This Week in Startups - Portfolio construction, Sequoia's transition & Fast with Acquired.FM + The Dropout: This Week in Streaming with Lon Harris | E1429

Episode Date: April 8, 2022

First, Ben Gilbert and David Rosenthal from Acquired join Jason to talk portfolio construction (13:41), Roelof Botha succeeding Doug Leone at Sequoia (30:58), and to debate the takeaway from Fast's demise (52:22). Then Lon Harris from Inside Streaming joins to discuss the final two episodes of The Dropout (1:24:16)! (00:00) Jason intros today’s show (1:31) Catching up w/ the http://acquired.fm guys: David Rosenthal and Ben Gilbert (12:25) Fiverr - Sign up for https://Fiverr.com/Business free for the first year and save 10% on your purchase with promo code JASON (13:41) Ben on investing in tech (21:39) Ourcrowd - Check out the deal of the week at https://ourcrowd.com/twist (22:46) How David thinks about his capital allocation (29:41) Notion - Get started for free at https://notion.com/thisweekinstartups (30:58) Talking about Doug Leone’s retirement (52:22) Talking about the elephant in the room: Fast.co shutdown (1:24:16) Talking with Lon Harris about the finale of “The Dropout” Check out Acquired: https://www.acquired.fm FOLLOW Acquired: https://twitter.com/gilbert https://twitter.com/djrosent https://twitter.com/AcquiredFM FOLLOW Lon: https://twitter.com/lons FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood

Okay, we have an awesome show for you today. I have the Acquired Boys joining me again. Ben and David are with us. We're going to talk about Ruloff taking the reins at Sequoia from Doug Leone. And we'll talk about the fast.com implosion. Who's responsible? Who's most responsible for that train route? And my pal Lon Harris is with me again.

This week, no solo dolo today. I brought in reinforcements since Molly's still on vacation. She'll be back on Monday. Brought in Lon Harris to do the final episode, episode eight of the dropout and what this means. Will it be a second season? And who deserves more jail time, Bawani or Elizabeth Holmes? We're going to answer all those today on This Weekend Startups.

Stick with us. It's going to be a great show. This week in startups is brought to you by Fiverr. Get access to millions of freelancers around the globe to help turn nothing into something today. Go to Fiver.com and use code Jason for 10% off. That's Fiverr.com. use code Jason. Our Crowd. Our Crowd helps you invest early in pre-IPO companies alongside professional VCs. If you're interested in investing, you can join Our Crowd for free at

OUR-C-O-WD.com slash Twist. And Notion. Notion is one place for notes, docs, projects, and everyday work that goes way beyond a wiki. Go to Notion.S.O and use promo code Twist to get to $150 off an annual team plan. For those of you don't know, Ben Gilbert is Gilbert on the Twitter. Yes, he's been around for a while. He got a solo name there, and he is the managing director at PSL. Pioneer Square Labs. Now, there's another Pioneer Labs that popped up subsequent to yours, right?

Yes. Daniel Grosses. Is it Daniel Gross is his name? Yep. Now, wait, wait. How many years after you did Pioneer Labs did he do Pioneer Labs? I don't actually know. I think it's Pioneer app.

Pioneer. I think his might just be Pioneer. I actually don't know a ton about it. We started. It's just Pioneer. And the website is Pioneer. Got it. Yeah.

We started, what, September 2015? So he may even sit around then too. Interesting. You know, I have this problem with launch. Everybody's like, oh, launch fun. And I'm like, no.

That's me. They're like, launch festival. Launch conference. I'm like, also me. Like, got those trademarked. Can you pick something just a little launch pad conference? I'm like, too close. And wasn't there like a launch?

There was something. There was launch.com, which my friend, Dave Goldberg, Rust in Peace did, which was a music. It was the original, like Spotify. And that is now owned by Yahoo. But Yahoo had bought it. So they actually owned the domain name launch.com.

And so I've been talking to them about the domain for the better part of 10 years. For no other reason than it's kind of like a moby dick kind of situation for me. Like inside.com was a moby dick. for me, I was like, I really want that domain name in the 90s. I was like, I got a really good idea. I could be like about.com, but you can go inside.

So it's like deeper. And there's, there's something in your soul that feels good when you get the short domain. It may not be worth. Like our friends at Tiny just got Tiny.com. And that has to feel real good. Absolutely. When you have a dictionary name or an ad handle like Jason, you have this wonderful moment in time where everybody covets your home.

It's like having the best home in the neighborhood. And every's like, if you ever sell it, you're like, never selling it. They're like, but if you do sell it, you're like, but if you do sell it, You're like, never selling it. My daughters are, my grandkids are going to live in it. They're like, but if you did, I'm like, never selling it. So literally like, very famous Jasons have come to me. Hey, big fan.

I'm like, not selling the name. It's like, well, you know, you ever want to be an action film? I'm like. Oh, wow. The state's getting high here. Can I, I will give you the name if I can defeat you as the super villain in the film where like literally I beat the shit out of you and you basically. basically bend the knee and say, you know, I give up.

You were the new action hero. Not to play David Sachs here, but like there would be a lot of computer generated. Like a lot of, you know, if you were going to be the big muscular. Yeah. Getting there. Getting there. All right. And David Rosenthal is here with us as well.

He's D. Wait, wait. Are you DJ Rosenthal on? DJ Rosen. This was my, uh, my college, uh, email address. Were you literally a DJ in college? Or did you just use it. No, no, there's like the randomly assigned like, you know, string of eight characters that Princeton gave me.

Is your middle name with a J? James. Yeah. So you literally are DJ. Both of our middle name is James. Yes. Is it really? Yeah.

Look at you guys. So you are DJ. You're literally a DJ, Rosen. Co-founder of kindergarten ventures, which I am proud to say, I got my beak wet. I put a little, I think we can say that I'm a minor, little LP. I'm very, very. very happy for you to say. I'm thrilled. Oh, yeah. I just, you know, I like David. I decided, like, I'm saying no to every venture

firm. But then, like, friends of the show or maybe, like, somebody I've known for over a decade, like, maybe put a little taste in. I mean, listen, I got the chatter laying around. But now I'm like 22 funds. Our profile just went like, you know, 100 X. Listen, I get invited to almost, I wouldn't say all funds, but I get invited to a lot of funds because people want to build that fabric or whatever. And it's just too many. I mean, I'm so over-indexed in venture. I mean, you guys have probably experienced us. And I'll let you sort of chime in on that. But you need to have a strategy when you're a venture capitalist where your 80, 90% venture, 10, 20% other, as opposed to, like, if you were a perfect portfolio manager, you would say 10% venture if you're aggressive.

Meanwhile, for you and us, and, you know, not only is it our investments, our portfolio is all in venture. but like our operating business is highly indexed to startups and venture capital as well. Oh, in terms of the pods. Yeah. Yeah, the pots. Well, you know, there is something about being all in. So how do you both think about as you throw off capital and you're over indexed in venture? Are you comfortable being over indexed in venture?

Because let's face it, it's like, you know, it's the area of your excellence. It's the most domain expertise you have. So you can be more comfortable operating it. And where else would you want to be, right? Well, you know, that's that is the question. Do you ever get nervous or over index, especially in a time like we've seen from Q4 into Q1? And now going into the next year when everybody's predicting a recession,

this maybe isn't the best place to have been, but it could be the best place to start. So let's just start maybe Ben, give me your thoughts on your personal psychology right now. Because managing personal psychology in a downturn with a predicted recession is important. Yeah. Yeah. Well, so you're asking if I'm okay being in just very boring regular venture really heavy and not just everything in crypto. That's the question. Are you thinking about going even more sure? You know, I'm going to take this Tesla jacket off because I'm so hot. But for people watching the street. It's a good looking jacket.

This is one of the original 100 roadster owners. I'm going to go to Austin right after this for the Tesla rodeo. So I'll see everybody there tonight. But this is the original Tesla. logo for people who don't know. That's what the key of the roadster looks like. It's that little, I don't know what that's like a triangle. They drop the shield, right? So now it's just the key. Yeah, it's not the shield. But it was like you still have it, right?

I have it right here. Yeah. Actually, somebody just, the Rally Road team wanted me to put it on. I don't know Rally Road, which does fractional ownership of assets. Sorry about the noise. You're going to hear my jacket coming off. Yeah, I think we were talking about putting it on for 250K. It turns out those roadsters were worth.

10 years ago, people were selling them just to get them out of their garages, the original roadsters, which they were going for maybe 40, 50 grand. They originally cost 150. They had dropped down to 40. Oh, my goodness. What an investment. Now, 10 years later, they hit classic, they're starting to get towards classic car style, you know, age.

And obviously Tesla's doing well. And there's a small number of them on the road. And when they get in accidents, they get totaled because they're tiny little cars. So there's a guy who buys all the used ones. If a car gets totaled, he buys them for 30, 40K now. you could buy a pristine one with under 50,000 miles for 3040K 10 years ago, you know, or so because everybody, when the model S came out, now it's 250. And then maybe for one that has some uniqueness to it, like the first hundred, it could be a little bit more.

So, and then I have Model S number one, which I think is worth a million maybe. So those two cars kind of, yeah. But anyway, Ben, let's talk about. So those are my personal. Those are my non-tech assets, I guess, that are, you know. One more real quick, little sidebar. I finally got a Model 3. It is unbelievable.

Model 3 is the greatest car ever made. I think the Model Y is even better, but the Model 3 innards are now, I think, matching the model Y's. But what is your favorite part about the car? May I ask? Ooh, my favorite part about the car, I didn't, I was not into driving before I got. I still wouldn't consider myself like I care about performance or anything, but just like, it's just the windshield. And you are so there. Like the screen is kind of out of your field of vision.

So it's just, I thought I would miss the instrument cluster. I never want an instrument cluster again. Like you just see out. And it's amazing. And it's so responsive. It's instantaneous. It's like I'm like, like my body is like going down the road. It's amazing.

