This Week in Startups - LIQUIDITY: Major challenger to OpenAI, xAI, closing on $6B in funding | E1944

Episode Date: May 6, 2024

This Week in Startups is brought to you by… OpenPhone. Create business phone numbers for you and your team that work through an app on your smartphone or desktop. TWiST listeners can get an extra 20% off any plan for your first 6 months at https://www.openphone.com/twist⁠ NetSuite. The number one cloud financial system, bringing accounting, financial management, inventory, and HR, into ONE platform. Giving you ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to https://www.netsuite.com/liquidity Attio - A radically new CRM for the next era of companies. Head to https://attio.com/twist⁠ to get 15% off for your first year. * Todays show: David Weisburd hosts Joshua Berkowitz, Donald Stalter and Jason Calacanis to discuss xAI closed on $6B (5:02), PitchBook's report on Emerging Managers (17:32), SVB’s venture portfolio situation (44:18), and much more! * Liquidity Timestamps: (0:00) David Weisburd intros Joshua Berkowitz, Donald Stalter and Jason Calacanis (5:02) xAI raises $6B in funding (9:49) OpenPhone - Get 20% off your first six months at https://www.openphone.com/twist⁠ (13:16) Sequoia leading a $6B round for AI (17:32) PitchBook's report on Emerging Managers (20:38) NetSuite - By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to https://www.netsuite.com/liquidity (28:18) The impact of the surge of venture capital in 2021 and its implications for the ecosystem (30:41) Attio - Head to https://attio.com/twist⁠ to get 15% off for your first year. (34:42) The impact of a positive investor attitude on founders (44:18) The Silicon Valley Bank (SVB) venture portfolio situation (49:33) Lightning round of last 3 investments * Thank you to our partners: (9:49) OpenPhone - Get 20% off your first six months at https://www.openphone.com/twist⁠ (20:38) NetSuite - By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to https://www.netsuite.com/liquidity (30:41) Attio - Head to https://attio.com/twist⁠ to get 15% off for your first year. * Mentioned on show: https://www.axios.com/2024/05/03/svb-venture-capital-arm * Follow Donald: X: https://twitter.com/donnystalter LinkedIn: https://www.linkedin.com/in/donaldstalter Check out: https://www.fieldguide.io https://www.permitflow.com https://slopepay.com * Follow Joshua: X: https://twitter.com/berkowitz_josh LinkedIn: https://www.linkedin.com/in/joshua-berkowitz-86005b23/ Check out: https://dexa.ai https://powerset.co * Follow David: X: ⁠https://twitter.com/DWeisburd⁠ LinkedIn: ⁠https://www.linkedin.com/in/dweisburd⁠ Check out: ⁠https://10xcapital.com * Follow Jason: X: ⁠https://twitter.com/jason⁠ Instagram: ⁠https://www.instagram.com/jason⁠ LinkedIn: ⁠https://www.linkedin.com/in/jasoncalacanis * Check out the Launch Accelerator: https://launchaccelerator.co * Check out Founder University: https://www.founder.university * Subscribe to This Week in Startups on Apple: https://rb.gy/v19fcp * Great 2023 interviews: Steve Huffman, Brian Chesky, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland * Check out Jason’s suite of newsletters: https://substack.com/@calacanis * Follow TWiST: Substack: https://twistartups.substack.com Twitter: https://twitter.com/TWiStartups YouTube: https://www.youtube.com/thisweekin Instagram: https://www.instagram.com/thisweekinstartups TikTok: https://www.tiktok.com/@thisweekinstartups * Subscribe to the Founder University Podcast: https://www.founder.university/podcast

All right, everybody. How are you doing, David? Good and well. How are you doing? How about those Knicks? Man, a long-suffering Nick fan. We got a little brief moment of joy during the Carmelo era. And before that, it was obviously Patrick Ewing and the Charles Spree, Royal, Allen Houston, Oak, May, so all that great time period in the 90s. This is my favorite Nick team since the Ewing era. It's right up there because the heart they play with, the grit. None of them were a top 15 pick. We're taking apart the MVP of Philadelphia. But I just want to say to the people of Philadelphia, you're the Sixth Barrow now.

We own you. And that's it. It's our town now. I'm joking. Did you make it to any of the games? Yeah. So I don't go to any Knicks games during the year. I see it's any Tick's tickets.

So I kind of treat myself because when they get to the playoffs, I save up all my Nix ticket budget for the playoffs. And I made friends with the guy named David Adelman. He was a really, really gentleman and fun guy. We met. Actually, you remember the party we had at I. Connections. Miami.

Yeah, he was out at that party, which was a pretty cool party. I mean, don't say where that party was. But in terms of elite attendees, that was pretty crazy. Yeah. And so my friend Antonio Gracias from Valor introduced me to him. You know, we've been texting back and forth about the Knicks and Philly. We had a dinner bet, a dinner bet. Two of us, one pace for dinner.

Then he asked me, am I coming to the game? And I talked to my wife. And I was like, you know, I just got invited you to the game. You know, I'm kind of making this new bromance. and so sure enough she gives me the pass to go my Knicks Hall pass as it were and I zip zip zip to Philly and there are

and I'm gonna buy a court side seat for myself but there were four seats behind the next bench that's my favorite seat in the world like when I go to the Warriors game I love the seats right behind the Warriors bench because I'm into the game I like to see them draw the plays You want to smell the sweat Yeah I just want to be like I'm the coach

you know or an owner someday And so I'm there and it was game four was unbelievable after like games one two and three being unbelievable. And then I went to the garden for game five, and I watched that four-point play in that whole thing. And then I was going to go, but I had to get back to my kids,

and I was going to go to the game last night. But I think it's taken about four years off my life. But, man, that was one of the best series I've ever seen in my life. And I just think that that kid Maxie is an all-star, man. There's a lot upside there. And Joelle's a warrior. I mean, I didn't like some of the dirty plays, if I'm being honest. But what a series.

Did you watch a series? Do you guys? I did. And now it's Nick's Pacers. Pacers are my team. So you talk about the 90s. That's my childhood. Well, I didn't realize that because...

That's the highlight of my childhood, yeah. Oh, it's Reggie Miller on the Pacers. So anyway, I mean... We were going to sweep the Pacers, obviously. But I'll talk to my... I'll talk to Brunson on the group chat, and I'll just let him know. We'll do the gentlemen sweep.

We'll let you split a game, okay? When we go to your arena, we'll let you win one, and then we'll just do the fire games. We'll let the games do the talking. Oh, do you want to make a dinner back, David? Would you like to get it on the action? Because Jake Al's going to be yum, yum, yum,

I have looked up the odds. Okay, so straight up dinner bet. Max per person is $1,000. Okay. Per person. So it's basically like a two-dine bet. That's not the bad I bet with David, by the way. It's just, we're like going to do Philly cheese steaks or New York pizza.

But you want to make the no boo? You want to make the Omokase bet? You feel in bold, David? Straight up. Let's do it. Let's do it. Okay, there it is. Omokase bet.

