This Week in Startups - E38: “Angel” Podcast: David Cowan, Partner at Bessemer Venture Partners shares insights on owning up to his anti-portfolio, understanding sunk cost, top traits for becoming a VC & best Founders & CEOs he’s ever worked with

Episode Date: March 18, 2020

0:53 Jason intros Bessemer's David Cowan 1:54 David explains how he got his start in Venture capital in 1992 4:22 What does Bessemer look for in a potential investor today? How has VC hiring and demographics have changed over time? 8:10 David gives an anecdote about understanding "sunk cost" 14:12 David explains how and why Bessemer started owning their anti-portfolio 16:03 Stories on passing on Facebook, Tesla, Google, PayPal, Napster & Youtube 19:13 What made Youtube standout from Napster from a regulatory perspective 24:05 David describes hearing the Twitch pitch for the first time 26:00 Consumer vs. Enterprise investing 29:42 Sales-driven culture 33:31 When is the right time to sell a company? 41:15 Anti-tech backlash... is it justified? 47:38 Who is the best Founder & CEO David has ever worked with? 52:10 Meeting Wade Foster and investing in Zapier 55:29 Are growth & product people making the best VCs today? 58:53 Thoughts on Quantum Computing 1:02:19 How is David investing in Robotics? 1:09:58 Jason ends the show by showing the trailer to David's Silicon Valley mockumentary "Bubbleproof"

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Hey everybody, welcome to another episode of Angel. This is season four and we've had an amazing, amazing season. Episode one, Sarah Cannon from Index Ventures, she brought it. Dan Rose was on episode two. He's at Co2 and started their $7,800 million early stage fund. One of the only people I know, actually the only person I've ever met who worked both for Jeff Bezos and Zuckerberg. If you haven't seen that episode, go ahead and check it out. George Zachary, my friend, the low-key legend of Silicon Valley from CRV was on the pod for episode three. And Sarah Tavel, the latest partner over at Benchmark, which is a really hard firm to become a partner at. They all have equal economics, and it's a very difficult seat to get. It is on episode four. We were just cooking with oil. And today is no different. Today we have David Cowen, who is from Bessemer Venture Partners. He's been a venture capitalist since 1992, which I think was George Bush president when you started?

What was president at that time? Yeah, moving from Bush to Clinton. Yeah. How did you get started in venture capital? I drove there. You just drove there, yeah. No cab. I was working at Oracle as a product manager, and somebody told me that I said, what's this room over here?

They said, that's the board room. That's where the venture capitalists are. And I remember that my dad had told me once a long time ago that, you know, you should look into this venture capital thing because you like you're a startup kind of person. And I said, who are these venture capitalists? I didn't know anything about them. There was no tech crunch at the time. There was no, I didn't know any names of any firms or any people. All I was told was that they're all a 3,000 Sand Hill Road.

So I got myself a paper map because that's what we had in 1992. Yeah. And I got on my Mazda and I drove over to 3,000 Sand Hill Road, parked the car, got out, started walking around. And literally knocked on doors like a sociopath. I didn't knock. No. Actually, like a true sociopath, I just barged right in. And I said to the receptionist that, hey, does this venture capital?

company hire summer people because you know I know about networks and data based or something also known as interns well okay and and and she said no we don't no summer people no some no we don't we don't work at the summers and I said well any of these adventure capital companies around here any of them hire summer people and she said yeah I think so I said well who and she took out a book called the Western Association of Venture Capital and directory and she circled five names on them and she gave it to me. I wish I knew who this woman was.

I'd go buy her a car now because I went home and I pulled out my PC with the dot matrix printer and I sent out five letters. One of those letters was to TA Associates. They hired me for the summer. Another letter was to Bestmore Venture Partners. They did not hire me, but I stayed in touch with them. And when I was out of business school, they took pity on me and gave me a job. That is hilarious.

The Hootspah to go to 3,000 Sandhill Road, which today still, is like the epicenter of venture capital and just literally not even knock on the doors. Just ask, hey, you got a spot for me and they gave you the directory. It was different back then. It wasn't as glamorous in industry. Today they'd probably call security

and I'd be out of my butt, but it worked. Yeah, you probably wouldn't have made it past parking for 15 minutes. There's probably security everywhere now. Yeah. Today you have to be way more qualified. Yeah. Who were the venture capitalists?

and how did they get their jobs back then? And then how do they get their jobs now? So when you're hiring now as an elder statesman at Bessemer, who do founders want to work with and who are you trying to hire versus back then who were people hiring for those seats? Yeah, well, that's a really good question as to who the venture capitalists were back then. I think in general there were people who came out of other areas of finance. Some of them came out of some old line industries like semiconductors, but for the most part, they came out of finance.

There really was not a lot of specialization like there is today. When I joined Best Merventure Partners, I was given the tech beat, okay? The tech beat. The tech beat. Right. So there was a retail investor and a bank investor and a biotech investor, and they let me invest in tech. Yes. And so I got to tell you, being the tech investor in the 1990,

Yeah, pretty good gig. Pretty good gig. Yeah. They're like, by the way, there's going to be a huge number of waves coming. Here's a surfboard. You're the only person on the beach. That was it. Yeah.

They're like, here's the North Shore. Better lucky than smart. Timing is everything. But then also that ability to say yes to something. Like, I just heard about this thing. It's intriguing. And it's something that I see is missing in a lot of young people today is like they just don't seem to have that hootspah or that like, I'm just going to walk.

in and see what happens, right? They just assume the system's rigged. They can't get the job. But today, it feels like it's never been more open, right? Like, people are starting microfunds of $1 million on Angel List and they're 25 years old. Yeah, the whole idea that you get out of college and then you get an entry-level job at some corporation or work your way up for years and years and years. I don't think anybody buys that anymore. No. You make your own path. What are people looking for today, when you start thinking about what makes a great investor in 2020, who'd have found, because you're trying to hire people that founders want to work with, I think, is the key, right? Yeah, well, there's, there's, we're looking for people who are, who are, you know, there's all

kind of characteristics that you can imagine people look for in investors. I'll skip kind of the, the normal ones that you'd expect, being smart and having integrity and working hard and all that. I think much more important than any kind of domain experience is intellectual honesty. So people who are, excuse me, people who are comfortable learning from mistakes, acknowledging their mistakes and their failures, talking about them. And that's a big thing. And then the other one is, I would say, the courage to leave your sweet,

spot because one thing about being a venture investor over a long period of time is you can't just have one strategy. Every strategy plays itself out. You have to constantly reinvent yourself. At Bestimer, which is the longest running venture firm in the industry, we know that better than anybody. We have to, like I would say our core competence is constantly reinventing ourselves. And so what I love to see in a candidate is somebody who was great at doing something and then stopped and did something different. Huh. That, to me, is the sign of a really courageous thinker.

Right. And that dovetails with that first part, that intellectual honesty. Yeah. Because that means they have it with themselves. They were able to say, you know what? I was in a jazz band and then I was going to be a doctor, but I dropped out of that to go into a startup about, you know, natural foods or something. They can actually move from one thing to the other with that courage. Yeah.

