#57 - Kevin Hartz

You know, there's a lot of companies being funded now that you know, are not massive size opportunities or they're one of dozens of companies in the same field that just lacks creativity and all sorts of other issues. So if you're going to really spend the time and build something great, you know, the expression is like, really make sure you go for it. Pitched a friend's business to Elon and he said, Kevin, I only invest in companies that change the world. And it's, it's a good litmus test to stick by. Okay.

That is Kevin Hartz. He's currently a co founder and general partner at Astar, an early stage venture capital fund, and co founder and chairman of Sauron, a home security startup. Before that, Kevin was co founder and chairman of Eventbrite, the first major events organization and ticketing company in the US which he started with his wife Julia. They IPO'd in 2018. Kevin was also formerly co founder and CEO of Zoom, that's X O O M, an electronic funds transfer and remittance provider which was acquired by PayPal in 2015 for just over a billion dollars. As a founder, Kevin's as seasoned as they come, so I naturally felt a bit guilty when I decided I'd sit down and insist on talking about the state and future of venture capital. Besides his success in company building, Kevin's been a prolific angel investor with early stakes in companies like PayPal, Airbnb, Pinterest, Ramp Anduril, Uber, Palantir, SpaceX Square, and many others. But Kevin has the rare perspective of having experience, experience both at a very high level, which I feel gives him a unique insight into technology markets.

Well, the vast, vast, vast majority of companies are ephemeral. Like could be months, it could be years, it could be a couple decades. But most companies come and go. They go through a rapid rise and then they recede and go away. Your yesterday's news. Nobody really wants to work there anymore. There's the new bright shiny objects. And so the strength and power and fluidity to help create these fast companies and get them growing also takes them apart.

There's also an appreciation for the game on the board, which I find a lot of investors don't pay enough attention to at a point in time when private technology markets are only becoming more and more competitive and are more meaningfully interacting with the rest of the global economy. Post Covid Covid an understanding of the state of play and your place in it is important. When your green dollar is no different.

Than the next guy's, what happens when you're a seed investor and you start doing growth in growth, every company looks amazing because you know, you're in these seed companies that are just like getting started with two people in a garage and all of a sudden you see something that has real revenue. And. And then on the flip side, if you're a growth investor and you come down to seed, you're like, what are these things? There's nothing here. Zero. My theory on this is that it's multi stage funds that are just trying to nuke the, like the seed market so that seed funds don't end up doing, don't do well in, grow into their space and compete more directly because like take an Adreessen Horowitz, they're firing cash out. But a $6 million seat is a tiny sliver. Like, who really cares?

We spoke about the cost of capital, competing inventure, perpetual motion machines, incubations, Ipoing founders and investors as distinct personality types. King making the expansion of technology markets and mouse nuts. This is the labossier podcast.

We choose to go to the.

We deliver right from the desktop.

We're gonna reinvent the phone. Smart way of doing it. Yeah.

Thank you so much for having me.

Yeah, thank you.

It's a beautiful home. It's really, really nice of you to have me here and thank you for making the time. I just want to start with a sort of level setting question here. I think it's in my opinion sort of important to romanticize what you do in a way on a day to day basis and maybe in creating this rough model of how you think the world works and sort of having yourself fit into that mold to rationalize why what you do is important. So I'm curious, from your perspective as an entrepreneur, as an investor, what's your North Star? What's your model for how any of this fits together?

Yeah, I think I came out of graduate school and I didn't know what I kind of wanted to do with my life. And I was spinning around like some other graduate go to med school or law school or something. That falls into Peter's narrative of, Peter Thiel's narrative of when you don't know what to do, you end up going to some horrific graduate school, like law school, and then ending up becoming a lawyer. And you end up, you know, like falling into this profession that, that, that you didn't even, you know, you just didn't know any better. And. But you know, when I kind of took stock of what I like to do, I like to learn and I Loved being around smart people and interesting people and oh, wow, like in the mid-90s when, you know, Mozilla came out and you know, and, and it became Netscape and Marc Andreessen was there at the first rise of the Internet. It was such an exciting time. But I could say the same thing about all these different subsequent periods. Whether it was, you know, at the time of Facebook and then LinkedIn and that revolution, or now with, of course with Transformers and ChatGPT and everything else in AI.

