20VC: Why To Win in AI, Investors Need to Change Their Approach | Why VC is Run by Principals and Associates and is a Broken System | The Bull Case for Anthropic & Whether Deepseek Changes Their Strategy with Nabeel Hyatt @ Spark Capital

Summary

Podcast Summary: The Twenty Minute VC (20VC) Episode Featuring Nabeel Hyatt

Title: 20VC: Why To Win in AI, Investors Need to Change Their Approach | Why VC is Run by Principals and Associates and is a Broken System | The Bull Case for Anthropic & Whether Deepseek Changes Their Strategy with Nabeel Hyatt @ Spark Capital
Host: Harry Stebbings
Guest: Nabeel Hyatt, General Partner at Spark Capital
Release Date: February 3, 2025

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Introduction

In this enlightening episode of The Twenty Minute VC, host Harry Stebbings engages in a deep conversation with Nabeel Hyatt, a seasoned General Partner at Spark Capital. Nabeel shares his insights on the evolving landscape of venture capital (VC), particularly in the realm of artificial intelligence (AI), and critiques the current structures and practices within the VC industry.

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1. The Need to Evolve Investment Mindsets in AI

Adapting to AI's Unique Challenges: Nabeel Hyatt emphasizes the necessity for investors to shift their traditional investment strategies to accommodate the unique and rapidly changing dynamics of the AI sector. He states:

"I’m really concerned that actually the way that we’ve always invested, maybe more spreadsheet SaaS investing is going to make us dinosaurs if we don’t move with the times." [04:12]

He argues that AI presents "mysteries" rather than solvable "puzzles," requiring a more artisanal and founder-centric investment approach.

Founder Market Fit vs. VC Market Fit: Hyatt introduces the concepts of "founder market fit" and "VC market fit," highlighting the disparity between what founders need and what current VC structures offer. He notes:

"And this market for AI is wildly different. I don’t think anyone would argue it’s not wildly different." [05:46]

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2. Critique of the Current VC Structure: Principals and Associates

Industrialization of Venture Capital: Hyatt critiques the prevalent VC model dominated by principals, associates, and junior General Partners (GPs). He asserts that this structure prioritizes personal career advancement over genuine investment in startups:

"The industry today is run basically by principals, associates and junior GPs. A principal is not actually waiting for an exit, they just want a promotion." [00:00]

Consequences of the Broken System: This focus on turnover and promotions leads to a lack of deep, meaningful investments. Hyatt explains:

"If you are managing a firm that needs to be very drastically reshaped for this new age, LPs find instability very disconcerting." [07:34]

He believes that the slow evolution cycle of VC firms hampers their ability to adapt to the fast-paced AI market.

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3. Investing in Puzzles vs. Mysteries

Definitions and Implications: Using Greg Tre's analogy of "puzzles versus mysteries," Hyatt differentiates between incremental, solvable problems (puzzles) and complex, uncertain challenges (mysteries):

"Puzzles are this thing that you can use that raw horsepower to solve. And mysteries are you have to go on the journey." [05:46]

Current Investment Trends: He observes that the recent B2B SaaS boom was characterized by puzzle-solving, which doesn't adequately prepare VCs for the enigmatic nature of AI innovations.

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4. The Fast-Changing AI Landscape and Its Impact on Investing

Speed of Innovation: Hyatt underscores the rapid pace of AI advancements, which renders traditional investing metrics like revenue milestones obsolete:

"AI is just completely blown that out of the water. And we see multiple products hit 10 million ARR in a couple of months." [09:53]

Sustainability of Growth: He cautions that such explosive growth rates may not be sustainable, predicting:

"Yeah, that will probably be dead in two years." [09:59]

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5. Evaluating Founders and Companies in the AI Era

Beyond Traditional Metrics: Hyatt advocates for a deeper evaluation of founders beyond quantitative metrics. He emphasizes understanding a founder's vision, adaptability, and ability to navigate uncertainties:

"You need to have good taste, especially in this world, and you have to be very fast." [27:18]

Rejecting the "Packaging Industry" Mentality: He criticizes the notion that venture capital is merely about packaging and flipping deals, labeling it as detrimental to genuine innovation:

"We build projects selected to be spread out when growing with authentic interest." [12:03]

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6. Sustainability of Value in AI Startups

Continual Innovation: Hyatt stresses the importance of startups continuously innovating to sustain their value amidst AI's rapid evolution:

"If you are not reinventing yourself, trusting idea, deep seek." [31:33]

Barriers to Entry: He discusses the necessity for startups to establish strong competitive barriers to ensure longevity and prevent being outpaced by competitors:

"You have to build a firm that can kind of like grok to that." [07:30]

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7. Mentorship and Team Dynamics in Venture Firms

Personalized Mentorship: Hyatt highlights the significance of tailored mentorship within VC firms, focusing on individual partners' strengths and fostering genuine relationships:

"It's really the journey of trying to get to know another person and trying to figure out what their superpowers are." [20:24]

Removing Politics: He argues that minimizing internal politics is crucial for effective decision-making and maintaining a focus on investing in exceptional companies:

"You have to work with a point where you people start with respect." [20:16]

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8. Opinions on Market Size and Product Centricity

Market Size Skepticism: Contrary to traditional VC practices, Hyatt downplays the emphasis on market size unless it's evidently too small:

"We don’t talk about or look at market size at all unless it’s. Sometimes there’s a confirmation that it’s a small market." [32:14]

Product-Centric Investment: He prioritizes product innovation and the founder's ability to execute over mere market potential, advocating for investments in companies that demonstrate unique product offerings and deep expertise:

"You’re trying to figure out if they're designed to innovate, and how they're going to keep doing it." [34:27]

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9. Future of US and Europe in the Startup Ecosystem

Optimism About the US Market: Hyatt expresses strong confidence in the US as a hub for innovation, attributing its robust ecosystem to Silicon Valley's concentration of talent and resources:

"I am incredibly bullish about the long term of the US Right now." [57:35]

Challenges in Europe: He points out the difficulties European startups face, such as harder fundraising environments and intense competition for talent, making Silicon Valley the preferred destination for ambitious founders:

"Why are you not in San Francisco. Forget the opposite case." [59:14]

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10. Personal Insights and Advice for New Investors

Navigating Uncertainty: Hyatt advises new investors to embrace uncertainty with confidence, understanding that the venture landscape is constantly evolving and requires adaptability:

"Venture is not a fixed game. It is more a creative exercise than it is a maths exercise." [66:52]

Importance of Storytelling: He emphasizes the role of storytelling in fundraising, encouraging founders to craft compelling narratives about their vision and future impact rather than relying solely on numerical projections:

"It’s storytelling. It’s always storytelling." [60:53]

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Notable Quotes

• On the Broken VC System:

  "The industry today is run basically by principals, associates and junior GPs. A principal is not actually waiting for an exit, they just want a promotion." [00:00]

• On AI Investment Challenges:

  "AI is just completely blown that out of the water. And we see multiple products hit 10 million ARR in a couple of months." [09:53]

• On Mentorship:

  "It's really the journey of trying to get to know another person and trying to figure out what their superpowers are." [20:24]

• On Product-Centric Investment:

  "You’re trying to figure out if they’re designed to innovate, and how they’re going to keep doing it." [34:27]

• On Storytelling for Fundraising:

  "It’s storytelling. It’s always storytelling." [60:53]

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Conclusion

Nabeel Hyatt provides a critical and forward-thinking perspective on the current state and future of venture capital, especially within the AI sector. His emphasis on adapting investment strategies, fostering genuine founder relationships, and prioritizing product innovation offers valuable guidance for VCs looking to navigate the complexities of a rapidly evolving market. Hyatt's insights challenge traditional VC paradigms, advocating for a more thoughtful and founder-aligned approach to investment in the age of artificial intelligence.

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Listen to the full episode on YouTube by searching for "20VC" or visit www.20vc.com for more information.

Transcript

[Nabil Hyatt]

The industry today is run basically by principals, associates and junior GPs. A principal is not actually waiting for an exit, they just want a promotion. Man, we are in the industrialization of startups playbook land where everybody's trying to churn out some piece of ridiculous arbitrage every week in order to get through the end of their incubator and raise their seed round. There is absolutely a belief that too much capital can mess up a company.

[Harry Stebbings]

This is 20 VC with me, Harry Stebbings. Now, our guest today has been a friend of mine for about eight or.

[Unknown]

Nine years, if you can believe it.

[Harry Stebbings]

He's very modest and so he doesn't really want the intro to be about him. So I'm gonna leave it with Nabeel Hyatt is a general partner at Spark Capital. Spark is one of the leading firms.

[Unknown]

Of the last decade with portfolio companies.

[Harry Stebbings]

Including Twitter, Anthropic, Coinbase, Affirm, Discord, Deal and more. And I do just want to say.

[Unknown]

Again on Nabil, Nabil helped me, advised.

[Harry Stebbings]

Me, was a friend when the show was very small and no one cared. That to me is the sign of true kindness.

[Unknown]

And so I really appreciate.

[Harry Stebbings]

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[Nabil Hyatt]

You have now arrived at your destination.

[Unknown]

Nabil, it is so good to have you here, dude. I'm also excited because you said before we have quite different views and that.

[Harry Stebbings]

Always makes for a great show.

[Unknown]

So thank you for letting me turn a coffee meeting into an interview.

[Nabil Hyatt]

It's showbiz, man. You're doing your job. I get it.

[Harry Stebbings]

Dude. It is great to have you here.

[Unknown]

Now I want to just dive right in. You said to me your single biggest concern right now, or sorry, something that you're thinking about is how we need to change our investing mindset in new world of AI. I'm really concerned that actually the way that we've always invested, Maybe more spreadsheet SaaS investing is going to make us dinosaurs if we don't move with the times. How do you think about this and the mindset shift that needs to happen in investing?