They don't let sunk cost stop them. That's like a... Explain what sunk cost is. is somebody who's hearing that for the first time. Well, okay, I'll tell you an anecdote. I took my kids to Disneyland and my son wanted to go on Splash Mountain. Oh, yeah. So we went there.

There was an hour line. And I said, we're not going on Splash Mountain. No one. And he said, well, what about the singles line? I said, what are you talking about? He goes, the singles line, come on. And I follow him past all the people waiting in line. And there's a line there for people who are by themselves.

He goes, let's get in that line. Now, this was to get on a ride where you sit in a log, and the log, you only sat, there was like one seat on each row anyway, right? You're not sitting next to your person holding hands, no. Exactly. So we got in the singles line, and a minute later, we were sitting in a log and splashing our way through Splash Mountain. And we get out, and he says, let's go again. I said, okay, we're getting the singles line again. It's great to have kids.

Come out, he goes, let's go again. Okay, sure. This is third time. Pretty much the definition of childhood is again. I didn't mind. We come out, we're soaking wet, okay? I was like, that was great, that was great. And we're walking out.

And he says to me, why are all these people still waiting? Why don't they go on the singles line? Right. I said, I don't know. Maybe they don't know about it. Right. So he and I are walking along away from the ride. And we're telling people, hey, the singles line is a minute long.

The singles line is a minute long. Now, we are soaking wet. So there's no doubt that we just went through. this ride. There's evidence. There's evidence, right? And people are looking at us, and I look back, and I was expecting this mob of people to go to the singles line, and there's not a single person. No venture capitalists in that line. Nobody moved, right? No venture capitalists in that line. I could understand it. And we're walking, and we get to finally the beginning of the line. And someone says to me, what, there's a, there's a minute? I said, yes, just a minute. And he turns to his friends,

and I could see them going, he's saying, and they're saying, and then his shoulders just slump, and he stands there. All these people were waiting in line and they thought, I spent half an hour waiting in this line. I'm not giving that up now to go to do something else. And that's sunk cost. That's some cost. Yep. Sometimes you got to get out of something. That was a mistake. Yeah. But the fallacy of you got that sunk cost keeps people in a bad investment or a bad line. Yeah. And it takes courage to get out of that line and say, you know what, I'm going to give up this 30 minutes for this other opportunity. Yeah. And we do it in our lives all the time. We're wedded to certain ways of thinking about our lives. And I mean, beyond investment, you know, we subscribe to certain

frameworks about reality. And as we get older, for some people, it's hard to give those up because they feel like they have so much vested in them. Yeah. And VCs are obsessed with thinking about thinking and decision making. Like, here we are. We're just in the first inning. And already we're talking about sunken cost and intellectual rigor and the ability to be intellectually honest. Why is it that VCs think about thinking and decision making so much? Because we have nothing to do. That was exactly what I was thinking. I mean, it's not like a real job, right?

We sit there, we meet people, and then we say yes or no, and then the rest of the time we think about the yeses and nos we gave previously. Exactly. The literal job is deciding if you're going to play these two cards or not and then obsessing over the cards you're already played. And how badly you played them, how well you played them. The funny thing is it's really people appropriately mock VCs because in a way it's a super easy job running around and spending other people's money saying yes and no. And having much less accountability than the entrepreneurs who are actually building things. and that's all, you know, guilty is charged.

It is a very, very easy job to do, but it's a very difficult job to do well. Right? I mean, you're saying yes and no. Easy to say yes and no. Sure. But saying yes and no to the right things, that's, turns out, that's the rub. Yeah, that is the rub. And if you want to do that well, then you've got to put a lot of work into it.

Hey, everybody. Instead of me reading you copy in an ad about LinkedIn Talent Solutions, I thought, you know what would be a great idea? Who made LinkedIn Talent Solutions? Who's the product manager? Give me the head of product. And let's talk about why this product is so awesome. We've had so many great hires with me today. Blake Barnes, the head of product for LinkedIn Talent Solutions. Welcome to the pod. Thanks for having me. All right. Thanks for that. Hiring is a tough journey, right? I mean, we talked about how what you want to be doing is growing your business. And you want to find your qualified candidates quickly.

And so we're just always looking for ways to get you more information, get you more insight to help you to do that. Screening questions are one of them. You know, we also build our platform in a way that you pay for performance, right? So you don't pay one lump sum for when you're posting a job. You pay for the canons that you receive. And then we build all sorts of smart things in the process to make it faster and easier. So, you know, we talked about how canons might not be the right fit. You sounds like you've experienced a fair share of that.

I think everybody's experienced that way you're like, you come into the meeting and it's like, oh, wait a second. Is this a fit? And the person's like, no, it's not a fit. It's like, what do we do now? So you want to be able to... Let's talk for 20 minutes and gracefully end the meeting. You want to be able to filter the people that aren't a right fit out earlier, and you want to be able to let them know that it wasn't the right fit.

It's only fair to let them hear back. Right. And so we can build... We've built tools using these screening questions, using automated systems that help you to automatically tell candidates that they're not the right fit for the role. Find the right person for your business today with LinkedIn jobs. You can pay what you want. And you get the first 50-5 for free from my man Blake.

Just visit LinkedIn.com slash Angel A-N-G-G-E-L. again, LinkedIn.com slash angel, and you get 50. 5-0 right now, terms and conditions apply because they're giving you 50. Thanks again, Blake, for coming on the pot. And thanks for this big stack of 50s here for me to give out to all the Twist fans and the intro fans. Happy to be here and, of course, anytime. And that's where the thinking about thinking comes in because you're like, hey,

I passed on Google, I passed on YouTube, whatever it was that you passed on. You've been looking at my anti portfolio. Well, I mean, literally you passed on those two? Or what are those? Have you seen my anti portfolio? No. Have you seen investors anti-portfolio? Oh, I know about it.

Explain to people what the anti-portfolio is. Well, in it. And then I'll get a tissue box here and then we can talk about what's in it. Well, there's, so this dates back to 1999. There were a lot of firms who were just pounding their chests about being masters of the universe and telling entrepreneurs that if you're not with us, you're not going to have a successful company, we make you, we're the kingmakers. And I, my partners and I didn't believe that, and we didn't, that was not the message

we wanted to give entrepreneurs. And so I thought maybe our website could be more useful. Maybe we can share our mistakes with entrepreneurs to learn from them. So I thought maybe we'll have like a hall of shame where we talk about the bad investments we made next to the good ones. But then I realized there may be entrepreneurs. or co-investors who aren't as, say, okay with this. Yeah, I mean, it's kind of dunking on people who failed.

It's kind of kicking somebody who tried really hard, hopefully. It's more than just shaming ourselves. Those are shaming all the... Dragging other people. So I said, okay, maybe instead what we could talk about, are there actually much more important errors? Those are the errors of omission. What are the great companies that we did not invest in?

Oh, my God. You should put it up here. Here's the anti-portfolio. Airbnb, Apple, Atlassian, eBay. Oh, God. And then for each one, you can see what were we thinking? Because that's when you look at these things, you've got to say, what were you thinking?

Oh, my Lord. So here, Facebook, Jeremy Levine spent a weekend out of corporate retreat in the summer of 2004, dodging persistent Harvard undergrad, Edward Savoran's rabid pitch. Finally cornered in a lunch line, Jeremy delivered some sage advice kid. Haven't you heard of Frenzer? Move on. It's over. So literally, you're shaming yourselves.