And, you know, listen, that can get dangerous. All right. Can we start the show here? We've got so much to talk about. Big, big, big week. Let's get started. This week in startups is brought to you by OpenFone. Create business phone numbers for you and your team that work through an app on your smartphone or desktop.

Twist listeners can get an extra 20% off any plan for your first six months at openphone.com slash twist. NetSuite. The number one cloud financial system bringing accounting, financial management, inventory, and HR into one platform, giving you one source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks.

Head to NetSuite.com slash twist. And Adio, a radically new CRM for the next era of companies. Head to adio.com slash twist to get 15% off your first year. Welcome back to this week's liquidity podcast. With me today, I have Joshua Berkowitz, a Berkorp of Family Ophemy,

office LP into some of the top VCs. Next, we have Donald Stalter, partner at Global Founders Capital. And of course, we have Jason Calacanus from the launch fund. I'm your moderator, David Weisberg, co-founder of 10X Capital. Today, we have a really exciting show. We have several interesting topics on the docket. We have Elon, your friend, Jason. His open AI competitor has raised $6 billion. Now we have data suggesting that VC emerging managers, managers in the first three fund, three vintages of their fund are outperforming established managers. And we'll end, of course, with everyone's three latest investments. Let's dive right in. Elon Musk's AI competitor to Open AI XAI has reportedly increased its round size to $6 billion for their upcoming race. Jason,

you and the besties discussed sucks scorched strategy, scorched Earth strategy on the all-in podcast. What do you think about Elon's aim with XAI? Well, I don't have any inside information. Disclaimer, disclaimer, disclaimer here. Just zooming out a bit. I think what we're realizing is a lot of these LLMs are going to be commoditized, right? And they're going to do an equally good job at whatever your task is. So we've seen this with meta releasing their open source project. We saw it when Claude, leapfrogged, you know, chat GPT 3.5.

So what I see from startups is they're willing to swap these things in and out. So then what's left? I think having a unique data set, say Twitter, Reddit, Gmail, if you're allowed to use Gmail, I'm not sure. YouTube, I'm not sure what their terms of service allows them to do. So being able to have a unique dataset combined with that gives you the ability to make a unique product in the world. But there's a big gap between how much money is being spent

and the amount of revenue being generated right now. So some of these companies are losing very large amounts of money because it's so capital intensive. And it's going to be a war of attrition. And I think that's what we're starting to see here is who can raise the biggest war chest, who can build the biggest cluster, who can have the biggest data set. And it looks like licensing data sets is becoming something that Open AI is starting to get better out. I saw this week they did FT. Obviously they're at war with the New York Times who could probably win an injunction against them,

I think, given how debt to rights they have them. you put all that together. There's going to be three or four at-scale players here, and then there's going to be a bunch of open source verticalized ones. I'm happy to leave those giant opportunities to the giant players,

sovereign wealth funds. It's not a venture game. This is like this is a game for Amazon, Elon, Tim Cook, you know, Sundar. This is not a game for VCs and most LPs. There's a rarefied era of LPs, specifically sovereigns, you know, maybe on the margin some high net worth individuals, like let's say

a Larry Ellison who likes to make bold bets, but most high net worth individuals, they don't like to make billion dollar bets. And so it's going to take a lot of money. It's going to take a lot of time. And I think what everybody's playing for is, you know, some version of AGI, a generalized intelligence. And so I've told people before, never underestimate even since we've been friends for close to three decades now.

Not the person you want to underestimate. He will be the number one, two, or three player in this. And if you make this bet, and this is not investment advice, you will have bet in the number. You'll have, I think by default, if you back Elon, you'll win the gold, the silver or the bronze. And if you look at his companies, he got the goal with Tesla,

got the goal with SpaceX. So, and I think, you know, Norrelink is a little bit young right now. I think the metals haven't been given out yet. Pretty good track record of winning the gold. So if you're going to place a bet, that's probably the best possible individual you could place a bet on. And I'm not just saying that because we're besties, but it's just the objective fact, right? And I'm interested in what our panel thinks.

Yeah, I think, I mean, I think the difference between this one and his other companies is this one, he's coming from behind. With Tesla, it was effectively the first electric car company with SpaceX. It was the first private rock company. I think the same goes for the boring company in NeurLink, too. He's got a big lead to come back from here, and his competitors are also super well-funded. So not saying you can't do it, it's always scary to bet against Elon, but I think the starting position is very different here than in the past. That's a great point.

Yeah, I'd agree with Josh on that. At the same time, it's interesting. Elon's got this network of Tesla, Twitter, NeurLink, boring company, and all these others who he's umbilically connected with. And so he's got this proprietary data set, especially from X. you know, where he's able to kind of build out crock. He's got sort of this open source platform, you know, good luck, mistrawl. I feel like, you know, he's going to be able to leverage a lot of his network to, you know, come at it from a completely different angle. I think, you know, he's a

sci-fi fan, obviously, and thinking about Neurrelink and its connection, you know, to this new technology is exciting, if not a little bit scary. So, you know, I think there's a massive vision behind this that we're probably all not that familiar with. But, you know, if you Google it, if you read online about it, you know, there's definitely something exciting ahead. Juggling multiple devices and apps to run your business is a mess. Open Phone is here to make it simple. By simplifying your business communications with one easy-to-use app. Open Phone has rethought every detail of what a modern business phone should be.

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Open phone. already affordable. Starts at just 13 bucks a month, but Twist listeners get an extra 20% off any plan for the first six months at Openphone.com slash twist. And if you have existing numbers with other services, no problem. Open phone's going to port them over easy, peasy, lemon squeezy, no extra cost. Head over to openphone.com slash twist to start your free trial and get 20% off. In terms of coming from behind, he was the co-founder of OpenAI. So in a way, he kind of was first to the party. Again, it just got a little weird with this open source turning closed source, etc. Another major issue here is what's going to win the day, open source or proprietary data.

You can look at a lot of different categories and say open source wins, but there's a lot of categories where we're being closed wins. You know, you look at Google search. That's a closed, black box of a system. Same with TikTok, same with Facebook. So a lot of these consumer products are closed black boxes. Then you look at the tech stacks, you know, it's obvious that like, you know, a lot of the open source projects just demolish everybody. And we're seeing that in corporate America now. So we do have to think about if you're in corporate America and you want to compete, pick company, LVMH, I don't know, Walmart, any company, and they need AI. They're going to use a proprietary platform where they're going to just get charged more and more, or

they're going to be locked in and they're, you know, could get rug pulled. Or I think it's going to say, screw it, I'm forking whatever's on the open source deck, right? And I think in decade three of corporate America embracing open source, and man, I remember the early days where the IT department's laughed at it, we'll never use that, blah, blah, blah. And then all of a sudden it was like, hey, for the small project, we use this MySQL open source, we use WordPress for this publisher. We tried this thing over here, this Linux thing. hey, we're using some open source storage cluster. We got this Hadoop thing going. And they use it for some small project.