[Nabil Hyatt]

Well, I think it's happening already whether we like it or not, right? I think we can't really preach that a founder is supposed to adapt to a market and understand that the market is there. There's a thing called founder market fit and there's also frankly a thing called VC market fit. And this market for AI is wildly different. I don't think anyone would argue it's not wildly different. And then the question is, in what way is it different? And we had a B2B SaaS amazing, wonderful bull run in 2021 and a little bit afterwards, and I think we got really good at. Like, Greg Tre uses this phrase of puzzles versus mysteries, which is just like puzzles are this thing that you can use that raw horsepower to solve. And mysteries are. You have to go on the journey. There's like fog of war and you cannot work it out ahead of time. In many ways, the B2B SaaS blow up of that era was all about the industrialization of venture capital. It was all about figuring out all of the puzzles needed to hire 100 associates to do all of the work, to figure out exactly the right SaaS metrics and then grind it all out. And no one has any idea what a model is even going to do in a week. So I don't know how that isn't a mystery. And so I think you have to build a firm with that set of talent.

[Unknown]

Can we invest in mysteries alone? Puzzles, they're kind of doable, but challenging the mysteries. This is what I find so challenging, which is like the world was turned upside down by deep seek.

[Nabil Hyatt]

Yeah. And something will happen again in three months. You know that.

[Harry Stebbings]

I do.

[Nabil Hyatt]

Yeah.

[Unknown]

And so how do we think about adjusting to investing in a world of mysteries when we've been so used to puzzles?

[Nabil Hyatt]

How long have you been doing this?

[Unknown]

The show? 10 years.

[Nabil Hyatt]

Yeah. So I've been a VC for a little bit over 10 years. So we're in the same generation in this sense of trying to think about unpacking this puzzle. I was a founder beforehand. I would say the early stages of venture capital, the real early stages of venture capital, if we think about the beginning of Sequoia and so on, that was all mysteries, man. That wasn't puzzles. And so I think the truth is, it may sound incredibly old school, but it's going back to the way things were really done before. It is an artisanal business. There's a reason it's an art, and that's because.

[Unknown]

But do you actually think so? Like, if we look at your ramp or your Brex or any of the kind of successful companies of kind of the last era, so to speak? Yeah. Serial founder, tick, pedigree founder tick in a good big market, tick knowable, go to market knowable, customer voice. This is completely different.

[Nabil Hyatt]

Yeah, it is. I am not Saying that if you built an awesome strategy to dominate the world and therefore you're probably regarded as like a tier one brand or whatever you were four years ago, you're probably dead without completely changing. And that was exactly the right strategy for that era. You go tick down the box. We were kind of like in late stage capitalism for startups, everything was red ocean and so it was all about optimization and speed and like minor arbitrages. We are now in a world where like you need rampant creativity inside of an org, you need like the all of it is in the nuances. And so you need to build a firm that can kind of like grok to that.

[Unknown]

Do you think many venture firms are adapting in the way that they need to?

[Nabil Hyatt]

No, no. You know, this cycle, because the cycle in VC of evolution is like horribly, horribly slow because it also loops back to LPs. They don't get to act on their own, right? They don't get to just like make a decision tomorrow. They have to go back and raise another fund against a new mandate, which probably requires like, I don't know, maybe you turn over half the team.

[Unknown]

By the way, what's doing what's right for the firm may actually lead to bad messaging to LPs. Because if you are managing a firm that needs to be very drastically reshaped for this new age LPs find instability very disconcerting. That is a red mark in your box.

[Nabil Hyatt]

That's right.

[Unknown]

And it may take three years to show that transition worked. By which point they will have churned because they will have gone in a beal. You changed your team entirely. You move this, this and this next fund.

[Nabil Hyatt]

No, LPs want stability at a time when there's rapid change. So it's the wrong market fit. You have to ask who's the person making that decision at that firm? So if they were sitting on all the wonderful amazing B2B SaaS markups from four years ago and so now they're the head honcho at that place, do you think they're really making this call?

[Unknown]

So what should we be doing? I learned from amazing guests like you on the show, I am building a firm. When we think about reshaping our firms to a new world of venture and startups, what needs to be done?

[Nabil Hyatt]

I think you need to think like a founder. I think you need to be okay with a small team that makes subjective bets and think about the craft of what a founder needs today, which is that honestly, what a founder needed four years ago was a lot of playbooks. You needed every single arbitrage. Y simple way to make everything move a little bit faster. The conversations I have founders calling me about now after a board meeting, before a board meeting, they are all unknowables. They are all trying to like, figure out what is the new user experience that I should use when models go multimodal and like, there are explorations. Not that, not necessarily. I have the answer for. They're not coming to me for answers. It's a sounding board. Right. And they need a sounding board of board members that are actually using their products and actually have a curiosity to use the rest of AI products and get more native instead of just, you know, watching Twitter and looking what gets markups.

[Unknown]

In terms of the heuristics for how you define quality, a lot of traditional investments are made with, oh, they're at X million in error and it's been 18 months to X million. That was a classic, like 18 months to $10 million gold standard.

[Nabil Hyatt]

Yeah.

[Unknown]

AI is just completely blown that out of the water. And we see multiple products hit 10 million ARR in a couple of months.

[Nabil Hyatt]

Yes, that will probably be dead in two years.

[Unknown]

So how do we think about revenue as a heuristic for quality?

[Nabil Hyatt]

Can I push back a little bit on even or step up one level from even that? I think, why did these simple heuristics Revenue? You can pick one. You have to hit 10 million. You can pick another set of metrics or dashboards that turn green so that you can get your partnership to agree to let you go do the thing you really want to go do. How did those things evolve? Because that's not how partnerships were 20 years ago. So why did that happen? That happened because you added people to the partnership. You have to look at the core of the org and then work downstream from that. What happens is if you take a room which used to have seven partners, and that room becomes 25 partners or 30 partners or 500 partners at a certain set of firms, like, what really happens? And I think the industry today is run basically by principals, associates and junior gps. That incentive system is what we're all swimming in, which did not exist 20 years ago. Why does that matter? Because what does a principal want? Well, a principal is not actually waiting for an exit. They just want a promotion, man. Like, they just want to move up.

[Unknown]

The ladder for a better job. They want to bounce to Sequoia or bounce to be a GP somewhere else.

[Nabil Hyatt]

And the industry have moves fast enough that they're not going to wait until an exit or Cash to get that other job. You're giving them a promotion or you're giving them more respect in two years or they're going to try to go somewhere else. That's better. Right. So what does that mean? Well, that means if I want to get a promotion and I'm inside of Shmooby Schmoobie VC firm, then I need markups. So if I need markups, how do I quickly get markups? I figure out what the guy one stage after me is interested in. And so my job is not really to go figure out what the future is, to go figure out how to be aligned with a founder and do great work or figure out how to get really deep with AI and figure out. It's to go have a dinner with Kotu or whoever else and figure out what they're into this month and then invest in it one month earlier, get the markup four months later so they can get a promotion. And that's basically the entire industry right now.

[Unknown]

Jason Lamkin always says that venture is a packaging industry. I need to get this, package it up and then shift it on to the next person.

[Nabil Hyatt]

Yeah.

[Unknown]

You hate that analogy.

[Nabil Hyatt]

I hate that analogy deeply. Well, to a certain extent you understand.

[Unknown]

It, you just hate it.

[Nabil Hyatt]

I understand it. I don't think it's good for startups and I don't think it's good for founders. And I also, maybe more importantly than just some kind of value judgment, I think it's a losing strategy when no one knows what's about to be hot in nine months without being very, very deep in the work.

[Unknown]

And so a winning strategy, respectfully, is back. Amazing founders with unique insights and go long.

[Nabil Hyatt]

Some of the hardest sports are the ones where the things you say out loud are easy to say but hard to execute.

[Unknown]

Yeah. I remember Bruce Dunleavy, I said to him once, what do you think of all of these transitions in the industry and how difficult it is? He said, venture is an incredibly simple business. Very hard, very simple, very simple. And I always kind of go back to that. So that's not the right way to do it. You mentioned that kind of principals and associates running firms. Totally agree. Is it not also just the explosion of startups that we actually have meaning? We need simple heuristics to gauge yes or no. Worth meeting. Not worth meeting. There are so many companies. If you don't have a framework for, is it interesting enough you're just going to be meeting everyone?

[Nabil Hyatt]

Yeah, but principals and associates don't even solve that problem. Right. You have 100x increase in number of startups and you added like nine principles. I'm sorry you didn't cover the industry suddenly unless you're doing pattern matching. And I think the more fundamental question is, can you pattern match in this market? I don't know that the Brita filter version of investing is the right way to evaluate or at least I'm not executing the way that I want to do my job and the way that I think my partners should do their jobs together in that kind of like trying to get win the coverage game.

[Unknown]

What's the Brita filter of investing?

[Nabil Hyatt]

You know, take all the founders, put them in the top and then you hope you sift out a handful of the good ones at the bottom. And that's a very inbound, inbox oriented view of the world. And if you do that, then your job is to read as much as humanly possible, market as much as humanly possible, bring everything into the top of the filter and then do a really, really fast job filtering this incredible amount of inbound in order to be very, I would say call it like transactional nature. Get through the funnel as quickly as possible, say no as quickly as possible to move on to the next one.

[Unknown]

When you reflect back on your prior portfolio in the last decade, was that a pattern matchy approach that was successful? Have you had to change?

