Backing Maniacs at Inception - What Investors Actually Look For | Jeff Becker - Antler - Episode#108

When I was in high school, I wanted to start this company and I went and pitched this angel investor and I wanted him to sign an NDA. He was so offended by this that he walks out of the meeting and drives away. And I just remember thinking like, fuck this guy. Like, who is this guy? I was like, what? How is that? How is it that this person gets to decide the future of the world? You know, it just felt like such a, like a disservice or like, you know, something that was unfair.

My guest today is Jeff Becker, general partner at Antler, where he leads the New York office. He invests at inception stage before the pitch deck, before traction. He's there on day one with the founders.. He's made over 200 investments. Before becoming an investor, Jeff spent the early part of his career at LinkedIn and then founded a company called EarHooks.

My brand is backing maniacs at inception. What I mean by maniacs is really people that have a deep relationship with the problem and they are front-loading their time, they are working insanely hard, they have sort of like an understanding and appreciation for the nuance that's required to build the thing that they're going after, and it's just infectious. Like, you're indoctrinated by that.

My guest today is Jeff Becker, general partner at Antler, where he leads the New York office. He invests at inception stage, before the pitch deck, before traction. He's there on day one with the founders. He's made over 200 investments. I've gotten to see Jeff's world up close. He invited me to attend and present at at Antler's cohort kickoffs, and the energy in those rooms is infectious. A whole group of founders starting their journeys on the same day, all in it together. Before becoming an investor, Jeff spent the early part of his career at LinkedIn and then founded a company called EarHooks. Jeff also writes the Monday Morning Meeting Substack and co-hosts Antler's Further Faster podcast. Jeff Becker, welcome to Not Another CEO Podcast.

Let's go. I feel like I'm gonna run out of the tunnel right now. Pumped up.

Uh, first question right outta the gate, what is the one thing that you look for in founders that you invest in?

Yeah, I mean, my, my brand is backing maniacs at inception. What I mean by maniacs is really people that have a deep relationship with the problem and they are front-loading their time. They are working insanely hard. They have sort of like an understanding and appreciation for the nuance that's required to build the thing that they're going after. And it's just infectious, like you're indoctrinated by that. And so the maniac is just a kind of all-encompassing word for where they're really spiky. And that can be different things for different people across, you know, whether you're a 10x engineer or a 10x salesperson, but you just get that sense when you're with them in the room before there's maybe a team or a product or something else.

How do you get that? Like, what do you— do you ask them specific questions?

Yeah.

Literally just how they present? Like, how do you—

Yeah, I'm gonna give up my edge here.

Yeah, yeah, I know.

But, uh, there's kind of 3 levels to it. The first one is the psychology. I wanna understand, like, what makes them tick? Why are they who they are? What were they like growing up? I just wanna know about them and how their friends or family might describe them. What are the hardest things they've done in their lives? Are they built for this? If I can make it through that psych test, I'll go to the obsession, which is more of an interrogation. Tell me what you're building. Why are you building it? Tell me about that thing. And you go sequentially down this line of questioning to see how deep you can take them. And then the last is the execution. When did you start? What have you done? Tell me how fast you're moving. And if I can get the mentality, the relationship to the problem, and the speed, that's enough to come into the office and spend time together.

The— you said something about going to their, like, their childhood.

Yeah.

Their background. Yeah. You're actually, I think, the first person who said that. And as from an investor perspective, and it's one of the things that I do on the show when I interview CEOs, every single one, I ask them about their childhood because for me, I really believe What I'm— what I've noticed in terms of a pattern is the childhood makes a massive— like the upbringing, the parents, the situations that they dealt with. It's— it's— I actually don't think either investors or founders spend enough time on that.

Yeah, I think it does two purposes for me. The first is every great CEO I've ever spoken to talks about resilience, right? They talk about this is a requirement. You have to survive. You have to be able to withstand pain and make it through really hard problems. And so one, I want to find out if they're resilient. The other one is I want to ask one or two questions the same every single time over thousands of meetings with founders so that I can understand who sounds and acts and is different than other people. And so one is just for me pattern recognition. The second is like, is there legible proof of resilience? And so that might show up in, for me, you know my older brother. I feel like my identity is little brother. I'm super competitive. I wanna win, like failure's not an option. And that is just sort of a reflection on my own psyche growing up, you know? And so the way I've shown up as a baseball player or a salesperson or a founder, you know, it's just sort of like relentless, you know, unwillingness to quit. But that's true in different ways for other people. Maybe you're like a top gamer, maybe you're, you know, someone who's an ultra marathoner, maybe you're, you know, someone who's done something amazing. I want to tease out those stories and find out why you did it. What was driving you? Why didn't you give up? What drove you to do that thing? And so that's where I spend some time just to understand both like, how are they different than others? And then what is unique about them and how their mind works?

I love, I love this because I'm going to clip this area and give this to founders because literally when I talk to founders, I tell— when I say pitch me as if you're going to pitch an investor. Yeah, they immediately start with My company does blah, blah, blah, blah. Here's— and, you know, by slide 3, 4, maybe the last slide, and this is my team, and we worked at this company and this company. And, and that's literally how— yeah, I would say 90% of founders, when I ask them pitch, that's how they pitch me.

Yeah.

I'm like, just don't even get to the company.

Yeah, just start. Yeah, you convinced me of you.

Yeah. Before we get into anything, and at every stage, people— yeah, that's only early. No, I, I don't think it matters. I think if you're a Series D investor, late-stage investor, you still want to know the person can operate, has that drive, right?

Yeah, if you're flying the plane, I want to know we're not going to crash.

Right, right. I love that. How long from meeting— actually, before I go to this, because I want— can you just explain the Antler model? Just because I think to have context to the rest of these questions, like, maybe just explain how that works.

