EP 13: An Interview with Keith Rabois on Why He Tweets and Miami Tech Week, Netflix Loses 200K Subscribers, and Even More Elon

Foreign.

Welcome to the 13th episode of Three Cartoon Avatars. I'm your host, Logan Bartlett, and I'm joined today by my esteemed co host, Nikita Beer and Zach Kukoff. How are we doing today, guys?

Doing well. My sewer line was plugged today, so I had a plumber come to unplug it.

That's exciting stuff.

I've turned my house into a, essentially like a hacker house where we're building products and engineers are sleeping over. So it was sort of a crisis, but the crisis has been averted and also my stock portfolio was destroyed today.

Yeah, I love that. I knew the stock thing going into this, but the plumber thing was like a fun adventure we all just learned about together for the first time.

Yeah, no, that's good. I'm glad you incorporated that. This is really the humanizing elements of Nikita Beer. That is sewer has been backed up all day. No, I really appreciate that, that level of honesty. Um, so I guess kind of a quick update before we dive into the regular scheduled programming. So we've, we've collectively been sort of talking and we've had a really fun time doing this over the course of the last, the last 12, 13 episodes or whatever. And we've really enjoyed having a bunch of guests on and having other people either talk with us or interview people. And so I think what we've kind of collectively decided is the format's going to evolve a little bit from, from here. We're thinking through a little bit of an evolved format that is probably going to be more rotating guests that come on to co host with us as well as likely an interview once a week. This is sort of the first week we've, we've tested this out. You'll hear the, the Keith Roboy interview that I did in person at Miami Tech Week here at the end. So I think you're going to hear the, the type of format that we do just continue to evolve. We're going to continue to experiment from, from here. So it's been a ton of fun and I think we want to keep doing it, but it's going to be a little bit of an evolved format. And Nikita, I know you've had a bunch of time constraints as well, so maybe talk to people a little bit about what the last, whatever three months has been for you and what you're up to from here.

I've had a blast. I've gotten great feedback from like, everyone that's listened. I mean, sharing product knowledge, talking about these news stories. I'm about to be launching a product in about a few weeks. So I'm going to be sort of the guest star going forward, but I'm still excited to be part of it and watch this thing bloom.

What started as a joke, Nikita launching an app and a product. What we thought was actually not true somehow we've grown up so much over the course of the last three months. He's actually building something.

To be fair, when the market crashed I was like, I think I need to sell another app to Facebook.

That's good.

I think people listen. We're going to miss having Nikita on every week, but I think people are really going to enjoy. We're going to have a bunch of different faces, bunch of different voices on and even so far it's been a lot of fun to be able to bring on folks who are even more involved in the weekly drama than we've been. So I'm excited for the new format. People are really going to enjoy it.

Yeah, I've gotten some people that you've heard to agree to come on more regularly as well. So I know packing McCormick's going to do it. Zach Weinberg, who was on last week, who's actually blown up as a TikTok star a little bit. He Tiktokers get really mad when you criticize Elon which and Crypto which which Weinberg did last week. And so we need to make sure he comes back for more of that type of content. Getting canceled by 19 year olds on on Tikt.

I am happy that Zach is the other Zach Weinberg, the other Jewish Zach on the show is happy is going to fall on his sword each week for the 19 year old mob. That's a pleasure to have him in class.

The rage bait comments that he's gotten, we just couldn't resist that. That sweet, sweet virality.

He's uncancellable.

He is uncancellable. He is post cancellation. I think when you sell a company for $2 billion, you're, you're in that position. But yeah, no Nikita, we really enjoyed it and you've obviously had a ton of insight into all the products and so one of the things we want to make sure is the, the founder and product centric kind of thinking and feedback. Obviously Zach and I don't have that here and so we'll continue to incorporate people like that and if there's suggestions that, you know, people we think we can hear on, we don't always have to have, you know, Jewish men in their late 20s, early 30s. So I think we'll diversify the ranks a little bit as well. So, yeah, no, we're.

We're.

We're excited to continue to experiment.

I don't think Zach Weinberg solves that problem, but I love that we're trying to one day.

Yeah. Pack is Irish, so I guess that gets us somewhere some of the way there.

So, Logan, how has Miami Tech Week been?

Yeah, so I guess we're recording this on Thursday afternoon, and it's so far, I think officially, it kind of got going on on Wednesday. Last night was sort of the start of it. I. I sat down with. With Keith on Tuesday, and so, you know, was able to hang with the Founders Fund guys for a while. And then last night, Insight had a party, then Craft had a party, then Lux had a party. I went to. I went to Ramp. Ramp had, like, a party for customers and a handful of their employees, and so I did that. But it's been fun. There's a lot of VCs down here. It's. There's not, like, one cohesive thing going on. It's sort of like. I think Miami Tech Week is a vibe more than it is a. Anything specific to, like, where you go or what you do. It's a lot of investors hanging out, but I don't know. I think people are just excited to see other humans again, like, interact en masse with other humans. I think cryptos kind of ignored the pandemic, but it feels like this is the first real event for a lot of people, so it's been fun.

I heard Vanilla Ice was at the craft party.

Yes.

Yes. Vanilla. I did not see that. I was gone at that. At that point, but I don't know how they landed on that. If it's. If it's intentionally ironic, if it's. If it's not, I have no idea.

Pre Pandemic, he was at, like, either Dreamforce or, like, some. He was, like, doing a bunch of tech stuff, making the rounds before COVID too. I feel like he's been a staple at tech parties.

I. I don't know if that's, like, really sad that he's doing this or, like, good on him, you know, at this point, I feel like this is kind of the business that Cameo has made happen, just at a larger scale. Right. I don't know what happens, though. I wasn't there. Like, once he gets past Ice Ice Baby, like, does he just keep doing it? Does he just loop back the different, like, versions of Ice Ice Baby?

He does Ice Ice Baby. Then he has under pressure, like, all the samples yeah, exactly.

After Ice.

Ice, baby. Techno remix. Yeah, I, I think it's all that. I have no idea.

I will say it's not sad for him. Like, power to him. He should get the bag. It's, it's like sad that everyone in tech is so old that Vanilla Ice is like an exciting person to have perform.

Yeah, I think that's, I think, well, it plays to the geriatric crowd that's in Florida pretty well. So I think like, this is, this is hip and new. I saw a funny tweet at one point that was like, it's nice that the super bowl actually has finally has like modern artists that we know. And then it's like the person slowly realizing that they're old. Right. That's kind of the way it's. Glad we finally have, you know, artists coming to our shows that are culturally relevant. Like Vanilla Ice.

Do you think that all these events are like, this is like the final event of the bull market. Like, I felt like the, like there's been an event like every two weeks in tech for the last six months. It feels like this, like market's tanking, valuations are getting cut. Like it's, it seems like the, the kind of foolishness and crazy spending is, is on the way out.

Do you think venture firms are going to stop spending 500 grand on parties with, with Vanilla Ice in attendance? I don't, I don't know if I thought that was just a product of, of venture capital and that was the best way to get deals.

You have to understand, Nikita, these people have like. Well, not maybe these people, but a lot of people in venture don't really have a social life outside of tech. So like, the idea that their venture firm can subsidize their social lifestyle is actually quite appealing. Certainly not that the investor on this call, but to many other investors in the world.

Yeah. Thank you to all the VCs who have subsidized the parties for the last 12 months.

It's, you know, it's the way of giving back. People say VCs don't add value, but here we are, we're, we're providing alcohol, food and 90s hip hop artists to, to the community. So it's the least we can do. So one topic to hit this week was Netflix shares were down over 37% on Wednesday after the company reported its first subscriber loss in more than 10 years. So Netflix announced Tuesday after the market closed that they had lost 200,000 subscribers in the first quarter. And it's also forecasting a 2 million subscriber loss for the second quarter. So just to put this in context, about 700,000 of the subscribers that were lost were due to Russia and their, their suspension of, of ongoing support of content there. So it would have been an ad of about 500,000 if, if you take that out. But just for context, Netflix previously told shareholders it expected to add 2 1/2 million net subscribers during the quarter. So 500,000 versus 2 1/2 million if you kind of normalize this. During the same period a year ago, Netflix added 4 million subs subscribers. So this is a big, big deal. It obviously sent the stock tanking. You know, before COVID Netflix was trading at $36 a share. It's currently down around 20. Sorry, $215 a share. During the pandemic, over the course, when it had the big run up, it actually got above 700. So it's kind of wild to see. This business seems to be reeling a little bit from all the machinations in the market. And it's interesting to see them, actually, the COVID darling, they're actually in a worse place than they were prior to the pandemic. So, Nikita, maybe give us your thoughts on Netflix as a product, where they are, what's gone wrong, where they go from here, all that stuff.

