The New AI Investor Playbook for Portfolio Success

Hello everyone, and welcome to this FI Venture Network event, The New AI Investor Playbook for Portfolio Success, brought to you by Founder Capital, the official VC fund of Founder Institute. We have an international audience joining us today, so please say hi in the chat and tell us where you're tuning in from. My name is Ryan Micaletti. I'm head of global operations for the Founder Institute and a general partner at the Veteran Fund. I've spent the last decade leading the team here that helped us scale to 8,000 portfolio companies across 200 cities. where I built a personal portfolio of over 700 startups. Today, I run the FI Venture Network and the Veteran Fund, which invests in seed-stage critical technology startups with military veterans on the leadership team. I'm excited to host the event today. We've got a really, really good speaker on a topic that's near and dear to my heart, portfolio success. So how do you support the companies that you invest in after you make the investment, and what are the best practices given the age of AI that we're living in? So Before we begin, just a quick shout out for the FI Venture Network, which is our exclusive network of early-stage VCs, angels, investors from the Founder Institute's global network. That includes the Decile and VC Lab communities, which are crushing it right now. As an investor member of the FI Venture Network, you get first-look access to companies that are raising capital and exclusive invites to events like this and other investment opportunities. So the application takes less than 5 minutes to complete, and it's completely free for investors. please go to fi.co/venture to learn more. All right, let's get started. Adam, it's incredibly great to see you again. Thank you for joining us today. For those of you who don't know, Adam Spector is the CEO of Chor, host of the Entrepreneurial Excellence Podcast, which is a great podcast, by the way. He's a GP at the Autopilot Fund and a 4-time founder and 200-time angel investor. So did I miss anything, Adam? You wanna give a quick intro on your side?

You did a great job, Ryan. I've done a few things. in sort of the Silicon Valley world, always. But I think I have so much more to do. So always learning.

Yeah, awesome. Well, you know, we've got a couple slides I think we could go through. I don't know if you want to dive deeper into your background or maybe share a little bit more about your work and how that ties into your work at Chore. And then we could go through the deck. But for the people in the audience today, like, we want to make this sort of an interactive presentation. So put your questions in the chat. I'll ask some questions as well along the way. And then we'll make this a fun learning journey for everyone.

Yeah, and probably what we'll do is more we'll talk through things. I have sort of 15 different slides, but I'm not going to present it. I'd rather just kind of talk through all the key elements of each one. And at the high level, maybe the place to start is my thesis has been arguably for a long time, and this in some ways is unique, but also there's a bunch of VC firms who have sort of done this well themselves, is essentially like the old playbook of just spray and pray to some extent is kind of broken, right? Lots of investors sort of think, well, Capital is a differentiator. So like, let's just like get that out of the way right off the bat. Capital is not a differentiator. Um, there's lots and lots and lots of money out there in your dollar bills. I wish I had some dollar bills somewhere to show you. Of course, I don't carry cash very much, but like, your dollars are no different than Ryan's dollars or my dollars or anyone else's. So, so dollars in capital is essentially not a differentiator. The biggest differentiator, and what we'll talk through, is Like being tactical and being a high leverage, high value investor. And that is what can differentiate you. It's really having a unique perspective on top of that. So does that all make sense? Right. I'm going to go.

Yes, it makes perfect sense, especially if you're trying to get into the best deals, right? Like if you want founders fighting to give you allocation or even to like potentially include you in like an oversubscribed round, It has to be more than dollars. There has to be a network behind you. There has to be value add.

Right. So why do people, as an example, give up so much equity to be in Y Combinator? Um, or why do they take the deal from Andreessen Horowitz over some other firm? Um, and why does even YC or Andreessen see those deals? I mean, the biggest risk you have as an investor are the deals you don't even see, right? You can only invest in what you see. And if you are not even seeing the deals, how are you ever going to get— have the best portfolio? And so the question you have to ask yourself is, how am I getting it? Sort of twofold. I mean, one is like top of your funnel, right? It's a sales funnel. Top of funnel, how do I get into these deals? And then the next step is, how do I convince someone to take my money over everyone else who's trying to get into that hot deal as well? And that is really about your ability and willingness to Provide extra value around your network, around the help that you can provide, what you've done in your career, and how you can differentiate. So for me, as an example, I've done 200+ investments. The value that I bring, and part of frankly the company that I built, The Chore, the whole idea is you get money from me, but you also are going to get massive operational leverage. My own biases, but I very much believe a company is essentially three key things. One of them is building a delightful, fantastic product. Obviously, you then need to figure out how to sell that product and go to market with it. And then three, you need to run the company. And this is where so many companies fail is and founders fail is they've never—they're world class at AI or whatever, and yet they've spent zero time figuring out how do I run payroll? Why would they? Right? They maybe were working at Meta. Back in the day. And Meta has a massive HR team. They never had to think about how my payroll was run. Money just showed up in your bank account every 2 weeks. That is a different world when you're a startup, and founders have no idea how to do that, nor should they. This world-class AI founder that you just invested in should not spend any of their time trying to decide, is like Gusto better than Rippling? Like, that is a terrible use of time. And so how do you provide them with the knowledge to bypass all of that and skip ahead to go back to using their time the right way.

Yeah, makes a lot of sense. So where would you like to start? I know you've got about like 15 different areas we want to dive into. Do you want to share some slides or do you want to talk through them?