Yeah, so Antler is essentially a collection of venture firms around the world. We operate in 27 cities. We have— basically 150,000 founders who apply every year to build companies with us. And the reason they apply to build with us is because we are working with founders before there's a co-founder, before there's an idea, essentially before they're even incorporated. We give them physical space to come work and to meet each other and be around other people that are, you know, as qualified, as crazy, you know, as ambitious, as hardworking. And that is electric. I mean, we'll talk about culture, but I think culture at day zero is essentially nonexistent for the majority of founders. So if you can create a room where the top 3% of people who are all exceptional in some spiky way are coming together to build stuff, you create this sort of engineered serendipity, this opportunity for people to bump into each other, find co-founders, find customers, test their ideas, raise their level of ambition, raise their level of work ethic. So we do that simultaneously in 27 cities around the world. We bring them into the office. We spend time with them. We get to know them. We try to understand what's true about them, the things things that are going to be true forever, like, are you a good salesperson? Do you work hard? Do you understand the problem you're going after? Can you attract people to work with you? And not just people, but great people to work with you? And when you start to see all those things, regardless of the company or the progress or the revenue, you can get enough conviction to write a friends and family check. And so the thing that we do differently is work with them first in person before we write the check. And the reason we do that is because we're going to try to come in before— every firm you've ever heard of. You know, we're going to try to come in when the founder is still like, should I, shouldn't I? You know, like, do I have a co-founder? Am I going to find that person? We're going to be there, give them the money, and then catalyze all those next steps because you've already seen that they have what it takes to get that done.

And so people are coming in. I mean, I've been there, like I mentioned, I've been at the kickoffs, which are, which are awesome actually.

Yeah, you killed them.

Most exciting. Like when I come in, you feel this energy because people— it's right at the beginning, so everyone only had some nervousness, but mostly excitement, you know? And it's amazing.

Like, you know this, I mean, they talk about you for months and months, years afterwards. Like, that was amazing, that kickoff. I'm sure they hit you up.

Yeah, yeah, yeah. But I love it. I really enjoy it. That energy is crazy. Like, it's really— it is. Um, but everyone has this— what I notice in your groups is like, everyone, obviously, because you go through the application process and everything, like, they've already hit some bar, obviously, from that bar of being in that program before you write the check. How quickly when you meet someone in that group and talk to them, like, how quickly do you know I want to invest? I know you don't invest right away. I'm saying like, how quickly do you feel that, that you want to invest?

So there's two levers. One is I'm trying to create a really interesting room. So in this first interview, when you're going from 20,000 applications in the US down to about 600 people that will work with Antler over the course of a year. That is a different criteria than will I invest. So the first bit is how do I manufacture a room that is insanely interesting? These are people that may or may not be, you know, CEOs of billion-dollar companies in the future, but they're gonna add enormous value to the room. Maybe they're an expert in something like, I don't know, they're a rocket scientist, or, you know, they went to Harvard, or they are a two-time world champion NBA 2K player, you know, there's something. There's something insanely interesting and spiky about them. Or maybe they have domain expertise on longevity or quantum computing or something. And the collection of those people is what makes the room really valuable. Once they're in the room and we spend time with them and we meet with them week over week, within the first, you know, 5 or 10 minutes, you can get a vibe of the best ones. What's interesting is there's also people who over those, you know, 3 to 5 weeks just surprise you. I mean, they are just not people you would expect. And they turn on the jets and they are someone that, you know, this process uncovers. And so part of why we do this is both to create this interesting atmosphere where people can meet each other and come up with new and novel ideas. Of course, we're going to back the obvious ones, the full conviction, everyone agrees within 5 minutes. But we also uncover the outliers, the people that people— other people wouldn't see. And that's much more rare. But we do see those kinds of people and you do get conviction on things that you just wouldn't expect in the first 5 minutes. And the, you know, obviously the game of venture, you don't want to miss, right? Like the idea is not to miss the outlier. And so, yes, we'll write those checks in week 1 or 2 on the obvious ones. In week 4 or 5, there might be 1 or 2 stragglers that, you know, turned the jets on, did something unique and interesting, added a co-founder, did something that wasn't legible when we saw the pitch deck and the, you know, the LinkedIn profile.

Yeah, it's, um, I think the challenge I see in the stage that you're at, not just from you, from any pre-seed, really early-stage investors, you don't— in your case it's different, but you don't usually have enough time to see that evolution, because at least the companies I see, they're going out to fundraise, and within a couple of days, weeks, I don't know, they've got term sheets there. And so you don't even— if Even for me as an angel investor, I don't feel comfortable because I only get like one dot on the curve, right? Whereas you actually are seeing—

Yeah, there's certainly a group of people that are raising like that. You know, they're ex-founders, they're people, they're spinning out of Anthropic or OpenAI. There's something hot going on.

Yeah.

And for sure they're going straight to a seed round. There is another group of people that are completely overlooked, the people that are like working insanely hard, that are built for more, that have done something that is unrelated but equally impressive. And that's a group of people we're trying to figure out, like, how should the world look in 15 years, not in 3 years? I think the hottest rounds I'm seeing right now, this is like AI services, cost control for AI, like things that are very legible. And for that, you need to be insanely well-funded and you need to go buy market share and you need to do it with a team that knows what they're doing. It's done it before. If you're thinking on a 15-year time horizon, there's space and time to do something that no one's thinking about. And so in some ways, yeah, will we be priced out of those rounds? Probably. But especially in frothy markets when everyone's like, you know, going for the stuff that is very consensus, there's this opportunity to systematically find the people that are being overlooked. So, you know, 4 years ago in crypto winter, I did 2 crypto deals that are now like our best performing companies. No one would fund them. You're right. We're working with them. It's very obvious these people are, you know, substantially better than everybody else. And, you know, sure enough, like tier 1 firms led those seed rounds. They're doing Series A's. I mean, these are potentially fund returners for us. And I think that's a function of focusing whether people are not. And you read about that all the time, but it's just so hard to do.

Yeah.

As an investor.

How did you even become an investor? Like, I mean, yeah, because you were, you were at LinkedIn for a while, I think almost a decade.

Yeah.

Started your own company.