[Nabil Hyatt]

No, I also think I was really badly shaped to be an investor in 2021. I mean, I think we got lucky. Spark was started in the early Web 2.0 era, like right at that age in the same cohort as USV and Benchmark 2.0. The beginning of the Girly era and a handful of other firms that I think all treated mobile really well and did mobile really well, which felt similar. You didn't know what the metrics were supposed to be. It was a wide open craz world and you're like looking at something that was maybe a fart app in the morning and then Uber in the afternoon. Like it was an insane situation. I think our DNA was very fixed by that. Our values were very set by that navigation. And I'll be the first to say that, like I don't know that we navigated the B2B SaaS era four years ago, this kind of industrialization. We didn't do the things that a lot of our peer firms did. Like we had been very successful. We could have very easily raised $5 billion. We could have very easily tripled or quadrupled the size of the team and we didn't do that. We Stayed seven people, six people partnership. We all write checks. We all do work with our founders. We like the service work. I would argue that made our job a lot harder four or five years ago, to be honest. And it makes it a lot easier now because we feel very well shaped for. For this phase.

[Unknown]

Do you agree with Dougli that we have seen the transition of venture from a high margin village community to a low margin commoditized industry?

[Nabil Hyatt]

I think he is executing the strategy of Sequoia as if that is true and still trying to keep the rest of it compact and true. Right. They're trying to excuse track where they're doing all the things.

[Unknown]

I would argue actually they're in the same vein as Spark, actually, which is kind of sitting in the middle. Like that seed fund is 190 million.

[Nabil Hyatt]

Yeah, that's what I was going to say.

[Unknown]

Their growth funds are like a billion and a half or two. Don't get me wrong. It's a huge amount of money combined as is Spark, by the way. I'm not going to let you just get away with that one. But it's not the Mega. Mega.

[Nabil Hyatt]

That's right.

[Unknown]

So I think they kind of sit in the middle. But do you agree that it's moved to this low margin commoditized industry?

[Nabil Hyatt]

I think when we look back at this specific era right now, it will not feel that way.

[Unknown]

Why?

[Nabil Hyatt]

Most of the firms are executing strategies that are not particularly effective to this market. That means you're actually only competing with a smaller subsegment of people on any given deal.

[Unknown]

One thing I find challenging is it is very difficult to win great companies when you are optimizing for performance and your competitor is optimizing for deployment.

[Nabil Hyatt]

That's true.

[Unknown]

And we've lost two deals in 24 months where literally they trebled the price and went to common stock. And I'm like to the founder, you should take it. It's free money. Yeah, but that is a different game.

[Nabil Hyatt]

That is a different game and we won't win all of those. And we absolutely. I have that same list. I have a same list of FOMO deals that you wish you had done and then the price just got insane and got crazy.

[Unknown]

Were your best deals all highly priced?

[Nabil Hyatt]

Yes. I'm not a value investor.

[Unknown]

No, I get you. But everyone often says, oh, the hottest deals don't turn out to be the best. Often is said it's the ones where they weren't competitive at all actually. And then they turn into something great.

[Nabil Hyatt]

I think we forget, dude, you're on a podcast.

[Unknown]

Just give us a sound bite. Like just.

[Nabil Hyatt]

Yes, I reject that notion. This industry is all about exceptions. That's literally the industry we're in. Why are we building a bunch of playbooks if the whole thing is about exceptions? You have to build a firm and as a founder you have to be okay with the idea that there's gonna be an exception next week to all the knew before or else you wouldn't be doing this.

[Unknown]

Do you give a shit if something's one of many? And what I mean by that is we're looking at a company now and I'm fighting with someone on the team about it because I'm like, it's not a generational defining company. They're one of 50 data providers. I'm just not interested in being one of 50. And they're like, well there's 15 data providers that make over a billion dollars a year. Good response back. Fair enough. If you're thinking about enterprise value, but like being one of many others, do.

[Nabil Hyatt]

They have some competitive barrier to entry, some reason that they might build be a lasting institution? Or is it an iceberg in the.

[Unknown]

Sun, lots of boats in the sea. They all have their own individual slice. But it's a data provider like all the others are.

[Nabil Hyatt]

I think that one feels like an easy no. If you just don't feel like they have a competitive edge, then that's hard. Oh, all these things are going to be big. It's maybe not big enough or maybe if a small enough fund. But we're trying to invest in companies that we hope will be public long lasting institutions decades from now. You have to believe that they have some enduring value that will last for a long time. Right.

[Unknown]

You guys move a lot of money on large checks, especially growth checks.

[Nabil Hyatt]

Yep.

[Unknown]

Can you do that on mysteries where companies can be turned upside down overnight?

[Nabil Hyatt]

So we operate an early stage fund in a growth fund. And how big is the early.

[Unknown]

How big is the growth?

[Nabil Hyatt]

The early stage funds a little over $700 million and the growth is double that.

[Unknown]

I mean it's not small for an early fund, is it?

[Nabil Hyatt]

It's seven partners. I didn't say you have to write small checks. I said you have to be subjective and come from first principles in your investing. And if you're spending all of your time trying to set up checklists for what is okay or not to bring into a partnership, if you're spending all of your time trying to work the politics of the org in order to get something done, that is all taking away from trying out the fundamental truth of whether this set of founders with this amazing idea is going to turn into something great. That's what I mean.

[Unknown]

Love that. How do you remove the politics?

[Nabil Hyatt]

How do you remove the politics? I mean, I think Venture, somebody said at one point, you probably know the quote because you're good with quotes. Venture is the most politics per human inside of like almost any org. And I think there's a reason for that. Right? The reason for that is that all of the measurements before exit are all false prophets until the thing is actually return back capital and you see this wonderful enduring institution, it's all just games and packaging. And that really means that if I internalize trying to build up respect with my peers in order to be thought of as being able to do good deals. I'm in a packaging product business for just my peers. So you just have to work with a point where you people start with respect.

[Unknown]

How do you approach coaching and mentorship within a partnership? How do you think about coaching in a partnership effectively?

[Nabil Hyatt]

Yeah, it's really hard because people call this an apprenticeship business. But in many ways, especially the way that spark does our job, it's more of a process of self actualization. If I was trying to be Bijan when I joined or trying to be Santo when I joined, I can't be the like mini me version of that person. And so I think the mentorship has to come from that phrasing. It's really the journey of trying to get to know another person and trying to figure out what their superpowers are, what are they, how are they going to be the best partner to a founder? How are they going to fall in love with a founder? Because a lot of this really is falling in love and then pulling that out of them. If you're doing a good job with somebody, then three months in, six months in, you're noticing things about them, their pattern of investing, their weaknesses, why do they, what are the bad deals they fall in love with all the time? Like we call crap on each other all of the time. I would not want to do this alone because I actually, actually think my partners know me better than I know myself. And they're like we use a phrase internally being your brother or sister's keeper. We actually feel like the debate is not a political fight to try and get something approved. It's a room that's a search for truth.

[Unknown]

When did you doubt yourself most as an investor?

[Nabil Hyatt]

Covid era it's kind of the worst version of venture of what I really didn't want startups to become which is everything was pushing to zoom. There's a reason we're doing this in person. I like making eye contact with people. I like connecting with people. It's the reason I like doing this. I like being service with founders. Founders. Well, I can't be in service with founders and try and do work with them if all we're doing is we're on zoom for an hour and then I'm just write a term sheet eight hours later. Which was that era I thought about.

[Unknown]

Leaving the quality of your investments go down. Do you think?

[Nabil Hyatt]

I didn't write checks. The best thing I did during that era is while everything was being marked up like crazy and everybody was having go go a couple of years, I wrote the fewest checks I've ever written in my career. I think I wrote like two checks in a year and a half.

[Unknown]

Do you think Sparks went down?

[Nabil Hyatt]

I think our quality of investing went down on the early stage team and has since recovered. Our growth team navigated it quite well. I think they actually did an incredibly good job of processing things. And there's a reason we have a separate growth team and an early stage team. Because I do think they're different sports man. They're just different animals and we do them in our spark way.

[Unknown]

Why do you say that? Because I have someone incredibly smart like you and then I have someone incredibly smart like Kush who tells me the opposite. Why do you think that? They are very different and actually it requires different teams.

[Nabil Hyatt]

I just watch what our growth team does and they do their job incredibly well. We talk about deals all the time. We talk in again, there are seven people. They're also a small team, but they can be a little bit more hierarchical. They can have principals, they can have associates, they can do more diligence. You can look at the numbers. You can call 25 customers. I'm not calling 25 customers. Most of the time I'm investing. There aren't 25 customers. And so it's a different process, it's a different muscle. I'm not saying I couldn't do it, but in a world where, as you said earlier, just doing the job simply at the highest possible level is incredibly hard, why would I try and play two sports? You can try and be Jordan and play basketball and baseball.

[Unknown]

Some say that you actually become a better early stage investor, especially with a late stage mindset. You know what later stage going back to this, you know what later stage wants. But you're also closer to public markets. You have A closer understanding of what makes a fundamentally great business.

[Nabil Hyatt]

Again, this is all amazing and wonderful pitches for 2021. Who knows what the public markets are going to like in AI in 7 years? What are you doing? And so if you spend all your time trying to internalize what the public markets are thinking about this month, you are absolutely going to make the wrong calls.

[Unknown]

What do you think of these VC armchair investors who love macro?

[Nabil Hyatt]

You just gotta hope that the cycle comes a background for them in exactly seven to 10 years when those companies want to go public. And if it does, they'll do great.

[Unknown]

You said service as a word quite a few times. Keith Rabois says on the show and very publicly, the best founders don't need the help of a vc. Do you agree? And how do you think about that in conjunction with service?