Yeah, I mean, I've kind of not been that happy with the Netflix product for a couple of years now. I attribute, like, their slowing growth and consumer interest in their product to something that I call product decay, and that emerges from classic growth hacking that we do. You know, Silicon Valley companies do growth. Growth teams at these companies tend to run the show, and they're incentivized to boost metrics that can have these sort of insidious effects. I mean, let's take an example. Like, their ranking of content is probably fixated, like on overall watch time, but that content might be beaty. That actually performs well. Like, there's two examples that I can find that I certainly don't want to watch, but I might click just to see what, what it is. And that's that show about, like, monsters dating sexy beasts, and then that silly reality, like, game show. The floor is lava.

And just to be clear, sexy beasts, just to give a little bit of the plot line here, but they, they, it's a dating show where each contestant dresses up in elaborate makeup in favor of their favorite beast, and then they go on dates and go out in public together. So I don't know. I mean, to each their own. But I, I think sexy beast is a pretty riveting concept.

Just to be clear, some people just call that dating an SF in general.

Sorry, Nikita, you were saying?

So, like, I think, you know, it'll certainly boost the top line numbers, but I think the, the problem is that it doesn't actually leave consumers satisfied with the product. And these sort of problems have plagued Facebook over the years as well. They prioritized kind of baity content and newsfeed that certainly increased engagement, but it ended up crowding out posts from friends and family. And that ultimately created this whole crisis where users actually just stopped posting, particularly in like, influential and higher income coastal areas. And that led Facebook to create teams like msi, which was meaningful social interactions. And they had initiatives like time well spent, which they try to get these like actual real posts from your friends back on the platform. And they're still digging themselves out of this situation right now.

Meaningful social interactions, by the way, or time well spent. Sounds like, you know, they hired some consultant to go in that, like, hasn't interacted with humans ever before. But on the, on the, on the Netflix point, like, what do you do from a product and content perspective if you're Netflix, like, how do you get out of this flywheel?

I think growth hacking is fine and it's, and it's necessary at those early stages of a product's life cycle. It's how you get the velocity going and definitely how you make money quarter over quarter. But ultimately, like consumer product development is just as much art as it is science. And if you take Snapchat, they've leaned almost entirely toward that art side. And by simply building cool things that they think would be interesting to their core audience, these like coastal teens. And so they're facing the exact opposite sort of problem. But for Netflix, I think they need to actually return to focusing on that segment of users and just be intellectually honest around what the best experience for them would be.

Right.

Right now, I think the friction to find like a highly rated movie is insanely high. Like we all have, we've all experienced this sort of decision fatigue when we open the Netflix app. I, like, I literally have to go to another app, which I use this app just watch to filter out by rotten tomatoes and IMDb scores. And what happens when I do that? I find a competing streaming service and watch it elsewhere so it becomes totally commoditized. So I'm not opening Netflix first when I want to discover content. So they, I think they need to actually make it a little more utilitarian instead of just suggesting low quality stuff so that discovery takes place on their product. Right now it's simply just a library. It was like the renaissance for the media industry the last 10 years because Amazon and Netflix were paying huge amounts of money to have all this content produced. Everyone I know that works in production was totally booked, like every day, working weekends, making a decent amount of money too. And they, they just. And the supply of these production staffers was so limited that a lot of production moved to Atlanta, moved to Vancouver. So there might be some sort of bubble popping.

Yeah, I think what's interesting. So I in full disclosure, one of our partners, the founder of Redpoint, Tim Haley, is still on the board of Netflix. He made an investment, whatever, 22 some odd years ago. And so just give that as a disclosure. I actually don't, you know, know anything or, or whatever. But I will say what's interesting. Netflix has changed the tires while the car is in motion before. Right. And obviously they started as mailing DVDs and then they went to content, then they went to or streaming and then they made false starts. I think it was 2009, maybe 2010, with splitting those two businesses off and they were going to have their streaming business and their DVD business and then they wound down the DVD business and now then they went to syndicated or licensed content and now they've leaned in on original content. There isn't a back catalog for them. Right. And part of this is originally the, the value prop for Netflix was there wasn't anything else like it. And a bunch of people enabled their success by giving them access to back catalogs. Right. And so it's interesting that the theory was, hey, are they going to be able to change the, change the tires while the car was moving and be able to build up this back catalog that had a big enough value prop that people would continue to subscribe? And also they were kind of reaching the market saturation point where they started to increase prices as well. Right. And so these two things have happened at once along with increased competition just in general for net new content. So they're spending more on producing new stuff. They have credible new competitors and they've lost their back catalog of stuff that like if you originally signed up for friends or whatever it was, Right. All this stuff is now on, you know, a seemingly infinite number of apps. And so I wonder, it's going to take a while for them to catch up with, if ever with the back catalog. So that the value props there. Now I do think it's a staple for certain types of people just to Just to have it. And there is a reasonable amount of great content on there. But I don't really see how they get out of this cycle that they're in right now. So long as HBO Max exists, so long as Disney plus exists, so long as Hulu exists, so long as all those other things. And so I wonder if like, you know, for the. Everyone's always said Apple makes the most sense as an acquirer. I kind of wonder if like that is a potential outcome here.

It feels like Netflix's content feels cheap these days. And I think their brand sort of been, sort of been tarnished. And when they offered this catalog in like, you know, 2010, you, for 10 bucks you got like 2,000 movies. And they got it from the, they, I think they licensed it from the Starz Movie channel catalog. But the, the market that they're fighting in today is so different from when they started. And to like, to be fair, I think actually Netflix is a genuinely terrible business. They're playing in a market where their average revenue per user is the same as like an ad based video network like YouTube and TikTok. But they're paying extraordinary prices for that content. And right now what they're doing is they're riding between this like high, highbrow, high quality experience like HBO and TikTok content. Like so they're, they don't actually have a clear differentiated product they're offering anymore and they're kind of in like no man's land is what they're creating. Hour long junk food when you can get the same dopamine hit from watching a 15 second TikTok video or, or YouTube which is free for ByteDance and Google. So I think the, like, as a product person, when I look at Netflix, like the funnel to get value is extraordinary. Like you have to literally sit at your tv, pull up the app and then watch an hour of like some floor is lava video. And, and you could have just gotten that by opening your phone and watching TikTok.

Now I think that's a great point and that, that's, it's, it's interesting, right? They've been at different points in time pretty arrogant about who their competitors are. Like in 2017 they said sleep is our competition. In 2019 they said Fortnite was our biggest competition. Right. And so they've been pretty arrogant about who they're competing with. But you know, we saw Quibi fall down this, into this predicament of, in the world of everyone's a creator, right? And the near infinite amount of content that you can get that's interesting scrolling on your phone and you don't need the, the production value of high quality lighting or sound or whatever, all that stuff. Like you're willing to accept the video as is, right? Are they caught in this middle ground where HBO is a premium product, that what they stand for is going to be, you know, high quality and TikTok is the long tail of everything and it allows the masses to come up with what's most interesting and most entertaining. So from a pure like time competition standpoint, I just think both of those are much stronger value props.

I just don't know if it's that big of a business. Like this background noise where you unplug and you kind of, you're just sitting like a vegetable and watching. Like that's like a, it's a, it's an important part of our lives. Like that's what people do. But I think you, you get a lot of that from passively doing it on, on TikTok and these other social networks. So I don't know if like an hour in front of your couch, like is. Is really, really merits the, the price and all that for that sort of content.

And I wonder, I mean, to some extent, right, like we're talking about a company that was founded in 1997 that got included in the Fang stock for whatever whoever came up with that gave them a very nice glow up to include them with everyone else in that, right? And so this could just be the maturation point of, hey, they've done a great job. They've basically had two acts already, which is far more than any company. You know, most companies barely get one, let alone two. And now they're on their third act of like, original content, which is, it's amazing, right? They went from the DVDs to, to the, you know, the streaming app to their original content. It's amazing they've gotten this. But I just wonder like, it's. It's clear that that is a value proposal, but I just wonder if we're at the saturation point of the people's willingness to pay for that. And you're seeing. As they increase prices, you're not seeing the stickiness that you once did, right? You're seeing churn. Because clearly there's alternatives to this passive lean back, you know, almost like pressing something for the radio station. There's a price sensitivity there that clearly, as they increase, there's increased churn coming with it.

I think that we should give them credit for like pulling it off twice. But also keep in mind this company was created during like the birth of the social Internet. Like at least the, the streaming business was. And they totally missed the opportunity to make any of this a social experience that would drive stickiness. Like, like if, if our, if we knew our peers were watching stuff, we would have to like keep the subscription going. But right now most of the discovery around, like the social part of Netflix happens on third party networks and it's not very intentional. So I think they had this chance, something that HBO certainly couldn't do, maybe Amazon could have done, but I think Amazon prime is just a loss leading business to keep you on Prime.