Yeah. I don't think I've ever had like a right to do anything I've done, honestly. So I do have some imposter syndrome. But when I was in high school, I wanted to start this company and I went and pitched this angel investor. This guy drives up to the coffee shop. I've never done this before in my life. I don't know what I'm doing. And I want him to sign an NDA. I thought like, I was like, oh, this is what I think you're supposed to do. I don't know. I'm like, I don't know, 16 years old probably. And he was so offended by this that he walks out of the meeting. He's like, this is ridiculous. Obviously you're an amateur. No thank you. And gets in his little Chrysler Sebring convertible or whatever and drives away, or his little Mazda Miata. I don't know what it was. But in my recollection, I was like, this is a silly little car. And I just remember thinking like, F this guy. Like, who is this guy? He could have just taken the opportunity to coach a 16-year-old, tell him this wasn't commonplace. And I remember afterwards just like kind of, I don't know, talking to my family about this. I was like, what is an angel investor anyway? It's like, oh, it's someone that's made some money that wants to invest in companies, or sometimes they raise money from other people and then they decide who gets to build companies. I was like, what? How is that? How is it that this person gets to decide the future of the world? You know, it just felt like such a disservice or like something that was unfair. And so in the back of my head, I was always like, I would love to do that. Like, I wanna be the guy that decides. And I never wanted to be in finance. I didn't wanna do iBanking. I didn't want to do the crazy hours. I wanted kind of my destiny to be in my own hands. Sales was a very obvious thing for me, like growing up a baseball player, being competitive. Let me go get a job that doesn't, you know, require me to do all the case studies and compete for the big banking jobs. And I'll just carry a bag and be number one. And that's what I did. So I went and I worked, actually worked at Xerox in the city. I sold copiers. I walked up and down the streets. I snuck into freight elevators. I just kind of like baseball, but like as a salesperson, the job is basically to look at the field, find the things that are unique about what it is that you can do differently, find the elements of the job that everyone's doing the same and change them. And when you can do that really effectively, you can develop, you know, opportunities to be better than them. It's sort of like to be better than average, you got to be different. And I just did that year after year in sales. And that very first year after college, I started a company, EarHooks. We scaled that to a quarter million customers. And then I took a job at LinkedIn that same year. So like, you know, LinkedIn would give us breakfast and lunch. I'd be there from 9 to 5, and then at 5 PM I'd switch over to EarHooks, stay there from 5 to 11, work on that. And both of those things just balanced each other. And as I like had this founder experience, which, you know, it's subscale compared to what you and I are working on in venture, but it was, you know, gave me business acumen, allowed me to, you know, pitch investors. We raised a little bit of capital. Got Daymond John to invest. There's just little moments of like getting a taste of being a founder, seeing the revenue click up, shooting out a holiday email where like, you know, you're doing $200K revenue or something really exciting. You're like, this is awesome. I like love building. And then having the LinkedIn experience, the front row seats to some of these amazing leaders and watching them build. I just wanted to start angel investing. And so I just started doing the job. I was like, you know, I'm not qualified. I don't—

While you were at LinkedIn?

While I'm at LinkedIn, while I've got ear hooks, I've got some free cash flow, you know, basically Erics is like paying my New York City rent. I'm getting, you know, I'm getting manager MVP of the year at LinkedIn. I'm on like my 9th job in 9 years. There's, there's some cash. So I start trying to find deals and I did 36 deals over 3 or 4 years. Really small checks, like $1,000 to $5,000 checks. And I backed some awesome companies. I backed Headspace, Loyal.com, Misfits Market, Public Goods, Alto Pharmacy, a bunch of stuff that was awesome. And the whole theory was health, wealth, and happiness. Like, humans want these three things. Let's just find the craziest founders. Let's figure out who's backing them. Let's also get some allocation. And so over time, I had this like kind of founder, you know, quasi-founder background, this tech startup, hypergrowth, learn focus, learn culture, kind of learn what greatness is. And then I had this kind of Excel spreadsheet resume of being an angel investor, and I was like, I'm going to turn all three of these things into one job, even though no one, like, gave me the license to do it. I'm just going to go take it. And now I'm trying to prove that I'm right about it. So we'll see. I mean, ask me in 15 years, but I'm having fun right now.

How did you get into those allocations? Like, for those companies, how did you— you just cold-called them?

Like, how did you— combination of network and AngelList, honestly. So I started on AngelList. I followed all these syndicates, and any time I'd see a deal I like, I'd call the person syndicating it. Hey, you know, I'm Jeff. Here's what I'm trying to do. I'm trying to learn about venture. Why are you doing this deal? How did you get in it? You know, tell me about the founder.

They would take the call.

Yeah, because they're trying to raise money. I mean, the way the syndicate works is, right, right, right. Hey, you're going to put even $1,000 here. Maybe you'll put $50, maybe $100. They don't know how much I'm going to invest. Let me try to get them in here because they're trying to fill up their allocation and prove to the founder they can fill it up. Yeah. So that was my first venture network. Those are the first GPs and people that I knew that are actually writing checks and just networking with them and building out my network. Emailing them deals, asking them for opinions, learning when they would and wouldn't do deals. And I built out this spreadsheet that was just the deal I looked at, the current round, the terms, the people investing, the reason I would or wouldn't do it. And then just like, you know, 3 or 4 years of this, I ended up with a spreadsheet of like, how am I doing? Where was I right? Where am I wrong? Which deals did I actually do? You know, I'm teaching myself about like MOIC and TVPI and DPI and like just trying to learn the game of venture capital. And that became sort of my resume for moving in.

Yeah, I've done the angel investments and chosen that I cannot be an investor because I'm so bad at that.

Yeah, I can't imagine.

That's true. It is hard. It is hard. Yeah, it is. It is a hard, um, you know, I think, I don't know, it's at the stage that you're investing, it's really some of my best— the companies I thought would do best did worst. And the companies I thought would go out of business, yeah, sold for hundreds of millions, all cash. You know, it—

isn't that crazy that everyone says that? Like, why— what do you— as an operator yourself, what do you boil that down to? Why is it so illegible even though, you know, the founders are great or the business seems great?

I think sometimes— I, I wrote this, I actually wrote an article on my Substack a couple weeks ago about luck, luck being such a big part of it. And it sucks to say, it really does. Actually, writing the article was very painful for me because when you write it and you're like, wow, he's like 50% of our success, luck, 60%, I don't know, but I think it's at least 50%. And I look at it and I'm like, you know, one of my companies, Israeli company, no revenue, no real customers, pretty bad operators, to be honest. I like the guys, but they were— and they were in the right place with literally no customers, no revenue. But an Israeli engineering team that was amazing in a cyber-specific space that in that exact moment was hot, and one of the big companies needed something before their earnings call to buy so they could go tell the market they were going into. So they bought it for $250 million cash, shut it down not too much long later, but it was the right time, right place. By the way, there was 50 other Israeli cyber companies doing the same thing. They just happened to be in the right place at the right time. Then you have the operators who are just— I had one guy, was amazing, built a company. This is like 12 years ago, 15 years ago. I mean, growing like today's kind of growth, you know, crazy growth and all this stuff. And then he got an offer to sell the company and was crushing it and was like, I'm not selling this company, and said no. He would have made— him and his wife owned 50% of the company. They would have made hundreds of millions combined. And he ended up continuing to go, and then the markets kind of came down for what he was doing and everything. Sold for $5 million, you know, 5 years later.