We'll talk through them. I mean, so I have it all here. I mean, it just hopefully be an interesting conversation between us because you're always a good debate partner, Ryan. So, like, as I mentioned, I mean, like, let's start with, like, this one, right? The idea being, like, passive investor problem. And what I mean by that is, for all the investors here, if you're just writing checks into SPVs, then sure, be a passive investor, right? You are— you're just trying to presumably diversify yourself from the market overall, right? You don't want to put all your money into the S&P 500. Cool. Put it into early-stage companies. Invest in a bunch of SPVs. Totally legitimate way to go. However, I would say like post-2021, there's there's so much capital. There definitely was in obviously 2022, 23, but even 24 and 25, there's a huge amount of capital sitting around. And once again, what you should expect and focus on is how to get leverage for that. that portfolio company. Ryan, for you, you provide all this different help to your portfolio companies in the Veteran Fund and also in FI and everywhere else. What does that usually look like for you? How do you provide value?

I think there's a lot of different small ways to provide value, and I think it overarching becomes network. Generally, the investor that founder is looking at taking money from has some sort of network to introduce them to, whether it's potential customers, other investors, follow-on. And so I think you could kind of stack your network in a way that adds immediate value to your founders. So for example, if a founder is really focused on, you know, if they oversubscribed their round, right? They're probably going to be more focused on sales and go-to-market than they are on their next round of funding. And so maybe you want to over-leverage the resources that you could introduce the founder to that could drive sales. A big thing that we do at the Veteran Fund is non-dilutive funding. So who are the partners that can help them secure non-dilutive funding? Where do those opportunities arise? And that's also— it's great for the founders and the company, but it's also great for the investors because in particular, non-dilutive funding prevents dilution, yet it gives founders a bunch of runway and capital and access to potential contracts.

So, so agreed, which is great. And that's like, that's real value, especially for a founder trying to figure this stuff out. I would add on top though, that a challenge founders have in many cases, or sorry, not founders, investors have, you know, the investors in this room in a sense right now with us, how many, how many of you read through the detailed investor updates you get from your portfolio companies? I will, I will bet you that the percentage of people in here who actually read through all of them, every single one that they get, It's close to zero.

I was reading one right before this event.

So there you go. But how many of them do you actually read, right? You miss them, you're not focused on it, there's other things going on. Um, you know, maybe you're better than most, right?

I read 100% of them.

That's great.

Yeah,

but I'll give you, I'll give you an example. So I, um, had a company, it's failed subsequently, unfortunately. Um, but in their investor update, at the very bottom, they said Click here if you want to get some of our swag and like fill in this key in this form. I asked the founder later on how many of their of their investors actually did that, and they said I was the only one. And like maybe maybe people didn't do it because they didn't want the swag. I don't know. It's like really cool stuff. And I was like yeah, I just I was more just curious how many people he he was like I wanted to see how many people would read to the bottom of our investor update and understand everything we've asked. And then here's a cool way to get a little something extra. In the company, to be clear, it wasn't just normal swag. The company was doing stuff in clothing. So it was like very on point for them to offer that and to really test out how their product worked. And I was the only investor who did that. And I find that in a lot of cases, that is the way it is. So at Shore, we sort of have investors. It's sort of a longer story, but we When we send investor updates, I, I maybe get 5% response rate, even though I put very clear asks right at the very top and everything else. Maybe 5% of the investors write back, which I find crazy. At a minimum, every investor should write back and say, congrats on the progress, great job. Anything I can't help you with your ask, but anything else I can do. And yet once again, maybe 5% response rate. Probably less than that, actually, probably closer to 2.5. It's embarrassingly bad, which, guess what, means I'm never going to recommend any of those investors to any of the other portfolio companies that I work with or deals that I'm getting into because they've shown zero value to me. And if they're showing zero value to me, I assume they're showing zero value to other people.

Yeah, that's a really good point. There's different theories out there. There's a prominent VC in Silicon Valley that Fortunately, they've got an incredible brand, but their MO is to just find the best founders, invest in them, and provide zero support and just let them go, which I think there's merits to that, but there's also merits to actually providing value and supporting the companies. And then there's ones that are very hands-on. And so, I mean, how do you— I don't know if you have an opinion on how you think about those 2 things. Like, your whole job is portfolio support and adding value. So I mean, like, what are the— with the founders that you're working with, what are the key areas that you think investors should focus on in terms of adding value and portfolio success?

It depends on the investor, of course, right? Depends on your skill set. So presumably, you're someone, you have money, because you've presumably done well at something in your career, in life, and therefore you have some level of expertise. Offer that level of expertise, to the companies that you are investing in. Say, I am, you know, I was the number one salesperson at these 5 companies. Okay, how do you help those companies be a success? Um, or, you know, another one, again, using Chore as an example, one of my asks always to our investors is, hey, please introduce us to your other portfolio companies because they all should be using Chore to run their operations. It's the easiest ask. And essentially none of them respond. And they are investors in us, right? They are, they're literally invested in our success and outcome, and they can't lift a finger to send an email to one other founder that they must know because they're obviously in the startup ecosystem and investing in startups to say, hey, like, this is a really cool company. I think you two should talk. So to your point about that investor, that they're well known for just giving the money and going from there, that works if you are incredibly prominent. VC, and like, you are just— your brand name is the only thing that why someone takes your money is because of your brand name. And essentially, you have a golden halo by taking their money. Okay, cool. Then yeah, you probably don't want help from your VC or your investor. But the fact is, like, the large majority of VCs and investors don't have that brand halo to take the money, in which case you need to provide other value if you're trying to build a long-term, high-leverage high-value portfolio.

Yeah. What are you seeing these days with AI? I mean, obviously, founders are using them. It's being integrated in a variety of places within the business itself. But like, are you— so question one is like, what are the operational best practices using AI? And then 2, how are investors using AI to support their portfolio companies? Are there any insights there?