It is like, but we drove from San Francisco a few weeks go down to Sand Hill Road. And of course, he's on the, he's on the entrance ramps. And he's like, you want to see what this thing can do? Oh, oh. Yeah, I had a friend who liked to like, he would, this is a friend of who's not me, he would double the speed when he get off turns. Then he would go like two and a half the exit ramp, three of the exit ramp.

It's like, dude. It's a 50 mile per hour exit ramp. We're taking it at 45. The tires are starting to grip and squeal in your whatever car you're driving. I know, let's hypothetically say a corvette or something. But it is a pretty amazing car. But you previously, you drove like a Honda, you're like a Honda Accord kind of guy, I take it. I had a Accura station wagon.

and still have. Oh, okay. Totally on brand. Like, are totally pragmatic. This is a good car to have for 10 years. Ben,

you're a BMW guy, obviously. I'm a 2008 Honda CRV guy. Oh, that is, that's a little bit of a sporty car, the CRV, right?

Maybe now. It's not from 08. Oh, the CRV is the SUV. I'm thinking of the other one. There's another one with a three-letter name. There's an HRV

that's a tiny version. There's a Toyota, like, Oh, you know what I'm thinking of? CRX, which is a weird. No, no, I'm thinking of there is Nissan G-T car. Oh, look at that.

Whoa. Yeah. Oh, you are a huge nerd. Bought it fully depreciated. Like, this thing is, this is like fully optimized. You know what? I thought you said Nissan, and I was just thinking you had a Nissan GTR.

Ah, that's a cool car. They nicknamed Godzilla. So this is what all the Fast and Furious kids drive. Like, when you see people doing donuts in those showcases in San Francisco, whatever, They call them where they go on the street and then make donuts and everybody goes around them and cheers. And then somebody gets hit by the car and everybody cheers more. Those, what do they call those?

There's a name for them here. Rally. Showcase, rally, show something. Anyway, they do these things. Incredibly dangerous. And then the cops come and they're just like, yeah, whatever. And it turns out they steal the cars or, and do this, or they steal the tires of your car, put them on their car, melt the tires, then swap. the tires back. So just so...

Dude, did you know that Jensen Huang, the incredible Nvidia CEO, one of the greatest, greatest of all time? What he's got a, is it Konigsberg, I think? The, that crazy supercar thing, but he used to have like literally a Fast and the Furious Toyota

Supra and used to like race that thing and yeah, almost died. Crazy. Sam Waltman's into racing cars. There's a bunch of people in the tech scene who are into like racing cars. I'm into living a long, productive of life. DHH likes it. I'm into like surviving for a long time and enjoying the last 20, 30 years of my life. We all know how hard it is to build something out of nothing. That's what the startup game is all about and it's easy to quit. According to a study conducted by Fiverr, 25% of people

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At fiverr.com. That's fiver.com and use the code, Jason, two R's in fiber. Ben, in all honestness, let's talk about portfolio construction here. as capital allocators. Obviously, they joke is, yeah, go deeper into crypto. We can dunk on that in a minute. But how do you think about it?

Are you just comfortable? I'm assuming you're well over 50% of your net worth is tied to tech. Yes. I've thought a lot about this, as you can imagine. And personally, I kind of look at it like I'm extremely comfortable with that

and not just tech, mostly early stage tech, given the fact that I'm 32. I hope to spend money later. I don't really have a lot of need to spend money right now. And so I'm comfortable with a large percentage of it being super high risk. The other thing about being in venture is it's not like being a startup founder. You are reasonably diversified.

There's almost zero chance you're going to have a 20x fund if your fund is large enough. But you should feel pretty good about generating a return and hopefully generating a three, four, five X. return from your funds. So I've sort of looked at it like I am way over indexed, you know, compared to what any financial advisor would tell you in what they used to call alternative assets or, you know, early stage tech venture. But I don't know. That's interesting. That's where my passion is. That's where my unique advantage is. That's the stuff I understand. I feel it's like if you were a great poker player, you would not be playing gin or rummy or backgammon. You would play. You would play more poker. So I think that's a really great insight. David, what's your take on this? Or you had a question for that, maybe. Well, I got a question for both of you, but more you, Jason, like, okay, so I've been working in venture for one way or another for 12, 13 years now. I don't know that I've ever seen an individual fund to lose money. Like, I think it's very hard for a venture fund, even the worst venture funds to be negative in the long run. Have you, I

I'm sure it exists, but like, what's your experience with that, Jason? I think you don't hear about it, and I think those funds go away. So if you, let's say you put up that numbers to funds and I think you could probably get away with it for two funds and if you really sucked, then maybe you don't get the third because you're raising the second, you know, in the J curve of the first. So. Yes, yes, yes, yes. All of that and like, I don't mean bad relative performance.

You said you've been doing it for, you've been doing it for 10 years too. We've all been doing it since like for just over 10 years, right? Yeah. I think I'm probably, I just mean like, like, like, like, like, like, Truly bad funds, bad funds, bad firms, relative to everybody else. They almost never below 1X. We all started in 2009, 2010, after the great. We've literally done a bull run for 13 years.

So it's kind of like it was high tide for us. It was a massive dumping snowstorm. We all look like, you know, we're great skiers, great surfers. But now that there's no snow. Madrana funds. Madrona is a great firm. So like that's, they're in a great league. But, you know, I joined their funds started in 1999.

That 1999 fund would. deep in the J curve and pulled out and ended up being close to a 3x fund. How close did they come to hit in the ground or the water? Oh, well, shoot. I mean, this is, I don't mean this to be a knock on them at all. Like, they're great and that they survived. But it was, I think, 99 to 2005 until they raised the next fund, six years with basically like your plane is like one engine and you're flying like 2,000 feet above the Pacific

ocean and you're like somewhere. between like Hawaii and Australia. And you're just like, this thing's going down any minute. But we got a little fuel. We got one engine. We're at 5,000 feet. We can see the water.

Let's see if we make it to New Zealand. Maybe we find it to Fiji. Maybe there's some, you know, Polynesian island we can land this thing on. Sequoia's the same story from the dot-com fund, right? Like, what was Doug saying that they did during the... Oh, they burn cigarettes in their arms before they, you know, lose money in it.

Yeah. Burn cigarettes. in our arms before we lose money. I love that. They forewent, foregoed. Their management fees during the 99-2000 fund also, right, to try and make sure that they were returning capital. I think it's going to get very real for people.

I think we're to see a lot of VCs quit in the next two or three years. I think what's going to happen is when people have to go to three or four board meetings and watch layoffs and watch valuations become so crushed and depressed that they look at their portfolio and go, you know what, this thing's not going to recover. What you'll see is, like, if there was a five-person team, you might see two people go, you know what, I'm just going to join this company, or I'm going to retire. I think you're going to see that, like, changing of the guard in a, if we do have a crisis. And I don't think that's guaranteed, but certainly some things going on. None of us are macro here, I don't think. But let's pretend we are.

But the good news is, like, if you look at America's track record over the last 250 years, you don't need to be a macro expert as long as you have a long investment period. Such a good insight. Like none of us need to, I kind of look at it. I think I've sold maybe like, if I look at my stock portfolio right now, I just don't turn it over. I just have my like 20 to 30 companies I really like. I keep adding to those positions.

I've sold like one to two percent of the value ever. And I kind of look at it like, I'm not trading. I'm investing. and so we probably will have some rough years somewhere in the next five. I don't know what one or two or five, but I don't know. But if you own Amazon or if you owned Airbnb,

I don't know what names are in. If you own Disney, the idea that Disney, Airbnb, Google, are not going to be relevant in 2030 or 2040 is kind of farcical. Like, they would really have to, to destroy Google or Disney, if you deliberately try to do everything wrong.

Like literally said, I'm going to make the worst decisions I can make every day when I come into work. I don't think you could stop those juggernauts. Like, you're not allowed to turn it off. But you get to make terrible decisions. No one's done anything new at Google in like 20 years anyway. So they just have the most successful high margin business of all time.

Literally, they felt a diamond printout. This is a Warren Buffett quote. I forget how he phrases it. My more crude phrasing is that you want to look for businesses that literally like everybody could go home and a monkey could run them. Yeah, basically is anti-fragile businesses. You know, they do arguably better in chaos. And Google certainly is that. Like, whatever happens in the world, you shake the globe, the snow globe.

There's no world in which people are not searching for information and clicking on ads that match the search term. Like, they just built the perfect engine. here's a bare case for Google because I've been thinking a lot about this not investment advice but I really like Google as the stock oh Nick Nick's super producer Nick just came through with the quote it's it's so much better than mine this is Warren invest in a business any fool can run because someday a fool will wow that is a rare moment of

perfect clarity from a capital allocator who has actually literally watched somebody take one of their great businesses and try to drive it into a wall. Like that's, he's talking about a person there. I don't know which person, what they did to him. I don't know who heard him, but somebody heard him.

And that's like a, that's the sub-tweet of the year of the century. Who, who heard you Warren? It's definitely Solomon Brothers. Thank you for the. Definitely John, good friend. Like I circle around the joke. I circle around the joke and you could see me like forming the joke in my brain.

and then Nick's like, boom, he just snipes it. Who hurts you, Warren? It's time for another R Crowd deal of the week. Right now, you can join our crowd's investment in Ciabra. According to the deal memo, Ciaabra's AI-powered SaaS platform analyzes billions of online conversations, and they do this to help companies gain authentic consumer insights while fighting disinformation in real time.

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So if you're an accredited investor, you can join Our Crowd for free at O-U-R-C-R-O-W-D.com slash Twist and review all the current deals. That's our crowd.com slash twist to sign up for free. David, how are you thinking about your capital allocation in a crazy time? Or do you not even think about it? I bet your head down and work. Generally, all of the above, generally my philosophy is much like Ben and I think yours,

but I actually have made a change with all the recent stuff going on. Just on the margin optimization, I have moved as much of my tech exposure into my retirement accounts as possible. Because I want to hold it forever and just be as long as long as possible.

