelerator was a speaker series out of the Harvard Club of San Francisco called The Alchemist Series. That became the accelerator. And the namesake was chosen from the book. The speaker series was about transforming technical entrepreneurs, alchemy into business entrepreneurs. But the book, the real alchemy of the book, is its mystical.

allegorical story, and I don't want to ruin it, but you should read it. It's fairly short. But it's more of a mystical allegorical story about getting in touch with what your spirit is really intending to do and how that can be the source of your real power. I mean, that sounds very new agey and genericky, but it's a very, very powerful read, and it's also Paoloolo is just a fantastic writer. And it is new agey, and it is semi-spiritual and religious. I mean, That is exactly what it is, right? That is. That is what it is, yeah.

And I think, you know, to your point earlier about accelerators, everything you said is right in terms of understanding why accelerators exist in this ecosystem. And everything you said is how we sort of get founders to take the leap. But the reality, for my experience, is that the biggest enduring value for the accelerators is how lonely the entrepreneurial path can be when you're starting out. And there's a huge value. and the connectedness with others. Even if you're going down your path,

whether things, you know, in times when times are difficult, it's obvious. But even when times are great, you want to be surrounding others as well. So there is a spiritual element to the core of who we are and the core of, I think, entrepreneurship, which is intended to be pointed towards in the name.

But it comes from the book, The Alchemist. And you chose to focus on B2B. And for background, people who don't know, were at DFJ, Draper Fisher-Jervison, and you did some events there. And you famously did, I believe you did the Justin TV, which eventually became Twitch investment, correct? I did, yes. I was on the investment team at DFJ for five years. And so my first unicorn investment was the pre-cursed to Twitch, which was Justin TV at Draper Associates. Did you source that deal? Did you? I did. I did. I sourced it. I championed it. I was the one. But nobody else believed

in it. The other partners didn't believe in it. So what's that like being like the young guy at the firm, you know, not a partner. And you see something like Justin TV, which is, was pitched as the Truman show. Basically in the real world, Justin was running around with a backpack with a camera and Mason was making like a reality show. It was considered to be candid as a goof. People thought it was a goof of a startup. You didn't think Justin TV was a goof. What did you see in that that made you think that there was something legitimate here in terms of a business? Well, the big thing when you're in early stage venture capital, everything you said is exactly right. So it was not a, well, I shouldn't say this, but it was not a popular investment when I was pushing it forward. There was a lot of contentious argument and debate over the investment on Justin TV because everybody was looking at this and saying, you know, what is this? There's a ton of illegal content on the site. So, you know, there's huge liability and what does this become? But the ultimate issue, I think, when you're an early stage venture capital, capitalist or even right now as the head of an accelerator is really the whole business is not

based upon what can go wrong. It's really based upon what can go right. And if something does go right, how big can it get? And I think there's a lot of education being given on analytically assessing startups on what can go wrong and, you know, assessing like technology risk and team risk and market risk. But there's little discipline spent on how can something become very, very big. And there aren't that many paths to building a company that can become a billion dollars in seven years, which is one of the secret needs. Nobody knew that Justin TV would pivot to Twitch, right? That was not on the table. So what was your pitch to the senior partners who didn't want to invest in Justin TV? And what was their objection specifically? I'm curious.

Well, so my pitch was that there was a fundamental shift happening in the ecosystem at the time, that there was this federation of media consumption. And at the time, it was really shifting from traditional TV. I mean, this was a bit ago, but this was at the time when there was all these debates about whether or not IP-driven media. So consuming content over laptops and phones was going to overtake traditional media. And there were a thousand different ways to cut it. And there was a lot of different questions about how do you monetize, what's the content, all that.

But there were several paths where it could have become something very, very big. That was the point number one. And there was a secular shift, I thought, in terms of what the younger generations were consuming versus the older generations. And then the second thing was the team. So there was a criticality, Michael Siebel, who's now running White Combinator, and Justin Khan and Emmett were all phenomenal. Who passed on coming on the Power of Accelerators, sadly. No Michael Siebel. He's too busy.

Keep going. Well, there you go. Maybe Michael will have a change of heart. But so that team was fantastic. And so part of this is whether or not you're assessing something in a static way or in a dynamic way. And the speed with which that team was iterating, I mean, I think everybody knows about Justin, you know, bringing his backpack around. But really, Justin is a genius on being in the flow, but also constantly thinking about how to iterate. And there's a very special combination between Justin and Michael and the rest of the team where they balance each other out really well.

So that was part of it. And then, you know, the other thing was there was a platform that you had. against which you could see where there were killer apps emerging. So if you can't guess the killer, so the reason why it was very controversial was for all the reasons that you would expect. The partnership was thinking that there was a ton of liability in terms of the media being monetizable. At the time,

there were a bunch of these big media plays that were getting hugely funded to take traditional content and put it out. And there was a question about all this illegal content was going to actually just be a liability. And there were a thousand reasons to say no. So I'm not faulting. DFJ. I would say that what's amazing about DFJ is that they gave me the rope to even champion an investment. And they had this policy where if there was one company that you were passionate about, you could actually push it through as an associate.

What check size do you guys put in at that level? This is the seed round or the series A? This is the seed round. No, it was the series. It was a, I think it was technically the second institutional round. But it was a, I think it was a two million dollar check that we put in in that stage. Five percent, ten percent, something like that? More, but I shouldn't say the, yeah, I can't disclose. But that was, so DFJ had this very generous policy where if you were passionate about one company per year, you could push it through even in the face of opposition with a lower threshold of support effectively. So they gave me the license to do that. And that was hugely generous at the time for an associate to be able to champion that. And I think what I learned most at DFJ was thinking about how big can something get, not about what can go wrong, but what can go right.

