Why a Chemist Left $7B to Bet on Physical AI Before Everyone Else | Bilal Zuberi, Red Glass Ventures

0:03

Bilal, welcome to the show. Thank you. Thank you, Turner. So good to see you, man. It's awesome to see you too. I'm really excited because we haven't really got a chance to sit down and have like a two hour conversation. I don't think like ever before. So this will be fun. I think probably the most interesting place to start is you have been investing in what we now call, you know, physical AI for 18 years.

0:29

You were at a pretty large fund, Lux Capital. I think they have, I think Claude told me $5 billion in AUM. $7 billion. Oh, $7? $7 billion in AUM. You left to start your own fund. you know, it wasn't necessarily the hottest thing in the world, but suddenly like it is, people will not stop talking about it.

0:50

So as somebody who's been doing this for a really, really long time, what do most people typically get wrong when they first start to invest in something that's not just software? So number one, many thanks to Jensen Huang, who I think in January 2025 put up this chart that now people have seen many times where he says there's AI, the energetic AI, and then physical AI.

1:14

And I was like, oh my God, the future is physical AI. um you know 18 months ago when i was like starting my conversations with lps that maybe i should do a fund uh there were many lps who said we've never done investment in this area this is capital intensive and i try to tell them no it's not at least not the way i'm approaching it or the kinds of investments i want to do

1:36

But it was an uphill battle because, you know, oh, this is probably only large funds can do this, where you can write big checks and hold on to your positions.

1:45

That has completely changed in 18 months and everybody wants to invest in it. The way Jensen describes physical AI, it feels like a little bit more narrow around robotics and autonomy and so on. The thesis of my fund is AI and the physical world. I think there's tremendous innovations happening in AI. I think we all realize that at this point.

2:05

hundred different ways um and i think we want to fund some of those fundamental innovations but we also believe that ai is going to have a massive impact in real world physical industries you know things that we consume you know this table this glass the food the energy we consume the industrially produced products that we have and so on defense and all that stuff um What are the mistakes that people make? I mean, look, number one, there's a lot of very smart people investing in this space and they're coming from different vantage points.

2:36

Some people have been doing it for a long time. So clearly they bring that expertise. They also bring a scar tissue to it. Sometimes their problem would be that, you know, they've seen too much and they know a hundred ways to fail and that's all they think about. So they sometimes miss the big idea because they had seen something like it before and they wouldn't do it.

2:54

But for newer people, you know, go-to-market in these industries is tough. Decision-making in your customers is much more complex. The incentive systems at your customers are not exactly aligned with you.

3:12

They want better products, but they just want to protect their market share more than anything else. They've never seen rapid growth and, you know, oligopolies or monopolies. It doesn't really happen to them. um they um you know they would love to push all the risk to you and you as a young entity might assume all that risk thinking that's what it takes not realizing that there's not enough at stake for your customer to be there for the long term so you end up sometimes investing in companies that feel like a big idea but the practicality is missing One of the things, you know, I talked to LPs about as I was doing fundraising was that, you know, of course, we want to fund

3:54

big, important ideas, change the world ideas and companies that can become very, very big. And hopefully the entire investment investor ecosystem will want to be a part of that at various stages.

4:05

So it's not a niche one. But I also said that we want to back founders who understand what it takes to turn a startup into a business. So why is that such a big deal? Look, startup, you and I can create a startup during this podcast, probably cost less than $25 to register. And we can call it, we're going to go mine on the dark side of the moon and likely get admitted into some accelerator and even get funded.

4:29

Especially with you and my background. Yeah, I can spin up Claude right now. These guys know how to raise money. While we're talking, yeah, Claude can go and we'll have a website and a product. These days, people are saying, can these guys raise money? And if you can raise money, great. People want to fund you, so we can do that. But the business, business has customers who buy products.

4:47

When they buy a product, they give you revenues. And the revenues are real only when there's margin associated with that. And going through all those steps is non-trivial. It's finding a customer on the other side that cares about your product enough to part with real dollars toward you. And in a way that's not just real dollars while they know that you're packaging a dollar with every product you sell to them, but you are actually generating margins and profits on the other side.

5:14

That's a tough ask. And I think the greatest companies that, you know, I've been fortunate to be part of have figured that out. And as their business starts to grow, they also start to grow the TAM. So they're turning their startup into a business and the business is becoming bigger and bigger on its own, expanding. And the opportunity set in which they're building is becoming bigger.

5:36

Those are the business that I think are just most amazing ones. So it's basically you need to make sure on day one, or as close to as day one, you can sell a thing profitably, you're gonna make money, maybe the TAM in a spreadsheet or in a market report can or cannot be big, but it actually has to be large long-term, whether or not the spreadsheet says it does.

6:02

It has to materialize over time. It's not so much that you have to start selling day one. You have to do real development, real product work, but you have to understand what it takes, what it takes to sell. I met somebody earlier today who, remarkably smart individuals building a research lab in a very important area.

6:24

But when you reach the point of like, you know, what is your path to turning it into a product that actually people use it? They just haven't thought about it. And they don't see that as a priority, which is fine because they're researchers who are basically doing, you know, research just happens to be inside a company and in today's climate, they'll get funded.

6:45

But I think that cannot be your portfolio. There could be a shot on the goal that you take in your portfolio. There's room for something like that. But that cannot be in a majority of your portfolio. You mean as an investment firm? As an investment firm. Okay. So it's almost like you need to be commercial. Like the founders need to be commercial and know how to get customers to pay them for the thing.

7:07

Isn't that the purpose of starting a company? I mean, I think so. I mean, why do we start a company then? Like, I don't understand if we're not trying to be commercial. Like, I mean, professors, I mean, research, I mean, basically saying nobody will give us money in a university. So let me create an alternate form of a university and do research there.

7:25

Don't take me wrong. Like, you know, Vinod Khosla and others who funded OpenAI, it was not commercial, it was a nonprofit. Vinod could do that, but Vinod can also give a billion dollars to somebody as a nonprofit grant because he wants that to exist.

7:40

That's very different than necessarily an average VC who's trying to do remarkable investments and make a mark on the world to the extent that Travis Kalanick was saying everyone wants to make a mark on the world. You know, we're trying to find amazing individuals who will create real value, who will create real products, who will improve people's lives and who will create products that have economic value in society.

8:04

And that's what we get paid for in return because then society says, thank you for building that. We'll give you a lot of money because I think you will continue to add money for the long time to come. And hence, we will apply a multiple to it that will be pretty high and you can cash out and we will continue with the company going forward.

8:21

Thank you very much. And that's what we call an exit. Does that happen a lot, you think? I think so. This episode is brought to you by Monaco. Monaco is the first revenue engine built specifically for startups. Monaco's AI-needed platform replaces your legacy CRM and sales point solutions. It has everything startups need all in one place.

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10:00

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10:26

You know, VCs are responding to the environment that they're in. They know what their job is, but sometimes they feel like in the interim, you got to do what everybody else is doing. And if everybody else is funding research labs, then maybe I should have a research lab in my portfolio as well. And then they get some get carried away. But I think VCs, investors generally understand that their job is to invest in something that creates long-term real value.

10:52

And people may defer on how long it takes to create that value. That's okay. You know, SpaceX is a very old company. Tesla is a very old, it feels like a new company, but it is not. I don't think anybody has a 23 year old, 23 year fund. I don't think my LPs are willing to give me 23 years. Now, maybe if it becomes, you know, at the end of 12 years, if it's starting to look like SpaceX, they'll hold on to it.

11:16

But, you know, otherwise these are 12 year funds. In fact, 10 year funds plus two has become very common. Maybe they'll become 15 year funds, but that's roughly the timeline that you've got to make your mark on the world with that company. So what's happened over the past couple years? Because if I go back three, four, five years ago, I feel like the mantra was hardware is hard.

11:41

Right. So what's changed that people are now all of a sudden really excited about the category? Hardware is still hard. I really encourage people to not let VCs tell you that hardware has become easy. It has not. In fact, it's become in some ways harder. Supply chains in China have been cut off. If you designed a product here, you could go make it in China.

12:03

Now you have to do everything yourself. You have firms that are having to basically reinvent motors and actuators, things that used to be bought in bulk in China, and we're having to rebuild them here. But put that aside. What has changed? Few things have changed. One is, you know, the founder set that has been attracted to the hardware space is a founder set that Silicon Valley is more familiar with and understand.

12:32

And that founder set understands how to build fast moving companies. I've often said that, you know, while technology is a great differentiator for a startup, the real differentiator is the speed. You know, if you can move fast, you can do amazing things. You can do something that's relatively commodity and build an interesting company because the other players who provide that commodity are stale and are not going to move fast.

12:59

I mean, it's like Uber. So there's like a car ride. Correct. There's hundreds of millions of cars around the world. Correct. Right. Every photo taking app could have created an app that also deletes your photos. But Snapchat did it and they did it fast. Yeah. Right. Everybody could have added filters, but Instagram did it. And eventually everybody tried to, but Instagram had already established its lead and community around it.

13:21

But in hardware, you know, 18 years ago when I entered venture, we had discovered 18, 20 years ago that there's this whole world of deep tech, clean tech, that, you know, energy is massive. Like, you know, all of enterprise software business is like three, $4 trillion of revenue, right? Just automotive alone is $4 trillion of revenue. Industrial is another $10, $12 trillion of revenue.

13:44

Manufacturing is another. Construction is another. I mean, we're talking $40, $30, $40 trillion worth of economy that's available for us to work in. The problem was that because we did not understand these industries intimately as investors or as founders at that time, we said, who should we fund? We said, let's find these guys who have 20, 30 years of experience at Shell and GE and BP who really understand oil and gas and energy and manufacturing and let's fund them.

