And so tiger is used as this kind almost Meme for this but what they were doing Actually Founders appreciated the lack Of diligence and the high prices and all That stuff now were they giving the Vegetables or just giving dessert to the Kids I think they might have just been Giving dessert to the kids and they Should have been better off giving Vegetables it takes too long to wait to A full exit and sell nothing along the Way if you're coming in at preed seed Even early series a taking some Percentage of your position off of the Table is The Prudent thing to do Otherwise you're going to be sitting on Funds four or five with zero DPI coming Back to Market and asking your LPS to Support you again on the next fund it's Just not sustainable in this industry as Hold periods continue to elongate people Need to use that as a mechanism for Getting Capital Bay this weekend Startups is brought to you by HubSpot YouTube Network whether you're a Marketer a sales rep or an entrepreneur HubSpot has you covered with its Tutorial tuts and AI powered tools visit Hubspot's YouTube channel and activate Your free chatbot Builder today check Out the links in the episode description To learn more Dev Squad most Dev Agencies only offer developers why Because product management is hard get
An entire product team for the cost of One US developer plus 10% off at Dev Squad.com Twist and and Mercury 90% of startups Fail just 10 out of every 100 make it Mercury exists to close that Gap helping Companies succeed with Banking and Credit cards engineered for the startup Journey join over a 100,000 companies Banking with Mercury at mercury.com Welcome back to this week's liquidity Podcast with me today I have Logan Bartlett from redpoint Ventures next we Have Hunter Somerville from stepstone of Course we have Jason calacanis from the Launch fund I'm your moderator David Weissberg co-founder of 10x Capital Today we have a couple great topics on The docket we discuss the fundraising Market in the Venture space we discuss Increase activity in secondaries and Finally Google's big bet on generative AI let's Dive Right In pitchbook is Reporting that tiger closed their latest Fund of $2.2 billion its smallest in Over a decade Tiger's previous fund Raised $12.7 billion in 2022 the height Of the bull market during when tiger LED 921 million plus rounds in 2021 and 33 100 million plus rounds in 2022 this Graph seems to mirror the ernston young IPO graph that showed a very lackluster Start to IPOs in 2024 but there is light at the end of
The tunnel earlier this week and and re And Horwitz announced that they have Raised 7.2 billion coming in 4% over Their target Hunter you have a unique Focal point and that you invest in funds Secondaries and directs at the late Stage what do you think about these Indicators yeah I think from a Fundraising standpoint uh it it's really Not that bad at all particularly for the Platform brands that are out there um I Think there are big allocators both Domestically and internationally that Are looking for ways to get exposure in The asset class view this as a very Highquality vintage year a good Innovation cycle and therefore uh are Naturally inclined to go with the bigger Multi-billion dollar platform Brands to Get that exposure both due to perceived Safety and also because of the check Sizes that they're writing and so I Think where you see struggles from a Fundraising standpoint is anyone that Has weighted uh heavily into late stage Um LP simply have gotten too much late Stage they don't necessarily want to be Adding more and in this market a lot of The late stage players are either Sitting on the capital and not being Overly active or are paying very high Prices for late stage AI related deals And so it's not a place that LPS are are Typically looking to be aggressive right
Now but when it comes to the the Platform brands of of which I'd say They're you know 15 to 20 that would Count in in that kind of category we see Them able to hit or exceed targets Pretty consistently fund over fund um so I don't I don't view it as a a tougher Uh fundraising environment for them Where it is tough is in the longtail of Smaller more emerging managers that are On funds one two or three and that Aren't getting the time and attention From allocators and have a much Different you know road to SLO Logan I See you nodding your head what are your Thoughts on the fundraising environment Today yeah I mean it seems like there to To Hunter's Point there's there's some Water line I don't know the Mendoza Line In baseball I'm sure the baseball Enthusiasts here would appreciate where If you're above it or below it uh is is A determinant of how easy things are for You in the in the uh private fundraising Market and so I think what I've heard at Least anecdotally from my peers in the Industry is if you're above a certain Threshold of returns and how you managed 2020 and 2021 was prudent and pragmatic It seems like there's a real desire to Concentrate dollars with those Managers From a limited partner side if you fall Below that line either because you Deployed way too much Capital over the
Course of 2021 at too high evaluations Or you're just not in the preferred Manager class for an individual limited Partner I think it's really hard time to Fund raise there were a lot of First-time managers that went out and Got funds done in 21 and I know there's Really a triaging going on on the lp Side it feels like where they maybe Initially thought that manager was going To be more long for this world and have Decided not so it seems like people are Really consolidating to the Comforts of Name brand firms uh across the board Yeah I would add Um Hunter makes two really good points There uh the platform brands are the you Know in our case the uh flight to safety Right for our industry so of course if You're coming out of some uncertainty And you work at an endowment or a Sovereign and you work for somebody um They're looking back and saying to those Uh fund managers hey let's really take a Deep dive into uh to Logan's Point hey How did you behave over the last couple Years did you s and secondary when you Had a chance and to tie the stories Together when tiger came and did $ 1201 Million rounds did you sell any Secondary did you take advantage of that Opportunity for your LPS and if not why And see this is where you know a lot of Reflection uh is necessary as a GP when
You're a GP and you write checks you can Get very full of yourself you can get a Little bit of um a God complex I'm the Decider who gets money um and then when You have to actually get DPI and send Returns you got to get humble and say Hey am I good at this and and really Examine you know what is your Decision-making process when you place Bets what's your decision-mak process When you sell um equities Etc and so the The second piece uh that Hunter uh Pointed out about this is going to be a Great vintage I think is the really Important point just because the last Two years were chaotic um and there was A lot of cleanup and there were 120 Hundred million rounds by one firm that Didn't even even join the board of these Companies like of those hundred million Investments I'd like to know how many of Those did Tiger join the board I mean Does anybody have that number because to Put aund place a hundred million do plus Bet and not take a board seat seems Insane to me like where's the governance Where is the you know follow through on These bets and so I wonder you know if If they're going to change uh their Staffing requirements Etc um but I do Think the most important thing is the Game on the field right now the game on The field right now Now is really Serious entrepreneurs building great
Businesses with capital efficiency in Mind and taking all these gains from Ai And essentially the super cycle starting Over again instead of with cloud and SAS And mobile and then before that Broadband and social networks and social Graph now hey here we are we're going to Start this over with AI and a new level Of Efficiency um and it's really Exciting you do have um to Logan and Hunter's Point a lot of scrutiny on the New funds And so we we talked about this statistic Something like 15 or 20% of firsttime Funds are able to close their second Fund right now I mean there were a lot Of venture Tourists and I am glad to see that be Over because the Venture tourists were Making my job and I know Logan you Probably had the same experience really Hard it's hard to like get to know a Company when some lunatic is like here's 100 million or here's 50 million or Here's 10 million and I don't need a Board seat and yeah UNCA note sounds Great and you're like did you do Diligence and I had Founders complain to Me you're a seed fund doing better Diligence or more detailed diligence Than a series a Investor and you know now that's changed Now we have six weeks to get to know a
