This Week in Startups - Evaluating founder ambition, tools vs platforms + USV's Albert Wenger: post-capital world | E1569

Episode Date: September 25, 2022

First up, J+M discuss founder ambition and tools vs. platforms on VC Sunday School. (3:06) Then, USV's Albert Wenger joins to break down his firm's $162M climate fund, his book "The World After Capital", and more! (24:16) (0:00) J+M intro today's topics! (3:06) Evaluating founder ambition, tools vs. platforms (11:14) OpenPhone - Get an extra 20% off any plan for your first 6 months at https://openphone.com/twist  (12:48) How investors evaluate tools vs. platforms, and when/if something is "too hard" (19:50) J+M tee up today's TWiCS guest (22:50) SnackMagic - Get 10% cashback up to $1000 until October 15th with code HOLIDAY, and see more at snackmagic.com/twist (24:16) Molly welcomes USV Managing Partner Albert Wenger to discuss USV's $162M climate fund and the climate crisis investment opportunity (33:26) Coda - The All-in-one doc for teams, get a $1,000 credit at https://coda.io/twist (34:57) Albert discusses his book "The World After Capital", and the human attention problem FOLLOW Albert: https://twitter.com/albertwenger FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood Subscribe to our YouTube to watch all full episodes: https://www.youtube.com/channel/UCkkhmBWfS7pILYIk0izkc3A?sub_confirmation=1

All right, everybody. It is Sunday. Good morning to you on Sunday. I hope you're having a restful weekend. And we've got some great content for you. If you're going to hiking, Molly, bike rides. We're just sitting on the porch watching your hummingbirds. Any of those? I guarantee. That's what I'm doing right now. Pretty much. We have, however, we have content for you. We have a great VC Sunday school. We talk about founder, ambition, how to evaluate it as a VC. What questions to ask? And it's actually through the lens. It's like we're combining startup of the day and VC Sunday schools through the lens of a block party, a tool that just raised a $4.8 million seed round. Yeah, congratulations to them. And should founders be building tools, platforms going for the goal, replacing existing platforms, how do you make that decision? How do investors make that decision of what to back?

And we go through all the permutations of how VCs, seed investors, and founders think about this topic. And then I have an investor on this weekend climate startups. I'm interviewing Union Square Ventures Managing Partner and author of the World After Capital, Albert Wenger. We talk about his investment thesis, the new, relatively new climate fund that Union Square Ventures has raised. The book where he sees the climate industry going, where he sees the world going, it's a very unusual and philosophical conversation with the VC. The world after capital is just like he made all his money in VC and now he's a hippie and wants to go for socialism? Not capitalism. Capital.

Like the idea is in this book. the thesis is that effectively we've solved, like capital is abundant. Got it. But attention is not. And so he's talking about this transition to a knowledge age. Love it. And how to sort of get there without massive disruption. It's really, it's a really, I loved this conversation.

I've always wanted to tap Albert on the program, but I don't know. I don't think he likes me. And so we finally got him on the program because you're here. I love it. I'm joking. The system is working. The system is working as we planned. It's going to be a great show.

Stick with us. This week in startups is brought to you by OpenFone. As a startup founder, a lot of mistakes are easy to roll back. But using your personal cell phone number as your company number isn't one of them. OpenFone makes it easy to get business phone numbers for you and your team, right on top of your existing devices. Visit openphone.com slash twist to get 20% off your first six months. Snack Magic and Swag Magic are global gifting platforms and the most stress-free and customizable way to delight employees or customers.

Get 10% cashback up to $1,000 until October 15th with Code Holiday. And see more at snackmagic.com slash twist. And Coda is the all-in-one dock for teams. If you've got a stack of niche workflow tools or if you're buried in docs and spreadsheets, Coda is the doc that brings it all together. Startups can get a $1,000 credit at coda.io slash twist. All right, everybody, it's Sunday. That means VC Sunday school.

This is, I'm excited about this one. This is like a little bit VC Sunday school. We're starting to mind the news a little bit because this is a half VC Sunday school, half kind of startup of the day seed funding news. So this conversation started in our group chat when we were talking about this new startup called Block Party, which is built on top of Twitter's API.

It lets people automate and customize the blocking process, basically just make it easier to create a livable environment for yourself on Twitter. So Block Party raised a $4.8 million seed. It was developed by this engineer, Tracy Chu. And Jason said, in response to this, a nice interface on Blocklist is a great start. Maybe you'll find 1,000 people who will pay $100 a year for it. But then you said, she should just build a lot.

a competitor and grow for the gold. And my initial response was to be like, well, yeah, but building on somebody else's network effects is a really straightforward path, which is not what a VC should say. Right. So Tracy's awesome. She's been an advocate for, you know, and was just early on to this problem. So congratulations, I'm raising the money. And the product looks awesome.

Yeah. I mean, I want to use it. Yeah. When you look at a problem on the internet, you can look at the problem of like, okay, there's a group of people I don't want to have to associate with in a social network. Great. That's a real problem. And oh, here's a very elegant solution. Twitter has block list, but they probably haven't updated the technology in five or ten years.

So a block list for people who don't know is if Molly had blocked 50 people who were harassing her, she could give me that block list. I could upload it. And then I wouldn't have to go manually through blocking all these. I know this because you put me on their block list. And all of a sudden, a bunch of people said, I can't see your tweets anymore. I was like, I think you blocked me. I didn't block you. Oh, I used a block list.

So these block lists, like they serve a purpose where if Twitter can't keep up with the brigating, whatever it is. So awesome. And I do think like tools, if you look at tools, whether it's buffer, social media tool, we've invested in them. We had Little Bird, rating six. There's a bunch of tool companies out there. So tool companies can become platforms. and that's a great path. Maybe that's the path that she has in mind.