14:11

Yeah, that makes sense because they're the experts on the industry. They'll know how to navigate. Correct. But they're not founders. They don't have the founder DNA. They don't have the entrepreneurial spirit. They don't move fast. They can't make it and break it. They do things the old fashioned way. And hence they are no different than the other incumbents.

14:33

So what happened is that because these industries take a while on its own, by the time they would get to market and market would be ready for them to be there, the incumbents would be like, ah, the market is available, let's go. And the incumbents will catch up. So you have to move fast. You have to do things slightly more unnatural. Starting with, obviously, Elon Musk back in those days and then moving on and, you know, founders of Nest and then Palmer Luckey who created Oculus and, you know, and a bunch of, you know, Aurora and then Applied Intuition and Anduril and, you know, all these companies that we now know about.

15:08

These are Silicon Valley folks. They move fast. They hire fast. They raise capital. They deploy capital. They know how to bend the rules. They know how to do things that are not typical for that industry forward-deployed engineers. And now in physical sciences, it's become a real thing. So the first thing that changed was the quality of the entrepreneur and the type of entrepreneur changed.

15:32

And I think VCs became more comfortable with that. So they were no longer talking to staid old guard.

15:41

The second thing that happened was that government was seen as a SBIR mill that would give you small grants that would help you do some development of some really big idea, but never became a customer. Really? And it was all, you know, I'm on record talking about this, that this was all bullshit. It was, you know, it was a job creation mechanism.

16:07

And a few companies that became really, really good at getting SBIR mills would get Tens of millions of dollars, in fact, hundreds of millions of dollars in SBIR dollars would just go to them. These are startups? Are these like incumbent companies? These are like, I call them SBIR mills. They were good at creating proposals and submitting them and getting, you know, there's nothing to, but it's like, you know, I need to do some research.

16:30

Let me give me some money. I'll call it a commercialization effort, but there's no real plan to commercialize. I'll get my SBIR one and two and then move on to another topic and SBIR one and two and just keep going. So that was actually the business model was getting government grants, essentially. Yeah. And kept people afloat for the longest time.

16:46

Yeah. And I think thanks to the effort of a lot of founders over the last 10 years, and then frankly, some VCs, you know, I mean, I remember making early defense tech investments 15 years ago, and nobody was interested in them. And then often at these defense tech panels, you know, there'd be the same few of us, Trey and I and a few others were like always on these panels together talking about government needs to change its procurement policies and so on.

17:14

And so that started to change. That has now become, government's become a massive customer. And it's a direct customer, but it's also an influencer on the incumbents to say, you need to buy from these guys. And that has created a very real market. I mean, government budget is, you know, it's a trillion dollars in defense, but at least a big portion of that is now headed towards these companies.

17:37

Now, we need to do a lot more. Trust me, it's still small peanuts relative to the big budget, but certainly even the small peanuts is like big numbers for the startup industry. And then the third thing that happened was that in the world of robotics, everything was very deterministic. And by robotics, I mean, broadly speaking, it was, you know, you had to almost hard code what would you need to do for a robot arm to come in, grab this thing, how much pressure to grab it with and move it here and put it down.

18:09

So like every single potential path that could happen was like literally in the code base. In the code base. It's almost like if-then statements or something like that. Relatively speaking. I mean, we're not doing justice to it, but roughly that. Okay. And then it became, you know, probabilistic with AI. And now it is, you know, there's real time models that are looking at, you know, there's, you know, there's obviously vision models that are identifying this and, you know, connecting it and then there's robotic control models, world models, VLAs.

18:40

all kinds of stuff, which is saying, okay, I now know that this is a glass. I also know that it needs to move there. I can take a path to get there. I can in real time figure out how to grab this so that I don't crush it. And all of that stuff became probabilistic. So it became much, much more easier to not only solve more interesting problems, but to generalize that solution.

19:01

So nobody wants to build a robot or it's not a startup idea to build a robot to pick this up and put it there. Yeah. Right? Somebody needs to do that. Let's assume this is a bottling company or a glass filling company, but this is not a very big venture scale business. But if I have a model that can do that, but it can do hundreds of other things, now you're doing something very interesting.

19:20

And that is a more venture-like model. So I think that's what you're seeing, especially in physical AI, that people are like, okay, this is very interesting. It is not that I can drive a car inside an airport knowing exactly where the lanes are. If you go back to Kiva Systems, the early robotics company that Amazon bought, it was like literally markers on the ground that the robots were tracking and following and doing things.

19:44

They weren't super intelligent, but they did very good automation work. But now when you think about robots, you're thinking of robots interfacing with the world, interacting with people, hopefully not smacking people, not killing people, but able to do things literally in conjunction with humans. And that has become very interesting. And then that has caused a lot of capital to come into the space.

20:07

Correct. Correct. A lot of capital has come in because people realize that the markets are more accessible because of that.

20:14

And you can actually build real revenues. And now the thing is, okay, can you become the dominant player? Can you become... get in early and create whether you call network modes or platform mode or something that everybody builds around you or including you and you become the most well-known player and then it's harder to move away.

20:37

Large corporations who are customers. So if you are a large automotive company or a manufacturing company or whatnot, they don't really have too much of a capability or talent base internally to build AI themselves. You know, the smartest engineer out of UIUC or Carnegie Mellon or MIT or Stanford is probably not saying, let me go necessarily go.

21:02

My first job choice is like working at a PLC company. I mean, a robotics actuator company. So these guys have to buy the technology from the outside if they're going to use robotics and automation and AI in their workflows. That has now become open that, hey, if we can become that entity that starts working with these companies, then these companies will trust us.

21:27

And if they trust us, they won't move off of us. And if they don't move off of us, then that means that we can become the most important player in that industry. So then where do you think, if I'm building a company or investing in companies in the space, where do you think the most interesting place to be investing is right now? Maybe this is what you're doing, advice to other people, et cetera.

21:49

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23:35

When you're early to a space, any space, the early solutions that get built, in my opinion, are full stack solutions. Because you've got to provide end solution to you, the customer. So this is like SpaceX per se. SpaceX per se or Tesla per se, right? You know, Elon Musk wanted to build, you know, he had to build a car. And the next thing you know, he was searching for the right door providers or the door latch providers in China.

23:58

So you have to build a full stack solution. Then as the customers start liking your solution, oh, I never knew that you could do this. That's pretty interesting. I like that. I like this electric car that has no sound. I don't have to fill in the gas and goes really fast. And this is really cool. And so the customer interest grows in that area.

24:14

Then you see the stack disaggregating. A full stack, a stack evolves. Oh, interesting. So you can be at the infrastructure layer, chip layer, model layer, data layer, application layer, deployment layer, post-training layer, all of that stuff, RL, all of that. So the bigger a market gets, the more... sliced the stack. Yeah, because you have more and more players willing, I'm going to do this and I'm going to do the best job at doing this, right? Early, there's Tesla.

24:42

Then came all these autonomous startups, autonomous car startups that were all building their own company, like Zoox and Cruise and all of these companies. And at that point, like, you know, we're going to build the whole car and it'll be our car. We just do it better than Tesla and this way and that way. And then came like the Auroras of the world who were like, we're going to build the entire operating system.

25:00

So, okay, you know, you can build a car, but the entire intelligence will be ours. And then came, you know, Applied Intuition, which is now already a $15 billion company doing really well. And it was like, you know, look, yeah, all that is fine. But, you know, you see this thing around simulation. This is where I'm going to go and become an expert at.

25:19

And yes, I'll grow from there. But Applied Intuition was an autonomous car simulation company. So what does that mean? What were they doing? Well, when you are training models for autonomy, you need to collect data. and feed that data into the models and you know if you're a waymo you spend billions of dollars and have many cars that we have seen for the last 10 15 years running around roads collecting data and they have the ability to collect real world data daytime night time in california and other places when it's raining when it's you know all that lightning strikes and all of that stuff And they collect that data and, you know, and then you have feed that into the

26:02

models, but you can also simulate. So you can collect data on a road in San Francisco, but then you can simulate it a million different ways. Same road, but at night, same road with a guy crossing the road, same road, but there's like heavy rain downpour and an eight-year-old child standing on the side. You know, so one of your sensors is occluded.

26:22

Now what happens? What are you seeing as a machine when one of your sensors has dirt on it or whatnot? You can do millions of simulations. And this was non-trivial to do. Creating those simulations that were real physics, so it wasn't like a gaming simulation. It had to have real physics involved in it. And then providing the platform for you to be able to store those simulations, share those simulations, run them into the model and develop your model further.

26:46

Applied intuition was like, look, Waymo can do that. Maybe Tesla can do that. Maybe Apple can do that. But the major automotive companies around the world who really are the providers of cars, they don't have the capacity capability or technical know-how to do this. So we're going to provide that to them. So that's where they started. And then obviously grew from there.

27:10

And now they have many products. They provide full autonomy suite. They provide in-cabin suite. They have solutions for cars and trucks and mining and drones and robots and all that. But you start on tools, in their case, they went to then platform and then built applications on top of it. So I think that stack evolves and people start playing in the stack.

27:30

Today, you know, I see a lot of excitement about some of the most capital intensive parts of the stack. I sometimes jokingly say, you know, like if Elon Musk announces that we're going to land on Mars, somebody wants to create like a rocket that lands on like Venus or something, right? Like we got to go, let's go further than Elon Musk goes.

27:50

You know, if we're doing like, you know, data centers in oceans, which is already like, how are we going to do that? Like, let's go data centers in space. And we've seen companies get funded who are doing that and hopefully they'll be successful. Yeah. But I fundamentally believe that while all these layers of the stack are very important and we have invested across the stack, across many industries, the most under-invested in area, and I think the most interesting area right now, is at the deployment layer.