Nikita, I agree with your sharing experience thing, right? Because we're all watching these things, the social experience. We're all watching these things in different times, right? And they, they did this one big drop and you watch it yourself. But one of the great things about television in general was the shared experience, right? And right now like the only things that we have shared experience around are like presidential debates. It's like sporting events, it's award shows. And we've lost this like, and then it was kind of Game of Thrones for a little while, but we've lost this like connectivity of everyone on Twitter talking about the same thing at the same time or knowing what other people are watching. And Spotify, Spotify has captured this from a music standpoint, right Spot. Clearly if you look in the right hand of what they're, what they're doing, it's more of a social experience that they've, they've recognized you're not, you're not

opening the app and seeing anything. I think this is like, it's certainly happening, but the level that they could be executing, they're far from that. I mean the biggest thing they've done in app that actually even shows any kind of social proof is those labels that they added in the last couple of months that say like top, top one in the US currently. Like that is the furthest they've gotten. And they literally have your identity. They, at one point they had Facebook sync. The execution was really poor when they streamed everything that you watched to Facebook. But there has to be some version of it that could make it actually, like could. The content could have social proof.

Yeah, like, why can't I know that Nikita's on season two of Sexy Beasts already watching like the, you know, the second episode. Like, why can't I know that? Why can't we be friends?

I mean they, they like, it's definitely a, a tricky thing to execute But I think there's a way to navigate the privacy implications and still capture the stickiness of like, your friends are all watching this. Don't cancel your subscription yet because you're going to be left out.

I mean, I think it's just clear they've reached the maturation point for whatever their market is. And I don't like, I'm not, I, it seems like Reed Hastings, a great, a great leader and he's turned, you know, he's been able to continue to pivot this and evolve. So I don't mean to take anything away from them. It's just now a different business. It's not a growth stock in the tech world anymore. Like, it's, it's kind of a mature, becoming a mature media company. And that's, that's fine. It's just valued very differently than what a high growth tech company is. Elon Musk was in the news, as he seemingly always is, but he, he laid out his plan for his takeover of Twitter in an SEC filing. He said it would be $25 billion in debt and another $21 billion in personal equity. The funding is going to be provided through two debt commitment letters from Morgan Stanley's senior funding in which the bank commits to offer loans worth 25 and a half billion. Notably, I guess Elon didn't list any equity partners in there along with him, but it came out that he is talking to Thoma Bravo about a potential pairing up here. So it's interesting. I mean the story's been ongoing for the last, whatever, 10 days at this point. Two weeks. Last week right before, right after we aired, we talked a little bit about the poison pill with Dan Primac and they actually implemented that as well. And so there are, there is some protection against, against a hostile takeover for Twitter's board. But interested in your guys take. I didn't think it would actually get this far that he, he would, he would have funding set up and funding secured as he, as he once upon a time famously said. Nikita, what are your thoughts here? Did you think we would end up at this point? Where do you think it goes from here?

I think Elon's public Persona almost pigeonholed him in this position where he has to now buy the company or else it's going to be such a big blow to his ego. So I don't think he can back out from where he's standing now. He's literally going to have to find some private equity company, whether it's Tony Bravo or I think Apollo was the other one that he's working with. I think he's going to have to find some way to buy it now. I, I think there's no way he'll, they'll be able to stop him. I mean, with, even with the poison pill, he's not, they're talking about the

tender offer, but the tender offer, they can still block it, right? The tender offer can still, like, they're, they're, it's sort of a game of chicken at this point. I, I think the, the poison pill in place, like, can make it impossible to acquire, but it would be a really bad look if, if he, they ran a tender offer and the shareholders said, hey, we want to go with this. And then ultimately the board decided not to do it. Chamath on the all in last week did a, did a really good job kind of outlining the history of the poison pill. The one thing that they didn't talk about was the notable example of Yahoo and Microsoft. So this happened in, in February 2008, Microsoft placed a bid on Yahoo for $45 billion. They put in a. Jerry Yang, who's the CEO of Yahoo at the time, put in a poison pill to block from a takeover when ultimately they weren't able to agree on price. The stock dropped 25% and ultimately Yahoo was sold for four and a half billion to Verizon in 2017. So we went from a $45 billion offer to 1/10 of that nine years later right here. And so that's the example, the counter example that these guys are up against of, hey, this really can go south and the board could act in a very myopic way that doesn't prove to be very successful. And so I think, by the way, about that, it was half stock, half equity, or sorry, half cash, half half stock. And so if you look at that today, that was whatever 22 billion of Microsoft stock. If you held that, that would be $220 billion worth. And obviously, who knows, like, they wouldn't have actually held. But it's just insane. Like you can destroy a ton of value right in, in thinking you're acting in the best interest of the shareholders.

Yeah, I mean, the one, I think the thing that's interesting about this whole Elon situation still is he, Elon never learned or doesn't care to learn. I think to his credit, like, the act of seeming serious, like, he's very good at accomplishing things clearly. Like, look at the track record he's created so far. And yet with the way he speaks purposefully by the way. And the way that he interacts in the world, I think is. Doesn't signal to the Wall street establishment, to the media chattering class, that he's a serious contender for many of these things. And so I think what you're seeing is like this weird cognitive dissonance where people are watching him get more and more serious and closer and closer to being able to force the issue in a real way, but still feeling intuitively like they should be objecting or they should be dismissing it because it's coming from a guy who likes to post 420 memes on Twitter.

Yeah, he definitely doesn't talk like your typical billionaire, I think.

Well, in typical Elon fashion, I guess all this stuff, I mean, it was a holiday for him on 420. So it seems like, you know, know if the timing of all this is just serendipitous, but he, he was. Yeah, it seems like this is going to continue to go on. I don't think we've heard the end of this for the next weeks, months. I have a feeling that we're going to be talking about this for a long, long time.

So are you guys Twitter shareholders?

No.

Tiny.

Okay. I think just part of it, the part of the problem is that a lot of people haven't internalized that the tech bubble of like Covid has popped and so they're still attached to that, like I don't know, $77 share price. So the $54 offers just feels lower or feels too low. And I mean, I think realistically though, with inflation ever, like all kind of long duration types of tech plays are probably priced fairly at this point.

Yeah, Twitter only needs to look at Netflix that was trading at $700 at one point during the pandemic and now is trading at whatever $200 to know that maybe they shouldn't be to the high watermark of what was their 52 week high or whatever happened in the pandemic. Another topic we wanted to hit. Andreessen Horowitz announced this week that they were launching an accelerator called Start. So for more than a year, A16Z has quietly piloted its own take on an accelerator for early stage entrepreneurs. In exchange for, as of now, unannounced percentage ownership. Andreessen Start is going to offer up to a million dollars in venture capital. The checks are coming out of Andreessen's $400 million. See, that closed in August 2021. The areas they're going to focus on are consumer enterprise, fintech, games, other. And then I thought, interesting. American Dynamism. So there's no standard deal that's going to be in place. They're going to negotiate separately with each startup. They're potentially going to scale up and down as they as potentially makes sense for them. And yeah, so it's interesting, I guess. Zach, what are your thoughts on why Andreessen would do this? Sequoia obviously announced something that was comparable a few months ago, I guess. So what's your opinion here?

Yeah, I mean, look at what Andreessen's doing here, what Sequoia has done with Ark, which was their program or start in India even before that. Now, I will say what's interesting about a lot of these programs is even if they only fund whatever it is, 10 or 11, you know, companies per cycle, they still get access to via the application process. Hundreds, if not thousands of people who will likely apply to this. Right. So if you're and researcher Sequoia, even for the limited cost of doing 11 of these deals, if you can have a relatively emerging investor, junior investor, comb through a number of these applications, you can actually probably see a lot of the same cycle of folks who would go through YC pretty early in that process before they've gone through YC as well.

I think the target of their audience, and from what I've heard through the grapevine from colleagues, is that they've been proactively reaching out to a very specific type of founder, which is like these experienced tech executives, like chief product officers, kind of senior product managers at sort of the big tech companies. And it seems to me like they're effectively like scaling out an EIR program. And that seems to be kind of the big point of different differentiation from yc, which, you know, takes bets on those kind of young and foolish college dropouts or junior Facebook software engineers. I don't know if actually that's going to lead to better outcomes or returns. I mean, probably because at least these people know how to manage teams. They know how to operationalize a product development cycle. They probably won't be as gritty. They won't have the same level of grit. But so I think for them, like, for these types of can, like these types of founders, offering a million dollars is like a nice cushion like before because they've been advantasized in their previous roles at these, you know, big tech companies and they've been afraid to take the plunge. I've heard this in private conversations like, what if I can't raise money? And I've always told them, like, look, it's, it's easy to raising money is the easiest part. It's hiring. That's the challenge. And so it gets them past that mental block. And so I think that's why it's an attractive proposition. And I mean they, you could certainly like, I, I feel like I could approach any firm and I could probably get some sort of check from them to get started. But I think most people actually can't really internalize that without it being put on a blog post saying, we will give you $1 million.

I mean, I, I will say, like, listen, we know that former CPOs, former VPs of, you know, Lighthouse companies in a given industry tend to start interesting startups. But we know that as often as those folks build great businesses, they equally as often probably, if not more so, build businesses that tend to struggle. Like the challenge I would have is if I'm, you know, the, the CPO of any major unicorn.

Right.