Company maybe three months for a deal to Close and and that's healthier so I'm Very excited about the game on the field Right now yeah it's so much better I Mean there's three different Constituents I sort of think about on The that um all's incentives aren't Totally aligned and one is like the Individual GP and what they might be Pursuing what might make them wealthiest For example then there's what's best for The founder and then there's what's best For the limited partners and so tiger is Used as this kind almost meme for this But what they were doing actually uh Founders appreciated the lack of Diligence and the high prices and all That stuff now was it actually were they Giving the vegetables or just giving Dessert to the kids I think they might Have just been giving dessert to the Kids and they should have been better Off giving vegetables but from that Vantage point you could argue it was a Good product right or people at least Like did on the entrepreneur side on the Their own Pockets side of the house I Mean raising big funds generates big Fees and I'll tell you a 2x on a 12 Billion fund makes a lot more money than A 10x on a $500 million fund or Something and so from that constituent Standpoint at a selfish sort of Capitalist level I get I get it like I
Actually think that's a very prudent Decision if you can make that much uh Raise that much money um raising it I Don't know as a capitalist maybe it's a Good thing to do do I I I that's not my Personal uh way of doing this business But I I at least understand it but then There's a limited partner constituent And Hunter I'd be interested your Perspective on this like that was the One that was worst served by this Strategy right like raise big dollars Not do a lot of diligence just put the Money to work and that constituent I Think is really who got burned over the Course of 2021 because the Fe income is Signed up for what 10 years right so These people are still going to do fine Over the course of the next 10 years With these big funds yeah I mean I think One area LPS will definitely ding firms On is pacing and so if people were Putting money out the door that quickly Um and and coming back to Market and Doing like annual funds instead of the Typical two and a half to three um Regardless of who that firm was you're Going to have to make a harder case for Why you should get a reup and you've Probably stretched the budget of the LPS That you work with simultaneously um and There are people that you know will will Be perceived as stacking management fees And approaching their business that way
And ultimately the the best way to to Build trust with your limited partners Is by finding alignment that really Works across the three constituencies That you mentioned and so that is all Tied together by being long-term Oriented and maximizing multiple and end Of day carry not a fee accumulation Approach all right startups are you Missing calls are you juggling all these Notifications are you manually managing All of these customer interactions well Hubspot's chatbot Builder is here to Revolutionize your workflow their Chatbot Builder is going to automate all The important tasks in your funnel like Qualifying leads or creating support Tickets scheduling meetings and so much More and you can do all of this without Being a developer no you don't have to Write any code imagine all the Efficiency you're going to gain and Setting this up is so easy just install The tracking code and you're ready to Rock best part completely free that's Right F re it's the best price you need A Hands-On guide we'll head over to Hubspot's YouTube channel and check out Their video how to create a chat bot With HubSpot there's a link in the show Notes of course you'll learn step by Step how to tailor your chatbot to meet Your specific business needs I love chat Bots when I go to a website you think I
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Also a pretty good analogy what is in The best interest of the founders a lot Of Founders I know now have come back to Me and said you know when you said um You needed board Observer seat when you Had 5% ownership and a board seat when You had 10 and I was F on that I've Really appreciated having you on the Board because when all this blew up uh I Came to you and you had really good Advice and you picked up the phone on The weekend and a lot of these folks They're not picking up the phones on the Weekend and you know you you have to be A good Steward of capital and you have To be thoughtful uh about how you build These companies and you know I was Really lucky to be able to watch and be Friends with Bill Gurley and ruoff as he Was coming up at seoa with Alfred and You know hanging out with Doug Leone and Mike morit I I got to see their approach And everything came back to not the Management fees not the how much how Many assets under management they had it Just came down to like hey building this Business and what the founder was doing To build their team to build the product To Delight their customers and every Conversation seemed to go back to the Same place and then when I saw some of These Tourists uh and I LPD some of their Funds
You know a lot of it was you know their Paper gains their press the Midas list All this other stuff that is really Superflous and what I what I've learned Going into my second decade as a fund Manager of a fund I created which is Very different by the way like all due Respect Logan like you joined red point It's a great institution you didn't have To like start from the cold start of Saying like inherited it yeah you Inherited it like it's really hard to Cold start these things and I was you Know talking uh with my wife over and I'm like God this you know she's like Maybe you should have just joined Another firm and you wouldn't have had To deal with all this and I was like now You tell me yeah exactly now you tell me On fun four now listen we've hit all of Our goals which is great and we've built A great team and I wouldn't have it any Other way um but boy you think this Business is easy during the boom times And you realize how hard it is when this Stuff blows up because now you're Looking through a portfolio and you're Saying okay what's what's good in here What where can I squeeze out some DPI Where can I find this and you're like God if I had just made some better Decisions when I was deploying the Capital I would be in a better position Than now and and that pressure it it
Takes a little while for it to manifest I find with GPS it's just a little bit Of time to manifest that you're not just Getting a checkbook to drop money from The sky you you actually have to return The money and you have to return it Faster than the public markets do or Else you're out of business and um yeah I just think a lot of people join this Pursuit because of I Think what it looks like from the Outside and what it looks like from the Inside is an unbelievable amount of Shutdowns suffering pain exhaustion and Just sheer force of will to get some Things across the Finish Line That's What is about and then some luck by the Way I am telling everybody who tells me They want to get to venture capital Don't do it I know a lot of young people Are watching oh it seems like the Greatest job ever it's a great job if You want to have every weekend be phone Calls from Founders that you have to Pick up the phone and that you cannot Send to voicemail there there's no Turning it off so if you're thinking About Venture you better be thinking About 60 70 80 hours a week because it's Going back to that this idea that you Could just be at both weekends of Coachella and go skiing for eight weeks Like no sorry it's a it's a big problem Because people's board loads and
Capacity is strained to the hilt because Of the pacing point I just made so You're going to have a lot of pass offs And even if you got the board seat or The board Observer seat doesn't mean That you know you're going to have Everyone fulfill their promise to to be That person that's that's actually Interacting with the founders and doing The hard yards and the hard work and you Know you got a lot of pass off kind of Behavior and a lot of Junior partners That are now saddled with tough vintagee Portfolio companies that they're Spending their time on instead of Building their own track record and and And setting themselves up for future Success so I do think that board Coverage and capacity issue is is only Beginning to become a problem and it's Going to get worse and no incentive Right because they're underwater on the Carry what are the odds that these funds Are going to return what they thought You know the senior partner sold them on This 3x hurdle this is what you make When you when you deliver a 3X so it Could be very demotivating for for the Junior Partners in those cases Jason you Mentioned how difficult it is to be a GP Do you see a correl between being a Great founder and being a great GP That's a great question you know a lot Of the people I know who got into being