Like, what did it cost? And it's like, it's open source. It's done cause it. It's free. But where's the license bill? No, no, we're hosting it on our servers. It's basically free. And they're like, oh, can we get some support for that?

They're like, yeah, this is a couple of companies I can support us. Or we can just hire two people from the open source project. Here's a list of the people working and contributing on it. And they're like, oh, yeah, hire two people. So now corporate America knows this movie. And they know it's actually safer in a lot of instances to go open source. So I am fascinated to see if that plays out here. I'm interested in what you think, David.

One way to look at this that's really drew my eye is Sequoia is leading a $6 billion round at an $18 billion valuation, essentially for an early stage pre-revenue business. And you kind of step back and think about why is Sequoia doing that. And the first thing that you really have to come to grips with is this is this is not a venture investment. This is a traditional growth equity investment. So something, a very different dynamic with a venture investment, you're trying to get the 100x, you're trying to return the entire fund with a power lot outcome. With a growth equity investment, you're trying to get more of a three to five X with downside protection.

But then you look at it and it looks absurd because how do you price in downside protection into a pre-revenue and early stage company? And then you have to really look at Elon's track record. Jason, you mentioned space. SpaceX Tesla. He's also had basically since PayPal, none of his projects have actually failed, if you look at Solar City, Boring company, NeuroLink, even Open AI. So I think Sequoia is really making a bet that this cannot go down to zero. There is going to be terminal value and downside protection. Of course, they're investing on a preferred share. But it is interesting to look at Elon how he's able to attract this amount of capital for a pre-revenue company. And the next war is obviously going to be,

can he win the war for talent? If he's able to win the war for talent against Anthropic and against Open AI, he will be able to catch up very quickly. If he's not, I think he is going to have trouble here. Probably, you know, it's a dogfight out there for talent, but people want to work with Elon and the artist working, people want to work for Elon,

and the people who are phoned in are not going to last working for him. So he's got a really interesting approach, which is like you're all in or you're out, right? I think might be one way to say it. And, you know, he is committed as he is. And, you know, his commitment level is second to none. I mean, he's just a samurai in that regard. And so, and, you know, back to my analogy of gold, silver bronze.

Like, if he's, if he gets a sense he's in second or third, he's going to go into beast mode to get that gold. And, you know, I don't know you can say that about a corporation with a hired gun CEO, right? They don't have founder authority. They don't have the drive. So I like your assessment, David. There's some downside protection here. The track record. I think also on the fundraising side, he's sort of done,

Elon's like two hype cycles in one with this, right? There's the whole LLM hype cycle where funds of family offices and institutions suddenly feel like they need an allocation to one of the big LLLM companies. And that's sort of pushing capital into the space to almost all of the companies that are raising here. And then you have Elon himself, who is a known quantity, lots of people want to back all over the world. and you put those two things together, and you create a situation where there's so many pools of capital all over the world to want into this thing.

And I've spoken to lots of big family offices that I would never expect to be interested in something like this. But because it's Elon, because it's LMs, you put them together, they feel like this is something they want to be a part of. Because it's just sort of so of the culture and of what's hot right now, rightly or wrong way. Yeah. I was also going to say, I think it's downside protecting. given its connection with the Tesla is the massive public company that has, you know, a huge balance sheet. So, ostensibly, you know, a strategic investment or whatever, you know, could be in the

cards. Elon can make decisions than no one else can as part of this business. So I feel like there's just a really interesting, very powerful sort of virtuous cycle. What do you think, Donald, you're on more cap tables than 99% of Silicon Valley. What do you think about Sequoia being in open AI and then backing its main computer? competitor XAI. How do you look at that? Look, I mean, I think that Sequoia is in the business of making money for its LPs. And I think, you know, sort of cut and dry, they've been very, very successful with Musk over time. They've made money, as you said. And I think they probably also believe that

they're going to make significant money on Open AI. Open AI is connected with Microsoft on another level, Sam's a force in nature. So I just view it as an economic decision more than anything else. Moving on. Pitchbook just released the report. titled Establishing a case for Emerging Managers. In it, Pitchbuk presented compelling economic case for investing into emerging managers, which are managers in their first, second, and third vintage. Empirically showing emerging managers have outperformed established managers between both the top and bottom quartile. Joshua, I know you're very active in the emerging manager space. Why not just invest into the large, multi-stage firms? And tell me a little bit about your strategy.

Yeah. So first, I would put this report in a category of reports that, like, let's run a correlation, report the results of the correlation, and then make a whole bunch of inferences from that. And so from like the GP standpoint, it would be like, hey, there's a bunch of successful founders from Stanford. So let's only invest in Stanford founders or MIT founders or Waterloo founders or pick your whatever. And so, yeah, there's a lot of really successful emerging managers. Of course there is. Does the fact that there's a positive correlation means you should only do one or all. only to the other. I mean, I think it's just sort of a really big oversimplification. It's interesting data, but I think it's, you know, one of many, many data points that should sort of help you figure out what, who you should back and why. So I just sort of start there. And then you go, what other, you know, what other data points are super big influences to this? Well, we know venture is a power law outcome. We know that the best venture capital funds tend to persistently outperform year every year. We know that most of the returns, all, fall to the top 10% of venture capital funds.

And so each of those different correlations tends to push you to a different category of firm to back. And which of those categories you want to back depends on your situation and status and who you have access to, right? And so if I had access to Sequoia, yeah, it would probably make sense for me to put a ton of money into the big, large mega cat, or you know, mega VC fund like Sequoia. I don't. And most LPs don't.

And so you end up playing a different game, trying to, find really talented emerging managers to bat. And luckily, those can, they can perform really well, too. And how do you know, a lot of people know about VC's portfolio construction as an LP, how do you construct your portfolio of managers? I tend to think the right mental model for an LP is you're investing in the underlying companies and you're using the GPs to do that and paying them 20 to 30% of the profits for the privilege. If you believe that venture follows a true power law outcome, then what's unique about a power law distribution is that the more end you have, the bigger your sample size, other words, the more investments you make, the higher your mean

return. Very counterintuitive. It doesn't work that way. So as long as you can invest in great companies you think you can invest, you should invest in more of them rather than less. And so, on balance, I try to have a very diversified portfolio as long as I can invest and find top GPs who I think are investing in top companies. That's sort of subject to, you know, administrative headaches and the relationships I can maintain and what have you. But I sort of believe more is better subject to those types of constraints. And so that for me ends up being about 10 to 15 funds a year. All right, let's do some quick math, everybody. The lesser business spends on operations and multiple systems and delivering your product or service,

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a few more weeks, head to net suite.com slash liquidity. That's net suite.com slash liquidity. Jason, you're in a couple dozen funds yourself as an LP. What's your breakdown of emerging versus established managers? Yeah, I've been two of the high profile, highest profile mega funds as a friend of the fund. You know, when you're when you're a GP who can provide deal flow, you can get some kind of unique access to those ones that are like the classic large ones. And then the rest is a long tail of 25 to 250 K-checks. And the reason I do it is I like to build those relationships and understand how emerging managers are looking at the space.