[Nabil Hyatt]

Look, I had a bunch of venture that I raised as a founder. I raised eight rounds of venture capital as a founder. I never had a horror story from a vc. I had nobody who was like terrible and horrible. I basically had mostly VCs that were fine. They fall into the Keith for boy camp. Like they show up to board meetings, it's okay. And I'm just gonna run my company. I just imagine that in any other context of life, if I had somebody who was on my team, anyone else on my team, and they were fine, what would be the feedback?

[Unknown]

Marriage. Actually it wouldn't be fine. Disastrous. That'd be good marriage.

[Nabil Hyatt]

If your executive assistant or your VP of engineering or your head of product was fine. So why are we accepting European, Why are we accepting mediocrity at that level? I think what you want is people who are engaged, who look at the details, who are invested emotionally, who want you to win and are doing the detail work to be able to not just give you armchair VC advice that they got from the one other board meeting they were in this week with the other hot company that they're in. Because every single startup is a different journey. And so until you get under the covers of what's really going on inside of this org, AKA how do these co founders fight, what are the problems inside of the executive team, then you're going to give different advice to somebody if you really understand them. And so it's worth understanding them if you can't. If you go out and raise, look, I've had really tough rounds to raise both as a founder and as a VC who's back to seed company or a Series A that's not working out well. So look, if you cannot find that amazing and wonderful VC that you think is going to be deeply engaged and use your product. Then go for the no op vc. Go for the VC who at least do no harm.

[Unknown]

Oh yeah, high price. Fuck off.

[Nabil Hyatt]

Fine, I get it. But where you flip that to being the goal? Mediocrity is the goal. That's not the goal. Every time you have an ability to have an investor or an employee or really anyone enter your orbit as a founder, your goal should be somebody who is going to be obsessed with you and and think about your mission and try and help you. Otherwise you shouldn't be engaging. And if you fail at it, fine.

[Unknown]

But many second time founders I meet say, listen, the thing I've learned about the first time is what I want from my venture investor is good money, good terms, get out of the way.

[Nabil Hyatt]

And again I just say they're setting their bar too low. That's the bottom line. Like they're settling for mediocrity because they're afraid of risk.

[Unknown]

And that's why it's important you do more marketing. There we go. I win this debate. Can you do that at scale? I mean, you do what, two checks a year?

[Nabil Hyatt]

Two to four at the most.

[Unknown]

But yeah, like two checks a year can't do many. You can't have high service and high volume.

[Nabil Hyatt]

Absolutely not. It's a model.

[Unknown]

What do you do when you lose faith in the founders?

[Nabil Hyatt]

Hopefully you have had many, many conversations before you get to that point. When I use a word like service or falling in love with a founder or being dedicated or loyal, that doesn't not come with tough love. That does not come. You use the marriage analogy. If you're just smiling all the way through marriage, you're not executing it right. You need to have tough conversations. And so yeah, sometimes you're having a tough conversation that you feel like that person has lost their way.

[Unknown]

When they've lost their way, what did you not see that you should have seen?

[Nabil Hyatt]

It hasn't gone well for mostly two reasons. The first is that they're conflict avoidant and I didn't pick up on it early enough. And it's very hard to pick up on early because you're going through a period where ideally you love them, they love you, there's not that much conflict, maybe until late term sheet or something like that, but there's not that much conflict. And then you go through 25 conflicts in the first month of the company or three months of the company and you realize that they're conflict avoidant, they're not facing the problems of that company. Because every company has a thousand problems. Obviously that's the first one you try to read for it, but you can get it wrong. The second one is that every founder is like, this is one of those things that I did not have as a framework 10 years ago. But after you make a bunch of mistakes and you look back on things, they can become more clear. Every founder, you want to move really, really fast. We all talk about execution speed. You can imagine somebody on the very, very far end of execution speed. We also want them to have taste and judgment. We also want them to be, especially in the world of AI, only taste is going to matter in the future because execution is just going to happen, right? So these two things are directly in conflict. If you are always the shoot first, ask questions later person, you probably are not really deeply introspective about the choices that you're making. You're just shiny penny running after whatever happened on Twitter yesterday. And if you are deeply, deeply, deeply full of taste, you didn't ship anything. Like you just sat navel gazing forever trying to find the perfect thing. And so the casting for a founder needs to match the opportunity of that startup. You have to have good taste, especially in this world, and you have to be very fast. But where you are on that spectrum is incredibly illuminating. You mentioned earlier you were just looking at a company that was like very, very Competitive N of 35, should I invest in this thing? It's like, well, that's an execution play. That person needs to be in the top 0.0005% on the planet of being able to execute. Because the roadmap ideally is probably pretty clear. And even if it's not clear, some competitor's about to do it tomorrow. And so you could see it and you can run faster than them. And if you can aggregate everybody's innovation that's happening industry across all 25 of your competitors, you will win. There's many other situations, especially for the deals that we do at Spark, which are often creating a new market that didn't exist before. But you have to have incredible your.

[Unknown]

Granolas of the world. Respectfully, I put in the incredible taste. Yes, I'm sure he's great at execution too, but there's real taste, real taste.

[Nabil Hyatt]

And I'd say granola is a great example of a situation where everybody else competing in that market would have taken the execution angle. They would have built a me too product. Slight arbitrage. Looks like Fireflies or any of the other things with a little bit Faster or maybe a chatbot in a slightly larger box or whatever it is. And they would try to run faster than their competitors. Chris, his product changed completely from the seed round to the Series A, which we led like complete reset, even though the internal metrics were okay. And it was because it didn't feel right to him. He could kind of like self inspect and realize it wasn't working. And that takes real taste. But he's in a competitive market, to be clear, and he knows it. Like he's got to be pretty high on the execution path as well.

[Unknown]

Oh my God. He's a hard combination of both, actually.

[Nabil Hyatt]

And that is where I think the best founders can manage and understand at any given moment what is the muscle that I'm using and how am I using it. I think the mistakes for founders is realizing that one I like got them wrong on one of these axes quite a lot. Or I casted correctly. Maybe you casted somebody who's very execution oriented with a good amount of taste. And then the market flipped. Something crazy happened.

[Unknown]

Well, this is what I was going to say, which is something crazy happens and the sustainability of value today seems to have completely eroded. And what I mean by that is something Crazy Happens and OpenAI release a new model and it just completely kills granola overnight or the data provider example that we have. I don't know if any of the large foundation models decide that actually that's the prime easy market for them. They have all the overnight the data providing goes and it just goes rolled into their core products.

[Nabil Hyatt]

Yeah.

[Unknown]

How do you think about sustainability of value in such a changing world?

[Nabil Hyatt]

I think you have to find a founder who is continually innovating. You can ask all the simple questions about barriers to entry and all the rest of it and have some decent answers. But the truth is, if you are not reinventing yourself, trusting idea, deep seat.

[Unknown]

Tells you that you've got no idea about barriers to entry.

[Nabil Hyatt]

I'm saying you have to justify it to yourself to go to sleep at night and maybe have some base where it says for right now, this is what I think the barrier to entry is. This is how I think their next year is going to be good. But some kind of compounding effect where we think no matter what happens after this year, it's ebay, they just launch a product and 40 years later the product looked basically exactly the same. And it's just fine. Those ages are not right now. It might. Those might metastasize inside of smaller vertical markets and AI in the next couple of years. But by and large it is a sea of speed and taste at the same time. Right now.

[Unknown]

Do you give a shit about market size? You said about kind of the market creation angle there. How do you think about market size? It's such a simple heuristic for investors to fall back on.

[Nabil Hyatt]

We don't talk about or look at market size at all unless it's. Sometimes there's a confirmation that it's a small market. If the guy's starting an ice cream truck then it's probably not for us. But usually if you're creating a.

[Harry Stebbings]

But with respect, I would still push.

[Unknown]

Back and say crumble one of the fastest growing businesses in America, which is the cookie business that is looking like a venture sized outcome at this point.

[Nabil Hyatt]

Starbucks was also a venture backed business. I didn't say they can't be good businesses. I said they're not spark businesses. Again, we're not trying to canvas the entire world for every single possible thing that we can invest in. We're not trying to be the Brita filter of venture capital firms that has to look at absolutely everything I need to do a good deal a year. That's the job. It's not that hard. It's incredibly hard to execute. It is a simple thing in its essence. And so if I try and win every single war across every single front, I will be average across the whole board. So we try to be good at what we're doing. We try to partner well with founders who want that product. We try to look for new market opportunities. Which by the way, in the world of AI is you can imagine why, like I'm a kid in a candy store right now. I'm like the most excited I've literally ever been in my entire career, including as a founder. Like it's just an amazing opportunity. And if you're asking what makes a new what makes it new market opportunity, I think it's you're looking for a new behavior. Looking for a new behavior where when you try it, it just like sears into your brain. You can't stop thinking about it. That's it sounds again sounds simple. But if you just do that, is this really a 10x better product? You just don't see that many of those. That simple thing you just don't see very often at all.

[Unknown]

You're such a product centric investor. I spoke to Kyle at the bot company, I spoke to Andrew at Descript, I spoke to Ritu before I really stalked the shit out of you. Very impressive. But everyone was like his product centricity makes him such a unique investor. And I thought it was just so interesting because product is the one transient element of investing. If you think about market people and product, it's the one thing that will really change. I mean, market can do, but often lesser people iterate around the same market. Why do you focus on the one that is so transient?

[Nabil Hyatt]

So you used market people and product as your three cores. I think if you just look at right now market, do we understand any of these markets? How fast are they all changing in the world of AI? They're all shifting like crazy. And who knows which ones are going to become commodity markets with absolutely no margin whatsoever anyway. So if it's a big market, maybe it was a big market two years ago and it's about to become a really small market. And the same thing in reverse. People is very interesting. And I think there are firms that do really good job at just making people bets. I think you have an instinct about people that just you get over the line and you make your bet on people.