So you're doing the Roth IRA thing, doing your... I have an old Roth and then making contributions every year to new ones. So I, I've shifted, I've used the market downturn as an opportunity to tax loss harvest a little bit, shift stuff into the retirement accounts.

And then in non-retirement stuff, I'm actually mostly Berkshire at this point. I view that as like, I actually think Todd and Ted, the investment managers there, are fantastic investors. The Berkshire, Apple investment is one of the greatest investments of all time, period, full stop. When did they make that? Explain that to the audience what they did. Because between 2000. He doesn't like tech stocks. He likes for 2015 and 2019.

Apple. Yeah. But it's not, it's not Warren or Charlie. It's Ted and Todd at this point who are doing this. So wait, when did they, do they invest in?

You said 2013? I think they initially started the position around 2015. 15 and 16. Yeah. Yeah. Anyway, I'm very happy to get broad market exposure through a great investor

for them in my non-retirement account, still get some tech exposure. And then for my active investing, I do it. try to do it mostly through retirement. I've come to two things. One is keep investing early. Earlier in the life cycle, as early as possible.

And then I'm trying to perfect the building of a position in the winners. Those are the two things I'm trying to do. So vis-a-vis the WhatsApp, you know, backing up the truck position. I'm trying to do that, but earlier. So, you know, you get somebody in, take more risk in getting people into the accelerator, right? There's only really three accelerators, four accelerators that I think actually are worth going to. If you're a reasonably new, good new founder, I think we have one of them. We've done it. We're on a 25th class, seven each class. We've had, I don't know,

five or six companies become worth over $100 million and already, right? It's a nascent program. And then we have a unicorn now. Grin became a unicorn out of it. Over 12% position in Grin. And so, you know, that when I started under 1% positions in the Ubers and Thumbtacks and Robin Hoods of the world with these 2550K checks, then 2% of superhuman, 5% of calm, 12% of grin. You know, you go along that sort of journey and all of a sudden, you know, having a fraction, you can build a nine figure position by owning under 1% if you, you know, hit like if you split the arrow with an Uber investment, you can, hit a hundred million dollar position if you have five percent of a of just a you know two billion dollar company like say calm and then you know if you have 12 percent you can hit a hundred million dollar position with it being but you know an eight nine hundred million dollar company so is a I think that's just the the position I'm coming to it now David you do

small investments right now with kindergarten and you don't you don't care about pro rata or you do fight to get it which one yeah oh yeah everything I was talking about before I should caveat is just personal account, you know, trading of not venture investing, the vast, vast majority of my investing in Benz, too,

is venture investing. But trading the personal account teaches you things. I didn't use to trade individual stocks, and in the last couple of years I've been doing it a lot. And I think it's really valuable for early stage private tech investors

to be forced to grapple with public market realities. the altos guys talk about this all the time they made their the altos i think they talked about this on our episode the retirement plans uh for the for the firm there uh they all actively manage i mean i think i'm sure if you wanted you could like do an index fund or whatever but they decided like this is going to be part of our culture we're going to learn by doing that and then apply that and it's because that's what the lps and their funds might be the high net worth individuals and their funds are probably doing it for some part of a retirement play or for their kids.

And, you know, that's actually a very clever way to stay in the game. But tell me how you are thinking about now that I'm an LP and I'm now on the LPAC. You and I both. Oh, we're the LPAC. Here we go. I didn't see that in the side letter. David, I'm looking at this investment in a CPG company. you invested in a sports drink.

When you pitched us, you said you were going after SaaS and marketplace. How did this investment happen? Take us through how you source. When he pitched you, you didn't say he was going after show. Oh, they were a college roommate. Oh, how interesting. You had the inside line on a sports beverage with your college room. No conflict, no interest.

Okay, well played. I'm still figuring out. We're still figuring out pro rata. It's such a different world. now with Angel List, right? Like we, my, uh, current operating assumption is we will not be doing follow on and pro rata in investments that we make in a given fund out of that same fund. We will probably do it in the next funds, like just do it kind of a daisy chain. As long as you tell people that you're daisy chaining, it's totally fine. Yeah. I think we're going to

daisy chain rather than raise, do a traditional venture style, which I did, you know, forever of, you know, raise a $250 million fund of which 100 is initial investment and $150 is reserved for prorata. I just like, then you're trying to predict the future. And I think Daisy Jane is better. So make sure you fight for prorata every deal and say I'm a valid you added investor. I have a podcast. I can help in other ways. Please give me, make an exception in the side letter, please give me prorata.

I'm going to work for it. And it's going to be such a de minimis amount. It will really help me raise more funds and help more founders. That's the script. clip it here and just keep saying it over and over again. Do not fight, fight, fight for that pro rata. You never know when you're going to hit something big and that pro rata can be worth something.

You come to Uncle Jason and say, hey, you got those LPs sitting out there. Maybe we could do my pro rata and split the car. And I'll be like, yum, yum, let's go. I knew there was a reason you addressed it. Of course there is. And Ben's like, I'll do that too. I'll do that too. Secure the bag.

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$250 off their annual team plan. That could be a couple of months for free. So it's pretty great for a growing startup like yours. That's notion.s.o and use that promo code twist during checkout for $250 off. All right. Let's talk about Sequoia since I have you here. You guys did a great two-parter on Sequoia. And I just had Doug Leone on episode 1403.03,03, and I've been friends with Ruloff,

who's on the board of Inside.com, previously Mahalo, been a friend of mine for a long time. and he picked me to be the first scout for Sequoia. So thank you for getting my entire career in Angel investing started in many ways. Is Ruel still on the inside board? He is. Yeah. I mean, we do quarterly board meetings. He shows up.

He's never, he's been late once. Like literally something happened and he gave me a $100 bill when he walked in five minutes late. And I framed it and I have it on my wall in my office. I had a autograph and I put on my wall in my office. And I'm going to start that at my firm late for a meeting, $100 bill. So what does this mean, I think, in the industry to see this changing of the guard and Roloff taking the baton from Doug, who basically worked with Michael Moritz. I think they had the baton together, who took it from, I guess. Valentine.

So here we go, the third generation, basically. what does it mean to you David? Well, first off, I have to say your interview with Doug. I mean, any interview with Doug is great. You're starting, you know, on third base, but like you did. That was so good. It was like just a, you know, I could tell. It's a top five episode, I think.

Oh, yeah. When, when I could see it when I was watching that interview, like, I was like, oh, Doug's going, Doug's going to retire. David texted me. He's like, this is the farewell tour. You got to listen to Jason's episode. This is the farewell. Yep.

Yeah. I got that sense of history when I was talking to him. And I also got the sense, you know, like, since we've known each other and he's mentored me to a bit, to a certain extent, which people don't know about. And I, you know, I try not to talk about personal relationships all that much because I feel like it's, you know, up to the other person, maybe if they want to talk about it. But he mentored me a lot in venture when I was raising my funds, as did Ruloff. But Doug took a particular interest.

And I think there was a level of trust. in like the interview, which when you're lucky enough to have a personal relationship with somebody, like I had with TK, when he did that seminal two-parter, uh, or Saka, you know, or Tremoth in some early interviews, like, yeah, it really does help the person. I don't know, just be honest and candid, you know, it's like a super advantage. But so what do you think it means that Ruloff got the slot? Well, it was, um, you know, I mean, from my perspective as a total outsider, but having covered, you know, Sequoia for a long time and known folks there. You know, I think the last few years, everybody was watching to see was, was it going to be when, when Doug retired, as everybody

knew it was coming? Yeah. Was it going to be a rule off or was it going to be Neil Shen in China who took the senior steward position? And I mean, obviously the last 12 months in both the U.S. and China has, I imagine, changed a lot on that. But this was huge. It's kind of like, this is like the smoke coming out of the Vatican moment, you know, when, uh, when, you know, Ruloff was anointed to, to be senior story. And then, you know, they'll all tell you like, oh, we're all, and Rolov even uses the animal farm quote, right? Like, we're all equal here. Some are just more equal than others, you know, blah, blah, blah. But this, this is, this was really, really big. Big deal. What do you, what do you think, Ben? What are your thoughts on this moment in time? Is it a big

deal? Huge. Huge. Why? Well, two reasons. One, the Sequoia fund, which I want to come back to in a second. But two, Sequoia has been one of the only firms, the only venture firms ever to do generational transfer

incredibly well. Benchmark is another example where the second generation did as as good or better than the first generation and certainly better since venture just keeps getting bigger and bigger. Every subsequent generation does better on a dollar's perspective, but on a on a percentage or an IRR perspective, you know, I think you have to look at did the second generation

of Sequoia do as as good as Don or better, I think probably better to to, to look at Maritz and Leone versus the, the OG goat of Don himself. And I think Sequoia, this is, you look at the partnership that they have now. They're just, just all-stars. I mean, it is, it is an example of, uh, of generational transfer to a firm done right, which most of the time doesn't happen. Like most of the time, people who started the fund, built the brand, um, you know, had the initial relationship with LPs, but like they hold on for a long time. And I, I think, um, you know, the, the whole venture industry has a lot to learn from building a, you know, hopefully 100 year franchise. I imagine they're, they're looking to

subsequent generations after this that Sequoia has built. Yes, I think the generational transfer thing, Sequoia has done it well. There have been very, very few firms that have done it. I think why this specifically, and Sequoia transfer specifically, is so much bigger impact than even benchmark. You know, a great venture firm on par with Sequoia in the venture industry. They'll be the first to tell you. They're a small craft, boutique, you know, shoe leather business. By design.

They haven't had it. 20 different parallel projects for funds and then double down on the five winners like Injoresen or Sequoia. Sequoia controls so much of the capital globally and influences so much of the capital globally. Like, think about it. You know, they've got top three venture franchise, venture and growth franchise in China, top three venture and growth franchise in the U.S. Top three venture and growth franchise in India.