And to really answer your question, the way you have to do that is it might not be the current manifestation of the company, but it might be having an approach to determine where the killer app's going to emerge. And Justin TV had this breadth of users and different use cases that were emerging where you could have confidence that that approach was going to emerge something. And so when they started to notice that people were using the platform for watching games, and at the time that seemed like a fringe. thing. Like, you know, is that going to be it? Can you build a billion dollar company on other people watching people watch games? That is how emergent new phenomena occur. And one of the nice things about investing in a platform company is that you don't know what could go right because it's a platform and the street finds its own use for that technology. You'll find out in a year or two after it's out what people do with it, right? That's right. But the irony is that if you start trying to build a platform

company usually fail. So usually what happens is that you can't think about it like I'm building a platform because then you get overly funded. You build out these like ridiculous things for this vision of the world that actually doesn't come to fruition. Whereas if you're smaller, you're going to co-create that platform with your users. Got it. So maybe you're taking a couple of use cases and then iterating on those use cases. Yeah, that's exactly right. I mean, I think the genius behind this is Sean Ellis. Have you had Sean on? He's, so Sean is the chief marketing. I think he's one of these guys who's like been the chief marketing officer at all these companies that tipped in commoditized spaces where the big issue is timing.

I think that's the essence about sort of what you're asking is how do you predict this timing on when things are going to take off and how do you know if something's going to take off? And, you know, Sean was there at Dropbox, who's there at Eventbrite, all these companies that were relatively commoditized in terms of being these markets that, you know, there's a ton of file storage, there's a ton of events, planning, businesses. And his approach was to really look at where you're getting high engagement users and then look at, you know, who's really using. the platform and how and how big that market is.

So I think that was what Justin TV did really well. All right. When we get back from this quick break, I want to know why DFJ did not have a partner slot for you despite you hitting this crazy unicorn investment and why they let you leave to start the Alchemist Accelerator when we get back on this week in startups. Okay, now more than ever, we need people with the right skills to support our communities, especially the frontline workers who provide resources and care for those most in need. And to help, LinkedIn is offering free job posts for healthcare and essential service organizations

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So here is your call to action to post a healthcare or essential services job for free. I want you to visit LinkedIn.com slash power. Again, LinkedIn.com slash power. Okay, let's get back to this amazing episode. All right, Ravi Bollani is here. He was an associate at DFJ. He did the Justin TV, which became Twitch investment. But as you've said, you didn't, you weren't on the partner track. You weren't able and you didn't see a path to become a partner at DFJ. And so you wound up starting your own accelerator, which has become successful. And so this leads me to wonder, why didn't they want you to be a partner there? Where there are just too many? any partners or they didn't like you or you were too, you don't work well with other people, you seem like such a nice person. Why didn't they make you a partner after hitting a unicorn investment? Thank you for the question, Jason. That's very flattering of you to ask. I should say

first of all, DFJ was the original anchor LP and Alchemist. So they wrote the first check and that vote of confidence was huge. And I don't even know if Alchemist would have existed if DFJ didn't become the anchor LP. But let me answer your question. So the reality was that Justin TV, which became Twitch, did not succeed. It didn't take, nobody knew that it was going to be big

until after I was trans, after I left DFJ. And so again, I think this is the phenomenal thing about being in ventures that you don't really know if you're good or not for seven to 10 years. And so at the time,

I was four years into my associate position, and it wasn't clear. what was going to happen with Justin TV and with Twitch. And I should say Draper Associates funded Justin TV, which was actually a fund that Tim Draper, who's part of the DFJ partnership, has as a special vehicle. So it was a little bit different also on that regard.

So that's the first thing, is that Twitch was not a unicorn at the time that they had to make a decision about my status. And the second thing is, I don't know if I would have, I think as you know, Jason, is the thing about venture capital firms is that it's not really like an industry.

Like that's sort of a false analogy to think that I think VC is like any other industry like consulting or banking and you're being promoted to partner. It's much more like little mafiosas. Like each fund is its own family and they have their own culture and they have their own ways of making decisions.

And really, when you think about these big names like DFJ or Mayfield or USVP, it's really like five people. Like at the end of the day, it comes to like a small, out of people that are making some core decisions. And I think from their judgment, they didn't, I mean, I think that if, I think there was a feeling if I'm, that, you know, Robbie was a nice guy, that I'm a nice guy, but I don't have

sort of the sharp elbows to become a venture capital. Wow, that's interesting. I'm not saying that they actually said that explicitly, but I think if I was trying to be honest on making that assessment that there, I think there was an assessment that I was, I was, I was a good team member, but I wasn't meant to become... Not cutthroat enough to be a venture capitalist in Silicon Valley. And they never said that. They never said that. I just think that there's an assessment. But I think there's an assessment, and I don't even know if they would, and that's probably

overly specific and not necessarily something they would say, but I think there was an assessment that I wasn't the right fit for the partner path. Got it. And I would say, though, that in general, the, but the biggest blessing for me was actually not getting promoted to partner at DFJ. was having them fund alchemist. Because that was my alchemy. That was my path of actually...

The beautiful thing about entrepreneurship is that I think with alchemist, we talk about how, you would think about it as the entrepreneurs, the alchemist, or she is creating all of this change by transforming industries. But the reality is that the path of entrepreneurship actually can alchemize or can change the entrepreneur. The very practice of going through...

And I do think that that's what happened to me was that I actually have developed a lot from going down this alchemist path where I wouldn't have if I stayed in venture capital. So you start this alchemy and you say, I'm going to do B to B. I'm assuming this was because why Combinator was, let's face it, pretty much a B to C approach primarily at the time a decade ago or seven years ago. I'm not sure. When did you start Alchemist? We started in 2012. 2012, yeah. So back at that time, Y Combinator was, you know, probably considered mostly B2C, yeah? So that's why you went B2B, or was just something about B2B that you just preferred?

Again, this, so, no, this was something that we co-created. So everything that we've done that's been beautiful has been co-created. It's been with, in real time and agilely developed. So what happened was we started, and what you're saying is essentially true, but we started at the Harvard Club of San Francisco. And this was when I was at DFJ. I was doing these speaker series events. So I always loved teaching entrepreneurs. And in fact, right now I also teach at Stanford.

And so I'm a lecture in the MSND department. We put up all of our lectures at eCorner.standford.edu. But I also, when I was at DFJ, I was running these speaker series at the Harvard Club. And we did this six-week program where we just structured a bunch of the key lessons into the six-week program. We didn't think about it as an accelerator. But we had all these amazing VPs from Salesforce and Oracle and all these, big enterprise companies coming and we were like, why are you coming to this Harvard Club speaker series? And they said, because we don't need to raise $5 million. Everything that was

happening in the consumer side was happening in the enterprise side. You could do 500K, you could do what $5 million did 10 years prior. But we want all the education and guidance that we would have gotten from a VC fund. And Y Combinator and 500 startups are all much more geared towards really building consumer companies. They were designed around coming up with a chart that went up into the right and then injecting FOMO and having everybody read into the tea leaves and then write a check. I mean, that's an oversimplification, but there's a bit of that. That's kind of sounds like a bit of the

playbook. I mean, the cynical view of accelerators during that time was they were taking the 100K and spending it over 12 weeks a little bit at a time and increasing over each of the 12 weeks to build a chart. And then if you were a savvy investor, I would say, oh, this is great. Look at that chart.