But when you have such insight like she does on what's wrong, sometimes trying to fix, I don't know, the internal combustion engine as an example, the time it takes to make it more fuel efficient to lower emissions, you can work on the muffler, you can work on that stuff, that's all fine. Sometimes you say, you know what, maybe I'll just make a new car. Maybe I'll make a new form of transportation. Maybe I'll do something even more disruptive. So that's a lot of money.

$4.8 million. I think, you know, if Tracy's heard with the tools, and sometimes I tell this other founders, well, can you even solve this problem on Twitter? And now you've got the risk factor of being on Twitter. And what's the outcome? What's the best case here? You know, a 20x for your investors, a 50x, you know, that might, which is a great return, you know, for a series A firm. I'm sure they'd be happy with it. Yeah. So sometimes I'd just like to have a conversation with the founders of, okay, what is the, from first principles, the problem we're trying to solve here, online interactions can be toxic, right? That's the core problem, I think.

Would be, I interpret it. There are toxic people online. Well, okay, so you can block them and you can more efficiently get rid of them. Or you could take a mental health break. I thought from the screenshots, that was the coolest thing. I need a mental health break. Like, just stop letting people come at me, which I have actually experienced recently. Like, enough.

But from first principles, like, if she built or her team, and her built a new version of Twitter and then invited the first thousand people and made it paid. Okay. You know, and then maybe gave a rating based on how reasonable

people were or something. Just go for the gold and build a Twitter competitor. It's time for somebody to build a Twitter competitor. And where this gets at BC Sunday School is this question of founder ambition, right? Not in her case specifically, because again, we don't know what the, We don't know what the pitch is, the end result of the pitch, the last slide that says this is the ultimate goal here.

But it does lead to this question of sort of like when you're talking to a founder, how do you evaluate? It's a little bit of the like power law, Sebastian Maliby thread, right? The thread throughout that book, which is how do you identify an outlier versus somebody who wants to build something perfectly good that could have perfectly good returns, but not outsized returns. I talked to a founder the other day who was like, we think we could become one of the biggest companies, if not the biggest company in the world. And I was like, love that. This is where people get into conversations about TAM.

So total addressable market. What is the total addressable market for a tool built on Twitter, a tool built on Instagram? The tool built on that platform, their TAM is a percentage of the total users on that platform. And then you can narrow that TAM. The total users on that platform, platform who are English speaking, let's say if you're going to start in that world, or have

a credit card or pay for software, right? So it might be that 70% of people in the world just don't pay for software, right? I think that's probably true. They just don't want to pay for software. They'll just take the free option every time. So if it's, I don't know, if the U.S. and that's your B-Chet is 50% of the market, and then you're 30% of that market, your net, net 15% of the overall Twitter user base, you know, and then how many of them have this problem. Okay, maybe it's 10% of those have the problem. So now you're at 1.5% of the platform needs this tool. Okay. So will more people need the tool in the future? But you have to have like a thoughtful discussion about what is the Tam. And what's the upper bound of what people would pay.

I said there's a thousand people pay $100. Like I'll pay for any Twitter tool for a hundred bucks for a year because I'm addicted to the platform. I get tons of value from it. The platform's probably worth a half million dollars a year to me and, you know, commerce that gets done from it, maybe a million. So I'll pay for anything that makes my experience a little bit better. And who knows, maybe that's why she was able to raise this large amount of monies. There is that final three slides. Hey, we're going to get this group of people.

We're going to give them these tools. And then we're going to give them this other option, right? Or maybe she's going to build, it seems like the tool will go across multiple platforms. Then the other problem is, I don't think Facebook, Instagram, and TikTok will ever let you interface the way Twitter does. Twitter is really permissive with their API or most permissive. Most permissive. That's never going to let you in his enthusiasm. Yeah.

Right. So something to think about, you know, when you're building a business is, you know, a lot of young entrepreneurs I find want to take the safest route. You know, like, I think I can get this done, but I'm, you know, don't know if I can get this other big, bold vision done. And then there are people who have only bold vision. They don't even know where to start. And you're, it's really a balancing act. You do need to have like some product that provides value to get people to go over there. And that's, I'm frequently referred to as a cold vision. start problem. So she definitely has identified a problem and then you get to collect those users and then see what you can go from there. But I think people want a paid social network. We talked about this with Be Real, right? Like Be Real might become a paid social network without advertising with real names. So I think there is an opportunity with real names to do something interesting. Nobody's ever gotten up the gut with that as a premise. Like, correct. Let's just pay. Right. Like now might be the moment that's like, okay, we built this thing. It's It's going to be safe and comfortable and fun and you have to pay for it.

We don't know what the market would say to that. It's very possible that we're at a point in society where we'd be like, yes, please. I'll be delighted to that. LinkedIn is as close as we have with real names, I think. Yeah, Facebook, LinkedIn would be the two. LinkedIn, then Facebook probably in terms of like 80, 90% are probably real names. Consider it's the other way on most platforms. All right, everybody on the phone today is Open Phones founder, Darina Kulia.

Welcome to the program, Doreena. Thanks, Jason. Great to be here. Now, what mistakes do most founders make with phone numbers in their startups? Great question. First one is they use their personal phone number for their business. And it's an easy mistake to make because you don't necessarily think about it much. You know, you incorporate your company, you put your phone number, there's all these forms you fill out.

It very quickly goes from being your personal number to being the number for the company. And when that happens, there are all these data aggregators and all these data aggregators and all kinds of services that take your number and put it everywhere. Yeah. Suddenly now there is this uptick in spam text messages. It's the worst. Yeah. And people just wonder, like, how are others getting my number?