To look at the whole ecosystem top down. It seems like the fundamental bottleneck when we're talking about investing, and we sort of will be, I guess, for a while today is this question of why there aren't more great generational companies. So in your opinion, I mean, is entrepreneurship itself fundamentally constrained by a shortage of great founders or a shortage of real entire opportunities? Right. Is the world founder limited where we just need more people starting companies, or is it opportunity limited with like a finite number of massive businesses that exist at any given point in time due to just number of opportunities, regulation, technological inflection points. What camp would you say you're in there?

Well, the vast, vast, vast majority of companies are ephemeral. Like it could be months, it could be years, it could be a couple decades. But most companies come and go. They go through a rapid rise and then they recede and go away. And there are many forces at bay. But as a company goes over into the kind of elder years, I guess you would say, or the decline, it's an accelerating phenomenon where you just lose more talent. Your yesterday's news. Nobody really wants to work there anymore. There's the new bright shiny objects. And so the, the strength and power and fluidity to help create these fast companies and get them growing also takes them apart, except in certain cases where, you know, you can. What I think of is kind of create a perpetual motion machine like a business, build the like foundations of a business that can really withstand, you know, that test of time. And you know, we see those in the, in the seven in the public markets that have, you know, mostly effectively set up really awesome monopolies. And God bless them for, for that. They did a great job. And then there are companies, you know, the perpetual motion of say a PayPal, which, you know, I kind of think of it as like in Genesis in the Bible where in the beginning God created like PayPal and sorry, that was a really heavy duty religious and reference to the PayPal mafia. They created this thing and it's managed to run, you know, for so many decades now since. I think it's PayPal, launched in the fall of 98 and the testament that it runs. It's seen some headwinds and so on, but it's an incredibly durable business despite everything in the normal trends of things.

To start to get into the state of venture, if that's what we want to call it. I mean, over the time you've been investing in companies, certainly over the time you've been involved in tech things, the amount of capital in private tech markets and venture as a whole has just absolutely exploded. So before we talk about maybe the state of venture investing, maybe we back up and ask how did we get here in the first place? What was the driver or the many drivers that led to so much capital inflow into these markets in the first place?

Well, it was all of the excitement that we experienced. I want to say it was the excitement and being a part of building some really great industries and driving innovation. But I think, you know, our friends in New York and all around the world started to see the returns that were coming out of this. It was always a very cottage industry. We, for example, lost a great one. Last week or just a week ago, Dick Kremlich passed away. And you know, he was out there with Arthur Rock and the whole group in the early 70s and it was a very niche industry. And it always felt like, you know, as going through this, it always felt like venture was this thing that was only on Sandhill Road and very much cordoned off. And then you had this sort of mainstreaming of tech. It's democratized tech that, you know, you have like new funds starting as fast as startups now. And I was talking to a friend of mine, Mark Stodd, who started a fund called Dragonier. And Mark is very clever. He invests in public markets and has, you know, done incredibly well in private markets. I think his first investment in the private markets was in 08 and Facebook. And he's moved primarily into the public markets because like, it's just way crazy, crazy competitive. And you know, the, and for the majority of, of funds and for the overall numbers of it, you're, you're going to lose all the returns because, you know, as Peter Thiel famously says, competition is for losers. And you have insane numbers of undifferentiated players all trying to invest in the same company companies.

Just like a million threads I could pull on there. So hopefully we go through these one at a time on the topic of just the rise of these massive outcomes that we've seen in tech in public markets, there's an investor I really respect who once told me that the biggest learning he had in his 10 years of investing in venture, that he's thankfully done very well at, is that oftentimes we continually and sort of structurally underestimate the extent to which monopoly like outcomes dominate the rest of a market. And that unfortunately, even looking at public markets over the last 10 years, like the mega cap tech stock trade, was probably the best one you could have made. And a lot of people unfortunately are maybe a little bit more prone to or enjoy sounding smart rather than making money. So with any of that in mind, I think a lot of the outcomes here or a lot of the drivers here are probably inflationary. But the idea of a trillion dollar tech company, let alone, I don't know, I think 11 publicly listed multi trillion dollar companies was insane. So I guess the ultimate question I'm trying to ask here is what do you think the fundamental shift is that led to such massive outcomes? Was it just the dynamic of Internet businesses? Was it something else? Why has there been such concentration?