Okay, yeah, where did, can you give me the a source of each of these customers. Show me where they came from. And they're like, yeah, this came from Facebook. I'm like, oh, that's great. Can you break it down on a percentage basis for what's paid and what's not? And you're like, oh, 90% of this is just you paying to get people to come to the website. I get it.

Now, not that paid is not real, but you know, you probably would want to wait six months to see if that cohort data if they actually stuck around and it wasn't just gasoline on a log being charred, but not an actual real fire of consumer passion. So how many companies have gone through Alchemist Accelerator? And what is your standard deal? Do you have 100K for 6% or 25K for 5%? What's the deal? And how many have gone through it in the last eight years?

300 have gone through. Wow. And our standard deal is $36,000 US dollars for 5% of equity. That is negotiable. So we do, there is a range. And we do it, we do cater. the package depending upon the company. Got it, which would be an applied $700,000 evaluation,

which is roughly half of what we get and a third of what Y Combinator asked for. So you do get people saying, hey, that's a low valuation. How do you react when a founder says, I think my company's worth more than $750,000 or $700,000? What is your response to that? Well, so the reality is that the valuation, the cash is really, everybody who understands Alchemist knows that no one does it for the cash. So if you calculate the valuation that way, I understand how you're looking at it. We actually try to structure this so that it doesn't hurt the founder from a fundraising perspective.

The cash is supposed to. It's a little bit complicated to go into, but we structure the financing so that it's not going to be at a, it's not going to trigger things that are going to lower the valuation of the. the company. So you'll put the 36K in at the whatever the last round was, but then get the balancing in different equity in options or warrants or something? That's essentially it. Yeah. Or common shares. Yeah. Yeah. That's effectively it. And it does you do that every, do you have to negotiate that every time with every company? No, it's, it's, it's fairly standard. But we do, but I mean, we do negotiate with every company. So we're not, yeah, so yeah, we do. So, that's got to be brutal like every company thinks that they're worth 10 million dollars and they're not

in many cases in most cases in this case and then how do you deal with the fairness of like hey they're all in the same cohort and one says well i got this deal and i got this deal doesn't because i have the same issue in ours where everybody wants to get a unique deal and everybody thinks that they're you know the greatest thing ever and the other companies are not so how do you deal with that i'm curious it's a conversation to be honest. So I think it's not that we have any hard. So the first thing is that we like that, because we do want the founders to know that it's not cookie cutter, like actually we treat each team. And this is why we're not, why, combinator. We're not, you know, we're not admitting 200 companies into a 12-week program and having them compete against each other. We choose the

amount of companies that we can take on based on giving them all a lot of individual attention. And I think our founders feel that. And so we enjoy having that comment. We actually welcome that. And then it's just really a conversation about mutual respect. So they need to understand that the, if they're, so the question you're asking is a completely fair one. The 36K, the reality is that anybody who's gone through Alchemist knows that the money, a lot of people don't even care about the 36K. So the 36K is supposed to pay for rent just as a background in San Francisco.

So our program is six months. You're spending six months in San Francisco. You have a team of two people. You know, it's like 3K to pay for your rent in San Francisco per month. and then we provide co-working space and then all your other expenses are basically handled. The spirit of it is more that

do you want alchemist to be a partner with you during this journey and then is that something that you put value on? And so that's sort of how we have the conversation and we do think that there are companies that are different. So some of the companies are further along, others aren't, and then at the end of the day

we want to come to an agreement where both sides are content and happy and then we move forward. It hasn't been an issue actually. So we've been really blessed but I think it's partly just because we do spend a lot of time at the beginning, making sure that everybody feels comfortable and then moving forward. I don't know. I just don't even negotiate anymore.

I just tell people like, listen, if you're in this zone for the launch accelerator, we're putting in 100K for 6%. If you think that 100K bought us 3%, 2%, 1%, 1%, 4%, you can calculate it. And then the rest, you just have to decide, hey, if we paid for 3 points at 100K, and do we make the company more than 3% more valuable after? you get through the accelerator and then you just have to answer that question. And then some people are super valuation sensitive. And if they are super valuation sensitive, it's very simple. Like you should just go for max, you know, valuation at all times, right?

Go find the dentists and ask them to do a party round. I mean, I literally just tell people that like, if you really want to go for max valuation, just get 20 dentists to give you 50k each. They wouldn't even read the documents. Yeah, I think that's a good way. I think that's a good philosophical way of approaching it. Yeah. And I think what you're saying is right.

ROI is, you know, if you have to think about, you know, does it pay for itself? Here's how you calculate it. And I think the way, what you're getting at, which is the heart of it is that look, you know, it's at some level, the accuracy of the valuation is not the really important thing. It's really about do you want to do this partnership and then move forward. And I think, you know, you're, I think also you have a fantastic platform and so you can just say, you know, this is the deal and then go forward. We, I think we, we, we, the reason I stop negotiation is just because I felt like it would open up me to having issues. around fairness with other founders right now. It's just like, oh, you know, what if like

one founder got a slightly better deal? The other one feels bad, you know, and, but I understand also, I, and it cuts both ways. It cuts both ways because I, yeah, we were thinking, well, let's just pick a revenue number. If you have 50K a month in revenue, you get this deal, but then you're like, well, wait a second, it was 50K in consulting revenue and another person's got marketplace revenue. Is it the take rate? Is it the GMV? Like, how are we going to actually calculate this? And then it gets even more complicated. And it's such a small amount of, equity and the hit rate is so low for accelerators like ours, I'm guessing you're anticipating 90% of your returns are going to come from how many companies out of the 300

in your mind? What is your power? 30. So 30 will be 90% right? And then 80% of the returns will be how many companies? So 90% of the returns come from 10. 80% come from the top three. I mean, I would say the top, or the top 10, the top, at the top, you know, 3%. And this is what people need to understand when you're running one of these accelerators. And we've been kind of unpacking this issue as we go through this 10-part series that you're the seventh in is, you know, these accelerators take massive risk. They take risk on things that VCs are not willing to risk. And they are, therefore, their hit rate is going to be super low because if you're doing it right, you're taking more risk, right? You want to take a lot

a risk at Alchemist? Yeah, that's exactly right. So we are not in the business of going after, you know, singles, like surefire singles or doubles. We like to fund crazy companies that are going to disrupt the world. So we are in Enterprise Accelerators. We definitely have phenomenal companies that are doing enterprise apps and DevOps like Launch Darkly, which is now, you know, is doing this fantastic feature flag as a platform company.

