Andy McLoughlin - uncorkcapital.com

Welcome to another VC Wisdom pod, round 2 with Andy McLaughlin, which is mine. I greatly appreciate Andy, he is a managing partner at Encore Capital. He invests in seed stage B2B software startups, originally from the UK and now in San Francisco. He's taking his first vacation in a very long time, so welcome to the pod again, Andy. How's it going?

Good, thank you, Charles. Yeah, yeah, as we just chatted about beforehand, excited to, um, we're gonna head back to the UK and see my family, and then we're dropping my kids off with my parents, and my wife and I are going to go to Ibiza for a few days. So it should be a lot of fun. Pretend like we're in our 20s again.

And you take vacations once a year, or is it just when the feeling calls?

I mean, summertime is a pretty good time to go. I mean, there's this myth, I think, and maybe this is more true in Europe than it is in the US, of like all the VCs disappear for 8 weeks on end, and that's obviously not the case. But people are taking vacations, and as soon as We don't have everybody in the office. Things can slow down a little bit. So this is a good time to go. I always feel guilty leaving, but I feel like a bit of time in summer and a bit of time between Christmas and New Year is gonna be slow. So, you know, you gotta take advantage of it. And I think when, like, you know, and this is true for VCs, it's true for startups as well. You know, you can't be running 100 miles an hour all the time. You know, you've gotta take a break occasionally, otherwise you're just gonna burn yourself out.

Unless you're Elon.

Well, yeah, exactly.

There are exceptions because if you're Elon and you're taking vacations, people plan a coup while you're out there. Yeah, um, but is there like— I mean, 8 weeks is just way too much, right? Like, it's on the fringes of ridiculous. It's like, if you found— if you find a vocation that you love doing, why being away for so much time, you know? Like, uh, it seems that you just don't like your job if you're taking like 8 weeks. And that's also the wrong signal sent to your founders, right? It's like, dude's just taking a break and he's just not there for me when I need his advice, or he's just not on the battlefield anymore, right? We're just not sharing the same DNA. What do you think?

Yeah, and I think the, you know, any vacation, we're very, very rarely kind of completely offline. I mean, I'm going to be gone, I'm going to be in the UK, but like, I have my phone, I have email, I have text messages. I'll be doing stuff every single day. I think the founders with us and hopefully with any great VC, they know that we're always contactable. If they have questions, they just need to ping us and we'll get back to them. It's not like we're going into a black hole.

But you absolutely need vacation even as a founder, right? Like, I've been guilty of not taking any vacation. And anytime I go into vacation, there's like a lot of consolidating that happens up there in my brain. I get a lot of insights. And yeah, I get some rest, which is important, and I come back like way stronger, right?

Yeah. Yeah, absolutely. I mean, the— I think, you know, founders, we're living in a world right now where, you know, 996, 997 maybe has become kind of the accepted norm. And I think you can do that in a stretch, right? It can be a sprint for a while, but a sprint is called a sprint because it's short. You know, you can't be running that kind of schedule forever. If you think like this is a business that could last for 10, 15, 20 years, there's got to be, there's got to be a pause and a breath. Otherwise, you know, and even if you are Elon Musk, most of the people working with you aren't going to be. And, you know, if you burn people out, you're just going to churn through them. And that's actually way less productive, having to replace people and train them and get them up and running than it is giving good people who are working hard a bit of downtime. So there has to be a balance. I mean, there are going to be times when you're going to be working 24/7, But there's also got to be times when everybody has to stop and take a beat.

There's something to be said about changing environments, right? Like if you're constantly with the same lens, viewing the same problem the same way, solutions might not come easy, vs. if you change environments. I think the brain is made to have different insights while changing environment visually and having different conversations and different routines, right? 'Cause routines are good to solidify habits and performance, but it can also have you stuck in the same pattern. And sometimes there's like real big bottlenecks you need to be solving business, right? But as a VC, I wouldn't expect some of my port calls to go and take like 3 weeks vacation, right? I'd be like, what is up, dude? It's like—

Yeah, exactly. I mean, it's always a balancing act. You know, when you have a founder that's been at it for 5 or 6 years, I mean, they should feel able to take vacation. They should feel like they don't have to be there all the time. But it's hard, right? Especially if you're the founder and you're there to set an example to the rest of the team. You're the first person in the office, you're the last person to leave. I think, you know, it can be difficult to get over that hump. But again, at the same time, right, if you're telling your team that they need to look after themselves and they need to think about their own mental health and think about not burning out. You know, you've got to set an example in that way as well. They can't just all be charging all the time.