A venture capitalist have now gone back To being an entrepreneur because it's Very hard to know oh you know when you Take this corner on the track if you go Too fast you're going to flip it over And the Founder's like yeah let's do That no no no Slow Down slow down if you Go into that corner too fast and you you Hire that VP of sales or whatever you Know you got to be more thoughtful you Flip the car over uh and then you just Got to watch people flip cars over a Crash and you know that I think some People that's very hard to be able To um let the founders make the decision When they know they're making a wrong Decision or they suspect this is a Suboptimal decision so I think the People who are relentlessly supportive And inquisitive and have a lot of energy You have to have a Insurmountable like amount of energy and Enthusiasm because 80% go to zero at the Seed stage and at the Serius a stage It's like 60 or 70 go to zero what other Pursuit is there where the majority case Is just abject failure every day with Moments of like unbelievable Delight oh My God I can't believe we were the third Or fourth investors in this great Company wow um you know you really have To be built a certain way Uh as a gambler as a person who places Bets to have the wherewithal to lose and
Get punched in the face over and over And over again to have that you know one In 30 break out um and so again if You're listening to this and you're a Young person if you are Relentless in Terms of Your Intrigue and and how you know much You want to be supportive of other People yeah do it but if you've got a a Low energy level this is not the shoot For you what do you think Jason if Somebody's considering being an Entrepreneur versus being a fund manager And which which direction should they go If if they had iMed go to Entre be an Entrepreneur 1% provide some value yeah I mean at least you know exactly how Hard it's going to be and you've Suffered and you've gotten punched in The face over and over again I do think Like you can get a skewed version of Entrepreneurship um and Life by getting A cushy job at a VC firm um if it is in Fact cushy you know I I our team works Really hard people are doing three four Meetings a day with Founders Consistently every week you know we did 60 or 70 first meetings last week as a Firm so you know to do that requires a Team doing a lot of meetings you have to Have a lot of energy so I'm now hiring Based on like energy level on Zoom now That sounds crazy but to be able to do Four zooms a day and keep your energy
Level and positivity level high is hard It's not it's not an easy task and That's really what this is about is how Many people can you meet with how many People can you say no to and then when You do say yes how supportive can you be So go be an entrepreneur for sure go Work at a startup Jason do you think Being an entrepreneur makes you a better Investor or do you think it just makes You more empathetic to the founders and Therefore maybe a better board member or Supporter along the way 100% anation More empathe of course right and the Thing I've learned also is you got to be A little bit humble what I learned 20 Years ago doing web logs Inc and Building companies like is it exactly Analogous well hiring might be but how You do development or how you do Marketing has changed radically and it Changes you know some things are Fundamental principles other things Change so um but there are people like I Guess you know uh Fred Wilson uh and Gurley who are just career analysts and You know they seem to have done pretty Well too I think Hunter LaVine like you Know I mean there's a fair number of What do you think Hunter you play you Place these bets for a living on GPS What do you think is it is there some Dispassion that comes from not being an Entrepreneur what's the con no I mean I
Think there's no one size fits all it it It's all all Network and the ability to Interpersonally and empathetically Connect with people um end of day and I Think really be a supporter and someone That can take the blows and doesn't get You know affected or spooked too quickly I think there's a lot of Behavioral Elements that go into it um and we've Backed people that have been Founders And then become VCS we've done pure spin Out VCS who have never um had the Background um I think the best firms Combine different profiles together and Are able to bring both to the table but More than anything a lot of it comes Down to psychology in my opinion can you Say more about that I thought that was Like really fascinating like tilt I Immediately came to mind was tilt Control you know like you if you Lo if Your Aces get cracked right you're not Supposed to lose you're an 80% chance of Winning and somebody hits runner runner On you you know you can you can lose Your mind um and you could start betting Too many hands or whatever so tell tell Us more about the psychology of great GPS I mean I think when you look at a Lot of the younger less experienced V's They get rattled very easily and you can Just tell and they make selfish Decisions or they make rash decisions And they end up creating a bad
Reputation uh in the founder Community Because instead of being supportive and Helpful and solutions oriented you know They're worried about how they appear in Their partnership or how they're going To be viewed externally um and it Creates bad behavior and bad partnership And in a business where reputation and Relationships are everything that's not Uh a good way to sustain success as as a VC um and as you've mentioned um you Know today like there are a lots lot of Up and downs in this industry uh and Companies that end up being successful Had a bunch of weird twists and turns Along the way and if you don't have the Stomach the grit the conviction the Ability to Wade through all of that it's A horrible business for you to be in and You're inevitably going to blow up your Reputation in one of the the different Constituencies along the way and so a Lot of these personality and Psychological elements I think become In increasingly important that's not Even talking about how you interact and Build and maintain credibility with you Know other Venture Partners you work With within the firm um you know that's A whole another um Complication hey take a moment picture The ultimate All-Star team for your Startup you got that image maybe you're Thinking about the Avengers huh maybe
The X-Men Wolverine Cyclops Iron Man Well let's be realistic here until You've raised your series A or B you're Going to need help building this a team Right you may not have all the resources To do it finding Talent managing all These timelines and ensuring quality is A huge task for anybody building a Product and scouting for the perfect All-in-one 10x developer it's going to Take a lot of time well there's somebody Out there who does this for a living Skip the hassle and power up with Dev Squad okay they're like Professor X from The X-Men they just know where all those Great mutant developers are those really Powerful ones Dev Squad offers a Complete product team loaded with top Tier Talent straight from Latin America Same time zone as us right your team is Going to have two to six full stack Developers depending on what you need a Technical product manager keep Everything tight and a bunch of Specialists maybe you need UI and ux Design maybe you need devops how about Quality assurance they're all going to Be synced up in your time zone and it's Going to cost 75% less than the Equivalent team in the USA we all know There's a an incredible Arbitrage There's Talent everywhere in the world And now that we all work online remote Hybrid whatever it is you know that you
Can integrate this amazing Dev squad Team into your team if you're looking For seamless collaboration and the Flexib IL of monthly payments without Long-term commitments oh it's time to Take action head over to Dev squad.com Twist and snag an exclusive 10% off your Engagement that's Dev Squad d vsq a.com Twist it's time to Squad up and Transform your startup with the allstar Team you deserve Hunter have you seen I'll ask you to do a composite but the Most challenging founder situation to Deal With um and then thinking about your Reputation the firm's reputation in Dealing with you know something that was Crazy and if you give me a good one I'll Give you a crazy one too I mean where I Think you see the worst behavior from Founders is when it's like a a subpar Acquisition and it becomes a fight Among The Syndicate um and then the earnout And you have people talking to the acir From four or five different angles and No one has full visibility on what's Going on and you partnership elements Like end up disappearing very quickly I Literally had this one and you know it's It's always these like very minor single And double ones that get so contentious And we have this like situation and Where you know they um I have the due Diligence team when we have these Aqua