But also we have moonshot companies and disruptive companies like Rigetti, which is building a quantum computer or Matternet, which is building a drone federated network. So we love, we love companies that take risk in the sense that if the markets tip, they win big. And largely raised over 100 million coming out of the accelerator, yeah. Yeah, well, they've, they've raised 120 million in the three years post the accelerator, but so several rounds. So that's the most successful coming out of it, for sure, in terms of capital raised. Rigetti's the most. Riggetti's raised 200 million. Oh, okay. Wow. But, but yeah, and they've been from gate funds.

Like, Riggi, so launched darkly as funded by Bessemer, DFJ, which became threshold and Redpoint and

Retti. DFJ is called threshold now? I didn't know they changed the name. No, so DFJ became four funds, just to be

transparent. So what happened also, the other issue here with my story on DFJ is, and I should like imploding at the time. In fairness,

I'll say that you don't have to. Draper. DFJ became Draper Associates. So Tim Draper started. Tim Draper left. then Gerwitz and WNWA. He went to Futures VC and then Josh Stein and Emily

I mean effectively and Andreas created a version of DFJ that became Threshold Ventures with Heidi Royston and then also Jennifer Fonstad started a new fund called Aspect with Teresa.

So there were four funds that came out of DFJ and now DFJ no longer exists as a... Well it still exists as a growth fund it does exist. It's just the growth fund still exists but the early stage funds.

I like the fact that you're honest I was telling you during the commercial break that you're really honest about all this. And you seem very introspective. You meditate a lot. Are you like a very zen person? You seem very Zen. I'm Hindu. So I think you get a little bit, I think I get a bonus point for being born Hindu. So, but no, I'm not, I wish I was more Zen. I can't, um, I do, I do, I am a bit of a spiritual junkie. So I do like that side, but I'm not a, unfortunately I don't have a, I wish I did have more of a meditation practice. As a spiritual junkie, how do you deal or reconcile?

that our business, what you and I do every day, is based on extreme capitalism and extreme wealth creation and financial, aggressive financial betting. How do you reconcile that with, yeah, just the spiritual and namaste side of all this?

Well, now we're going to get, we're going to just dump. Let's get deep. You're going to take the, red pill and just go down the rabbit hole. Let's do it. Let's go on the rabbit hole, yeah. I mean, I don't, so I was raised in a Hindu tradition, which is sort of more of like the

Bhagavid Gita tradition, and that's the canonical, even though there's no Bible in Hinduism, but there is a canonical, allegorical story called the bug of the Gita. And the premise of this is that you have the protagonist who has to basically do this thing that they don't really want to do. They have to actually kill their cousins. And the, and then God in the form of a charioteer comes in and gives some advice. I think it's a similar analogy here in the sense that, you know, what you're getting at is, is that how do you live a spiritual existence? when you're doing all this crazy capitalism.

And the essence is to, if you can build, and I think this is actually what the markets teach you as well, is that if you try to chase money, even if you succeed, you fail. So one is that you may not succeed. I think everybody knows that viscerally, where if you put all of your attention on the end and not the means, it tends to not work out.

And even if it does work out, it's a shallow end. Yes. You really don't get joy. And you can look at, I think this is also, you know, if you want to go down Sand Hill Road and meet with all the venture capitals who have more money than, you know, the top half of the top half of the top half of the top one percent of people in the world, they're not necessarily happier than people who you would see elsewhere. And so I think the essence of this whole entrepreneurial journey and for you as entrepreneurs is, um, it entrepreneurship is a bifocal exercise. Like you have to, if you just think about the process and you don't think about the end, you'll hurt. And the essence, I mean, I don't want to, you don't think about the end. You'll hurt. And the essence, I mean, I don't want to. crystallize Hinduism, but the essence of Hinduism is to be passionate about the process, but detached from the results. So, you know, ultimately you want to do something for the sake of doing it because you enjoy it. And then at some level, you need to surrender to whatever

happens. And, you know, some things might become just in TVs. They may become Twitches and become these huge things. And then other things might become web vans. But the real success lies if you can make entrepreneurship itself a practice, like meditation, where the very active doing it is enjoyable and it's fodder to feed your soul. So, I mean, that's, I think, do it right now. Let's take a deep breath. Everybody listening to my voice. We're going to breathe in and we're going to breathe out innovation. Breathe in, capital, breathe out, innovation. But Jason, it doesn't, but it is true. I agree with you 100%. I agree with you. I agree with you. I agree. But I don't want to be, I don't want you to dismiss the point because it's not about being

serene. Like, I think you can also relish the grit of entrepreneurship. And that also can create success. Like if you get off on fundraising. Right. Like if you, some people hate fundraising. So we have founders that come up there like, God, I just want to work on my product. I just want to talk to customers. Why do I have to go in and meet with all these VCs? But if, and if you shift that around and you actually get off on the process of fundraising. Yes. You know, we don't call it, so we're a B2B accelerator and we don't call it sales in Alchemists. It's not sales. Because all we, so by the way, Alchemists, we only fund technical teams. All of our teams are engineers, but we were rated the highest accelerator in terms of funding rates per capita or per company and why company was number two

according to like the CB Insight study. And the reason why is that we don't call it sales. We don't call it, you know, fundraising. We call it commitment engineering. Commitment engineering. Yes, you're engineering something new. It's not a product. You know, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's raise. It's, oh, I got this, I have this challenge that I need to hack. And the people who are the best entrepreneurs and have the best outlier results are the ones who, in fact, you're correct, enjoy the process itself of being an entrepreneur. And you better appreciate it and love it because it's so goddamn hard. You know, if you're doing it for the money,

