← This Week in Startups
This Week in Startups
Airtable's 80% off value crash: VCs explain why it's still a win | E2321
01:12:33
Loading summary
Transcript134 lines
- [00:00]
A
Obviously a lot of hand wringing about the SaaS apocalypse over the last couple of years, the indigestion in our industry of what would happen to these companies that were Decacorns, unicorns. I guess we're going to start getting that answer.
- [00:12]
B
Private cap tables are only engineered to go up and to the right. They're not engineered to go down.
- [00:18]
C
The only thing that matters in our industry for venture kind of capital is growth rate. Nothing else matters. It's not profitability, it's not cash flow positive.
- [00:26]
D
A lot of these companies which have become zombies, even if they were Decacorns, they're just chewing people's time and hoping against hope.
- [00:34]
A
Interesting playbook, which Is to cut 80% of the staff, put young people in charge of these products or services, from what I understand, and run them first for profitability. This week in Startups is brought to
- [00:45]
D
you by Odoo, the all in one business platform. Your first app is free. Get started today at odoo.com/twist.
- [00:53]
A
Agree.com stop chasing invoices and automate your entire contract to cash stack.
- [00:58]
D
Go to agree.com and tell them Jason
- [01:00]
A
sent you to get 50% off for life.
- [01:03]
D
And Vanta compliance and security shouldn't be a deal breaker for startups to win new business.
- [01:08]
A
Vanta makes it easy for companies to get a SOC to report fast.
- [01:12]
D
Get $1,000 off for a limited time at vanta.com/twist.
- [01:16]
A
All right, everybody, welcome back to this week in Startups. It's our VC roundtable, which we do every Wednesday here on the program. It's August 5, 2026. We've got just tons of news to get through and a great panel. Again with us, Nico Banastas, founder, Managing director, Verdict Capital. How are you doing? It's been a while. No longer at General Catalyst. Yeah, that was the previous gig, correct?
- [01:42]
B
Yeah. Excited to be on this panel with you, Rick and Aditya.
- [01:46]
C
Yes.
- [01:46]
A
Also with us, Rick Heitzman is here. Co Founder, Partner, First Mark Capital, Pinterest, Airbnb, Discord, DraftKings. Tons of great unicorns in the portfolio. How you doing, Rick?
- [01:58]
D
I'm doing great. Great time to be a New Yorker.
- [02:00]
A
Yeah. Lots of good stuff going in New York.
- [02:03]
D
Democratic socialism aside the political slot, lots of winning between the Knicks and the World Cup.
- [02:09]
A
Did you get to see any of the Knicks games?
- [02:11]
D
I did. I saw you at one of the Knicks games.
- [02:13]
A
Oh, right.
- [02:14]
D
It was pretty great. The energy in the city was awesome.
- [02:18]
A
It's pretty great. I got to go to the closing games of every series. That was my goal. So I went to nine games with my brother and some other friends. Sack courtsided. A couple of them can't get courtsided at Madison Square Garden. It's just like literally, no matter how much money you have, you just can't even get them because they're for the Knicks alumni now and celebrities. But I was able to. Ben Stiller and I chipped in and we got a pair of tickets for Philly for the closing game. I got Atlanta courtside.
- [02:49]
D
That's not bad.
- [02:50]
A
Yeah, not bad. Not bad. I couldn't get spurs courtside either. They. They blocked us at the Cavs and they blocked us at the spurs from buying courtside successfully.
- [02:59]
D
In fact, still have next year. Run it back.
- [03:02]
A
Oh, God, it's so great, so great to have the Knicks win. And Adit Argawal is here, co founder, general partner at South Park Commons, Gamma sponsor of this week in starters, lumaLabs render, formerly CTO of Dropbox, early engineer at the Facebook Corporation. How are you doing?
- [03:22]
C
Great to be here. Excited to be part of the panel.
- [03:25]
A
We are starting to see acquisitions, which is great. We're seeing IPOs. The wrath of Lina Khan has ended. The four years of no M and A is over. And now we're starting to see M and A. Unfortunately, some of it's a bit lower than maybe the last mark of some of these SaaS companies. And we had a major, major acquisition just this week, Bending Spoons, which is a firm that buys distressed assets, or I would say maybe sideways assets, slow growth companies. They're an Italian conglomerate and they like to pick up assets that have product market fit but maybe aren't growing violently and maybe that the venture community has either given up on or lost interest in. They bought AOL, meetup.com, tons of other brands, and they seem to have a pretty interesting playbook, which Is to cut 80% of the staff, put young people in charge of these products or services, from what I understand, and run them AI first for profitability. They just put Airtable for 2.7 times ARR. The company's price and valuation peaked at 11.7 billion. The current equity value on the deal was 2.25 billion. So obviously 80% discount. That put the enterprise value at about 1.2 because they had apparently a billion dollars in cash. They had raised 1.4 billion to date. And so that created a lot of back and forth. Nico, I don't know if you had exposure to Airtable, but maybe your take on this deal. There was also A wrinkle that the AI first product they were working on was spun out of the company before this deal was done. And I guess that's a spin out. No indication if that was, you know, given 50 million or $100 billion in seed funding. So I think there's a lot of contours of this deal that have to be worked out, but obviously a lot of hand wringing about the SAS apocalypse over the last couple of years and finally the indigestion in our industry of what would happen to these companies that were decacorns, unicorns. I guess we're going to start getting that answer.
- [05:43]
C
Yeah, Nico, Yeah, absolutely.