And the difference between me spending the next 10 years on a company or me not spending the next 10 years on a company is a million dollar check. By the way, a million dollars is a lot of money. I certainly don't have a million dollars in cash. Okay? So I am not throwing stones out of my glass house on this one. But I'm also not a VP or a C suite executive from like a superstar, you know, decacorn company from the last couple of years. If the million dollars is really what flips you from, I'm going to stay in my relatively cushier job or I'm going to go be a really early stage gritty founder. I sort of question your commitment to doing it for the next 10 years.

Well, they were very specific in their language on their blog post. I think they, they had one line in there where like, if you haven't left your day job yet, consider applying. So I, I think they, they just need to, they need to like, they need to market to that type of segment of people. And I, I don't know if they'll actually end up building great companies. I, I, at least I, Andreessen has effectively also been doing this in the background before this program existed at least all like my friends that at Facebook that ultimately went to start companies during COVID and after they, they all went started with Andreessen and part of it was, I think they didn't know how to pitch and Andreessen was sort of accommodating around that.

Yeah, I mean there's a ton of like, you know, I hate to say it like this, but there is a ton of Alpha as a VC, taking somebody who's super smart and just didn't spend 50k to hire, you know, 4th and King to design their deck or whatever, whatever. They're charging 100k now, I don't know. And being able to like, help them articulate the vision for their company and invest really early versus waiting to only look at the companies that already have hired the deck designer and, you know, have workshopped their pitch within an inch of death.

It's, it's all a learnable skill. And I think that once, once you as an investor acknowledge that, I think then you can start looking past it to see is there something there.

Andreessen Horowitz should be careful if they're going to with yc. You know, Breslow, Breslow got knocked off his throne by, by, you know, putting in the wrong, in the wrong bin or whatever. So I, I, I would suggest they proceed with caution here. All right, so what you're going to hear next is a interview that I did with Keith Raboy at Miami Tech Week. Obviously, I am not a professional interviewer, so. And Keith and I are definitely friendly. And so it's a little bit of just a, a casual conversation. We went into a bunch of different stuff which you'll, you'll hear. And yeah, he's, he's never short on opinions and so definitely a fun conversation. Excited for you to hear it. Thanks, everyone for joining. I'm here today with, with Keith Raboy. We are here for Miami Tech Week. So I figured we'd do it in person. Thanks for doing this, Keith.

Welcome to Miami.

Yes, I. So for Keith and I are friendly, whatever the line in between, that I get him to do this, but also not the line to his, to his very fun birthday parties that I've heard a lot about. So whatever, whatever that middle group is. But we also share an investment in Ramp together.

Yeah. So at least you picked a good company.

I know, I know. Well, I need you to filter more of those my way. So. Yes, we are here. We have quite a contingency for Redpoint down this week. We're excited to see what, what is. I guess this is a second Miami Tech Week.

It is. So Delian, my colleague at Founders Fund, started Tech Week last year. He really wanted an excuse to move his younger friends to Miami. And so we created Tech Week as a way to overcome the inertia and get people to visit Miami. And then this year we've blown it out like 10x.

We were actually invited to a closing party for Miami Tech Month. So now it's. It's turning. It's really. There's a sprawl going on here.

It is between Bitcoin. Nft week. Yeah, yeah. Every. Every. Everybody in tech is here this month. Everybody who is anybody in tech has been here this month.

The. And then I guess FTX is next week in the Bahamas and that. I mean, that's like a, you know, whatever. A county of the. Of Miami.

Well, then we come back with F1

ready for F1, which is apparently like the hottest sports ticket. I was talking to some of my friends that are like, huge for guys,

and they said it's just going to

be insane trying to get seats.

The hotel. The hotel rates for the year are never higher or have never been higher than they are for early May, which is. Is past the peak season of weather. So it's going to be an epic event in Miami.

Is this the first time they've done

that or is it. Yeah, this is the first time Miami's hosted an F1 race. But it's going to be incredible.

It's actually fascinating, this drive to survive thing. It's such an interesting. Taking this little niche sport and blowing it out. And now Miami leaning into it.

Miami's leaning into it. Vegas just announced they're going to do a nighttime F1, which would be super exciting, but everybody's coming here for that weekend. It's going to be equivalent to Art Basel.

Yeah.

Well, so obviously you've. So you moved to Miami in December.

December 10, 20. 20.

2020.

So we're.

We're what, 15 months, 16 months at this point? So you, you. I know you've told this story before, but the criteria you were thinking about in picking a city, you were fed up with the Bay Area to say,

yeah, so we were fed up. My husband and I were fed up with the COVID restrictions, the lockdown, the crime, the homelessness and the taxation, the regulation. And our diagnosis was everything was going to get worse before we get better. And we didn't want to sit through the curve as, you know, waste years of our lives as everything was getting worse before, one day there'd be like light at the end of the tunnel. So we started filtering cities of where we can move to, both professionally and personally, both at Founders Fund and internally in our family. And our family criteria was simply warm weather, access to an international airport, cosmopolitan food, and shopping in a Barry's boot camp. Just apply tax rate below 4.5%. You apply those five criteria and there's no cities except Miami in the US

and then the big other one was International airport, right?

Yeah. International airport was pretty critical, partially so people could visit us, founders, et cetera, and partially because I do have to travel. Yeah.

And that's the one that. My family's all from Nashville and Nashville is near and dear to my heart and. Yeah, I think that was where it seems like it worked out to your benefit, to Miami's benefit, all that. But what could have been. In some ways.

Yeah. Nashville was disqualified of the Founders Fund list explicitly due to the lack of international airports.

It's a bummer.

Austin too, in some ways really doesn't

have an international airport. Yeah. Austin's an interesting one because they were such a. It was. It was like kind of the third or fourth tech city for so long and it feels like they kind of flubbed.

Oh, yeah. No one prominent in tech has moved since I announced I was coming to Miami.

Is that right? You're capturing that outflow. It's a zero sum opportunity between. Yeah, it kind of is. I mean, well, I don't know if

it's zero sum, but strictly speaking, there are people who have more and less influence. People are going to be more and less successful and I want 99% of them here.

Yeah, no, that makes sense. Now, how do you think about. I feel like it's weird. Before we were starting, it's a weird straw man of like the San Francisco advocate or supporter, which there are some still out there, believe it or not. The dyed in the wool. I am not that I think San Francisco has a role in the overall tech ecosystem, but how do you think about the public drawing to people to Miami? And is it at the expense of San Francisco? Is it at the expense of other cities? How do you sort of think about where San Francisco is today?

Well, I think San Francisco is the next Detroit. I think the writing's on the wall and you'll look obvious in hindsight. Everybody be like, well, of course it's Detroit, but. Right. Detroit took 10 years to fall apart. It was the epicenter of American business in the United States for 20, 30, 40 years. And then it fell apart within a decade. And it's taken 30, 40 years to rebuild. And that's going to happen in the Bay Area. Yeah. So fundamentally right now, the way I think about Miami is Miami is the future. So you can either be part of the past or the future. And some people opt in to be part of the past. They're old, their age, their brain isn't that flexible anymore. And there's people who are Embracing the future, and they're all moving to Miami.

I'm going to get a hard time for not pushing back on some of these things. And I want to.

I want to qualify. You should push back, because I'll give you evidence.

No, no, no. I don't. I don't actually. Don't even believe any of the arguments I would actually have. I actually kind of on your side with a lot of these things. But I. No, I think it's. Yeah, I mean, I think the proof's in the pudding now. And so was the original mission for Miami Tech Week and doing this whole thing together from Delian's mind, Was it to get. Was it to convince people that were kind of Bay. I mean, obviously other cities as well, but Bay Area native, to see the light at the end of the tunnel?

The best metaphor I'm going to borrow from someone else is Miami's like a addictive consumer app. And the problem with a new app for consumers, you have to initiate that download. Like, until you get people to try your app, you have no idea of convincing them about the engagement, the quality. So a lot of people have never been to Miami, especially from California. New Yorkers have always been to Miami for a variety of reasons. But a lot of my California friends had never been here. So we needed to create an excuse to overcome that inertia. And then when people come here, they're very pleasantly surprised. They see the most. Most arresting experience to start is people are happy. That was the one thing I didn't realize when I moved here, was how happy everybody would be. You go to a coffee shop, you go to a restaurant, you go to a bar, you go to Barry's Boot Camp. Wherever you go, you will find happy people, inevitably. And that's made it easy to layer on new people, because people want to be around. Happiness is contagious. And some people want to be around happy people. I'll tell you a quick anecdote. I had a friend of mine in technology visit me last June from North Carolina, where he had relocated to his family during COVID And we went to dinner, and I told him how everybody here is happy. And he kind of smiled at dinner. And then I took him to a housewarming party of some friends of ours who had moved to New York and introduced him to 30 people at this party. And so we were driving home after dinner, and he looks at me and he said, you know what? I didn't believe you at dinner at all. But every single one of those 30 people I met at that Party was happy.

Yeah. And you're like, is it drugs? Is it the weather? Like, what's going on?

It's definitely not drugs.

Yeah. Yeah, exactly.

Not at my party.

Well, we're in the founders of an office and I've heard colloquially referred to as Miami Keith, because everyone said, now you're in such a good mood walking around here.

