Smash Notes

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

Why Must Venture Founders Get Customers to Pay?

Bilal Zuberi says founders need to be commercial and know how to get customers to pay them, because a company is started to be commercial. An investment firm can take one shot on the goal with research, but research cannot be the majority of the portfolio.

Some professors who cannot get money inside a university start a company as an alternate form of a university and keep doing research. Vinod Khosla and others funded OpenAI when it was not commercial and was a nonprofit. Vinod Khosla can give a billion dollars to somebody as a nonprofit grant because he wants the work to exist. An average venture investor trying to do remarkable investments and make a mark on the world is in a different position, to the extent Travis Kalanick was saying everyone wants to make a mark on the world.

The aim is to find amazing individuals who create real value, real products, better lives, and products with economic value in society. Society then offers a lot of money for building the product, on the belief the builders will continue to add money for a long time. A pretty high multiple gets applied, the builders can cash out, and the company continues. The name for the outcome is an exit.

Grokipedia·Vinod Khosla·Travis Kalanick

Transcript

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

The Peel with Turner Novak

More from this episode

  1. What Is Physical AI?Bilal Zuberi says physical AI is the third bucket on the chart Jensen Huang put up in January 2025, next to AI and energetic AI.
  2. Why Is Hardware Still Hard?Bilal Zuberi says hardware is still hard, and in some ways it has become harder. Supply chains in China have been cut off.
  3. Why Is Physical AI a Venture-scale Business?Bilal Zuberi says physical AI is a more venture-like model because one model can do a job and hundreds of other things, so the solution generalizes.
  4. What Is Dyna's Scaling Law?Bilal Zuberi says Dyna recently put forward a scaling law: when the company gets 1 million hours of data, real scaling starts to happen.
  5. Why Do Founders Have to Chew Glass?Bilal Zuberi says founders chew glass because the path is hard and there is no easy way through it.
  6. What Are Bilal Zuberi's Four Core Values?Bilal Zuberi set four core values for his fund before he had a name or an office: curiosity, intensity, integrity, and humility.
  7. Why Can't Bilal Zuberi Get Paid for Advice?Bilal Zuberi cannot get paid for sharing intelligence every now and then, so he built a business model that pays him for that work.
  8. What Does Red Glass Ventures Look for in a Founder?Bilal Zuberi says Red Glass Ventures looks for a first check at the earliest stage, whatever the round is called, and a founder with a missionary belief that…
  9. Why Do Technical Founders Still Have to Pitch?Bilal Zuberi says technical founders still have to pitch because most investors are not technical enough for the product to sell itself.
  10. Why Do Investors Now Talk About Hundred Billion Companies?Bilal Zuberi says a unicorn is a quaint word now because the target has moved past 10 billion to 100 billion.
  11. Is 2021 the Best Vintage in Venture?Bilal Zuberi says the 2021 vintage is not the best vintage in venture, and what the 2026 vintage will look like stays unknown.
  12. Why Did Bilal Zuberi Take a 90% Pay Cut?Bilal Zuberi took a 90% plus pay cut when he left Lux because he treats the job as a mission he already holds with conviction.
  13. Why Do Venture Funds Keep Raising More Money?Bilal Zuberi says the extra fees from raising another $2 billion, $40 million a year, go mostly straight into the managing partner's pocket.
  14. Can Venture Fund Fees Make Someone a Billionaire?Bilal Zuberi says a partner in one of the big venture funds can become a billionaire on management fees alone, without having to show investment returns.
  15. What Are Founders Buying Besides a Venture Capital Check?Bilal Zuberi stays on many Lux boards with no compensation, no equity vesting, and no salary because his reputation matters and because the pledge he made…

People

More answers like this

More with Turner Novak

Related episodes

Plays from this note through the rest of the episode.

Note

Weekly highlights

One letter a week.

The notes worth hearing, with the minute they were said.