Well, let me tell you, you put it in different places and it kind of snowballed from there. So that's the first mistake. The second, which is initially as a founder, you're the salesperson. You're the only sales rep. And then you hire a first sales rep. And sometimes founders let that person use their purpose. personal phone number. Oh, no. That number, the data, everything that happens is just fully belongs to the sales rep. And if that person leaves, you lose the entire history with your customers. Yeah. And then what if that sales executive goes to a competitor? Exactly. Yep. Okay, everybody, Twist listeners can get 20% off any plan. For their first six months at OpenFone. Just go to openphone.com slash twist. If you got an existing number, they'll put it right over for free. Head to O-P-E-H-O-N-P-H-N-E.com slash twist today for 20% off. When we invested in Uber, I tell a story in my book, there was a VC who was like,

you know what, too hard. Just sell, you know, dispatch software to cap companies and charge them 10K a year, charge them $1,000 per car, you know, per driver per year. Just sell software. Reasonable to look at it and say that. I mean, too hard is a real thing. It's really, really hard to know. Like, are there Jason's rules for like, how do you know when something is legitimately

too hard. There are certain things where we're like operationally, that's too hard. Or, you know, replacing network effects, I think would historically be considered too hard. Like build another Twitter. Here's the thing. You know, if you have a plan to build a great Twitter, there might be half of investors don't want to go on that journey. Half might be intrigued by it. And you only need one to want to go on that journey. One percent of investors want to go on that journey. You need only find the one percent of the, you know, a couple of thousand VCs who write seed checks out there to say yes. So there's, you know, if there's 3,000 legitimate seed partners in the world who can evaluate your deal, syndicate leads, whatever, who could put a million bucks in,

three million bucks in whatever, you know, that means there might be, you know, I don't know, 30, 40 of them out there who would do it. So it's up to you as a founder to find the investors who want to go on that journey. For a tool company, you typically find a lot of angels who want to do it, and then you don't find VCs who want to do it. because VCs have gone down the tool route. And, you know, vertical tools very quickly get to a million in revenue and then don't get to 10. A buffer, in fact, got to a decent amount.

Buffer app, which I love, publicly puts up their revenue. And people were going hand over fist trying to invest in this company, including me in the early days, because it was such a great social media tool. Buffer allowed you to authenticate 50 different accounts and put in a tweet. And you could schedule them ahead of time. You could also do repeating ones. So every Sunday you could say, hey, check out BC Sunday School. Here's a link to the YouTube playlist, and the playlist doesn't change,

so that goes out every Sunday night. Great. Except then Twitter banned the use of repeating tweets, and then they built their own scheduling software. So there was a concept, Molly, this is a super fascinating one, called Open Startups, where people would just say everything. Here's our salaries. Here's our diversity numbers.

Here's our revenue. here's a number of customers, and they would take the dashboard that maybe a CEO would look at. You can go and pull it up, Nick. Here it is, Molly. The company did really great for a while, and you can see they had a lot of churn,

people leaving the product, and you can see their revenue came way down. So maybe this is monthly revenue, is it? And if you scroll down, you can see they have $1.5, $6 million in reoccurring monthly revenue, see their churn, et cetera. So that's a lot of revenue, right?

But this is kind of as good as it gets, and the tools, you have to then become a platform. Platform be like HubSpot or Intracom or whatever other tool, you know, started as a tool became a platform. Elite IQ in our portfolio was a tool that became a platform. So there is a path there. There are limitations to these businesses. The headwinds of the businesses tend to be for tool businesses.

People will make a cheaper version of your tool. So there's a lot of copycat SaaS. And one of the classic things to do is say, oh yeah, this person like Salesforce costs, I think maybe $150, $200 per sales executive per month. And I've been pitched a zillion times on, we have a $79, it's half price version, or we have like a price that winds up being, you know, $40 a month, but you pay for the year and we do $10,000 for up to 20 salespeople.

So just different pricing, you know. And so God bless you. That is the challenge of SaaS. You got to keep expanding the offering to provide more value, and you have to keep reaching more people. And then the core group that you met, they may not want the new features, right? They, so then you start to have product drift, it's called. So this is where platforms come in really handy because if you have a platform, Salesforce then made a Salesforce app store.

Odu has an app store. People start building app stores so that you can get a long tail of functionality. Then you start taking some of their revenue. And when you're a platform like that, and you have an app store, revenue can scale, you can scale, ideas can scale. So these are all things VCs have to keep in mind and founders. But I think there are some seed funds that would love, love, love to do tool companies all day if they can get in at the right price.

And then there are some funds that are like, why would we waste time on a tool company, right? We've seen the pattern before. And this is where pattern recognition starts to head. And so I've been training our team at our. investment meetings, hey, if the founder's smart, they've got customers who love their product, they're making money, it's growing. In the early stage, do we need more? Because entrepreneurs are not static. They're dynamic. They're pretty dynamic, aren't they? So a lot of times entrepreneurs will start hitting these headwinds, roadblocks, limitations of their first business model, their first thing,

and they'll say, hey, we're hitting a ceiling. Oh, newsletters are great, but they're only going to get us to a couple million in revenue, we should start doing some live events. And, oh, maybe we should have a social network where people talk about the news. That's what I did it inside. It's like, okay, the newsletter business, I can see where that's going. Okay, the offense business, that's doing great. We need something between those two. So I created Inside.com as like a social network for business people and trying to get,

I'm literally in the process of trying to crank that flywheel while having millions of dollars in advertising revenue for the other two products. And it's hard. Right. It's always hard. Because the question for every entrepreneur who's building is what's next, right? Yeah. And sometimes you hit lightning and above.

And how can you disrupt yourself? Yeah. Yeah, basically either you're going to, who said that recently, Bob Iger said it in conversation with Karat Swisher at the Code Conference last week. I just caught up on that interview. It's pretty good, actually. He's like, we can disrupt ourselves or we can get disrupted. And that's when they started looking at, wow, we're licensing the Marvel character

to Netflix. Netflix is getting all these subscribers. They got Daredevil and all these great shows over there. Maybe a Punisher or whatever. Maybe we should

make our own shows and have our own subscriptions and they had the headwind in their business of, well, we already have us, we'd have to give up the licensing revenue. Netflix pants a heck a lot of money.