In other words, it's really not even for deal flow, because our deal flow is second only to Y Combinators. We're getting 20,000 applications for funding now. So we're getting so many applications for funding as a 21-person firm that my team has said, please stop tweeting that we have meetings open next week because we want our response time to be reasonable. we've now gotten it to 200 applications to one investment. YC is investing in 1%.

We're now at 0.5. And the reason I did that was after a long, heartfelt discussion with Ruloff at Sequoia. And he told me what I was doing was, he's been mentoring me for a long time on this. I was obviously the first Sequoia Scout. And Moritz and Doug Leone and getting to watch Jim Gatz

and all this group and obviously Bill Gurley, as you increase the deal flow. And I say this thing all the time, time to new fund managers, I tell them deal flow is destiny. It's like deal flow is destiny or deal flow is your denominator. And the more you can look at and the more you say no to, the ones you do say yes to have just more elite criteria. And so the other goal I've had is to get up the number of meetings. And, you know, I do learn some things from emerging managers about their approach. but what I found recently is, you know, I'm kind of doing it to pay it forward because the lessons I'm getting are not, you know, they're neophytes in a lot of cases. They're figuring it out. So I'm getting less and less of like the knowledge exchange. And so therefore I add one per year. One new manager per year. I get probably three or four hundred people contact me. It's nice to look at the deck. My team meets with 10% of those. We meet with maybe 30 a year. And we pick our favorite.

And so, you know, I don't want it to be a distraction for me. I don't do the meetings. My team does them. And it's an intelligence, wisdom-generating effort for us. It's a way for us to just participate. We have a saying that Michael Moritz talked to very early on, maybe 20 years ago, no conflict, no interest. And so, you know, if you have some conflicts, right, and you're both competing for deals, and I'm an LP, like, that messiness from the outside is actually a way of building a really deep web and not missing deals. So, you know, when somebody's like, I'm like, oh, who's investing?

Like, oh, this person, this person is. I'm like, oh, I already have shares in your company from these two funds. That's really powerful, right? So now I'm already on the cap table. I can have a really thoughtful discussion. I also think these emerging fund managers today are scrappier and more resilient. And I would tell you it was the opposite for the last five years or five years before. I'll put everything as Silicon Valley Bank bankruptcy.

see. Like B, SVB, A, SVB, right? I used that as my like before and after Christ. before you know SVB went down you know there's a lot of folks who were playing the role of venture capital

it was almost like cosplay you know they're like sending me these updates and you know I'm like I forward to my one of my managing directors

and I'm like are we an LP in this and then I'm like no I'm like oh I tell the person hey you know you sent me this update he accidentally

put me on the distribution and said oh no no no I have like 300 people on it or our LPs I'm like, why? You're giving this data out or whatever? He's like, yeah, and they were up seven, you know,

they were 7X on paper like year over year because of some crypto investment. I was like, if you're 7X sell half that position, DPI 3 and a half. Lock in the wind. He's like, oh, yeah, no, our tokens are locked up. I'm like, for how long? Five years. I'm like, how much can you sell?

Can you put it into an SPV? How do you sell some? Of course, that went to zero. So, you know, the lessons after 400 investments, I'm on my fourth fund plus the Sequoia funds. I would put the first three together. So I'm kind of on my third fund. I'm just leaving emerging. I'm like kind of on the, you know, the doorstep of being established versus emerging.

And I like the ones raising money now. If you can raise $5 million, $10 million now, Sophia Amarosa comes to mind. Other folks are out there grinding. Love those grinders. Yeah. I mean, I agree with you. We've invested in maybe 20, 25 funds emerging managers and the ones prior to the market crash, we're definitely more of the hand-wavy type.

They weren't as hungry as dogs. You know, as we see right now, we've got all these just hard fighting emerging managers who are kind of bashing down doors to get into deals, you know, learning about all the new industries that are emerging so rapidly and just getting their clutches onto the, under the best opportunities. And, you know, they're already inside companies like Stripe talking to people on the engineering team figuring out who's going to spin out. They're already inside of Open AI. So some of those emerging managers are really, really good, the ones that have kind of come out for the past three,

four months. I find that, you know, there's been a pretty big generational shift with some of the larger venture funds, the multi-stage funds where, you know, maybe they're not as hungry, maybe they're, you know, looking at sort of fewer opportunities and doing a lot more portfolio management. So from a deal flow source standpoint, you know, the new breed of emerging managers has been fantastic, I found. And, you know, I think philosophically, you know, the piece that Pitchbuk put together, you know, would align with that. From a statistical standpoint, you know, it's probably just a, you know, small portion of emerging managers who are really that scrappy, who are really that good. Yeah, when you see Carta, Pitchbook, all these folks putting out data, they all have partial data.

I would not. It's no dick to either of those companies, I'm just saying. Survivorship bias. Yeah, the data is incomplete. So, you know, they do their pitch book. They do the best they can. But I'm more like talking to GPs and then you'll get a better sense of this. What I'm seeing, because we have a list of 11,000 investors in the syndicate.com,

or syndicate investment club, 4,000 have done an investment. And then we have a list of 2,000 venture capitalists from the top funds in a Google sheet that we just give to our founders when they're in our accelerator or founder. After we invested and we give them that sheet and we have a fundraising process, mentorship process that we talked to them about. I invited all of those to the Quitty Summit, and we just didn't email. I was shocked at the number of people whose email addresses were no longer working or I'm no longer at this firm. I think there's probably been an attrition of between 10 and 20% of managers at funds, and then there's probably another 20% to go that are

kind of window seating or babysitting and just living off the trickles of the management fees. And they're basically zombie funds. I think we're going to to identify the zombie funds pretty quick because we as a fund, when we introduce people to them, we say we look for their last investment. It's a little trick, right? If we're going to forward somebody to another fund, we just try to figure out what their last investment was in the date of it. I think just also understanding how the ecosystem worked. In 2021, it was very easy to raise a fund. Tons of people did it. Venture capital became a very cool thing to do. And a lot of it was also enabled by all the liquidity in the growth stage and that you had wealthy executive.

and early employees that were happy to plow the money back into the ecosystem and opt-in the way they do it, they did it, was through emerging managers that were strict tourists in the ecosystem. I think all of those folks, if they haven't washed out already, are going to wash out in the next few years. And while it will be sad, it'll also probably be much healthier for the ecosystem to get back to the people that, you know, that really, really do want to do this, that are committed for the long term.

And quite frankly, there were probably too many venture capitalists, just as there were too many startups for a while. And so it's always painful the transition. It's probably going to be good for the long-term health ecosystem. Yeah. What's been interesting is these, you know, multi-stage funds who are sort of dormant, raising their subsequent funds right now through big investment banks or through, you know, sort of other parties, whereas, like, you know, that they're really not deploying all

that much capital. You know, that's something that we've had our eyes on and why we've enjoyed investing in really scrappy emerging managers and just, I think we've focused kind of primarily on that. Startups and small businesses, listen up. You want a CRM that neatly organizes all your customer data so that you can avoid missed opportunities and you can deliver a personalized service. Rigid CRMs can adapt to your fast-growing needs and that's where Adio comes in. ATTIO delivers the goods.