Hire situations you know I I see it as An opportunity for our team to learn so I'm like okay here's the and I like Checklist so I make a checklist check All these items and every time we go Through one you know the checklist gets Edited you know post and one of the Things we check is like you know Obviously just for Hygiene what's the um What's the stock option plan for the for The manag team and then also can we get The vesting schedule of that I'm going To give a composite here I'm not talking About a specific company but imagine a Company where 90% of the sale values in The equity for the management team and Then a or 95% even and then imagine like Half of it's on signing and you're like Wait a Second um and I I I just said to the Person I was like um I want you to win Just can we give the investors Rlps you know just X consideration and It was like this big thing and I said You know just for your own reputation Over time just so you know this is not Going to move the needle for our fund And it'll give you the ability to come Back to us and other people and you know They'll feel really good about backing Your next company and you'll feel pretty Good about it it's it's not going to be That much of a haircut for you it's just Like a little a little buzz on the side
It's not a big deal and um you know I Wind up like you're saying talking to The founder of the company uh and I just Say hey you know do you want to be Perceived this way and Zuckerberg used To do this all the time and Chris Saka Called him out publicly on this podcast Or on this week in startups he called Him he called Zuckerberg out on the Podcast for doing this and you know you Do see these like weird Trends and so I've had to deal with that and that's Always a problematic Logan because you Don't want to be like the bad VC who's You know arguing over the minor Employment contracts But oh totally But yeah you can't do things that are Unethical I don't know it seems people Like lose their minds over fairness is a Big one or insecurity and when you have To flip it on the VC side if you have Someone that feels like they're being Treated unfairly like I I will lose my Mind over the dumbest things but if I Feel like I'm getting screwed immaterial To the dollars or whatever it is like it Will drive me insane but then the Insecurity one's an interesting one and Hunter to your point on like the Partnership Dynamics and how comfortable Someone is in their seat generally when I'm dealing with other board members That are maybe newer or are uh for
Whatever reason maybe less uh embedded Into their firm or they haven't had a History of returns or whatever that's Where you tend to see really perverse Acting and things going on because They're insecure to their partnership And so one of the things I think when You're taking a great investor it's yes The Lessons Learned sure that might be Helpful that they've sat on the board of XYZ company but but the best thing I Think you're getting is that person will Be a rational iterative thinking actor Of what actually makes the most sense For you as an entrepreneur for their Limited partners they're going to play That long game and if you have someone That's optimizing for a local maximum Along the way like oh well if this sells That I become a partner or a general Partner or I get into the management Company or whatever that's where you Really see this like weird behavior and It can lead to just really um Interesting board Dynamics or Conversations cuz people are solving for Something that isn't congruous with the Ultimate outcome of the company yeah It's also interesting you have some of These people now who had a company go Public or went public through a spa and They got promoted for it and now the Equity value has been crushed and and You almost wonder if it's deserved in
Retrospect and that's an interesting Partnership Dynamic too yeah it's uh Getting liquidity isn't easy and when You have the opportunity man I feel so Smart right now with some of the Secondary transactions we did and yeah You know and it comes up in LP meetings Now oh wow yeah oh you made that Decision okay that seems like a that's Was a good trade um even when I sold Uber I sold Uber shares back to Uber you Know maybe at 30 bucks a share five Years four years before they went public And then I sold some at $37 a share to Masi Yoshi son like I really was Thoughtful about pairing that position On the way up just a little bit uh and Then holding some amount I held all my Robin Hood and that was a challenge Because I just believe in that company So much and then watching Kathy Wood and All these folks run it up to 60 bucks a Share while we were locked up that was Like a new experience for me and I'm Happy I held it now because I just got My Robin Hood gold credit card today and I just watched them continue to execute And I guess the stocks recovered a bit And I'm like going to be a $200 stock Someday I don't know what my LPS did With their shares I'm holding mine I Still believe in that management team And that's that's the second part of I Think being good at this job is just
Knowing like if this team is truly Special this product is truly special And if it's going to stand the test of Time some stand the test of time is Really really interesting to see that Like Airbnb and Uber and even coinbase Which I thought like huh I wonder if That one's going to stick around like You you know uh a lot of these things Have staying power and if you don't if The business doesn't die there a good Chance it could Thrive um I know it's a Weird observation but I see keep seeing It your first point I couldn't agree With more um every you know of every 3,000 longtail seed investor that's Listening to this needs to sell partial Positions into large growth rounds uh it Takes too long to wait to a full exit And sell nothing along the way if you're Coming in at preed seed or or you know Even early series a taking some Percentage of your position off of the Table is The Prudent thing to do and Otherwise you're going to be sitting on Funds four or five with zero DPI coming Back to Market and asking your LPS to Support you again on the next fund it's Just not sustainable in this industry as Hold periods continue to elongate people Need to use that as a mechanism for Getting Capital back Jason do you have a Did you have a structured way that you Went about doing I know Fred Wilson I
Think had like some structured framework On the way up that he would trim Positions or did you just sort of do it Ad hoc with intuition I started making Phone calls to people and saying what Should I do and when I had phone calls With ruof Bill Gurley Doug Leone you Know that cohort um they all Logan Barlett Logan Barlett you know the all Stars the Mount Rushmore who's who a venture capital yes I know we got we got work to do Logan We're going to be in this business for Another years we got time we have time Um you know people retire at some point LeBron and Steph are going to retire and That'll be our a whole new generation Luca and yeah Jaylen I got some good Advice and you know 10 20% in each of Those rounds on the way up seemed like The right number so I did that and then I had some situations um I saw another Trend happen which was Founders saying Hey um we have this opportunity to sound Secondary you're cool with it I'm like That's great for all of us and they're Like ah yeah it's one more thing Um would you Wave uh your selling of the shares and I Was like yeah um so you're waving yours So we we none of us are selling they're Like no no we're selling we want you to Not sell and I said ah I said but we're Par parsu and so let's just do that
Let's be part parsu what do you want to Sell and they're like we want to sell 20 Per. I was like great I'll sell 20% They're like uh well if you sell 20% we Probably could only sell 14% that's Great so we I'll sell 14% sounds great And then I'll see you at the next board Meeting and I just held firm um and I Think other folks didn't I know the Other folks who didn't and now they Probably have some regrets because you Know we locked in in I'm just taking one Case something to the effect of like a 15 or 20 x by selling 20% or 14% And we Still have the 86% of the shares those 86% of the shares on today's market Might be worth the same as the 14% we Sold right so and now I do think it's Going to come back but you know will it Come back fully I don't know and that's Did that end up being contentious Because as we talk about those three Constituents you definitely did right by Your limited partners there right you Might have done well by Jason calacanis There but like did it become contentious With the entrepreneurs at all getting That done no I I said to them I said Listen you know I've been with you since The beginning we happened to have Incubated the company that went to our Incubator I said I I need to get Liquidity for my LPS in order for me to Invest in the next generation of