So that cash goes away. And we have to spend more. And we have these people who resell ESPN and our own other channels. They're going to piss them off when we say we're going direct. And so they had to time it. So sometimes timing is important.

Every detail is important. Probably always. Every detail is important. So more questions on this? It's interesting, actually. No, I was going to say, actually, this question of tools that help you program social media is a big part of this week's interview on this week in climate startups. Oh, really? It is.

Yeah. So it's like a really nice segue. What segue? Because I talked to Union Square Ventures, Man partner and author of the world after capital Albert Winger. Oh, smart. And yeah, super smart. This book is so interesting.

And one of the things that talks about is how all platforms should be programmable by the user. Like, you should, you know, effectively have like a bot that can interact with these outlets on your behalf. And that includes banking and includes whatever it is. Like, you should be able to program it to work for you instead of waiting for the algorithm to force things on you. Hopefully he's been talking to Tracy too. But it's also a super interesting interview. about his investment thesis, the book, and then where he sees the climate industry going

because Unisquare Ventures raised, closed last year, $162 million climate fund. And so he's got some really interesting ideas about where climate investing is going. It's like a great conversation with a legend. I was super delighted. Who, by the way, side note, uses Linux.

Yeah, there's a lot of those weirdos out there. It's still happening. It's still happening. I couldn't believe it. I mean, with the browser, You can, if you have a Chrome browser, a decent browser, that's all you need. You can use any operating system and get 99% of the web done.

I mean, I was addicted to Chrome. And the only thing that broke my Chrome addiction was Zoom. If Zoom could have figured it out, I would have still been on Chrome right now. But Zoom does not support Chrome. And Zoom became so big. But I was using Chrome at the office for everybody. Man, did everybody get more focused?

Oh, Chrome books? Are you talking about Chrome books? You mean? I had what's called a Chrome box. ChromeOS. ChromeOS. in what's called a Chromebox. You put the Chrome box on the back of a wide monitor, Molly.

Productivity goes way up. People fall me on it first and they're like, oh my God, this is like the most elegant, simple operating system. No apps, nothing crashing, no eye message, ipoto, grinding your machine to a halt. Yes, please. It was so dope.

I really would like to get back to it. But we had a company on that makes a laptop that you can swap out the parts for like chicklets. You know, so you don't have to throw your laptop away when you're done with it. You just switch out a bunch of like little ports. So if you wanted to put a memory card reader in or a new USB standard comes out, you could put it in. You know, you have Thunderball changes. You put a new one in, a new hardware.

And they just can't, I think what was it called Nick, the foundation laptop? It was incredible. And so they just came out with a Chrome version of it that Google is officially supporting. So framework laptop, a shout out to them. So they do Windows, they do Linux, they do all kind of stuff, but they're now doing a Chromebook. So I mean, I may buy one just for the fun of it. I loved Chrome, the efficiency of it. Yeah.

All right. I can't wait for this interview. Anyway, yeah, it's great. It's a really great, super old school, interesting interview. All right, I want you to beat the holiday rush this year with snack magic and its newest partner in crime, swag magic. Snack magic and swag magic are global gifting platforms. It's a stress-free and customizable way. for you to delight your employees or your customers.

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It would be so nice. See more at snackmagic.com slash twist. Get on this early. You want to get those holiday gifts out early so people can enjoy them. Snackmagic.com slash twist. Albert Wenger, what a treat to have you on this weekend climate startups. Thanks so much for coming on. Thrill to be here.

I know you have a new book out, which I have completed and I'm excited to discuss with you because there's a lot of really provocative ideas in there. First, though, I have to, in deference to our segment, ask you about USB's $162 million climate fund. And the thesis behind that, the fund just was announced in last year, right? 2021. Yeah, we raised it in 2020. We, in fact, made some investments in 2020. We announced it officially at the end of 21.

So what made you a doubt you've been a thesis-driven firm? There are three iterations of the thesis. What made you add climate to that? set of theses. Well, it was the recognition that this is both one of the biggest threats facing humanity, maybe the existential threat facing humanity, and also one of the biggest investment opportunities because of the level of transformation of all aspects of society and economy that are going to be required to successfully combat the climate crisis. It seems like it is a problem at the scale of your thinking, for sure. Like, as you read your

theses and you read your book, you know, it actually seems like sort of a natural fit from what little I know of you. Yeah, it is. I mean, I think the surprising finding in 2022 is that many people still don't have a grasp on the severity and the progression of the climate crisis. So I still talk to people who are like, yeah, that's going to be a real problem for my children. I'm like, no, no, this is a real problem for you. now, today.

You know, and like a good case in point is a third of Pakistan is underwater, and it wasn't reported. We had a category of one hurricane caused the largest flooding in the history with Fiona just now, and it sort of makes the news, but then

the Queen's funeral takes back over within a nanosecond. And so, the biggest surprise to me and to us at USV and all of this really is, that we were in a way the first sort of big brand name firm to have a dedicated climate strategy. They've always been sustainable and climate firms that have been added for quite some time,

but in terms of sort of the big firms that made a lot of money in the digital revolution, we were the first to have this separate thesis. And the big surprise wasn't for us so much that we thought it was logical to do, but rather how many people still think this is kind of a future problem, may be that it's actually not as big a problem as it clearly is. One thing that I find particularly interesting about your thesis is that you invest in both mitigation and adaptation, which is somewhat when I started actually covering climate solutions as a journalist before becoming an investor, it was through the lens of adaptation and resilience, which has been a little bit of an underreported