Yeah, I mean, on one, From an operational standpoint, at least, in some ways, when I look at investments, AI is essentially the same as saying you're an internet company 20 years ago. Everyone was an internet company at some point. It wasn't a thing for a while, and then everyone was now an internet company. Today, everyone is an AI-enabled company in some way or another. So it's not a differentiator anymore to say, AI for X. At least I don't care anymore about that because there's AI for X already. So in that sense, AI is almost a meaningless term in a weird way to me. From an internal company use case perspective, AI, of course, is being implemented in every part of the stack, from, of course, your code, everything you're writing and building, all the way through to the sales motion and everything that's happening there. And then operationally as well, that's actually, we found since we're building this, much harder to do just because everything's an edge case and you really need a smart person to action on the work that you're doing. However, the ability to go do the various AI components and do them well in a unified fashion is pretty difficult. So as an example, for us at Shore, we just recently brought on a single person to sort of own all of our AI and automations and try to build that out in an intelligent way and essentially go through all of the key things we do on a daily basis across product, go-to-market, operations, you name it, and automate in some cases, in many cases AI, but some of it's just automate some of those workflows so that we can remain at a high-level functioning business. Part of that is in service of one of the goals that I've told my team is we need to be 50% more efficient in how we spend our time. And we track that pretty religiously, actually, how we spend our time than we were 2 years ago. So 50% improvement in 2 years. And we're not an engineering-focused organisation where you get a lot of the leverage today with AI. And we still think we can get a 50% improvement by the end of the year.

Yeah. What, but what categories or what parts of the stack are you seeing AI play the biggest role in terms of increasing productivity or efficiency? What, like, if you were to invest in a founder today, it's like, what's the first thing that they should do? Automation, implement AI within a particular department of their business?

Yeah. I mean, you, I would assume they're doing 50% of their coding in Cursor or something and they're writing a large majority of their code with AI at minimum as a companion. There's certainly debate about whether AI is actually providing as much upside value as people imagine. On one hand, you can say, yeah, it's amazing, it can code all this stuff. On the other hand, if AI writes all of your code and then you have to spend all of your time debugging its code because it's essentially like an intern or maybe a smart intern, net-net, are you any better off? Is it more fun to debug or write your own code in the first place? is a legitimate debate. But I still think it's pretty clear that using AI for code is probably the first area. The second one is you can get a lot of things done on the go-to-market side with AI and a relatively small team to go do that. And so those are probably the biggest areas where I've seen a lot of AI leverage.

Are there any particular companies or technologies that you would recommend maybe on the go-to-market side?

So I don't actually have great recommendations on that, mostly because that landscape is changing so fast. And so what I mean, even on that front, I don't invest in go-to-market companies because it is so hard to stand out and it is so easy to replace those companies quickly, which we do ourselves at Chor. We test something out for 2 to 3 months. If it doesn't get the results we expect, we move on. And find another tool. And so there's a constant recycling of options, which makes it very hard to build a long-term business, is a challenge we found. I think you can build some cool things like we've tested out Libby as an example on the AI side. The problem with Libby that we found, it's very cool, but it's very expensive. So when we were looking at using Libby for some of the workflows that we do internally, it was about 5x more expensive, at least 5x more expensive than us doing it ourselves with people to accomplish maybe the same outcome. Questionable. Might have been slightly worse than what the humans could do. And so the cost-benefit analysis for us wasn't quite there yet. It's sexy, but I'm not here for sexy. I'm here to win.

Yeah, that makes sense. If you were to go through You know, I would, I would say like your top 10, let's like reduce that to like top 3 companies that you use to run operations for your portfolio. Top 3, top 5, and you're, you're, you know, need to help, you know, pick out tech stacks, whether it's payroll or, you know, CRM. What are your favorites that you've worked with?

Yeah. Oh. Well, favorites you've worked with with portfolios or like we work with internally at Shore?

Maybe both, right? Because I know you sort of, you're very mad. So

yeah, I mean, from a perspective, both internally we require our team to use, we have ChatGPT, but we don't use it a ton. Our actual customer work, we actually use Gemini. The reason we do that is due to security. So it's very unclear to me whether ChatGPT is essentially taking everything that I tell it and rolling it into their own training model. Whereas Google has incredibly robust security protocols around everything they do, right? This is before AI. They were doing that with Gmail and everything else. And therefore, from a customer policy, we use Gemini much more. So one example, slightly versions of prior, um, for our own CFO and for our general counsel. So I literally have a general counsel Gem and a CFO Gem, and those are trained on our core data, like our core contract, our core things that we're doing, our most recent financials. And then we're rolling that in to say, okay, how do we start doing intelligent analysis for that when I have questions about what we're up to? And then same thing on the investing side. So from an investing side, building out actually, it's shocking to me. I think I've only read about one VC firm that's really using AI in a smart way to vet investments. And everyone should be doing that. You should literally be building a project in ChatGPT, if that's your preferred model. Like, here are all the core things that I look for in an investment. Here's the key information. Here's the historical data. Here's what I've learned. And do a detailed analysis of what's been a successful investment either that you've made or other companies have made. And try to dig into all that data and then create your own massive prompt for what to do and then build it into the project. And so every time you get a new deck, Throw it into— and you can build something much more complex than this, but throw that deck into ChatGPT, into your project, have it pull public data about that founder and everything else, and then come out with essentially a yes/no investment decision. If you're not doing that to some extent today, you're probably shooting in the dark.

Yeah, there's some interesting companies like Velvet that allow you to kind of use that, and they'll produce analysis. But I do think there's something about creating your own structure within Gemini or ChatGPT, however you do it. Let's go back to the concept of agentic AI. You've got these gems, right? One's a CFO, one's your legal counsel. Exactly. That's internally a chore, right? And then are you also telling your portfolio companies that they should be setting those up? And then how do you see that as complementary to maybe a real CFO or real legal counsel?