Companies like yours and Founders so I Hope you understand it's the business I'm in is getting some early liquidity They're like totally get it Jal totally Get and when I wanted to sell some Uber Because I personally had money but I Wasn't you know where I am now I just Went to Travis and I said hey I heard There was like a secondary thing he's Like how much you want to sell and I was Like here's a number he's like no Problem I got you and I was like thanks Travis I was like is there anything I Can do and he's like yeah there is Something can can I um have the Voting Rights to your shares and I was like you Got it Boss I just I literally physically Saluted to him I said Oh Captain My Captain and I literally gave the Voting Rights and nobody knows the story but I Told Travis you can my Shares are your Shares now you vote my shares um which Turned out to be preent if you know the History of the company being a Founder Can be overwhelming don't I know it you Know I get those phone calls on the Weekend sometimes people are a little Overwhelmed they need to talk to jcal They got my phone number I know the Reason why there's a hundred different Things you're responsible for you got to Take care of your office space or remote Workers HR software raising money
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Managers and I assume this this is going After is this going after manager Liquidity or it's going after company Liquidity it's going after manager at The early stage roughly the seed or Early stage I mean I think you the these These time Horizons keep getting longer And longer right of when these companies Are going to go public and the uh bars Keep going up higher and higher of what You need to go public right I I think People have probably seen I think it was Philip leant said pretty publicly from Kotu that the new bar might be a billion Dollars in revenue for a company to go Public and if you're an early stage seed Investor or angel investor in This I mean it starts to be a different Product when you're talking about Companies raising at 10 20 30 40 50 Hundred billion dollars in the private Markets like Once Upon a Time Microsoft Back in the day went public at like a 500 million dollar valuation you can Look at these charts of how much value Is created in the public markets versus Private markets for a lot of tech Companies and you look at it for Cisco And you look at it for Facebook and you Look at it for Microsoft and then you Compare it to like some of the companies Today and most of the value is actually Getting created in the private markets Versus the public markets Once Upon a
Time and so if you're an early stage Investor it makes sense to me that you Would want some liquidity or some Product to get out and change hands so Someone else is taking more of that risk Along the way uh so I think it's I think It's smart I do think there's a lot of People that have been doing this as a Part of their strategy at different Points in time and so I don't know how It's probably needed more than it has Been today I don't know if it's Necessarily like a totally novel uh Concept but certainly seems that it's More prudent than ever and Logan I'm Curious we talked early in the show Tiger's raising 2.2 billion down from 12.7 billion you know the late stage is Essentially disappearing more or less so How do these companies get to a billion Dollars because the way that I look at It is companies go public when they Decide to go public when they file an S1 So so how do we reconcile this dir of Lat stage Capital with companies wan to Go PR stay private longer it's hard I Mean if you look at what what the number Of public companies uh I don't know in In general back in the 90s or 2000s like As we've increased the regulatory Hurdles for these companies to go out There's a lot of benefits to it for sure Right there's a lot less fraud going on In the public markets uh the the the
Disclosures are a lot better than they Were once upon a time but the as the bar Goes up higher and higher the number of Companies that go public keep going down And so you have retail investors that Aren't able to access these products uh Or access these companies that once upon A time would have already been public And so I don't know there's obviously Tradeoffs and it's one of these things Like whenever someone tells you Something and all the upside it's it's Everything sounds great right of course We want more disclosures on public Businesses so people won't get defrauded Right like of course why would you argue Against that well there is a counterside To all of these things uh which is well As regulatory bars go up like the number Of companies going public will go down And so there's always two sides to any Coin and so I think that this was well Intentioned but led to some per Incentives Jason where do you land on This philosophical Argument you know we've had some great Companies go out like desktop metal had A spack and you know it's it's been Tough for a lot of these companies I Don't know the public markets understand The Venture business and I don't think They've think in it in in decade long Windows I don't think they even look at In oneyear Windows and so it's very hard
For a company that's not yet profitable To go public and I think the excess That's got taken out of the system now Could make it possible for people to Feel more comfortable doing later stage Rounds where the money is not going to Just be incinerated in a unsustainable Burn rate so hopefully this time when The late stage money comes in and it Will come back there'll be another masi Yoshian there'll be another Yuri Milner And listen Yuri made the some of the Best trades in the history of venture And investing M has made some of the Best Bets in the history of investing And people will come in and just Hopefully they're thoughtful and they Don't just drop money and not take board Seats and not have a thoughtful approach To it and then the founders and the Boards have to be thoughtful about how To deploy capital I cannot tell you how Many times I watched this you know money Get dropped on a company and then all Focus is lost all focus is lost and Great art requires constraint and I I Think you know there's just Great interview you know one of the Seminal Works in Bob Dylan's catalog is An album called blood on the tracks Shelter From The Storm simple twist of fate I mean there Are some incredible tracks on there uh You know along with tangled up and blue
And they asked him hey why did you write That album tell us what was the you know The the motivation and what was the Inspiration he said well I owed Columbia Records in record and they had paid me In advance and I they were going to sue Me and I was going to lose the house if I didn't get them that album so I went To the studio and I recorded the album In two weeks guys yeah no no I okay you Had a commitment but but what did you You know the songs you wrote and he's Like yeah I needed to get them those Songs that's why I wrote them because They I owed them the money and they were Going to take it back and this person Couldn't Reconcile the point of this is sometimes Pressure and focus is important and a Deadline and goals you drop a hundred Million dollar onto a 28-year-old team And they were just cranking and they Were growing at 14% month over month 12% 20% and then all of a sudden they hire This VP of sales they get this Incredible signing bonus and this Incredible severance package and when I See That all the alarms go off oh signing Bonus oh severance package we've never Done those things yeah but we can afford To do it now and sure enough that VPS Sales is gone the next VP Sal is gone We're still paying two VPS sales the