They've got hedge funds. They've got heritage. They've got the Scouts program. You know, they've got, they were part of Y Combinator. Like this, the, you know, they are, this is like a, you know, Goldman Sachs type generational transfer. Like, this is, this impacts so much around the world. So the scale of it, the footprint has gotten so enormous. And the previous footprint was so enormous, but they let that power dissipate by allowing, by doing distributions and saying, here is your.

shares back, LPs, when the LPs were like, okay, now we're going to give them to some investment bank to manage or we're going to put them in account somewhere. Now, Rulov said, hey, we're going to just do this Evergreen Fund. If we distribute square to you and now you have a billion dollars, or let's just pick a more reasonable, you have a hundred million in square. I'm still on the board. We're still involved with the company. We're not getting off the board. We're now going to stay with the company. We're going to stay with Google. Okay, we're distributing a billion dollars to whatever, you know, endowment. Do you want to manage your Google investment? Or would you like us to keep it here, and then maybe take a little bit of it and put it into the next five funds.

You don't have to do a capital call? Well, you can do a capital call, and we can just leave it over here. And once a year, you take money out. Yeah, we'll manage it for you since we're on the board, and we were the first investors in the company. Such a good pitch. The super high level on the Sequoia fund to make a software analogy is that defaults matter. They change the default from being, you know, a 10-year fund where you do a distribution to LPs and then you go back to them for your next fund and say, hey, can we manage some of your

capital again. And they changed the default to say, hey, endowment, that slice of your, your capital that we manage. What if we just manage that forever? And that is a part of the Sequoia fund. And you are just choosing to allocate a part of the university endowment to us to manage indefinitely. And we have lots of great funds that we can deploy that into. We'll keep you posted. We'll talk with you about the timelines on everything. But it's changing the default to remain involved permanently rather than always get your capital back and re-up next time. Yeah. It is just fascinating and it's absolutely selfishly fantastic for me because Roloff is one of my great friends. This is the best possible scenario for me. How does it affect me? Got to secure the bag.

How does it affect my power base? My power base grows. What's the the secure the bag? I love it. I never, I never really heard it until you started using it. Where'd you pick it up? Yeah. Secure the bag, I think, is a mobster-gangster term that then became popularized in the hip-hop rap community. So like many things, Scarface, Godfather, Goodfellas, Gladiator, a lot of these, you know, seminal works of Machizima kind of made their way and were inspiring to hip-hop culture in the 90s in New York. And so the idea that even in a brutal world, whether it's the mafia or gladiators, you mean why combinator? Is that? Yeah, the mafia.

So there's a perfect segue. That you could actually have some honor and that there was some discipline, right? That's the paradoxical nature of our thing, you know, what they would call the mafia. And that's really what the point of the sopranos is our thing, like the last generation was the last beautiful. You know, this thing of ours was kind of perfect. And then it's the decline of what was beautiful about the mafia. I know that's a, that's the paradox that they're playing with is like, there used to be honor. You didn't rat on your friends. You did your time. You wore a suit. There were rules. Wives, children were never murdered. We never touched drugs. No sweatpants, no nonsense.

sense. And, you know, then all of a sudden, people started wearing hats in, you know, and there's a great scene. I was, I was literally in my younger years in a restaurant with a group of guys and somebody walked in with a hat and it just freaked everybody out at my table. I used to run with a little bit of a crew that maybe was, you know, and somebody got off from the table and told the person take the hat off. The person did take the hat off. And it literally, that's a scene in the Sopranos, where Tony walks up to a guy and says, take the hat off in Artie Bucco's restaurant. That's not a, that's based on real world events. Like you had to behave a certain way, you know? Well, back to Sequoia. And Rulov, this is why this is so, unfortunately, generational transfer is when these shifts happen. And, you know, Rulov has laid out his blueprint with the Sequoia Fund, but there's going to be a lot more. Like, things are going to change now. And we are going to see how it's all going to change.

Here's the great thing. I think also not resting on, not resting on your laurels is one of the things I take away from this. And the other thing is experimentation and not following. So I don't know if you saw it, but Sequoia is launching their own accelerator.

Why Combinator says, Hey, we're up, is that right? Well, just in Europe. I don't have any interest to be clear. I have no inside information. They did not come to me and ask for advice, you know, no, I mean. Foolishly, yeah.

Actually, you know, we're partners. and they meet with all my accelerator companies. It's not like they came to me and was like, hey, you know, what do you think of this like they did with scouts? So I'm just making it clear, because people sometimes assume I have inside knowledge, I don't. So making it clear, they did not come to me in this case to float the idea. They just did it.

And they're doing a million dollars into each company. And they're going to do 15 companies. And they don't say how much they're going to invest. But I think what's unique is they're not trying to do what Y Combinators doing. They don't want to do 400 companies. They could do that tomorrow. They're saying, we're going to do 50 companies. 15 companies, and I think if they're putting a million in, that means they're looking at putting

a million in for 5 or 10%. So it's basically like they're taking a seed fund and adding, they're adding a 12, whatever it is, an eight-week program, I think. They're adding this eight-week program to a seed investment. So I thought that was a very interesting concept that I might copy. So it's almost like it's more like graduate school. They're kind of like putting a big investment in. And they are not just trying to copy other people. I think the Sequoia Fund, I never heard of anybody doing the Evergreen Fund and venture like that. Is there somebody who did that before them? There have been immigrant funds like Sutter Hills

an Evergreen fund, but it's a very different design and proposition. Yeah. So what do you think of this? Well, I, the art. So at PioneerSquare Labs, we've started 31 companies now in our studio. Different model. We're a big glorified co-founder.

We've got 22 people, engineers, designers, all that, and we start these companies. Which means you get some co-founder equity in each company, you get 20% of each company or something, just for founding it? What's the ballpark? We're a true co-founder. Okay, so you get half of the equity. Does that fuck up the cap table downstream

with other investors where they get jealous? And they're like, why should you get 40% of the company? The founders get 40% and we're only getting 20 for putting money in. As with anything else, there are some investors that have a problem with it. There are lots of investors. I think we have 90 funds that we've co-invested with at this point who are completely fine with it and understand the value. When the people have a problem with it,

what is your response to them? And then what is the profile of the people who have a problem with it? I'm just curious because there's a little jealousy that goes on. I notice. I'll tell my stories after, but tell us how they shade you or guilt you or what's their response to you about this issue. The studio business is a tremendous amount of shoe leather. I mean, it's running an operating company the same way that running a startup is running an operating company. And I think the people that don't like it don't realize that and they look at it like, oh, you're just running a fund.

And how come you have all this, you know, this like outsized economics for, you know, deploying tiny amounts of capital in your early stage? I just think it's, it's a misunderstanding of what's being done. Because no one's looking at the founding team and saying you have too much equity for doing all the pavement pounding you're doing at the beginning. Right. But when you look at like what a founder has versus the second or third employee, it's 10 or 100x less. And so you can't out of one side of your mouth be saying, gosh, it's really,

about all the equity that's necessary for the next 10 years, and then out of the other side of your mouth saying, but the founder and CEO of the business should have 50x more than the first hire. It's a little bit, yeah. It is the jealousy of lazy people. This is what I experience. Everyone has their own perspective, and everybody gets that. Way too gracious. But everyone gets it shaped by a worldview that was successful for them.

The thing that I always have to remember is everyone's got a widget that works well for them, shapes their perspective. And like, I have my own and people that don't like this business have their own. And so I think, like, you're never going to change the mind of someone who has, who is extremely successful doing something a certain way and then tell them that that way is not the way anymore. All you can do is say, well, my way is different. And they can both be successful. Yeah, it's incredibly magnanimous. Okay, but the point that I'd not to just like, I would literally talk about PSL. Way diplomatic. I want to like, the reason I brought it up is because I think Sequoia had a very similar insight, which is the deal for early stage investing totally changed

from what early stage investing used to be, where you'd put in a million or two and own, you know, a meaningful chunk of a company. 10%. 40%. Yeah. It's back in the day, 40%. And then not too long ago when we started, you put a million in at 10 million post or you put 2 million in at 12 million posts.

You own 15% of the business, 10% of business, sometimes 20 for that first seed round. And so when that changes, and if founders are doing the thing where they open up a note at a very high valuation and just take a bunch of 100K checks or 500K checks and it becomes unattractive or the superior returns get arbitraged out of early stage investing, what should you do? You should play a different game. You should find a way to be on the other side of the table. You should move late stage. You should find a way to be fluid based on the way that the landscape has currently changed to produce the best outcome for you. your investors, and moving earlier than early stage is one way to do that. Fantastic. We have actually done that. We have something called Founder University now, which was a two-day free program. We made it a 12-week program. People pay $700 to come for 12 weeks.

If they finish the 12 weeks, we give them the $700 back. 94% finished. 85S for their money back. I think 10 people were like, keep it. I don't care. It was so awesome. We had 100 people go through the first. We have $200 in the second.

The 100 in the first cohort, they were, so good that when I met them, I gave five of them 25K each for 2.5% of the business. These are companies that aren't incorporated yet in a lot of cases. I was like, here's 25K to get incorporated for 2.5%. And people are like, you're crazy. What are you doing? Like, that's too early. And I'm like, is it?

I mean, if I do 100 of these for 2.5 million, is it if one hits? You know? You did a great, shoot, I can't remember if it was on Twist or on another pod. A few years ago, you talked about, um, startup investing as like the analogy of like you chip stack in poker. Yeah. And like it's it's all like, where are you in the hand and how much are you putting into that hand at

what point and it's managing that, right? And like putting in 25K that's like to a large basket of startups. Like that's that's not crazy. It's what we call in the business a feel or bet. There are some people I've watched sophisticated players, Phil Homie does it sometimes. We're in a hand. The flop comes out.