But sometimes it's frustrating for you to see like European founders go like 3 weeks on vacation. I mean, probably not the founders you funded, or some VCs take 8 weeks vacation. Do you feel that? It's like, how are you guys going to succeed or compete against Silicon Valley if like that culture is like deeply ingrained in you guys? And like sometimes I look at Europe, with these eyes or my native Canada and I'm like, you guys don't stand a chance, man.

Yeah, I think change, things are changing. I think had we been having this conversation 10 or 15 years ago, I think, you know, there'd be a lot more of that. I think now, you know, the kind of Silicon Valley work culture, the Chinese work culture has kind of seeped into Europe and the UK. And now, you know, you see the best companies coming out of those regions, you know, they act and feel more and more like a Silicon Valley business. I think sometimes it takes a visit out here. I was chatting with a chap from London who was in town this week. He came to the office to talk and he's like, it's eye-opening. You come here and you think that everybody is working hard in London and you come here and just realize they've got it turned up to 11. It's just a different sport. You think you're playing check as well and you come here and people are playing 4D chess instead. And that was exactly the experience I had in 2008. I came out here on a trade mission. I thought that we ran a solid company, well-run startup in the UK, and I met a bunch of startups out here and just realized it's different. And so I think there's now been enough people that have experienced here and gone back to the UK or gone back to Europe and have kind of imbibing that into the local work culture that is changing. But it's still, you know, you really kind of have to spend a bit of time out here to appreciate it. And, you know, and it's good and bad, right? I'm not saying that, you know, the, the way that people run companies in Silicon Valley is perfect because, you know, there are a lot of things, you know, the monoculture is very real, you know, the obsession that people have with everything startups, you know, it can be a lot, you know, people come to San Francisco and they're like, it just feels like that's the only thing that people care about, which to a degree is true. It's like going to LA, you know, where people, you know, if it's not music or entertainment, people don't really care. And I feel it's kind of that way in San Francisco now. It's become an industry town.

Do you feel there's something to be learned from China? I've spent time in China, and when I was, I don't know, in the dropshipping business and D2C business, I felt there was something to be learned from them. Supply chain logistics, copy-pasting, improving hustle culture, not so much. I think like 100 hours a week is just like diminishing returns, right? And the deep-seek moment to me was like, yeah, no shit Sherlock, we can produce language models at that perform similarly at what, 20, 50x less the cost. Do you think there's something to be learned? Would you invest in Deepseek if it wasn't for geopolitical—

Oh yeah, I was going to say, I think CFIUS would make that very, very difficult. I think the Deepseek thing, even if it's overblown, even if it's not 20 to 50x more performant, even if it's 2 to 5x, I think that's still should be ringing alarm bells. And I read something earlier today about another Chinese model. I think it was KIMI-K3, which is outperforming a bunch of the Silicon Valley Labs state-of-the-art models in certain benchmarks. And so, you know, I think this has to put, you know, a bit of fear into the OpenAIs and Anthropic because, you know, we've been living in a world where, you know, the US— and this is kind of very classic— the US has been kind of gluttonous on compute, right? It's been able to get its hands on pretty much as many NVIDIA GPUs as it needed, and it hasn't had to worry about scarcity. It hasn't had to worry about efficiency because it could just throw money and resources at the problem. And then you look at what's— what happened in China where they had to get hyper-creative using older GPUs, maybe even not even, you know, NVIDIA, but looking at the Huawei approximations. And kind of building with them. And so they, you know, they had to think about it from a different, you know, through a different lens. And I think that, you know, one of the things that is going to happen out here at some point, and it might be this year, it might be next year, it will probably be by the year after, is people getting a lot more surgical on the cost of compute, the cost of inference, the cost of training. Because right now there's basically unlimited venture money and not even venture, but like unlimited money from venture funds and sovereign wealth funds and everything in between to, to continue to kind of fund these, these labs and to continue to fund the inference players on top and to continue to fund the apps who are consuming the inference and often doing it on negative gross margins as well. But at some point, like these, these businesses are not going to be sustainable with the economics that they're playing with right now. And maybe the frontier labs, it's a different game, but I'm thinking about the inference providers and the inference consumers. People are going to start thinking, well, you know, we cannot be spending this much money on this all the time. So, you know, what can we begin to think about moving to other parts of the cluster? You know, what can we move to the edge? What inference can happen on a phone? What inference can happen on a computer? Can we basically cut our inference spend by 50% by just being smarter about where we, we run the workloads? Can we run them on open source models instead of the latest Anthropic model, for example? So, you know, there's a— I think there's going to be a big shift where all of a sudden people start thinking about margins and profitability again, especially as some of the non-labs think about going public.