Third VPS sales is in here everybody's Looking at this thing like a piggy bang Somebody's debating the goddamn Reception area of the office space and What the the the logo and the desk and The architect does The Architects have To do with our customers or the team Right and I'm sorry to get on fire about This but man this is one of the great Tragedies of capital you know we the Best thing about this Industry was the milestone-based funding System you have to clear Market every 18 Or 24 Months which makes you focused if you Don't have to clear Market I how many Times did we have Founders Hunter Logan Say to us we've got 97 months of Runway We've got infinite we got 272 months of Runway it's like that doesn't mean you Should be burning $3 million a month It's not required to burn three million A month and then all of a sudden the oh People are churning customers aren't Resigning up and the churn goes from Three million to four million and then We do a layoff and that increases the Burn it's like it's really hard to get The magic back when you start spending At that level just like it's hard for People who start flying private or Business class or they start staying in Fourstar hotels it's hard to go back Hard to go backwards hard to go from
Playing you know in the $25,000 buying Poke poker game or the $25,000 hand Blackjack down to $500 a hand Blackjack But that is I think what I'm most Concerned about um you know watching the Cycle and I think you know it's going to Take a while for these scars I know the Dotcom scars took forever Fred Wilson Has dotcom scars big time and Jerry Colog as Partner the Doom scars were so I think He checked out after a friend of mine Jerry and so I think the scars are Pretty deep on this one I think they're Going to last there's a fascinating Chart that I would need to dig up but It's basically Equity value created by Capital consumed and if you look at it Like there aren't many companies that Have consumed a lot of capital and Created a lot of equity value now part Of that's a product of history and you Know Venture Capital wasn't as big of an Asset class and all that but if I Remember the chart correctly it was Basically like uber and snowflake were Kind of the two businesses that have Ever consumed a lot of capital and Created a lot of equity value but if you Go down the list like Microsoft Facebook Amazon you know atlassian Salesforce you Like go down the list of names and a lot Of these were like pretty Capital Efficient and they just kind of worked
Right and constraint to your point Jason Like breeds trade off and breeds focus And in absent of that you know you get The opposite of it you get the opposite Of constraint you get the opposite of Focus yeah and I think a lot of these Companies that didn't show that are Going to have slow deaths or have to Seek m&a or or private Equity uh to Effectively fix them in in a very Difficult kind of way but it does create A lot of opportunity for new companies In each of these categories to come in And be much better capitalized much more Frugal much more efficient and have a Real uh opportunity to displace some of These that you would have viewed as Incumbents with real Moes and so going Back to what we set up front this is a a Very interesting Innovation cycle for Many reasons but that's another one I Think tying it back to the secondary Part of this um you know it also creates Difficulty in what you would consider Buying at least on the company side Because a lot of the companies that are At a point where duration is shorter and You you'd want to buy into them have These horrifically messed up cap tables Or structure or debt or whatever else Has been put into them and then on top Of that they're not growing at rates That allow them to get above the last Round price before the runway runs out
And so as a second buyer and that's an Area we've always been very active um You know company secondaries you've got To be really careful around that's only One of the three areas that we focus on Um we're also very active in LP interest Purchasing where LPS because they've Been in a fund for eight to 10 years Eventually need to seek liquidity or Trim their positions and then I think The most interesting category um is Really the discussions around doing Something more strategic and scaled Whether that be a strip sale a tender Offer or a continuation fund and our Counterparts in breath Ren and in in Private equity and buyout have been Doing this forever but everyone in Venture needs to start thinking more Strategically about it um and you know Funds don't have to stay in existence For 15 to 20 years like you can do Something more interesting around that Assuming you have good companies and can Find a good partner on the other end of That and so to answer the original Question um I'm surprised there hasn't Been more competition in this space Until now um and maybe you need a big Reckoning um to to have people who Realize there's Arbitrage and there's an Opportunity to take advantage of the Distress and do something on a secondary Basis but I've always said uh I I
Thought there would be more competitors To to what we do in this category and And and now there are um whether whether It's this one or whether it's uh you Know other other firms that have popped Up or other GPS that are now considering Doing it as a component of their Platform extension Yeah I I uh I'm fascinated by it I'm Glad it's out there we would consider it I guess you know at some point we have a Our first fund is like 4.9x uh on paper and we've distributed 1.x and I don't know what is reality Right now three in between and so Somebody came to me and said under hey How about three x I mean I'd have to Take a look at it and be like Huh that that does solve a lot of Problems for me because now I'm in the Top quartile and I can wrap that up up And you know it's opportunity for you to Take that you know uh strip and and and Go nurture it and and uh you know give Somebody else the opportunity so yeah With and thing we didn't even talk about Was m&a I don't know if you saw Andy Jasse talking about um on CNBC talked About the iroot or whatever the Roomba Block you know acquisition he's like What are we doing here it's like this is Nothing this is a tiny little ticky Tacky m&a and it's being blocked and Then figma getting blocked like to your
Point before Logan of like hey you know We want to protect people we want to Have a competitive market place is figma Getting bought and Adobe buying figma G To change the landscape no it's not Sorry um is Roomba getting bought if Lift got bought you know would anybody Care I don't think so you know like Maybe we just have to say the top five Players in Tech they're under a certain Level of scrutiny because of their scale And any acquisition that's under x Amount or merges amongst equals is fine Because that creates more bigger players And more competitive so if you take Google Microsoft and um apple and Facebook and You make them play one set of rules for Acquisitions and then the long tail let Them go at it you know what if Uber and Airbnb merged I mean it's a crazy idea But okay they would block it of course They'd block it they're blocking Everything but if you put instacart Uber and Lyft and door Dash together I'm Just throwing a bunch of Assets in there An Airbnb and you made this like ond Demand Mega Corporation worth 500 Billion it sounds pretty great to me and They would block it of course they would Block any combination of that nobody Would even try and um this is freezing Capital markets in a way you know but Not having these singles and doubles and
It's going to screw up Innovation Because you know there's a ton of Companies in our portfolio that I'm sure Would get bought for 500 million to 5 Billion and we'd be totally okay with it But they're just what are the what are The m&a Departments doing they're coming Up with obscure ideas like what they did With mustafa's company they're like Inflection yeah like let's just gut the Company yeah oh we can't we can't buy The store great we're going to go in We're going to take everything out of The store we're then going to light the Store on fire And then there'll be a bunch of Smoldering Ash but we'll have the team That works at it we're going to put them In the store next door and you can't Stop us and what constituents are being Served in the like I mean I understand The if we could go back in time and like Instagram should it have been acquired By Facebook I you know we can have that Debate but like Instagram isn't Instagram without Facebook being Facebook empowering it to where it is Today and you guys remember that Acquisition was totally made fun of at The time and everyone's like oh my gosh This photo sharing app and all this and You watch clips of like John Stewart Making fun of it in 2011 or 12 or Whatever and now he's got uh you know