Yeah. I mean, well, it's impossible. I mean, sunlight, you know, vitamin D, something totally contributes to it. There's lots of research behind that. But happiness is absolutely contagious. So I once interviewed Patrick Carlson at the CEO summit for Coastal Ventures, and I asked him, how do you have a culture at Stripe where everybody's happy? Because everybody I knew at Stripe was happy. And he said, I don't do anything. I just hire people who are already happy.

Yeah.

And so sometimes, you know, you filter the.

Right.

So there's some of that. But, yeah, you can't come here and not be happy. And so my thesis was originally was engine people are like, how are you going to get engineers to move? That was a big critique of, like, Miami. I was like, engineers are people. Humans have been humans since Shakespeare. So the same things that appeal to humans are going to appeal to engineers. I just need to clarify that, communicate that, amplify that, and we'll have all the engineers here, and they are. So I have a. I run a company, a CEO, while I'm investing. And we have now 40 engineers, 75 to 80% have moved to Miami. We could easily double that engineering team in the next quarter or two if we want to. We'll have to see whether we need that many engineers right away. But fundamentally, we go to New York, we go to Chicago, we go to la, and we go to the Bay Area. We tell people you're going to be happy and you're going to be professionally challenged.

And so the Miami, like, in willing it into existence, which I think you and Delian and have done that, like, is it. Is it kind of a pet project? Is it. Because you'll be at the nucleus of this and therefore it's great investment opportunities will come out of it. Like, how do you actually think about willing all this into.

I think it's like starting a company. It's no different. When you start a company, everybody around you thinks it's ridiculous, it's never going to work. Have all the criticisms, all the reasons it won't work, and then you have to overcome inertia. And inertia is not your friend, and time is not your friend. And then you have to find ways of overcoming that inertia. And then eventually you get momentum and the network effects begin. So when I first moved to Miami, I went to a dinner that Sunday night with the mayor and like, about 13 people. And that was the entire successful version of Miami in tech now. And I did handcraft. Like, every single person I wanted to move here was like handwork. I'd have them stay at my house, I'd entertain them. I'd put a program of things to do and test out Miami. Now people want to move to Miami. I don't have to do anything. There's such a network effect.

I haven't been invited to your house.

There's literally thousands of people here, hundreds who've been very successful in tech. So, yeah, I may help connect the dots here and there, or there might be someone who's so strategic, I might use a little bit of my time to help navigate Miami for them. But that's it. This is just propelling. And like, I. I had a birthday. My birthday's in March, so I had a birthday party already. Three people. March 17th is my birthday. Three people from that birthday party have already bought a place in Miami.

Well, specifically, I've heard your birthday parties are a really good time. So it's not totally surprising.

They're boring as hell, but they're a

good experience to get people to come

to visit to Miami.

Yes, that's exactly right. Well, it's. Yeah, I'm excited for. I mean, we're. So we're recording this on Tuesday. We have. It really is picking up what, Wednesday, Thursday, Friday, Saturday of like, all the events and stuff. But it really is stacked in. I. It seems like someone made the joke. That's a lot of VCs. But I actually, I mean, I know a lot of operators as well that are flying in for the event or are already here in the ecosystem.

So I'll give you my radical theory behind the Miami movement that I can now prove empirically was the correct thesis. But a lot of people disagreed with me initially. So my thesis was, having studied Silicon Valley, been old enough to have actually worked with the people who built Silicon Valley at the tail ends of their career as I was starting mine. And then having read everything about the history of Silicon Valley that could be read, I had a specific view about what made Silicon Valley Silicon Valley. And I said, I'm just going to recreate that in Miami. And my diagnosis was the key to Silicon Valley was actually the investors. It was a set of people that had a very different risk appetite that all co located and that's what made Silicon Valley. It wasn't Stanford, it wasn't the weather, it wasn't this counterculture. That's all nonsense. So the first thing I did is I'm going to move the investors here. I'm going to move angel investors, I'm going to move VCs. If you look at my goals that I announced when I moved here is I want five competitive firms to founders fund open offices in Miami in the first year. I want the VCs in the ecosystem of angel investors to be the best possible place in the planet for them. And the founders will move here secondarily. And that's exactly what happened. Now the reason why I say I can prove this theory is there's a great new book written about the history of venture capital called Power Law and he argues this thesis perfectly. And so now I have a complete book to give people that don't believe in the Keith Hypothesis. But I've been running this playbook for 16 months before the book was published.

Totally. I was actually annoyed when it came out because I think one of the things I had done was piece together a lot of that stuff. And you really have to, I mean it was like pretty onerous process of like going to old Don Valentine interviews or like watching, you know, YouTube's clips of him speaking at Stanford or like Cal has a big resource of information about that stuff and he packaged it up in such a, like easy, consumable way.

It's a great book. I highly recommend anybody interested in both entrepreneurialism or venture capital. But yes, specifically I was lucky enough that when I started my career in Silicon Valley, I got to work with Pierre LeMond, I got to be on the board with Dick Kremlin. So I absorbed a lot of their history, you know, through that experience. And then, you know, 22 years of doing it myself, basically pieced together all these pieces so I didn't have to go backwards too much. There was maybe the first generation of like the traders 8, National Semiconductor, I didn't, I didn't know them. But the next generation from I, I didn't know Don, you know, et cetera. Next generation I got to meet and get to work with, which is really exciting. That's why I had this view in the back of my head of what really mattered was different than what people reflexively were articulating.

Totally. No, that's interesting. It's. Yeah, I'm excited to see all the people that come through. It seems like there's a very loud Group of. It's all the very online people that I know are definitely here. And then there's like a long list of people that are like not broadcasting it but are also definitely coming through.

Oh, yeah. I mean, like last night was the first night and I was at a dinner and then a party and ran into a ton of people that have not broadcast yet that are very successful and very interesting.

Totally. I just bumped into one in your office. Here's a board meeting. Yeah.

Yeah.

He's definitely not going to publicly proclaim it, but we'll.

Yeah, well, that's. He's not going to have a choice because the founders he's working with are going to post a photo of him here later today.

Yeah.

Okay.

So there's actually going to be evidence of it. Well, that's good. You moved out to San Francisco in 92,000. Okay. I thought it was before that. And where are we? What does this remind you of right now in Miami?

Me? Well, other people have told me that have very high fidelity experiences, that it's more like New York 2008. I've heard this from a lot of people who actually built New York technology in 2008. So I wasn't there though. I participated. I grew up in New Jersey and New York and, you know, lived in New York, so I understood it. But I think that's the best metaphor. The venture metaphor is running like a series B company. Yeah. We went quickly from C to series B. Now we have to prove that we can scale this.

Yeah. What do you think? In 10 years, what does the geographic dispersion look like? You know, 20 me 32 of dollars from Venture. What's the split?

So I don't care what mediocre venture capitalists do, but I care what we do at Founders Fund. So the criteria I set was going to be our new fund should have equal dollars allocated to Miami in the entire Bay Area. Wow. So in the last fund, and this is looking backwards, so a lot of bias here we are 24% Bay Area and 9 or 10% Miami. And I only moved here halfway through that fund cycle. So we're almost caught up.

Run rate, it's probably.

So I expect this new fund to be about hopefully 15 or 16% Miami and hopefully the Bay Area is no more than 15 or 16%.

Wow.

That'd be a pretty significant accomplishment. Three years to go from zero to on par with the Bay Area for founder squad and it would be amazing.

Yeah, well, especially I mean, in mass, it's what, 45% probably Bay Area still. So obviously a lagging indicator.

Yeah. But I think we'll have other funds follow us, you know. So the disadvantage of venture is you get an advantage for about one to three years and people emulate what's working. So I suspect a lot of funds will be copying our strategy in Miami.

Yeah, well, there's a lot of people here that are scouting it out, so. Good. Well, shifting gears a little bit. So I originally exchanged notes with you over Twitter. Your Twitter Persona, I think is renowned and it's a little bit of. If people are pot of kettle.

Yeah.

Oh, that's fair.

Yeah.

Two people here that maybe have a little bit of a distinction of their in person. But how do you think about. Like it's clearly something of a marketing. I don't know if it's just fun and you. You mess around and have a good time with it or how do you think about a marketing strategy? I can tell you my view of it, but.

Well, it is a marketing strategy in some extent. I learned this when I was working at Square. I read every single tweet about Square for almost three years. And what I realized is that you could amplify value propositions by retweeting real users experiences. And that VCs noticed this and it helped us with race money and it helped with recruiting. So that experience bled into other things I've done professionally. I launched Opendoor, I tweeted about Opendoor, became a VC tweet about our portfolio companies and about our brand at both Coastal and Now Founders Fund. And so it is a marketing platform and it does resonate because the target audiences are pretty similar. People who use Twitter, follow Twitter, tend to overlap with the people who are interested in technology. The flip side is I also have a large following now and I felt like I'd be neglecting the advantages of having a following if on some issues I didn't proselytize. Yeah, I felt like I have 300,000 followers. If there's things that are important to me in my life, I should talk about them because otherwise what am I doing with this audience? So I do talk about issues that transcend, you know, pure marketing for the fudge. And I think that makes it more interesting for many of my followers, probably elevates a few, but fundamentally it's mostly used professionally and personally to move ideas forward that I believe the world needs to hear.