- [05:44]
B
Yeah, I don't have any exposure. And this company did meet how in the past. It's actually really impressive to have gone so far as they have like how many companies, right, really get to the 400 million plus revenue run rate. Like that's something for anyone who is like a founder, vc, startup ecosystem participant to celebrate. Yes, they were darling during the very good times, rightfully so, because they were growing. And whenever you see this magical concept of multiple expansion, oh my God, you know, like everyone gets so excited. You pile in, you basically pay ahead for like 2, 3, 5, 10 years. And then, you know, we've been around now for a little while, some of you are longer than me. The multiples compress and reality hits us and kudos to them to having the courage actually to have this transaction because as you know, private cap tables are only engineered to go up and to the right. They're not engineered to go down. So kudos to them that the team had the courage to do the AI stuff and then they needed to part ways with the part of the business that is the bulk of it. But it's not very viable today and I'm glad that bending spoons exist and all of us that have legacy portfolios could take advantage of this situation. Some founders of course might decide to persevere. And two, three years down the road, if the multiples increase in that sector, who knows, they could leave for another day. It could be higher.
- [07:12]
A
Aditya, what is your take on I guess the multiples that we saw at that time? Many of us said, and you alluded to this Nico, that we were maybe suspending disbelief as a community giving things 50, 100 times forward looking revenue. There was massive competition to get into these deals and maybe the terms weren't even that favorable or even have any kind of protections for those late stage investors where they would get a liquidation preference. In other words, at least Twice their money back. These kind of things were left out in a competitive environment. And this seems to be an incredibly, this seems to have been founder friendly terms. But when the sale happened, now everybody's like, oh my God, the founders didn't get a good deal. So maybe you could help us understand what happened during that period with the different right sets that you saw, maybe game on the field. And then did the founders and did the employees get screwed here or is this like a good enough outcome for everybody?
- [08:17]
C
Yeah, so I think all the valuations peaked in 2021. This was kind of peak Covid. A lot of these SaaS companies were essentially getting term sheets, you know, the classic kind of term sheets within 24 hours at 50, 70x kind of forward multiples. I think looking back, I think all of us can say that those are probably too high a multiple if you can't keep up the growth rate. My big takeaway from this for me, by the way, we were an early investor. We're very happy for Howie, very happy for Andrew. We're very happy for the team that has built a great product. But if you're at 400 million in ARR growing 20%, having raised 1.4 billion, I mean, you know, in some ways this is actually a reasonable price for the company. If you kind of think about it. If you take a step back and you kind of look at it more objectively, this is not a crazy outcome for the company kind of given kind of the sequence of events that have happened. But I think that the big takeaway for me is the one that we learned at Facebook very early on is that I think that the only thing that matters in our industry for venture kind of capital is growth rate like we nothing else matters. It's not profitability, it's not cash flow positive. It's not kind of like do you live to see another.
- [09:32]
A
Why is that? Why is growth rate so important in venture? I mean, obviously I know the answer, but I'm asking for the, for the people listening here, why do VCs care so much about that growth rate?
- [09:41]
C
Because I think they. Suckers for growth. Exactly.
- [09:46]
A
Everything is moving a lot faster in the age of AI. But moving fast often means taking on more risks. Every time your company adds a new tool or a vendor launches a shiny new integration, that's one more opportunity for something catastrophic to go wrong. No one wants to get left behind, but you still need to worry about security. It's kind of job one. That's why you need a partner like Vanta. Vanta is the number one agentic trust platform and it's being used by over 16,000 companies. We're talking extremely legit organizations. Ramp cursor Harvey. All those great surging companies. Vanta is making sure these incredible startups are audit ready and, and they're ready to do the same for you and your startup. As well as looking out for all the problems that can arise between audits and across all your AI tools, vendors and your entire work environment. Whether you're a fast growing startup or a global enterprise, Vanta is here to help you automate your security and compliance and earn improve trust. So get started today@vanta.com twist that's V A N T A dot com twist
- [10:50]
C
but I mean if you just do the math, right? I mean if you're growing at 45, 50% year over year over year and you manage to kind of pull that out for maybe even seven to eight years, you've basically quadrupled, maybe quintupled essentially your valuation not so evaluation your kind of like revenue which then obviously has knock on effects. Assuming that your gross profit margins, your gross margins kind of stay equivalent. Which for Airtable were always high. Right. Airtable was always a pure software kind of a beautiful kind of company in that sense. But there's a huge difference between even 40% growth and 20% growth. Right. Like the just as you know, exponentials are beautiful on the way up, they kind of kill you on the way down as well.
- [11:32]
A
Yeah, in one case you're doubling every two years. The other case you're doubling every essentially three and a half, four years. That's a major difference. And entry price matters. When did you invest in Airtable? What was your like entry price ballpark? And then how does this sale work out for you?
- [11:47]
C
Yeah, we were close to I think a series A series B. So I think we did okay. I think it's a reasonable outcome. But even if you kind of look at somebody who came in at the series A or series B, what you're really underwriting is kind of 100x from there. Right. To kind of like make them venture math work out to kind of make it work out for your fund. So I think the kind of the flip side of this is venture capital is kind of brutal. If you don't grow like you know, everybody who's underwriting something at the A or the B, you have to be underwriting as high a growth rate as you can. And I do agree with Nico that there is courage in actually pursuing this outcome instead of frankly just Kind of drawing it out for another five years and keeping on taking shots on goal and keeping on trying to figure out how to juice the growth from here. So I do think there's courage in this, but obviously some disappointment for the later stage investors and so on. But I suspect that's also the game that they were playing at that point.
- [12:46]
A
It was the game on the field. Yeah, the game on the field, Rick,
- [12:49]
D
was money was free.
- [12:51]
A
Money was free. We were in that ZIRP era and we also had Rick. I think a belief I heard from a lot of VCs is hey, the worst case scenario is I get back my money because this is a great company, it's a great founding team and that's exactly what happened here to the late stage investors. They got to place a bet with a floor and the floor was hey, I get my money back in five to 10 years, which isn't the end of the world for a venture firm. So your take on this outcome?