Yeah, I mean, the simple way that all of them should be doing this is it still pains me massively when someone says, you know, we spent $10,000 on our lawyers or some crazy number on their lawyers to do any basic work, let alone like cap table management is the worst example of that. I mean, it's literally terrible to have your lawyers do cap table management. But we tell our portfolio companies all the time, like, yes, you should be— every single legal discussion document that you get, as long as it's easy-ish for you to deal with, run it through AI first to do some basic problem spotting and issue spotting. And once you do that, then turn around and tell your lawyer, hey, these are the things I found. Or I'll give you an example even for ourselves. So granted, I have a legal degree. Um, but I'm not a practicing lawyer. Um, we had a small— I, I, we needed to make some edits to our contract. I had our lawyer do it. I explained the problem and what I needed to have done. Um, and then there was a small edit that, um, one of our new customers asked us to make to it, which was a good question. It was a good ask. Instead of asking my lawyer to do it, lawyer to do it, I just literally put it into our general counsel and it came up with good language that I thought made complete sense. And I just put it in myself. Now there's a risk reward to that always. But that's the case for everything in life, is can you do something faster and better? And what is the risk profile trade-off? In my mind, in many cases nowadays with AI, you can do so much with a relatively low risk. Now, look, I'm not going to go argue a case in front of a judge or write up a whole legal discourse that I'm going to submit to the court all with AI. There's lots of examples of where that's been a huge disaster because you're citing cases that don't even exist. But if you're putting general language in, cool. Or maybe send it to your lawyer. Here's what I've drafted up. What do you think? That can be a general good use to go. Although the one thing I'd add is my lawyer has also said it's really annoying when he gets that from companies, because what he then has to do is he essentially has to rewrite what the AI has done. And that can be just as expensive. So you have to be very thoughtful about where and when you use AI in those situations. But It can build you a basic financial model if you give it the key things you're looking for. It can build you some of the key things you need as a founder. And so that is really what you should be focused on on the early end.

When you're working with a portfolio company, let's say you have your first onboarding call, what does your checklist look like? How deep are you looking at the companies in terms of their tech stacks they're using? What does sort of like your onboarding checklist look like?

So for an investment or a chore?

Let's start with investment.

Yeah. So as an investment, in a sense, we're not looking for— for me, and to be clear, the type of investments that I do, they tend to be on the smaller side. So I've done 200+ investments, but generally speaking, they are in the $25K to $50K range, partially because my thesis, and there's a lot of data that backs this up, is unless once again you are that top, top, top tier brand name VC, you're probably not going to get into the best deals. So your better play is to say, I'm going to build a 2 to 5x fund instead of a 10 to 100x fund or a zero fund, um, and invest in lots of different companies on a more regular basis. Um, there's lots of data once again that actually supports that sort of way of building a portfolio. Um, and so in those scenarios, I'm not looking for What is their tech stack? My assumption is that at least from an overall tech tools that they are using, that founder is a world-class expert at those things. That is what they care about. That is what their focus is. And I'm going to assume that they're already doing the right thing. What I do care about is, are they truly deeply passionate about this topic? And why are they building in it? Like, are they willing to stick with it? For years and years and years and years? Or are they in some other way a little bit insane? And I mean that in all the positive ways as a 4-time founder myself. And once again, as the host of this podcast, we've done probably 90 episodes at this point with great entrepreneurs. You have to be a little insane to build a startup. You just, you have to be. And how do you— and I want to find those insane founders. Irrespective of what you think of Elon Musk's political leanings, everyone, you would invest it almost certainly, you would probably invest with him because he is an insane founder. You know, he is going to go deeper, work harder, and push further than anyone else. And that is the sort of founder I want to find every single time, is someone who is willing to push the boundaries and push and do things that people wouldn't expect. Because by definition, a startup is trying to do something that no one has seen before, right? I mean, well, you might build a new coffee shop, sure. But like, if you're building a tech startup, you're doing something that no one has done before. And you have to be a bit insane and willing to go as far as possible. So that's what I really look for. So it's an intangible thing versus the sort of clear, like, oh, you're using the best tool. I might not know what the best tool is, right? There's a lot of modern CRMs. Right. If you told me that you're using Salesforce, I'd probably tell you that you're a bad founder if that's what you're using right now. Why would you be using Salesforce instead of HubSpot early on or some of the other new modern ones that are even better than HubSpot or Salesforce?

So that's a good overview of like kind of what you're looking for and the founder persona or some of the maybe like, you know, characteristics of the founder that you're looking to invest in. When let's say like you find that founder and you invest, right? And then you're, you know, post-investment, like what are the things And maybe this goes more onto the Chor side, but what does that checklist look like? Like, okay, we've invested. Now let's make sure you're using the right payroll software. Let's make sure that your go-to-market strategy is solid. Do you have like an onboarding checklist that you use for portfolio support?