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and you'll get 15% off your first year. That's A-T-T-I-O.com slash twist. Yeah, and I think fund size really matters. I think we need to talk about that as well. I have the ability to raise decent amounts of money, have the ability to merge our fund with some very large multi-stage funds, and I looked at the economics as a solo,

well, not solo GP, I have a partner now, actually. Thanks of you know. But as somebody who's traditionally been a solo GP, and now a bunch of manager directors and a very large investment team for a $50 million fund because I don't need the management fees, right? Like I've already, you know, had some big wins. So I am focused on, I think I'm never going to raise a fund above $50 million because I think it keeps you more focused to put $25 million into 200 names,

find the best ones, you know, it might be 40 companies coming out of there, give them, you know, $250K, $500k each. We talked about my portfolio management strategy, four and then find the top three and then just put another two or three million at each of those. I was speaking with a really well-known sort of seed investor just just this week. His journey was kind of the classic seed investor journey where he started off by raising, I think, that $10 or $50 million fund writing $150K checks into into early-stage startups with all his friends, raised a bigger fund after seeing some success, doing $300,400K checks,

and then raised, say, $60 million fund writing, I think, $1.1.5 million checks and leading deal. And that transition from this sort of fund two, collaborative checks to fund three, where effectively you're not competing with all your friends meant that he couldn't work with his friends, meant that his deal flow dried up a lot, meant that he had much bigger obligations to all of the founders. And at a time where he thought he should have been feeling successful and like a winner because now he was leading deals, he just sort of hating the job. And so three years after raising that fund, he just said, you know what, I'm done.

I don't want to do this anymore. I want to go back to basics, want to go back to the collaborative checks, sort of rebranded his firm, what have you, and is now loving life and working with his friends again, writing the small collaborative checks at the early stage. And it was like a really, really interesting lesson. It's because what the VC that guys tells you to do is raise bigger funds, go from collaborative, collaborating to leading. And I just don't think that's the right approach for so many people.

You're so right. Donald, what are you those? I agree with that. I mean, I think that, you know, it's really about the energy of, the investor and making sure that, you know, you're doing it because you love it, that'll help you get those economic returns. You have to make rational decisions around, you know, whether you're going to do a secondary at some point in time, call it in an investment you make in the early days or, you know, whether you're going to kind of maybe double down on the next round, like you do

Jason in some cases. But like, if you hate your life, you know, you're never going to be successful. So I think, you know, in this particular case, you know, with this manager, you know, I wholeheartedly agree that he should have retrenched. It's nice to have a hurdle that you can hit and get into the bonus for everybody, your team, et cetera. And also I find with the management fees, it gets a little pernicious when you start layering them on top of each other and it starts increasing. And then you're like, oh, there's a bunch of money sitting here. Should I hire another person? Or I can put it in my pocket. Oh, you know, it's like, okay, I'm coming out of pocket for a million dollars in salary. year because I have such a great success with the media side of the business that's very profitable.

I just underwrite like a million dollars a year and extra salaries because I'm like, you know what, I'm going to hit more unicorns, hopefully more decicorns, and then someday I'll hit another $100 billion company. And this time when I do, I'll own 10 or 15% of it, not, you know, basis points. And so it's very easy for me to do the math to contribute, you know, essentially a million dollars a year to my funds because I know the value that can come out of this. And that's where I find when a manager figures out, like, their economics and what they love Donald, to your point, you kind of get very dialed in. And you don't need these external virtual, not virtual signaling, but status signaling moments. Like, I don't care about a tombstone

that says we race 300. Like, what I care about is how many bets did we place and who are, just get me the 20 breakouts and get them, you know, in, uh, get, uh, get. Get them to our jam session. I want to spend two hours with them. I want to hear about the business. I want to meet the management team. And so now it's like, back to your point, Donald, you have to love doing this because it's too hard and painful and arduous as people are

learning and it's too stressful. If you don't actually love it, you're going to do a bad job about it. I wake up every day. I can't wait to see that week which five companies my team thinks are the best out of the, you know, we're up to 71st meetings a week. I'm like, give me the top three, four, five, and they get me them with a little summary, a little mini deal memo, and we decide who goes to the next round, you know, of meetings. Man, it's so enjoyable.

And that is a critical, critical part of life and specifically the life of a venture capitalist. So many things are out of your control. So you have to focus on process, the things you can control, how many meetings you take, how thoughtful your decision making is, how hard you work for the company, and then how thoughtful you are about doubling down. And, you know, it's not that difficult of a business if you keep it simple. Do a lot of meetings, give a lot of nose.

And when you do invest, just bust your ass to get them to pull through to the next round of funding. And that's literally, you know, every time we talk to David, I tell you what I'm working on, the thing I'm working right now on is pull through, which is what a lot of venture firms will look at. They'll put TechStars, Y, comedy, or launch other accelerators next to each other and say how many of them get their start

up to the next round of funding. It's very low, 10 or 20% made it to that next round of funding. How many make it to Series A? Now you're at 5%. How many make a Series B, 1%. And then for seed stage firms, how many make it to Series A, you know, whatever, 30, 40%. For Series A firms, how many make it to Series B? Okay, 50%, whatever it is.

And so, you know, you have to get good at each of those functions. And process is what it's about. Yeah, I'd also kind of add that, you know, philosophically, you know, back to kind of the happiness point, if you're happy, if you're enjoying what you're doing with your fund, then that's going to trickle down to your founders and you're going to be a great champion for your founders. You're going to bring that energy to your founders. And it might sound kind of superficial, but I think it's a contrarian view. It has been over the past couple of years at least where people are pulling out their

caliper and their surgical knives telling founders, you know, we need to cut back on our burn and do all kinds of other things. Whereas, like, if you're, you know, you're the fan in the stadium when the Knicks playing and you're clapping and you've got, you know, a whole bunch of other folks clapping, maybe the Knicks will win. So, you know, let's be, you know, let's be great champions of our founders and, you know, let's help them push through. I think that's sort of, you know, a really key thing to take into account as an investor and just having kind of a well-rounded approach will enable people to do that. Yeah, absolutely. I think one of the biggest signals, it's the most basic, but it is the most powerful is GP-C. commit. You mentioned, Jason, you're, you're putting in essentially 5% and that's five times more

than the average person. 10% actually, it's a $50 million fund. Yeah, so over four years, I'm putting a million in cash in and then a million each year in like salary. So it's probably five. So like 10. I like what homebrew did, you know, over time, you know, as, you know, and I have like a family, like when I say I'm a family office, I'm kind of running my own money myself and this like family office concept and you know, I've been working on that with my wife and like what our goals are, you know, over the next 25 years, 30 years that I got left of me to work. And we're like, you know what? Every time we look at investments, the best place to put it is my fund. So, why would we do anything else and give management fees and carry to anybody else when I think

I'm pretty darn good at this. So let's get more of our money into this. And that's, I think, I think that happened at Sequoia as well. The partner started putting in very large chunks of the funds. I know a benchmark very famously as a huge amount of their LP capital. That is their former GPs. I mean, if you're going to bet on somebody and you do this for, it's just interesting. Like, people are like, oh, you know, I have this great. I get contacted by, you know, wealth managers all the time.