- [13:19]
D
No. And that's what happened. The later stage investors got their money back in five years. Again, not the end of the world. But a lot of those growth funds are actually going to lose money from that time. So this is not going to be their worst deal, hopefully not be their best deal either. But they're getting their money back. The early stage investors have a decent outcome. And I think the most important thing people haven't talked about for the founders and even the investors is time. Right. A lot of these companies which have become zombies, even if they were decacorns, they're just chewing up people's time and hoping against hope. The right thing to do is move on. Say hey, we have a decent offer. We're not growing the way we thought. Bending spoons is the acquirer of choice for a lot of these deals. Move on, sell to bending spoons or someone like that. Recycle your time, recycle your capital into
- [14:10]
C
something that you're really excited about, particularly time right now. When you think about the hyper agents kind of spin out. That happened, you know, as part of this. The biggest issue right now is that the next two or three years are kind of the kind of a beautiful period is a Cambrian explosion of opportunity. So if you're talented, if you're Howie and you're talented and you're trying to figure out how to make this thing thing that it's just really hard to kind of like re accelerate the growth rate versus trying out something that hopefully can be a more seminal shorten goal. You know, that kind of makes Sense.
- [14:41]
D
And that should make sense for all of the founders of that era, all these guys who are breaking their pick trying to go from 18 to 24% growth rate, maybe that that's not the best use of their time and talents. Best use their time and talents is to say, all right, we played this game, it didn't work out as possible, let's play a new game.
- [14:59]
A
Nico, the idea of trying to do this on the same cap table is a flawed concept. That's what I saw a lot of people talking about. Well, why don't they just manage the business like bending spoons is going to do for profitability and then build a new business inside of it, which they were doing with some new AI product apparently that they spun out. Maybe you could explain to the audience why that doesn't work with a calcified cap table.
- [15:22]
B
It's really hard to do because like when you've hired people when things were happening and everyone was positive and optimistic and the growth rate was high, as Aditya was saying, the multiples were like nuts because people were playing the game on the field. As Rick and you know, you, Jason, were saying, those are not the same of people that can basically over the next year or two would just need to slow down, shrink, play defense and try to optimized private equity style, get the profitability up, get it to be like steady growth but leave for another day. Those are not the same kind of people. Often a lot of these like calcified cap tables. What you also have is like founders who took a lot of money off the table in 20, 20, 21, 22 and they might not even be as motivated, might not be as hungry. Also we shouldn't forget during that time there was that crazy anthropological experiment that everyone was forced to go full remote and you raised all this money, you hired all those people, the growth rates and the multiples came down. You have like 50 million sitting in your bank account in 2023 and you're like, oh shit, I'm working in a company that is not growing quickly with a bunch of people that we've hired all over the world that I don't know who they are, I don't know where to get started. And as Didier saying, oh my God, this chatgpt thing sounds intellectually interesting. So what do I do?
- [16:53]
A
You know, it's such a great framing Nico, because we all know like remote work just doesn't work for 80% of people and it doesn't create the proper hard driving culture. Any VC who's been at this, you know, game for any period of time knows that it's like worked once or twice in history. Okay, fine, those are the exceptions that make the rules. But I think that's a real insight. And then so is Aditya taking money off the table. This has been a controversial move and VCs were told it's founder friendly to let founders take that, you know, 1050. Even like in the case of that conference software, I forgot the name of it. They took 200 founder took 200 million off the table. Hopping, hopping. We all know it, right? Like we all saw that happening and we're like what is that going to do to people's motivation if they've already gotten rich and they can, you know the way I say it is like once you can buy an airplane for cash money, not a jet card, like jet card kind of money, okay, that's 500k a year. But when you can spend 2 million a year and buy a 10 million dollar plane or $20 million plane, that's when the founders totally going to be distracted. I don't know any founder or human
- [18:07]
C
who can for what it's worth and I'm curious if Rick and Nico would agree. I haven't seen that many founders especially over the last three or four years take out that kind of money. Right. Like I think a lot of it is really like let me kind of like put down a mortgage on a house. Let me kind of like at least be able to like have that baseline.
- [18:25]
A
Five million, 10 million is what you're saying. Maybe not even, but I haven't, not
- [18:29]
D
even seen, we've seen a couple million bucks of here's a, here's a couple million bucks to let everybody make the round work and gives people money to put a down payment on a house, feel a little bit more comfortable and play to win because they.
- [18:45]
C
This is what Mark did for us at Facebook in 2007 when we had our first secondary sale. Everybody was allowed to kind of do about like a million or two in secondary and it allowed basically all of us who are early employees to buy a house. That was it. So you can buy a house in San Francisco. At least put the down payment back then.
- [19:02]
A
Keep in mind that was 15 years ago.
- [19:05]
C
Can you believe it guys? I bought a house in Noe Valley for like, you know, like, you know, a million and a half dollars. Exactly. Yeah. Preanthropic.
- [19:13]
A
I'm fascinated by this business. I might be tempted to back it as a venture capitalist is these roll up companies. There is Constellation, I Think that's doing this. There's some SaaS group, there's other folks who are involved in this. And I guess Thrive Capital is doing roll ups of legacy businesses. Have you looked at this or.
- [19:34]
D
We have. I know the guys at Constellation well, they've actually been doing it for close to 30 years. Canadian company and one of their models is, hey, we'll pay one times revenue, we'll crank up pricing, we'll take out the employees. And if you look at it, it's a public company. It's really compounded over the last 20 years. And bending Spoons is doing the same model. I think those guys have done a great job, frankly. Part of the model is we're willing to do the hard things that maybe your VC board members wouldn't do. We're willing to make the cuts, implement AI and increase prices. So if you look at a lot of these companies that they've acquired, they've increased prices 100, 200%, they've taken the costs out and they've turned it into a very, very, very profitable business. And in a way that might have been left for dead in the legacy world. Clearly AOL was left for dead. But even companies like airtable, which have a pretty vibrant customer base, they're going to be able to run the same playbook. I think that what Thrive or GC are doing is very verticalized. They're looking at the accounting sector as one of the places they're doing roll ups and being able to implement AI there. So it's a slightly different version of the same thing where maybe you're doing a little bit more financial engineering that a normal venture capitalist would do.