[Unknown]

Thank you. Yeah, my turning down of Chris Granola and the precede shows that, doesn't it? Thanks, nabil.

[Nabil Hyatt]

Can't be 100% all of the time.

[Unknown]

Or Alex at Deal. Yeah, yeah. Or Christina at Banta.

[Nabil Hyatt]

I have my fair share of issues too.

[Unknown]

I just managed to bring the real best.

[Harry Stebbings]

Yeah, thanks.

[Nabil Hyatt]

And I don't think of product like, am I the product master? I think of product as an instantiation of what the founder does. So let me recast it a different way. How do we separate hucksters from good executors? Because they're here pitching us as VCs. The way we separate hucksters who do a good pitch from people who are real executors is you look at the thing that comes out of their hands. You look at the thing that this petri dish of humans has created in the world and you try and evaluate and ask questions against that. So when you say I'm a product investor, I would push back slightly. And that I've never evaluated a company by like looking at the product, using the website and being like, oh, this person should have a $15 million check. I don't think that's right. You look at the product and you try and learn about the humans behind the product by evaluating the product. It's the questions that you ask. Somebody like Kyle, who started Cruise, is now doing Botco and you ask him why he made the decisions he made in this thing that you are using. And that's where you can get A sense of who this person is and what they're going to do from there.

[Unknown]

I had an absolute fucking meltdown with the team the other day because I have like a seat. You're going to hate this, but like you fricking hate this. But like a CEO template of how we analyze CEOs. And they took that CEO template and put it on a CPO and asked the same things. And I'm like, that is criminal. Like we changed the template entirely. To what product decision are you most proud of? What would you most like to build? But you have constraints that mean you can't build it. What are you most embarrassed about building? And this is actually what I don't actually care, the specific answers. It's the way that they think around those questions.

[Nabil Hyatt]

That's right. It's the way we conduct any deep level of investigation on a person. You're not asking them like, give me your TAM answer and give me your margin answer. You're trying to figure out how they think about the things they're doing and what are the best. If you're talking about an early stage startup, what is the thing they have thought about the most? They produced a TAM slide or they produced something. They did that for the deck, for you. So they put what, two hours into that, three hours into that? Nowadays they probably sent it over to Gem or some other product and just had it spit out those slides to get to what they have been obsessed about. It's like this thing that you're using they've spent the most time thinking about. So it's where you're going to get the most insight into who the human is.

[Unknown]

How many companies do you meet a week? Honestly?

[Nabil Hyatt]

No. 20, 30.

[Unknown]

20 to 30 a week?

[Nabil Hyatt]

Sometimes, yeah. Email.

[Unknown]

Email on a call.

[Nabil Hyatt]

I don't do that many on a call. I probably one to two a day.

[Unknown]

Okay, one to two a day. How long do you have?

[Nabil Hyatt]

I think the one hour call is the worst call anywhere because it's like too short to get a real read and too long to get the kind of speed dating version of the world. So a half an hour. I'm just trying to figure out whether I like the person at all and I want to have a second call, right? And then I'd rather go from a half an hour to two hours. So you do the first one and you're just trying to get a read. Is there a kismet? Is there a connection? Is there any chemistry here? Do you feel it? And then after that it's like, yeah, we should Just, let's just go for a walk, man. Let's go have a conversation. Let's go really talk about everything.

[Unknown]

Will you ever invest if you haven't met them in person?

[Nabil Hyatt]

Probably not. There's some world where you met them five years ago. You know them quite well, you know. Chris from Granola is a prior Spark founder and so he was one of the first people I met after I joined Spark because I was supposed to go sprinkle growth fairy dust on him in New York and talk about growth marketing, growth hacking and all the rest of those metrics, things that I don't really aspire to now. And I said, you know, Discord, Jason, I knew for seven years we were founders together before investing in Discord and also smartly passed twice on Discord before investing. So like, you know, like, like a lot of long term relationships and a lot of short relationships where you pass and then spent time Cruise back in the day with Kyle, I passed. We did a huge deep dive on why I thought his business wasn't going to work. He disappeared for nine months and wouldn't return my emails. And then he comes back nine months later and he's like, yeah, this is, we've, we've pivoted. We've gone from trying to put, you know, aftermarket things on top of Audis and we're now going to build a full self driving stack. I'm going to show you a demo. You and like five other investors a demo. Because I really liked our last conversation. And so you knew somebody for eight, nine months, you've thought of how they internalize information and you really know them. Now that can't always happen with every investor. The last investment I did was a company called wordware and that was a very, very fast, very, very competitive. They had term sheets for quite a bit higher. But you know, I'm getting dinner with the founders, I'm going for walks in the morning. Like I met with those guys six, seven times before we invested. In the span of a week you don't have time, but in the span of a week because you care.

[Unknown]

Wordware, Granola, Descript, these were all pretty big valuations actually and pretty hot rounds they were. How price sensitive are you?

[Nabil Hyatt]

I'm not that price sensitive. I mean, there's always a number. We could go through the deals that we didn't do because the price got away. There's always a price where it just doesn't make economic sense anymore.

[Unknown]

But we're looking at a Series A now and it's like we put down like 10 on 60. And the founder's like, I want 100. And then the partner's like, we'd do 80. And I'm like, We'd do 80, but not 100.

[Nabil Hyatt]

I feel like for us, valuation is always a test on conviction. Like if you liked it at 60, but don't like it at 65, but.

[Unknown]

60 goes to 100 and that is different.

[Nabil Hyatt]

That is different.

[Unknown]

But 60 to 80 is not that different. And then 80 to 100 is not that different. Do you see what I mean? We can push it.

[Nabil Hyatt]

Harry, this is hard job. This is a hard job.

[Unknown]

What did you turn down because of price that you most regret?

[Nabil Hyatt]

Because we run a fund the way that we run a small number of investors, six investors with a $700 million fund is kind of broken in venture capital. And so what it means is usually it's not about valuation, usually it's about check size. So in our model, if you really believe in the company and you want to have the ownership that you have and you believe that they're at the right stage, then it's about whether you're going to write a $5 million check, a $10 million check, a $15 million check, a $20 million check. And so sometimes you say valuation, but I root back to maybe that founder is raising around and you don't think they're going to spend $20 million very well and it will mess up the company. There is absolutely a belief for me at least that too much capital can mess up a company. And so sometimes it's not about valuation, although obviously it's algebra. These things are all related. It's about, you know, a $25 million round here is probably going to kill this company. And so if it was a $10 million round, I'd be in and also we'd have the ownership properly and it'd be a good partnership. But I just, I think this company will be different with this amount of capital into it. And so the company changes.

[Unknown]

Which one stands out most?

[Nabil Hyatt]

Mine is figma. It was quite a while ago now. It was still pre launch, so it was trying to write like a very large check pre launch. For me, it's that because also there was just like a connection with Dylan. It's not just that it was a large valuation, it's that I think that that journey would have been fruitful and interesting and an amazing way to spend five to 10 years of your life.

[Unknown]

Before we do dig in on AI, do you just want to, you said there about kind of capital Inefficiency within companies. One challenge and real concern that I have is a lot of growth. Investors who have too much cash bluntly are going, I'm willing to pay up because I believe it's going to be a $5 billion company. Fine, I might not get a 5X, but I'll get a 3X. And I'm playing a deployment game. That's right, but it's the wrong actual thinking because you're assuming that it's equiprobable and that putting a preemptive round in place will still lead to that 5 billion. But me and you both know if I try and shove cash in before it's ready, I could destroy that potential 5 billion and make it a 1 billion.

[Nabil Hyatt]

It's another good example of where we have a different world now than we had four years ago. That company will probably raise another hundred million and then they might just die. In fact they probably will die. Their probability of dying eventually it'll take a long time because it got a lot of money goes up. So then if that happens, if you feel like that company's raised too much capital, you can watch their hiring velocity, you can look at the quality of the people they're hiring, their execution speed, you can see it all teetering and then maybe invest in something else in the market. Even though there's a lot of money.

[Unknown]

In the market, when you say no, don't raise that round. And do they listen?

[Nabil Hyatt]

Never.

[Unknown]

Do you engage in secondary markets actively? No. Why not? With the huge influx of private late stage capital and the continuing delays of public markets, we need liquidity. At some point you have to deliver cash to your investors. I do too. Do you not think that becomes an ever more important part of our role?

[Nabil Hyatt]

I'm not saying you never sell secondary. I'm not saying it never happens again. The primary job of trying to figure out a little bit about the future. Listen to those founders who have that little glimmer of the future, have a beginner's mind enough to be open to it, so that when somebody comes into you with some cockamamie idea that was way off piece from how you thought the world was going to work, that you're open to shifting to it. That takes time, energy, research. It takes trying every product, it takes curiosity. The question is where are your hours coming in the day? And so sure, there's secondary that happens, sure there's later stage valuations that happen, sure you can decide to figure out you want to do growth. Sure, you could run a conference every month, sure There's a thousand things you can do, but doing the simple thing at the highest level takes time and energy and I don't even think I'm good at it yet. So I'm still just trying to get good at my first job before I do the second, third and fifth job.

[Unknown]

When we think about AI companies specifically, you said to me before, and I love this, there's three categories of AI startups. Yeah, I love like a framework. I know you do, but we're not in the age of frameworks anymore, guys. Just remember that as the guy with three categories of AI startups, just saying what is.

[Nabil Hyatt]

It's helpful to bucket things and have lenses.

[Unknown]

Totally. No, it very much is.

[Nabil Hyatt]

Can we say lenses and not frameworks and then I'm with you.