Yeah, that's a free plug for Jeremy Levine. You're welcome, Jeremy. Here's Tesla. In 2006, Byron Dieter met the team and test drove a roadster. He put a deposit on the car but passed on the negative margin company telling his partners, it's a win-win. I get a great car and some other VC pays for it. The company passed $30 billion in market cap in 2014, now at $140 billion in market cap. If you had invested in 2006, that's probably an under $100 million round.

It was the $30 million around, $40 million. It's now $100 billion. Yeah, over $100 billion. Yeah. So you're talking about $5, $10 billion mistake. Yeah. And you take the time to put your names up there and to really force yourselves to think through your mistake. I think that's the intellectual honesty and rigor you're talking about before.

And perhaps this one is incredible. David Cowen, I don't know if you met this clown, he passed on the Series A round saying PayPal, rookie team, regulatory nightmare. True, actually. He got that one right. You actually got the first two-right. It was a rookie team with this Peter Thiel, David Sachs and Elon Musk guy and Max Levich and total rookies. Pre-Elon Musk. Pre-E-E-Lumus, right, because they had it merge.

But you also had this Reed Hoffman clown in there. It was a regulatory nightmare. Four years later, $1.5 billion acquisition by eBay. Do you remember that meeting? Sure. I remember. Who pitched in Palo Alto? Was it Peter Till?

Sacks? That I don't remember. I remember being in those offices right near the University Avenue. when they just started there in Palo Alto. I thought it was a great product. You know, emailing money seemed awesome. But they were completely oblivious to regulation. And I thought that's going to kill them.

That mistake actually is one we had repeated a couple of times, including at YouTube, where we thought that they were going to, they would perish from ignoring rights. Yes. The sword would drop down and just behead them because people were putting SNL clips on. Right. Here's another walk down. I was right at Napster, though, when I went to visit Napster, and I thought, and the guy, and I, and Fanning was saying, look at these numbers. They're amazing.

Yeah. And they were amazing. And I was thought, this is awesome. I got to invest in this company. And then I said to him, how do you, you know, whom do you pay for all the rights to this? And he said, well, our lawyers don't think that we need to. And then I said, I literally said to him, oh, so you're stealing it. Right. Literally, like, this diamond heist was incredibly profitable.

Look at these diamonds, a hundred percent margin. Where did you get them from the ground? You dug them up. It's like, no, we took it from a diamond store. But, you know, at PayPal, they pulled it off. Well, here's a great one. Before we go on to this great one, what's really interesting about what we're talking about here is thinking about thinking and thinking about decision making. The Napster decision was the right decision. Because you would have been embroiled in lawsuits, and they went personally after the board. I remember that, right?

Yes. It was pretty brutal. So the right decision. With YouTube, it was the wrong decision. When you look at those two, was there something with the pattern matching that was different in hindsight? Yes. I think so. Okay.

I think it's that, is that, I mean, I don't think there was anything more to Napster than simply stealing this content and giving it to other people. One trick pony. Whereas with YouTube, the stealing was an accidental byproduct of actually something else that was quite useful for people. So I think because of that, you know, people, like, they got a chance and they were able to fix the problem and still have a fantastic, amazing company. They could point to, here is what we're doing. We're letting people put up their personal videos.

And if people upload stuff that's not supposed to be up there, we can take it down. Or then they came out with the master plan, which was, we'll let you. claim it and you can take it down yourself and we'll fingerprint it. And if we have your archive of every SNL episode, signing a live episode, we'll just automatically take it down and flag it for you. You make the decision. YouTube minus stolen content is still awesome. Great business. Yeah. Such is he and this is what being a great venture capital is about is thinking about that decision. How did you play Ace King suited? And how did you play Queens on the same flop? In different situations, the same cards could have radically different outcomes.

And the message, I mean, this is, this was helpful for us, but it's also, I think, an important message for entrepreneurs, which is if you come pitch a fancy venture firm, and we say no, it doesn't mean you're not going anywhere. It means, it means, you're going on the hall of shame. You could be on our anti-portfolio one day. Absolutely. All right. Now I'm going to pass you the tissues here, so you have them.

This is going to be a tough one because this is the, this is the one that's probably hard. So take a deep breath. I try not to look. Don't look. I'll go ready to. Dave Cowan's college friend rented her garage to Sergey and Larry for their first year. In 1999, 2000, she tried to interest Cowan to these two really smart Stanford students writing a search engine. Students, a new search engine?

In the most important moment of Bessev's most important moment ever for Bessemer's antiportfolio, Cowan asked her, how can I get out of the house without? going anywhere near your garage. Oh, my Lord. Oh, God. It's so brutal. I had this happen with Masterclass. You know the Masterclass

where they teach people how to do stuff? Yeah, sure. Yeah. Are you in that one? No. Okay. So I'm sitting with a kid from Masterclass, David, and he's like, he said, yeah, we got,

here's our first masterclass. I was like, well, that's a great domain. I'm, I'll take the meeting. Just if you can get Masterclass.com, that takes some. level of dexterity, right? Unless you're registered in 95, which you didn't. He bought it.

I was like, okay, good get. That's a good get. Show me. And he goes, well, we got Dustin Hoffman. Here's the clip. I was like, that's incredible. How did you get Dustin Hoffman? It's like, well, my dad's friends with him.

I was like, oh, okay. I mean, you're not going to get anybody. It's not scalable. Not scalable. Who else does your dad know? Exactly. And that's exactly what I ask. Is your dad like, you know, Michael Ovid's?

Creative Arts. Yeah, exactly. If he's Michael Ovid's great. But if not, you don't have an Ovid's last name. So I'm good. Thanks. It's not going to work. YouTube. You can type in anything you want to learn. It's on YouTube. And now it's like I would have owned like 5% of the company. It's like a billion dollar company. It would be $50 million mistake.

It's brutal. But you learn from it. You know, when you say yes to only one in a thousand pitches, you know, you don't have to say yes to the best one every time. If you say yes to one that's in the top 10 consistently, you could still make a pretty good return. Yeah, I said no to Twitter, Zinga, and Tesla. Because I wasn't angel investing at time. It was just my friend's companies, and I was just introducing them, but I said no to all of those. To Twitter, Tesla.

Tesla. And Zinga. Well, Mark said, like, Zinga Poker, and I was like, yeah, it's like, how you play this, and not legal? And he's like, when do do virtual things? I was like, Mark, nobody's going to pay you for virtual coins. like poker players are not that stupid. He said, oh, it's not about poker players.

Like old ladies in like Milwaukee. I'm like, that's not what poker's about. Because I was a poker player. So I just like an idiot thought, well, what you're taking the whole dynamic out of the game by not having real money. Well, you know, that's. So I thought when I first heard the pitch for Twitch, I literally said that's the stupidest thing. I mean, watching people playing games. That seems like so dumb.