piece of this and certainly underinvested, I only know of one other firm that invests in adaptation. And it's not that easy to find adaptation investments. And, you know, there's some people who are sort of saying, well, you're just investing in the demise of the planet. But I think the reality is we're so far behind that a lot of adaptation will be required. And we had some existing adaptation investments also in the funds. So, for instance, we're investors in a company called Gotenna that makes mesh networking and it was started after Hurricane Sand. Because a lot of our infrastructure, our communications infrastructure, is heavily centralized. And when cell towers go down, your phone becomes kind of a paperweight slash very expensive

flashlight. And so we need solutions, for instance, like Otena, that provide mesh network. And so we had some exposure to this idea of adaptation previously. We have one adaptation investment in the current fund, which is a company called FlobMap, out of Australia, very apropos, given the flooding in Australia and elsewhere in the world, which is one of the most rapidly accelerating negative impacts of the climate crisis are these flash floods that are taking place all around the world. So we'd like to make more adaptation investments.

We've blocked about that, and we're actively looking for them. So if you are an entrepreneur working on some aspect of adaptation, please come to us. A good example of this is there'll be way more cooling needed in the world. For instance, in places like India, there are parts of India where it just gets too hot to stay alive without cooling. And that's going to become more common. In India, it's going to become much more common elsewhere in the world. Right.

And it can't be cooling in the way that we think of it. It can't necessarily be. It can't be air conditioning. Well, it will probably have to be air conditioning, but ideally be air conditioning that's more energy efficient and also doesn't leak coolants that are themselves, refrigerants that are themselves massively greenhouse gases when they evaporate. Exactly. That's what I meant.

It can't be like the thing that we're thinking of. Yes. It is possible, for example, to build an AC with CO2. So if the CO2 leaks, you just have more CO2, which is bad, but it's not terrible compared to some of the refrigerants currently in use. Right. Exactly. And then speaking of those startups and entrepreneurs, tell us, remind people what your stage is.

Yeah. So with the climate fund, we're targeting sort of very early, stage. For us, that generally means, you know, often either the first institutional money in or maybe there's some seat institutional, pre-seat institutional money in, usually means that there's something that you can look at. So it's not just a napkin, so we don't do sort of pre-seat deals. So there's some work, but this could be, for example, bench scale work if it's a hardware. And what's interesting is that we've taken a really global approach with us. We've invested, I've mentioned Australia, but we've invested in India, we've invested in Africa,

we've invested in Europe, and we're also technology agnostic. So, you know, we've invested in electrification of transportation, but we've invested in nuclear reactors, we've invested in drawdown. So this is a climate thesis fund. It's not a specific technology. It's not like, let's say, a hydrogen fund. Right. It's opportunistic in that way.

But it sounds like you are open to pretty hard tech to commercializing R&D, maybe. Oh, absolutely. The climate crisis is a physical problem, and it will require a physical solution. It is not going to get soft by software. It doesn't mean that software won't play a role. For instance, many of the startups in our portfolio that make hardware use software extensively to simulate the hardware. So a lot of them are doing a lot of development in silico before they ever build any real

hardware. But it is a physical problem. It needs physical solutions. So does that mean you're biased toward hardware a little bit? The bulk of the investments in the fund are hardware investments. What do you say to, I mean, I think investors are having, there are a lot of new climate investors in particular and existing investors who felt burned by the first time around who are a little gun-shy about that, who are saying, you know, that's a way to light money on fire.

I'm not saying I'm quoting Jason. I'm just saying, I've heard him say. Well, I mean, look, I sort of think that, first of all, as always, we're sort of standing on the shoulders of giants, right? So with the people who invested in the green tech bubble, it was because of their investments that we now have very cheap solar. it's because of the investments that we have very cheap batteries. They got those industries onto the cost curves that they're now on.

Also, some of those funds made money. Not everybody lost money. And then so much in the world has changed. I mean, we're so much deeper into the climate crisis. The public recognition that it is a crisis, that it requires government action is higher than it's ever been. The amount of debt financing available globally for it is higher than it's ever been. The amount of equity financing coming in is higher than it's ever been.

So I think it's a fundamentally different point in time. But that doesn't mean that, you know, it will work this time. Now, should it not work, I think we have in some ways bigger problems than the funds not working. Yeah, definitely. Has to work. And well within our 10-year fund timelines, in my opinion, the timeline, the fund life structure should not be an impediment. Well, the fund life structure is sort of a very arbitrary concept in any case. You know, we've just exited our last position from the 2004 fund.

We have lots of positions in the 2008 fund. And so all the life of the fund just means is that's when you stop guaranteed getting fees. And you have to go to the LPs and say, look, we're doing a good job. There's a lot of value in the portfolio. They keep paying us fees. But this idea that the fund life that somehow like, oh, you've reached the end of life and now you have to liquidate all your positions, that's just not how it works. Now, of course, if your fund goes out of business, that's a different story.

But, you know, for firms that have continuity, the fund life is just more or less a somewhat arbitrary number. Right. And should not be an excuse to make a hard. I mean, these are hard investments, but like you're saying, some elements of them were de-risked by what came before. And then the risky parts, that's just the job. Exactly. That's a perfect way of putting it. It doesn't matter how great your startup talent is if you can't click in as a team and work together. Startups are not an individual game. You need chemistry. And when you use CODA, CODA, it keeps everyone in sync. It's the doc that brings everyone together, one dock, to rule them all.