if you're doing it for the outcome, you will quit very quickly because getting punched in the face sucks. And that's really a lot of entrepreneurship is just getting smashed in the face with bricks. constantly. And you actually might start getting, and I think the best entrepreneurs actually get off on the process. Like if you really meet the best entrepreneurs, even after they make money, they're itching to get back in the game. And you're like, why are you? Yeah. I, I, no, I think what we're talking about here right now, Ravi, is actually the good stuff. I think this is the good stuff of the episode we're doing right now. You and I are co-creating right now because there is something beautiful and magical about doing something very hard and getting beat up and it being

a struggle and then getting through it, right? Yeah. And you know, Luke Skywalker went into that cave and he saw a Darth Vader and he had to go through that crucible. The getting through it is part of this process. You know, when you feel that blood in your mouth because you got sucker punched, I always remember getting sucker punched the one time when I was like 15 years old on the steps. on 76th Street in Ovington,

no 76 and narrows. Anyway, I got punched out when I was on the steps in, right? I just got soccer punched when I was like 15 years old. I got the blood in my mouth. You know, you remember that taste of the blood in your mouth? And then it became like a huge brawl. But that blood in my mouth, I always remember that. Kind of liked it.

Kind of like the feeling of like being in the fight. And I think that's what entrepreneurs need to do. They have to really enjoy being in that fight. They have to enjoy the painfulness of raising capital. Go. That's right. And I think the two are interconnected. Like the joy and the thrill that you're going to get in life

is actually going to be tied to the fear and the uncertainty and the grit. And I think that they say that even like, and I don't, this is a dangerous analogy, but like heroin users get, they start to enjoy the prick of the needle because they associate that with the thrill that's about to come. Wow. And I don't want to, I don't think that, I don't want to.

Don't do heroin. I'll just tell you, Ravi. Let me just make it clear to people listening. We're not advocating doing heroin. It's a dangerous false analogy. But that grit, so it's, you know, you're actually living life when you're enjoying the palpability of the moment. Yes.

And not trying to abstract away the things that you dislike and saying, you know, I want to insulate myself from this experience and just code. And that's why I want to go work at Google where they have warm toilets and I can sit and have sushi for lunch and just sort of have this really comfortable life. You could be on the warm toilet with your sashimi. You could do both. You could be on the totale. And you could be making, you know, a good salary.

And that, but that is not life. Yeah. The reality is that the joy of life actually is tied to that grit. And it's tied to, you know, being in that moment when you are building something and you might, you know, at DFJ, we funded SpaceX and Tesla. And there were, and I don't want to go into the confidential stuff there. But there's definitely things where the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, thrill of that output was tied to some very also challenging times. And I think every path that is actually interesting in entrepreneurship is tied. And I think the great entrepreneurs, you know,

at Alchemist, and I know we're supposed to get into the details in Alchemist, one of the reasons why we are differentiating ourselves on quality versus quantity. So we'd have a smaller class and we spend more time on each company. Is it a cohort and how many people are in your cohort or is it rolling admissions? It's a cohort. It's we limit it to 25. and we try to do 20. It's six months instead of three months. Each of the companies typically gets three coaches. So a coach is somebody who's just mapped to that company that's working with the company.

Is that an alchemist accelerator employee or a mentor, part of your mentor network? One of the three coaches is a partner. And then the other two are what's considered faculty with an alchemist. So we have our top 80 partners. Typically, the founders are people who have built businesses worth $100 million or more. Is there a session that occurs? Is there 26 weekly sessions? or do people float in and out of an office?

Do they have to come to everyone? How does that manifest itself? There's 24 weekly sessions. It's all optional if you want to attend the weekly sessions. There's co-working space, which obviously right now is not in practice because of COVID, but you can also be working out of the office in San Francisco and in Mountain View.

Before COVID, how many people, you know, of the 20 companies, how many would be in an office weekly? Actually, it would typically be around, it's typically around 35 or in the, are in the co-working space because we also have some of the alums that will be working there too and they overlap. But out of the current class, half of them come to the office,

a third of them? Probably a third. A third are there. Because frankly, one is the companies, we think there's a lot of value in working from home as well. We also want you to be going out and having meetings with customers. The office is more of like the spiritual center. It's like people come if they want to be with other people and connect.

Yeah. Prior to COVID-19 and the pandemic, was it a requirement to be in the Bay Area? It was highly encouraged. But you allowed some remote? We allowed remote. So I didn't allow remote. And now we're 100% remote. What are you now?

Are you 100% remote? Yeah. How is that going? It's the best of times and it's the worst of times. It's both. So there are things that are better with remote. So actually you can have more meetings remote. We think it's better for our.

So we're doing all of our weekly gatherings remote, and we have shifted. So a third of our companies are outside of the U.S. We used to do our weekly gatherings in the evening. We now start off at 9 a.m. in the morning, and so that way everybody can participate in real time. And it's actually been really effective from an efficiency perspective because we've put a lot of development into developing our virtual tools, and people really like them. What are the tools? Obviously, Zoom and Slack.

Oh, we use, so our off-the-shelf tools are Slack, Zoom, Asana, things like that, Airtable, but we actually have our own proprietary software. We have our own developed team that builds software for. What is the platform then? What does it do? It's called The Vault. And you're using it for everything. It's like a combination of LinkedIn and Salesforce.

So you use it to book all of your meetings with mentors, with VCs, with customers. We also put up all the content. so you can get all the content there. And then also there's real-time support, and then also you can look through a directory of pre-answered questions that have been previously asked. So it's really efficient. Like if you need to get to a resource,

you can get to it much quicker than you could before, and it provides a lot more flexibility. And digital's also been good for our founders that have felt like they were hurt. So I think for female founders, funders, fundraising is better digitally, interestingly enough because it's more, I think fundraising is more meritocratic, even though it's more two-dimensional over Zoom. Interesting. And what's lost? You said some things are lost. What do you think is lost in all of this? The connection. I think it's almost,

you know, we're doing this interview right now digitally, and it's a great interview. I think it's really fantastic and fun. But there is, there is, and this is getting back to this. It would be 10% better. It would be 10% better in person, for sure, 20% even. Yeah. And I think it's, I think it where it comes into place more on the psychological connection piece of entrepreneurship again is that there is something that happens where there is a limbic connection physically when you're just in the room with other people where it makes it easier to like the analogy that I use is if you ever need dough, there's a point where if you're needing dough, it gets to a point where it's like really easy to need once you've worked it for a bit. Like if you're working in a co-working space with a bunch