It's a multifactorial kind of cause then effect. It was incredible talent that came and with a fortuitous cycle, you had the best talent coming into the, to the market, into the tech arena. It was demystifying tech. It used to be that you had to be a double E or PhD in this. And so it was opened up to a much wider audience. Then again this, this phenomenon of tech reaching everyone and it usurped all the businesses in so many different areas, it just kind of swept them away. And not just in the United States. The incredible growth in all the continents of, of the planet like that, you know, saw this happen and so you just added zeros on these things. You know, in the 90s when it was Microsoft and Cisco and intel, you just couldn't believe how big they were getting in the late 90s. But it turned out that was just mouse nuts compared to like the, can you say mouse nuts in a podcast?

I don't think I've ever heard that expression before.

Just small, very. My business partner Bennett's going to watch this and he's going to be like, no mouse nuts. But the, you know, those Companies in the 90s, Microsoft, Intel, Cisco, that we saw as these grand companies are, you know, compared to what, you know, at least Microsoft is today. And the rest of the magnificent seven are, you know, dwarfed in, you know, multiple zeros removed. So it's then it's really, instead of coming out of college and saying this whole myriad of different companies to go to. It's really the tech ecosystem that dominates and is kind of continuing to absorb the talent.

Okay, this one's a little bit hand.

Wavy and something I think about a lot. So maybe a bit of a flyer, but broadly speaking maybe you disagree with the premise. But as far as I can tell, we're indexing more and more of the world around us in more real time and more granular ways. And suddenly as of the last maybe two or three years now, we're able to parse through that information way more efficiently. Like orders of magnitude more efficiently in a post AI world. Do you think public markets eventually price themselves in? Like if all value investing is front running information, what happens when there's nothing left to front run?

Oh, you're taking me into the public markets and I try to shy away from it. I mean I would just simply answer that, that there's facts and then there's what people decide to make decisions in investing. You know, that can vary quite a bit. And then there is maybe elements that are hard to price in of the quality of a management team and beyond the ability to succeed with new product lines and continue to innovate. So I think that's something that we are worried that we'll get to, but I don't think we'll ever quite do that.

Totally. Okay, meat and potatoes here. Let's talk about the state of VC as a whole right now. I think Silicon Valley, and again this is sort of me being opinionated, has probably self servingly told us that raising VC is the best way to capitalize any company. But many of the greatest companies, I Mean Microsoft, Dell, eBay, WhatsApp, Midjourney more recently, were bootstrapped early on. Earlier on, granted this was sort of just what you had to do if you wanted to run your own company and not be ousted by investors for a professional CEO. But that dynamic has changed and capital is so abundant that this isn't as much of a problem anymore. So in your opinion, when is VC a suitable capital instrument for companies and when is it not?

Yeah, it's so situational, it depends on the founder, the market and so on. Look, but to be honest, most companies, especially if they're all bits, I know that there's been a preponderance of new businesses that are a mix and are quite complex or capital or capital requiring that that do need venture from the beginning. But look, if a founder can start a company and start building it and grow it and get it to profitability they should do that at least for some part of the company's lifetime. And I encourage most founders. I was just, just heard from a friend who's building something right now and you know, encouraged him just that to, to kind of build it, like grow it, get in contact with the customer because that's what's most important. Like I felt, you know, when we were getting eventbrite off the ground, the most important period or one of the most important periods was just the beginning where we were spending kind of 24, 7 just interacting with the customers, getting their feedback, changing the product in real time, pushing it out. And we weren't distracted by, you know, capital or who to hire, what kind of office or anything else. And it was a, you know, it drove capital efficiency, it drove lots of good habits. So I, you know, I. Against my selfish best interest. I do think founders should spend more time bootstrapping.