- [20:52]
A
Our show is filled with helpful and practical advice for founders. But there's another reason to become a regular twist listener. Amazing deals on essential products to help you run your company more effectively. So I'm super excited to announce our New deal with Agree.com the All in one contract to cash flow workflow. Go right now to agree.com, sign up and tell them you're a JCAL listener and they'll give you 50% off for life. Agree is the number one fastest way to go from contract to cash. That means gathering E signatures, invoicing, billing payments and revenue recovery. No more jumping between four or five different platforms just to write out a contract, get it signed and set up billing and start sending out invoices. 99.64% of all invoices on the entire platform are paid within just 10 days. So if you want to stop chasing invoices go right now to agree.com and if you tell them Jason sent you, you're going to get 50% off for life. Let's pull up the Constellation software ticker guys. Let's take a look at that. I, I think this is an interesting concept. I know we have apps and they've done incredibly well making tens of millions to hundreds of millions of dollars in revenue. And you know, app businesses are pretty easy to run. There's Constellation software. Let's put on it at five years and just take a look as opposed to one day so we get something a little more.
- [22:14]
D
If you do the, do the max and it'll just show max, it's one of the, one of the prettiest charts you'll see reverted a little bit. But you know, from, they went from I, I guess that's about 100x from you know, at one point in 2000 to 2020.
- [22:31]
A
Yeah, do all again gentlemen, let's take a look at that all chart here. Yeah, if you go to 2000 it looks like it's had an incredible roll up and could have been even bending spoons.
- [22:42]
D
Is up 40% from its IPO. And they also had the courage to go public a week after SpaceX when everyone was afraid that SpaceX would take all the oxygen out of the room, all the capital out of the room, all the press out of the room and no one would care about IPOs. They went public that next week and I think they've traded up about 40%
- [23:03]
A
market cap currently at 30 billion basically. And yeah, so this would be a pretty meaningful acquisition for them. 3% of their market cap, 4% of their market cap. What a great, interesting business. Another issue I think a lot of us faced, Nico, was founders or boards saying hey, please don't sell in secondary with the founders, you know, please go long, et cetera. If you were in Airtable and there were 5, 6, 7, 8, 9, $10 billion offers coming in for secondary, it would have been wise to maybe pare your position. So I'm curious if there's a lesson there too as well for VCs and then maybe we could all talk about what our philosophies are on secondary sales when we hit certain benchmarks in our investments. Nico?
- [23:49]
B
Yeah, I think that's a great topic to discuss and I'm sure all of us have like views. The world is changing. Like the whole private market universe is getting to be much larger than before. The venture capital industry is getting to be much bigger. There's stratification of different Folks Angel, Super Angel, Solo gps, Blue Ocean or Pingosian or Red Ocean of Micro vcs. A lot of legacy firms, venture capital banks, crossover folks. So now I think it's a lot more clear for a lot of the smaller folks to be selling to the next. You know, like people in the food chain. So if indeed you're somebody who invested in the first money round, the precede round, the seed round, this E round and back in the day, like in the 90s when you guys, you know, got third, did Jason or Rick, you could go public in four years. When I started in venture capital in 2009, 2010, we were underwriting, okay. You know, these companies could go public in like five to seven years. And now many companies won't go public until like, you know, in this case of SpaceX, 20 plus years later. So if you just have that in this new reality in mind, it makes sense. Somebody who invested well year one year.
- [25:14]
A
So what do you do? Do you try to pare your position and what percentage do you try to sell Nico, along the way? Do you have, do you have a stated philosophy internally at your.
- [25:23]
B
Yeah, I would say, I would say to you, yes, there's the art of investing. There's also the art of selling. So we do first money investing at verdict. That's the only thing we do. We invest in freaks. We're building in new, new markets and we are like the very first investor. And yes, if we're sitting on 100 extra TVPI and or the founders are selling 20 to 50 million in this round and you know, the investors are going to be a sovereign fund or very large final frontier, final boss corporate. We are going to be asking ourselves every quarter so we trim 5 to 10% on the way up because in this big round, normally here's what happens. They're going to be people who either didn't hear about it or missed out or lost the opportunity, who two months later are going to be so freaking, you know, hungry to get in. So you're doing a service to the founders because you're making the market for the next, next round. Whoever you know missed out is excited to buy. And the people who just invested are like, oh my God, look, we picked the right company. We already got like a small pseudo markup in the secondary market.
- [26:30]
A
Yeah. How do you think about it?
- [26:31]
B
Get the incentives right and do you
- [26:33]
A
have a, do you have a playbook now that you're deploying? And you have to communicate this as well to your LPs? So I'm curious, do you get pressure from your LPs when you're raising your fund or discussing with them. Like, hey, are we going to clear and move any of this TVPI to DPI and that relationship?
- [26:50]
C
I think it's a great question. I think that having just gone through a fundraise cycle, we just actually announced our Fund 4 raise this morning. So obviously a lot. Thank you, everyone.
- [26:59]
A
Not easy to do.