of other co-founders that you all trust and love, it's easier to sort of get in that zone. So there's that. And then I do think that there's a mentorship piece that is something that You just, there's a, that's valuable in person. But. Yeah. I was such an in person person. And now here we are in this pandemic. And I can't be. So I've just decided, you know, to your point about accepting reality and, you know, the philosophical nature about what we do in this pursuit of outlier success. I've just said, you know, I'm just going to embrace it and assume that this is the new normal. And even though I hate it, I hate it. I hate Zoom. I hate being on Zoom all day. It's to me a torture, but I have no choice, so I must make the best of it. And that's what I've chosen to do. The thing that concerns me, because you and I are sitting here, you know, right as San Francisco in the Bay Area starting to open up. We're in phase two going into eventually phase three. We recorded this at the end of the May. We'll be coming out in the first week of June in 2020, for those of you listening to the archival document. The question you and I both have to. answer is even though we've gotten all these meetings, even though you and I writing small checks, U-36K into 20, me 100K into 7, almost winds up being the same amount of money, you and I can write

those checks. But will our companies be able to raise from seed funds and venture funds, the 500K check, the $2 million check without them being able to meet in person? What does the early signs, what early signs do you see of virtual meetings resulting in real cash? I think they will. So, you know, the guidance that we got, so we talked to a set of prestigious VC funds, you know, in preparation for our demo day. And the guidance that we got was that they're all, most of them are doing, I mean, all of them right now, obviously doing virtual meetings. They like to do socially distance meetings before they write their check, but we've

seen people write checks without ever actually having met. There's a strong, to date it's been if you had a previous relationship with that fund or if they know you, that's a huge bonus. But I don't think, I actually think that it's going to become a lot more meritocratic. The ultimate issue is that all these funds, especially if you look at the dry powder funds, the funds, there's been a lot of dry powder that was raised in the last two years that's not committed. They need to deploy capital or unless they have to worry about their IRAs. So they still need to write checks. And the reality is that it's too cumbersome to try to meet with founders. So you need to set these meetings. meetings up and you need to drive things virtually.

So if they're not getting the read on the founder, they're not getting the charisma of the founder and that sort of situation in person, what do you think they're making their decisions on? So they've removed that high touch, the feeling in the room they get. What are they looking at to replace that in their decision-making stack, these downstream investors? Well, I do think that all investors have different sticks and they're not a monolithic group. So there are some investors that pride themselves on betting on people.

people and teams. And I think those investors will probably invest closer to people that they know or that they're connected to that they can validate them in some way. And so I think there are, you know, you need to try to find a proxy to get that investor to trust you. I think other investors actually are just being much more meritocratic about doing customer diligence like they should, looking at the product, looking at the data and making decisions based on that. I do think valuations are going down by 20% to a third. Which puts us at that. double reality probably in all cases, I mean, here in the Valley. So an example of that might be a $15 million valuation last year goes down to, what,

12 or 10? Yeah, I'd say 10. So it depends on the, and all, again, every company is different. Sure, there's outliers. But my main point here is that I don't think investors are not investing. I think they're correcting for that risk by adjusting valuations. Yeah. And I do think that if you're in a market, which is a, which is where you're getting wins in your sales because of COVID.

So collaboration, cloud, e-commerce, digital health, then I think there are investors that are moving even more quickly. How do you deal with competitive companies coming to the accelerator? You have some breakout success doing quantum computing. another person comes in and says, I want to build a company that defeats that company. We have a better model. Do you not invest, or do you invest? And the founders of that company understand that you're an accelerator and you're going to invest across a wide range of companies? Our rule is that we will not invest in a competitor within the class that we admit or within one class after or before that company that we admit.

So we keep a one class buffer because the biggest thing that we're building is a trusted space. both physically and virtually, and so we don't want to compromise that. And the reality is that companies pivot all the time. So even if we admit somebody that doesn't look like they're competitive, they may end up pivoting into that space. And it's been, I should say, it's been a big boon for most of our alums. So, you know, Raghetti is, I think, a fairly famous quantum computing company that's graduated from Alchemist. We also have had now this ecosystem of other quantum computing like QCWare and others that

will benefit Righetti. So, and LaunchDarkly, I think, is going to also have a bunch of great DevOps companies that will come from Alchemists that will benefit LaunchDarkly. Yeah, this is something that outsiders don't understand. As the Sequoia folks said, no conflict, no interest. Like, usually these things seem a little conflicted, but even that's okay because the big company might wind up acquiring the small one. So if I invest in a company that is working on sleep, but I'm also an investor in Com,

I bet you Com feels pretty good about that. at least they know that if they were going to acquire that company, they would have somebody who could do a proper introduction, right? Yeah. No, that's exactly right. And it's amazing how, in my experience, I understand that founders have this fear of competition. In general, I think it's better to jump into situations

where there's a lot of people within your ecosystem that could be relevant. At DFJ, we three times funded, I know we keep going back to the FJ, but there are three times we funded competitors, not intentionally. They became competitors. but all three times both of the companies did well. So in any space, there's going to be usually three winners. If there's a market that is ripe for a venture opportunity,

there'll be one winner that will be the outlier that nobody can acquire, that'll go public. And then the other two will get acquired by the incumbents in the space that need to have a strategy there. So in general, I would not worry. I know it's easy for me to say this, and there are exceptions, but founders don't worry too much about competition, worry about learning and the pace of your development. How much diligence do you do on the companies coming into the accelerator because they are very nascent?

What does diligence look like coming into your accelerator, the alchemist accelerator? It's three basic phases. There's a written application that gets assessed on the classic things that you would look for for any company. Then we do a second phase, which is the people. So we do try to reference the people if we have connections between the founders and alchemists in the community and get thoughts on how those people are. and then there's an in-person interview and an assessment in-person that might lead to also for their diligence. And in the in-person interview, usually there's three people that are interviewing each of the startups. One's usually representing the VCs. One's usually a former alum of Alchemist and one's usually a successful founder. Accepting people in these early stages means you're going to make a lot of mistakes. That's part of the game, right?