Yeah. And I think you were the first that taught me a very important lesson of not necessarily to engage with bad faith arguments. And I think notoriously wrong is.

Yeah, that was an old Square ism. So there's this one annoying person who kept writing the stupidest tweets about Square. But because I was running a company, you can't always like, share all the reasons why.

Totally.

And, but it, but I didn't want the.

And you've already lost if you're arguing.

Yeah, and you don't. But I didn't want the record like people assume, like, well, they read this tweet about Square must be true. So I wanted to authoritatively say it's not true factually. And so I got in this debate using the wrong thing and it became kind of an internal, kind of amusing thing. Like a lot of our company meetings would have various tweets with my little wrong comments. So I kept that up a little bit. Maybe I should get rid of it and try something new.

I, I, I like it. I, I, I will use a, a screenshot version of it occasionally when, when someone else is being bad faith. So it works, it works well for me. But yeah, I mean, it's an interesting marketing platform to the extent that you can, I've seen your views. The companies, I think, have benefited from the awareness of it.

I mean, definitely. I mean, there are times when in a competitive situation, like very hyper competitive, competing with other VCs are good, you know, to lead an investment round. Some of the founders do. Well, many of the founders do reference checks. But one of the things that resonates with them is they're definitely significant. Founder CEOs who I've worked with will say, like, when the company needed help, like defense, you know, in articulation of why they were succeeding when the rest of the world was against them, I would use my platform and my following to help them. And that's a real value when something goes wrong. So that's helpful. The bad side or the flip side? The crazy side I've had over Twitter over the last decade is I decided to chase this fool's errand of correcting everything wrong on the Internet, which is just a bad idea. There's so many bad, so many dumb things on the Internet that I need to be more disciplined about trying to correct everything wrong that someone publishes. So I'm a, to try to be more, you know, focus my time on something else. What?

Yeah, correcting everyone on the Internet that's wrong, I think is a endless exercise. Yeah, I think, I think you might lose that battle. So I guess just because we're talking about it, what do you think about. We don't necessarily need to go into the different personalities bidding on Twitter right now. But what do you think about, like, the core fundamental problems of either the business, the platform, the opportunity that could be with someone that you used to work with, or like, what do you think of Twitter today?

Well, I think Twitter's a mess. Partially. It's been underperforming, probably product velocity, but consistency and high fidelity. It's the most important social platform. So to be clear, my views have been consistent. You can read tweets from the last decade. The most important social platform in the

world is Twitter because of influence and

impact in society, input of countries globally, period. No exception to that. However, could it be a better business with more value and more value creation? Absolutely. But more importantly, it's ideologically bankrupt right now. The new regime is anti speech. And the whole point of Twitter is to give people unheard voices, long tail voices, more of a platform, less gatekeepers, more access, more democratization. And the new regime thinks their job is to censor. And so I'm very happy to see that people who don't believe in censorship are trying to do things, whether it's directly, indirectly, buy, acquire, run, whatever. To solve this problem, the world needs to hear more voices with a more diverse set of views. Not less voices, more controlled by people who already have power.

What do you think of, I mean, the specific examples that come to mind on the, like suppressing voices and all that. Maybe you have a better example, but obviously the Hunter Biden laptop thing, very specifically. And the president being kicked off the platform after January.

Well, I think kicking the president off the platform, where you have Putin literally on the platform today is completely indefensible. There's no way you can have Putin tweeting and Trump bad, like, Trump is not going out murdering people, like, for fun. Like that just makes no sense.

So there's just a subjectivity to the subjectivity.

It's like ideologically, intellectually, and ideologically bankrupt. In addition, there are clearly people at Twitter suppressing things that are critical of the ccp. Yeah, like so, for example, my husband wrote a policy paper on that was published by foreign policy, the most elite foreign policy, you know, sort of publication on the planet that Twitter will not let him buy ads against. There's no possible defense for that, except that someone works for the CCB at Twitter, and I've tried to get this fixed and they still won't fix it. So, like, Twitter is working for the ccp, supporting Russia's dictatorial regime and suppressing Trump at the same time, which makes no sense. Then The COVID let alone the COVID stuff. So almost everything that was published on Twitter was wrong. And almost everybody who had a different opinion that was turned out to be accurate was suppressed on Twitter. So fundamentally, this is what happens. When you give people power to make decisions. They will either reinforce their power or they'll reinforce the powers that be. And the whole world of science and technology are disruptive people with disruptive ideas that prove to be right with the benefit of hindsight.

Do you think that. So just to back up on that, you think someone at Twitter is working with the ccp?

Oh, I know for a fact, like, there are definitely spies for the CCB that work at Twitter and Google and

they're suppressing stuff that they don't 100%.

And then fortunately, after the next election, we're going to investigate this. I'm very excited that the new regime in Congress will definitely look into what CCP spies are working at these technology companies.

Interesting. And so do you think, like, how do you actually solve this? Is it just more speech and sort of letting it be out there?

I think this is not. Again, I generally default to very basic principles, and they're almost always right and everything else. Annoyed. Anything that can be published in a book should be allowed on Twitter. So if Donald Trump can write a book, he should be able to tweet if he wants to write something that would be banned in a book. So, you know, obscene, pornographic. We have principles for hundreds of years, actually arguably thousands. If you go back to, you know, sort of Greece and stuff that have worked. Why are we trying to come up with new principles when we know what works? Do you.

Do you not think that the scale of the Internet and the ubiquity of some of this stuff changes the paradigm? Like, we need to rethink antitrust laws or some of these things because of the digital.

You know, I think that's usually an excuse. And if someone has a reasonable argument, they should point to specifically what's different about a digital regime. But the printing press is basically. All these controversies that people debate about Twitter were unlocked when the printing press happened. All the powers, all the governments that existed, all the religions that existed, hated the printing press. The printing press have been one of the best things ever for mankind.

Yeah, yeah. Interesting you touched on China. I can't. I can't be remiss to. You have been pretty vocal anti China and other. I mean, congrats on the Midas list. But other funds out there have. Have entire strategies in China. What do you like, do you think that that is at odds with being a pro U.S. american fund?

Well, I definitely think it's morally and ethically at odds. It's legally permissible, which I think the law should change. I don't think it should be acceptable for an American fund to invest in China without the. Without the CCP changing sort of either its principles or being removed from power. But I think that's up to Congress to change the law. Law. So they're not, for the most part, I don't think these funds are violating the law. I think we at Founders Fund believe as American citizens, we have an obligation not to help the ccp, so we would never invest in things that would help the ccp, and we're pretty critical of funds that do while taking the privileges and advantages of being an American.

Has that been something. I've noticed it of late. Is it something to draw a distinction more and more and call people's attention to the, you know, the potential conflicts that exist here?

Well, I definitely think the agenda of the CCP is now more activist, both internally and externally. And I think, therefore, it's more obvious to a broader swath of the American public how we have to confront some of these problems as opposed to ignore them.

Yes.

So therefore, I think there's going to be more pressure on financial services firms, just like there's going to be more pressure on corporations that do business with China.

Yeah. Interesting. And it's. I mean, the, the other thing that exists in all this is TikTok. And what is possibly going to. I mean, it's. I spent a lot of time on it. Redpoint has a TikTok presence on it. Right. It's an amazing platform in so many ways. And it's also absolutely terrifying. Right.

Yeah. So I'm not allowed to use TikTok as my guess. So fundamentally, yeah. I was an advocate of the Trump administration's tentative decision to ban TikTok. I think we should absolutely ban TikTok for a variety of good reasons. Actually, I think that one of the issues the Trump administration got into was there was two or three distinct reasons to ban TikTok. And, and rather than just settle on one and how the policy follow that, they're trying to triangulate these three different reasons. There's an economic retaliation reason, like American social media companies are not allowed in China. Arguably we should have reciprocal rules, but there's a national security rationale which I think is pretty important, and I think that was probably the one that they should have pursued. And ultimately, the American administration needs to ban TikTok? Yeah.

Or at least bring like bring the code base to the United States.

There may be ways to make it work otherwise to at least minimize national security damage. Absolutely. But there's have to be pretty clear, pretty transparent rules and pretty difficult to manipulate because otherwise definitely people will manipulate.

I feel like a crazy person every. I always get yelled at online for defending Facebook and stuff. But I'm like, at least we can call Zuckerberg to Congress, right? Like at least we can, you know, versus TikTok. I think mostly gets, I mean, not a free pass. I think people are cognizant of this. But it's. It's pretty scary, right? Like the amount of stuff that's going on, it's scary.

It's a great platform to influence behavior 100%. So I was actually told a pretty good anecdote that I really believe that the initial plan when musically sold was to basically dumb down the American kids so that China can compete better with us, which actually is a pretty good strategy in some ways. That isn't like, arguably that's not a short term national security problem, but it is actually. It sort of betrays a certain mindset totally.