A deep one. So once again, going back to the whole thesis of Chor in the first place, founders spending any time on operations is literally slowing them down. It is an anchor and tax on their outcomes and success. The simple fact is the moment you put money into a startup and they go from being a bootstrapped startup to a venture-funded startup, this key thing is switched, which is they go from having unlimited amounts of time but essentially no cash to now having lots of cash but no time. Because to some of the points of some of the VC firms you mentioned, a lot of big VC firms, they write the check. They're of course ecstatic. They wrote this $5, $10 million check to a founder. The moment they're done with that check, that VC checks out and then they'll check back in in 12 months. And if you're crushing it, they'll be ecstatic and be like, yeah, let's go, let's put more money in, let's go. And if you're failing in any way and not hitting your targets and you know you have 6 more months of runway before you run outta cash, that VC's probably not gonna care anymore about you. So founders need to understand, and they're terrible at doing this, that they have a 12, maybe 18-month runway. To make it happen, and if they don't use every bit of that time wisely, they're guaranteeing their failure. So I've come across founders in my time where there's one who I'll just never forget. He was saying, "I'm gonna go do my Series A. We're finally get the metrics we need." And I was like, "Well, how long have you been around?" They've been around for six years, and I basically told him, like, "I don't think there's any chance you're gonna raise a Series A." And one of the things he had spent his time doing. So very impressive guy. He had worked at McKinsey as a senior person at McKinsey, all this other stuff. But he was like, oh yeah, but I saved all this money because I did my own books for the past 6 years. And I basically laughed at him. I was like, I was like, why? He's like, well, I know how to do it. It's like, who cares? Like for $250 a month, you can get someone else to do your books and you, you now freed up an extra hour Every single month, maybe more than that, every single month for you. So how many hours is that over 6 years? Right? I mean, you should be able to do the math quickly, but like, you know, 600 hours or something like that. I don't know, 60 hours, whatever it is. But like, um, uh, the amount of time that people waste and founders waste, like he, he thought he was doing well because he was so frugal and no one cared. I don't care. I try to tell my invest— my investments this, You get money from me. You're— I'm not giving you my money so you can put it in a bank account and earn a small yield on it. Like, that is not why I'm doing it. If I want to earn a small yield on my cash, I'll put it into my own bank accounts for that. Um, I give you cash because I want you to grow and I want you to grow fast. And you have a short time window to achieve that. If you do not do it, you will fail because you will not get more money and that will not enable you to keep taking off. So you need to remove all distractions outside of the core things you need to achieve, you need to do to achieve success. And that's it. Some founders get it, some don't. And the ones who don't are the ones who I think are gonna fail pretty quickly.

Yeah. There's a question here from Christos in the chat, but before we get to it, I'm really curious. So what does that deep checklist look like? When you're thinking through the the onboarding of these companies? Like, what are— what, like, what's— what do you run down? What's the list?

Yeah. So, so yeah, sorry, I got distracted on the other part. So very clear, like, look, you need to have basically 4 or 5 things in your core stack to run a smart business. And we have these listed actually on our website, but you essentially need to have payroll set up. You need to deal with registration, like registering in the state that you're in, plus wherever else you have employees. So state registrations, compliance in a sense, you need a good way to manage that, right? So if you have your mail going to your home office, um, or wherever your office is that you work, that sucks. It's probably going to pile up. Like, I don't know. I don't want that. It should get a virtual mailbox because you're probably going to move offices. You might move apartments, get a virtual mailbox that also enables a virtual team to go action on all that on your behalf. So get all of that set up. Um, after you do that, uh, you need to get finance set up. So find a good bookkeeper, an accountant, um, one that hopefully is not too expensive. Shore does a great job on that front. We're very low cost, but like find someone who's just gonna do your books and do them on time and do them well. Beyond that, you don't, you shouldn't really care. Like don't over-optimize for that. Like I've had friends who are like, oh, I'm interviewing 4 different bookkeepers and trying to figure out the best one. I'm like, What is the best one? You literally want your books done. Like, you want your books done every single month by the middle of the month on time. They're all going to tell you they can do that. They might all be lying. Who knows? Just choose one that gives you a good price. And if they don't get it done in 3 to 6 months, okay, fire them and find someone new. But don't waste time interviewing all these folks. Like, what a waste of time as a founder. How— once again, going back to this example, if you're like this AI world-class founder, How are you gonna evaluate if the sales guy from XYZ bookkeeping firm is telling you the truth about how great their product is? The whole point of that salesperson is to tell you how good they are, and you have zero way of understanding if they're telling you the truth or not because it's not an area of expertise of yours. So bookkeeping, the final one, um, uh, equity. So you need to get an equity system set up. Go with Carta or Poly or AngelList. There's a few, a lot of different options. Just choose one, get your equity on it, and go from there. Hopefully find someone else to manage your equity instead of you as a founder, definitely, but also your lawyers. Like, if your lawyers are managing your equity for you, you are wasting money. Please don't do it. It is a terrible, terrible decision. A first-year associate, you know, for $500 an hour, a first-year associate will manage your equity. That's not why they went to law school, and it's not a good use of your money. So those are kind of the 4 core areas. Get those 4 things set up. There's always going to be more stuff. You should hand it off to an expert to run things day to day like us at Shore. But in the end, you just need to hand— you need to choose these things and then move on.

What about maybe let's like double-click on the HR category. So underneath that would be like payroll and hiring. What are you seeing in terms of ways that investors are helping with that, or even just recommendations on like the tech stacks? Like You mentioned Gusto versus another company. What are the technologies specifically within HR that you would recommend that could help optimize time?