If you're going to get in early, you're going to accept people who you will eventually regret having accepted or, you know, who might disappoint you, how do you deal with having your name on a company where you're no longer rooting for the founder? Where the founder has disappointed you or behaved badly, how do you deal with that as an accelerator with them as a graduate with your logo in their deck?

The only way a founder disappoints us is if they act unethically. If they're acting, which happens. Which happens, but it's very rare. So it has happened to us, but it's probably happened once. out of the 300 companies that we funded, just to be clear.

So I just want to make a distinction between that and not succeeding. So we actually think that it's not necessarily a failure if you didn't financially succeed, as long as you did it with all of your heart. And the reality for us is that if we had 100% success, we're not taking enough risk. Of course. So we want to be constantly, quote unquote, failing. We want to be, you know, exploring new markets. Like, you know, we funded an anti-matter company called Positron.

Well, positron's great, and you guys should check them out. But that's going to be a path to figuring out how to build antimatter to get to Mars. And the timing on that may have been different than Rigetti, which is a quantum computing company. But I love them both because they're both really true entrepreneurs. They're not starting a company because they want to be a founder. They want to actually change the world. When you do have the bad behavior, which happens once in a while, what do you do? How do you manage that as an investor?

That's very unfortunate. And this is where you have to separate your roles from the coach of the company to being the fiduciary for the community. So, you know, I am your first and foremost, the cheerleader of the founder. But I am also a fiduciary for the investors and for all of our customers and all the other mentors that are stakeholders that we, that trust us when we're introduced in the company. So it is not, if somebody is doing something uneathetic, basically, what will happen here is that you have to deliberately do something that is unethical or misrepresenting yourself or doing something that was clearly wrong. And I know there can be gray lines and entrepreneurship around this, but I'm talking about something that's just like...

Clear cut. Yeah. And if you did that, then what normally happens is that we're assessing... The reality is that what I'm looking at is on... I'm looking at the business. I'm looking at the ethical issues and I'm looking at the legal issues. And then I'm trying to make an assessment on all those then make a plan against that. I'll usually talk to the founder directly and ideally have a path where they're going to be invited to remedy the situation in a mutually consensual way. But that usually will require that founder to take some hard medicine and to accept that path. And if they don't accept it, then we have to do what's right and we have to protect all the

stakeholders that are involved. Yeah, it's the unfortunate part about what we do. And, you know, when you're in this early stage, I've had it happen where I just told people like, you know, You don't need to have me on your cap table. Why don't? Oh, yeah. You just rip up the term sheet, send us back the money, and we'll all move on. Nope, I've done that as well. Yeah, it's just like life is short.

Like, no one investment is likely to make a difference when you get past two or 300. I mean, obviously, an outlier of outlier as well, if you happen to invest in Google or Facebook. But in most cases, like that company that's having the problems is actually not going to be that company anyway. So you just rip up the term sheet, send the money back, send half of it back, whatever, you know. Or I mean, we've had, but even if we don't, you know, even if we've already invested, we'll tell people, you know, you don't need to mention us on your cap table and you can just move forward, even if it's been like after the company's graduated. And, but that doesn't happen that, you know, it doesn't, it's not that often. And what are your thoughts as we wrap up our hour together here on the future? You know, you started your accelerator in 2012 when the market was really starting to heat up again. You, you started right after the, the, you started right after the, you know, the, you started. the Great Recession. So that was really good timing. You know, things were starting to heat up in 2012. Here we are in the trow. You knew it was coming, I'm sure. And here we are in the trow and it's looking pretty, pretty dark out there. What do you expect the next couple of years will look like?

Not the short term, but let's call it the midterm. What does the next three, four, five years, the midterm look like? I actually am very bullish. I love this time. Actually, to be honest. So I, you know, I was at DFJ during the downturn. Because the, you know, as John Dohr would say, the mercenaries leave and the missionaries stay. So anybody who, so this is the best time to be a founder. It's the best time to be a seed stage investor because, one, if you're a founder, you have less competition, you're probably doing something you really care about. Your employees are grateful. You're not trying to keep them. You know, they're all, they're grateful for whatever, for working for you. And all the big companies are cutting their R&D budgets. And so when the markets,

come back, you know, and you can pick your number. The Spanish flu was, I think, like, 18 months. It's something between six months and 33 months. But in the next one to three years within that time frame, the markets will come back. All the big companies are going to suddenly be focusing on growth, not profitability, and they're going to have a vacuum of innovation, and you're going to get acquired for a huge multiple. We started out of the Yammer. So Adam Pesoni, who was the CTO of Yammer, he was one of the founding mentors and Alchemists. And so the companies were housed out of the Yammer offices in San Francisco. And Yammer was funded, you know, after the Lehman crisis in January of 2009, I think.

They launched up my event. Yeah. And then they got acquired in 2012 for like $1.2 billion. And the reason why was because nobody had been built out an enterprise social network in that time. And then when the market's tipped, Microsoft was like, oh, we need an enterprise social network strategy. And they paid up for, so I love, this is the best time to start a company if you can get

the cash. And it's the best time I think to be a VC, because, founders are grateful for the money and you can invest on fairly good terms. The issue is getting the cash to survive the downturn. What are you advising people in your portfolio who are coming to you saying, I have the six months of runway, I can't raise money, what do I do? You cut your burn now, as painful as it is, if you have any burn to cut, because, again, it's a nonlinear return on your runway for every week that you make that decision earlier.

So if you cut half of your burn right now, you're going to save six months or three months of time, 50%. If you cut that when you're three months in, you're going to have like six weeks or four weeks. So cut it now. You'll be surprised at how your startup will survive even if you don't have roles that you think are critical. It's amazing how startups actually. It's so true. People think, like I can't, I had one founder. It's like, maybe I should shut it all down instead of going from whatever X number to 50% of that or a third of that.

And I was like, yeah, you may want to try having a third of the number of employees and see how it feels. And you know what? They felt more efficient. Oh, yeah. Especially if you have dead weight, the employees are actually grateful to get rid of the dead weight. And then usually that you go through this like little trough where people, you know, it's a bit traumatic. Shock. But then, yeah, there's a bit of shock.

But then people actually re-get back to their core. I would say where this also happens is that if this is advice for the founders that are listening is that if you do have investors, your investors may say, hey, you know, just keep going and, you know, we'll bridge you, you know, at the end. And that's a very dangerous scenario that nobody's going to necessarily coach you on because your incentives are misaligned. So explain it. So if you have a board and you have six months of cash and you bring this issue up to the board, your board of VCs may say, don't worry about that.