Well, I think American kids are probably doing it to themselves as well, it seems at times.

But yeah, yeah, you never really know whether that's true. But I do think are major issues in allowing the CCP to control content, manipulate content that affects a whole swath of the American public. We would not allow this on Twitter.

Yeah, no, absolutely. I guess kind of shifting gears a little bit. So I think almost to the day you called the market top, like almost very literally, which, whatever. An amazing serendipitous prognosis of what was going on in the ecosystem. What did you see get that time of doing that? And then also like what's happened? How have you internalized some of the stuff that's happened the last couple months since then?

Yeah, to me this is not that difficult. There's basically as soon as interest rates started to go up, there was going to be a market correction. There has to be. Technology stocks generally generate cash flow significant years in the future. And so if you change the discount rate, the value of the company just has to change, change. And so the thing that happened in October was all these inflation deniers basically ran out of excuses. So there was this, it's transitory, it's this or that excuses that the Biden administration was proffering. And a set of the market, a set of people were believing nonsense. It was obviously true. If you look at January 1st, I posted that we're in for serious inflation this year. Jack Dorsey posted we're in hyperinflation. And everybody critiqued them even more. So the Twitter debate, fundamentally the inflation was very obvious. Obvious, but there was enough excuses the Biden administration was throwing out that people kept believing. Then finally in October, I think the administration, the Fed basically explicitly said, we have inflation. So as soon as that cracked, I was like, duh. Interest rates are going up. Well, that means technology stocks are going down. This is inevitable. Fortunately, Ari Levy from cnbc, I think, asked me point blank, is this the top of the market? Yeah. Twitter threat, right? Yeah. I mean, I've internally been talking about it at a founder's fund and debating what we should be doing differently because of this. But the fact that he asked me, is this really the top of the market? Happened to clarify my brain. I'm like, yeah, this actually is right now. Because there's no more excuses. Inflation's real and nobody can deny it anymore. And that's basically what's happened. And interest rates are probably going to continue to go up for a while, but all you have to do is monitor the inflation rate. This isn't rocket science at all. Every month you get a government report card on the inflation rate. If inflation keeps going up, stock, technology stocks are going to keep going down. If inflation stabilizes without having to raise interest rates, interest rates, then either things will be stable or things might get better. But it. You don't have to monitor one data point. It's not. This really is simple.

It's. Well, every other change that I've lived through had some like, very specific, almost micro thing that happened to the ecosystem or the macro.

Let's talk about this. So 1999. So talk about the benefits of studying history. 1999, the market collapsed in 2000, you know, in March of the, in June. The specific cause of that was six federal interest rate hikes by the Federal Reserve. And 99% of the people in tech from either didn't know this or forgot it. And they all should have known it. Most journalists forgot it or shouldn't or should have known it. But if you live through that market correction, which I did in 2000, you knew exactly what triggered it, which was the Federal Reserve raising interest rates. So it's like, if the Federal Reserve starts raising interest rates again, guess what's going to happen? We're going to live through 2000 again. Totally. This is not, again, like, most of life is really simple.

And I was honestly, it was interesting Most of the examples that I had lived through were like, I remember in 2016 when Tableau and LinkedIn took a bloodbath. Right. And that was like, everyone was very concerned about this very small pocket of software and what was ultimately going to impact each other. And all those things sold off for a little while. Or then there was a very big Covid thing where it was like, hey, the fundamentals of these businesses are going to change. Right. And therefore what all is going to happen. But this was the first one that was like, I guess dating back to 99, that predates mine, but the first one that was like, actually as simple as, you know, interest rates, inflation.

Yeah. It's just. Do you ever see anybody build a discounted cash flow model? Like, I'm like, I mean, I don't do that. As Deli has talked about publicly. I never look at these models, but I definitely watch my colleagues. And you change me to variable. I definitely could see what happens with Excel.

Yeah, yeah, yeah. That's interesting. So how did you internalize that? Like, what. What did you guys. How did you think about it? How did you act on it? Where are we now?

Well, we. I had started wanting us to avoid investing for the most part last summer and had some success or failures with my colleagues convincing them. Peter definitely also is a macro and is actually the best macro thinker that I know. Also believe that we're heading for a recession and inflation, et cetera. But there was so much momentum going on in the world that I don't think we were as disciplined as we should have been about ceasing investing and being really restrictive on valuations until about October. Then I think we did shift pretty fundamentally about not being willing to chase valuations that other people were willing to pay. Pay last year's I tweeted also, we were price takers. So basically, the company would set the effective valuation and you could either be in or out, and you could decide to compete at that price. But you didn't have a choice of resetting the price. Starting over the summer into October, we started saying, we're going to be disciplined on price and we're not going to chase valuations.

Yes, but counterintuitively, you also leaned into a handful. I mean, one that we worked together on, but you leaned in on a handful of opportunities that you saw outsized potential and what was going through that. I know at some extent accumulating advantages that go through these markets.

Yeah, I mean, to some extent we thought we had asymmetric. Those are all companies that we were previously investors in Ramp, for example, Kavak, et cetera. We leaned into pretty aggressively. We felt we had asymmetric information about the quality of the team, the caliber, the opportunity in the market, et cetera. We do like concentrated bets. As Founders Fund, we're probably most famous among LPs for concentrating our dollars. Two winning companies. It's a strategy that Peter and Brian and Napoleon here have really executed. It's not something I typically do, but fundamentally that's the founder's fundamentality is find winners and really double, triple down. And we felt like there was some opportunities to double, triple, quadruple down. So in some ways those are intellectually inconsistent. But also depends on timeframes. So these are all growth fund investments. Growth fund thinks in a three or four year time horizon season. My predictions about the current market are more like this month, this quarter, this year. So depending upon how you map to different time frames, you could come up with a different answer whether you should be leaning in or leaning back. I never wanted to pull back. For example, in seed investing, I love writing seed checks. That's my forte. I don't think there's any reason to adjust your seed strategy based upon macro dynamics because you're going to be building a company for six to 12 years in the future. Nobody knows what the world's going to look like in six years.

And it'll either work or it won't and it won't be because you paid 10 or 20 or 50 posts or whatever.

So yeah, I think we're going to be very aggressive in seed. I want to be as aggressive as ever funding seed companies. But by the time a series B kicks in, you need to be very judicious about what price you're paying for what risk.

Yeah. And it's interesting. So I guess the state of the venture landscape right now, as you think about it like so, so you lived, you started your career at the tail end of the, you know, whatever the Kramlex and Pierre LeMond and all those guys where. And then we've. I say that there was kind of the broadcast television days and the cable television days and now we're sort of in the streaming wars where what do you think is going on in the market at large? Like people are getting bigger or have gotten bigger over the last year. Do you think we're going to see a consolidation of brands that exist?

Yeah, I believe we've been, you know, vertically integrated. Other people have talked about it more elegantly, including one of my junior colleagues. Average written about this as well. I, I think this is like law firm error, like you have to be multi stage or it's going to be very difficult to compete. I think brands that were very successful with focus, like Maritech and the growth sector, more benchmark, et cetera, et cetera, are going to really struggle in this vertically integrated multi stage environment. I think a lot of the seed funds that were doing well, solo JPs, et cetera, were kind of relying upon artificial markups where everything was up and to the right for the last two or three years. They looked good on paper, but until those turn into true DPI or liquidity, they're not going to perform anywhere in your expectations. I mean those portfolios should be written down, divide by three just to adjust to the public comparables. They don't look so hot. So I think the trend of launching a new fund raising $100 million plus, boss, everybody think you're the coolest fund ever. That that trend is pretty much done.

Yep, interesting. I guess one, one other thread I wanted to go down was just investment what you look for in entrepreneurs and all that. And I think it's, I mean I'm mostly investing post product market fit and you're mostly investing pre product market fit. I, I invest in dot coms. You invest in, you know, people.

Right. That'd be true.

And, and so I feel like there's, I, I always love peppering you with questions about how you actually think about that and, and so maybe the types of things you're looking for in entrepreneurs in general, like what makes people really spike. Do you want to be able to write a check into them?

Yeah. So my preferred course is to invest on a team and a keynote deck and nothing else. No business metrics, no product even sometimes, but basically nothing that another investor can kind of evaluate. Once there's metrics, there's a lot of smart people in our world and so I feel like that kicks commodity ties. But if you just force a decision on the deck in the team, there's very few VCs who want to write significant checks against that. So I'd prefer to compete on that dimension.

Is it mostly, mostly referral based that things are coming in or.

Well, that level, it's often not a referral. I have to intercept before anybody else gets involved because then some of them are still raising rate. Yeah, I prefer like nobody else being on the cap table ideally. That said, definitely we'll look at investments from highly qualified referrals or even occasionally from a Twitter, a random tweets, et cetera.

Your DMs are about to be just a nightmare.