And why do I feel more and more like this, um, models race and compute race is not going to lead to superintelligence.

Look, I'm not, I'm not smart enough to, to have a strong opinion on that. I mean, it feels like we are getting closer and closer, and I think the fact that Anthropic were reticent to put their latest model out there, given the potential dangers that it could cause, tells you that, you know, we are we are getting closer. I think that Dario had said— people kind of laughed at it— but he said that, you know, AGI could happen within a year. Um, and at the time that felt kind of ridiculous. Maybe not quite, who knows. Um, I think there's also just, you know, the models that the folks are using inside the labs are, what, 6 months, 9 months ahead of what the rest of the world is using. So who knows what, um, what's actually kind of happening inside Anthropic right now.

But isn't there something to be said about everyone thinking the same, groupthink? In that AI arms race thing. And I have some kind of feeling that superintelligence would come from an external solo scientist or company, something that's not being built by these guys. Seems that people are pretty much all thinking the same and really engulfed into this, this race of acquiring more talent and acquiring and all working on the, on similar thesis, right? Like just to to catch up with what the competition is doing?

I guess when, when you think about the applications of AI today and where most of the value is being generated, it's in the areas— and coding is probably the prime example, but, you know, legal work is another good example where, you know, the existing models and the transformer approach is actually incredibly— it's an incredibly good fit. And so I think for the model providers, it's actually very rational for them to continue investing there because they know that there is, you know, this is a huge, huge, huge market to be won. And then there are going to be adjacencies they can move into as well. I think your broader question about, though, does this transformer model, does continuous improvements to the existing technology lead to AGI? I don't know. But I have to assume that the big labs who are scooping up talent at an unreasonable rate are hiring people that have a different point of view and that have a different structure that they're working on that could get there more efficiently.

Interesting. What's your thesis nowadays? How is this AI race changing what you're investing into?

Yeah, I mean, back when I started doing the venture job about 11 years ago, the lazy venture question you'd always ask yourself is why couldn't Google do this? Why couldn't Facebook do this? Why couldn't Microsoft do this? Less so, why couldn't Workday or SAP? But whatever. I think now, you know, the question is why couldn't somebody do this with one of the models? You know, why couldn't somebody build a skill in Claude to do this? Why couldn't somebody vibe code something using Lovable or Replit or Anything or Bolt or one of the other, the other RORC or one of the other, the other tools. And what is it about a tool that has kind of defensibility from either, you know, the models themselves or from someone's ability to, to kind of build a copycat? And I think there are going to be whole waves of software that don't have a good answer to that. I mean, CRM is the— is probably the prime example right now. You know, a lot of people who might have bought HubSpot or even Salesforce are probably going to think about coding something for themselves which is better suited to their needs. I do think that there's probably a bit of a false economy there and, you know, someone's going to say, well, you know, I stopped paying $299 a month for HubSpot for my team, and now I'm spending $1,000 a month on tokens and a bunch of my time and some of my engineers' time to build something that's perfect for us when actually HubSpot was probably good enough. And so you have to ask, like, does, you know, does the economics weigh up? But, you know, I think there are going to be whole other sectors where, you know, the models or, you know, the individuals live coding simply can't build something which is production ready or doesn't have, you know, can't support the network effects that actually deliver the, the real value. Um, you know, as I think about the things that we've been investing in recently, good examples would be vertical software where the, um, the teams have access to unique data that the, that isn't available on the public web. So, you know, they, they're using the models to, um, and training using the models, but ultimately the data, which is the the differentiator belongs to them through some kind of partnership or some, you know, some other way they've been able to acquire it. And that's exciting. And then the, you know, the infrastructure. I invested earlier this year in a UK-based company called Mirai who are doing infrastructure for on-device inference. You know, one of the areas I'm pretty vocal about. And, you know, I've always thought that, you know, on-device was going to be the future. I just didn't know what was going to be the hook for it. And it turns out that voice, text-to-speech, speech-to-text is actually the perfect place for on-device to shine. The latency, the security, the quality of the models that can be run on device now as well. All of a sudden, you know, and the cost, you know, you run on device, it doesn't cost you anything. And so, you know, now, you know, we have the ability to, you know, to think about, you know, how we can build software differently using tools like that.