So dumb. And then my, and then there was very much smarter person than me on my team, Ethan Kurzweil, who said to me, no, no, you have to look deeper because this is a phenomenon and people are doing this and look at the numbers and all of that. Yeah. And as I looked at it, I said, oh. And I placed that bet. I placed that bet. But my initial reaction was, yeah, this is really dumb. And that was a pivot out of Justin TV. Right. Which is another strike against it. because you're like, okay, these guys are just scrambling, right? They're pivoting out of like... They have a few good pivots out of that, actually. That was more than...

Social cam? It was like a fork. They did. They forked it. They forked it. That's a really interesting concept as founders. I don't know why more founders don't pull that off is the fork. It's like we have two great ideas.

They're both working. Let's just literally go after both and take one VP and one president and just two founders. Go pursue both. Has it ever happened other than Twitch and Social. Cam and Justin TV. I don't know another example of that. I imagine so. I don't know.

I just don't know another example of that. But they had pivoted out of that. I knew that that was going to be a thing because I was in South Korea and I was going through the channels and I get to a channel and I was like, oh, is that Starcraft? I play that game. And then I hit the next channel. It's another StarCard channel. I hit next.

There's another StarCraft channel. I was like, wait a second. It's something wrong with the TV and then I was like, no, there's three channels of StarCraft on. What is going on here? And then there were people talking and there was picture to picture. And I was like, what is this? And, you know, when you look at what the behavior is in China and South Korea, they were just exhibiting different behaviors that made it here.

What's the secret to investing in enterprise stuff versus consumer stuff? Like, you have to change your mindset a little bit and think about it differently? Different frameworks? Well, I think what's interesting is that the two are converging more and more. when we're building teams now to build enterprise software companies, we're actually looking for the people who think about UX and experience and onboarding and how do you, because the best companies think like Atlassian, right, where you come in from solar winds, like they're bottom-up enterprise businesses, Zapier, which is one I'm in.

Just had weight on the pod Friday. You, oh, great, great founder. And you're you're really delighting users inside an enterprise. And that's how you're getting in. And so it's much more of a consumer-like motion than going to a CIO with a pitch. And the way you win those accounts is the same way, you know, you get somebody to put an app on our phone and start engaging. Which is. Which is you have to really think about.

this person's needs, emotional needs, other kinds of needs, how to make something super, super, super easy to get a job done. You give that to a person in the best way possible. You have growth hacking teams or data science teams that are A, B, testing different ways of where the paywall should be or what the app should look like or whatever. And you're bringing people on like consumers. They just happen to be employees of enterprises who ultimately are going to pay you six or seven figure subscriptions. If you are an accredited investor, you need to understand what a special purpose vehicle is, an SPV. An SPV is something I use all the time at the syndicate.com in order to syndicate an angel investment.

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A-S-S-S-U-R-E-D-co slash angel. Let's get back to this amazing episode. How did you do it back in the 90s when you were at Oracle? How did you get people to buy enterprise software back then? You could tell the most salacious story. Well, I mean, Oracle is the best example of elephant hunting, rock star salespeople going out there bagging, you know, huge, huge accounts. That was it. That's what that was the play.

There was no, yeah. No bottom up, top down. No bottom up at all. Nobody really wanted to use. It was all sold. Yeah. That doesn't work now, does it? Can you think of an example of that working in today's market?

I can't. Like what's a company in the last five years that it's worked to have like a sales top-down driven culture where somebody writes a 10 sales force, maybe? Well, so I don't want to name names because it's not a, it's not a flattering look. But there are, you know, I see a lot of companies out there who really sell. top down, sometimes some pretty shitty products, but they have the right, they have the right, you know, boardroom connections to get in there to get, you know, boards to ask their chief, whatever officers to look at something. And that, you know, I, that is something that tends to help

you raise venture capital and then you raise VC and then you go do it more and you hire more salespeople. Those are actually really good companies to compete against because the customers are usually not very happy with those products. And so, you know, like you follow them in and you say, okay. They got the Achilles seal. Yeah. Yeah. They sold top down so they don't have the loyalty from the front line that actually uses the product. Exactly.

So, yeah, Salesforce has bottom up and top down. For the big accounts, they have Salesforce. They have a Salesforce, I think. That's Salesforce. Although, I mean, from what I hear, the, the, the, the, the, the, the, the, they have. The product itself is quite long in the tooth. Yeah, they're trying to fix that, yeah. So what they have, of course, is this ecosystem that's just, you know, amazing and unique.

And so it's pretty compelling to use even if it is an old-looking product. Yeah, that is a challenge. When you look at the old products, people get so familiar with them and they have so many hooks into them that even something like eBay or Craigslist from force of habit, like to change. Did you hear Craigslist is making a billion dollars in revenue now? Yeah. Did you see that? That's unbelievable. And it's 50 people work there and a billion dollars in revenue.

And they don't change the website all that often. I mean, they added maps, I think. So when you look at an apartment, it's on a map. That's hot stuff. How do you explain something like that? Like, when do you know to change the interphrase or not? Like, how do you look at a Craigslist as a venture capitalist and reconcile that one? one. Oh, I don't think Craigslist is killing it because they have, because of that interface.

No. It's just they, because it was a, you know, a brilliant value proposition when they started it. And sometimes when you, especially in marketplace like dynamics, it's winner take all. If you're the first one there, like eBay, you're, it's winner take all. There's no way to, there's no way to create, you know, a something that can compete with Craigslist. Now, you know, there are many, many companies that compete with Craigslist in a vertical dimension. and, you know, try to, you know, compete with them in different areas of listing. Yeah, chip something out. But the overall platform and say, we're going to build another Craigslist, but it's going to be better looking.

It's like, that's not compelling. I want to go into the environment where somebody's actually going to respond to my ad. That's the most compelling feature. When is the right time to sell a company? Because I remember Dropcam, which you were an early investor in, I believe. Yes. And they sold, I think, for $500 million, right? to Google. And I was like, yum, yum, and I had heard about it and I was trying to invest in it, you know, long before the 500 million. And I just thought, my God, that is going to go to the moon. The founders come to you and they say, we got a 500 million dollar off. You did the series A or B, I assume? Seed. You did the seed of? Oh, my lord, of Dropcam. You did the seed. That's like a $5 million round. It's 100 X.

Maybe two or something. Oh, okay. It's like a 200 X investment. My lord. I think it was 100. I think it was 100 or something. Wow. That's incredible. But they come to you and say Google wants to buy it. Yeah.

What is the conversation like back then about should we keep going or not? Now that was, I think, 10 years ago versus today. Would the advice have changed? You said the game keeps changing. You got to adapt. Would you have given them the same advice? Did they sell too early? And how do you manage that with founders who, I think they were,

first-time founders. I'm pretty sure they came out of another startup. I forgot which one. They weren't PayPal people, were they? No. They were out of some other startup. I don't remember. Yeah, but how do you have? Greg Duffy. Yeah. I remember those guys. I met him. I was so taken by the first version of that drop cam. I loved it. Yeah. So, well, well, you make that decision to sell. Okay. Well, I, I have less wisdom with respects specifically to drop cam because I wasn't on the board of that company. But I, but, you know, I did talk to Greg along the way. and I've been involved in a lot of companies where we did sell. And unlike a buy decision, a sell decision is not one you can look back on and say,

was it the right one or the wrong one because you don't know how the other path would have come about. The alternate universe is not available to you. Exactly. Now, having said that, I sold Twitch way too soon. That one was a mistake. That was $8.50, a billion? It was a billion. Yeah.