Yeah, pretty straightforward. So go with Gusto or Rippling. I personally don't think you should go with a PEO. There's certainly debate about that, but PEOs tend to be very expensive. and don't necessarily scale in a great way, and you lose a little bit of control for not a lot of upside. So I don't want to go with a PEO, but get Gusto or Rippling as your payroll stack. Use a company called AbstractOps to manage your state registrations and get that all set up. It's pretty low cost, and it just manages like, yep, here, pay you a fee, manage all my state registration stuff. Wonderful. Like, you just, you don't want to deal with trying to fill out forms on some government website. It is a waste of time. Hand it off to them. That's kind of it. Like, you're set. Like, if you get that going— and of course you need a bank account. Like, get a good bank account so you can pay your— run payroll. And you should get a bank account that has high yield on it. So another thing I find founders making huge errors on is they go get Mercury, which is a great bank account, but they put all the cash just in Mercury. Or even they say, I want to be safe because I remember all the issues with Mercury and with SVB, so I go with JP Morgan or something. Um, the problem with any of those is their checking accounts pay basically 0% interest, which essentially— and by the way, you can earn about a 4% yield in an MMA account or other comp— there's companies like Meow, which is the bank, bankmeow.com. Um, they have a high-yield checking account. So if you can put your money into a high-yield checking account or move the large majority of your money into an MMA or treasury account at 4%, That's the equivalent of making on every million dollars that you have, $40,000 a year. So you have to decide as the founder, how do I manage this properly? Or am I willing to give up $40,000 a year or more to pay my bank to hold my cash? I wouldn't. I don't know. The world could fall apart. There's lots of risk. Let's hope SVB was a one-time event. Most of these neobanks, including Meow, they have something like $50 million in FDIC insurance because they, they split up your cash into like all these different partner banks. Um, who knows if that will even work, but that's theoretically what it would do. If you keep your cash with JP Morgan, will that still— I don't know. I would just earn a high yield and not pay my bank $40,000 a year, at least once again, that's just on $1 million. So, um, get a good bank and then make sure it flows nicely into your payroll.

You mentioned Meow Bank, but is that the one you recommend for founders, or is there other banks you work with?

I recommend— well, the 2 main ones we recommend are Meow and Brex.

Yeah,

are the 2 main banks that we recommend. The upside of Brex is they have a really robust system across all the banking, checking, I believe accounts payable, and expenses, all that stuff. They have a very robust end-to-end platform. Meow is a little bit more bare bones, but on the other hand, it covers all the basics, which from a bank perspective, that's what you want. Is my money safe and can I earn a high yield? And if those things are important to you, then that's an easy thing to do. And then can I put it in different places if I really want? Right. So even with Meow, you can put a large majority of your cash into an MMA that's, I think, managed by Bank of New York Mellon, one of the largest banks. And they have their own level of security risk. Doesn't matter what bank you're with, or you can put it into T-bills, which T-bills are the same whether you buy your T-bill through the interface on Meow or buy through JP Morgan. It's a T-bill backed by the US government. So yeah, different debate for us to have at some point, Ryan, whether the US government's going to default or inflate away our cash. But assuming that's not on the menu for today's discussion, let's just assume your money is pretty safe in a T-bill, irrespective of who's managing it.

Specifically with Brex, I mean, they do have some accounting, some basic accounting and bookkeeping Do you, when you work with founders who use Brex, do you recommend using their, you know, basic bookkeeping or like, do you, do you still use like a Xero on top of that?

Yeah. So like a Xero would be like, look, there's sort of the difference. Like a Xero is a little bit more like the ledger to some extent, or like a platform, right? Like QuickBooks a bit. I think it's great to have everything in one place. And so Brex does a really good job of that. And for the basics and end, it's a great system and way to have it. We tend to recommend instead that you have your money on either You have your books managed on something like QuickBooks, which is obviously the kind of US standard, if not global standard. Um, or in our case, a lot of our customers, we're putting them onto Puzzle because it's sort of a newer, um, ledger and it's far easier to manage. It's much lower cost to manage from your bookkeeper's perspective. Not every bookkeeper understands it. So it's sort of a new thing, but it's much lower cost to manage. Um, and then you can still do, it's a far more robust system, right? The downside of something like a Brex with those basic systems is, um, there's always a trade-off. Let me put it this way. There's always a trade-off between buying something that is many, many products under one system or point solution. So I'll use maybe Rippling as an example. Rippling has lots of different products they offer. Um, one example in their case is they have something called RPass, which is their like 1Password competitor. Um, it's included in many packages. It's, I'm sure, a very good tool, but I'm almost 100% certain 1Password is a better product overall than RPass is, because that's all that 1Password does. They are solely a password management and high secure product. And I personally prefer to have the leverage and ability to move around as I see fit. To different providers. So the danger with using everything that Brex offers or everything that Rippling offers is you're now stuck with that platform. And so if you ever want to move off of Rippling, but you're using rPass, it's really hard to move off of Rippling. And, and that's where the challenges come. So I personally prefer best-of-breed single-source products that are really good at that one thing that they do. And it's a little higher management overhead. which has its own risks, but I am playing a little bit for the future with hopefully still not overthinking things, right? Like, I'm not going to go use some brand new— we've come across companies that have, I'm using this brand new payroll provider that like just came out of stealth. I don't want to mess with that. Like, that's not worth my time. But like, I'm also not going to overthink, like, go with Gusto or go with Rippling. You're not going to go wrong. Don't overthink it and just be done.

Yeah, makes sense. Um, let's get to some audience questions here. Before we do, um, you want to share a little bit more about Shore and what what you're working on?