[Unknown]

Lenses works well for me. But what is the three categories of AI startups and how should we think about that?

[Nabil Hyatt]

This actually is a framework that came in the mobile revolution for us at Spark and then reapplied. So this is an old lens reapplied, which is adaptation, evolution and revolution. And there are versions of this that have existed as people have talked about AI generally. Can I use the mobile analogy to kind of get you there? So adaptation is the obvious. Like I'm going to take the thing and I'm going to make a copy of the thing for AI. And so in the mobile revolution, this was the New York Times makes newyorktimes.com on mobile. And that's the product. Right. And that's obviously a world where 2023 was kind of the big adaptation push. And that was when Adobe Firefly launches. It's when Spotify DJ launches, it's when Canva Create, I think it's called. It's when like, you know, the big boys came to town with their AI products and everybody had like a year to go think about what they were going to do after the GPT era and like ship their incumbent advantage. Stuff like that's all adaptation, evolution. I think the easiest way to kind of separate it is it's when there's a new workflow. No, it's when the behavior has changed slightly. The good example of this is in the mobile era is Instagram, where you're suddenly doing a different behavior than you used to. When you think about Flickr or prior photo websites, it's a new behavior that is native to that medium. This can be done by incumbents and by startups. By the way, like sometimes a really fast moving startup will do it, sometimes it's an incumbent granola is a good example of this. Right. They are an evolved product you are treating. I don't know if you want to call that an AI meeting note software. I don't know if you want to call it transcription software. I don't want to call it just Apple Notes with AI in it. But it's a different behavior, it's a different way of using the product. I think replit agents the way that they've rebuilt. Another really good example of like evolving the medium in a way. Descript is another example. You cannot take the incumbent UI and just slap descript on. It is a rethinking of how you would do audio and video editing from scratch with AI in mind. So that's evolution and then the last one, revolution. This is the canonical. Like I'm sure this gets talked about every week on your podcast, but this is Uber, right? This is like it's an entirely new platform that would only exist because this technology exists.

[Unknown]

Where do we have the most and where do we have the least?

[Nabil Hyatt]

Oh, we are in the industrialization of startups playbook land where everybody's trying to to churn out some piece of ridiculous arbitrage every week in order to get through the end of their incubator and raise their seed round. So we mostly have evolved products that are not good enough or we have adapted products with a coat of paint on top that says AI.

[Unknown]

What do you find most interesting?

[Nabil Hyatt]

We invest most of our largest exits at Spark over time and most of my the most satisfying work over time has been on the revolution and sometimes the evolution category. So we have no desire to invest in any anything that's an adaptation. We're trying to lean towards the more disruptive, the higher risk, knowing that that won't always work out. But at least it's a journey worth.

[Unknown]

Traveling when we think about value accrual in the new landscape. Kyle at the bot company said that bluntly. You've hedged this and you have bets in foundation models and models and then you also have bets in application layer.

[Nabil Hyatt]

Yeah.

[Unknown]

How do you think about where sustainable value accrues and the GPT wrapper? Oh, there's no value in application thin layer.

[Nabil Hyatt]

I wouldn't call that hedging. I believe both could win. We were a very early investor.

[Unknown]

Do you maintain that stay with models?

[Nabil Hyatt]

Absolutely, yeah. I mean we were early investor in anthropic and very happy about the investment and think there's a lot ahead for it and feel really, really positive about it. Absolutely. And then on the other end, can.

[Unknown]

You paint the bull case for me with Anthropic.

[Nabil Hyatt]

Sure. The thing to understand about Anthropic and OpenAI chatgpt, they're direct competitors, obviously, is to think about it in the terms of this adaptation evolution, revolution framework. I'll just use this thing we just talked about a minute ago as a way to make this point. If you are trying to make the next best model and you're running out of data, then what do you need? You need to understand how people want to use your model. If you want to understand how people want to use your model, then you need a lot of people using your model. And so the fact that those two companies have a user interface which has both insights to how a user would use it, but also, frankly, data exhaust on how people are trying to navigate a model and get through it, gives you insight that no one in some academic lab somewhere just popping up a model is going to be able to advance as fast as you. You can make a faster algorithm, but you can't get new data and new data exhaust from consumers.

[Unknown]

But the level of consumer data is probably 10x more for OpenAI than it is Anthropic.

[Nabil Hyatt]

I didn't say it was the only competitive benefit, but for both of those companies. You said make the case for these. I think for both of those companies, I think that's a major, major case. Right. They will have a user interface. They will have user data that will help them be smarter.

[Unknown]

I'm sorry, does everyone not like Deep Seq sitting on number one is getting more consumer data and more consumer insight than anyone else. I mean, Xi Jinping is having data fast, but I mean, respectfully, there's so many that do. I mean, you.com has a pretty good, good user interface. I wouldn't say it's that much worse than Claude. It's like it's okay.

[Nabil Hyatt]

Do they have enough users and enough growth? No. Do they have enough scale? No. I think you want to own the interface with the customer. And if you own the interface with the customer, you have the chance to iterate on an interface with the customer and stay ahead of everybody else. So if you just look at anthropic and you look at artifacts, right, which now OpenAI has copied. If you look at the next phase of the things, those are going to come out of insights with the customer and those things matter. It's not just model quality. So I don't think foundational models are just model quality. There's also your ability to continue to innovate your taste, your execution speed and Then do you have a relationship that's very direct with the customer with which you can still keep iterating with them faster than everybody else? So if I compare that to somebody who's spending a bunch of money on compute for an academic lab for a very large foundational model, I don't think those things accrue very well over time. I think you need to be full stack.

[Unknown]

Does deep seat change how OpenAI and anthropic should operate? I just had Jonathan from Grok on the show and he said if I was Sam Altman, I would open source today. You will die if you don't open source.

[Nabil Hyatt]

I don't know that Deepseek changes that much for the way that I think about the future, strangely enough. And maybe that's an odd thing to say when everybody in the world is freaking out about Deepseek this week. I don't know that I ever really believed personally that the hundred billion dollar or five hundred billion dollar or one trillion dollars training was the only barrier to entry for making these models. In fact, if we had believed that only capital was going to win, then we would not have invested in Anthropic because surely Sam was telling us and everybody else like we're going to win the capital game. Capital game is the only way to win. And so there's no reason to build a competitor. So we didn't believe that back then or else we wouldn't invest it in Anthropic. And so it's still true today.

[Unknown]

And do you think Anthropic wins then because of product taste?

[Nabil Hyatt]

I think Anthropic wins the same way that every company wins, which is that they are executing very fast with taste. They are listening to their customers and delivering what their customers want.

[Unknown]

What do you think will be a bigger business? The API business or the consumer?

[Nabil Hyatt]

I think when you're at the front end of innovation, when you're moving really fast, I think you want to be vertical. I think you want to have as much connectivity layer between the model you're trying to build and the thing that the consumer is trying to wrestle with the world to make happen.

[Unknown]

You said about data exhaust and you said to me before about it, I just want to make sure I get the quote right. The data exhaust is more important than models, that being the consumer insights layer.

[Nabil Hyatt]

Well, I'll give you an example. If you're descript today, you don't just sit on this amazing and wonderful interface which kind of changed the market and reinvented what this was. You also sit on Every single edit that every single person has done to try and go from a rough cut where somebody like me comes on your podcast and says ridiculous things and then cut that down to something that actually sounds like a wonderful production, that's internalizing the wisdom of experts. One of the things that we're seeing right now in this world, OpenAI and lots of other companies are paying a bunch of PhDs to by hand go figure out PhD math equations so they can internalize the model. I think Web 2.0 was very much the kind of wisdom of crowds. And we're at an age where it's the wisdom of experts. We're not trying to get what the average output of every single human is. We're trying to get what really amazing people at whatever their field is, across every field in the world would do in this situation. And so if you are running a next gen product with AI deeply embedded and you have the best users using that product, that will inform you to make better products for those users and inform the models that you're building. This is about trying to build a top of market product and then trying to make decisions for, I mean AI. The promise of AI is this, this thing, this little alien in your computer is going to help you be smart and as smart as the best person who does this thing.

[Unknown]

I just walked with Manny Medina from Outreach and he's building essentially Stripe for agents. And he was talking to me about kind of the future of agents. And he was saying, hey, the future is actually hyperverticized in what would have been non interesting small markets, but because you're replacing labor, it's actually so much bigger than you could have ever thought. And so an example is like Happy Robot, this Andreessen company which is brokers calling truckers to organize loads and transport. Before you were like that's not very interesting, but actually if you replace the broker, that's a multi, multi billion dollar market. How do you think about the future of an agent economy in that respect? Are you excited by that? Do you spend time thinking about it?

[Nabil Hyatt]

I spend a lot of time thinking about it. I think most of them fall into, if you just really think through the second order effects of it fall into kind of like near term term arbitrage which might just take that whole market to zero. Especially if you are meeting the market where it is today, with the models of today, you need to assume that you still have a second, third and fourth act in your business because you're going to need to keep innovating or else how are you not going to get lapped by 25 other competitors who are also going to build call agents into your vertical market tomorrow. And so I think you do have to ask some of these questions sensibly. How hard is the job to be done? This is a direct contrast. If I'm, if I just took my 200k check and I just joined an incubator and I'm trying to show 10% week over week growth so I can raise my seed round in three months, then I want something that the models can solve for tomorrow. And so I might go into a market that, I don't know, a little bit of transcription from AI, it like solves it and we're kind of done. If that's really the extent of your innovation, you're probably going to be awash with, with 50 other people who also joined all the other incubators and are also doing the exact same thing. And so your marginal benefit to the world is zero if you are doing something at the very edge. I mean I definitely am constantly trying to advise founders and encourage founders to think about what the models might do in six months or nine months and.