And to Emmett's credit, he was not a big seller. And we should have listened to him because that would have been worth at least 10x if we held it just another two or three years. But in the case of Dropcam and in the case of like many other companies I've sold it like half a billion or more, including Skybox and others I can think of, I think it was the right decision because we were getting a strategic multiple for a company that. that really was not in a position to generate that kind of financial value anytime soon. There was still so much we would have had to do in order to build a company that would be worth $500 million that would be valued at $500 million by, say, some Wall Street investor who doesn't care what we're making and is just looking at the financial aspects of the business. So that's the lens.

The strategic is looking at it. They have their own thesis, which is, hey, you're part of Amazon. you're part of Google, we can do something. In this case, NEST, in this case, building out the NEST portfolio. Right. And Dropcam really has become kind of the anchor of the NEST. Absolutely. Home automation thing.

Yeah, I am all in on NEST, yeah. Yeah. By the way, I'm not, I mean, Nest, of course, is part of Google. And I'm not quite willing to get to acknowledge that passing on Google was a mistake. I think the jury's still out. Yeah. But we'll say. Yeah, I still think it was the right decision.

It's hard to hold, isn't it? Like selling and buying shares in a seed stage company, pretty easy. You know the maximum you can lose. You put in 500K, a million, you lose a million or 500K. Selling, you get a – when it's a big number like you're saying, and it's disproportionate to what Wall Street would value it based on a price-to-earnings ratio. Yeah, okay. You beat what the street would have paid.

And we got a lot more work to do. But holding. Ooh, that's the hard one, isn't it? Yeah, well, so and holding also after you go public. Would you hold after a public offering? So you got an anecdote there. Let's hear it. I can see it in your eyes.

You know what? I see it in your eyes. 50% of the time, we sell at the right time. We have, like we're pretty good at picking private companies, but picking public companies. That's, you got to. What's the one that's had the best run post your investing in it privately? Shopify. Yes.

Toby. Yeah. I interviewed him up. Where is he in Ottawa? Yeah. I interviewed him back in the day when it was like a hundred person company. He was on the podcast. And that has gone supernova.

Yeah. Yeah. Wait, you're saying you held or you didn't? No, we didn't. We didn't hold. We didn't hold. So, I mean, we missed the 10X post. Yeah, I haven't done the math.

But that's, and I haven't, you know, there may be others in our portfolio that are worse, but that one's just kind of recent. So the wound is still fresh. I'm just going to push these Kleenex a little closer. No, I mean, I am doing the same thing with Uber. I still own, I like about half my position. And, you know. Oh, poor you.

Well, and everybody's like, are you selling? Are you selling these other early stage investors are texting me? And they're like, you know, high profile. Are you holding? Are you holding? I'm holding the other half. I made a decision in my mind. I sweep half by houses, you know, have that foundation safety.

Yeah. Put it in bonds. The other half, I believe it's a 10x from here. I don't know if that happens in five or 15 years, but I think it's worth holding. So that doesn't really work for VCs because we are, we're either in or we're out. If we're in, we're going to be on the board. We're going to be actively trying to help the company. And if I'm going to sell half, am I still going to do all of that.

I'm either going to do all that work or I'm not. If I am, I want to be still in it and benefiting. So I understand that because when my guy, TK, left and now it's DK. I was like, I think I'm out. But then Darra, I started to like warm up to him. I'm like, I think that like the apology tour and the like clean up the mess tour and really listen deeply to Wall Street is working. And the path to profitability is pretty clear.

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Thanks for support on the pod. And let's get back to this amazing episode. What do you think of the anti-tech backlash? When you and I came into the industry, I came into the industry in the early 90s as a journalist, people were pretty enamored and enthusiastic and rooting for the nerds and rebels of Silicon Valley. And now they're just dunking and hating

and hating everything. What went wrong? What went wrong? What did we do wrong? What do you think of this press like just constantly anti-everything? Yeah, well, I think... Because you're pressure. You don't do a lot of press.

And thank you for coming on the pot. I know you're not like a big, like go on the dude speaking to us and press stuff. Well, you know, I think we're going to maybe talk about this in a little while when we touch on bubble proof. but, you know, I think that we deserve it, okay? I mean, I think Silicon Valley, like, in many ways is much worse than anyone thinks. I mean, we are really living in this bubble and, you know, I see it every day when people are designing products for billionaires instead of designing products for people, everybody else. Yeah, civilians, as we say in the business. Yeah.

A little condescending, I know. Yeah, I don't, anyway, and I think that, you know, the way that we, you know, many people flaunt wealth and the way many people talk about the inevitability of our success and our genius, I think, is quite off-putting appropriately. And I think so there's a little bit of, I think, humility that needs to, uh, needs to. to come to Silicon Valley. I think, and then of course, you know, there's the fact that we really, you know, through the, I think Facebook is, of course, getting the brunt of the anti-tech backlash because of, you know, their alleged complicity or recklessness in the 2016 election. I think, you know, that's somewhat, personally, I think that's somewhat well-deserved.

I do. I mean, if you think about it, he came into the industry and I thought when I first met him, like I met him when it was still just on college campuses, Mark. And I was not impressed by him. And I felt like he was not really thoughtful, right? And you meet some people. We get to meet some really extraordinary people in the position we're in. And I thought, this is one of the least thoughtful people I've ever seen.

or ever talked to. And his philosophy was move fast and break things. And it remained that, even when the business started to get to scale and have a lot of power. And at some point in my career, a very close friend of mine who was in elder statesman pulled me aside and said, hey, schmuck, you made it. You can stop fighting and stop swinging your elbow because I was a fighter early in my career as a journalist. And I changed my game a little bit. I said, you know what, I'm not going to pick fights every day in my life and be crazy. And I think Mark never changed that, move fast and break things when he got to hundreds of millions and then billions of users.

You got billions of users and you start breaking things. You know, you may break democracy. You know, you might break a bunch of dissidents in a foreign country who are going to be murdered and tortured and reeducated because you're handing over their information. Like, you've got to take the work more seriously than when you have a billion than 100. In 2016, I went to Facebook to the campus to meet with the people in charge of news to say, listen, you've got to do something about this. And I gave them a path. I said, listen, forget about trying to find fake news. You can't find fake news because news, you don't know if it's

fake, but we can start vetting the sources. And we can vet whether journalists are following the rules of journalism, just like scientists follow the rules of science. They're scientists who do, and they're those who are not scientists, and they don't. Scientists can be wrong, but they're still valid scientists if they follow the rules of science. Same thing with journalists. Journalism, you can't, you know, people, now people don't like stories and they say it's fake news. It's only fake news if the journalist didn't do his or her job right. And we can actually audit journalists and see if they're doing their job right. It's not that hard. And we can even do it in an open way on Wikimedia where you take news, whether it's print or podcasts or whatever

it is, scrutinize them publicly and say, are you following the rules of journalists? Great idea. And I got the Newsium, which is the News Association, to say, we'll do it. Like, we will run this. And I said, Facebook, Newsium's ready to do this right now. All you got to do is put a little badge on the ones that get vetted, okay? Yeah. And it'll cost like $10,000 per audit.