28:20

It is actually putting robots in the field to do the work. It's the messy part of the equation. It's also where the real-life learnings will come. There'll be models that'll get post-trained on the specific tasks and all the complexity. It's a little bit like at some point Waymo had to say, we're going to build a car and we're going to drive it.

28:43

You know, right now we have too many people who are at the sort of the intellectual academic layer, not denigrating anybody. It's just, they don't want to do this dirty stuff. They like want to sit in like good factories, good offices, like, you know, do clean stuff. It's almost like picks and shovels. Like we're going to build the tools for them to then go use.

29:01

Yeah. They want to build models. They want to build the intellectual stuff. They don't want to build the thing that works in the field. You know, the works in the field is you have real things happen in the field. A beautiful robot, like this beautiful microphone. But if I had a five-year-old here, you know, he could just go like this. And suddenly your sound engineer is like, holy shit, what is going on? Right? Or everything is great, but I put a phone here and it's vibrating.

29:24

Or you have a beautiful model that does the screwing in assembly, but a train passes by and this entire train shakes because this is not on a vibration-free table, right? So dealing with all of that, and that will generate real-world data that will make these models much more interesting and much more applicable and much more real and more accurate and more efficient and so on.

29:50

And I think, you know, I'm certainly investing in that space. And I think we will see more of that. Everybody wants to build the models, but nobody wants to build, you know, actually put them in the chef, like chef, the company, put them in the, you know, in the field to do cooking or like foundry robotics, do manufacturing in the field or do cleaning, you know, or do, you know, logistics or whatever it is.

30:14

And I think that's going to be very, very interesting. So why is it that you think people are not doing that? Is it not fun? Is it hard? Is it perceived to not be valuable? Is it perceived like investors don't want to fund it, so I'm going to build this thing? What's causing it? I mean, one, it's hard.

30:34

It requires you to understand the business, the end customer well. Most VCs have no idea about the customer set. I mean, where you live, right? You have real world industries around you. How many VCs do you think are walking the shop there and understand what's going on there? I don't know. I mean, I don't even do it enough. I mean, you know, it's like VCs.

30:59

Everybody has friends who work at Amazon and Google and Dell. And we hang out with the CIOs and the CISOs and the CTOs and the CEOs. Like it's easy to just send a text to your friend and be like, would you guys use this? And they say, yeah, it looks great. Yeah. And then like that's your diligence, really. Correct. That's super easy to do.

31:15

You know? It's easy if there's somebody who's building a fundamental model around manufacturing or robotics or something, you ping somebody at Berkeley or Stanford or MIT and they're like, yeah, yeah, this professor is very well known. This work is really interesting. It's like a cutting edge work in this space. And you're like, wow, maybe we should be funding this fundamental lab in this space, you know, just grasping model or this, some other model.

31:38

And very much, we need to do that. Don't get me wrong. We need to do that. But then you say, yeah, this is all fine. But now we need to deploy robots in the field that pick up, you know, think of just laying the roof on your house, right? Like the roof tiles. It's like when you do roof tiles are laid, like 10, 20 people show up and all day they're like doing a repeat work.

31:58

Like now you take a robot to do that. You can create a lot of efficiency, do it really fast, create a great company doing that. But you got to be up on the roof with a robot. right? Or doing any other kind of construction work. You have to be in the field doing that. And I think few people want to go that far. And I think that will change.

32:16

Like, I'm investing in it and I'm sure others will invest in it and we will start C deployment. You know, five years ago, you could be a research lab, open AI and anthropic and not care much about revenue. Who cares? You know, we just, we're building the most amazing thing in the world. We're building the AGI. Like, who cares revenue, dude? Like, we will build whatever revenue.

32:35

Today, Every day we wake up, like Anthropic is now at 67 billion in revenues. And last June, it was at 40 billion in or whatever it was. And, you know, like everybody's like, no, we have real businesses. Should Anthropic also become a legal AI company? Should OpenAI become that? These companies are getting into physical AI because they feel like there's going to be large markets that they can open up there.

32:55

So real businesses need to be built. So the same way that we saw in the LLM world, that research labs had to start worrying about real dollars and cents and real business and real revenues and margins. Right. The same thing will happen in the physical AI space, not just robotic, but broadly. You have to think about real revenues, real margins, real customer traction, real churn.

33:13

All of those things are going to matter. And that's going to be the deployment layer. And it's not just about putting machines in the field and doing services. It is most important. This world requires data. You have to collect data in the field. Even for simulation engines to work, you have to have enough data in the field to be able to have good physics and good simulation models that can then take that and multiply it many fold.

33:39

And I think companies that have that will accrue a lot of value. So is that largely not happening in a lot of cases of the actual collecting data of some of the new technology that's being deployed, being applied? Are we not

33:55

you know, going, are we not going through those motions in terms of how customers are using it in a real sense? Like in terms of like what needs to be done? No, we're not doing it enough. Not nearly enough. I mean, look, so let's just take robotics, you know, and I don't want to just harp on robotics, but let's take robotics. How many demos have you and I both seen of like folding laundry, making coffee, shutting doors? It's all fine.

34:20

Yeah, I've seen, I mean, I see the videos of them all the time. It's like the same demos. It's like bench maxing. benchmark maxing or whatever that word is. Yeah. That was like one of my favorite things. It's like every week, a new model, they like made up some new benchmark. They're number one on. You're like, what? We just made this up.

34:35

You know, look, and robotics is harder. And I think some of these benchmarks are, you know, there's no good evaluation models in robotics. There's no good benchmarks in robotics. So everybody has to just, you know, see what I'm doing. Like recently, there's a company, Dyna, that came up with, you know, oh, scaling law that, hey, when we get 1 million hours of data, we start to see real scaling happen.

34:54

Oh, that's interesting. A lot of people started to pay attention to that. It was just in the last week or so. But then a whole bunch of companies are like, well, this has already been done and we've shown it as well or whatever, or this has now compute requirements that are very high or whatever. But this is all very important work, but it's still in some ways researchy work, right? And what needs to happen is somebody needs to take it into the field.

35:18

Now, let me do a little advertising for Red Glass, right?

35:23

I said, you know, to do what I do, investing in AI meets the physical world. You need to understand AI and all the things that are happening in AI at an extremely fast pace, right? Every day we wake up to some new thing happens. Some new model has dropped and open source is now better or cloud inference is better. But now, no, you can actually have these small models that operate like large models, but run on your own private GPUs.

35:47

And so we have to keep in touch with all of that and be, you know, at least fully aware of it, if not an expert at it. In my case, you also have to understand in the physical world, these industries, what are the problems in those industries? How do you sell into those industries, have relationships, trusted relationships into those industries and be able to help founders who are building in those companies by creating those networks and relationships.

36:08

Founders have to do all those two things, which Red Glass does. And on top of it, they have to go deploy it in the field. They have to be answerable to the customer and the customers like, you know, yeah, I like all your big things, but this is what my problem is. You know, I was just with the founder earlier today that we've recently funded.

36:27

And I was reminding him that you start a company and you, when you started the company, you had 100% equity. And you thought by the time the company goes public, you will own still, I don't know, 20, 30% of the company. Hopefully he owns more, but who knows. And the company will be worth billions of dollars and you'll be worth billions of dollars and your product will be used by everybody.

36:46

And that's your motivation set, right? Like change the world and make a lot of money and make a lot. Now you've hired the first 10 people and those 10 people, you're giving them maybe a percent, half a percent of equity. And they also believe that, oh my God, if this becomes worth $10 billion, then I'll make, I don't know, $20 million. And my life changes, my family's life changes.

37:05

But by the time you're hiring employee number 400, 500,

37:09

This is like another job for them. There's some amount of equity and compensation, don't get me wrong, but they're not joining this as like, I'm going to become Insta-rich in the next two, three years, right? Now think of your customers. They're sitting there, they're like, there's no way in hell I'm making any money off of this, right? Like I am a senior engineer at a automotive supplier, right?

37:31

all this hype that these guys have, you know, dude, I just get paid to do my job. Does this do my work better? Does this make my work better? I have all the downside to worry about, but very little upside. So you have to deal with that and, you know, and pay attention to that. And I think a lot of founders don't want to do that. Those founders that do, do really well.

37:56

They're close to the customer. Their ears and eyes very close to the customer. Understanding what the customer wants. Their product roadmaps often evolve with the customers. They're not just trying to be profits. They're not just trying to make grand statements about what the future of the world looks like. To some extent, they have to do that.

38:14

But they also understand execution really matters. And the best entrepreneurs in AI in the physical world or deep tech or whatever you want to call it are the people who've done that both. Elon is, you know, for all his faults and, you know, I have lots of issues with him. But he's able to paint the big picture and then he's able to execute.

38:34

Sometimes he's off by the timing a little bit, but it doesn't matter. That's a second order issue. but he's able to execute. Many people can paint big pictures, but they can't execute. Or there are people who are like too stuck in the weeds and they can't help people see the bigger picture of why what they're doing is really important. And the best entrepreneurs are those that can do both those things.

38:55

Few, but they're there and they're the ones that we should all chase. I feel like one way I've been kind of like distilling down of how to think about that and describe it is like being very commercial. You can sell it, you can execute on it, deliver it to the market, which is maybe also part of like painting a picture. So like you're very commercial.

39:14

You know how to make money in a sense. Yes, commercial. It's also,

39:20

look, if you're building something that's going to take several years to get to market, it's something that's going to require a lot of capital to get to market. then you have to be able to sustain the interest of your investors, your employees, even your customers for a long period of time. And you have to have the ability to do that. So is this like a very underrated aspect of this? Very underrated.

39:41

But also equally, those people who are very good at it are not very good at execution sometimes. Paint a great picture, but they haven't shipped anything in 10 years and they keep telling one hoopla after another, right? Like one hype story after another. Look, Moses was followed in the desert, if you're a believer or whatever, at least the story, for 40 years.