There's an ace and two other cards. And he's in whatever. or second, third person to act out of, let's say, he's second person to act out of five, four. And he just, like, there's 800 in the pot, and he puts 200, and you're like, okay, there's like three people to act after you or two people to act after you.

200's not meaningful. And all of a sudden, three people fall. And he wins the pot, or then that happens in the minority of times, or, I don't know, two people fold. Now he's heads up against somebody. And now he's just got to figure out that one person's hand. And that $200 has a feeler bet. If it pays off one out of four times,

he's break even, right? Right. If you did it $200 and you want $800, if it works, one out of four times, it's a, it's a break-even bet. So it becomes super interesting as a feeler bet. And you give these people 25K, it's a feeler bet. You see what they do with it, right? Like some of those people are going to take 25K and they're going to do nothing with it. Some of those people are going to take 25K and they're going to go to town with it. And you're going to be like, all right. And now you have more information and more information and earlier information is like my thesis. Right. But it's just to your point, Ben, it's so hard to do this. this work. Do you know how hard it is to run Founder University and have 200 people who are building their MVP ask you questions? Like, they're literally asking the same hundred questions every week for 12 weeks. How do I raise money? How do I get product market fit? How do I find a technical co-founder? I mean, you have to be willing to suffer through just hardship and the hardship of starting a company, which you do, Ben, of of 10 ideas, how many wind up?

getting funded of your 10 ideas? So of the 10 ideas, we start working on about two of them. Okay. Of one that we work on. Of 10 that you've worked on. Of 10 that we work on, one spins out into a company. And every time we spend something out into a company, we have the ability to get it venture funded through, you know, relationships and pre-veting and that sort of thing.

So it's like one out of five ideas make it there. So you have to come up with five ideas to get one. And then one out of 10 that you build get funded. So that means 50 ideas. One out of 50 ideas gets funding. Yeah. And then out of... But our goal is to not even like...

Those ideas should get thrown away. It'll be 10. So you go 500 ideas to 10 executed to one working. I mean, it's a lot. And the operating business comes in really dialing in what you do at what stages. So the goal would be to get from that 10 ideas to the two that we actually work on, like do that in an hour and a half meeting. So that you just burn through the bad ones as far.

fast as possible. Pick your most fertile potential ones to work on. And then hopefully you're not writing code and doing heavy design stuff. Hopefully you're able to throw a lot of those out and kill them for customers don't want it or business model reasons or Tam reasons or the goal is just like burn through all the bad ones and is the most efficient way possible. And that's the thing when you're really looking at like the P&L of running a studio of figuring out if you're good at it is can you get through all that crap in a super efficient way? That is fascinating. And I don't envy you running one of these.

Beto works, science. These companies are known for one hit every five to ten years, maybe. That's the funniest thing is like ever, that's the like thing about studios. Oh, well, they did hymns and oh, well,

they did dollar shave club, which is funny that they're both. They didn't really do dollar shave club. They invested. Totally. I don't think they, and I think they've been very. Or fitly or,

you know, everyone's got this like, one cute example of the studio. But like, Sequoia is one of the few firms where like, even if you back out the winner, they've got another winner. But like, if you go to one of these super successful firms and you back out their decicorn, it's like, but that's the whole business that we're in. Yes, exactly.

Exactly. So it is similar. All right, listen, we, we, there's, uh, their news. There's a huge elephant in the room. Over the last two weeks, something happened. It has, we all have to discuss it. It was an act of abhorrent violence and drama. And I need to get your takes on this.

Everybody's talking about it on social media. And of course, I'm referring to fast.com shutting down. I'm just trying to figure out if this was the TST-E-Lon and Twitter. Or is this? Or Will Smith smack. That was the one I was kind of teasing. But all right, this is going to become the raw shock test of all raw shock. Fast to shut down this week.

And we just have to go through the timeline here. And this is, I think, going to be, I mean, I think the amount of information that's coming out about this train wreck has taken me on a journey of feeling sympathy for a founder I thought was just misguided. And now I'm kind of learning might be a complete charlatan and horrible. But I don't know where I sit in this drama yet. So maybe you guys can help me figure this out. The timeline is pretty simple. Fast raise is $2.5 million seed at an $11 million valuation in 2019, 2020. They raised $20 million at $150 million valuation by Stripe, which apparently is making a mafia bet, according to Ryan Breslow, to create a competitor to Bolt.

September fast launches. It's one click checkout with select merchants, quote unquote, and does the infamous- I'm sorry, September. 2020. They do fast-do like a nominator? No, I don't think so, right? I don't think so. If they did, they would have done 7,000 tweets about it and we would know. Yeah. Fast launch is one-click checkout and does the infamous $5 merch show where tens of thousands of people buy hoodies and have no idea. I think that's probably there's the fast hoodie on Nick. It is. I think those hoodies cost them $30. So I think they lost $25 on each one. Lost leader. It's a lost leader. It's a lost leader.

Costco hot dog. Like the Costco hot dog. It's the Costco hot dog or the or it's the chicken at who did the roast chicken. Costco also has a $5 roast chicken. The $5 roast chicken. Costco sold so many of those

they bought the chicken farm from what I understand. Guys, I went to IKEA for the first time in a while. Oh, you did the meatballs? Swedish meatballs. I did the, I did Froyo for a dollar 10. Dollar 10.

They had Froyo for $1.10. A dollar 10. But then I figured I did some research. I found out. The hot dogs, the IKEA hot dogs, they have a policy, or at least they used to have a policy, that they had to have the cheapest hot dog within a 30 mile radius of the store. That was like the stated policy on the pricing on hot dog. I have a great idea.

I'm going to open a hot dog stand across from IKEA for 50 cent hot dogs. And they're all going to go in by 40 cent hot dogs from them. Take the hot dogs and go sell them at your stadium for $7. So anyway, I'm starting a new fashion label called Jason's Fast, and I'm going to buy up all the fast. So, okay, 20, and listen, I don't mean to laugh about this story, but it's so tragic and insane that I think there's a little bit of humor in it. And that's how we process things. 2021 fast raises a series B at close to 600 million, 884 million led by Stripe.

Again, throughout 21, 21 fast grows to 450 employees processes a meager 30 million in transactions to generate 600K in revenue about $1,300 per employee. Which if they were driving for DoorDash would be 100 door dashes a year, if you made 13 bucks per, or something like that. So if all the employees did one DoorDash every other day, they would have made the same amount of money? No. It's even less. But anyway, at its peak, Fast was burning $10 million a month generating $50K. In other words, if they had put that $10 million into a bond portfolio and gotten 4% tax-free, would have made eight times as much money.

Okay. I gotta jump in here. There's last to criticize here, but I hate this thing about the 600K because what if they just were making no money, then this wouldn't be the conversation at all. The conversation would be they're building a really complex platform and they haven't launched it yet, so of course there's no revenue. Okay. Do you think there's any world in which the fast...

I'll take the other side of it. Is there any world in which building one-click checkout requires 450 people? Okay, so this is where you get into like the, I don't understand how complicated it is to build a checkout solution and like interface with the payment rails and the payment gateways and of course, like line up all the deals with the e-commerce providers. It seems hard, but I don't actually understand how engineering hard it is. There's their fraud risk stuff.

Is there? Yeah, but I mean, you do not need 450 people. These guys were playing the momentum game. As a comp. Friends of acquired Modern Treasury, they have, what, maybe 100 employees,

maybe a little more at this point. They are doing money reconciliation, payment operations. Comparable FinTech challenge just as hard, I would imagine. And 50 of those employees are very new. Yeah, 50,000 employees are very new and they're moving close to $3 billion a month at this point.

Yeah. So, no, I mean, these are very efficient businesses is another way of saying it. You don't actually need them to people. Sort of. So like, uh, sort of,

but like what checkout, I think checkout has super thin margins. And so even if your payment volume is super high, I think it's actually hard to build a big revenue business. Yeah. I mean, your point about turning on revenue, um,

then changes everything because you start doing math. So I always tell founders, like if you're selling the promise of this, do not bring up the performance. Yeah, don't do math. Right. Because people,

you know, if you go to a bunch of smart people and you're like, yeah, we make $10 per customer. Like, how many customers you have a thousand? Okay, so you make $10,000? It's like, well, how often do they spend $10 with you every day or every year?

It's like, oh, we sell them this meditation app once a year for $10. That was literally comm's business. And then it became $10 a month or $6 a month. And all of a sudden, the whole economics change and how you view the business changed. And rightfully so. But I guess to me what I find fascinating about this,

and I'm interested in your position on it, it is the founder. Ah, okay, yeah. And so, and just to wrap up, things started going wrong. In late Q4 of 2021, they tried to raise $100 million at a billion dollar valuation, right as the markets were repricing stocks. Then they tried to do a down round at a $450 million valuation and told potential investors, they planned on doing a layoff to cut its burn.

And then in March, they told investors they were looking to be acquired, and then in April, they shut down. So literally, you know, this feels like, to me, malfeasance on the part of the board, the investors, and the founders and the management team to run a company at this level of speed with no brakes, no guardrails, no trans, no alignment on the car. Are you suggesting they ran it fast? They ran it very fast, too fast, in fact. And this is just malfeasance. And I think this is, there's something wrong with the founder here because somebody, did a tweet storm about his history.

And he's got a long history. Did you retweet it or you engaged with it or something? I retweeted and I was like none of this could have come up in diligence. And I don't know if any of it's true. But, oh, we're showing right now the graph of like the employee account, which, you know, employee account does correlate. A lot of investors will look at the employee account chart on LinkedIn and use that as a proxy for how the business is going, which is a fine way to find high growth companies.

But then you have to look under the hood and say, is that growth line in any way related to the reality of the economics of the business. And in this case, it was not. Adding more people to this business did not help the core business. I think that's the Cardinal Sin here. But pull up the tweet storm, if you can find it. I retweeted and said something to the effect of like, I'm sure none of this came up in diligence.