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startups? Give you $1,000. They want to support startups. That's why the name of the show this week in startups. That's coda, c-c-o-i-o. for $1,000 off. Well, let's turn our attention to the book, because obviously it ties into this larger thesis and it's just a fascinating read. It's called a world after capital in which, and I'm quoting you,

capital is no longer scarce, but attention now is that we're making this transition to a knowledge age. Can you sort of break down the high-level concept for us? Yeah, so when I use the word capital in the book, I mean physical capital. This is machines and roads and buildings and so forth. When I say it's not scarce,

I don't mean the opposite of scarcity isn't immediate abundance. It's what I call sufficiency. So, meaning we have sufficient capital to do the things that we need to do. The issues, are we pointing the capital at the right things? And that's determined by our attention. And so to tie these two parts of the conversation together, we're not paying enough attention as humanity to the climate crisis quite yet. And so as a result, we're not pointing enough of our physical capital at solving it. When we do point our physical capital, of which we have so much at something, we can do amazing things. I mean, a good example of that is Chinese building entire cities, you know, basically in the space of a year or two. So our ability to build things is quite phenomenal. It's the question,

are we building the right things? Are we pointing capital at the right things? And that is determined by attention. And there we are very far off. And so the thing that's holding us back as humanity isn't how much capital we have. We can always need more physical capital. We will build more physical capital. But what's really holding us back is we're not pointing our human attention at the right problems. Right. Problems and opportunities for them. Because one thing to say about the climate crisis is it's not just that it's a huge threat, but it's also an incredible opportunity.

Like, I would much rather live in a city that's all EVs. It's nice and quiet, you know, the air is better. I would much rather live in a world where we have abundant electricity. We'll never run out of fun things to do with electricity. I mean, we can, you know, have lots of light displays, for example. It's this idea somehow that there is this negative tradeoff where you can either have economic growth or you can succeed against the climate crisis. It's just a completely false and a tradeoff that doesn't exist in this way.

In fact, combating the climate crisis would be the most pro-growth and the most pro-progress thing we could do. It's pretty pro-human. Yes, really. That too. Well, and to get to your point about the queen, for example, we have also shown that we have an ability. You talk about self-regulation in the book. we have an ability as a society and in media to direct our attention. Sure.

On to one topic pretty effectively. But what in your mind are the things that prevent us from doing that? Well, markets have worked incredibly well allocating capital and helping create physical capital. And they do so because, you know, prices aggregate information about what people want more off, what people maybe need less off. if you combine that with entrepreneurial activity, you get a lot of innovation and a lot of capital accumulation, physical capital accumulation.

And that has worked phenomenally well. We've drawn slightly the wrong conclusions from it, which is we've sort of drawn the conclusion from it, that markets are graded, you know, all allocation problems. But the attention allocation problem is quite different because the most important things don't have prices, and in fact cannot have prices, because in order to have prices, you kind of need a supply and demand.

So, for example, much of the demand for climate solutions is from people who haven't been born yet or from people who are too young to vote. So their demand isn't effectively represented. And so if you're going by kind of current prices, you're misallocating attention. Another example I give in the book is, you know, a meteor hitting the Earth, right? This is an event that we know from the Earth geographic record happens every million, a couple million years or so. So it's extremely a rare event. when it happens, it's quite devastating. But there's no price because it's such long time scales.

Like, what's the supply and demand that would form a price here? So they're very important things at the aggregate societal level that we're not paying enough attention to because we've kind of become over-reliant on markets and prices. And that same is true at the individual level. So individually, for example, one of the key things we as humans should pay attention to is kind of what's our purpose in life. And there's no market for that. There's nobody paying you to pay attention to that.

In fact, the exact opposite has happened. We've built all these systems that put a price on attention, but that price is basically marketing, right? It's advertising. Advertising is the resale of attention. And so many of the systems, whether that's, you know, YouTube or Twitter or Facebook or TikTok or whatever, all revolve around capturing as much human attention as possible

because that's the fundamental business model. You capture the attention and then you resell some portion of it. And so not only are we in a situation where we're trying to use, prices to allocate attention. But the only really effective mechanism we're having is where our attention is essentially hijacked for the purpose of reselling it. So we're facing in a way all these essentially adversarial systems that are trying to get as much of our attention as possible, as opposed to sort of pointing our attention at the things that actually matter. Right. You point out this tension between a world after capital, not necessarily a world after

capitalism. Exactly. My goal. There is attention there because capitalism in some ways does not want to solve our attention problem, even if the meteor is coming. That's right. And don't look up, obviously, was a fictional version of that. Pretty on the nose. Pretty on the nose. But my point about capitalism is it's very good at solving a certain type of problem. It's bad when you try to use it to solve every problem. And also, because we've been running it for some time, it's actually solved many of the problems that it's good at solving, which almost by definition means that the problems that are left over are the very problems that it's not actually. good at solving or that it has created itself, right? And so I look at this very similar to the transition from the agrarian age and to the industrial age. It's not that we stop doing agriculture.

It's just that we compress the amount of human attention that was required for agriculture. So if you go back to agrarian societies, they had 80% of all of human attention was focused on agriculture so that 20% of people could do something else. And we have successfully shrunk that in most parts of the world to below 10%. So we still do agriculture, but it takes up much less of our attention. And my goal with the world after capital and with what I call the knowledge age is to do the same for explicitly economically incentivized activity. So today, most of our waking hours for most people are taken up by explicitly economically incentivistic, which is basically work and consumption. And I would like to use technology, digital technology, in particular automation

and AI and so forth, to shrink that part very substantially so that we free up a huge amount of human attention for the things that aren't explicitly economically incentivized. And those are things like the types of problems and opportunities we just talked about, but that's also just spending time with friends or with family, you know, like reading a good book, you know, rehabilitating some part of nature or looking after animals. There's, you know, a clear separation. There's a merit of interesting, exciting things for humans to do. It's just that the least important ones of them are the ones that are economically incentivized. And the most important ones are the ones that the ones for which we need to create this new freedom of attention, basically.

Right. You actually talk about three kinds of freedom in the book, economic, informational, and psychological. Right now, it sounds like you're describing the psychological part of that equation. Yeah, I'm describing in a way all three. So economic freedom is some form of guaranteed income, some form of universal basic income. That's just to make it so that a lot of people can, on the margin, decide whether or not they want to spend another hour working or not, freely decide that.