40:01

People followed him until they reached the promised land. You would think at the year 39, somebody would have said, this dude has no idea what he's doing. But people kept following him because he was a prophet. And, you know, how he spoke to the people and the message he brought to the people and the belief that people had in him allowed them to follow him for 40 years.

40:18

Yeah. And I think entrepreneurs are like that. People have to be able to follow them, but they have to also know where they're going or at least have the ability to execute on what needs to get done. Because I don't think we would be singing the story of Moses, Prophet Moses, if he hadn't reached the promised land. It would be a little bit of a awkward story that before the years we wandered in the desert and then the story ends.

40:41

It is actually kind of like an amazing story. And then like the land of milk and honey, I think they call it. And like- He literally parted the Red Sea. He did unnatural things. Founders do that. Look, you know, the Red Glass name, it's sort of funny, right? I named it after my glasses, but actually I didn't name it. My children named it because I couldn't come up with a name.

41:02

And I was struggling with all these boring names that felt like VC, gobbledygook. So my children were like, just call it Red Glass. And I asked some friends and they're like, dude, that's pretty cool. But here's the thing. Red also is passion and courage.

41:14

You know, red is also the color of good luck in Asian cultures. And glass is transparency and clarity, which are really important values to me personally and to my fund. But also glass is molded into beautiful objects like that beautiful glass you have. I have the plastic one. I offered you the glass one. It's okay. I want to put that on record.

41:35

I did say you could have the nice one. Glass is also molded in fire, right? And that's what founders kind of go through. You have to go through the fire. There's no easy way. It all looks very glamorous from the outside. You know, there's a lot of VCs who like to call themselves founders of every company they end up investing in early. I never do that.

41:59

Do people really do that? All the time. All the time. I won't name anybody, but there's some people who are like, you know, haven't founded a single company really, but they're like, I'm founders of these eight companies and bullshit. I mean, whatever. Just because you're an early investor doesn't make you a founder. You're a founding investor, maybe.

42:16

But the founders chew glass. This is not easy. No founder will tell you that they love fundraising. Even Travis Kalanick, who's like one of the most successful fundraisers in the history of venture, maybe, wouldn't tell you that he loves fundraising. In fact, he, like, ships on VCs every day these days. Yeah. He's been going on a tour lately.

42:36

He's, like, getting it out of his system. He's got some, like, really, like, excruciating, just, like, he's, like, crucified some people lately with some of the stuff. you know he's getting it out of his system there's also you know and and you know look give credit to him for having built what he built and then yeah kicked out of it but also like there's also an effort to rewrite history right you know winners get to write history and he wants to establish himself as a winner and he's actively rewriting history because back then when he was let go the prevailing consensus among all VCs, I would say, or many, most VCs and community in general was that SHIB went astray and

43:20

strayed off the target and needed course correction. But that's okay. It doesn't matter. Look, it doesn't take anything away from him. He built it with blood, sweat, and tears, and he's doing it again. We'll see how that goes, and hopefully it's successful. But the point I was making is that these guys, founders, go through an excruciating journey, and I don't think most people appreciate that.

43:43

And I'm hoping that as a fund, we can be appreciative of that.

43:51

a little bit more of the Travis thing. Like he actually, it was pretty interesting. He also kind of like dug a 16Z a little bit, which they did end up like leading the round of his new company and joined the board. He's kind of like, yeah, you guys fucked up big time. I don't know if you saw that. I've seen some of these interviews. Look, man, every VC needs getting dunked on.

44:08

VCs have too big an ego. uh we think we are very powerful god complex is very easy to get yeah in fact if anybody understands god complex it's probably travis then he had the god mode on his app at one time where he could see every card everywhere that was moving around and taking people to people to places um you know

44:29

When I started the firm, before I had a name, an office or anything, I had four core values. I really sat through and thought about, you know, what are the values for the firm? Most VC firms don't have values. Most VC firms have, if you ask them, they'll give you some statement. But if you asked, picked up a random guy at the company, at a VC firm and said, what are the core values of your firm? I think you will hear some pretty random blah, blah.

44:55

Just like add value to our company. Add value, be nice, whatever. I don't know, something, right? Make money for LPs. Yeah. Or for ourselves, maybe, maybe that actually might be the more correct version. Yeah. Some people do both, but most often they don't. Um, I, I, you know, like there's, there's many, many things that a VC accomplishes, you know, having beautiful office might be an accomplishment.

45:18

Yeah. That could be a value. That could be, you know, some of those offices are insane. There's too much money, man, you know, too much money in some VC firms. Um, but.

45:31

My core values for the fun, and every employee hears it at least once, right? It's curiosity, intensity, integrity, humility. They have to be curious. What is happening in the world is phenomenal. What is happening in the world of technology is still underappreciated.

45:52

I don't think most people appreciate what is really happening. And I'm not just talking about the general world, with the rest of America. I feel like in tech, I feel like the average cent in tech still is just like, oh, this robotics hype is just all, it's like all hype and it's a bubble and it's going to die. Everything is a hype until it's not.

46:11

So I don't pay too much attention to that. I think if you just look at the fundamentally what's happening in technology, some incredible minds working on incredible things and incredible progress being made on a daily basis. So we may be off by 10 years Hopefully not, but we may be off by 10 years. But man, we're moving in the right direction on making technology accessible and available and intelligent such that we can solve the most important pressing problems in the world.

46:38

Like you can literally pick up your phone and just ask Clyde, like, hey, I want to learn about this thing. And then just like go and like do it for me. And like you can come back in 30 minutes. You just like learned it all. It gives you like, you can read something for two minutes and understand most of it. And then it like accomplished the thing and like did it.

46:55

Yeah. I mean, you know, these are basic cases, right? Like last night I was doing prorata calculation on a company that I've invested in. And typically I would sit with Excel and create a model and whatever. And I went to Excel and I wrote like seven lines. Hey, I invested at this price this much. This is the round that happened after that.

47:10

This is the safe note that happened after that. This much warrants, this many. create a spreadsheet that gives me my prerata if I was to maintain the same ownership for series A or whatever, whatever, right? And it created a beautiful model for me. Now, even just, you know, a year and a half ago at Lux, you know, I would probably take all of this and, you know, just send it to the CFO.

47:30

Hey, can you just create a model for me? I mean, I know how to do it myself, but I'll just push it off to the CFO. And she would do that. But now Claude can do that for me in like a minute and a half, right? And this is like a basic example too. People are solving cancer with, I mean, you know, or people at least trying to solve cancer with this.

47:47

Like this is like basic shit. So that's curiosity. The second is intensity. Work hard. I was at a dinner at a famous VC's house a few years ago. Some of our common friends were there. And one of the things he said that stuck with all of us was, this is the greatest show on earth and we have the front row seats to it. What else could I be doing? Imagine you have the opening show of Hamilton tickets front row.

48:17

Are you going to sit there and do fucking emails?

48:20

Like, you know, you're going to be like, Oh my God, I am seeing history happen. That's what's happening in front of us. So 20 hours a day is not enough. And I can survive with at least four hours of sleep is necessary for me, but it's just not enough hours in the day to do what I need to do and learn and

48:41

get execution underway. But those two things together can make you a good VC, curiosity and intensity. Okay. Where we live in the world today and the impact that AI is going to have in the society, it is going to require us to be good humans as well. We are deciding fate of humanity. We're deciding literally where bombs get dropped and people are killed.

49:02

AI is going to be doing that. AI is deciding what healthcare you get, what medicines you get, what coverage you get, what loans you get. AI is doing all of that. We are really changing people's lives in very, very meaningful ways. We better have humanity in all our decision making. Humanity comes, in my opinion, from the last two core values, which is integrity and humility.

49:24

You've got to be able to stand for the ethics and the values that you care for and are willing to give up some asset, some value, some upside for. And humility is understanding that if I sound smart to you, yeah, sure, I'm sure my IQ is not terrible, but it's because really, really smart people come and tell me incredible things all the time.

49:50

I'm in some ways regurgitating, I'm analyzing, I'm like the Claude. I'm a pre-trained LLM that's getting a lot of real time reinforcement learning happening. So I think that's important to understand, have the humility of founders doing the real work. you know, and not just founders, but every single person in that company, even those that are not going to become super rich, they're just doing a job.

50:17

They're doing the real work. They're going frustrated at home at night that either their project didn't work or their, you know, sales didn't close or their boss was unhappy at them or their politics in the company or whatever. That's really understanding that that's what the value is. And I think VCs tend to attribute way too much value to themselves, which is because we have money, we have power, we have access.

50:44

So we feel like we're on top of the world. Yeah, it's kind of like this weird dynamic where people just want to be friends with you and they are nice to you, like overtly almost. It can kind of get to your head. It's like, man, I'm kind of the shit because everyone wants my... People just want your money, really. It's kind of it. So it's kind of like this weird dynamic where...

51:07

I try not to think about this, but is this person just my friend because they want my money? Look, this is my take on myself. I just had lunch with CEO I funded and it was a very competitive round and I ended up getting serious allocation in that company. But here's the thing. I said, when I met you, you were talking to a lot of VCs. You took a half an hour call, but then you called me back and you said, can we get on the phone again? It's because you probably thought I had some smart things to say and interesting things to say, because you were talking to a lot of top VCs.

51:41

And then after the second and third call, you were still willing to talk to me because you really clearly, you know, you're not calling me because I'm good looking. You're calling me because I'm telling you things that you find useful for your business. That's just getting off the ground. So you value my intelligence and, you know, perhaps my knowledge base about this industry.

52:00

and my networks or whatever it is. But if I came to you and I said, hey, for all this intelligence that I'm going to be parting to you every now and then, why don't you pay me $250,000 a year? You're probably going to say, bug off.