Wow.

And just hindsight, he didn't do anything wrong. He was building this company, it was going great, just the market dynamics switched.

And the media glamorizes the like, oh, he said no, Zuckerberg said no, you know, Evan said no. That's right. It's like At the end of the day, you got to take care of yourself.

I've had a couple of founders on that have talked about liquidity windows and that when liquidity windows show up, yeah, you take them.

Yeah.

Because all the glamorized stuff, there's a graveyard of other companies that didn't take that, that kind of moment, that window. And I think that that's the— but it's— yeah. So it's weird. Sometimes you invest, you're like, this is a good thing. There's a good company, good product, good founders. Maniacs. Like, you're like, this is— I know the space.

Yeah.

And then it goes to shit, you know, and, and, and it's, um, it sucks. It— I talked to someone else, they were telling me they were in this business, fintech business, something, and then there was just a government regulation that came around, changed, and instantaneously the whole business went out. Yeah, just went to zero.

Yeah, it's, it's like I tell founders all the time, when there's— when, when capital is easy, you should take it. You never know what's going to happen. You know about the rainy day. You don't know about COVID You can't predict the regulation changing. Right. But so many people, some people are very dilution sensitive, can kill the company. You know, some people don't take the opportunity for that secondary when the liquidity window's open like you talked about. But you got to keep, you know, protecting the house and like building the base so that you can keep operating from a position of strength.

Yes.

And I think a lot of people miss that because they're swinging for the fences or they think they're better than They think a lot of people do.

I think especially right now, you meet a founder, first-time founder, 20-something years old, good, good founder, good company, crushing it because the market is crushing it. They're raising at $1 billion, but they're doing $2 million of ARR. And they're like, this is great.

They equate their valuation to their abilities. Exactly.

And then I tell them, I'm like, right now the sun is shining. Take advantage of that.

Yeah.

Don't spend all the money that you just raised.

Yeah.

Don't think that you're actually worth a billion because you're probably more worth like $100 million, maybe less. So, but, but it's hard if you're in it for the first time. It is really hard if investors are chasing you and telling you you're the best, right? Please let me give you money, please. You know, you're like, well, I must be amazing. You know, like, yeah, it's, um, I really— it, it's, it's tough actually, you know, when you, when you see it anyway. But that, that is the—

that's tempting, right? You're like starved for a little bit of recognition, a little bit of capital, and like someone's like handing it to you, how do you mean remain disciplined?

I mean, I don't think you— I think you have to be— you get a first-time founder. Yeah, it's very hard because you don't know what's coming down the road.

Yeah, you know, it's like that Silicon Valley episode when Monica tells, uh, the main guy to like, you know, take a lower valuation.

Yeah, yeah, yeah.

Nobody told me I could have taken less, right? Nobody told me.

Oh, I, I mean, I think that the, the dilution stuff— I tell people, you're building a venture-backed company.

Yeah.—

it's a binary result. The dilution is not good. The extra 1% really won't matter. It's either gonna be worth zero or it's gonna be worth life-changing amount of money. There's not really an in-between. So, who cares? Finding the right partner, getting the right terms, and not getting buried under evaluation that you can never get out from underneath.

I think all that stuff compounds. I don't have a lot of very successful CEOs that are completely— you know, egotistical and selfish. The ones that seem to do better are the ones that are building an amazing team, sharing the cap table, surrounding themselves with the best investors at whatever cost that is, because they're after, you know, the success of the company, not like their personal network.

You have to be. I mean, you have to be. I do want to talk about something that I read on your Substack. It was about— I don't know how to say the name of the company. Polisia?

Polsia?

Polsia, whatever. And it's this one-person company, supposedly.

It's AI SLOP spelled backwards.

Right, right, right.

It's not even a real word.

So I really like this. I've read a bunch of your articles, and this one just really— can you just talk about— just give the background a little bit?

OK, so for those that don't know, there's a headline that came out that this guy raised $30 million at a $250 million valuation, 1 employee, 6 months in, like, just, you know, 7,000, 8,000 customers just ripping it. And, you know, it kind of follows that narrative of, like, the one-man unicorn. And what the company does is you basically log in with your Gmail. It understands who you are and what your, you know, relevant expertise is, your network, the people, what your skills are. And then it suggests businesses that fit for you and for your distribution. And then you basically say yes. And then it has a team of agents that go and build the business and it ships a feature every day and you can pay for additional credits and additional features and all kinds of stuff. But essentially the payments are basically out of the box with Stripe. It has, you know, agents doing all kinds of things. So, for example, I signed up. The idea that it gave me reading my email and understanding my network with founders was to build a pitch deck evaluation tool that you could charge, you know, $20, $50 for, and it would tell the founder, is this venture backable? Is the TAM big enough? You know, is the team good enough? Is the idea novel enough? And then after you get that all kind of squared away, if you want to build an investor database for a $100 add-on, You know, you just click a button and get your investor database built. And so every day I get an update from Polsza that's like, you know, we shipped the founder evaluation score, we shipped the investor database, we shipped the sharing feature. But it caught a lot of flak in the headlines because some people were like, there's no way this is just one person and/or there's no way the tech actually works.

Yeah.

And then the other people are like, the future is coming, you know, like companies are building themselves now. And he's not the only one. There's a company called Thomas in the YC batch. There's others that are building. Kind of in the same vein. So it's interesting to just see sort of like the evolution of the Vibe Code websites where even that was magical. You type a sentence, get a website. Now we're like another step in where it's like you don't even type the sentence. It just tells you what you should build. The payment's already integrated. You don't have to do a whole lot. You just have to distribute.