Linda Con on and they're talking about How did Big Tech get this big and all That and it's like we're trying to Relitigate decisions we made in the past Doing so in the future and we're just Overe extrapolating these like I Robot And Amazon like who cares we need that Capital in in the ecosystem to be able To continue to Spur entrepreneurship Forward and and so it's just like we're We're who are we serving by doing this Did Whole Foods suddenly become a bad Product I don't know I'm not like I I'm Asking it as a question I'm not like a Whole super I know I still shop there Yeah I don't know did Walmart go out of Business because Whole Food's got bought By Amazon doesn't seem like it I don't Know Hunter what do you think about m&a Yeah I mean I think it's going to be Tough and you'll also start seeing more Scrutiny on the the financial buyers too Um you know with people thinking through What is or isn't appropriate from Private Equity um and that will become a Problem too because they've stepped in And have become more of the liquidity Provider as strategics become more Scrutinized from an antitrust standpoint But I don't know that they'll remain Immune uh as well um whether it's in Take private situations or in buying Builds or in combining companies Together and frankly that would be a
Good thing with some of these categories Where there's just you know too many me Too companies like you would love to Have good private Equity people come in And start putting those together Thoughtfully um instead of continuing to Have 10 of them exist um you know Forever doing nothing and so hopefully There's a way to bring m&a back it's It's critical to our industry it's the Predominant exit Avenue or at least has Been historically an IPO windows are Always cyclical and so if you don't have M&a to fall back on the liquidity Situation becomes more and more dire uh Which I think actually feeds into David's first question and also into the Second because that's where secondary Once again comes in as as one of the Only legitimate options in an Environment where liquidity is still a Big problem um and you know while Fundraising doesn't appear to be a Problem at least for the bigger groups Liquidity is a problem for everyone I do Think there is a fundamental kind of Underpricing of future liquidity if you Looked at the graph we showed earlier q1 2024 IPOs the lowest amount in over Decades on the m&a front you know There's probably a 5050 chance on the Next election so I do think people are a Little bit over optimizing on his Historical ultimately on the IPO front
Companies there's such a large pipeline Of companies that have to go public Somebody's going to start going public And um my my thoughts that that could Open up sooner than people think yeah no I I agree I mean eventually Hunter your Point like 99.9999% of companies eventually get Acquired fired right that's the terminal State and so if we freeze m&a it's it's Just going to lead to this liquidity Crunch that we've all been talking about And so yeah I don't know to what end Well we got Reddit out and that seemed To have done well and I guess we'll see What happens with shrip how's it Actually held up I haven't kept I know It was sort of a blood bath in week two Uh but has it has it flattened out a Little bit more it's a great question I Haven't looked at on a day-to-day basis But pulling it up right now the first Week seemed like it was good Andice roughly yeah that's good and Rubrics filed to go out so hopefully There's this stream of folks that are Going to start trickling out I mean the You know you end up with your arrows in The back if you if you run ahead but um Hopefully we get some of these more These businesses that want to lead and Get out and manage the public market I Think that will happen but to your Earlier Point Logan uh the scale that's
Required to go out is just ridiculous in Comparison to what it's been Historically and it seems keep getting Bigger in terms of what companies need To to be at in order to consider doing It and so all of that still elongates Things further and leads to an even more Robust secondary opportunity however You're buying it at the company level The fund level or through more of a Strategic solution next up Google Appears to be all in on generative AI at Last week's Google Cloud next conference In Las Vegas nearly the entire Conversation was dominated by Ai and Gemini platform earlier this week the Chief of Google's AI business Demis Hassabis said that Google plans to spend Over a hundred billion dollars on AI Logan with companies like open AI Anthropic data bricks competing against Incumbents such as Google and Microsoft Give us a lay of the land and how do you Look at the AI ecosystem today one of my Friends at Benchmark Eric vishria said That these Foundation models are the Most rapidly depreciating asset in human History and I thought that was a I Thought that was a funny line that like The Incrementality uh by all these dollars And the step function change that seems To happen with every model it just seems Demonstrably better than the one before
And so maybe this is an infinite Rat Race that we're we're on and there will Be a handful of winners like there were In Cloud where it ends up with Google Owns part of the market and Amazon owns Part and Microsoft owns part and then Sure there's this digital ocean thing Over here but it's small in comparison To the overall ecosystem and maybe That's how how it ends up but it feels Like that's a hard uh game to play when Open source keeps pushing ah head as Strongly as it as it is and obviously Facebook has a lot of incentive to keep Pushing open source so I don't really Know how all this plays out it sort of Seems like there's a prisoners dilemma Going on between Google and and Microsoft and Amazon an open Ai and Anthropic and all of them are sort of Beholden to the decision that the next One makes um I guess it's the game on The field and you have to play it but it Seems like uh it's going to be very very Expensive and to what prize I'm super Impressed by AI in general like anyone Else it's hard not to look at this stuff And be super impressed by it but is the Difference between gpt7 versus GPT 8 Going to be such that it creates that Much more Equity value I don't know I Don't know how that's going to play out It just seems like um we're seeing a lot Of parallels to the internet craze which
I think everyone believed in the trend But it doesn't mean every company Created a lot of equity value along the Way I'm coming to the conclusion that we Might look back on language models like We look back on fiber and storage which Is to say we don't really think about Them all that much yeah I'm sure there's A lot of money being made in storage but It seems like a commoditized market I Don't think anybody's going am I on a Seagate drive or a Western Digital can Can we talk about my fiber are we going Through a Cisco router or you know I Just want to get an idea of you know uh The packet size and you know it's like Does it work or not does it give the Answer or not and then what product or Service can you build around it what Data set what reinforcement learning can You do and then to your point Logan you Know it might turn out that an open Source project around the narrow you Know focus of Photography um and you know might beat Chat gp4 so so you know chat GPT and Open AI may run the table for a little While or Google might run the table but This open source projects that Apple's Working on and the ones that meta are Working on they have access to a lot of Data data is the new oil they have Unique access to Consumer data whether It's chats or DMS or emails or YouTube
Videos whatever they happen to have Access to I I think the verticalized um Items could commoditize these broad ones And so yeah I I'm glad that they're Doing it though because like the fiber Buildout of the dotom era a lot of the Great businesses like Amazon or YouTube Were based upon this incredible buildout I I think we're going to be sitting here With possibly a surplus of h100s and all These things because we this idea that Um we're going to use all the compute The software may need some time to catch Up we might have what if we have too Much Compute is it possible is it possible That so much capitals running into chip Design that like the fiber buildout we Just overbuild it and we're sitting There going hey software is not actually Solving the problem the self-driving is Not working you know door Todo yet it's Doing 87% or 92% so um I'm pretty happy With the application Level and that's Where I think a lot of the opportuni is Going to be people are going to build Consumer apps that just work and brands That just work on top of this technology And the YouTube and the Amazon the Actual application that people use is What they remember not that it's on AWS Or that you know the bandwidth came From what was it Worldcom I think Hunter you might have