It's intriguing to observe like the climate of VC nowadays. I'm curious to hear your thoughts about how the market is going. Is it winner takes all? Read like the 1% is like taking 80% of the capital nowadays. Where does that leave new VCs, right? And where does that leave new founders? Are they— are there too many VCs nowadays? Too much capital flowing around and like unqualified people just like copying others' bets is what I'm seeing in this market. And does it mean that as a founder that is average, right, it's like not the super, super performer, my chances of getting funded are like near to zero? What are you seeing nowadays?

Yeah, so we— are there too many VCs? Look, I mean, as a VC, I would obviously love to see less competition, but frankly, you know, more participants in the market is typically only a good thing. I think, you know, it forces us to be better, it forces the companies to be better. But I think, you know, this has always been true, like, when, you know, most markets are maybe not winner-take-all, but winner-take-most. Um, and we are living in an age today of, um, of deep consensus investing. Um, you know, a company, once it's deemed to be consensus, and you know, often this is through some kingmaking by, you know, a, a tier 1 firm writing a massive check into the Series A or maybe even to the seed round, you know, raising a $100 million seed round, which is kind of hilarious to me, but it is what it is. Um, And ultimately then kind of saying, okay, we've, we've kind of crowned, we preordained this company to be the winner in the market. And at that point, you know, they raise the fast follow Series A and Series B and the Series C, um, and, you know, and the market expects them to win. Now, that may not be the case. I think history has shown us many, many times over that the company that raises the most money isn't necessarily the company that wins. And I do think there are going to be a lot of big blowups where companies that have raised hundreds of millions of dollars, maybe even billions of dollars, are ultimately going to be less— worth less than the, um, the value of the, um, of the capital invested. And so people, you know, lose somewhere between everything and a little bit of their, of their investments. Um, that said, I think there are also going to be companies that become generational where the tactic has worked. So, you know, it's a— it's an understandable economic play by, by the big VCs, especially if they can buy relatively cheaply early on and then just kind of take it to their friends to do the, to do the follow-on rounds. I think the question of where does that lead the kind of early stage VCs, it really means like our job, you know, as seed investors is to, to really more than ever kind of turn over the stones and find the opportunities that are maybe not immediately apparent to the rest of the market. And that can be a combo of maybe founders that don't quite fit Silicon Valley central casting. Maybe they didn't come out of Stripe, maybe they didn't come out of Anthropic, didn't come out of one of the other super hot companies. Maybe they're based in a random part of the world. They want to be in Silicon Valley and they will be here, but they're not there yet. Or maybe it's a market that just isn't quite obvious yet. I think as CVCs, we can afford to take the bet that something even if the market isn't big enough right now, you think it's growing quickly and it's going to get there in the next 2 or 3 years, or at least get close enough that a Series A, B, C will kind of see where the trend is going and want to get, get on top of it. Because ultimately, you know, once something is deemed to be consensus, um, one of the big guys is going to come in with a big check and just do a deal that we think is economically viable. So our job, you know, our job has to be to find the, the uncut and polished diamonds and basically spend the next, you know, 9, 12, 18 months making them look as deeply consensus as possible, knowing that that's the thing that will probably ultimately drive a successful fundraiser for us.

Isn't that like, um, a sign of a bubble as well, when Zuck is poaching researchers for $100 million, all VCs invest in same companies at ridiculous valuation? Like, Lacoon starting his new company, guy has like zero business acumen. Same for, uh, Shutz, right? Uh, these guys are genius on a technical level, but like zero business acumen. Um, and they're get— they're getting like a couple billions, right? Isn't that like a sign of a, of a bubble in itself?

Yeah, I mean, I, I think the question then is like, does the bubble burst or does the bubble simply contract? And I think what, what we've seen is that there are, um, enough examples of businesses making real money, right? This isn't just La La Land. This isn't the first kind of web bubble where companies were going public based on bullshit metrics like DAUs and MAUs and eyeballs. These companies are generating real revenue. And I think the very best ones will probably do it with very great growth and solid economics as well. That said, I think in every cycle, there are going to be a bunch of companies that raise a bunch of money. And ultimately implode and, and go nowhere. Um, but I do think that the, the upside from the, the generational businesses in the making will outweigh the downside from the companies that kind of go nowhere. And, you know, hopefully most VCs, most LPs will end up still in the black even if things do contract pretty solidly, right?