52:16

We can hire people to do this. We need full-time. We don't need these part-time consultants charging 250,000. So I can't get paid for that. So I have created a business model to get paid for that. My business model is that I go to LPs and I say, give me money so I can give money to these guys And that's how I get paid. I get the fees and I get the carry and you take the money.

52:37

So instead of me asking you for money for sharing my knowledge, advice, insights, connections, and all that, I actually give you money that comes with all of these things to hopefully increase your odds of success and increase the magnitude of your success, which then results in, you know, carry on the other side that feeds me. Yeah. So I had to create a business model and that's what VC is.

53:00

And so what I sell to the founders is not my money. Money is fungible commodity today. Any amount of money I give you, somebody else has more money than that. They have cheaper money than that. They have maybe easier money than that. They have money that comes with maybe other fancy things, private jets and fancy dinners or whatnot that I don't do.

53:24

But I try to become a partner to the founders. What are you usually looking for when you're meeting a founder for the first time? Because I think you, today at Red Glass, you're kind of formation through Series A, which to different people, that means different things. But what are you specifically kind of looking for when you're meeting and talking to someone? And this is maybe helpful for other people that are also getting into investing.

53:49

Maybe it's helpful for founders that like, what is an investor looking for when I'm meeting them? It's like, what's your general arc of a conversation and just like a meeting usually kind of look like? What are you trying to do? So I invest in the earliest stages, ideally the first check-in, whether you call it pre-seed or seed or whatever it is.

54:09

Sometimes I take pre-seed and seed from... you know, friends and angels or whatever, then they call this an A. So it doesn't matter what the title is.

54:17

I look for, first and foremost, you're investing in the founders and everybody will tell you if the smart founders or whatever. I look for conviction and mission.

54:27

do they have a missionary zeal towards this idea? This needs to exist. Do they really firmly believe that this is important? And then I probe why. And sometimes they're off. They have a belief system that is not based on any fundamentals, just a belief system. But they have to have that missionary belief in what they're doing and the field that they're in and the necessity of the solution that they're going to be building.

54:55

Any examples of that? Like from investments you made in the past that people might be able to like, like applied intuition? Yeah. Applied intuition was very simple. It's like, you know, it had a fundamental belief that while everybody in the industry was saying that all these automotive companies are screwed and they should be just metal benders and we're going to build the next automotive company in Silicon Valley and whatnot.

55:15

They had a fundamental belief that what are you talking about? These automotive companies run the entire economies of countries. These are not going anywhere. It's an extremely complex business. They had a missionary level of belief that these companies are going to continue to exist for a long time to come. Our job as entrepreneurs founders is to provide technology to them so that they can get to the next phase.

55:37

And the next phase is digitizing their solutions, electrifying their solutions, automating and providing autonomy to those solutions so that they can do superhuman work, right? What humans could not do sitting inside those machines. Was this their series A when you- Series A was their first round of financing. Okay. Yeah. And it was, you talk to Kesser then and he would tell you that.

55:58

Right. Kesar and Peter, both of them were like, they were like, grew up in Detroit, Michigan, came to Silicon Valley, clearly saw that this is really important to build.

56:11

And they had many other, I mean, they had, I'm sure Kesar could just go become a general partner at a big VC firm. They're like, don't need to do that. Why would I want, what is that? Why would I do that? That's like a shitty job compared to what I'm doing. He's loving what he's doing compared to doing a sales job like mine, like selling to other founders.

56:32

But he had real belief in that. So I look for that belief and that conviction. So the missionary is number one. And then the second thing is, are they prepared for the job that they're taking on? So if you're taking an extremely technically complex thing, do you have the technical depth required to do that? Or can you accumulate the technical depth that is required on your team? You're taking on something that's going to be very capital intensive.

56:56

So it's a little bit of saying, do you have the foresight to see what it will take? And then you have the ability to get that. So the capital intensity may be like, you're going to think, okay, do we think they'll be able to capitalize the business appropriately to do this? Or they're selling to an extremely technical customer. Will they be able to understand and meet those customers and have those conversations and build the product that they need to get there or hire the right kind of team? I can say in my sleep, oh yeah, it would be really nice that I don't have to see a doctor.

57:28

Just an AI can do everything that a doctor can do. Easy said. The technical complexity of it is pretty serious. And technical complexity includes working through the regulatory frameworks that exist, working through, you know, the trust issues that are, you know, implicit in this and so on. So do you know how to do that? You can't just launch something and be like, we'll see.

57:54

You have to have the understanding or, you know, discovery of a new drug or new class of drugs. You know, you have to understand what is happening there and have a point of view and technical understanding of, you know, where it can go, like enough breadth in that space and depth in that space. And the second part of that, as I said, is,

58:12

you know, if you need capital, do you know, do you have the personality to be able to raise capital? Do you, you know, do you know what it takes? Are you a good storyteller? Yeah. That's something I learned from Gaurav at a four. It was my first job in venture. And I thought it was really weird that he said that. Their ability to raise capital in the future, I'm like, oh, that's kind of dumb.

58:36

I need to fundraise. It's just about making a business. But fundraising is actually super important and kind of hard, like we talk about. You and I have to fundraise all the time. It's not fun. It's not easy. But those who do it well are often those that realize that this is an important part of the job and then they strive to become good at it.

58:58

So, I mean, that's a good, a good topic. Like if, has there been any, maybe anything you think that sets apart the founders that check all the boxes except fundraising and or crossing the chasm to like get to becoming a good fundraiser? Like, is there something specific that typically people tend to do differently? Or is there something like, like a change people tend to make that ends up kind of like unlocking that superpower for them? I think I usually invest in companies that tend to be fairly technical.

59:33

Technical founders, even if they've had business experience, often tend to think that the solution will speak for itself.

59:42

And all they have to do is just... provide a little bit of color around it, and then the product will speak for itself or the solution will speak of itself or our customers will speak in its favor in a way that will sell. And the investors are like, oh my God, this is a trillion dollar TAM, like just based on using the product. Look, if the investors were sufficiently technical and knowledgeable about that particular industry, maybe.

1:00:09

But most investors are not. So they need to be convinced. And that convincing depends on the investor. Some people live in FOMO world. They spend their entire careers and build great careers in FOMO. Some others are like, I want to know if this is going to be a massive industry. Like, I remember, you know, when the word unicorn was invented.

1:00:33

It wasn't that long ago, was it? Like, you know, oh my God, we have these things called unicorns. Yeah. And I was with a VC two, three weekends ago who was telling me that last year he led $5 billion investments. Like the investment going in was $1 billion. Like the amount of capital he invested? The amount of capital he invested in those companies was $1 billion.

1:00:54

How far have we come? How fast? Yeah, that's insane. he's a great investor, don't get me wrong. Like, I'm not saying it in a negative way. I'm just saying that capital has taken a different, you know, shape.

1:01:07

And to be honest, I think it's a moment in time too, by the way. You know, we've gone through these cycles, just not that big. You know, when, you know, I remember when, you know, Remember when Tiger Global was during COVID writing checks on a daily basis? Yeah, I think there was like, someone did the math. They did an investment per day.

1:01:27

There you go. For like a year. And you know, they did not invest in a single of my companies. And I don't think they invested in a single Lux portfolio company. Oh, really? Okay. And I can tell you that I can only speak for myself. I won't speak for Lux anymore. I used to, but I won't anymore. I speak for myself. I used to pick up, you know, what am I doing wrong? That freaking Tiger's investing in everything, but none of my portfolio companies.

1:01:47

Like maybe I'm doing something wrong, right? Like why is my company not getting mocked up by Tiger or SoftBank or whoever of that moment?

1:01:56

Only about a year or two later, I was like, thank goodness that did not happen. Because most of those companies are like, I don't know. I think on a net return basis, the fund will probably meet LP expectations maybe if we just go far enough out. on like a, in the moment, I think it's kind of, it was like a rough, rough time. I mean, dude, there was all kinds of companies that, you know, people were building pizza companies and thinking that's going to be like, you know, the next SpaceX or, you know, this was like pizza robot, like not only one, right.

1:02:31

Like a bunch of them, there was pizza robots and people were trying to convince each other, by the way, They're all well-meaning guys. Don't get me wrong. Some of my companies probably look idiotic to others too. But people are trying to convince me. You don't understand, Bilal. When you get the pizza in six minutes versus 15 minutes, the taste is completely different.

1:02:46

I was like... I could see that, actually. Yeah. I can totally believe that. I just don't think I got into VC or got a PhD and built a founder career and then VC to solve that problem. Yeah, that's fair. Yeah, actually... It was, like, during that time during COVID, I think, like, Tiger had invested in a bunch of my companies. Like, every company that raised follow-on rounds, like, they had tried to.

1:03:12

And, like, they really liked that about my fund. Like, we love your portfolio. And it was, like, a really... It was, like, weird because at the time, you know you're, like... This won't probably end well, right? Look, this is not against Tiger. It's like, you know, many of my friends are doing this now. And to some extent, one could argue that maybe some would say even you're doing that, right? So it's not against Tiger.

1:03:31

It's time, you know? It's like, they believe that there's a rising tide. And if you do a portfolio approach, then, you know, all you need is a few success stories and it will wipe off all of your failures. Like you said, it might actually end up becoming an okay fund. Yeah, because didn't they invest in like open AI early? I don't know. I think I remember...

1:03:49

I haven't followed them so closely, man. But I can tell you that today is the same thing that's happening. Like, you know, remember, so I said, not too long ago, we were talking about there's this thing called unicorns. And oh my God, how amazing would it be that we build companies of unicorn. The first unicorn, if I remember correctly, in Lux portfolio was a company called Desktop Metal.