I, so I told you before, like I hate these stories because I feel like they're making it sound like, it is not— there's no way that this is one person. I mean, yeah, by definition it's not. I mean, he has marketing people, I'm sure he has contractors, I'm sure he has a whole army of people doing a bunch of stuff.

Yeah, who's filming the miniseries? Who's doing the marketing? You know, I'm sure there are contractors at minimum.

Somebody, you know, somebody is helping. But of course it's presented to the world as it's a one— he could have 200 contractors and still say with a straight face, I'm a one-person company, you know. And, and I hate it because I do think it makes people think like Yeah, this is how it is. Yeah, of course I'm gonna build a huge company this way.

Yeah.

On the flip side, you look at it and you're like, well, he's good at telling a story, right? And that story seems to be working. He's raised money.

Yeah.

Now he's got all this PR now. And, and it's this, it's this, um, and I don't know where it's actually gonna go, you know? And, and you made a point in the article of like, because, because I look at that and I say, I would never trust this to build a company for me with my name associated. Like, I don't know what the hell it's going to do. At least my experience using Claude, and it does some weird stuff sometimes, and I don't want that to be kind of out there. Now, again, that's not for everyone, but I don't know. But you made the point, maybe share the Shopify point, because I think that was, for me, that was the point of that whole article. I was like, yeah, okay, whatever my opinions.

Yeah. So I think for us in venture, I mean, you've built a massive company, right? Like, it's a bit disrespectful to the craft of venture building.

Yeah, right.

Because there are things like, like focus and novelty and unique insights and team building, right? There's like, there are things that are required to build something generational. I think if you kind of shift the focus to a different kind of business, you think about Shopify, how many people stood up a dropshipping t-shirt business or stood up a, you know, a nutraceutical business or stood up something, like an Etsy shop, right? And so there are an insane number of permutations of kinds of companies you can build that are not venture scale. And the way I look at Shopify, for example, is, or even, you know, some of the vibe coding sites, there might be thousands or hundreds of thousands or millions of people who want to try their hand at being an entrepreneur, who want to, you know, put up a Shopify store. But most of those things are going to go nowhere. Most of those people are not going to, you know, get the brand right. They're not going to get the distribution right. They're not going to spend money on advertising. They're not going to figure out the dropshipping or the supply chain to get the product. They're not going to figure out all the nuance to actually making the company go. However, inside that group, there are going to be 2%, 5%, some number of people that do take it the distance. You know, I think about EarHooks and my own experience building a company. At the time, we had to do WordPress. We had to create a theme. We had to call— you know, people in Serbia to do CAD designs. We had to call China to create, you know, injection moldings. Like, we had to do a lot of stuff. I think there is a version where there are people that will go do all of that with the leg up of payments are integrated, the shop, the store is built, the ads are running autonomously, the Twitter posts are built for me, all the things that Pulsar does. And because they're so motivated and taking it, there will be some power law within that thing where 5% will create 80% or 100% of the value, and there'll be a bunch of waste too. And I think that's probably true of like Windsurf, some of the vibe coders. I imagine, you know, I know that I've started 10 vibe coding projects and zero of them are revenue generating, right? So like, Lovable being worth $12 billion, I am sure there are companies building real companies on Lovable that were more dedicated to finishing their project than I was to starting it.

Right.

And so I do think there's an audience for this. He just did a first episode of his miniseries, and he interviewed a woman who had, I think, 29 companies running on Pulsar, spending her whole day just optimizing these companies and sharing content and trying to build them out.

I have to watch that. I didn't watch the video. I know you mentioned it, but yeah, I mean, look, I see my kids. I put them in front of Lovable, and I said, build something. And they went, and they built an app. They figured out how to get the Yelp API. They built this whole kind of like— You know, it tells you what you should— what activities you should do, what restaurant based on your mood, based on who you're with. Anyway, so they built it on Lovable, but again, we published it.

Yeah.

And that's it, you know, and I published 6, 7, you know, but I don't know if these are, you know, is this— I don't know. But the Shopify example is every time I see these things, I'm like, there's no way, there's no way. But then you think about it and you're like, what do they need? By the way, I was writing this article about luck on this, you know, yeah, it was about sub— on the Substack that I mentioned before. And one of the things that I I found was this post from the AE who sold Twilio to Uber when Uber was like a seed stage Series A company. Wow. And Uber ended up being the anchor customer for Twilio, and they used it when you wanted to call the driver.

Yeah.

And text and whatever. It was all going through Twilio. And so actually, when you look at the Twilio kind of growth, Uber was a huge, huge portion of that growth. And so if I was playing with Twilio back then, we were playing with Twilio, trying this, doing this tech. You can send text messages like that. But then you have one Uber.

Right. I called it in the article, I called it a Pareto extreme, because it's not really like 20% create 80% of the value. I think it's like 1 to 5% create 150% of the value.

I agree with that. I agree with that.

I think the same is true in venture. I mean, look, my portfolio of 200 companies, they're not all going to survive. We're going to hopefully have 20% of them create all the value. Maybe 10% of them will create 99% of the value.

Right.

And, um, you know, in some ways we're taking similar bets, you know, uh, to what a Pulsar or Shopify might be doing. Uh, that's different than a software business that knows their ICP and wants every single customer to be successful.

Right.

So it's a bit different.

Um, in terms of once you start working with a founder and I'm saying now you've made the investment, you've put that check in. Yeah. How do you like the founder?— this is a completely different subject— how do you like the founder to communicate with you? How do you— Yeah. How do you— because you like to see that, that kind of like you mentioned, the trend line of how they work. Like, how do you, how do you do that? Email, Slack, WhatsApp, in person, monthly, weekly?

So I have a bit of imposter syndrome having never built a unicorn myself. Like, I don't feel like I have a right to tell someone how to run their business or scale it to $1 billion. What I do say every time I onboard a founder, we have a meeting and I say, Now that I'm an investor, I work for you. Like, whatever you need, I'm going to clear roadblocks, make introductions. Like, if I'm not working as hard as you, I don't deserve to be on the cap table, especially at the terms that we're coming in at, because it's early and it's expensive. But I'm also going to get diluted to shit. So what I say to them is like, I work for you. Text me, call me any hour of the night, whatever you need. Let's do it. I will tell you what I think. I have pattern recognition across all these companies. I've seen what's worked and what doesn't work. I've met with amazing people like you. I've learned the lessons. I will tell you what I think. If you take my advice and I'm wrong, you're more wrong than I was for taking it. You know, at the end of the day, you have to be the one to make the decision. You're the CEO. You're in control. Dial my credibility on different topics. I'm never going to give you advice about how to write a line of code. The only thing I know is HTML. You know what I mean? Right? That's not my space. I sold for 10 years. If it's enterprise sales, my credibility is going to be dialed up. And let's actually— consider what the advice is here. And I just— I'm very honest with them. If I don't know the answer, I'll tell them I don't know. I usually have someone in my network I'll dial up, but it's really an I work for you scenario, not the other way around.