Historically, I mean. Okay, so we've spoken about maybe what got us here in the first place. Generally what's happening right now as far as capital inflows are concerned. Looking forward at like a 30,000 foot level for a moment. I mean, historically, if you look at the history of private equity or other sort of asset classes, they tend to consolidate in bull markets, bringing lots of new competencies under one umbrella. And it seems like we're finally seeing venture capital sort of emerge from a similar phase with multi stage and crossover and platform and buyout and asset agglomerator and incubator and every model in between, which feel like they've kind of emerged as symptoms of that huge capital inflow we spoke about earlier. What does that trend point towards? Like what's your read on the direction of this asset class? Or is what we mean by venture capital as a whole changing?

Well, I think everyone wants to kind of relive the glory days in some mechanism. Yeah. And some want to not end up in such a competitive situation. So they consolidate or try a new model or, or whatever else. You know, but the reality is that you have, you know, some of the, like the great brands like a Sequoia that's strengthened and built its ranks and expanded into different practice areas. And then you have like the newer beasts like Andreessen Horowitz, which is, you know, has been really disruptive coming into the market and paying up on rounds, being very aggressive and you know, and so investors are naturally trying to justify their existence and their existence to LPs and what will look good in a presentation, that kind of stuff. Totally.

We suddenly sort of have this moment in time where two very distinct business models in venture have emerged, right? One being, I guess, making money on returns, one being agglomerating as many assets as possible and largely making money on fees. The former, in my mind can almost always outcompete, or rather the latter can almost outcompete the former because they have a different cost of capital, right? Like as a seed fund, most of us can't go running around San Francisco paying $100 billion post for some AI infrastructure deal Everybody's seen, has an opinion on and will outbid you on. All else equal. I mean, how do you compete at seed when larger firms can outbid you?

You know, that's the big question. You know, a lot of it is relationships, brand. And at the end it's, it's not a fund, it's a person that you're working with. And so, you know, is it, is it, you know, a founder has to decide, is this the person they want to go through the battle with? And you know, and if, if the founder's just in it for defying the highest bidder, you know, that that's, they can find that in this market these days. But, you know, I, I love the seed stage. I had the good fortune of seeing a lot of great businesses from their very early inception and that's a rush for me and I'm excited to help this kind of new generation of founders do the same thing. But we also try our own kind of what you call proprietary deal flow. It belittles what I'm doing, but I've started a business called Sauron, which is a home security business. So co co founder of that with Atomic, with Jack Abraham, and third co founder Vasu roboticist, out of Postdoc, out of Caltech. And starting your own company kind of assures that you're going to get the.

Term sheet signed right, More tangibly here. And this is unique for you, right, because you've sort of been sitting in both seats at pretty high levels, right, As a founder, as a venture capitalist, what do founders actually care about at the end of the day? I mean, if, if I'm sitting in the shoes of somebody starting a company, it seems like brand sort of signaling type of thing, a high price being cheaper, less dilutive capital, a sort of quick and minimally distracting fundraise process. And otherwise to stay completely out of the way when you're on the cap table, VC firms often claim to add value beyond capital. But I think a lot of the best founders, again being opinionated here, don't really need introductions or operational help to begin with. Ironically, I think the cases where this doesn't apply. Are the larger firms that can afford to staff huge teams for operational support. Is value add real? And if so, where? Like, is Vinod Khosla right when he says that 70% of venture capitalists are actively valued attractive from companies?

70%? I, I mean, I don't think so. I mean I would hope our fellow investors are bright enough not to. There's certainly some segment that can be destructive there but yeah, that sounds a little cranky. A little bit on the cranky scale, but adding value. Look, I do a lot of work with first time founders and you know, some of the things that happen are insane. Like you know, I, as I think back through them, there are things I can't, you know, sworn to not talk about, like terrible things. And you know, obviously great things have happened as well. But you know, the, the journey of a founder and while, you know, look, you hope everyone can be like Elon, you know, Elon Musk did have help early on in Zip2 and then you know, with PayPal and his independence grew, you know, and so just again being, doing something for the first time and having somebody there to answer questions and, and guide you along the way has saved me a lot of time as a builder because I've been on that other side for a couple different businesses.