Yeah. Um, so, so Chore, the whole thesis into— look, I've been actually doing Chore or related Chore things for almost the past 5 years. Um, my third company, now my fourth company, are both related to back office operations. The thesis being pretty straightforward, which is once again, founder time is so precious and no one should spend time on things that is undifferentiated and they're not good at doing. So to use a quote, kind of a semi-famous quote for those who know it, Jeff Bezos gave a famous talk 15 or 20 years ago at the Founder School at Stanford. And he essentially said, build a better beer or make better beer. What he meant by that was a long time ago, back in the 1600s or something, maybe 1700s, 1800s, there were all these breweries in Belgium. And they needed electricity to make their beer at a high scale. So most of them built their own power companies to go do that. Cool. Makes sense. There was no other way to get power, so they made their own way to build, make power to make their, to brew their beer. Then suddenly there was a rise in, a rise in electric utilities who were specialists at being an electric utility. Those specialists. So then some breweries moved over saying, I'm going to outsource my electricity generation to these utilities. And guess what breweries are around today? They're the ones who outsourced their electricity to the specialist utilities and didn't try to make beer and try to make electricity. Same thesis with what Jeff Bezos was trying to say in regards to Amazon. Um, no company today would think it's smart to go get their own server, right? How many companies do you know, Ryan, that are making their own server in their garage? And how many founders do you talk to who say they're doing that? And if a founder said that, you'd probably laugh at them and say, I'm not going to invest in you. You're crazy. Why would you ever go make your own, put your own, build your own server and put it in your garage? garage. There's a million reasons why that's a bad idea nowadays, but that used to be the norm, right? And it is more expensive to some extent to outsource your server capacity to AWS. However, there's a lot of benefits that come from doing it, including you don't have to think about all the challenges like managing a server, building it, maintaining it, security, power, backup, you name it, right? There's all these challenges there. And it's the same thesis with Chor. To me, it is just as insane to go say, I'm going to go run my own operations as it is to say, I'm going to go have my own servers in my garage. Why would you go do that? Why, as a founder, should you learn how to run payroll, like press buttons in Rippling? Why is that a good use of your time? Why is it a good use of your time to figure out how to go register for, for employment-related things in California? Why is that a good use of your time? And so that is why Tora was started, was to take this on for other people to say your time is precious. You have a 12 to 18 month window, run as fast as you can and delegate everything that is not your core competency because otherwise you will fail because you won't be moving fast enough.

Yeah. Awesome. Well, thank you for the info on Tora. I think we'll include some information in our follow-up, but Let's go to Christos's first question here. This is going back to when we were talking about Gemini and the gems. He's a big fan of using custom GPTs for different things. This approach still requires a human prompt for each GPT and to process the response. How do you further operationalize your team of GPTs?

Oh man, great question. It's actually been really difficult. I think this is where arguably AI has failed so far. There's lots of promise on AI taking action on your behalf, and certainly if it's coding for you, sure. But the ability of AI to go from, here's what I suggest that you do, to actually taking the action to go do those things still takes a bit of human effort. And that is a real big challenge there. And so there's this missing piece and component where you need a human to go do that. So what I try to do is try to hire people nowadays who understand AI, who are leveraging it every single day and are comfortable making it a key part of their workflow. Because how much faster can you become by using AI in the intelligent ways? So operationalizing it is really, really tough, right? I can't get an AI today to call up the state of California. I can't get an AI today to go press the buttons in Gusto to run payroll. Now payroll's mostly automated, but the moment you have to lay someone off or fire someone, I can't have an AI go do that, nor frankly would I trust an AI to go do that right now because they might hallucinate, right? And they, they, they by accident pay someone $100,000 as like their severance and you're like, oh my God, and the money's gone and the person hates you. You're never getting the cash back. I wouldn't trust AI to go do that today. Um, so there's certain areas where AI can be great, but when it comes to internal operations and leverage, a lot of things there is actually You need to run these agents, but then you need to— you're the person, the humans need to take the action that those agents suggest.

Yeah, along those same lines, you know, Grace is asking here and saying that AI increases efficiency and workflow. In your experience, how accurate is due diligence on a portfolio company using AI? And then the second question is, how accurate is your Agentic CTO for AI?

Yeah. So when it comes to portfolio review, in a sense, I'd say the AI is only somewhat accurate. One of the things that's actually on my list soon, I have not done this, but I recommend everyone do it, you got to find time, of course, is backtest it. So the easiest way to go have AI help you out here and see if you've built a good agent for portfolio management and portfolio discovery into investment decisions is backtest it. So Over the past 2 years, I've probably received, I don't know how many hundreds of investment requests. Obviously, I pass on this massive percentage of those. What I should do is have AI go through my email, find all the pitches that I've seen and listened to, find all the decks that I've received, and then go through it and say, tell me which ones you would invest in, and see what it says. Then have it combine that with who has actually raised a Series A or a Series B since I heard from them, or their next subsequent round of funding, which is not a guarantee they're going to be a success, but at least it's a proxy for whether they were successful since I invested. So it's very easy. I mean, easy is in quotes. There's a lot of work to do, but there's an easy way to test if your AI is making good decisions by simply backtesting and seeing it chose Company A. It said you should invest in Company A. And then I also know 24 months later, did Company A raise a Series A or Series B or something? So that would be good AI in a sense.

Yeah, that's really interesting on backtesting it. And then do you have any comments on how accurate is the Agentic CTO for AI? You didn't mention that as one of your agents, but is there a way to leverage that?

Yeah, I mean, so, so we, we don't have an agentic CTO, but we at Tora, we have an agentic CPO, product officer. And so I've had detailed conversations, like long, long, long conversations about a lot of product decisions that we're making. One of those is we updated our pricing as an example. Um, and we went back and forth nonstop about how to update the pricing, what needs to be done, how we should do it. Um, what does it look like? What does the market say? What's market comps? All those sorts of questions, and it was pretty accurate. Now, still, obviously, we put our own flavor on top of it. But instead of hiring a pricing consultant, I was able to do a detailed review and come up with what I think is a good outcome. Is it ideal? Maybe not. Probably the next step would be to hire a consultant to review what we did. But I also feel pretty good about it. Just even by looking at other comparisons that are out in the market, I feel like we made a good decision. Overall. Um, and the key thing there with all of these is because with AI you're able to move so fast, you, you actually do need to move so fast. And so what I mean by that basically is when you make, we just launched this new pricing model, we're gonna watch it for 2 months and then we'll update it again. I'm like, it's not a 6-month timeframe. We need to constantly be tracking and all the other things we're doing with AI, with our marketing, we need to be tracking in depth. What's our inbound lead look like? Are those working well? Are they failing? Right? Did our new pricing model or updates to our website, how are these things changing all of our other metrics? And we should be able to get to an end answer of what that one thing did because of our ability to use AI to track the data that's coming in and merge it into a single unified view.