And to be clear, you have a number here. I mean, it's $1,000 a month. It's not like solve everyone's problems. It's make sure they don't live on the street. Yeah, exactly. And we can talk more about all the benefits that has relative to the existing social security system that we have today. The informational freedom part is all about computation and who controls it. So I should be able to program YouTube, not YouTube programming me, right?

And fundamentally, we all carry supercomputers in our pockets. and yet when you pull up an app on that supercomputer, let's say you pull up the YouTube app, at this point you're reduced to basically your fingers and your brain. Like the supercomputer is working entirely on behalf of YouTube and not no longer on behalf of you. So informational freedom is all about how do we fix that. And then psychological freedom is sort of our brain evolved in a world

where when you saw a cat, there was an actual cat. And now I can produce an infinity of cat pictures for you. So our brain is maladapted for this world, just like it's melodept, or, you know, like our bodies are meladeptive for a world full of sugar. Right. I got distracted thinking about how you would also have a deep fake cat, and then you wouldn't even know if the cat was real or maybe the cat would turn out to be cake. Yes. Because apparently that's what we do on the internet these days.

You're arguing that this is as massive a shift as the shift of the industrial age as the agriculture, the age of agriculture. And one of the things you point out is that literally this attention process, that like possibly a reason for the Fermi paradox, which of course is the idea that the universe is so big that mathematically speaking, there must be advanced civilizations, but we haven't encountered either any. So either either. So either we're way behind the curve here. But you point out that there's this actual other possibility, which is that other civilizations have gotten so distracted by alien TikTok effectively that they miss the media are coming, that we could be driving ourselves to extinction as a species by paying attention to. to everything but the incoming asteroids, right? Yeah. And so people sometimes call it the great filter. There's some event that wipes out civilizations.

And, you know, one theory is that you get to a certain point where you discover market economies and they work incredibly well. And then you become so obsessed with trying to solve everything through markets that you kind of forget that markets are good at some things and not good at others. and that leads to an attention allocation problem, and that ultimately does you end. And I think that's kind of the trajectory we're currently on. And, you know, having...

I mean, I didn't want to say it, but like, that feels like today. Yeah, no, we're there today. I mean, the expiration date on the industrial age was, you know, several decades ago. I wanted to come back to this point that you just raised, which is this magnitude of the transition. I think this is sort of fundamentally the issue with a lot of mainstream publications with a lot of mainstream politicians, which is that they look at digital technology,

and they look at where we are today, and they're like, oh, this is just a matter of fixing the industrial age, you know, it's just like, let's tweak the interest rate a little bit, let's have some job retraining programs over here, and all will be fine. And that's been the narrative for quite some time, and more and more people like, it's just not working. I don't know what are you talking about. Like, it's working for fewer and fewer people. And so much of the world of the capital is about, no, this is as big a transition as when we went from being hunter-gatherers to the agrarian age, as big as when we went from the agrarian age to the industrially. And in each of those transitions, we changed pretty much everything about how humanity lives.

Right. So when we went from forager to the agrarian age, we went from being migratory to being sedentary. We went from living in very, very flat societies to living in extremely hierarchical societies. We went from being promiscuous to being monogamish-ish. we went from having animistic religions where every rock, every tree had a spirit in it to theistic religions. So these are massive, massive changes.

When we went from the agronage, the industrial religion, again, massive changes. Went from living in the country to living in the city. Went from living in large extended families to living in nuclear families or no families. Went from lots of commons to basically all private property. Went from great chain of being theology

where basically religion said, look, you're a farmer. I'm going to tell you how to be the best possible a former, but you'll never be a noble person because, you know, you weren't born one. It's so tough. We went from that to the Protestant work ethic. The harder you work, the better off you'll be. And by the way, there's nothing sinful about that, right? So we've changed just about everything twice. And the big mistake that is being made at the moment is this idea that we've reached some end of history where we don't need to change things again.

Right. And or where it's just incremental tweaks to the system, as opposed to, no, this is a transition that's as profound as those prior transitions. Everything needs to change. And so, you know, when I sometimes talk about universal basic income, which we talked about briefly, and when I sometimes talk about the need to change, you know, who controls computation on these devices. And when I talk, people are like, you're crazy. We can't change everything. And I'm like, no, it would be crazy not to change everything. The precedent says that when our technological capability changes fundamentally, and digital technology is a fundamental change in our technology capability, we have to change everything about how we live. And the longer we delay that,

the worse it will be. Right, because currently you're speaking about it actively, we have to change. But what you're also pointing out is that we will be changed. Exactly. And that this book is an effort to sort of contribute to a discussion that could engineer a softer landing than some of those transitions have had in the past. The transition to the Industrial Revolution and the agrarian age were incredibly violent and terrible. Incredibly violent. We wiped out all the foragers. That was the starting point.

Literally, basically, we left a handful of foraging societies. The second thing is the early agrarian age was awful, too, because we were terrible to agriculture. So there was mass starvation all the time. There was all this infectious disease that was being transmitted from animals that we didn't know anything what to do about it, you know, all the way up through the plague. So that was a terrible transition. And then the transition of the agrarian to industrial age was a series of revolutions globally,

and then two World Wars. We didn't really fully exit the Agrarian Age until the end of World War II. So we have two examples of really horrific transitions. And now that we're midst transition, there is the hope that maybe we can sort of read history and be like, oh, no, we should be doing this proactively. I would say, you know, the jury's still out. I think we could still do it proactively.