Um, What is there to say about VCs as well that don't have like any original thesis or thoughts whatsoever and only follow up if there's a lead investor that chips in the round? You've seen that phenomenon, right? And it's probably drastically accelerated in the last couple of years. Uh, what is there to say about that?

You know, I think there— it's a, it's a model that works. I think it depends on on what the ambition of that—

like, is average returns, I would say.

Uh, yeah, it's average returns, but like, you know, the chances of losing your money are relatively low. I mean, it, you know, I think if you were to index, you know, we're going to do everything that, um, that Sequoia and Benchmark did, you'd probably end up kind of having a pretty good fund. I mean, it wouldn't be a 10x fund, but I'm sure it would still, you know, be, you know, top 50%. That said, like, you know, that most, for most seed investors though, that's not why we do this. We're not doing this just to make a surefire buck. We're doing it because we enjoy the thrill of the chase and, you know, we enjoy building the relationship with the founders and being there, you know, when nobody else believed in them and, you know, helping them kind of go from 0 to 1 to 10 to 100 and beyond. And I think, you know, there are a lot of people who made and probably will make inordinate amounts of money on SpaceX and Anthropic because they bought in at the time what seemed like crazy valuations. But, you know, they might make a 25x on that, maybe even a 50x on some of those checks, given the potential kind of size of the, of the outcome. I do also think, conversely, there are going to be a bunch of people who bought into, um, you know, 3 or 4 layer deep SPVs, and, you know, have no idea what they're actually holding and somebody sold out earlier and they end up with nothing. And so there's going to be a lot of people who think they're sitting on small fortunes who ultimately are going to end up with very little. But that's the game, right? If you tick the box and say that you're a sophisticated investor and that you are prepared to take the risk that comes with investing in an SPV with zero information rights and not really knowing the provenance of it, then That's the gamble you're making.

Yeah. Um, the de-risking of the VC investment class, it's, it's interesting, right? Because so isn't, isn't, isn't it not meant to be de-risked, this investment class? Isn't it meant to be in the high-risk, high-return, uh, part of my portfolio?

Yes, but yeah, no, I could completely— I mean, like, you know, we— that, that's our belief as well. But, you know, the there is basically almost an unlimited amount of capital for decent-looking seed investments right now. And the bar though, to go from seed to Series A, I feel like has become harder than ever. The level of traction, the level of buzz, the level of whatever it is that Series A VCs are looking for is just meaningfully different today versus 3 years ago. And what that means, especially kind of when it comes to Series A, people are looking for something that feels as close to a sure bet as possible because they're thinking about de-risking the Series B and the Series C investments as well. So they want to strap themselves to something that feels like a rocket ship. So yeah, you know, in many ways it does feel like post-seed, a lot of the venture in the venture asset class has gone away and people are much more kind of just thinking about I'm going to pay up crazy prices to get access to what I deem to be the best, most sure asset, hoping that it can become a generational business. And so, you know, it's probably unlikely that I lose my money, but it also maybe is unlikely that I get the kind of venture-style return that they might have been hoping for in the past, unless they find one of those, you know, one or two a year truly generational businesses that can become hundreds of billions or trillions of dollars of EV.

Is it fair to say that founders get more capital with less advice nowadays? And is that a good thing? I think that's what— isn't that what like Paul Graham was advising? Just like take the money and the advice like secondary, because indeed, like, it's hard to give advice as a VC when you're not in. And most VCs have not been operators themselves. What are your thoughts about that?

I mean, I think the best VCs that we work with at Series A and beyond, like, they are super hands-on, you know, they are taking board seats. You know, one of the reasons that we like to work with them is as a seed investor, we can't be the biggest, most active VC around the table forever. Like, we want to be there at seed, we want to be there through Series A, but post-Series B, we typically want to step away. Maybe we roll off the board, maybe become an observer, and we want to work with, with investors who can, you know, who are going to serve the companies really, really well, where we know that they're going to be super hands-on and helpful. So, you know, is there less advice than in the past? I don't think so. I think it's just that there's more money that goes with it. So maybe from a, um, a ratio standpoint, it feels like there's less. Yeah.