Like when you become a VC, you get like an endless stream of founders emailing you, LPs emailing you, and then two other groups. Private Aviation, email you constantly, and wealth managers. And these wealth managers are calling me, and I'm just like, you want me to give you my money to do this.

By the way, on the other side of your business, your wealth managers are calling me to try to get access for their high net worth individuals in our funds. Like, you're not going to do a better job than me at getting to 3x returns.

I'm trying to beat the market here, three to 5x. Sorry. I'm not giving you my money to play with. If I was going to give my money to anybody, it's going to be real estate I can enjoy with my family or venture capital. That I have like, you know, a really big edge on, right?

Like Michael Jordan playing baseball. Like, what are we doing here? You know, like, well, there's even like some extreme situations. Several funds like SV Angel, you can't invest that early stage phone. That's just Ron Conway's money. Roger Aaronberg, one of the greatest early stage investors. I think he's hit multiple 10x funds. He's like, screw this.

I'm just taking my money and just investing my money. So when he invests in a company now through Ebert Capital, that's just his own capital. So I think there's a lot of rationale. Unfortunately, for GPs and LPs, that's not the common thing, right? And you have GPs not aligned with LPs and they're investing sometimes in other people's funds, more money than their own funds, which itself is a pretty disturbing signal. I think private equity is really far more mature than venture capital in this specific arena. And there's like two parts of it.

One, it's expected that GPs in private equity invests significant amounts of their personal network than their funds. And there's a preferred return. In venture capital, you have none of those. You have people at best committing their management fees. And there's no preferred return. And you put those two things together and you end up with some really bad behavior. So I say the preferred return because in venture capital, you can have a 10-year fund.

you can make 2x, which is, you know, just slightly more than effectively the 10-year treasury rate and still collect a significant amount of profits, even though you've done nothing. And so you have these sort of two factors in venture capital, I think, that really mess up the incentives. Well, let's do the math. I mean, you take a $100 million fund, you get a 3x net return, which by most measures as top quartals, sometimes top desks on some industries, that 3x return, you get back $40 million in carry at some point. over 12, sometimes 14 years.

You raise a $300 million fund. You have a guaranteed $60 million fund in day zero. So much so that you saw during the last bull market platforms like Pipe actually borrowing your management fees in year five, year six back to you. So sometimes incentives can corrupt and that's something that unfortunate that we've seen across the industry. Yeah, I really hope that this downturn in VC will help us fix some of those things. but I haven't seen anything yet that makes me think it really needs to be led by the institutions

to demand better of like these structures in the LPAs and I haven't seen any evidence they're doing that yet. Yeah. I mean, for me, the way that that's been reflected in a number of circumstances is that the partners who are less committed to their funds don't monitor and don't work with their portfolio founders as much during challenging, you know, market conditions. they don't get in the weeds with them because, you know, it's water off, it ducks back if it doesn't work out, whereas folks who've committed, you know, more of their net worth end up working much

more closely with those founders or much more passionate about, you know, getting exits and insurance success. They keep their eye on the ball. So I think it's a good insurance policy as well. David, what's going on with this SVB's venture portfolio? I saw a headline. I haven't gotten caught up on it. Yeah, absolutely.

So the fire sale for Silicon Valley Bank is. nearing completion. It took 14 months after the collapse that we talked about earlier in the episode. And this, you know, SVB Capital, a lot of people don't know that. They had one of the very top fund of funds really in the market. It was top desol for certain vintages. And they ended up, you know, it was basically dragged down with some of the, you know, it's a good part of their book. And it's now been acquired by Brookfield and Sequoia Heritage pending bankruptcy approval, but it's something that's been ongoing. I know a lot of people had a lot of interest in that asset.

I'm not sure how the process went, but it's basically coming to an end. Anybody else hearing back channel about this, Josh? Donald? I note it took a long time to get this deal done. And speaking to folks at SVB, not in this part of the business, but the other part of the business, there's a big exodus of talent from this group during that one-year period because everyone was stuck in limbo. So I think one question I would have, if I was an LP in any of their funds,

and on one hand, the sale feels like a rescue for the platform. But on the other hand, the question is, is it really the same team? Are they still going to have the same access they had before? Because keeping a business and effectively in bank, percy in limbo is usually the best way to attract and retain talent. I remember when SVB was looking at our funds and part of their process was we want to,

have access to all of your investments in real time so that they could, I guess, establish banking relationships, whatever. So it was a very interesting approach. Again, back to no conflict, no interest. I'm not saying there's anything wrong with this, but you know, I got a banking business. You got somebody who's early stage. Okay. You know, I'm watching, you know, these early stage, C stage funds, Series A funds in real time. man, I think it gave them like perfect visibility into the banking side of the business. And then on the banking side of the business, yeah, again, I'm not saying anything's nefarious here, but they're, their clients are wiring money, their venture clients are wiring money to

companies. I got to think they're seeing that as well. And I don't think they're calling up saying, I saw Sequoia or Founders Fund send to you $10 million. Can we get a meeting? But if they saw like $10 million go from Founders Fund to a company and they research that company online and they're like, oh, you know what? Nobody's actually contact this company.

It was in TechCrunch three years ago. I guess fair game, right? I think it also worked the other way, right? Because if your founder's fund and you have a company that, you know, wants a line or wants some venture debt, they're an LP in your fund. You give them a call and say, I have this amazing company. We're all in. We want to back it.

Please, you know, please take a look and give us your, you know, sharpen your pencil and give us the best deal possible. So I think it really, everyone won from this. you know, little insiders game. It would seem that a variety people from SVB Capital could spin out because they've got ridiculous LP relationships and start their own funds. That's something that I'm kind of keeping my eye on. And, you know, there are kind of plenty of folks who are very, very senior, who'd been doing it

for call it 15, 20 years there, even longer, you know, who are, you know, definitely beyond the horizon on that front, whether it be early stage investing or late. One thing that's interesting, and you've seen some of these large asset managers go public and they're almost always valued on their management fees. A lot of them end up being regret going public because the public markets don't really value the carry. It seems like that was probably the case here in terms of valuing it on its portfolio today. Josh, you brought it up about some of the talent leaving. But the way that it looks like it's structured to this new entity, which is Pine Grove, is a cash up front of $340 million and significant earnouts if they're

able to start new funds and launch new funds. So I think they are going to go out and hire staff and perhaps try to go back and hire some of the people that left as well. But it seems like it's been structured in a thoughtful way. One thing I wonder is, you know, SVB got access just because there was a lot of great reason to give them access if you're at Top Silicon Valley Venture Fund. I'm curious how Sequoia's competitors will feel, you know, with SBB now being owned by Sequoia Heritage, Does Andreson want to give an LP allocation to Sequoia to do the other top funds? Because now there's a bit of competition here. And I know they sort of compete, sort of collaborate.