How much do they use that?

I mean, it's kind of a distribution. Some people are texting me at 2 in the morning, you know, every day. Actually? Oh, yeah. I mean, hey, I'm working on this thing late at night. Can you look over this term sheet? What do you think about this thing? Hey, can I come by the office tomorrow and jam on this idea? And I try my best to respond to everyone like instantly. I just feel like I love when people are instant responders. I try to be the same. That's obviously a privileged place to be in. Like, I have the space in my life to do that. But most people don't take me up on that. I think either they feel like that's unreasonable to ask or it's just like they're focused elsewhere. But there's a subset of people that like they want all the help they can get. They'll lean on me and I will give them everything I can, so long as they're doing an amazing job building their company, right? This isn't a— this isn't like, I'm going to help you if you can't even, like, get out of the bed in the morning and make some calls to your customers. I'm not going to do the job for you. But if you are putting up amazing numbers and creating incredible leverage and someone the Antler portfolio should be really proud of, yeah, I'm going to— I'm going to double, triple down.

I think that founders— and I put myself in this bucket— don't leverage their investors. Enough. That is a general belief that I have.

Why is that? What's the psyche on that?

I think one is sometimes you don't want your investors— again, I'm going to say myself earlier in my career— you don't want them in the business because you're scared. That's how I felt, of like, well, if they see this and I ask them for an intro to this person and that person doesn't buy, yeah, now is that going to look bad on me? Yeah, because I start, you know, you have to just follow on. Are they gonna— exactly, exactly. You start thinking like Did I expose them to too much? What if it doesn't go well? What if— and then when they tell you, hey, I work for— you know, I want to help you. You're like, do they actually want to help you? And in some cases, I think investors don't tell you. I had an investor— I won't name the name, but very well-known fund— and they said, just tell us you want intros to any of our portfolio companies. Let us know. We'll make the intros. I said, okay, great. Actually, I would like intros to like 80% of your— here's the list. I gave them the list. No intros.

Nothing.

Zero. And I said, okay. So then I— Another CEO I talked to, he said, you have to hold them accountable. He said, I put in the first slide of my board decks, I put a leaderboard for which investors made the most— generated the most revenue from introductions.

I love it.

I said, that's kind of ballsy. Yeah, I didn't feel completely comfortable doing that.

It's just the power dynamic.

And it's—

this is honest. It's not— I'm not coming for you.

Exactly.

The honesty.

Which actually— and he said, you have to do that. And I said, okay, I'm not going to do that, but I'm going to go and I'm going to have this conversation. So I went back and I said, hey, what? You know? And he said, oh, well, Dave, it would be helpful if you like wrote an email for every single one of the introductions, personalized, and then told me the person. And he was actually— the investor was correct. Like I had just said, make introductions. Now, he didn't come back and say, cool, Dave, I can. Yeah, but I need this from you. So 6 months goes by. I'm kind of like, well, where are the introductions? Then I did all that, and then I had another situation, which was he made, call it, 15 introductions, but it was all the companies that he was either a board member or investor on. And the other ones, he's like, yeah, but that's a different partner. And I said, yeah, I know, but ask your partner. Ask the partner. And I've seen this with some of the companies I work with now, where with the bigger funds, if they have different partners, it's actually like— 9 different funds in one umbrella. Yeah, you know, where each person's kind of like, well, I'm not going to use that, you know, the, the, the political capital to go and make— anyway, my point is in all that is to say like it's, it's sometimes hard to get that help, or it's scary because you're like, oh well, should I tell them that I'm thinking about replacing my CRO? Because if I tell them that now, now they're going to think that I'm, you know, and, and so it's— but But I think the best investors are the ones that legitimately, like, actually want to help and then do help. Because sometimes one of these investors— one of them helped us close one of our largest deals ever, and he called the buyer who he knew. Yeah, I was like, this is like, this is it, this is it, you know, and vouched for us and everything and got us over the line. You're like, okay, that was worth the entire investment.

Yeah, that can be your Uber. That can be the thing that catalyze everyone else.

Got us a really good candidate, you know. I mean, I think— and again, as founders, you don't really even appreciate, like, yeah, I talked to this candidate, the candidate's going to come work for me. But when you put the candidate on the phone with an investor— yeah, doesn't matter who the investor is— yeah, it makes the candidate feel like, oh yeah, man, I'm really important to this company. Yeah, you know. And like this— and, and they have this investor who's excited about them. Anyway, so I, I love that you do that. I think— I just think people don't, don't take advantage of that.

Well, I think the founders should be working to make it obvious that my political capital is worth it, right? Like, if they're doing the job and they're someone I'm so proud of, I'm going to spend political capital as freely as possible, right? Because I'm so proud of this company or this person or whatever. So that is the job to be done, right? And it's like, if someone isn't doing that or isn't— you know, if they're asking me to help them do something that they could do themselves, I'm like, you've got to have taken it all the way, proven to me that you can do it.

That's actually— that's a good point.

And then I feel like I can take it, you know, the last mile for you.

That's a good point. You want them to show you. It makes you— if they're like, hey, can you—

I want to be proud to make the introduction. Right. And for the people where I'm like, this is a fund returner, I mean, I'll email the President of the United States. Like, whatever it takes. You know, like, there's nobody out of reach for us. Especially, I mean, at Antler, it's interesting, but 250 employees, you know, 10,000 founders in the network, you know, 2,000, 3,000 advisors. Like, there is almost nobody out of reach. Like, if we really want to get in front of someone, there is someone somewhere that knows somebody that knows somebody.

Right.