Um, hands-on in what, in what shape and form, right? Like, if we take you as an example, you've been like quite successful in your own company, right? Like, what does hands-on mean to you? A couple of emails a week and one face-to-face call or physical meeting with the founder?

You know, there's no magic recipe, and the involvement will change over time as well based on what the founders need. I mean, my view, and I think everybody has a different opinion on this, but my view is you figure out with the founders kind of what they need at any moment in time. And sometimes it's just like, leave us alone because we're heads down. You know, we, we know we've hired the people, you've helped us with that. We've raised the money. We're not quite ready to have customer conversations yet. We're building out the tech and we're going to come back to you in a month when we're ready. And at that point, the best thing you can do is step back and, and leave them to it. However, like at the right times, I've got help with fundraising, help with hiring, help with go-to-market. We just hired our first head of comms at our firm this week. So he started, and Ilan's job, he's formerly head of comms at Segment and at Atio, you know, obsessed with venture. So he's joined the dark side. His job is to help our founders become really good at storytelling, because what we've seen is that, you know, the ability to build software is kind of in everybody's hands now, right? The table stakes, it's not just can you build something great, Because building something great has been somewhat democratized. It's now, can you tell a better, more compelling story than the other 5 people that are doing something that looks similar to you? And a lot of technical founders, they have this, they have the story locked up in their head. They understand better than anybody else what it is that they built and why it's special and why it's different. But they're often not great at getting that story into kind of a narrative that the rest of the world can consume. And so that's what Ilan is joining to do. And you go to the kind of series ABCs that we like to work with and thinking everybody from Sequoia to Benchmark to, I think the guys at Wing do a really nice job at this, Lightspeed, they all have big functions around kind of like the operational support that founders need. And so our job is kind of help get them to the point then when they can go and work with these bigger firms. And then it's also just getting the text message at 10:00 PM, be like, shit, our lead engineer, has an offer to join Anthropic, you know, how can we think about kind of keeping them? Or, you know, we've just landed our first customer. They're asking for this on indemnification. You know, what should we do? You just never know what it is that the founders are going to need. And that's actually one of the things I love about this job is that every day is different. Like every 30 minutes is probably different as well. And, you know, if you're good with context switching and maybe you have a bit of an ADHD brain like me, it really is the best job in the world.

How do you retain an employee that had an Anthropic job offer? That seems like impossible.

I mean, I think it depends on, on what that person's motivations are. If it is to say that I worked at Anthropic and if it's to make $1 million a year and be a—

and have the best job in the world, it's like, seems like a no-brainer. There's like—

but like, it depends on the amount of impact they want to have. Like, you know, if they, if they want to kind of have something where they can make a change and they can see it in production the next day and hear from customers, then, then that's great. If it is that they want to go and work in a really big company, then, you know, then it's going to be very, very hard to keep them. And I think part of the advice to the founders is like, is this person actually savable? Because if not, then it's probably not worth your time. You know, you can make them an offer, you can kind of think about equity, you can make them feel, you know, feel good about about what's going on. But if they have the ambition to go and work in a big lab, even if it's just for a year to have a line item on the CV, then there's not a ton that you can do.

Benchmark, Sequoia. I can't help but thinking of companies that violently hosted some of their founders. Is that still a phenomenon nowadays? Did you have to take that decision yourself? At what point? Do you take like a semi-toxic superstar CEO out like Travis, right? Like, uh, isn't that like a super hard decision to make? Because with hindsight, if Travis would have stayed, I'm pretty sure Uber would have been like way more successful, right? But there was this toxic culture thing that needed some kind of interventions, and I understand that investors were scared. Like, when do you actually make that decision as a guy like you that's been on the founder seat and investor seat?