It'll cost nothing. You can take the top 200 journalist sources in the country. Amazing. And then people will see the badge. And those are the ones they'll share. Those are the ones you put in the feed. don't censor anything. Anybody can print anything they want,

but we're just not going to give them the badge. Just like an audited financial statement, we're going to say we checked, not that these numbers are right, but that you have controls in place and that you have an organization that corrects itself and has controls. We can do that for journalism.

And they said, no thank you. And I went back again in 2017. I did. Newsium was ready to do this. I went to, Newsium said, we'll do it. And then I went back. back in 2017, I said, it's getting worse. Do it now. And they said,

you know what? We just did a test and, you know, users didn't like the idea of vetting sources. And I said, did you tell them it would be done openly and publicly with like open rules? Yeah, sunlight. They said, no. I said, well, do it again. They said,

well, we already ran the experiment and Mark, like we already told Mark that it's not going to work. The God King. We already said thumbs down. I said, well, go tell them again. You didn't do it right. And they said, no, I'm not going to do that. He's got sycophants around him. I think it's a big problem when you get powerful and rich and people are depending on you

for big chunks of cash, man, getting the truth is hard. It's hard, right? I mean, this is where a lot of leaders go wrong. They can't be told the truth. The people around them just won't tell them the truth. Who's the best leader you ever worked with? When you look at these, like on an entrepreneurial level, just people who you were so impressive, whether you invested or not.

So there's like two models. There's like the founder and the CEO. In terms of the CEO, it's Jeff Weiner at LinkedIn. That guy, he killed it. And he managed to somehow take all these different, you know, he hired great people. And he, you know, like fought multiple fires at once on multiple fronts. And he was, and I thought he did a great job. It wasn't clear of a business model, right?

The business model was not clear. They had, and the site was slow. The architecture was terrible. And he went in there and he said, I'm going to be the product. manager. I remember he was on the pod and he told me, I'm going to fix the product myself because it's not getting fixed. And, you know, we talk about consumerization. You know, I'm going to put like pictures there. You know, we're going to, but when he came in, there was still a concern that Facebook was going to roll over us and do professional social graph, right? And he did a great job there.

On the founder side, it's got to be Peter Beck. I'm sorry to all the other founders I work with. You're all wonderful. I love you all. I just want to be. I just want to be. I just want to shout out to Peter Beck at Rocket Lab, because that guy is, he's all about the mission. What, explain to me what Rocket Lab does? Rocket Lab is, as he would say, opening space for business. Rocket Lab has developed the world's only small payload rocket, which means that it's not about size, it's about frequency and reliability. All the rockets in the world before were all made bigger and bigger and bigger to deliver

school bus-sized satellites to geosynchronous orbit. Super powerful, super huge. It takes six years to build the rocket. It takes $500 million to a billion to buy the rocket. But today, what we want to put in space are not these huge mainframes, but networks of tiny little cell phones, if you will, that are disposable.

But you can use cell phone parts and you could make them super, super cheap, and you can ride Moore's Law as they get better and better. a totally different model for space, but it doesn't work with the big rockets. You need rockets that can deliver lots of small satellites every week when you need it, where you need it, pinpoint, and that's exactly what Rocket Lab. Just in time rockets. Just in time delivery to space.

These are for these low Earth orbit, like their sizes of like a small car, lunchbox? So this Kleenex box here is like probably about maybe two-thirds of the size of the most typical cubesats that are going into lower orbit today. Think like a toaster. A toaster. Like a the long day. Yeah. So Spire Global, for example, and Planet, those are the two largest constellation.

Yeah, I think now they call themselves just Planet. So Planet and Spire the two largest constellation, CubeSat Constellation operators. They're both toaster size. One of them looks at the Earth. The other one listens to the Earth. The one that I'm invested in Aspire Global, we track ship. ships, planes, and weather, and we're adding new applications all the time. Ships, planes, and weather.

Why? So hedge fund folks can like trade on data? For weather? Well, yeah. I always hear that that data is really valuable to people who are trading the markets and making bets. So definitely financial sector is a customer for weather data, but it's actually the larger customers are in agriculture and logistics.

So where do, you know, and also to some degree disaster relief trying to figure out you know, where to put. Any of those three-letter agencies, like those kind of satellites? They might. We're generally focused on commercial, not military applications. And the other, and the other, of course, so not three-letter, but four-letter, because NOAA is a very big customer. Noah used to get all our weather data from American-built satellites in space,

and Congress really starting at the, during the global financial crisis, put an end to the United States building our own weather satellites and said we should start buying commercial data. And Spire is today the largest collector of weather data in space. Yeah, Michael Lewis did that whole little short book on weather and data and just the Trump administration just gutting that agency at some point. It was just super scary. He did a little micro like book for Audible. Zapier, how did you meet them? It was.

You realize the company's getting huge. Are you on the board of that one? Well, we don't have offices. We don't have a board. So, you know, Wade and I get together every month. That's the equivalent of a board meeting. Wow. The, the, I don't remember exactly how I met Wade. It may have been Sneal Nagaraj who introduced us or maybe James Cham. I think I should shout out James Cham at Bloomberg when he was working at Bessamer. Anyway, So, you know, I met, I met Wade and his co-founders. And it's all distributed a couple hundred people now. He told me he's over 50 million in revenue. He was just crushing it for this company that makes this middleware, this no-code stuff. How did you know that was going to be a good investment?

Because that was not an obvious one, that there would be a business model or that no-code or that these APIs would take over the world. It's a little embarrassing my line of thinking, which was that I was wrestling. I was trying to figure out home automation in my home. and I had cameras here and music, sonos players, and I had different things. And what I really wanted was information from one system to do something in another system. Right. So this ifth thing was really, really neat. And so I started, so I thought this ifth thing seems like this is really a useful way to integrate systems if they have APIs and you can, you can,

build this other layer really, really easily. And then Wade came along and said, that's what we're going to do for the cloud. We're going to do this for business. That's like no-branner. And I thought, okay, it's probably a better idea than doing it from my house. Absolutely. I mean, home automation is tiny, but like it's now taking over business. So much of our business today and so many of my startups are like, yeah, we can just use Zapier for that.

Zapier. It'll make you happy. Just make a zap. Just make a zap. We'll just pipe it from here to there. And I had the same experience. If this and that and Zapier, we're both out at the same time. And I don't know if you remember, but Twitter and Instagram got in a fight, and they wouldn't let Instagram photos embed on Twitter.

So you'd have to post a photo on Instagram, then post it on Twitter and save the one with the filter. Or you could zap it. Or you could zap it. And it was like they'll just automatically crosspost everything on Twitter. Great. You're saving me like, I'm doing like three or four of these photos a week. Great. Saving me time.

But that's like one of those crazy, non-obvious ones where the market showed up later. And I think Zapier is actually playing an important role in the ecosystem because it's really making it easier for enterprises to buy best of breed SaaS applications, knowing that the integration is pretty easy because they can just zap it, as opposed to having to buy, you know, a broad SaaS app, like an ERP system, which is what enterprises used to do. One system to unite them all. Yeah. Like was this crazy idea and you had to have all these developers doing it. Now it's like, oh yeah, yeah, if somebody like asks us a question. in our, you know, question form, we could just pipe it into this, you know, air table or this, you know, Google sheet and put it into Slack and put it into Zen Desk, whatever you're using.