A lot of high growth tech companies used to go public in four years. I think I heard somewhere that this is the reason a four year vesting schedule exists is because that was sort of the timeline associated with going public before, which seems crazy. Today they stay private for a decade or longer as we see significantly more enterprise growth and capture occurring in private markets. Why aren't companies ipoing and why do you think they should? Because I think you're in that camp.

Yeah, look, this is the other kind of vector of big problem with the venture industry is the extension of that. And yeah, in the 90s there was this six capitals, six quarters of increasing revenue and file to go public kind of rule of thumb that many followed. The public markets were meant to support that. Then you had Sarbanes Oxley and you had all sorts of other issues come about. But the reality is it's so safe in the private markets nobody can see exactly what's going on behind this veil. And so there's not a lot of incentive out there. And right now the public markets are dominated by seven companies. You know, it's not clear what's going to force any change There, so. And then finally you can raise endless capital at higher and higher valuations, way out of whack with the public markets. So, you know, it paints a very dire picture of the venture industry.

So we have these massive, massive outcomes, I mean trillion or multitrillion dollar businesses. But you have, I think rationally so maybe 99.99% of venture dollars chasing after 0.01% of out. In your mind, is it any easier to pick a, say $500 million outcome versus a trillion dollar one?

You know, it really is just one has to, you know, feel that a founder can go the distance and that the founder is pursuing a great market. A lot of cases they switch directions. But I, I would say that, you know, there's a lot of companies being funded now that you know, are not massive size opportunities or they're one of dozens of companies in the same field that just lacks creativity and all sorts of other issues. So if you're going to really spend the time and build something great, you know, the expression is like really make sure you go for it. Pitched a friend's business to Elon and he said, kevin, I only invest in companies that change the world and it's a good litmus test to stick by.

I think the narrative here, and granted you are probably like a walking counterpoint to this, what I'm about to say, but the narrative tends to be that if you enjoy exploring lots of ideas and you're sort of all over the place with this kind of thing, should invest and if you love the day to day execution and being in the weeds, you should build. And that these two personality types are almost inherently very different. Do you buy that or do you think great investors and great founders are more similar than people realize?

You know, there's certainly some overlapping Venn diagram, but in the investment side, and this is important if what you're thinking about in the future, the investment side is pretty independent and you know, you could say lonely, you're kind of on your own. You come together as a partnership. You have maybe firms have their partner meetings and things or you do some collaboration, but when you're like in the trenches with your startup team working night and day side by side, that's, you know, an incredible teamwork and a incredible kind of experience, you know, with other people. And so those two are so different that I think most people can figure out one or the other.

Another sort of mirroring here. I mean the common wisdom again is that startups often have two types of teams. Those that can get from 0 to 1, those that can get from 1 to 100 is the same true for investors? Like, can someone be good at both seed and growth or are they fundamentally different skill sets?

Well, wow. I don't think I've, you know, they, they, they are different skill sets. You, you kind of need to practice each of them and, and perfect it and you can be good at it. One should not do it at the same time. What happens when you're a seed investor and you start doing growth? In growth, every company looks amazing because, you know, you're in these seed companies that are just like getting started with two people in a garage and all of a sudden you see something that has real revenue and, and then on the, the flip side, if you're a growth investor and you come down to seed, you're like, what are these things? There's nothing here. Zero. So you like, I think the intelligence and insights and grit, you know, you can be good at both. Just don't be careful not to do them at the same time.

I think I've been really continually surprised at how few options you have when it comes to structurally competing as a fund. I guess brain being one of them, which is why you see an industry that seems to so rationally sing its own praises every chance it gets as a fund at Astar, how do you think about competing in an industry that has so few vectors on which you can actually do that?

Well, I mean, you know, brand is important, but, you know, again, it's individual track record. It's, you know, who you want to spend that time with and who you want to have in, in your camp, and that can be helpful. But it's a great time to be a founder because there's a lot of cash and a lot of, lot of options.

On the topic of incubation, quickly. And you're in an interesting position to be answering this question. With Sarn as an incubation right now, it feels like more and more people are trying and very, very often failing to incubate startups as funds. To me, this seems mostly like a symptom of excess capital that we were talking about earlier. But why do you think it's so difficult for a fund in particular to incubate great companies? And in the few cases where it's done well, what's the secret sauce?