- [27:02]
C
It was great. Fund four. We just launched it. 575 million meaningful step up from fund three, which was about 270. And I think a big part of the reason why LPs were excited about kind of fund four is because we had shown TPI for fund one and we are starting to show DPI for fund two. And our take is that all of these venture capital markups are nice, but at the end of the day, our job is to return money back to our LPs, right? My take is that Nico kind of nailed it. I don't think if you'd asked me when I started SPC Fund, I would have said, oh, there are only two instances in which we make money. Either the company goes IPO or a company gets sold. And I'm maximally founder friendly, right? Because that is, you know, I'm not trying to do anything. But the world is very different today, right? Like, you know, the number of public companies in America has gone down by 20% in the last decade. People don't want to be public. It kind of sucks to be a public company. So the way we approach it is actually to try to be maximally transparent about what our algorithm is with all parties, right? Which is that we are first money in. So obviously we're not going to sell in the first round after us, the second round, or hell, even the first three or four rounds, right? But when it comes to the later stages, assuming that it is a sanctioned sale where people are participating, it is kind of like a, hey, we're doing a round, people can sell some. Then we have a formula. If we can sell 15% of our position, let's say to return, you know, like one turn or half a turn of the fund, right? Then we are going to pursue it, right? And we like it to be formulaic because I think that I don't want to have to constantly be testing the secondary markets to figure out the exact price. It's just exhausting, right? To kind of go and deal with all of the brokers. So I'm more like if the sale is happening, it's sanctioned by the company. If I can sell 20% of my position return, kind of like 0.5x kind of DPI to my LPs. I'm going to do it right. It's not kind of a huge debate,
- [28:56]
A
which is like a great, it's great that you actually have codified this. And that's actually, I think, the big difference than five years ago. If we, if I were to ask this question five years ago, people would be like, yeah, we're long and we want to be founder friendly. Rick. Now I think after the last two cycles and as our other guests have talked about, Rick, hey, we're extending to 15 or 20 years before IPO, or in Stripe's case, maybe 50 years or never for their IPO. It seems you kind of have no choice, right, but to have a philosophy.
- [29:24]
D
And you know, the difference is being as a venture manager now is you become more of an investment manager, right? It was easier to sit and buy and hold forever because you knew forever was only going to be several years to a sale or IPO. Now for now, sit and hold. It could be 30 years in Stripe's case. And you can't do that with funds that are 10 to 15 years long. So you actually have to make a much more active decision to be not only a buyer, but a seller. So, you know, having that and then like every other, you know, relationship, the most important thing is communication. So being able to communicate that to the entrepreneurs saying, hey, here, here's where we play, here's where we might want to get off for a little bit. If you have some excess or, and you know, especially if you're getting ready to go public and there's some excess demand, you know, you might rather have more Wellington, more fidelity, more long term public capital on your cap table than a seed fund who you know is going to be up 100x in the IPO and is holding their breath till the lockup, as opposed to someone like a BlackRock or Fidelity who's looking to double down on the IPO. So this is staying public for staying private longer has basically changed the game. And therefore, you know, you're going to have to manage in those rails. And part of talking to the entrepreneurs is, hey, here's the new game being played. You used to have to transition your cap table only in the public markets. We can help you transition that cap table in the private markets.
- [30:55]
A
If you've got a company, you probably have a tool for invoicing and one for running your website. And then finally you got one for your CRM, of course, and somehow Even with all these time savers, you're still moving data around by yourself at 10pm that's why here at Twist, we recommend Odoo O D o o the all in one management software that's all already serving 16 million users across more than 170,000 companies. Think about that. They're bringing everything you need into one platform. That means your CRM, your sales tools, accounting, manufacturing, your website inventory and of course your point of sale, if you have a point of sale, all right,
- [31:29]
C
where you need them.
- [31:30]
A
And they're all in constant communication with each other. No more logging every change order or new sale across three different apps and the dreaded spreadsheet as a database. No, you make a sale and your invoice gets created instantly while your inventory gets quickly updated. So if you're still cobbling together your back office across five different tools and apps, get started today@odoo.com twist and your first app is free. That's o d o o.com twist two situations where we did sell and my philosophy is like once we hit 50x on the investment, 25, 50 or 100, because we are first money in as well, we're going to pare 10 or 20% and then at the next turn we hit 100, 200x, we're going to pair another 10 or 20%. Did that with a consumer company and I just told the founders, we're parsu with you. They were like all good. Did it with a SaaS company that hit a billion that's probably now worth less than 100 million. Cleared $18 million position was one of the best distributions we ever had as a firm. And they asked me, please, please, please, please do not sell. And I said, we have a contractual right to sell alongside you and we have a contractual obligations to our LPs who we told we would do that. So if you guys are selling, we're selling. If you're not selling, we're not selling. But we're doing a part of pursuit the exact same as you. And they took that. Well, fast forward now to today. I have a couple of investments now, 200x300x and there's not an opportunity to sell Aditya on the cap table officially. But there are these brokers and that is, as you correctly pointed out, a very dangerous place to play because the brokers in some cases are complete, utter boiler room scumbags. I'll just say it outright. There are some that are kind of legit. There are some that are legit. I think the majority that are boiler rooms.
- [33:21]
C
I think a lot of the secondary brokers, a lot of the SPV peddlers right now you just have to stay away from that stuff. Right. And I think that's the stuff that frankly founders probably rightfully get angry about, which is like who are you putting indirectly or directly onto my cap table? But as long as you can go to a founder and I think you said it well, which is that if I can swap in basically a long term minded growth investor who is kind of like good for your cap table, then I think everyone's happy.
- [33:50]
A
Yeah, that's. Yeah, that was Rick's point, which was a great one. All right, listen, we got a lot more on the docket to get to. Before I do that, let me take a moment to thank Harmonic who is supporting this week in startups and these incredible roundtables. They're an AI powered database. They got a ton of information on there in startups. They're refreshing it constantly. They put like an AI LLM around it and it's not just like doing a simple database search anymore. You can source all these incredible companies. Very simple. Let me show you what I did recently. I was in Japan and I told my team, you know, I'm really interested in humanoid robots because I was watching them fight in cages. I don't know if you guys have seen human humanoid robots fight in cages, but I think this is going to become like the next ufc and if they can fight in a cage, I think people are going to start buying these. It's going to replace boxes. Things are. We started doing some research here and there's like 16,000 units were sold in 2025. That's going to triple this year. And I don't have any exposure to this unitree obviously the biggest one. Then we asked it, hey, can you do this by how many are being shipped? Because we want to find new ones and we just keep having this conversation about all of this great data that you can only get. You can only get all that great data in Harmonic. So thanks to our friends at Harmonic. So visit harmonic AI twist get $4,000 off company sourcing and monitoring amazing deal harmonic AI twist for $4,000 off. All right, let's keep moving. Robinhood now earns. I was a pre launch investor in this company. They're now earning more from predictions than stock trades. This is pretty amazing. Robinhood Prediction market originally launched in March 2025 prediction markets now its second largest business line only behind options trading options made 342 million in revenue in Q2 event contracts, prediction markets made 156 million. And so this is surging. Obviously you got Kalshi and you have polymarket. Robinhood, though still relies on Kalshi for its underlying technology. I think. Rick, you were you in DraftKings, am I correct?