Make that like three times bigger so people can read it. And then just throw it to me in the tweet. That's a UD tagline. I'm sure none of this came up in diligence. What happened here, I think, is maybe Stripe was so wanted revenge on Bolt so badly this is the theory

that they saw this kid as a proxy for this kid Dom Holland who I had on the program who didn't seem super sharp to me and you know listen I want to make it personal but I didn't even want to have them on the program but they kept begging to be on the program over and over again and I was like this person's too much

marketing when we're not on this show anyway listen I would love to have Dom back on the program but they were super aggressive about the marketing, and it was always this like promotion and marketing, and they named the people at the firm. You know, like when people get called Googlers and like they self-assign themselves,

we're Googlers, we're Amazonian, whatever. Like, they were kind of trying to create that mythology. It was almost like an Elizabeth Holmes kind of derangement of like, we're going to do all the accruedrement and theatrical stuff for a startup, as opposed to what needed to be done, which is product market fit. But anyway, he's got a background according to this where his background here is that he was involved in a towing business and other businesses where he was incredibly smarmy and confrontational and I guess accused of being a charlatan in previous

businesses and we'll put on the show notes a link to this but what is the takeaway here in terms of late stage venture capital well I don't know I say late stage not as in the stage of investing but as oh I see like late stage capitalism of late stage capitalism and then in parentheses, venture specifically. All right. So what happened here? I think there's plenty to criticize, and I will. I'm not going to be like,

let's start with the criticism. Diplomatic. But like, okay, here was a thing that was going super well. They built like an insane team in the first like year. So like they knew how to meme their way into bringing very talented people on. So going back to my earlier comment of like when something works well for someone, they kind of keep doing that thing because it's the thing that they know works. So you like keep, you're trying to build an amazing.

And I actually do, from all accounts of people I know who are hiring fast employees right now, they're like, the talent density is crazy high. So like, in some ways that can sort of explain the psychology around why do we need to build an enormous team so fast, because it was the thing that was working. Now, when we look at the stripe angle, stripes at B2B company, they have no consumer relationship. And consumer relationships at scale are crazy. valuable. But of course, like a lot of the consumer touching businesses are really hard to build. And also, if you look at something like a checkout solution, super thin margins. So their revenues

were going to grow really slow. I think Stripe kind of looked at this and was like, huh, opportunity for us to have a consumer relationship, maybe this is like our option bet. And if you were going to go about making an option bet on something that you think could be really important in the future, but would be really hard to get sort of mass penetration on, you kind of think, okay, well, then the founder or this business needs to have some unfair advantage where they actually will be able to will something into reality from a cold start. Like, they need to get installed on all these e-commerce platforms. All these merchants need to adopt them. Like something crazy has to happen in order to allow them to thread that needle.

one way, I don't know if it was clearly that didn't work, but one way you could do that is effectively meaming yourself into existence where you build the five-year aura of a successful company around your brand persona, you attract all the best people. And at some point, if it's like, if you did actually have a strong brand and you do actually have all the best people and you do actually have stripe backing you three rounds in a row, you could call it bad money after bad, but, you know, backing you continuously a high value. At some point, like, you could actually get the customers to show up and believe that this is great. And if it actually was a great product, which I don't know, that's a plausible strategy.

Didn't work at all one up and a ball of flames, but like you can see the strategy. David, one of the great things about entrepreneurs, if they get good at something, they do press their advantage. And all executives, Bob Eiger is a great dealmaker. He goes on the deal run of all deal runs. Somebody's a great operations person like Frank Slutman at Snowflake. he just fires people who are average or good performers and replaces them with people who are good or great. And everything's a war to him, right? So it's an operational machine.

He's not out there banging the drum and doing marketing. He's just destroying people who work for him who are not good or who are good. And he's like, you're not great. You're only good. 8.5 out of 10, you're fired fast as as as slow as we go. you know so what do you think of you know Ben's defense of a founder

it was more of a hypothetical defense okay hypothetical defense you want to listen you want to take the other side Ben you got to be a big boy and then David is going to I took the other side now David's going to referee go ahead David oh boy okay yeah I mean I deciding vote David who's right

me or Ben I think Jason is right but I think Ben you would probably admit that too like this was the running of this company was a travesty, you know, probably, you know, is it thereinose scale? Probably not, but like, it's somewhere between a travesty and a Theranos. But the reality is, on a scale of one to Theranos, where do you rate this in broad or

malfeasance or incompetence? Theranos being 10. Well, Theranos were at stake, so there's no lives at stake here. Yeah. Madoff being an 11. I don't know. This is pure speculation because I know none of the details, but I'm guessing. a four. I don't know. Something like that. But, but the reality is like, you know, one modern

treasury funds 10 fasts from a venture capital standpoint. So like this is the thing. These are like big flashy stories. It's like watching a train wreck. Everybody gets excited. But yeah, they happen because like the economic incentive for capital is like, sure, let's fund a bunch of these and one of them's going to work. Here's the things I don't like about this. Number one, governance. Who's on the board of fast that allowed

this person who had a sordid background to run amok and burn money at this rate? Who was in the meeting

when they presented a two-year plan that made no f***ing sense and didn't put their foot down and say maybe we don't need

450 people. Where was the governance? So that's my first question. Well, that was part of the problem. Like,

you got Stripe leading these rounds. Stripe's a great company. I'm sure all the people there are great. Were they on the board? They're an operating company. They're not board members. This is where strategics are. So number two, when we talk about strategics as investors and we're like, ah, you want to do a strategic round fox in the henhouse distorts what the goals are?

Not a clean term sheet, probably. Like, strategic always have some non-pure financial incentive. And that's exactly right. So you put a strategic and, you know, listen, Stripes, I'm a much. Among strategics, I understand, like a founder wanting to take their money. But this is what happens when you lay down with a strategic. They have a, you're going to wake up and you might not be in the position you want to be in. Like, this is a, this is the absolute pinnacle of why strategics are kept out of high growth, early stage companies.

It's because they're going to have a distorting effect. three, the scale of investment is completely unnecessary and we're breaking the milestone-based system that makes our industry what it is. So governance, strategics, and milestone. All three of these things were thrown out the window and then finally diligence, which I don't know how much of Dom's past is being exaggerated.

There's two sides to every story, yada, yada, some people are polarizing, some people knock a lot of shit over while they build the future, I get it. but that's what I want to know about. That's the piece that's missing for me is governance, strategic, diligence, and what was the fourth one I came up with? Oh, milestones, yes.

So let's talk about the milestone-based system of Silicon Valley. Somebody comes up with an idea. They go to an accelerator. The accelerator accepts them. Okay, you hit a milestone. Come out of the accelerator. You beat the other people coming out of the miles, or you meet a bunch of investors.

You pass market with a bunch of seed investors and dentists and seed funds and angels. yeah, you get product market fit, you start scaling, you get a venture firm, you get to true scale and predictability, you build a management team, you get to your series B, C, D, E, you go public. Is there a major risk here, Ben, that people have forgotten the milestone-based system that got us where we are today? Yes, and that is not just, like, Fast is the most fiery example to talk about that, but over the last five years, everyone shifted one click down the, uh, round system in what they were looking for. We heard all the time, series A is the new B. C is the new A. Probably two or three clicks.

Right. I was thinking the same thing, David. Maybe we moved two clicks. And in this case, four. Preseed was not an asset class that previously existed. In fact, even 10 years ago, Seed wasn't really an asset class that existed. That was Angels.

So we invented two brand new clicks in the whole thing. And in doing that, I think we got everyone so comfortable with the idea of moving their underwriting criteria two, three, four years earlier in the life of a business for that amount of capital, that there is sort of the risk of the whole thing, of people being so insensitive on price versus milestones, that, yes, I think we are in a very high-risk, non-resilient system right now.

Like, everything kind of... Fast is a great example of this. The playbook that they were executing, assuming there was a sane strategy and they had a good discussion about it, That was just not a resilient strategy. If everything went right, it maybe could have worked, but they did need every single thing to go right everywhere along the way, and there was no slack in the whole thing. A lot of the people who choose to raise rounds like this that aren't hitting the traditional

milestones are basically just reducing their resilience and requiring that everything go right in order to create some positive outcome. And as the whole venture system shifts to that, yes, all these investments take on much more risk. And Jason, know what you've been saying goes hand in hand with governance, right? Like milestones and governance go hand in hand. And I think, you know, actually, if you read a lot of the stuff that Roloff, you know, wrote, I think probably even in his memo around the Sequoia Fund, you know, that's what he's all about. And I think what they're trying to do with the Sequoia Fund is like if you set up incentives such that when you invest in a company, you care about the long term, you know, economic outcome of the company, then you care about milestones and actually building stuff and performance.

Whereas so much of the venture industry, and I'll rate to my hand, like myself included in the type of stuff that I do, is instead baked on, based on mark markups, based on making the fun look good, based on TVPI, based on selling secondaries, based on getting liquidity. And that's how you end up with stuff like this. Yeah, it's really, it's really crazy that people have forgotten what got us here. I cannot, I mean, the number one reason, the number one. reason we've turned things down of late, you know, or in the past year was the valuation just didn't add up for us. And we were like, if you're raising at a $50 million valuation and you have no revenue and you barely have product market fit, well, we could just focus on accelerator companies or do 500K into 10 seeds that have their first five customers.

And we don't have to worry about you going from zero to five customers. We've already got 10 opportunities. So it was like, I love the founder. I love the business. I love the product mockup, but I have other options. And if you have other options, then why not focus on the other options, I think is the case. And so discipline is what's needed. Governance is what's needed. Governance is actually cool. This company with proper governance would have had somebody pump the brakes. And I'm not throwing shade at the board members, you know, from Stripe or index, or Brian sugar is a friend of mine is an angel investor. Maybe he was on the board. And who knows?