1:04:08

And I remember waking up one morning and- They're a public company now, aren't they? They were a public company and then they got sold. And they went public at a very high valuation and their valuation went down significantly and then they got sold. Okay. But that was the first unicorn. It was just a few years ago. In Lux portfolio now, there's many unicorns.

1:04:26

I mean, I invested in like six, seven, eight unicorns that have become unicorns in the Lux portfolio. But unicorn is such a quaint word now. It's, you know, it's now often I hear my friends talk about, you know, like this company could be worth, you know, three, four years ago, but like this company could be worth like $10 billion. And I remember people telling each other, if you're not investing in a company that could be worth at least five to $10 billion, you shouldn't even be investing.

1:04:53

And I would ask them, how many $10 billion companies have you invested in? that you invested early that became 10 million, zero. It doesn't matter. It's the prevailing logic is that everybody says 10 billion. Now 10 billion, who the fuck cares about 10 billion? Now it's 100 billion. You know, like we are building the next Stripe, the next Databricks, the next OpenAI, the next Anthropic.

1:05:11

So the- I mean, that's trillion dollar territory right there. If your entry prices are like, you know, 2 billion, 5 billion, 10 billion, and you know, interim markups look like there are many companies that are hitting 10, 20, 50, 100 billion dollar numbers, Maybe this will all work out. I don't care. My thing is, at the early stages, when the founder starts building company, they may talk about 100 billion or a trillion or whatever.

1:05:35

The reality is they have to hire co-founders. They have to hire technical employees. They have to build a product. They have to raise capital. They have to convince people to join them in person if they have moved families over and come join them. They have to think about their first product. They have to think about pricing. They have to think about go-to-market.

1:05:54

You know, this founder that I, you know, told you it was a very competitive round that I invested in. Conversations were around go-to-market and the lessons learned from applied intuition or nominal and others and how did they apply to their particular world. That's the help and advice they get. Now that they have money, more money cannot solve this problem for them.

1:06:12

Right? Like, okay, we gave them money, but if at this point we walk away, you know, he still has those questions. He has to go somewhere to ask those questions. Yeah. Yeah. So I feel like there's an implied in what we've been talking about. Like, this didn't end well in the past. And is there like a, it also won't end well this time? Or is it different? Like, is it okay that it's going on now, do you

1:06:35

think? Look, 21 Vintage is not the best vintage in the VC world. So who knows what 26 Vintage will look like. That said, there will be some companies that are going to be just amazing.

1:06:46

Amazing. I really hope so. Well, first, I hope some in my portfolio, but generally in venture, I think there will be some amazing companies created because incredible talent is coming in, solving incredible problems, technology supporting them because the speed at which it's developing and capital is available for them to move fast and speed becomes more available to them.

1:07:06

but not everyone. And because it's not everyone, there will be lots of losses. And every VC thinking that,

1:07:17

You know, they are playing, you know, the, they're playing, you know, the entire landscape and, you know, something or the other will work out. And hence, let's just roll the dice and see what happens. It's not the right way to do this. You have to be very thoughtful about it. You have to do what I'm sure you'd think about it too, like a portfolio construction.

1:07:37

You have to think about what's my early bets? What's my middle stage, late stage? How am I playing this? Is there something in my portfolio I've invested in that could potentially become very large, but very high risk investment, but can only be one or two in the portfolio? Something you invest in, you're like, you know, look, I have such conviction on these founders and the TAM associated with the market they're going after, or the opportunity set that they're going after, that I'm willing to pay a very high price.

1:08:02

But that you can't say that for every company, right? Because that can't possibly be true. For every company that you see, it's like, could be a hundred billion dollar company. That doesn't make sense. And there are others that are like, look, I can't, I can see that this is an important problem, but I don't know how big this gets, but I really want to work with this founder and help figure that out.

1:08:22

And that's your early incubations or hatches and, you know, EIR types of situations. And, you know, you take some ownership in those companies and help them build. Yeah, so you're almost like taking different types of risk and you make sure you have like a basket of like quite a couple different risk profiles to make sure that if there's spikes on any

1:08:45

existential risk that happens like across the portfolio, that it's still, that you still make money. Where like the risk is balanced out where like it's different types of risk. I'm trying to build a firm. I'm not playing YOLO. I'm not saying, you know, hey, I just left OpenAI. I have a lot of friends who are leaving OpenAI. Give me money and I'll just invest in a bunch of these guys.

1:09:06

And let's see what happens. Yep. And it might all be exactly the same type of risk that you're taking, really. I'm sure there's room for those investors in the world. And that's not me. That's not what I'm building. I'm building a firm that should last a very long time. That should last past me. That should be the legacy of that firm. Should be incredible investments we made where founders saw us as real partners to them.

1:09:30

at the earliest stages. Uh, and we did it with, um, you know, humility and we did it with being nice. Right. Like I, I, um,

1:09:43

I think all of those things matter. And when you do that, you have to think about portfolio. And you have to think about, you know, there are various ways that the world could play out that I do not control. I don't control, you know, interest rates and flooding of capital or, you know, capital getting pulled back. I feel like oil prices has an insane, oil prices and like geopolitics has a way bigger impact on.

1:10:12

I don't control war. I don't control elections. Yeah. You know, yesterday I was talking to a founder who was like, you know, crypto is screwed. Today I was talking to a founder who said, you know, I built my last company in, in weed and the weed is screwed.

1:10:27

Okay. I mean, everybody told me crypto was the next big thing. I don't know what happened. I'm not close to it and never was close to it. So I don't know, but, um, Other things will happen. I can't control that. But as a portfolio, as a managing money on behalf of families and endowments or foundations or fund of funds or sovereign wealth funds, and also in my case, it's like, well, we are trying to, you know, return their capital and then some.

1:10:55

And we're trying to do that by investing in these companies at the earliest stages so that we can have the most ambitious ideas that get funded so that they can become big and they can have positive impact on society. That's the job. And it's a job. I love doing that job. I'm trying to hire people who love doing that job. And, you know, along the way, by the way, We make good money.

1:11:20

You know, we're decently compensated. I took a 90% plus pay cut to do this job when I left Lux to do this. But I really firmly believe in it. You know, I told you earlier that I look for being missionary about this and having conviction. And I had to find that in myself before I started this. I feel this is a mission I'm on. I refuse to believe you have to be an asshole to be successful in that industry.

1:11:41

I just refuse to believe that. And so I'm going to do my darndest to show that you can do that i refuse to believe that you have to be you know sort of loosey-goosey on your ethics because the world is too complex no i mean you know i think it's a line of hamilton like you know if you don't know what you stand for what will you fall for uh or something along i haven't heard that but that's um I like that line.

1:12:04

That's a good line. And then the idea that, you know, if we can do what we're doing, we will impact human lives. I grew up with posters of scientists in my room. I thought I would become a scientist and a professor. That's why I studied science and then a PhD with the Nobel laureate and all that stuff. And what I discovered while I was, you know, through that process and then in PhD was that what I really enjoyed was a reading about how their discoveries changed lives.

1:12:31

How my professors, my PhD professors, discovery of, you know, the reactions in polar stratosphere and polar stratospheric clouds were leading to discoveries. destruction of ozone layer, which was leading to cancer on earth. And then you could create alternatives to chemicals like Freon and others so that you would not destroy the ozone layer, so that you would not have cancers in the world.

1:12:55

And it required you to do the chemistry to create Freon, first understand the physics of what was going on, then create alternatives to the Freon, and then do the political work that was necessary to get the world to stop using Freon. And that led to massive impact in the world. So I realized that's what it takes. And I said, I'm going to dedicate my life to doing things like that.

1:13:14

And I built a company. And as I was building a company, I realized that what I loved most was the early stage. There's negative one to zero, where you're like ideating and thinking about the problem and how to think about the problem and zero to one. And when it goes past that, I was like, okay, that's nice, but not enjoyable enough for me.

1:13:34

So that's where I decided that I want to become an early stage investor. I think there's a couple other things I really want to hit on and it's maybe related to being an early stage investor right now. It almost feels like a lot of

1:13:48

being an early stage investor, being like a small emerging manager fund, you're almost like kind of like an outsourced associate in a way. I think this is like your words, but I kind of like resonate with this. Somebody said that to me. Okay. I mean, I feel like this is almost like many people sort of have this like sense right now. So what is kind of going on where a lot of new and or small funds are essentially like outsourced associates for someone else? Yeah.

1:14:15

Number one, I don't think everybody's an outsourced associate. A lot of people are dedicated to the art and the craft of doing this. They're building firms. They may be starting small. They may remain small. They may remain a $50 million fund, like our friend Semmel has $50, $70 million funds, and he can raise bigger money, but he's staying there, at least for now.

1:14:36

Benchmark was like that. Union Square Ventures has stayed that way. And some others may have ambitions to become megafunds themselves.

1:14:44

But there is a lot of capital available in the market. There's a lot of people who've discovered that, you know, you can make a lot of money here and perhaps lasting money, right? You know, you can actually put your shares and put money into SpaceX shares and hold them for the next 25 years. I know people who are doing that, who are creating their, you know, programs to just buy space shares for the next 25 years and not sell any benefit.

1:15:08

Now, there's a lot of money available and that money wants to go direct into companies for many reasons. fun. You know, they think it's like great to meet founders and be directly invested versus like money managers. Yeah, it's awesome. I mean, I love doing that. But there's a lot of LPs who also want to do this because it's better economics.

1:15:27

You don't have to pay as much in fee, carry is reduced or whatever, you know, like if you're doing. So what they're doing is they're finding people who have access to deal flow and saying, hey, I'll give you a little bit of money so you can put in a little bit of money into these companies, but then bring them to me as if raising downstream rounds.