- [36:07]
D
I was. I was an early investor in DraftKings. I followed this market for a while. It's really opened up and part of it was the opening up of the futures contracts instead of having to go state by state for a regulatory basis. That's opened up tremendously. Some of that's being pulled back by the AGs today, but you'll see. But obviously Vlad did an amazing job at Robin Hood having that tip of the spear of the low cost trading to just get into all of these wallets, especially in a certain demographic of largely young men and then being able to offer more higher margin products. So I think that market's going to open up, it's going to become highly competitive. Obviously Fanatics has announced in this market, Giraffe Kings plays in this market, FanDuel plays in this market, and of course polymarket as well as Kalshi. So you're going to see that same battle for the customer wallets that you saw originally in the sports betting world from about five years ago. And it's going to be incredible to watch.
- [37:08]
A
This is now, I think, when you made that first investment.
- [37:13]
D
Yes.
- [37:13]
A
How do you underwrite an investment in something that a lot of our LPACs, our agreements with LPs don't allow us to go into? Vice gambling, adult content onlyfans, et cetera, or psychedelics, drugs writ large. But even some of them have valid uses and are being studied at Stanford and wherever, Johns Hopkins. So how does one underwrite that kind of investment and convince LPs, hey, we want to get into an area, some people might call it gray, some people might call it emerging or frontier. How do you, Rick, underwrite that with the LPs?
- [37:50]
D
We have active conversations with our LPs. We were the first investors in Riot Games and we had some pushback that the name was Riot and that's a really violent name. And therefore, maybe we should reconsider investing in a company known for a riot and that wound up being the most popular video game through League of Legends over the last 20 years. But as we thought about DraftKings, there was probably two things. When we first invested, when it was largely illegal, sports gambling was illegal in almost every state. You know, we had to say we're starting in daily fantasy and we'll only participate in the markets and states where this is legal. We're not going to play in the gray area. We're not going to try and do anything illegal, but we'll do the right thing. Then the issue came when the New York AG tried to shut us down and they said, and the RLP's came back and said, hey, wait, wait. Remember you said you were only going to do things legal. It sounds like you guys weren't playing in the white area. You were playing a little bit in the gray area. What's going on? And we had to have the conviction and stand by our entrepreneur and Jason Robbins and say we think they're doing the right thing. We think this is a megatrend and this is going to become an important category and we're going to stand by that entrepreneur. No different than what we did in Airbnb when that went through significant regulatory upheaval. No different than you did in Uber that faced significant regulatory issues that we had to take a position of. We think this market's not in the gray area. We think this is going to be a very clear market in the medium term and you're going to have to trust us.
- [39:20]
A
Nico, any thoughts on participating in, you know, things that maybe LPs, a lot of them in the Middle East, a lot of them on the east coast are just like, hey, no fly zone for us. We can't touch this. We got, you know, whether it's the Jesuits, the Mormons, or anybody, you know who's got deep roots into some of these philosophical no fly zones. How do you look at emerging categories? Are there ones you want to participate in that can't, or ones that, you know, you're, you're particularly interested in here, but maybe you got to do it personally?
- [39:54]
B
Yes. As Rick said before in the topic of like selling or secondaries, it's all about communications, which is the case with all the relationships. Right. So in our case at verdict, we've said we're not going to do anything that has to do with vices like gambling, alcohol, cigarettes, except tobacco, etc. We also don't do any personal angel investing. Like, anything we do is like through the fund. We don't do any advising, incubation outside of the fund, like none of that stuff to remove any conflicts. Now, from there on, there are new emerging categories and that's our job. Like for all four of us on this panel, we do invest in new, new stuff that sometimes it's not the cup of tea, especially it becomes more mainstream for all of the institutional lp. So that's where you need to be very clear with your communication. Understand where they're coming from and you can do carve outs, cost some more money on legal fees but you can navigate that stuff if you have to.
- [40:56]
A
Aditya, any thoughts on that or I want to talk about Robinhood's venture fund
- [41:01]
C
to that I think we can move on. But my take is that there's a lot of cool stuff, stuff to invest in that is not vice right now. There's lots of kind of like, you know, new physical AI biology stuff to focus on. We just don't do vice. We think that there's a bunch of new cool things out there. But I think again a recurring theme seems to be that early and constant communication goes a long way.
- [41:24]
A
Yeah, absolutely. Robinhood Ventures Fund too. Publicly traded closed end fund structure. This is a unique fund structure. It lets non accredited retail investors buy into private companies. My understanding is then the fund managers, the GPS don't get carry. They can't get carry. They get like a percentage of the assets under management. And obviously this is nothing to a company of the scale of Robinhood but I guess Vodaf here and maybe pulling a string and seeing where it leads them. They're targeting 200 million in the IPO New York Stock Exchange August 13th. Maybe it'll go as high as 230 million. And their focus explicitly Y Combinator startups. So competing with the folks on this call to a certain extent and they already hold stakes in 80 private companies. 2% annual management fee and it says here, plus 20% of realized capital gains. Don't know if that's accurate or not. Have you looked at Aditya? These closed end funds and I think Naval and the team at Angellist have one as well. I think it's called usvc.
- [42:32]
B
They do, yeah, it's called usvc. You're right.