Well, there's, there's a lot of different incubation or, you know, you try not to use the I word now that, you know, it's more of a studio model is what's often used but you know, there seems to be, Sutter Hill is, you know, really seems to be the, the ones that have done, you know, and Spicer have done an incredible job on the incubation side. And, and so it's been shown to work and there are some great companies out there, you know, whether it's Snowflake, as in the Sutter Hill example, or all the way back to Genentech, you know, out of Kleiner Perkins. It's, it's a tool in the tool belt. But you have to have the right people involved. And my sense is that, you know, there needs to be one single kind of founder owner that you know is going to live and die by it. It's harder, like I'm going to exaggerate it, but it's harder to just whip out, you know, a dozen companies and hire someone out of McKinsey to run each one of them and then hope that they make it. There's just, there's no owners in that. It's. So maybe ownership is the, you know, is the key term is like, like it's Sauron, like I, I really care. Vasu, oh my God, she really cares about the company. And you know, so we have our live or die founders on it.

On the topic of too much capital or symptoms of too much capital, there's this really unique dynamic that funds of a large enough scale will sometimes have to do these mega rounds at early stage in order for it to be worth their time. The idea I think, in my opinion, right, of a founder trying to raise 4 million and being told well what could you do with 10 is sort of hysterical. But it seems like too much capital is a very real thing too. Right. I think this idea of a suicide round or the idea that you could blow up your company by raising too much is pretty real or at least becoming more widely debated. Do you think that's true? And if so, how much is too much?

My theory on this is that it's multi stage funds that are just trying to nuke the, like the seed market so that seed funds don't end up doing, don't do well and grow into their space and compete more directly. Because like taken Andreessen HOROWITZ with like 6 billion, what's the latest fund?

Oh my God. I mean across all it's big.

I mean, yeah, I mean they're firing cash out. But when at the seed you do a three million dollar, five million dollar or even six million dollars, like that's a six million dollar seed, is a tiny sliver like who really cares? That's a substantial investment for Asar and we want to see that through. And you kind of need to look at that. It's much like, it's much akin to, you know, it's kind of the like opposite of when you talk to founders and you find out how much they're going to compensate themselves, their salary and you want them to take very low salaries because you know they're going to create value in it. You know, this is, this is some kind of message or signal that you're, they, they don't really care.

Do you think venture funds can king make? I mean if you're building a software point solution, maybe too much capital can kill you. But if you're building a super capex heavy company, can the ability to raise a lot of money in itself create a moat? I guess, you know, the prevailing wisdom was that this was sort of the case in AI until, until more recently.

Yeah, I mean just in general that's never really worked. I'm, I, you know, I like, maybe I haven't gone through the kind of intellectual exercise of looking at the biggest fundraising companies, but I think like competing on amount of capital is just like a terrible thing to do. Now if it's a company like Facebook in the 2010s and you're a venture fund and you can put as you want to put as much money into that thing because it's going to win whether or not it needs the money or not. And venture investors unfortunately want to plow as much money into companies because the funds have increased. They need to put capital to work this sort of thing. And so you see companies choking on capital because they're being force fed capital preemptive rounds to companies that don't need it, all this sort of silliness.

So when does it make sense to raise a huge round early on and when does it not? What's the heuristic in your mind for knowing when to stay lean and when to go big?

Well, as a founder or CEO you would want to just sit down with your core team and map out like, okay, we can raise 10 million, here's our use of proceeds over 18 months or so. But if we had 200, where could we invest? Would it have a much better impact? Could we handle the scale of that capital? Or is it, you know, is it such a massive valuation that it'll be minimally dilutive? You know, perhaps that there is some justification. There is just to sit on the cash that's happening in the best companies. They tend to be sitting on the cash.

So, so to start looking toward the future on the topic of, I guess the cost of building AI seems to really be tangibly driving down the cost of engineering, of design, of day to day operations. Even the cost of creating software more broadly is trending towards zero. Are companies naturally becoming less capital intensive? And if that's the case, will venture itself need to change or do the best companies end up naturally expanding to take on more competencies?