And I really would love to know what they're talking about having seen that. Maybe they're just buying the asset to manage it because they're almost like a strip sale and they're not going to have this be an ongoing entity. I wonder. They do that. Pine Grove does do a lot of these continuation vehicles. We talked about it Jason four or five episodes ago, how, you know, the GPs are. semi-retiring and there's no one to continue the vehicle. But there are earnouts here that incentivize them to continue the franchise. So it'll be interesting. But it'll be another case study

on what happens when markets go under and there's still assets. There's good assets that go along with bad assets and how bankruptcy ports are able to navigate that. All right. Should we talk about our last three investments? We'll start with you, Donald. Last three investments invested in a business called Slope that does B2B payments alongside Sam Altman and a variety of other folks, USV. It's an exciting one. I think Sam Altman had this quote back in the day, hire for slope, not the Y intercept. So, you know, hire for people who can learn really, really quickly and accelerate. And the founders are super young building an explosively growing business.

You know, we think it's the next stripe, if not much, much larger. and Open AI is sort of, you know, deeply involved in the business. I'll go on to number two. Permit flow. Founder is very mission-driven, looking to help solve the housing crisis effectively. You know, software for developers, builders, contractors. You kind of calls himself like the turbo tax of the space. You can do prep, submission, tracking across a whole bunch of municipalities across the country.

It was really exciting, actually, in December. You know, he was contemplating going out. for a Series A and literally the day he contemplated it, Kleiner Perkins came in and gave him $20 million at 100 post. And then because Felices didn't get a look at the Series A, the next day they came in and they gave him a note at a different valuation, put it that way. So it was a really, really exciting funding round. And, you know, he's seriously off to the races.

I think this is one to track. And then Field Guide is my third. You know, they do trust and auditing software. the founder came up with the idea at Atrium, if you remember Justin Kahn's startup. And it's, you know, AI for advisory, you know, attacking, call it Walters, gluers or a portion of Thompson Reuters. It grown extremely quickly. You know, I was in the seed. I've invested, you know, several times. And it's built for and by practitioners. It's evolved into a whole variety of verticals. Samir at Bessemer, who did, you know, he's the CEO of Sendgrid previously, led the series B.

so he's deeply involved in the business, and we're very excited. We think, you know, this could occupy, you know, a 500, I don't even know, plus billion dollar market. Awesome. Josh. Well, why don't I start with that? The company I helped start last year, Dexa. Dexa. It's a search and answer engine for podcasts. So in the back end, we're transcribing and embedding audio from all your favorite podcasts, this one, all in, the Huberman Lab, Berris, and many more.

we're making it possible to quickly search and discover information without having to listen to, you know, the hours of podcasts. So if you're, if you're frustrated with having to miss some, you don't have enough time in the day to keep up with all your favorite podcasters, use Dexa to search, find summaries, and generally get all the amazing information that's trapped in audio and video. What's the relationship, Joshua, with the podcast, because I am, I know a couple. Yeah, so we are currently powering a Roman Labs search on his website. We have formal partnerships with some of them. We'd love to partner with more of them. But on balance, we're sending a lot of traffic back to every podcaster. So by and large, almost everyone, once they learn about what we're doing,

it's sort of really happy to be featured on here. Any downstream concept of what you'll do with them in terms of revenue or that kind of stuff? I think the most important part is first to get millions of users. this doesn't really matter unless we build a platform people want to use every day and I think there's a bunch of options to monetize with subscriptions or or special products for the podcasters themselves.

Yeah, it's a great idea. We're getting flooded with concepts in and around this, right? I'd love to talk to you about it offline. Well, it's clips, there's transcripts, there's summaries of transcripts, it's just kind of everywhere. And, you know, my philosophy is like, okay yeah um sure as long as you send traffic back and then i'm like wait a second my archive's worth

something uh are you gonna pay me a licensing fee for this and so i'm i'm like i have 2,000 episodes of this week in startups almost and 177 of all in i'm like should this be something where we get paid or there's a revenue share or we license it to but one company so you know i'm i'm super curious is how this will, um, how this will hash out. We'd love to explore it. I think all of those can make sense. Yeah. Cool stuff.

Oh, this is genius in terms of the dissemination of knowledge. I mean, uh, you know, no longer is, uh, is, is, is Wikipedia our only friend. This is going to be massive. Yeah. Expace. So, yeah. So, so the second is a fund funder, for person I just recently back, Casey Caruso. Um, uh, her fund is called topology.

Uh, she was formally. She dropped at Harvard. She's a machine learning wonder came true force of nature. She was working at Google while moodlining at Bessemer. Then she was the fifth investing partner paradigm. She spun out recently to back deeply technical founders. She could easily be one. I think almost everyone she backs wants to hire her.

She finds the incredible talent really early and really gets that. And she herself is sort of a force of nature and the kind of person that you absolutely want back. The third is a group called PowerSet. PowerSet arms top technical founders with their own mini funds to invest out of. Oh, I heard about this. Yeah, so this is Jake Zeller. He started doing this back to Angel lists about 10 years ago. It related also to Spearhead after that.

And so now he's out on his own group called Power Set with a really interesting model, again, honoring top technical founders to sort of invest in their friends and back, you know, Great emerging companies. It's Sequoia Scouts program, right? And then it was like scouts. And then I think Naval at Angelus did spearhead where they gave like a little micro budget. It's such a great idea. And it lets people try on venture, you know, for 50K, 100K bullets.

And many of their original sort of scouts, I've actually gone on to become exceptional solo GPs in their own right. I think Yuri Segalov got to start with an Angelist fund. Josh Buckley did. I was the first syndicate. There you go. There you go. I've done 300 one of them now. So I think, you know, if you were, I was just talking to an intern we had and we don't do

internships, but one of our LPs asked us to do them a favor. And I was like, that's a favor that you're going to have to pay back three. You're sure you want to do that? No conflict, no interest. And they were like, what do you mean by that? It means I said literally, if I, we don't do internships, I hate internships. If I take this person for three months, you owe me three equivalent favors. And they were like, oh, okay.

And I was like, okay, it's your choice, because I don't like internship. So I was in a meeting with this intern, and he wanted to be a venture. And he says, what do I do next? And he had like, this is really good, like hustler. And I said, don't join venture. So that's what I'm my dream. And I said, go work at three startups, one to two years each. When you're 27 or 28 years old, you will have scar tissue, and then you'll easily be able

to work in venture capital. And then this is just like a great little onboarding. I do wonder how these are set up if they're one LLC, you know, kind of fund. They're actually angelous funds in the back end. So sort of structurally, it looks like a fund of funds. Yeah. And each of those individuals, if they want, can contribute their own capital alongside power sets capital. Right.