- [42:34]
C
Yeah. I mean I think that I haven't looked into these closed debt funds too closely but the sense I get is that it isn't the people who end up kind of being on the other side. The entrepreneurs don't love it. There was kind of a blow up I think just like two weeks ago where I think there was something about USVC getting some stake in Anduril and then Brian Schim kind of called him out and my takeaway was just that this is kind of an example of just like, you know, the way as I understand it, it kind of makes essentially founders feel like they're not in complete control of their cap table and it kind of just leads kind of, you know, it's just kind of icky to kind of like deal with kind of in the current structures. And so I suppose that giving people more access to startups is kind of a good thing. I'm not convinced that this is the right mechanism, at least myself right now.
- [43:29]
A
What are your thoughts, Nico? In the case of the Anduril, it seemed to have been an LP in a fund that was early into Anduril. So their LP interest, which is their right to do, does it mean it gets recorded on the cap table of that startup? That startup has been pretty performative maybe, or effusive in their engagement of SPVs, et cetera. They're an effusive group that love to get in fights online, I've learned. So Nico, your thoughts on the role of. It looks like this is like another interesting opportunity for liquidity and for more access to venture assets. So I don't see it necessarily as a bad thing, even if there's some hand wringing.
- [44:11]
B
My point of view is like it's always good for anyone involved, like founders, existing investors of companies, prospective investors in other companies to have more options to like invest or sell. So clearly there is some new legislation that lets this thing happen. And you see entrepreneurial minds like Vlad from Robinhood to go and seize the day as early adopters in that field the same way that he did with the prediction market stuff, right? So when the times are good and you have a lot of interest from family offices, retail investors to do stuff in startups, this kind of things will do well. Now if the times are not good, the question is what happens to all those investors? Because imagine you being a founder on the board of a company where you have a long tail of investors who might be shielded from you through like a structure like that, but might be unhappy because you this quarter you miss revenue or your reporting is not as great as it is, you know, for a public company like you would have to do some of this management. So you got to be a little bit, you know, thoughtful, who you want to let in and why.
- [45:26]
A
Yeah. Rick, any closing thoughts here?
- [45:27]
D
Yeah, no, I think access is good. Access is good for investors. It's just putting in a position that's not, it's not burdensome to the entrepreneur. And I think probably some of these later stage startups which are closer to liquidity, have more easily understandable models. And I know, you know, the Robinhood fund that had anthropic and OpenAI and SpaceX had a great Debut also and it's probably even traded up. But you know, I'm not sure having them invest in a slate financing at YC makes any sense.
- [46:00]
A
Aditya, let's talk a little bit about the massive number of open source models that have emerged just in the last 60 days that many people are reporting are giving them results similar, maybe not as good to frontier models, but certainly good enough is what I keep hearing. These models are good enough. I'm curious what impact that's having on how you run your firm and then what you're seeing from entrepreneurs and how they run their startups. So let's start with going around the horn here. Has it changed how you're running your firm? You know, finding startups, managing startups, et cetera?
- [46:36]
C
Absolutely. So I mean I think that one of the companies that we incubated at SPC about seven years ago was Basten, which is one of the leading providers of these open source models. So just seeing the amount of usage these models are getting across most of the enterprises that we are familiar with, I'll give you a great example. Actually. I think one of the things that's poorly understood is like if you look at something like Open Evidence, kind of a phenomenal company, you think that you go to Open evidence and there's like one call to kind of an LLM model, but in reality when you hit Open evidence there's actually 50 different kind of instantiations of calls to like various models to run different parts of kind of like what they're serving. And right now like 80 to 90% of the calls within that open evidence kind of one call trace happens to open source models. So their usage is through the roof. Now when you look at it internally the way we look at our firm, everything from sourcing to helping us triage who to talk to to allowing us to compile all of our feedback to getting all of the context on these firms. Everybody at our firm now has their own personal agent at South Park Commons. No one has an executive assistant, but we all actually have multiple agents. What are you using?
- [47:51]
A
Hermes, openclaw, Claude code.
- [47:53]
C
We actually have our own, we have our own harness that we have built from scratch. We actually have a team of six or seven engineers. We started off using Hermes, but then that ended up kind of having like catastrophic memory loss. But nowadays we built our own harness. We actually multiplex between different models. Our favorite open source model right now is Kimi. All these long horizon, kind of like running, kind of like models are fantastic. And frankly, no wait, did I hear Correct.
- [48:19]
A
You have six to seven internal engineers working on a venture capital firm's tools.
- [48:25]
C
Yes, yes, absolutely.
- [48:27]
A
How many people total in your firm?
- [48:29]
C
30.
- [48:30]
A
30. So it's 15. 20% of your team. 20% of your team, Jason.
- [48:36]
C
It is incredible. I cannot. I mean, I'm an engineer. I write a lot of code. As of this February, in our code base, we had about a hundred commits in the history of our firm. Five months later, we have 5,000. All of our GPs have committed code almost on a daily basis. Right. This is something I'm extremely proud of. And the thing that I keep on thinking of is the amount of leverage that it's added to all of us in terms of our ability to go out and do the things that we do every single day. When you go out and you try to find great people to source, that number goes from 15 people to now maybe 50. The number of.
- [49:13]
A
Explain what that is, because that was the first one you mentioned. Sourcing deals, who you source deals from.
- [49:18]
C
No, this is actually just like people who are, for instance, applying to South Park Commons to be a part of our community. Right. Like, our ramp has kind of like, our curve has essentially increased 50% year over year. Our firm hasn't increased by 50% year over year with still the same size. The only way to handle that growth is through all of kind of like the AI capabilities we have built now. When we are able to now essentially go back and give detailed feedback to everyone that unfortunately, we say no. Do we have a 1% acceptance rate for people to get in? Everybody who applies, we try to give them personalized feedback based on what we have seen in the past, we could not do that. Now we actually have a shot of doing so. So up and down the stack, our desire and kind of willingness to use these AI tools is just kind of magnified tremendously. And here's the thing that I think is the most interesting part. It is fun. It is fun to work with these AI models. It is actually a lot like stuff that felt like a chore in the past, like having to go trawl through LinkedIn. Now you can actually just talk to your agent. You're kind of jamming on this thing. So I think there's a lot more fun in the part of the job that used to feel a little bit more routine that I think all of us have tremendously enjoyed. We're all having the most fun that we've had in a long time.