As a result of this, companies in general have become phenomenally less capital intensive. I mean look at, you know, in the 90s you had to, you would bring your own servers into a data center and set them up and have people managing them and you know, I mean the costs were like extraordinary on every. And we've, we've abstracted so much and automated so much. So it's, it's this bizarre contradiction that we have are raising so much more money with companies requiring less capital efficiency. The difference is that the market opportunity is much grander than it was 20 years ago in the sense that you have this global market. Then back to the conversation of adding some zeros trillion dollar company opportunities.

To that point actually. I mean Silicon Valley I think likes to give itself a lot of credit for changing the world. In a lot of cases that is sort of deserved. But it turns out instead of software eating the world, it mostly just ate Silicon Valley for a long time. But suddenly you have this maybe 80% of the economy that's all antiquated services, heavy legacy industries that hasn't been touched by tech in a meaningful way. I think AI fundamentally represents this ability to automate a lot of this. What do you think are the knock on effects of this sort of movement into the real economy and what were the real drivers in your mind? Like do you, do you see you know, a Facebook scale outcome in mining? I guess.

Yeah. Well it's just something that like I am always kind of wondering like what will be the next platform shift and what will come next and what will be disrupted next and just been like pleasantly surprised to the upside at the rate and pace and quantum of change and you know, to the fact that we have these multi trillion dollar tech companies. A whole gaggle. I don't know how you define a gaggle but seven plus a gaggle. Gaggle.

Not like geese.

Yeah, they're geese. Yeah, yeah. But you know, you have this set of multi trillion dollar companies and I think we'll be surprised. I don't want to try to predict, you know, if it's, it could Certainly be in mining and, and so on. But just to see like the work being done on the, you know, robotic process automation or the BPOS work, like you know, really working now and growth or on the legal tech side or cursor, which you know, apparently no longer has a hockey stick. It's just straight up to 100 million. It's unbelievable. So exciting times, great for innovation and change. Did I answer that? I shouldn't ask that question?

I think so. Okay, I'm curious as well on the topic. Looking ahead here on the topic of capital innovation, it seems to me that other industries in finance, maybe talk about hedge funds or private equity industries, really transform themselves with these fundamental innovations on capital structure. So maybe LBOs are the best example here. You could probably argue that the Y Combinator safe is a good example. But I'm curious, looking ahead, what do you think the next great capital innovation is? Is there some kind of gap you see that's begging to be filled?

Yeah, venture I would say hasn't been, you know, we, we don't have as many, even though it's venture capital, we don't have as many finance types as I would say in, you know, the private equity LBO side. And so there's been kind of less innovation there. You know, certainly like the safe, as you mentioned, I think it was Sean Parker came up with the FF shares which was a way to create, create a kind of preferred class and sell shares as a founder without warping the 83B or so on. But these, I don't know, these are just little base hits. I mean, it's just we've kind of been doing more of what we have. Like you talked about the big financing rounds. If I think of Xai in the massive rounds in quick succession they did, that was highly effective to pay to attract and recruit talent. Not NBA athletes, but researchers, ML researchers on average, I think the initial team were given something like $65 million stock grants at that $17 billion valuation. So using size and scale as a weapon, maybe that's the explanation of how you use the capital.

So what's the end game here? I mean like looking ahead, obviously a big part of the business that doesn't get automated away is the sort of person to person connections that drive so much of the industry. As you were talking about before in the context of even competing, but in a world where a computer can evaluate a company with even greater efficacy than a person, even with even limited information, what happens and do we get there?

I, you know, I mean similar to the earlier question of the stock market and information narrowing gap. I think that's always something that, you know, we fear gets there very quickly, but there will always be some gap.

I've got one more for you.

Okay.

It's the last one I ask at the end of every interview is what should more people be thinking about?

What people should be thinking about is not all AI. There's other things besides AI out there.

Fair enough.

So it's a counter.

Just as we finished.

Just as we finished. It's perfect timing to get the scale. Perfect timing. I'm so sorry.

Thanks so much for doing this.

Thank you.

It was a lot of fun.

Look, thank you for having me. You should have grabbed Julia.