As a fully separate entity. Got it. So that's even better because now they're learning about fund management. So you're not abstracting all the pain of raising a fund, Josh, right? You got to grow up at a certain point and learn how audits work and all this stuff. And maybe a million dollar fund doesn't have an audit. But, you know, this is a lot of, yeah, it's going to be a lot of work. So I love this idea.

Training program and a great way to, you know, make money simultaneously. And luckily, he'd been doing it for a decade, too. So he sort of knows what to look for and in which founders are more selective to be successful. Who did you say was the principal there? What's his name? Jake Zeller. He's also got a partner, Jonathan Swanson, who's the founder of Thumb Tech and Athena. Oh.

Jonathan, I was one of my best friends. Yeah, I didn't realize this was his thing. Nice guys. I played poker with him a couple times. I was the first investor in them pack. Who won? Different outcomes. I did okay.

I did pretty well. And I just so good at poker last night, I can't have to talk about it. Jason, I'm going to play with you for the first time. Oh, yeah, at the liquidity summit. That's right. I'm excited. Shout out liquidity. This podcast has a event that I'm doing every year in June.

Used to be called Angel Summit. This is your six. It's called Liquidity Summit. Liquiditypod.com slash summit. It's 125 people, about 25 of them are speakers. Tickets right now, 60 GPs, high net worth individuals and about 30 or 40 LPs. So it's just my way to hang out with the cool people

you hear on this podcast. There's about 10 paid tickets left. If you're an LP, we let you at this point be my guest. So if you're an LP and you've invested in a fund on the last year, ping me. And I'll try to get you, I'll squeeze him with a free team. get complimentary ticket, but David's going to be there in the speaker list is bonkers and a lot of the besties you know are coming, including two literal besties, Brevard, and Chama.

Is it my turn? Do you three? It's your time. Oh, I'm up. Okay. All right. AI, super important. There's a lot of data out there.

And we love using AI to take all the data out there and make sense of it in the world, right? because data sets that were too expensive to do manually, you know, you can just kind of discover things, seeing what protein folding, all kinds of stuff. So here's Home Score. It goes out, it figures out through a bunch of proprietary machine learning, et cetera, if a home is a good investment or not. That's it, homescore.com.

It is basically like Carfax for homes. It's that simple, folks. You don't have to overthink this stuff sometimes. Jenny AI, the company we incubated, and they have been in the AI space since chat GPT2.5

or 2. I know this because they were like, hey, you know, Sam Waltman, can you get us into this beta? You know, and it was the early days of all this. If you've used grammarly before to help with writing, you know about having like a psychic,

this is that for people who are writing professional papers. So here you see, if you're watching on the screen, if you're not, go to YouTube.com and search for liquidity or go to liquiditypod.com. And here you see, like, being able to navigate through making actual professional paper in academia and put citations in it. And, yeah, Stanford, Penn, Oxford. It's really amazing. And you can go check it out at Jenny. For my final one, hmm, which one should I go with?

Actually, I'm going to go with SparkBug. this is a really interesting company that went through our accelerator a couple of years ago, and one of our jobs that we're getting better at as a fund is knowing the winners in our own portfolio, man, is it hard to keep track of all these companies? And we've really got a handle on that because we built the platform to do it. And, you know, one of our associates is like, hey, J-Cal, you're going to need to look at SparkBlog because the charts up into the right. It turns out one of the big problems retail has and the people who put their products in

retail is incentivizing and engaging and educating people who work in retail. So they created a platform for, let's say you made an electronic device or any complicated, a coffee machine that would be at, you know, Williams-Tenoma, et cetera. They figure out a way to educate and then give credit to the people who sell more. jurors of coffee machines or, you know, Terra Cafe TK-O-2. And it's very simple. They give them a dashboard. If you measure it, you can manage it. They educate them and then they unlock rewards. It seemed to me like an interesting business to make a small bet on. And then we just kept increasing our position. And I am just super delighted with their progress. If you're in

retail and you want to have a better staff and have them be more motivated, they're now powering 2,500 retailers and 500 brands. So zip, zip, zip. And as you can see here, it increases sell through and it retains employees. It incentivizes sales and it's easy to install. I hate to be a proponent for this.

But sometimes things seem very small when we see them in the accelerator or founder university. It just feels like a, you know, it gets dismissed as a feature. And then we watch that little feature be a wedge. And then these smart founders, they just keep banging that wedge

into this giant stump and it cracks open. And man, boom, all the money and engagement and customer love pours out. So I just spark plug. dot app is my third choice, jena.a.ai,

my second and homescore, my first. I'm not putting them in that order, but I just homescore.com. I really want to make sure you check these out. And if you're listening, the number one thing you can do for a founder is just go check out their website and their company. And if you know somebody who could benefit from it,

just email it to three people who could benefit from it. So if you know somebody in retail or in products in retail, just please help them out here or somebody who is buying homes. This is a good panel. Nicely done, David.

David, you're learning to be a great moderator under my tutelage. Every week you get better. But really. Life hack, put yourself in a room where you don't deserve to be in and surround yourself with great people. And you catch up.

Not immediately. Every episode, do it's like, how did I do? Can I do better here? And I give him a little note every three episodes. I don't try to give them too many notes. But your superpower, David, is you are a connector. You're a connector. And you're just so great at

booking these amazing guests. And if you want to read a good story, I never shared this before. When I was a young pup in New York, there was a magazine called The New Yorker. And in 1999, this magazine and wrote a story about me, Larissa McPark. And it was called The Connector. It's so long ago. Look at that young guy with the Bulldog there. That's my Bulldog, Toro. I wrote this story about me called The Connector.

And the backstory on it, it's a pretty funny story. LaRissel's like, hey, I want to interview you. You're like this larger-than-life figure here in Silicon Valley, Silicon Allie in New York with this magazine, Silicon I Reporter about startups. And she says, meet me at this. cafe. We both lived in West Chelsea and we meet over there on 13th and 9th Avenue, 10th Avenue. I'm going to bring my friend Malcolm. I said, okay, sure, I bring friend Malcolm.

Shows up with this kid with crazy hair. And I'm like, what's your story? And he's like, oh, I'm Malcolm Gladwell. And you, my friend, are what's called a connector. This is before he'd written, you know, any of the books. What was that first book he wrote? Tipping point. Tipping point. And in the tipping point, it's like, there's a thing called the Dunbar number. and the Dunbar number, there are connectors. You tell him the name John, and then a group of people, if they know Joshua or Donald, they'll know 27 on average, and the average person knows four. You are a connector.

So they named it the connector, and then he came out with the book. And then, David, what I'm telling you is, you have that skill as well. You just know a disproportionate number of people with the first. If I used to list everybody you knew with the name Joshua or David or John, you would just, you would rattle up 20. It's like a really good superpower to have. I appreciate that. Well, it's been another great episode for everybody on the panel for Joshua Berkowitz, Donald Stalter, Jason Kalakhanis. This is your host, David Weisberg. Thanks for listening.