1:15:46

And I will do SPVs. And if your fund was two and 20, I'll do one and 10 or whatever. I don't know that whatever the numbers are, but it's an access game. And if you have access to those companies, great. And if I have to pay you a little bit of this in your fund that might return 3x, 4x, 5x or whatever it is, fine, we'll do that. But what I really want to do is go direct.

1:16:09

Your $2 million, $5 million that I put into your fund is noise to me. What it is, is a $25, $30, $50, $100 million check I can write into these companies as they become big and growing. Is that okay? Or do you think it's something you just have to accept as sort of what's happening right now in the market? I think there's a lot of that going on in the market right now, and I have no problems with that.

1:16:32

I actually think that there's a... So when I moved from Boston to Silicon Valley 13 years ago, I was a VC in Boston and moved to Silicon Valley. One of the things I noticed was that Silicon Valley works like a cabal. There are multiple cabals. You're like groups of investors who do things together. Oh, 100%. Right? Like we always invest together here.

1:16:52

There's a bunch of defense tech investors who are like all supporting each other's companies and a bunch of other, you know.

1:16:58

And I have a feeling that some of these cabals are now money hungry, large AUM funds. Right? Again, nothing wrong with that, but that's who they are. No amount of AUM is small enough or big enough, sorry, for them. So they want every dollar flowing into startups to flow through them.

1:17:19

They're not about multiples. They're not about... They're just like, my power is the amount of money I have. You will take my money because I have the most amount of money available. And because the most amount of money may have ancillary benefits, like I have access to quarter doors of power because I have money available or... I have access to certain companies because I've invested in so many that I know the CEOs of half of your customer set or whatever.

1:17:39

Yeah. So I can introduce you to customers. I can introduce you to a politician. I can influence what those people think. You know, I was just reading on my way here that the largest contributor to the elections this quarter was like Anderson Horowitz, like in terms of donations. It wasn't, you know, some other PAC or whatever. I would have guessed it was like a, I would have guessed like open AI or like a big tech company.

1:18:00

At least according to this report, it was Andres and Horowitz. But even if it's not exactly right, they're up there. Nothing wrong with that. Every right to do what they're doing. I mean, it's a smart strategy. I think it's like a smart strategy from them to do it. Which creates value for their portfolio company, sure. Why not? Hopefully it creates value for my portfolio companies too if they get money from Andres and Horowitz down the road.

1:18:18

But certainly General Catalyst is a great investment firm. They're doing this. They have global reach in policy circles around the world. They do less politics, but more policy, but that's okay.

1:18:33

But what some of these cabals will actually do or could do is they could start restricting their portfolio companies from accepting SPV money.

1:18:44

How would you do that? So you're a seed investor with another big investment firm. Your portfolio company is now raising $500 million. So you were like, dude, I can write a $30 million SPV into it. And if that becomes 5X, I'll make a lot of money. That lead investor could say, we're not going to allow any SPVs to invest in this round, even if they're your SPVs.

1:19:04

So it's like, it's part of the terms in the term sheet. Yeah, in the terms in the term sheet. Or just as a board member. Or just as a board. You're just like, hey, by the way, like,

1:19:13

I'm on the board and I say, we don't do this anymore. And the founder's like, okay. Yeah, and the founder's like, dude, I love you, but I'm not going to piss off this big fund partner to get an SPV from you. Let alone an SPV from somebody who's not already on the cap table. Yeah, that's true. Because that big investor is probably going to give him a lot more money.

1:19:30

So you want to keep him happy. Yeah, but also those guys are basically saying, why am I letting all these other LPs who want to invest in the company come through Turner? If they want to invest in companies like this, they have to come through me. I have 17 varieties of funds that you can invest in. I have a residential fund. I have an energy fund.

1:19:49

I have a debt fund. I have a growth fund. I have a defense fund. I have whatever fund.

1:19:56

Why don't you invest through me? Why should they give that one in 10 economics that you're getting? Why should you get it? Yeah, I should get it. And all they have to do is just, you know, politely. And I actually saw, I know of one case where a great investor who would have been very helpful was recently told that they will, you know, sorry, our, you know, board or, you know, the powers to be have decided that they will not allow us to take any SPV money.

1:20:26

So that could happen too. So then I don't know what happens to all the, if the business model of some of these funds is, you know, like I can't survive on a $10 million fund.

1:20:36

but it doesn't matter because I'll raise 50 million in SPB. I don't know what happens there. But this is all noise. You know, this is all important to our industry if we're talking about the mechanics of our industry. But at the end of the day, from a founder perspective, what they care about is I want money, but I also want advice and help.

1:20:51

I don't want no nonsense. You know, I don't want you to invest in competitive companies and fuck me over later. You know, and that is some of the bad behavior that we're also starting to see in the industry. Really? I mean, and they probably just like, They just want you to not mess anything up. Like, it's just like they, that's a lot of it from what you hear is like, if you just like don't do anything to make things harder for them, that's in like the top, I don't know if the number is 10, 20%.

1:21:21

I mean, I don't know, man. I'm not an expert at this, but you know, I don't know how I would feel if I was at, you know, OpenAI and Anthrop, I mean, if I was a founder at OpenAI and my big investor also had money in Anthropic. Now, at this point, they're both operating almost like public companies, so maybe it's different. But if you are a smaller company, if you are a $2 billion, $5 billion company, how would you feel that? Or if you had a defense company and you had competing investments in those spaces? What do you think the pitch is to pull that off? Where it's like, I'm an investor in five big AI companies, I'll compete, and I'm coming to the sixth one.

1:21:54

How do you think they convince them to let them take their money? Is it just not really brought up and there's all these other things they can do for them? You know, I don't know how they pitch it, but I can imagine... You know, them not being very open about this. Or they're so big that it's like, I'm Fidelity and I invest in every company that goes public.

1:22:14

Or, you know, at least, you know, above a certain market cap or whatever. And I have an index fund or whatever.

1:22:21

I'm not sure it should be seen by founders as like the top quality capital. But that's my opinion.

1:22:28

You know, you don't want, I mean, you know, you don't want to be the stepchild.

1:22:33

You know, you built blood, sweat and tears to build a $5 billion company. Holy shit. You know how hard it is to build a $5 billion valuation company? Yeah, really hard. Hopefully underlying has a business too. Yeah. And then somebody comes in and becomes a $20 billion company and suddenly they're the top dog. You know, the most important intros are going to them.

1:22:53

The customer, you know, conversations are happening with them. The board member is spending more time there than with you. And also board member knows what's going on in both and knows how to strategically help the other one. Or the board member is like, you know, trying to get you to sell your business because they're like, you know, hey, why don't you just merge into this other company and then we'll together take it.

1:23:11

And you're like, I don't want to merge this company. I want to build my own company. No, but you know, like if one and one will become three. Now, Again, I don't think VCs do this because they're bad people necessarily at all. I know many of these guys, a lot of the senior partners, I've worked with them, known them. I've been in the industry long enough to know most of these people.

1:23:32

I think it's the incentives. Just follow the incentives. And it's you, the more money that you touch that flows through you, the more money you make. So you want to deploy, pass through as much funds as possible through your fund. VC is a big VC. If you're a $2 billion fund, you're a pretty profitable fund. You know, people are looking to buy management company shares because it's like a nice annuity you get for the next 10 years.

1:23:59

And then it compounds because, you know, every three years you raise more money, over two years you raise more money. Now, you're that fund and you're like, hey, I have, you know, seven employees, six investors, two other people, some staff, whatever. And I get nice money into my pockets. I take 10 million home or whatever, right? I don't know what the numbers are, but let's assume that it's millions, certainly.

1:24:19

And then you raise another $2 billion. That generates $40 million annually of fees. Do you think the VC expenses go up by $40 million? You

1:24:29

might hire a couple more people. You might spend 2 million more, 5 million more. Maybe.

1:24:36

Actually, these days, you know, investment funds are... Size of AUM is increasing and funds are shrinking. Right? Yeah, we're all using AI. We're using AI, but also like power is consolidating in a few people. Like if I'm not giving a lot of advice to you and I have to make a decision on $100 million, I need a couple of junior associates to...

1:24:55

Do some analysis to tell me that this voice recognition company is better than this voice recognition company. And then that associate is not going to write that check. I'm going to write that check. So I just go do it. I don't need a lot of in-between people.

1:25:09

But the point is that net new $40 million annually revenue you got is probably going straight into the managing partner's pocket. Mostly. I mean, why do $2 billion? You should raise a $5 billion fund. Exactly. So that's what's happening. If they could raise $5, they would raise $5. If they could raise $10, they would raise $10. I mean, there's only a few people in the $5 and $10 category, but certainly you can do this for $500 million or a billion dollar fund, $2 billion fund.

1:25:33

You have people who are raising separate funds. We have an early stage fund. We have a growth fund, but we also have this thing in energy fund or we have a clean tech fund or whatever. And as a founder, it's like, that's more money for you. Like, that's potentially awesome. There's like more money that's being deployed towards your theme or company.

1:25:51

That can be an awesome thing. Yes, absolutely. But it's also more money available for if you don't have alignment on incentives and ethics to your competitors. Yeah, fair. Funding noise in the system, forcing you to take more money than you need to.

1:26:08

you know, forcing you to, you know, you know, skip exits when you needed to because you should go bigger. Yeah. And all kinds of stuff.

1:26:19

I know you feel this way, but there's kind of like a circle jerk almost in sort of like tech media. You mean consensus investing. Consensus investing. That's like more polished. So like what's kind of going on and what do you think is like sort of a solution to like navigating through this as an investor and maybe a founder too? Yeah. So I'll tell you, at Lux, we used to, for a number of years, every year we would write just within our portfolio, what are the top five companies that we think will be the biggest fund returners.