Yeah, I mean, when we invest in a company and in founders, you know, the hope is that they will be there leading that business all the way through the journey. But I think, you know, you have to be realistic that sometimes that's not gonna be the case. And sometimes it's gonna be the founders who say that, you know, they're not right to lead this company long-term. And sometimes, you know, you have to kind of have that conversation with them. None of the companies where I've had those conversations have been at the scale of Uber. And sometimes it's not even you're removing a founder, but there's been a founder fallout and you're having to mediate 2 or 3 founders and figure out how the company can survive and grow once you've probably had to remove one of them. So it's not fun. I think what my hope would be is that even if people are pissed off, at the time when it's going through, they would look back later and say, actually, that was the, that was the right thing to do. And I think we have enough examples where, you know, we've had to move a founder on, um, and maybe that co-founder took over, where we've had to, um, to bring in a new CEO, sometimes at the founder's ask, sometimes at ours, and it's actually been successful. I think there's also lots of cases when it hasn't been, and you get, you bring somebody new in and there's organ rejection from the company, but, you know, you find the right person and it can be, it can be really successful. Like one of our our portfolio company is Human Interest, which is an SMB 401k provider. The original founder CEO Roger came and said, look, you know, I just don't think I'm the right person to do this long term. I'm not in any rush to leave, but, you know, we should be thinking about, um, about who, you know, we, we might want to have at the helm in the future. Um, and then something kind of crazy happened where a guy called Jeff Schniebly, who was one of the founding partners at Wing, who'd led the Series A in Human Interest. He's super hands-on, former operator, ran a big part of GoDaddy with Silver Lake before he'd become a VC. He was always like, he was the kind of VC that I love to have raised series, like to raise a Series A with because he just was all over that business. Just, it was his first investment. Tons of time for them, tons of expertise. And Roger pings me, he's like, so I think Jeff is going to be the new CEO. I was like, well, that's, that's crazy, you know, why would somebody leave a cushy GP job? But then the more I thought about it, the more I felt like Jeff's actually a great, a great fit for this. And, you know, since taking over, he has absolutely crushed. And so, you know, lots of times it doesn't work, but when it does work, it's, um, it can be pretty magical.

Yeah, most of the time I I don't think it works, right? Like historically, if we've checked, I mean, it was a long time ago, but yeah, like there was a classic Pepsi guy that they put in Apple, right? When Steve was not there. That's right, yeah. And yeah, most of these corporate guys never do well because corporate is so cushy and it's like playing another game, right? It's like a good PR and most of the time, Yeah, I guess it's case per case, right? Like the CEO role, if you see that they worked at previous startups and that they've been successful and that they fit the culture 10 on 10, do you still use like headhunters in these cases or do you rely on your own network and intuition?

I mean, I think for like a CEO hire, we're almost certainly going to use headhunters and this is where I often lean on the expertise of my team. So Adriana, who's our head of talent, you know, she was the head of talent at Segment. She was the chief people officer at Mural. Um, you know, she's, she's worked with a bunch of recruiters over time. She's recruited execs as, you know, when she was an operator, now as a, as a, an operator inside a VC firm. Um, and you know, if we can find somebody in the network, that's great. But I think when it's as critical as finding the person to lead the business, you need to cast as wide a net as possible. Um, and you know, you work with a great recruiting firm and that could be someone, um, like a Riviera or an Artisanal, and they're just going to have a network that expands far beyond what we have. Um, and you know, we're paying them frankly a shit ton of money to go and source the very best people, um, and then to convince them that this is a crazy hot opportunity that they should dive into.

What's next for you this year? Like, what are your, your main priorities after, after the travels? What do you want to accomplish?

Um, I mean, we have, um, you know, we're still mid-cycle on deploying our fund. We've got a bunch of companies selling right now. Um, I think the, the biggest change we've seen in the last 6 months is that M&A is really back. Um, and this is up and down the stack. This is from the smaller companies, deals worth less than $100 million up to the billions of dollars, the many billions of dollars are beginning to happen again and happen at speed. I think a lot of the big players, and this is everything from spanning cybersecurity companies who are trying to add kind of AI native functionality, a lot of kind of traditional SaaS businesses getting scared and being like they need to invest in the future, they are all looking to pick up high-quality assets that can help bolster their, their products and their, their teams. Um, and so, you know, I think off the top of my head, we have probably, you know, 8 to 10 companies right now who are either, um, beginning to spin up an M&A process, in process, or, um, just kind of wrapping, wrapping one up. Um, and I haven't seen that many at once in maybe my entire time as a VC.

I love it, dude. Always like super insightful talking with you. My brain's a bit mushy today, but, uh, thanks for showing up. Uh, where can people find out more about you, Andy?

Yeah, you can find us on our website. It's uncorkedcapital.com. I'm on Twitter as Bandrew. There's been a lot of World Cup content for the last, the last few weeks. It's going to get back to normal, normal stuff now, talking about startups and technology and AI and, you know, the less fun stuff, but more fun in some ways.

A zandian Charles for another