[Harry Stebbings]

Start to chart there because is that a worthy exercise?

[Unknown]

And what I mean by that is it's so unpredictable. Six to nine months of product roadmap prediction for model providers. Good luck.

[Nabil Hyatt]

You can try and figure out what it. I'll put it more simply, who cares?

[Unknown]

18 months, they decide to change, Deepseat comes out, they get hit by that.

[Nabil Hyatt]

Let me try a different wording. Pick a job that's hard venture. No, I mean if you're a startup.

[Unknown]

Being a doctor, pick a job or.

[Nabil Hyatt]

Decision that is not solved by today's AI perfectly. Pick a job that you think it will be worth trying to pursue for the next decade because that's the nature of the startup. And so if you can solve it fully, which are the most satisfying things, as a founder, I can satisfy this fully by the time I get to the end of my three month incubation period in my little seed round and I'll be done, then you probably are going to get lapped if you think the best you can get is an MVP that hallucinates constantly because this particular problem is incredibly hard. But people will pay a little bit and I'll get a little bit of traction. And if I do that, I can make a little bit more progress and I can imagine working on this project for the next ten years and still innovating seven years from now. Okay, so now you're on a right Path. And then, by the way, if the model takes an extra three months or more or three months left to hit its level of fidelity, you'll be okay.

[Unknown]

What's been your biggest loss? Nabil?

[Nabil Hyatt]

Loss?

[Unknown]

Yeah.

[Nabil Hyatt]

My mother.

[Unknown]

I mean.

[Nabil Hyatt]

What do you mean?

[Unknown]

Have you had a zero?

[Nabil Hyatt]

Oh, have I had a zero? I'd push back, man. I don't know that you should look at your losses. I mean, maybe if you felt like the decision that you made at the time, if you look back on it and, like, you just were in a bad place when you made the choice, and you should try to not be in the bad place the next time you make the choice. So you made the. Made the choice for the wrong reason. But I don't know. We're in the business of the things that work.

[Unknown]

And so you study your successes.

[Nabil Hyatt]

Yeah. How did I find that founder? What were the signals that happened there? What are the lessons I can learn? What are the things. What are the types of founders that connect well with me and. And I connect well with them? What are the market dynamics at that time? What was the product like at that time? Those are things worth deeply investigating.

[Unknown]

Are you incredibly bullish about the future of the US Right now?

[Nabil Hyatt]

I am incredibly bullish about the long term of the US Right now. You're in a market dynamic where I.

[Unknown]

Don'T understand you Americans, respectfully, because.

[Nabil Hyatt]

Too positive?

[Unknown]

No, because a lot of you are like, oh, you know, Harris, Harris, Harris, Trump comes in, does a load of really efficient stuff. Markets go to the fucking moon. And you're still like me. I'm like you. Ungrateful, ungrateful champagne socialists. And we sit here with the LEGO head chancellor who does negative growth on us, and we're meant to just take it.

[Nabil Hyatt]

I don't know that the president affects the economy in the US as much as you would think, think that any president affects the economy in the US.

[Unknown]

I think you would normally be right, except Trump. The confidence that is instilled now in the US Public markets I think is unparalleled. And I think he.

[Nabil Hyatt]

But I'm not investing in the US Public markets today. So when you ask me, how do I feel about America, am I optimistic about America and all the rest of that stuff? My immediate. My pronation of thinking about the world is like, oh, well, why do I think about 10 years from now? That's my thinking. I'm a long, long, long. Like, I don't get to do anything today. I get to invest today for something to seven, ten years from now.

[Unknown]

But I Think a huge amount of people want to move their money to the US Want to invest in the US in data centers, in real estate, and you name it. Because of the state of the economy.

[Nabil Hyatt]

Sure.

[Unknown]

And that trickles down.

[Nabil Hyatt]

It does. It does. But what's your point? I'm optimistic. I would be optimistic about the U.S. in either case, no matter who won this election. I'd be optimistic about the US Are.

[Unknown]

You optimistic about Europe? You've got granola here. You spend some time here.

[Nabil Hyatt]

No. There's been exceptions to every rule.

[Unknown]

What do you think the challenges that Europe faces then?

[Nabil Hyatt]

If I was a founder starting a company, my default state is dead. Things are really hard. It's hard to recruit, it's hard to raise money. All of it's hard. You're pitching the worst of the world that you're dedicating your life to this thing and you're all in, quote. And so if that's true and you're trying to risk mitigate all the things that are going to kill you, and it's the age of AI, I don't know why you're not in San Francisco. Forget the opposite case. Can somebody succeed in London? Can somebody succeed in Berlin? Of course they can. But the real question is, as a founder, why would you make that choice? So that's the problem. The problem is that more of the people who are actually all in, not just telling you they're all in, more of the people that are actually all in who are actually trying to do everything on the planet to put themselves in the best case, to win and are willing to sacrifice for it. They're going to want to be at the dinner where they're learning about AI people. They're going to want to be able to recruit the best. All those people are in San Francisco right now. And so why wouldn't you do it?

[Unknown]

They are just. The only challenge I push back on is like, talent acquisition is so fricking hard there. Competition for talent is so high, salaries are so high. Churn is so high. You guys are very promiscuous with your jobs.

[Nabil Hyatt]

Yeah.

[Unknown]

Oh, wow. You know what? This isn't that hard anymore. I'm sorting off to somewhere else that's way hotter. Oh, well, Anthropic's new up round isn't as big as X's, so we're moving. Christ, you jump around.

[Nabil Hyatt]

So what does that incentivize? That incentivizes a system where you have to keep innovating and you have to.

[Unknown]

Have speed or you have to have synthetic growth.

[Nabil Hyatt]

There's a downside to it. I agree. You have to be smart enough to separate those two things.

[Unknown]

Final one, before we do a quick fire. So much of our job is you sit down with the founder after investing, and they're like, what do I need to get to raise my A? And you're like, well, and you kind of plot the path to A. I.

[Nabil Hyatt]

Just had this conversation.

[Unknown]

Yeah, and you kind of plot the path to A. It goes back to that. I don't like that conversation. I understand it and I have it. But it goes back to the packaging of just putting a ribbon on you and then passing you along. How do you feel about that conversation of what do I need to get an A? And how do you approach it?

[Nabil Hyatt]

Yeah. How do you get to the next round? I usually try and start from asking them a lot of questions about how they think about the future and trying to separate them from the way a VC thinks about the future. Because ultimately, we're listeners more than we are really tellers. I get that part of this job is for us to be tweeting, for us to be on podcasts like this and so on and so forth forth. But the future is invented by founders. The question is, what can you surprise an investor with in the next year that they weren't asking versus the other.

[Unknown]

Way around, A down round.

[Nabil Hyatt]

Like, if you. If that conversation has often led to situations like, well, everybody kind of expects us to do 8 to 10 million in ARR. I was like, oh, well, everybody expects you to do 8 to 10 million ARR. Then I got to tell you, they probably won't invest if you do it it. Because what they want is for you to exceed expectations. What they're trying to invest in is the best. If they think you've already got eight to 10 in the bag, then it's not going to work. So I'm so glad we had this conversation. Now, what do you think would really surprise yourself about this business if you woke up a year from now? What would shock you? What would make you feel amazing? Do you think you can storytell that to VCs? Can we. Can we work on packaging that? Let's make about 20% of the time, 25% of the time, founders are down for it. After we invest, I immediately try and have a conversation and get a pitch deck together for the next round. Just a glossary, just a table of contents. What would you want your next pitch to be? Could be story, could be product, could be data, could be anything. It's storytelling. It's Always storytelling. Let's get the story down. And I think people default back to numbers when they have no other story to tell. So let's start from the beginning. Tell the story about what you want to be able to tell the world in 18 months about this product that you're building, this company that you're building. And then we can figure out whether we think that that's actually viable enough or are you sandbagging?

[Unknown]

I love that. I'm going to take that. It's just a one pager. It's like a memo.

[Nabil Hyatt]

Yeah.

[Unknown]

Okay. When we look at all the cohort of enterprise companies who've raised seeds and A's over the last three to five years and they're brought up on the triple, triple, double, double style kind of pathway and they're at 8 to 20 million in ARR. What happens to them? Because new growth investors are going doesn't fit my AI company growth cycles. Lovables at 10 million so fast.

[Harry Stebbings]

Axes bolts at X so fast. Do they just.

[Nabil Hyatt]

I don't have a smart answer here, man. I don't know.

[Unknown]

You don't know?

[Nabil Hyatt]

I don't know.

[Unknown]

I don't either.

[Nabil Hyatt]

I don't know.

[Unknown]

I'm worried.

[Nabil Hyatt]

Yeah. Yeah. I can tell you that some of the founders that I've worked with that are stagnating and don't have that next chapter. They're doing the things that founders do.

[Unknown]

It's not even they're stagnating, it's their doubling. And that's not enough now for VCs who are used to AI revenues and.

[Nabil Hyatt]

They'Re like, yeah, I even use the word stagnating. And you're right, it's not. They're still growing.

[Unknown]

Yeah, they're still growing.

[Nabil Hyatt]

Yeah.

[Unknown]

Listen, I want to do a quick find my friend. So I say a short statement. You ready?

[Nabil Hyatt]

I'm ready.

[Unknown]

Okay. So what have you changed your mind on in the last 12 months?

[Nabil Hyatt]

I don't think you should evaluate any company by the models that are underneath it. Even model companies business school have just.

[Unknown]

Gone out of business. What about I'm thrilled. I can't work in Excel spreadsheets teams like Harry if you do equals some. I'm like, ooh, came up with a bracket.