1:26:53

And then we would, everybody would write their five companies and would aggregate and would come up with a consolidated, oh my God, 2021, we think like these are the top five companies in our portfolio from a meaningful returns. This is just inside the firm. Inside the fund consensus, finding consensus within the firm. Okay. And then we do it again next year and then again next year.

1:27:14

And you know, the thing we learned in that was that most of the companies were different every year. And certainly the positions changed a lot. So it's like the flavor of the year a little bit. If somebody got a recently run nice financing at a big price, like, whoa, this company is hot. And the company that's like two years long in the tooth and hasn't grown very much since then, like, eh, it was really hot then, but now it's coming down.

1:27:34

And it's real. It happens in every portfolio. Nothing special to Lux. We just did it to be very... try to be more quantitative and qualitative about our own internal assessments on this. The same thing is happening at the industry level now. Every year, it's like, or every month or every week these days, like what are the companies that everybody's excited about? And then, you know, you listen, everybody just runs into those companies because the idea is, you know, it's, you know, To some extent, it's like, you know, is this company at least worth the LIC pref that they've raised? You know, the company's raising money at 25 billion, but they've only raised 500 million.

1:28:08

Is this company at least worth 500 million? So, yeah. So then my downside is relatively protected. Let me play for the upside. The founder, on the other hand, is now, you know, raising money at 25 billion and, you know, has taken on significant liquidation preference. So he has to clear that before he gets any money or she gets any money or they get any money.

1:28:29

This starts to become a problem. The biggest issue right now is that, you know, you seeing these, what becomes consensus. It would be one thing if it became consensus because it built a real business. So there are some businesses that are growing really fast and that's fine. But you're also seeing consensus, which is like nothing has happened in the business.

1:28:50

They've registered a trademark maybe. And boom, the valuation jumps. Why? Because three other top investors have invested. So boom. You know, and a lot of people, founders are also figuring out how to game the system. Like I've had friends who I've known for a while who are researchers in AI. We're like, dude, how do I structure my shares that after a year I can actually do some, because when my price goes from, you know, 500 million to 5 billion, I'd like to get some equity out, but I'd only be a year.

1:29:20

I think I can get it to high prices within a year or two. Do I get founder preferred shares or what structure should I strike? Do I need it in the documents that I'm allowed to do secondary of 10% of my shares? What if the board blocks me? People are starting to think about all that nonsense, right? Because again, follow the incentives. We are creating incentives for people to be distracted by all this bullshit.

1:29:43

And, you know, all this bullshit looks good on paper and whatever. VCs in the meantime keep raising bigger funds, creating a lot of fees and, you know, getting rich on fees. You can, if you do the math and you're in one of the big funds, you can become a billionaire just on fees alone. Just the management fees? Just the management fees alone.

1:30:00

That's crazy. It's crazy. I didn't know, trying to think of like how... So I guess for people that don't know, basically for each dollar that you raise in your fund, you roughly get 20% of it in fees. Just roughly speaking. So if you had a $10 billion fee, a $10 billion fund that you raised. $2 billion in fees. $200 million in fees. Well, $2 billion over the course of the 10 years.

1:30:22

$2 billion over the course of the 10 years. Exactly. Yeah. So you generated... By raising, going out wherever around the world you went and raised a $10 billion fund. There's not many people who can do that. If you could, you just generated 2 billion in fees over the next 10 years. Guaranteed income. Yeah, I was going to say the interesting piece of this is you raised the money and you locked in.

1:30:46

Your $2 billion. Which is, so the incentives. So you hire a team and whatnot. And over the next 10 years, I'm going to spend a billion dollars on them. I'm the sole managing partner. I'm going to spend a billion dollars on all these people, on my events, and all the things that will happen over the next 10 years. Here's my budget for the next 10 years.

1:31:01

And the other billion dollars is mine. You can be a billionaire. without having to show returns because you raised one $10 billion fund. Now, I'm not, mere mortals can't go and raise $10 billion fund. You and I are not about to go out and raise a $10 billion fund. But you know, if I raise $150 million fund like I did, You know, like, look, it's not loss on me.

1:31:22

Yeah, sure. It generates $3 million annually in fees, right? And I've hired a bunch of people. I have an office. I have lawyers who are bloody expensive, but they're very kind and nice. You have a nice suit. You got nice glasses. I don't have a suit, but it's definitely there. It's a nice jacket. But the thing is, you know,

1:31:39

over 10 years, you have $30 million in fees. Now, what I do know, however, is that the $3 million annually I make in fees is less than my compensation in the last year I was at Lux. So you have to take huge pay cuts to be able to start this. But if you become big, and this is why I see a lot of people wanting to become big AUM, is because the fee is really enticing.

1:32:02

And then comes the other associated benefits. Look, if you have a lot of money, you're floating around in circles that are more powerful, you get invited to all these cocktail parties, and then you get invited to billionaires' homes for dinners because they think you will support the political campaigns or the charities that they care for, but you have excess money so you can give to that.

1:32:21

It's your circle of power grows, and you convince yourself that all this is in the interest of the company. Maybe. And the contribution margin is pretty high when it's like, okay, $125, $150 million fund. You do, nothing changes, but you raise a $300 million fund. Nothing really changes on the cost structure, but you raise a billion dollars.

1:32:45

Like just pure cashflow. Yeah, I think this is where, you know,

1:32:51

a lot of people struggle with succession and so on. because you'd have to give that up because you have to give that up you have to give the economics up and so on if you want to retain the best people now you can let the best people go and just keep hiring young people to do the That's not what I'm building. By design, I don't get rich on fees.

1:33:14

I'm paying. I'm hiring people. People have joined me, leaving other big funds to join me. The two other people I hired had offers from other big funds that joined me. So I had to give competitive salaries. They have great equity in the firm. They will grow their equity. It's very standard, but they will grow too. I want the fund to eventually be five general partners equivalent and everybody has equal carry.

1:33:36

It's like, just keep it simple, stupid. And what we are right to win is not the amount of money we have. Our right to win is you should come to us because you care about getting the advice and support and help and the

1:33:54

love for your industry and you that we bring to the table. If you're just looking for capital, There are many sources of capital available. People think that the cheapest capital might be, you know, like, oh, go to the big fund. They have a lot of money. There are always, for every big fund, there's a big brother out there. If you think Anderson Horowitz is big, there's Piff out there.

1:34:14

If you think General Catalyst is big, there's QIA out there. Everybody has a boss. I don't know who's QIA's boss or PIF's boss or Singapore, Tomasic's boss, but there's always somebody else who will give you money and maybe even at a cheaper price. So the minute a bigger boss gets involved, then people start talking about, but look at the value we bring to the table.

1:34:32

Look at the partnership and look at the investment expertise of this guy. And I'm just doing the same thing at the smaller end where I'm saying, you know, take 3 million, 5 million from me. You can get it from 1800 other places. But the reason you get money is so that, you know, we can help you build the business. And oh, by the way, the most important thing that people don't tell you is I'll be there through thick and thin.

1:34:54

Let me tell you, I've been out of Lux now almost coming up on almost two years. I mean, at least we announced it in December. I mean, I left middle of last year formally, but I'm still on many, many boards for them. I'm not getting compensated for them. I'm not, I don't have equity vesting or salary or anything, but I care about, you know, yes, I care about my partners at Lux and I want to be supportive of them.

1:35:16

But most importantly, I care about these founders. Yeah. Right. Like through tick or thing. And these, you know, of course I'm on, you know, applied intuitions board and whatnot, but I'm also on companies that are struggling. And they take up a lot of my time. But I'm doing that because my reputation matters. And the pledge I made to those guys when I was trying to win their investment back in the day was, you are buying yourself a partner.

1:35:41

And I want to be that partner. And if I am not there when going gets tough, if I replace myself with some young associate who's like sitting on the board, I'm not being fair to you. I'm effectively lying. And I don't want to do that. We need good ethics in VC. There are a lot of great people in VC. Hopefully, we can promote that more. And I think we can also do a better job of aligning incentives.

1:36:06

So the founders, the VCs, and the LPs have similarly aligned incentives. Yeah. I feel like there's a lot more we could talk. We could probably talk for like another hour, but we are both, we are both significantly late to this dinner. And I know actually people will, some of them listen to the podcast. They'd be like, dude, that's why you were late.

1:36:26

Are you kidding me? You're recording a podcast with Bilal and you were, you know, 25 minutes late because of this. Oh my God. Well, this has been a lot of fun. Thanks for doing it. We can always get together again, man.

1:36:37

We should just bring these mics just attached to the table at dinner. I've actually thought about that. People have been like, oh, you should do like a group thing. Imagine if we did a round table dinner and everybody had a microphone. That would actually be interesting. I don't know.

1:36:48

Listenable. I think it'd be great because, you know, look, I used to do this falafel dinner, falafel ventures. Oh, yeah. Nabil and Samuel and Avidan. I've seen those. And there was no hold barred, very open conversations. Yeah. And we thought about for a second during COVID days when we were like depressed sitting at our home. They're like, you know, maybe we should turn it.

1:37:11

And then all in came and we're like, hell no.

1:37:14

There is no way we're doing this. Get out of the circus. I don't want to become a circus clown. Yeah. Well, man, maybe we should do that. I should figure this out. People are going to hear this, and if I don't do it within the next... month or two, she'll be like, dude, why did you not do that dinner podcast series? But anyways, this has been a lot of fun.

1:37:36

Thanks for doing it. So fun. Always fun to talk to you. Thank you for being you. Thank you for being funny. Thank you for being real. And thank you for pushing, you know, entire industry to, you know, do a little bit better. Well, thank you. Yeah, that's my job, I feel like. And your job is to check out this episode's sponsors, Flex, Monaco, Numeral.

1:37:54

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1:38:22

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