Maybe Dom negotiate some sort of board control. But, you know, governance is important when, you know, and having a co-pilot, if you think of governance as like a really good co-pilot, when you're in the soup, when you lose an engine, like having a co-pilot reading that list for you, okay, now, step one, reset the engine. Step two, check the oil gauge. Step three, flip the, you know, circuit breaker. Step four, do this. Step five, you know,

check your altitude. You know, like one person's flying and one person's going down the checklist. Like, this is why modern day aviation is so radically different. Read the book, The Checklist Manifesto, and you'll learn about this. This is why people survive surgery and plane problems, you know, aviation challenges and disasters get avoided. It's because of good governance, good checks and balances. So I think that to me is a big lesson. Give me a company as we wrap here that you're super excited about.

It could be any company you've invested in. But at this moment in time, this week, this month, something happened that made you excited about that company. Something that made you excited about a company in your portfolio. While Ben's thinking, you know, what's top of mind for me right now is InVIDIA. We're in the middle of our Invidia series here. And, you know, I don't have a particular view on the stock. The valuation is incredibly high right now. But, God, what they've built, like, it's just, it's such a story.

I was thinking a company you invested, but okay, we'll go with that one. Yeah. Jay and talk your book and David's like, I don't want to talk your book. I don't have any investment here, but sure. What do you got? What do you got, Ben? Let me go to Ben, and then I'll come back to you, David. Ben, what do you got?

You got something queued up. Could be one of your studio companies that's getting tracking. Well, it's funny. I was going to, this is like a PSL acquired sandwich. So we just had the founders of Trova Trip on our LP show. And I think that episode's going to come out maybe tomorrow. But they've built, it's a travel company. that lets groups of people go on trips

with creators that they already follow. So the creator stands up a trip on Trova Trip. It's run by a third-party operator from Trova-Trip's platform. We looked at this, actually. I was very intrigued by Trova-Trova. Oh, yeah? Yeah.

Did you invest in it? Yep. Is this a studio? So full disclosure, I'm actually on the board representing PSL Ventures. And it was a female founder? I believe was a female founder? Yep.

and Nick. Lauren and Nick. I remember meeting Lauren. Yeah, it's a really cool company. So you as an influencer say, I'm going to do this trip. You get to go for free. Yep. And you might make a 10% or 20% of whatever dollars come in.

Yep. And then your fans. So if you did an acquired FM goes to, I don't know. Someone more exciting than Sand Hill Road, hopefully. Well, I mean, it could be something cool. Like, well, went to the Rosewood on a Thursday night. What an adventure. That is exciting.

We could take everyone on like a backpacking trip in Patagonia. Yes, and it could be something epic. They pay $5,000 once in a lifetime and they get to go with two people who they would love to be affiliated with your selling a little bit of access. We looked at this back in 2019 and I fell in love with it. But I don't know why we didn't get there. I have to look at my notes, but maybe I got to make up for this mistake. Mine is going to be anyplace.com. This is something we incubated.

And they were originally started by letting people do short-term rentals in two and three-star hotels, which had so much availability and living in a hotel was great and for nomadic people it was great because you could, but hotels didn't want to take the risk of people wind up domiciling there and they didn't know how to run like, so think of it like

as an Airbnb reaction, hey the hotels you know, are that are being impacted, are not the five star hotels it's the two or three star hotels that are $200, $300 a night that Airbnb is beating. But then living

a hotel is pretty dope because you and the hotel just says okay we'll change your sheets once a week you know as opposed to every day. I have wanted something like this before. This is great. Now what they did was they did an experiment where they set up a podcasting studio, a widescreen monitor, a standing desk and they made their own kind of curated spaces at anyplace.com which are designed around people who need to be on a grain screen all day or you know, whatever. And so here you go.

you can do short-term rentals, if you're a podcaster, if you're in-house sales, if you need to do whatever, or you live a nomadic lifestyle. So if you wanted to spend a month in Miami or Los Angeles, you can go to your boss and say, hey, can I rent this for a month and, you know, be in your backyard? So if somebody working for me said, hey, I want to spend time with you every day and we're going to do a retreat, we'll go for two weeks, everybody gets a room with an office in it, basically, a home home office in it. So it's a pretty cool idea. I encourage everybody to go try anyplace.com. Free ad for them.

David, do you want to, all your portfolio companies are like, okay, Ben understood the assignment, Jason understood the assignment. David did not understand the assignment. But I did because I was talking about acquired. That's true. Somebody wants you to.

If only more people were curious about listening to podcast episodes about NVIDIA, where would they turn? Where would they turn? There's three podcasts. I'm just playing the game at a different level here. There's a, There's the Nvidia

shareholder podcast. I could get 30 seconds talking about a portfolio company here or I could get three hours talking to people on my own pocket. Give us a portfolio company. Let's go. Your whole portfolio is on edge is here. There's this portfolio company. It's called Nvidia.

They have this really interesting chip. It's going to be big, everybody. It's going to be big. We encourage everybody to look for an Nvidia chip in their next laptop. It's a go-go-go. I want to give a quick shout-out to my kindergarten partner and portfolio company, Kettle. You've had a, you've had an ad on the show.

they are really rocking and roll and they're building a reinsurance company. They're literally building a new reinsurance company. It's amazing for climate risk. And you've talked a lot about it on the show. We've talked about it.

But it's working. They're building a reinsurance company. So great. Got it. There it is. R kettle.com, I think is the one to take a look at. So for all the venture capital is trolling for investments

on this podcast, there's three for you to look at. We're talking our own book. Everybody's favorite part of the program. Thanks again, boys. You always do a great job, Ben and David. Go check out Acquired.fm. Searchwriting your podcast player

and look forward to guesting over at Acquired at some point soon. We got to find a third person and let's do like a little mini super team over there. Oh, you know what? I'll bring Molly over. That's what we're going to do. I'll bring Molly over.

And we'll come over to your house and you guys can cook us dinner. All out. Love it. All out. All out. Well, thank you for having us. It's like, it's super controversial.

Now, like, there's a group of people, like, the overwhelming majority of people love that podcast, and it, you know, hits, it hit like 31. Yeah, thank you. And people are copying it now. Like, there's a, uh, some venture capitalists did one and they basically said, we're just copying it. We're just going to take the, there's like three of them now, but they're just like, we're just literally taking the exact format. We're going to make a joke. We're going to have a J-Cal. We're going to have a SACs.

We're going to have a Chmoth. We're going to have a nerd science. There's only one J-KAL and SACC and Chmachach. Of course. Yeah. I mean, listen, it's fine. People want to try to, um, but it's flattery. But, you know, there's a group of people who maybe disagree with one or two people on the pod and are like upset at me or then they back channel to Molly.

Molly, can you talk to J-Cal about what Sacks said. And I'm just like, even Jason can't talk to Sacks about what he said. Well, whatever. I'm just giving one example. It could be Freiburg and another or Tramath another. But it's like, who hates Freiburg? Freeberg is the most wholesome. What I mean, when he said, I mean, I, you know, anyway,

I'm not throwing any of my besties under the bus, but what I would like to encourage people to do is you can be friends with people that do not agree, have your exact worldview. This was the strength of America, you've absolute morons, be able to sit at a table with somebody who voted differently than you or likes films that are different than the films you like

or they love golf and you love poker. Vival auldifference. What is wrong with you, people, that you can't even sit and talk about things that are important with people you disagree with. It's a road to disaster if you cannot maintain civil discourse or even uncivil discourse with a group of people who are different than you. It's so insidious.

It's like such a, it's everywhere in society, but it's in Silicon Valley too. And that's just so depressing because that's not what's like Silicon Valley is about differences. They literally like there was like this Overton window and like from one side, the Republicans were like, here's a piece of plywood. They put a piece of plywood. And then the left people were like on the inside and they're like, oh, you put plywood on the Overton window?

They just put their plywood on the inside. So now we got this like Overton window. They used to be super wide open. We could talk about anything. Oh, yeah. Should we have affirmative action? Should we not? Like, I don't know where I stand on affirmative action on a college.

Should it just be merit based? Like, this is super complex. It's going to the Supreme Court. None of us know the answer to how admissions should work equally. Does anybody know the answer to that question? If we did, we wouldn't be sitting here struggling with it. So be able to discuss things with people who have a difference opinion and then have the humility to be like, I don't know how to deal with Putin. He's a sociopath.

He's a dictator. Does any of us know how to deal with Putin? What's that? Like, if I were like a, if I was very good at geopolitical strategy, like, I would be doing that. But I'm, that's not my job. And I don't know that that is not my strength. So yeah, probably not going to spot off on a pen. I've got a perfect quick example about this.

I, we were just visiting, we have really good friends from business school who live in Dallas. And one of them is a oil and gas private equity investor. And the last few years have just been brutal for him. So many of his LPs have just been, you know, their university endowments. And they're like, well, our students, you know, our constituency banned us from investing in this anymore. And, uh, the whole time. And now, like, with Russian Putin, he's like, yeah, I mean, it's a lot better. Our world runs on oil and gas still.

Like, yeah, it'd be great if it was sustainable. But wouldn't you rather get the oil and gas from America than Putin? Like, it's so short-sighted what people have been doing. Yeah. All right. Listen, everybody followed Ben. Everybody, all, David. Great conversations.

Let's have more of them on the more difficult subjects. We'll see you over at the Acquired FM feed with Molly. Set it up. Nick, let's go. Let's keep these conversations going. All right, boys. I'll talk to you soon. Take her, David, take her, Ben.

All right, everybody. Lon is here for this week, and streaming, Molly is on vacation. We got to start with the dropout. Let's talk the dropout. Yeah, it's over. Now, this is the eighth episode. It's over. It's done.

That was it. It's done. My perception was they took their time up to episode seven, and then episode eight was just like so much happened in such a short, compressed period of time. A whirlwind, yeah. It was a whirlwind. on a storytelling basis was the whirlwind something that you liked about the eighth episode, or do you feel like they should have opened it up to 8, 9, 10?