Just execute and we'll try to fundraise three months from now. And if you can't raise, we have your back. We have your back. We have, we're managing, you know, $500 million. we can write you a check. Now, if you do that, when you're within 12 weeks of cash and the company's about to die, the board members have a lot of leverage over you. Even though they may not have this intention, the reality is that your fate, it's too late for you to fundraise. And so if you go to the board at that time, they may provide terms that are not necessarily

terms that you would normally want to take. So when you're six months out, you want to have that honest conversation with the board and say, hey, I want you guys to bridge me. If you don't, I'm going to cut my burn. Why do they bridge you right now so that you can sleep at night? Why make the company go to the air? And the BC doesn't want to bridge you because they don't want to take the risk.

So they want to have somebody else. They want to see if somebody else is going to come to the fore and they can wait. And in fact, if they wait, they'll also have more leverage on the terms. And this is being a little bit overly cynical. I don't want it to, you know, to... It's a real phenomenon that does occur

whether it's intentional or not. In some cases, it's not intentional. In some case, it is intentional. Yeah. And this is something that I don't think founders get taught unless you have a third space, not your board, not your investors, but something else.

And so in that moment, you need to tell your VCs, look, if you're not stepping forward, it's okay, but then I will cut the burn for the company, and we will make cuts because I need to make sure

that I have at least nine months of visibility. Yeah, and that's where you think it's nine months is the minimum. Yeah. And so you can just keep cutting to keep it at that. Well, you cut,

I mean, if you're in B2B, you can, there's obviously a bunch of operational things you should accelerate your receivables, delay your payables, do everything you can to preserve cash, furlough your employees,

ask your employees to make tradeoffs on cash versus equity. So there's a lot of different things, but you need to ideally weather out the storm, which I think, you know, I personally, you know, the rule of thumb is nine months. I feel very uncomfortable with nine months. I've always been 18 months. I'm an 18 month guy.

Yeah, I think 18 months, I want three years. But like, I think you should try to see if you can get to 12. The great thing about 18 months is you can put your head down and work for nine to 12 months. and just really focus on those customers and the product. At the end of the day, what is the most important thing for founders to remember when they're running an early stage company?

Well, I think the most important thing is to validate the need before you build the product. So your time is your most precious resource and put faith in your worth in your team and your customers, not your investors or tech crunch. Like it's a noble job to be a founder and you should source why you're doing this because of the customer that you're serving

or the team that you want to work with. I think it's a great place to stop and you've been a great guest. Thank you for being so candid and honest and to the GFJ team. Wow, you blew it. Here is Ravi out there. Investing in 300 companies.

You let him walk out the door. The man who... They own 25% of Launch Starkly, so they're doing well. They're doing good. And now they get to be a co-fester. And we're appreciative of DFJ. They anchored our investment. What's it like when you meet with Josh, my boy, Josh. What's it like?

Josh is like, oh, we knew you were a star. Have they tried to come back on car are you? Have they kind of tried to come acquire an alchemist? So Josh led the investment in Launch Starkley. So Josh, you know, DFJ owns 25% of Launch Darkly, which, you know, you can look up the valuation, but it'll do well for his fund. Yum, yum. And DFJ was the anchor LP and Alchemist.

So DFJ has been a huge supporter of Alchemist. I think Josh is a fantastic investor. I also think that when you're building your own, he's building his own firm. So he's being an entrepreneur himself. And in that moment, you have to choose who your teammates are going to be. And I think certain people are fits

and certain people aren't. And honestly, for me, the biggest blessing on my life was starting Alchemist on my own. So I'm very grateful for how everything turned out. You like being a solo founder. It's nice to be a solo founder. You pursue your muse.

Well, I think it's good at different phases. I think for me, I think venture funds are all idiosyncratic, and there's certain character people that will fit and certain people that won't. And so for me, I think it was nice to be on my own for a bit. But now I'm so deeply appreciative of Danielle, who's the other managing director of Alchemist, who's effectively a co-founder. We have a bunch of other managing directors and the greater team. And Alchemist would not nearly be what it is if it was just doing. So I'm very excited. You saw Techstars raised like 40 million bucks. And people are starting to look. look at Angel List, Y Combinator, TechStars, maybe as their own businesses. And I was talking to David from TechStars, say, hey, you ever, Dave Brown, you ever think maybe Tech Stars be a public company? He said, yeah, actually, I have thought about that. These entities that you and I and others are building are becoming bits of brands. They could have value. You ever think, you get approached by anybody to buy it and team up and like maybe we take you and put it with this venture firm. You become the top of the funnel, they become the thing? How do you think about that?

The danger of a venture fund, I think there's a danger of a VC fund tries to, you know, acquire an accelerator because I think it, it, it, it, you're killing the, the goose that lays the golden eggs, which is that we hold the sacred space where, we're, where there's not any signaling risk with, you know, the VC. So the reason why this whole space started was because the VC started doing seed stage deal and it created these signaling risk conflicts. Yeah. That there needed to be a third party space.

So I think that's dangerous. I think with publicly traded, I do think that there is actually a lot of creative structuring on how to do these, which is what actually I'm thinking a lot about. Publicly traded companies, I think that also will confound your effectiveness to invest in private equity because of SEC law.

So I do think that there may be certain constraints around that. But I think Naval and, you know, and others are thinking pretty creatively about some solutions. You think they'll wind up becoming public? Angelist? Well, he certainly raised venture money. So, I mean, I think the VCs need to have liquidity. And I think I don't know what that path is going to look like.

But I assume the default is, you know, to go public. It is really interesting how the venture game has changed so radically just in the last 10 years and certainly in the last 20. All right. Continue success and follow Ravi. He's R-B-E-L-A-N-I. I'm sure you're Ravi at Alchemist Accelerator.com. That's right. That's right.

Or just check out out just Google Alchemist Accelerator. Yeah, you'll come up. All right, I look forward to breaking bread with you and having lunch or dinner when this is all over. Stay safe, okay, brother. Thanks, Jason. You too, brother. Take care. Bye, everybody. Great job.

We'll see you next time on this week's service. Bye, bye, bye, everybody.