And so if you know who your target is and there is a good reason, and I, as a salesperson, I would tell this to my team, you know, my sellers, why you? Why you now? Like, why is this important to you? And why is it important now? If it's at the right altitude and it creates the right amount of value, I have no problem approaching someone and saying, here's something that would create a lot of value for you. Like, I am doing you a favor by bringing this opportunity to you. And most people, if it's at the right altitude with the right sign of urgency, I think most people want that call. You know, if it's a good example, like if, you know, there's a deal that's in flight and I know someone's thesis at a fund is to back, you know, energy, for example. Hey, look, I've never spoken to you before, but I've watched your podcast. I know this is the number one thing you care about. I have a deal that you're going to absolutely love. I'm sharing with you because I think you're really going to appreciate it and it could return your fund. I'm doing that person a huge favor, you know, by, by giving them a deal that's going to return their fund.

Right.

But it's got to be relevant at the right altitude, a good reason. And so if a founder comes to me and says, hey, this is the person I want to meet, I'll shoot that shot. It's so dialed in. The forwardable message is so easy to send. It's like I'm caring about the other person. It's not really asking for a favor in that way. And I think that's the thing you learn in sales is there's always a reframe on what is good for the customer. And if you lead with that, if you lead with what is good for them, I mean, why would I hold that back from them? You know, we're doing them a disservice.

Yeah, I like that framing of it. And I think—

Like, if you asked me to introduce you to somebody, yeah, I would be doing them such a big favor. The podcast is amazing. What you built is amazing. Like, everything you touch has turned to gold. Like, that's the kind of thing where I'm like, yeah, David asked me for something. Like, you wouldn't even have to give me context. Yeah, it's like 100%.

Yeah.

And there's a group of people that are in that, in that bucket.

Right. You know, what do you think that your founders or founders in general do not understand about your side of the table?

The big thing is the bar to return the fund. So, you know, if you are managing a $10 million fund and you're writing, you know, $100K, $200K checks, any one of those things can return the fund. You can write angel checks, you could do CPG, you could do anything. There's like almost no deal that can't return a $10 million fund if it's, you know, in the $500 million range plus. When you have a $160 million fund or $250 million fund or bigger it goes, the bigger the bar is to return that fund. And so you either need to have greater concentration like Thrive Capital. You know, Josh famously put like 80% of that fund in Instagram and it returned Thrive's fund. But the Andreessen fund that had Instagram was like a 0.5x DPI because it was so low concentration. And so it's this amazing deal. But like the person who managed the fund and concentrated it had a much better DPI. And the founders don't understand the dynamics between fund size and concentration and And so when you are looking for investor-founder fit, you want to understand, like, is your deal, is the thing that you're selling them a product that can do the job they need to do? And so in my case, you know, if you start a billion-dollar company and I own 10% of it, I get diluted to 5%. I only make $50 million. I don't— I'm not going to return $160 million. And so it's not interesting to me. At minimum, you've got to be shooting for $3 to $5 billion just for me to get a 1x, just for me to make $1. And so the founders, I think, don't really appreciate the ambition and the scale and the novelty and really what's required for me to be any good at my job. They think, oh, if I turn this from a $5 million company into a $500 million company, that's gonna get it done. It's like, I'm not even gonna be in consideration for the Midas brinklet. You know what I mean? I'm not even gonna be anywhere on the radar. So I've gotta swing bigger and bigger. And more ambitiously.

That is— I do not think people understand that.

Yeah.

I don't even think multi-time founders. To be honest, I'm not sure. Unless you get in the weeds on looking at a portfolio and understanding the true outcomes. Because I think we all believe we're going to start this company, and it's going to be successful. Obviously, we all go into that. You don't realize how many fail, like actually fail. There's stats that are out there.

Yeah.

But I don't think people comprehend how truly, like, 90% of the companies, 95% of the companies, especially at this stage, at least, are going to be— are going to be zero.

Yeah.

And, and that, to your point, you can't return— I thought when I sold the company, I'm like, wow, I really feel good. My, my investors are probably happy. I don't think they gave a shit. I mean, in reality, yeah, it didn't— to your point, I know it didn't. Now I know. Yeah, it didn't move the needle for those funds.

I'm sure there were angel investors though. No, the angel investors were very happy because their fund size is that one check.

Exactly.

And that's amazing. And so I don't think they appreciate that. I think the other one actually is dilution, right? I mean, it's just so complicated round after round, whether it's liquidation preferences or pay-to-plays or cram-downs or crazy markets, whatever it is, all kinds of stuff. And so like the level of risk that we're taking to be that first investor,— it has to go perfect. Like, it literally has to go perfect. I mean, it was a lesson over 8 years of writing these checks. There's a lesson in, like, the complexity in later stage that I wasn't aware of when I first got into the game. And it was another layer of risk that I wasn't, you know, privy to. So now understanding how lick prefs work and some of these other mechanisms—

And you can't control that.

It's completely out of my control. I'm at the bottom of the waterfall.

Right.

I'm just the guy like, please, sir.

Well, I was telling you, I talked to this investor who their whole strategy now at this pre-seed stage Their whole strategy is invest in the best storytellers, because they know that the best storytellers, at least in the frothy market that we're in, will be able to raise the subsequent rounds at massive step-ups. And they tell the founders, when they invest at seed, they say, "I'm just letting you know, I will sell at A and B. I would like to sell at A and B." Yeah. And for the, for the best storytellers, they go out, they raise, they raise again, sell secondary, raise again. They've already returned that money.

If you can identify that fundraiser, 2 or 3x every 2 or 3 years, I mean, really good.

And it's a crazy strategy because, because I think the sad part is that the storytelling— it's not sad, but back to the craft, it's part of the craft of building a company. But sometimes the best storytellers are not the best operators. Yeah, but the market we're in, in venture, the best storytellers are the ones that get rewarded. Yeah.

And these markets where, you know, the platform is shifting, the future is changing.

Yes.

People can, uh, they do this, they do this thing where they compare like what is and what could be.

Yes.

And they just, the gap between that is my company and I'm going to change the world. Wow, I want to join this thing.

And the best are really good. Yeah. I mean, I've, I've seen some of these pitches where I'm like, yeah, you're real, like, I kind of want to give you all my money, you know. But then I'm, I, you start digging deeper, like, they, I don't know if they know how to operate the company.