Caught the tail end of this as an Investor the Worldcom did you catch the Tail end of some did yeah was there a Lot of pain and suffering yeah yeah uh I Mean I think playing the game of Continuing to to come into growth rounds In these businesses for for me would be Pretty scary Um they obviously consume tons of Capital but being an investor who has to Figure out which the winner will be and Then you know getting comfortable with Whatever price you're paying and what Kind of multiple that could look like in The future um is is is Pretty Tough so I I I don't disagree with you I think Playing the application side of it Although uh might still be slightly Early there playing elements of Infrastructure around it playing the Intersection of of AI and security and And what that can look like playing Someone that's sort of an arms dealer to All of them um and doesn't have to make A choice uh in order to do well are to Me more interesting ways to do it and And fundamentally even beyond that just You know companies utilizing AI to be More efficient and provide a better Product and solution you know I think is A great thing too um so all the Discussion gets centered you know in in One or two of these areas and and Hopefully that begins to broaden out a
Little bit more Logan I don't know if You caught uh Sam alman's interview Earlier this week where he said that 95% Of startups are building on gp4 and they Should be building on gp5 because GPT 5 Is going to crush their business model How do you invest into startups in such A rapidly um changing space I mean it's Really hard right uh I I think that if You go back and look at the uh the Internet bubble um I'm sure if you got Into Google was basically started at the Very tail end or you know kind of on the Other side of it but if you got into Amazon or Ebay or PayPal or Yahoo or Whatever it was you probably uh you did Extraordinarily well and for a long time You looked insanely uh preent and and Smart with your decisions but there was A big blowup on the other side of of of The journey to what those companies are Today and if you didn't get into those Names and you got into the web bands or The pets.com or whatever it is and not To disparage those names but like it Wasn't broad-based that everything that Was indexed to the internet worked it Was actually quite the opposite right if You go look at the I don't know the 10 15 names created an enormous amount of Equity value over a very long period of Time but just because the trend is Happening doesn't mean the totality of The outcomes are going to be successful
So I think it's it's really hard right Now uh and it doesn't mean that it also Needs to happen this second Google came A little bit later Facebook certainly Came a lot later Jason mentioned YouTube I mean one of the big biggest Beneficiaries of the internet Infrastructure was YouTube kind of Building on top of what had already Happened and so just because you believe In an inevitable state of a trend Doesn't mean you have to go all in at That moment in time and you need to Cherry-pick like where those Opportunities present themselves so I Guess the short answer to you is I don't Have to and I I'm going to try to be Patient uh in finding the things that Really resonate uh in the entrepreneurs I really believe in rather than trying To index or basket the AI ecosystem Which hopefully esteemed LPS like Mr Somerville here appreciate from a Perspective standpoint seems like Hunter You're in the best seat uh to capitalize On AI you're you're able to access it Through multiple different Investments Across managers yeah I mean what our our Business model is always interesting Because we can do fun direct and Secondary but specific to AI actually Specific to most of the things I like Inventure I bias towards seed in early Stage as much as I can um because then
You don't have to be playing the Cyclicality game uh or the runup game And with anyone that we decide to back In late stage like a A Logan and and the Omega team we want people that are super Thoughtful do more early expansion than Crossover late stage and are pragmatic And you know view this as a craft where They're doing like two or three things Per year instead of creating a basket Artificially in whatever trend is viewed As a musthave at that given time uh um So yeah I the flexibility we have I Think is is a real advantage and and we Don't take that for granted in terms of How we can structurally pursue it h I'm Going to make that our website uh Description what you just said that's Going to be Point by Point how we Describe ourselves in any future Fundraising deck we're just gonna say Hunter said this happy to be helpful Lan Speaking of which Hunter you know Jason Talks about uh his 5x tvpi but he does Have kind of a more Diversified strategy He doesn't have high ownership what do You think about fun fun like Jason's Well I mean specific to a 5x yeah I I I Like that from anyone um and I think the The conversation around that tvpi DPI Differential is interesting and and Frankly that is where you see the most Secondary activity is funds that have Done well but there's a difference
Between the tvpi and DPI that being said If you've crossed over a 1x you have a Little bit more optionality than others Do on the diversification piece you know It's not a one-size fits-all to see um You know I have more of a bias towards Concentrated portfolio construction Approaches and building positions of Impact through reserve and followon Management but there are plenty of People that have done an incredible job At you know diversification not being as Aggressive in followon um I just think You then need to prove your ability to Be additive and Hands-On with Founders And for many of those that take a high Velocity high top of funnel approach I Really just question that or have a hard Time believing it um the fact that Jason's talking about taking board Observ ation or board seats um even with A big portfolio I think is is the right Way of doing it I have just been Jaded By so many that take tons of positions And aren't even really involved between Seed and a I'm not expecting them to be Involved from seed to IPO but you know I At least want to see a high level of Involvement from C to a and bridging it To a good you know next partner and and Being a thought partner at the very Early Innings and it's just hard to do Um from a Capac capacity and and and and Time and attention standpoint that's the
Key is capacity and you know I'm super Lucky to have podcasts and events that Throw off a lot of Revenue and I'm able To underwrite a team that's three time The SI three times the size of a typical Seed stage fund so for a $50 million Fund to have 21 people kind of like Unprecedented because I instead of Taking an extra I probably take I take a Million dollars Less in profit out of The media side of the business to Underwrite the Venture side of the Business and that you know means I'm Doing a $5 million commit to my funds Every four years million in cash $4 Million in not taking profits out of the Media business but you do need to your Point Hunter you need to have more People it takes more processing power to Do 60 meetings a week 70 meetings a week We have people who can do 15 in a week If they don't have any vacation that Week you know that's five people on the Front line just meeting with companies Like a seat stage fund has two people They don't have you know I have 21 so I'm I'm I'm lucky to have an army but Most people are not lucky to have an Army to sort through all that and I Think you've also done a good job at Building a a community approach to it um Which is the other way you can deal with A massively large portfolio is having a Community of very high quality that can
Connect and learn from each other um and Utilize each other as resources and by Working with you know whoever you decide To on the VC side if they have a good Community then you're you're buying into That too yeah there so many times I'll Go into our slack and somebody will have Asked me a question hey on this legal Issue and then I go oh I know the answer To that and I click on it and six other Founders have answered the question There's 800 Founders in our founder Slack now that we've invested in you Know 400 companies over 12 years and you Know they have two or three founders Each we don't kick them out I mean if They do something bad we do but you know Generally we don't kick them out so They're sitting in there on their third Or fourth company they went to work for Google we just leave them in there they You know they they help each other uh It's pretty amazing to watch them help Each other if you have a great community And then you apply technology thoughtful To to Really piece all of those nodes Together uh it it can be a pretty Interesting way of of of doing it well It's been another great episode of the Liquidity podcast for Logan Bartlet Hunter Somerville Jason calacanis this Is your host David Weiser thanks for Listening