Or do you feel third option like they compressed it? And then if they, I think they're doing season two, they could go back and expand, you know. Are they going to do season two? I think she said, Amanda Seyfried said she wanted to do season two. There's no way they're not doing a season two because Balwani's, we have to do season two. we have to hear the end of the Balwan experience. There's more a story to tell. They could keep going for sure.

I like the finale. I mean, it does feel like once that, you know, this is where it all gets away from her. And like, by the beginning of this episode, the forces have sort of aligned against her. And it's one thing after the other. And they sort of have that moment where it seems like they get away. You know, the story comes out. The board agrees to stick with her. And there's this kind of eye of the store moment.

where it's like, oh, maybe we got out. And then immediately after that, Medicare comes in and shuts down the lab and it's over for real. And I like that. I felt like it captured how it must have felt for her, where one moment she's still interviews and top of the world and billionaire and genius Elizabeth Holmes. And then literally the next minute,

her own lawyer is like, I'm leaving. You can't afford to pay me anymore. You know, we were never friends. such a good observation about the dropout and how they did the storytelling, which is it might actually, they may have made the editorial decision that frauds take a long time to be discovered. And it's a long, slow process investigative journalism. And the fraud builds and you're covering up mistakes with more fraud. But then when there is a tipping point, the plane falls from the sky. Right.

And this was the plane like is. soaring to all new heights and everybody's like there's something wrong with this plane there's something rattling it seems like it's off course or whatever and then boom the engine blows and it is in a descent and a free fall that it is not going to get after and the john carrie roo story yeah is that slow burn i felt like i could watch just the john carrie roo story for eight episodes it left me wanting more that right and i think that they did a narratively i don't know how realistic this is, but narratively, they had this great moment of, it's that one interview. It's that TV interview she does where she can't really answer anything and she doesn't seem

sorry and she just keeps repeating that she's devastated because that was the line that they gave her like, oh, you know, really hit this in a humane way that you're devastated. And that's the moment. I think everybody sees that and that's the moment where it sinks in for George Joltz and for David Boise or whoever. Like when he just like, he's pieces out, he just leaves. Yeah. He's like, oh, it's over.

She can't, she can't convince anybody like this is it. It's all going to collapse around her and we're gone. My favorite scene and then I'll get yours was them coaching her on how to apologize. And it's sort of like a pairing of her Asperger's like qualities. Again, I don't want to diagnose. I don't know if she's been formally diagnosed. But they were, I mean, all but saying it that this person has the inability to communicate like a normal human. and she says I'm different.

There were like two or three scenes where that came to play. The one is she can't apologize. And she keeps saying, I was devastated. I was just, it was devastating. Right. But she can't say I'm sorry. And everybody around her is just like, is it so difficult for you to just say you're sorry?

And there's another scene with Bawani where she reveals, oh, yeah, you, you dated me when I was very young, didn't you? Right. And he's like, well, I have all these emails. And then she's like, well, I was barely 18, kind of insinuating, you know, this Schengali. How badly this could play for him. Like, all of these scenes of like, if you look at it from this perspective,

I can make you look very bad and leave you sort of holding the bag for a lot of this. Yes, the Roshima moment. And then there's the final moment where she's just like, I got a dog and a boyfriend and she's under the cover. And she's, I think they're kind of insinuating maybe she's on mall. and she's kind of like living her best childhood again, which she gave up because she's going to Burning Man. So those are my three scenes,

but you riff on those of what you loved about the last episode. I was going to pick the bit with her and Michaela Watkins. Early in the, who was the lawyer. She was the head lawyer for Theranos. Earlier in the episode, they have this great moment with them where she goes, you know,

you've really become a good friend. A friend. I don't have friends. Right. In Michaela Watkins' face, you can see, she doesn't think of this person as friend. They've been spending all this time

because she's in devastating legal trouble, not because they're hitting it off and getting a lot. And interesting that this episode of WeWork, which you may not get time to today, also plays around with this idea of like, these people don't really understand what friendship is. It's always every relationship is transactional. And there is no like real friendship there.

It's just what can this, what can this person do for me or get me or reflect for me or give me? So there's that early scene. And then later, when Michaela Watkins doesn't even work there anymore. And she's just saying, Rupert Murdoch sold all of his shares for a dollar. You should get ready to go to bankruptcy court.

She said, oh, can you do that for me? And she's like, I don't work for you anymore. And this is my friend. And like, no, this is somebody you screwed over. This is an employee who is counting on you who's now out on their ass. And like, I thought that the, the, I don't know if that really happened. But the tension of that seemed like the way that they personified everything that was going on in two people.

I thought was really good word. She's literally chasing her out of the Theranos office and into her Uber. And it shows, I love your point about the inability to form actual relationships. And also sociopaths and narcissists do not care about the fallout around them. And that is the tension of what's happening in the dropout is she actually does not care. She got a dog. She got a boyfriend. She's on to the next thing.

Right. And the lawyer, and this is a lawyer who's defending. a sociopath. So she's of moral questionable authority already. And even the lawyer who's defending a sociopath is like, you hurt people. Like, these are real people. Like, what the fuck is wrong with you? This is an attorney who was trying to, you know, screw over the widow and the person who committed suicide over this. That's how cutthroat she is. And even she has been pushed to the breaking point. And was waiting in George Holtz's bathroom to ambush his grandson. I mean, yes, he was cutthroat. Yeah.

This is like Darth Vader being like, dude, that's dark. Why would you do that? I mean, it really, it's interesting too where it plays with the idea of what it means by the dropout. Because the whole series you're thinking of, well, she dropped out of Stanford to start this company. But it's really the ability to just move on, you know, like, I've been doing this. This was the thing. Oh, it's not working. We tried.

And the delusional speech she gives on the way out, which is like, they tried to stop us. They're just not ready for true innovation. It's like, or you're a sociopath who surrounded yourselves with sociopaths, and you could have done this completely differently. Absolute, great storytelling. Yeah. Liz Meriwether is the show's creator. And she, Amanda Safreed is lobbying to do number two. But the quote from Liz, I would love to work with her and all the people who worked on the show again, but the story has gone as far as I want to go with it.

which means, okay, let's let another creator do it. Hand it off. I mean, we've heard a lot of stuff like that often before and then sell like White Lotus. When that was, it was like, this is a one-off day. We're not going to. And now they're coming back for season two. They keep saying mayor of East Town. Who knows, maybe they'll do another one.

I wouldn't say definitely not. Right? It's a negotiation. I wouldn't say definitely not. I would say, let's see, you know, give a few more weeks. And then let's see what happens with the case. I mean, does Sunny Mulwani end up going to jails? Are there more development?

What do you think? Just based on what we saw on the show, let's assume the show is pretty close to reality. Right. Based on the show, what is the proper sentence? We are not judges. We know nothing about the legal system. Yeah, I don't know how long people would do. On a moral or ethical basis, who is more culpable, Bawani or Holmes?

I mean, it seems pretty similar to me, right? Like, it co-dependent. I know I was reading about his big argument. I think they mentioned this in show is that he didn't draw a salary. Like, well, I wasn't. There was no profit. I wasn't profiting. So how could it be me doing a fraud?

And I think that honestly, like, as, you know, shifting semantic an argument as that is, I think there is something there. It wasn't his company. He was on a very core level helping this other person out. And it was her thing. And she was the one taking all of the accolades. And I'm the CEO. And I'm the founder.

and I'm the billionaire genius and the Steve Jobs. So on that level, she's setting herself up as the figurehead. But they're definitely both co-be. I don't think either of them should get away Scott Free. But you tell if you would tell it a little bit more blame on the CEO. Makes sense. Yeah, like the, I mean, it's just kind of a buck stops here sort of thing. Like she was in the position to when he's like, hey, maybe we should crack open these Siemens machines and look inside there.

she said absolutely not. We wouldn't know. Why would we do that? That's insane. We're a medical device company. We need to make our own technology. You know, like there was that moment when she could have done that and she did not. Yes.

There were ample moments for her to stop the fraud. And in fact, the show shows her contemplating stopping the fraud. Right. And I mean, I think this goes even one, beyond just fraud. I mean, fraud is bad. Don't do fraud. It's a criminal offense for a reason. But I think this goes even beyond financial fraud because.

because it's medical records. I mean, as they said in the end, people giving incorrect cancer diagnoses, AIDS diagnoses, misdiagnosing a miscarriage. I mean, this is very serious. This is people's health. It's very serious.

And what a great show. They have to have to have to do a second season. It's the best thing I've seen on Hulu since Doapsick. I don't know all the... I like Dobsick as well. A lot of good stuff on Hulu. It's Atlanta, season three of Atlanta on Hulu right now.

I didn't watch season two, which I heard was an artistic tour to four. I love season one. It's just very hard for me to keep up with this. And we will be back with Lon next week to go over with Molly. We crashed, which is on episode five, and we'll have episodes five and six if you want to catch up. And then we're going to start Severance. The Ben Stiller.

So we're going to keep doing this every Thursday and we'll start Severance. I am on episode. I'm just starting episode two. So if you want to catch up with us, I think maybe we'll do three episodes of Severance. Well, Severance is ending tomorrow. The finale. So maybe we'll do two or three episodes? So yeah, I think as many as you can, as many as you're ready.

Seven episodes? There's a total in the first season. All right. So maybe we break it into three weeks. So we'll do like three episodes, three episodes, two episodes. That would be a good way to do it. Okay. We'll see you all next time.

Bye bye. Thanks, Lon. Hey, everyone. Producer Nick here. I want to tell you about the SaaS Syndicate. If you're a founder of a SaaS company with a product and market, our investment team wants to talk to you. Head over to the syndicate.com slash SaaS, S-A-A-A-S to apply to raise from the Sass Syndicate.

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