When you look at who makes, we asked this question earlier about who's making good venture capitalists today, is it growth and product people? Because I keep seeing growth and product people showing up. And it used to be that product people, and I'm just sort of stitching together, some of these you said here. It used to be top-down sales, and I think a lot of salespeople became venture capitals back in the day, and a lot of finance people did. Okay, that makes sense. That's what we drove the industry.

But you just said it's all bottom up now, and it's all product design and growth. So is it what drives business is what makes you qualified to be an investor? Like that skill set? So there are different kinds of venture capital. And one thing I think it's helpful to do is to talk about the two. two different asset classes. We call them both venture capital, but there's old venture capital, which I still do, which is trying to figure out what businesses are going to work.

And it's hard. How does that work? That's like intellectually saying there should be something here in this open plot of land. There should be something here? Yeah, there's different ways of doing it. Some people do it without really thinking about the business too much, but latching themselves on to brilliant founders and saying this is a great founder. I don't really understand what she's doing, but I think I want to back this person.

And then there are other folks, I think like me, who approach it as mapping out new areas and trying to think there should be companies that do this, this, and this, let me go find them, right? And that's a different way. But that's like old venture capital. And because companies now get much bigger before they go public, the venture capital community has grown up to fund companies through much, much later stages when they used to be public.

And now most of the dollars in venture capital clearly are going into these big checks in companies, unicorns and others, and most of the dollars are going there. And it's a very different thing because in these companies, you're not asking, is this going to be a successful business?

You know it's a successful business. The product market fit is there. People are already saying, don't take this away from me or I'll kill you. and the subscription revenue is doubling every year. And you don't really have to be a genius to figure out that this is a good business. So it's more about winning the deal. And what can your venture firm do to help this company and make them feel like you're a good partner?

And it has to do with how quickly do you move? Do you have good terms, but also after you invest, do you have firm resources that are going to help us with recruiting and marketing and other things? Do you have an ecosystem of other entrepreneurs I can talk to and learn from? Which do you like better? You like the early stage, more artistic bespoke process? Or you like the later stage? Personally, I do the early stage. That's just what gets me up in the morning.

I am interested in, if you look at what I'm investing in, it's in robots, quantum computers, and space. And none of those have really yet got product market fit. No. I mean, robots and factories are crushing it. Robots outside of factories, you got the Roomba. I got CafeX, which figured it out, but that's been a lot of work to figure out just how to make a robotic Starbucks or Dunkin' Donuts. It's a lot of work. Hardware's hard.

Quantum computing, is that real? Quantum computing is definitely real. Why do people say it's not? And why do people dismiss it? There's a group of people who are like, this is ridiculous. So there are people who say quantum computing is not real. Those people are forming those opinions based upon very old information. There is absolutely no doubt that there are many working quantum computers in the world today.

They simply aren't yet big enough to do anything commercially useful. Sounds familiar. But the number of entangled cubits that we can get keeps rising every year. The number of entangled cubits without too much error coming out of it, I should say. is rising every year. And when that number gets up to maybe 100 entangled cubits or 200 entangled cubits, we will have computers that are not just more powerful than the most powerful supercomputers on Earth, but a thousand, a million, a trillion times more powerful, you know, easily. What is a qubit for people who don't understand what that is? I mean,

I've heard it's like a three-state moment. You can be, instead of binary one and zero, you kind of I've had three states, either it's one, zero, or not. So it's so weird. It's so crazy that, you know, it's just, it's hard to believe. And this is why Einstein didn't believe it. But it's unlike a bit, which either has charge or it doesn't have charge. So it's a one or a zero because it has charge or it doesn't. And it flows through a circuit either with charge or without charge.

A qubit has both. It is both zero and one at the same time. It's not one or the other, but you don't know which one. it is. That's actually, if you've heard that, you, that was somebody. It is actually both at the same time. Right. Because that is actually how the universe works. Until you measure something, it does not have a value. Spin, charge, location, velocity, it doesn't. And so we, so if you isolate a particle and you don't measure it, which means you don't interact with it in any way, it's like the cat and Schrodinger's box, then it actually is not zero.

zero or one. And you can pass it through the circuit along with the other zeros and ones if they're entangled. And you are simultaneously processing all possible combinations of zero and one that are flowing through that circuit. So it's a massively parallel computer. And if we can get a hundred cubits all entangled flowing through a computer like that, then every time the circuit operates, it's actually operating two to the hundred times. Crazy. So you're going to literally have it be able to crack the deepest encryption that binary computers made. Yes, eventually that will happen. It's going to be a hell of a year. But there's, don't worry, that's like, there's quantum, there are algorithms that quantum computers won't be able to crack. We'll have to, we'll have to swap out the old ones and put in the new ones. And for five years, everyone's going to freak out and it's going to be like Y2K, and then it too shall pass.

It too shall pass. I just want to know what Jimmy Hoff is buried, because once we get that, we're going to crack into The CIA will figure out where he is. He might be still alive. He could be living somewhere. So he said, robotic. What are you doing in robotics? I think I saw him on the Muni, but.

On the muni? Could be wrong. Could be wrong. He was talking to himself. Robotics, which, where are you going for robotics? You're into the Boston Dynamics kind of stuff, out of the factory, in the factory? So mostly, mostly two kinds that I'm, that I'm most interested in. One is flying robots, so drones.

Oh, yes. And then, and the second one is using robots for food production. Okay. Are you in Zoom? Are you in? anything specific? Nope, I'm in, well, I am in one that I'm super excited about. It's called Forever Oceans, and it's a, it's a robotic fish farm.

And we use robots to farm fish. And because we do that, for the first time, you can put farms in the ocean. We submerge the cages 15 meters below the waves. And now the fish are, you don't, you don't disturb the cages. Current goes through, so you don't have to worry about antibiotics. So there's no antibiotics. Oh, they're not pouring gallons. of antibiotics into the water, which is what every farmed fish you've ever eaten has.

I know, it's a big problem. And it turns out that 99% of the liquid water on Earth is in the oceans. And so by doing this in oceans, we can now actually scale up fish farming with the healthiest fish you've ever eaten. No mercury, no antibiotics. And robots, it collects the biggest fish when it's the right size. The robots do different things. They do things like in case any fish die, they'll take them out so they don't infect the other

fish. They'll clean the cage, so there's no biotic material. we have systems that feed the fish. We have an AI that measures fish happiness. So it watches the fish 24-7 because, look, a happy fish is a tasty fish, okay? No doubt. And they grow faster, they don't die. And so we have an AI that trained by a fish biologist from University of Virginia can tell you if the fish are happy.

And if they're not, then we can deal with whatever predator or intruder or storm or hunger, or whatever it is that's bothering them. What do you think in the, you have drone deploy, I know that one. Yeah. That's doing, like, checking railroad tracks and stuff like that. They automatically deploy and come back. Like, they do sorties. Is that what they're doing?