Yeah, that makes sense. I'll do a last call for questions from the audience. There's one here for Neil. For a new startup, do you think it's challenging to evaluate a whole suite of tools for every function? It is a one-time effort, but it takes time. How do you, how does one overcome that?

Yeah, so I would, a suite of tools, at least if you're talking like back office stuff and even other things, like I actually don't think it takes that much time. Like, as I said, like I just told you the, the 4 key things you should get for your every portfolio company. They need to get those things done. They can set it themselves or once again, outsource it. Like literally the ability to get great outsourced talent in every single part of your business. has never been greater than it is today. You need to be able to find those tools, make a decision, and move on and not sweat it. Once again, too many people over-optimize. And look, I'm guilty of this myself too. I will over-optimize the credit cards that I use, silly things like that. But it's generally a waste of time. The minimal amount extra that it might make on a 1% difference in a credit card cashback card versus my dining card or something, Probably doesn't matter in the grand scheme of things in life and into the success of my company, so I shouldn't over-optimize it. Like get a credit card that's going to do good. Just use it for everything to be done. That's what every founder should should do. An investor, and let me go actually really quick. I said there are all these other things I wanted to go over, so I'll go through them really quick here, right? Because they relate to some of these things. Like one, we already talked about all the infrastructure enablement. Like help your founders. With operational enablement, right? Getting the HR, finance, compliance, equity—all those key things. Make sure they're using technology as a force multiplier in a bunch of different ways. And what I mean by that especially is like you should be treating your fund like a product as well. Like too many founders think I have a fund; it's like cash. No, no, no! You have a fund; it is your product. How is that product something that is providing value to everyone? How are you using technology to enable it? How are you as an investor? Using a CRM to track every interaction that you have and every deal that you've seen and every deal that you're missing? How are you being smart as a fund admin for the product of your fund? And think deeply about what that means. And then think about how can you use essentially network intelligence for your portfolio companies and for your investments, right? And essentially that means how quickly can you leverage your network? So I have something like 17,000 connections. On LinkedIn, so my smart founders will say, "Hey Adam, I'm doing my next fundraise round. I notice you're connected to all these people. I've created a spreadsheet for you of them, and can you mark down which ones you know close enough to make a nice intro?" But out of my 200 investments, once again, it's probably like five percent or fewer whoever asked that. It shocked me. Now I should be more proactive and go offer that to them, but a lot of them don't even send updates, so I don't even know how well they're doing when they're raising their next round, so I can't even help them. But I also should be more proactive and have a better system set up like good VCs. I should be reaching out to them just like I do with my customers every single, um, like month or at least quarter. Hey, how are things going? What's your update? What's the business look like? Where can I be of value? That's an automated drip email. Like it's not hard to set up. And yet once again, most VCs probably on this call have never done that. Like you need to be running your VC firm like a company and making that like a product, right? So using— actually, we talked about some questions like Clay, Affinity, maybe Superhuman, Zapier where it makes sense. You should be building all these things up and you as a VC should be coding with AI every single day. And the last part I just add really quick here, sort of like become almost like— I think a great VC is truly one who is almost like a fractional co-founder for the areas that they are best at. So is it Are you a rockstar salesperson? Or in my case, like, I like to think a rockstar operational person. My portfolio companies, they don't have to pay for Chor. They can get my advice anytime they want for free, because I want, I want them to do well. Very few call and I need to help them out more, but that's what I should be is almost like an operational co-founder to them and be like, yeah, I'll jump in and help you on this stuff. Um, or at least help you set this up or tell you what to do. And in every single day as a VC, you need to be doing something like that. So,

cool. Um, one last question here from Sam. Do you have any, uh, AI solid CRM systems which are better than HubSpot and scale well?

Yes, but let me give me— let me— we just, we just were talking about one recently, and I'll tell you in 2 seconds what it is. Um, here we go. Uh, I think this one sounds dope. It's called Clarify. .ai. Um, so it sounds awesome. We haven't tested it yet. I'm considering getting it started, but it essentially rolls all these things in, all the key things you want to do within, with a CRM, or frankly your marketing stack into one using AI and leveraging AI in a big way. So instead of trying to pull together, now once again, there's some downsides, right? So they pull all this stuff in themselves. You're not using good point solutions. But if I'm a first-time founder or founder with not a big sales team, I probably want to get everything in one right now, and then over time, maybe break it up as I get bigger. But a founder is only making decisions in a 12 to 18 month timeframe anyways. Like, I need to win the next 12 months before I can start thinking about the next 36 months.

Yep. Sounds good. Yeah, we'll take a look at clarify.ai. Okay, awesome. Well, I think that's all the time we have today. Adam, if people want to learn more about Chore or get in touch with you, what's the best way? What's the Chore website?

Yes, easy to do. It's adam@hirechore.com. So if you want to learn more, it's obviously just hirechore.com. Get in touch, learn more. This is what we do. Do it every single day. Happy to help any of your portfolio companies, even if they don't want to use Chore. Just happy to give them advice on what to do, how to do this, get this stuff set up right. And hopefully the main takeaway that everyone has is, one, your time is precious in general for all of us. So by the way, thank you for spending some of it with me. But even more than that, you need to tell your founders to be incredibly thoughtful about where and how they spend that time, because they are on a very short timeframe to achieve success. And that's— they need to just focus on great product and getting it to market, nothing else.

Yeah, very good advice. Adam, thank you for spending your time with us today. Thank you to the audience. We'll be sending out this recording in the next, uh, 24 hours, and I look forward to seeing everyone at the next event. Thanks so

much. Always a pleasure. Thanks, everybody.

Take care.