I still am optimistic that we could get our act together. But there's also this other narrative where we just are so far behind on the climate crisis and continue dilly-dallying. And so what's going to force all those changes will be the climate crisis as it unfolds and as it gets really, really bad. And we're getting small previous of this,

like a third of Pakistan being underwater. Yeah. Which makes the, to bring us back full circle, which makes the attention part of this so important because at this point in history, we have all the knowledge that we need. We literally have this, the access to the world's information

and all of the history that you're talking about and the only excuse for not getting it right would be not paying attention. That's exactly right. Yeah. And it's a hard problem because you're faced with adversarial systems. So it's easy to spend hours on YouTube

watching the wrong things. It's much harder to spend hours on YouTube watching the right things. I mean, YouTube is this perfect example of there's all the most amazing content on there. You can get everything explained from general relativity to how to fix your dishwasher, right? You're like Neo in the Matrix.

I mean, you just, it's all there. And YouTube is also full of the craziest conspiracy theory, the most, you know, trying to get people riled up and turn people against each other. To make money. To make money. Right? Like, that's the capitalism part of it. And so the challenge is how do we change the structures in such a way that we ourselves can get the best out of YouTube?

and aren't forced the worst onto us. And these three freedoms that I describe in the book, they all strengthen each other, right? So psychological freedom is knowing that this is happening and knowing how to calm down your brain and knowing that you have more control over your brain than you'll let to believe, right? But that takes practice, and you need to make the time to practice that.

Informational freedom is, let me program YouTube, not be programmed by YouTube. And then economic freedom is sort of like, let me free up as much of people's attention as they want to basically learn something new, right? I mean, if I wanted to learn something new and new skill, or if I wanted to just, you know, dive deep on that particular topic, do I actually have enough free hours that I can allocate

as opposed to saying, oh, the computer is telling me another shift on a job, you know, that's basically a drop that actually a robot should be doing. Right. Or it's a literally, it's a life or death situation. I have to keep doing this job. The computer told me, and this is how I get my health insurance. Yes, exactly. It's not optional.

Yeah. It is easy in times of such an interesting, high-level philosophical conversation about incentives and the direction of humanity to forget that you are also a venture capitalist, not usually in a profession that people associate with. asking these large questions about the nature of capitalism. I wonder, how does all of this thinking inform you as an investor? Much of what we have invested in at UNSquare Ventures over the years is actually very well aligned with the thinking in the world after capital.

So our current investment thesis, for example, for the core fund, is all around broadening access to capital knowledge and well-being. And yes, we have the past, you know, invested in things like Twitter. and I still love using Twitter, but I would love for me to be able to program Twitter. Again, I don't want Twitter's algorithmic feed. I would like my own algorithm to be able to select what it presents to me from Twitter. Yeah, talk about quickly.

I do want to go back because I love the idea of a bot for all. It was very like Neil Stevenson. It reminded me of a diamond age. Yes. This idea that you would have an agent, a digital agent acting on your behalf to do the things that you want. Yeah, I believe basically all. systems ought to be programmable, right? So, meaning Twitter ought to have an API, Facebook

ought to have an API, Amazon ought to have an API. Anything I can do in the app, I should be able to do programmatically, so that I can have software that acts on my behalf, that represents me. You know, right now, literally, as I said before, when you turn, hit an app, you're reduced to your thumbs and the, where, while you have a supercomputer at your command. So basically, just trying to invert the power balance. And by the way, all of these apps run on APIs. It's not like companies would need to build anything new. The API is already there.

And there's also ways to deal with the economics of this. You could say to anybody, look, if you want to use Twitter programmatically, there's a monthly subscription fee, and that's roughly what the RPU of a free user is, right? So I do think all of these are manageable.

And we are seeing some areas where regulators have gotten this right. Open banking initiative in Europe is a good example of that, where bank accounts have to come with an API. And so your bank can't really lock you in by saying, set up your bill pay over here, and by the way, you'll never migrate it because way too much work. If I can have an API, I can have my bill pay set up, and I can lay new services on top.

So there is both precedent for that, and there is a way to do this that would fundamentally change the innovation landscape, would let us innovate on top of these systems, as opposed to having these systems sort of be the end state of what computers do. Right. So really, in essence, you are exactly the type of person that a venture capitalist should be. It should be our job to say, how do we disrupt the system? How do we be adventurous, adventure capital?

Yeah, it's a pro-innovation stance. It's a stance that says there isn't an end of history for society. There isn't a end of markets. And that any time that you get to a situation where large companies control, dictate the pace of innovation is kind of a bad outcome. And that's where we are today. The book is called The World After Capital. It is available

for free. For free? Digital for free. I was like, I know I got it because I have Kindle Unlimited, but I wasn't sure if that was like a real... Well, somebody uploaded it to Amazon. That wasn't actually me. I have to sort of figure out... It's totally fine because I want the book to have distribution. The whole idea of the digital copy being free

is that as many people can read it as possible. And then if you want a nicely bound and typeset version, you can pay for that. Albert Wenger, thanks so much for the time. Where else can people find you should you want them to, especially if they have these wonderful adaptation and mitigation ideas? I'm just Albert Wenger on Twitter, and I'm Albert at usv.com.

Albert, thanks so much for the time today. What a great conversation. My pleasure. All right, everybody. Thank you for listening. What a week. What a week. What a week?

More to come. More to come. Who knows what next week we'll bring. We do know one thing, though, which is that we'll have another crypto roundtable on Wednesday. So that you can you can count on. Bank on that. You can bank on that.

You can bank on lawn on Thursday. Yes, this weekend streaming. And we'll have caught up on Andor so that's your homework. It should be three or four episodes out. So we'll talk about that. Who knows? Maybe Molly will actually get back in and watch House of The, the dragon.

The, Megan, the Starring. I'm going to start referring to as house of the dragon. I can do this. I need to woman up and watch House of the Dragon. I'm going to do it. Why not? Why not? All right.

We'll see you tomorrow. Bye.