So, you know, people have been saying for a while, oh, look at all the things you can do with a drone. You can fly it up and look at a roof for solar. You can look at railroad tracks. You can look at construction sites. You can look at your farms. You can do all that. Well, that's all true. If you know how to pilot a drone, you know.

you know how to collect all the images that you take and then stitch them together into a map and then you know how to look at those images and actually get any information out of them. So it turns out that those things are actually hard to do and what drone deploy does is it does all of it for you. So you get your drone, download drone deploy. With your finger, you map out what you want to look at.

It automatically flies the drone for you, collects all the images, puts it together, it does a 3D rendering if you want, and then it has analytics, so it'll look at things like crop health or how many cars or like whatever it is you're trying to look at, and it'll do that for you, all automated. So it's like the, I mean, I think it's the most interesting, you know, commercial enterprise software company for drones. It's really, I mean, it's, I'd say most of the market maybe.

I mean, it's doing very well. What do you think of these V-TOLs that Larry Page is investing in? I want one. It's going to work. I want one. It's definitely going to work. It feels safe to me. I mean, tragically compared to helicopters, like having eight rotors and they're doubled

up, so you have 16. Yeah. You know, they're pretty fail-safe. And I don't know if you've seen these videos where in China they're like taking sticks and whacking some of these drones to see if they can get them to recover and destabilize. And it used to be that you'd whack it and it would like, now you whack it. It's like, it just instantly gets back into place. You're like, whoa, that is scary.

So I don't really have the Cajonists to invest in them right now because of the regulation. I mean, we talked about regulation earlier. They will be allowed at some point. There's just too much value in them. But the FAA moves very, very slowly, very cautiously. And like if we're not even, they won't even let a little quadcopter, you know, bring you a, you know, a burger. They're not going to let these VATs. talls fly people around for a very long time.

It's, you know, it's one of the things about regulation. They're incentivized by, you know, the tragedy, not the overall win, right? And I think is why China, if you look at self-driving, like authoritarian regimes, like, they're going to have self-driving and veto's first. And there's this company in China doing veto test flights right now in China on Hong Kong and everywhere. And it works. And it's impressive to watch a human.

get in a quadcopter, you know, or maybe they have, I think they have eight rotors on this thing, and they're doubled. So I guess that's 16 blades. And it looks smooth as butter. I think they're going to be the safest form of travel, like including cars, buses. As someone who lives in a very, very wooded area of California, I'm, I, for me, it may be the safest way to escape a wildfire if you're in a place with a wildfire. Absolutely. Yeah. If you're in Napa or a woodside or something and something goes on fire, you could just go straight up. Yeah, because otherwise, I don't really know what I'm going to do. You don't know where the fire is. You don't know which direction to go. And with one of those, Zippity-DUDA. It's going to work. I'm super bullish on those.

I think that, I think those can arrive before self-driving, in fact. Well, I don't. Overwater? Again, I just think the right, I think it's just, the FAA is very cautious. And there are all kinds of, there are all kinds of issues with flying people around in these machines, including, for example, even setting fires yourself. If one of those things crashes, it will start a fire. Yeah, that's possible. So there's all kinds of things that can go wrong. I see you got it to Smule. That's a great company. I had the founder on. I've been practicing guitar. I got a Mark Knopfler like a fetish right now. I'm trying to learn how to play electric guitar like Mark Knopfler. And Smule is just on fire. It's dear to my heart,

that company. You like it? Yeah, I'm a user. I love it. Oh, really? What are you, a piano? I'm a singer. I sing in an a cappella group. I heard that. And they just released a singing product, right? Well, it's now the main product is now sing. It's a karaoke product, social karaoke, and you actually sing in duets and groups and you can sing your part. And we bring together, you know, we bring this together into videos of people singing together. People are really into it. It's about social music. It's not just about doing it yourself. I was just thinking about musician, which I'm using for guitar, not Smule. I just juxtaposed my mind. I don't know. Have you have you seen musician? No.

Musicians is a great iPad app. You put it up, and as you play guitar, it hears the chords and tells you if you're doing it right and tells you how close you came. Oh, that note was too early. That note was too late. That note was right on time. And you play these games and you're fingerpicking the board. It's awesome. Yeah, it's pretty cool.

All right, listen, I can keep you here forever and a half. If people want to meet you, should they go through like your, oh, oh, by the way. you did your own well end with this when we go to break but just in terms of people contacting you do you have like a bunch of rules for people contacting you and they have to go through one of your founders or you got to go through a friend or can they just

email you a pitch if it's great like do you open emails when people send an email or are you anti-opening emails and I get a lot of emails and I have a hard time going through them all LinkedIn is a good way I invested in LinkedIn so I try to stay active in that community

so that's a good way to reach All right, I like it. Now, what is bubbleproof? You made a documentary, a mockumentary? What is this? Yeah. So, yeah, so this is a, there's a, there's a, a webisode series called bubbleproof that Michael Ferdick and I made to, you know, honestly just poke fun at Silicon Valley.

It's kind of like a more, it's like HBO Silicon Valley, but more inside baseball. People outside Silicon Valley watch. it and say I don't get it. People inside Silicon Valley think it's, they tell us it's kind of funny. So go to bubbleproof.tv to watch it. There's a, the first season is out,

10 episodes, and there may be a second season released very soon. You did this yourself. You funded it yourself. You didn't go to Netflix. This is just like your passion project. This was, yes,

this was a passion product. The motivation was not profit. It was to, it was to amuse and inform and warn. that Silicon Valley is much worse than you think. On that note, David Cowan, thanks for coming on the pod. You can follow him on the Twitter, David Cowan, C-O-W-A-N.

He's a partner at Bessemer Venture Partners, and here we go. He is Silicon Valley's most intoxicating innovator. I'm Michael's closest confidant. You know, we go juicing. I'm a grapefruit juice man myself. One of Silicon Valley's brightest stars shocks the international business community by walking away from innovation entirely. What does Garfunkel do when Simon moves on?

What does he qualified to do? I'd rather be a spare. It seems the question everyone wants the answer to is, what's next? I know I want the answer. We're going to start a fun. Venture fun? I raised $260 million for you. Is that a lot?

We're back. I'm back. I'd been Michael's partner. now I'm his mentor So we're ingratiates Smart Farmouts Lockley This is Palmsy

Jail away Expectation We are huge hands We love hearing that Oh um Yes Huge fans of yours too You and Bessemer by extension

Have seated unprecedented amount of control to Michael Seems like everyone's talking about it You know even the partnership I'd like to invest $3 million dollars in your company Don't you want to see our deck?

Were you thinking more like $3.5 million? So you're saying you want to do more deals faster until the fund is depleted? We have already made four more investments this morning, $24 million in totals. I'm thankful to Michael Ferdick. He's terraforming. This is what Silicon Valley needs. There's overwhelming consensus that the tech bubble will burst. This could be like the dark ages.

The world goes. hungry. The world goes hungry. The press is right. This fund is off the rails. Okay. How much time do I have? I'm an airbag. I'm an air pod, dude. I am mentoring very, very hard. What makes heroic ventures so special is a partnership that is beyond a partnership.

is beyond a partnership. It's more like a brotherhood between us. When we finish each other's... Yeah, yeah, exactly.