But in any event, there's always a spark. So the thing that leads me to want to write a check is a spark. And the spark can be different and in fact is different with different founders. But I have this reaction like, oh my God, I have never seen anybody like this before. And it could be like, this is the greatest salesperson I've ever met. This is the greatest storyteller I've ever met. This is the most tenacious person I've ever met. This is the smartest person I've ever met. They're very different. But there's this year that perks and I'm like, holy cow. If I don't feel that, I usually don't want to, almost never want to invest. The thesis behind that is if you think about how heroic it is to create a business in a proverbial garage with a co founder and say, I'm going to reinvent the world, I'm going to reinvent society, I'm going to reinvent an industry that's like borderline irrational. And so my analysis over 40 years is the only people who actually reinvent the world world have some herculean ability in some dimension that's not normal. Otherwise the chance you're going to reinvent the world rounds to literally zero. So I don't want to be investing in zeros. So fundamentally I need that spark or I won't write the chap. Another way that does resonate with me is Balaji wrote this. Well, he taught a class at Stanford called Startup Engineering where he expressed this concept in an intellectual maze that later Chris Dixon cut and paste into a blog. The founders who can walk you through the intellectual maze from starting to success instead of failing Failure are very rare. And when you meet a founder who can literally draw that map, the treasure map for you, I would also invest in that.

Yeah, got it. Well, the good news is Chris won't hear this because he blocked me a long time ago on Twitter. You don't have to worry about that. The copy and paste thing, it's interesting. So is it some specific spike that just. Is this totally intuitive to you? Is it something that you think can be imparted on people having? Is it pattern matching over time? How do you think about that?

I don't know. It's definitely the hardest part of venture capital to teach. If I could teach it to more of my colleagues, I would. If you develop this kind of spidey sense, I think you can be a successful Investor, period. And you're ready to write your own checks. So if someone shows this propensity, I would embrace them, fund them, give them money for their own fund or try to recruit them here to Founders Fund. So it's pretty rare where you can teach some things around pattern matching. So for example, we recently funded a founder who's about 20 years old who I met on a Zoom call. And my first reaction was like, oh my God, he's another Delian. It's like literally like another Delian as a good thing. So I called up Delian, I'm like, you have to talk to this guy. And he's like, why? And the idea sounded kind of crazy, but I'm like, this guy is literally you. And he Delin didn't believe it. Then he started talking to him on the phone. He's like, oh my God, he really is like me. So I found another Delian.

Oh wow, that's a. Yeah, well I mean then that's a pattern matching experience. Was, was deli. I mean in general, is that like, is that an arch type or. Obviously people are one of one in that. But like do you have a mental model for a lot of the people you go invest with or.

No, but when, like when you see it, there's like a trait. So for example, let's talk about a well known entrepreneur, Max Lovech.

Yeah, sure.

So I remember when I first joined PayPal, about three months later Reid Hoffman came up me and said, you know what's special about Max? No, I feel like a lot, but I don't know where you're going. He's like, Max is a first rate business mind paired with a first rate technologist. And in Silicon Valley there's almost none of those. Yeah. And like this, literally this conversation happened in January 2000. Yes, January 2000 or January 2001. And so if I find someone who's a first rate technologist and a first rate business mind, I would definitely invest. Because I now watching 20 years later, I'm like, you're right, there's about five of those people. Or like Jack Dorsey is actually first rate business mind. First pretty first rate technology mind and a first rate design mind.

Yeah.

Which is why he's had like ridiculous success. Is the Venn diagram of those three things doesn't really exist. Maybe like Steve Jobs, you know, like there's not that many people who can do all three.

Yeah, interesting. Yeah, it's a. Yeah, it's very unique traits in people. I just have Delian written down here with a Question mark. I'm not sure.

Lots of questions about that.

Yeah, I know, I know. Yeah, we don't need to get into that, that there. So I guess because we're sort of on the, the Twitter thread and, and all this, you know, I'm sure you've given this answer before, but it's, it's interesting today as you look at the people that are derivative or, or have some lineage back to PayPal, just the number of people that are in the news today that are running, you know, different funds, different, different companies, all that, like, what was it that made that unique moment in time? How much was nature versus nurture of that specific experience that led to. I mean, Roloff's now running Sequoia, Elon's obviously his taste. Tesla, SpaceX, potentially. Twitter. Right, you're here. We can go down to YouTube. Max at a firm, it's just like, it's an insane. Everyone knows the list, but it's insane. Yelp, LinkedIn. Yeah, all that, like what, what was it at that moment in time or that, that even either brought everyone this talent together, Causation, correlation, all that.

I think the number one thing was Peter Thiel and Max Levchin were just extremely excellent at assessing and hiring. So they hired a lot of very talented people who had ambition. That was the number one drive. And it was really. Peter hired most of the non technical people and Max hired all the technical people.

And everyone was 25 to 35.

The age range probably was more like 21 to 35 with some exceptions. But fundamentally that's about right. So people also had a lot of energy still. Good point. In the career post PayPal experience, I think the bit, the difficulty of building PayPal, we had a lot of hostility from eBay, MasterCard, Visa, Amex. Later post 9 11, the Treasury Department all had issues with us. They were trying to kill us in different ways. So we had to confront a lot of challenges. And I think building a company under hostile circumstances led to bonding. So each of us bonded together. We saw, we got to wait, witness what each of us was capable of under pressure. So building a company under stress I think is a healthy exercise. And I think there were some lessons that we were ahead of the curve. Like David Sachs was ahead of the curve of creating a separate design team that the product people actually reported to. For a while, he was ahead of the curve in rebranding product managers as producers to create value. We had some very advanced data science that Max Levchin pioneered, including like some very pioneer techniques that everybody, he now Takes for granted, including like your captcha tests that he and a couple engineers invented but forgot to patent because we were too busy. A lot of techniques around human and math confusing human labor and math in a very clever equation. They got on the COVID of Wire magazine back in 2000 for inventing. So there was a lot of pioneering things. We did a lot of management philosophy, anti mba, promoting people hiring up and coming talent that are now taken for granted across the technology world. So we pioneered a lot of ideas that have spread and that's kept us quite relevant.

Yeah, interesting. It's amazing just all the stuff that's come out of it. Well, the last one I had, obviously corporate takeovers of PayPal mafia has been in the news lately. So you're going to buy Berries Takeover.

Yeah, I figured it, you know, I have to. Eli can afford Twitter, you know, I need to find something I could afford. Good.

Well, we're excited.

And the only thing I use more than Twitter is probably berries. So I figured I should just buy it. No, just kidding.

It's much healthier for your site.

I already have like three jobs. I'm like ambassador to my Miami, the CEO of a company and you know, serve on the board of like 18 companies. As an investor. I don't have, I don't have time to run Berries, you know, as a side project.

I think, I think that's probably a safe, safe thing. How do you actually make all that? I guess last one. But how do you actually make all that time work? Like how do you manage your day to day across? I mean you essentially have three full time gigs, right? Yeah.

At least. Yeah, I teach Barry's for fun. So I think the key is to have skill set and prioritization. This is like an executive trait that developed 13 years running companies which is basically what are your priorities and allocate your time against your priorities. Mapping. I think most people do not map their priorities in time well. So I have this thing called a calendar audit that I use with CEOs which is I ask them to go to whiteboard and list their top three priorities on the left column. Then we go pull up their Google calendar and we compare what percentage of time do they actually spending. So it's three parties and they never really tie map.

Yeah.

Like for example, people say recruiting is my number one party. You probably hear this.

Yeah, totally.

I met probably one founder in my life who actually makes recruiting maps time based. So I'm always constantly doing this, like constantly. Like every day in the morning I wake up and do This. I do this in my interpersonal life, which drives some of my friends crazy. I do this professionally. I do this with like fitness. I'm always like triaging time against priorities.

Yeah.

And that's how you get a lot more done is really forcing yourself to prioritize strictly and then allocating the time to make sure it's in alignment and then you get a lot better output. Interesting.

Good deal. Well, anything I didn't hit?

Oh, yeah. We could talk forever.

Yeah, I know. This is fun. Thanks for. Thanks for doing this. A lot of good stuff that I hadn't heard yet.

So.

Yeah, I really appreciate you doing this and I'm excited for this week. I don't know what percentage is going to be boondoggle lessons. I mean, it's nice to actually have the first week real. I think this is the first like kind of in person event that sort of happened in a way pre Covid. It feels like.

Well, not people live here. Like we've had Basel, you know, Epic, Ultra, if you like, into music. So tech weeks of pretty substantial operation. F1 will be a substantial operation. I'm excited because I think unlike many conferences, in many environments where people go for conferences, deli and I think we can get between 10 and 20% of the people who come here convert. Yeah. So that's my real goal is prove that Miami is the center of gravity and technology and then move people here. That reinforces that.

Well, thanks for doing this.

Pleasure.

All right. That concludes the 13th episode of three cartoon avatars. I have a Miami dinner party to get to. So. Yeah, we. We only could make it whatever. However long. This is a couple hours. Definitely our longest one to date.

Nikita, given this is the last time that you can foreseeably tease the app before it actually exists. Should we do we do one last attempt at you telling us what you're working on?

Yeah. The name of the app is.