[Harry Stebbings]

What about the way that your parents brought you up?

[Unknown]

Did you do differently with your kids deliberately?

[Nabil Hyatt]

I don't know that I did very much differently because I think my parents did not understand me at all and yet were incredibly open to me walking my path. My mother was a first generation immigrant. She Just wanted me to be a doctor or a lawyer or whatever, except. But unlike a lot of first generation immigrant families, she never told me that. And I never even felt it. She could tell that I was gonna walk a weird path. She didn't even know what entrepreneurship was. She didn't know any of that stuff. And she just like, just wanted me to find my place. So, no, I'm more trying to mimic my parents than I am the opposite.

[Unknown]

Are you hands off as a parent?

[Nabil Hyatt]

No, I'm pretty hands on as a parent.

[Unknown]

But you let them do what they want to do.

[Nabil Hyatt]

Consigliere. I like the role of consigliere in the world. We can talk like crazy with a founder or my two sons about what they're going through, and then with earnest and deep, heartfelt, coming from a real place, be like, it's your decision at the end, it's okay. And I don't know what the truth is. So I'm not telling you what's right or wrong. You got to walk your own path. But it doesn't mean we can't exhaustively talk about it all.

[Unknown]

I said the other day to my mother, the best thing you ever did for me was fuck all when I left university and I was a law scholar to do a podcast. And to be fair, it's not fuck all. It's trusting in your child and their conviction enough.

[Nabil Hyatt]

Yeah, I mean, look, I had a moment where I came home after my sophomore year in college as a computer science major, which is you're like, oh, he probably maybe get a job. I wasn't even sure then. And I was like, I want to leave and I'm not even sure if I'm going to go to university. I might just start another company. I don't know. I just, I can't do this. I ended up going to art school and my parents were completely supportive. Could not have been more supportive of.

[Unknown]

Does being rich make you a better investor?

[Nabil Hyatt]

If I had any superpower joining Venture, it was that I had no long term desire to be in Venture. I was very happy to be in Venture if it worked out and I'm still very happy to go start a company, I would be very happy as a founder as well. It's just not what I chose to do. And I really love this job deeply. But if it had not worked out, it was okay. And so I came in with a nothing to lose mentality, which allows you to sit on the front end of creative risk and being willing to take that extra risk, which of course that's what this business is about versus this kind of protectionist. Like, I just want to make sure I have my job. I just may want to get to the next fund, which is where I think you make most of your mistakes.

[Unknown]

If you were sitting down with the HBS banker style, young investors today who've been used to the last five years, what would you advise them to prepare them for the next generation?

[Nabil Hyatt]

You know, there's this thing where musicians struggle with their second album when it works. And that is completely untrue about athletes when they get to their second year of being a pro. If you're a tennis player and you go to your second year, you get better, you get smarter, you get better musicians, it actually gets harder. Why is that? Why do you have the sophomore album problem? And it's because one is a core creative exercise where you're not trying to a your tests like you don't know what the next answer is with athletes. You know, that's a fixed game. Venture is not a fixed game. It is more a creative exercise than it is a maths exercise. And that is because the markets are changing constantly. The venture market is changing constantly, the founders are changing constantly, the products are changing constantly. And so it's just not like putting a ball in a hoop. I don't know how to talk to somebody about navigating that, but I try to get them to a world where they understand how to navigate uncertainty with confidence and without terror.

[Unknown]

Which company in the last 24 months did you not do that? You reflect on most, I think many.

[Nabil Hyatt]

Of the decisions that are made wrong in how people build venture firms and how people hire people and how people invest is about not being fundamentally attuned to that fact. And because it's so unnatural for humans to work in a kind of incredibly intrinsic way. Do you feel like you did a good job today? I came in six months after this job and I'm like, and look, I sold a company to Zynga beforehand. I was in this early like growth hackers of Silicon Valley kind of groups. I was ab testing everything with some of the very first people who were helping Mixpanel and Amplitude build out their data dashboards. I was an all in data guy. And so you can imagine I'm three, six months in and I'm like, am I doing a good job? And like I'm trying to measure literally everything to figure out whether I'm doing a good job. And I give so much credit to Bijan, who is the person who really recruited me into Spark, who Just kind of would always reflect back to me. It was just like, did you enjoy the work you did today? Do you think you put all in? Do you think you want to come back and do it tomorrow? That's it, man. Just do it.

[Unknown]

Well, did you make much money from selling your company? What I'm going at here is how did making money change your mindset?

[Nabil Hyatt]

I don't think that making money changed my mindset very much. I don't actually think I execute that differently than when I had a term sheet pulled on me and I had to sell my car in order to make payroll for my team. And those stages of early entrepreneurship. I don't know that I process the world that differently. Mostly because I like playing the game for the joy of playing the game, whatever the game is, and the score takes care of itself. And I get that we all get measured on a leaderboard. I don't get to keep doing this if we don't make a lot of money for our LPs and our founders aren't happy and all the rest of it. But I just enjoy the work and I still enjoy the work and I can go do other things if this doesn't work out.

[Unknown]

What question have I not asked that I should have asked?

[Nabil Hyatt]

I don't know. The big, broad thing that I think about right now is I can complain a lot about the way the VC market is structured today and think that it's not structured that well, frankly, for innovation, and it's not really in service to founders in the right way. That doesn't really answer, how should this whole market actually work? If you could wave your wand and it was 10 years from now, we might agree that especially in worlds of high levels of innovation, you can't look at a checklist and decide whether a company is amazing or not. Not. And that's not how you make exceptions. And we're in the business of investing in exceptions and exceptional companies. But that doesn't really lay out, like, what should this whole thing look like? If we really believe that startups are the font of innovation and that they help the world move forward and also create great capital value for people and all the rest of it, what should it feel like and what should it look like? I don't know the full answer for that, but I think that's a more productive conversation because once you've. You've talked about the way you think it should all work, then maybe piece by piece together, we can all try and nudge the world there.

[Unknown]

I'm seeing more and More founders want no pref shares like all common shares. How do you feel about that venture.

[Nabil Hyatt]

As an industry was a very weird thing when it was invented, right? This idea that you wouldn't take majority share in a business and you'll be a passive investor with just a board seat, a small voice instead of a loud voice. That was a unique thing when it happened. And so we've always been a world where we were in the lean back instead of lean forward control PE mechanism of it. Whether that means we're preferred or common or the term sheet changes and our lick prefs are different and all of these things have altered over time. Open to it. I just want to make sure founders can build good companies and that they treat the people that they're bringing into their orbit as people who should be committed to the same cause. And I think treating everything transactionally is kind of like the enemy of what I'm trying to work on. It's like, it's probably as simple as that.

[Unknown]

It's been such a pleasure to have you. Honestly. I love doing it in person. It makes such a difference being able to see this. So thank you so much. I look forward to you sending me a picture of when you ring the bell for granola at the ipo. I'll just send a picture back of me crying.

[Nabil Hyatt]

Thank you so much for having me on. I love what you do. It's like insane what you've done over the last 10 years and it's really, really amazing.

[Harry Stebbings]

I do just want to say the thing that really strikes you when you spend a lot of time with Nabil.

[Unknown]

In person is just what a good.

[Harry Stebbings]

Human being he is. How genuine, authentic, sincere, and just kind. Nabeel is one of the special ones. This was such a joy to do. I so appreciate his friendship and you can watch the episode on YouTube by searching for 20VC. That's 20VC on YouTube. But before we leave you today, it can be difficult to build a team that's aligned on everything from values to workflow. But that's exactly what Coda was made to do. Coda is an all in one collaborative workspace that started as a napkin sketch. Now, just five years since launching in beta, Coda has helped 50,000 teams all over the world get on the same page. With Coda, you get the flexibility of docs, the structure of spreadsheets, the power of applications, and the intelligence of AI. AI, all built for your organization. Coda's seamless workspace facilitates deeper collaboration and quicker creativity, giving you more time to build and Whether you're a startup looking to organize the chaos while staying nimble, or an enterprise team looking for better team alignment, Coda matches your working style. To try it for yourself, go to Coda iO20VC today and get six months free of the team plan. For startups, that's Codacoda iO20VC to get started for free and get six free months of the team plan. Now that your team is aligned and collaborating, let's tackle those messy expense reports. You know those receipts that seem to multiply like rabbits in your wallet? The endless email chains asking can you approve this? And don't even get me started on the month end panic when you realise you have to reconcile it all. Well, Pleo offers smart company cards physical, virtual and vendor specific so teams can buy what they need while finance stays in control. Automate your expense reports, process invoices seamlessly and manage reimbursements effortlessly all in one platform. With integrations to tools like Xero, QuickBooks and Netsuite, Pleo fits right into your workflow, saving time and giving you full visibility over every entity, payment and subscription. Join over 37,000 companies already using Pleo to streamline their finances. Try Pleo today. It's like magic, but with fewer rabbits. Find out more at Pleo IO 20 VC and don't forget to secure trust with your customers. Trust isn't just earned, though, it's demanded. That's why over 9,000 companies, including Atlassian, CORA and Factory, rely on Vanta to automate their security compliance. So Vanta helps businesses achieve certifications like SoC2 and ISO 27001, turning months of tedious work into this beautifully fast and straightforward process. Their platform automates compliance across over 35 frameworks, it centralizes workflows and it proactively manages risk, all while saving you time with automation and AI. So whether you're just starting or scaling your security program, Vanta connects you with auditors and experts to to get audit ready quickly and build trust with your customers. Get $1,000 off your first year by visiting vanta.com 20vc that's V-A-N-T a.com 20vc as always, I so appreciate all your support and stay tuned for an incredible episode coming on Wednesday with Max Levchin, founder at Affirm.