Yeah.

But at least for the fundraising game.

Yeah.

Doesn't matter.

Right.

And these guys at Series A are taking $10 million off the table, $15 million off the table. They don't even have businesses yet.

Yeah.

And they're making life-changing money.

Right. I mean, the investors have to still appreciate the, you know, what is durable here? You know, does this person appreciate the things that— well, you've had, what, 90, 100 CEOs on the podcast? Yeah. And I listen and they talk about focus and culture and talent and like all the things that are, you know, I think obvious if you're writing a book. But when you're investing at that stage, you're like, is this person going to build the number one, like, top world-class team, have a bar for it, keep the focus, not get diluted? And I don't know if they do that level of diligence. You know, they may talk about it, but it's really like they're investing on a story or on a momentum. I think the other thing we talked about, like the fund size and the dilution, something that's very different at Antler is the level of diversification, right? Like most seed funds, you know, maybe they'll take 20 bets. We're gonna take 200 in a fund. And—

In one fund?

In one fund. And the reason for that is because, one, because of how early we're going. But really what we're trying to do is have enough diversification to maximize our surface area on finding that company that doesn't make it through, given how risky this is. And because we're coming in so early, we can afford to come in at low valuations.. And so this is a very different strategy to most venture firms. Most venture firms are investing it in their first round, $10 to $20 mil valuations, $10 to $30 mil valuations in this market. And they're doing 20 of those and they're concentrating. What we say is there's a lot to be figured out by this group of people that don't have a co-founder, don't have a product, not really sure. But there is some legibility on their work ethic, on their founder market fit, on what they've done in their life. And if we can do that 200 times, what you do is you create this essentially insurance policy on the fund, right? Because you have so much diversification. If you look at the Monte Carlo on that, if you look at any firms that have done this from Y Combinator to Techstars to SV Angel, which is not talked about enough, is amazing, right? Ron Conway. The Monte Carlo on that is a 3 to 5x. It is enough diversification to basically index innovation against inflation. You're wide enough that, you know, the DPI is going to come over time. However, it's also a lottery ticket because the thing about venture is you can only lose 1 times your money, but you can make infinite. Like, you can make 1,000 or 10,000 times your money. And so you're basically playing the entire roulette board, and the odds are roughly the same, like 2-3% of finding a unicorn, except instead of paying, you know, 30-36 to 1, whatever roulette is, it pays 10,000 to 1. And so that's a really interesting paradigm. And it's why the fund math works at this level. This risk we're talking about, the risk of dilution, the risk of people, you know, giving up too early or selling too early. It's like fundamentally underwritten by having more companies early. And so that's why we do it the way we do it earlier for the audience that needs it at a valuation commensurate with the risk, at a diversification that keeps the insurance policy and the lottery ticket balanced really well.

Um, when is the next cohort like starting?

Yeah, so depends where you are in the world. 27 cities.

For New York.

Yeah, most of them are running 2 times a year. In New York, we're starting to bring people in every month. So bring in 10, 20 people a month and sort of stacking the room as we go. And I, you know, I think in this market founders want us to like go faster. Like, yeah, rolling admission. We're testing that out this year. Oh, cool. Um, so every, you know, 30 days there's like 10, 20 new people. And we're densifying the room. We're trying to make decisions in 2 or 3 weeks. So you, you still maintain this density in the office of, you know, 40 to 100 people at all times that are helping each other. But it's changing over. And so you're kind of refreshing it and getting new relationships and new customers. So we're always like founders, we're always iterating and testing and trying to figure out what the right mix of this is. And because we have 27 cities, we can try things in different cities every year. You know, we can get different shots on goal to figure out, yeah, you know, does New York doing it better than Stockholm, than South Korea, than India, than Africa? And we're learning from each other and trying to make it better. So this is our test this year to make it roll. Cool.

I like that. Um, what, what keeps you going? Like, what drives you at this point? Yeah, now you've been doing this for a while. Yeah, it is. I think people don't give enough credit for how much investors hustle, like, at least again, as founders, you're kind of like, yeah, they have an easy job, but you're hustling.

I mean, I know you— when I got into it, I thought it was going to be easier. I honestly, I was like, man, I've been grinding. Like, I gotta, I gotta sit back and just make some decisions, you know, write some checks. Um, and then very quickly I was like, if I'm not working as hard as the founders, none of them are going to want me on their cap table. So I went, you know, I love LinkedIn. It was a great place to live a great life. Wasn't the most amazing place to move my life forward. And so I left to go do this thing. I didn't appreciate, like, how my mettle was going to get tested. You know, I'm talking 15, 18-hour days, like crazy, crazy stuff, like what founders are doing. Whereas, you know, LinkedIn, maybe I was putting in 6, get a coffee, go to the barista, get some free lunch, hit the gym in the basement. Like, that's not the case. This is, like I said, like I'm texting founders at 2 in the morning.

No, I know you are the maniac that you're looking for, actually.

I just— in order for them to take my advice because I think you say this too, like there are great investors who have been founders who like deserve the ability to write checks and deserve the board seat and deserve to give the advice. If I'm not out like raising our own fund, if I'm not out, you know, innovating on our product, building stuff behind the scenes, trying to make, you know, the product for founders better, if I'm not like trying my best to build my own thing and build my own firm, I just don't think I have the right to ask someone for, you know, 7 or 10% of their company.

Yeah.

And then sit there and advise them. So, you know, we're out, you know, raising funds and trying to do that side of fundraising, getting that firsthand experience doing that. We closed on $225 million last year for the US fund, which is awesome. It gives us, you know, tons of ability to go back, incredible people. And then on the top of that, you know, I'm just in the office and I'm spending some of my time like writing and some of my time building. A lot of my time working with founders and just trying to do all the jobs of a founder and sort of cut my own teeth. Awesome.

Jeff, thank you very much for doing this with me. I really enjoyed this, and I enjoyed being on your podcast, and I'm happy that we were able to do this. And I love— it gives me energy to come to see what you guys are doing at Antler. I love it, you know? So I hope I get to keep coming.

I appreciate that. No, we are lucky to have you there. I feel humbled to be on this podcast and follow some of the guests you've had. It's been amazing. So I appreciate all the support for our founders and just doing this. It's been, of course, been great to work together.

Awesome.