- [50:32]
A
Same with me. Nico, any applications or wins for you personally as an investor and or at the firm.
- [50:40]
B
I mean, look, it's amazing for us as a startup VC with like two people on the investing side to be covering so much ground that we would need like eight, 10 people before, like, at the moment. Like, you can, like, you meet the founder, you ask that founder or some of the other amazing mentors or founders, you know, that you compare notes with. They would say, Jack, Mary and Sally. Jack, great. We already know Mary and Sally. We don't know. Boom. Your AI immediately does some research. You swipe right cold email going out like, this is incredible. Or you meet a company in the space you don't know much about. You can see the competitive landscape in like 3 seconds and then ask you. It tells you, well, for verticapital, I know that you need to pay attention to abc compared to what you looked for before at the. Your previous role like this gives you a lot more bang for your buck. Or I don't need to pay money to buy mailchimp. Boom. Now I have my own custom software version of it. Sure it's not enterprise grade, but does work for me. It's like, great.
- [51:51]
A
Yeah. The leverage, Rick, is unbelievable with these tools. Have you started using it internally at the firm?
- [51:57]
D
If so, we've used a lot of them. I'm not going to. We've done some of the things the other guys have said. One of the most important things is being able to pull in all the data around investment decisions. So we're pretty big. We have a fairly decent size partnership, principal level, investor level, and we actually have projects around each deal coming in, whether it's a new investment or a follow on where it's not only just the deck that we might have sent around 10 years ago or the deck in our internal analysis, but it's every single granola for every meeting we've had with them, every other piece of advice. And that project is you're able to collaborate with the project. So I only have to send you a note saying, hey, Jason, did you look at the competitive landscape? And we heard of this company? The project's just going to answer it. So you walk into any investment review with probably 10 to 20 times more knowledge about that company, that competitive landscape, and having your questions answered probably at a much higher level in real time, which is a lot more fun, as opposed to sending out an email waiting for you to answer. I maybe gave you a bad question. You maybe gave me a bad answer. Our purpose of our investment process is getting the truth as opposed to getting to an answer. And this helps us get to Truth in a lot more transparent way.
- [53:16]
A
All right, when we get back from this quick break, I want to talk about what we're seeing at our startups and how early stage startups are deploying AI to run their companies faster, better, et cetera. Let me take a moment to thank Ro for helping me lose 40 pounds. You've heard of GLP1s and yeah, listen, you see me now, I'm svelte, shvelt jcal. And maybe some of you are hesitating to get started on that weight loss journey. Maybe you're not in your insurance, maybe you are scared of needles even though it's a tiny little needle and you wanna take a pill. At RO co twistnow Road co Twist and I decided internally to run a contest with editorial director Lon and my brother Jamie in sales. My brother Jamie's lost 20 pounds as well and he is doing great. So we're going to talk about that weight loss contest we're having here on the show. Lon is going to get started on his road co journey. If you're interested in that, go ahead and check if you have insurance that will cover your GLP at Roe co Twist. All right, let's go to the next issue which is our startups are growing with AI. I have had a phenomenal experience in our accelerator and our pre accelerator, which is called Founder University, with startups that have raised that 125k check for an accelerator and then they just don't hire anyone and their revenue goes up and then we get to a million dollars in revenue and there's three or four people inside the company. Aditya, what are you seeing in terms of how founders are using this technology to maybe push off hiring somebody or maybe even two or three founders who are not developers or not great developers, being able to get product market fit with a two or three person team and less than 100k, so probably two
- [55:08]
C
separate parts of that Answer. Jason, at South Park Commons, at least we prefer to invest in highly technical founders. So my preference is to actually invest in companies where it's not easy to wipe code or kind of like to use these AI agents to kind of build version 0 of what you have. Right. I think that the most interesting companies today are the ones where code is a immense accelerant but in some ways is not the only limiting factor.
- [55:42]
B
Right.
- [55:42]
C
Like, so you have to have some other core insight. It could be about building semiconductors, it could be about accelerating nuclear fusion, it could be about building kind of like autonomous ships, it could be about Building better grid infrastructure for energy delivery. All of these things will be accelerated by these LLMs and long horizon agents being able to run autonomously. But if your only kind of alpha is in some ways spinning up a code to solve, I think what would feel like a more contained business problem, I think we tend to shy away from those. So I tend to find. But that being said, I think every single founder who is analytical, logical and kind of driven, has high agency, has strong engine, is able to get much, much further, kind of like with a small team of three or four people in conjunction with their kind of like AI kind of capabilities than they did kind of a decade ago. But I personally think that if you're truly looking to invest in generational founders, what I'm looking for today is where it's not just the code, you need to have some other kind of deep sense of domain expertise where code can be an accelerant.
- [56:54]
A
Nico, what are you seeing game on the field with this massive efficiency and you and I lived through it when we saw cloud computing come out and people getting desks at WeWork, right? You took hundreds of thousands of dollars, maybe even a million dollars out of that first year of spend when you didn't have to rack and stack servers and you didn't have to give a half million dollars to a landlord for your letter of credit or whatever nonsense. This seems to be like the next step function down. So what's the game on the field now in terms of that what I call year zero for a startup. And what's your advice to founders what to do in year zero?
- [57:30]
B
I think it's honestly a phenomenal time right now. Why is that? Because if you're a freak founder today in a good way alongside some of your other freak buddies, with all these AI tools and one round of funding and two months of work, you can make so much more progress than what a year ago you needed two rounds of funding, 10 people and a whole year worth of work. So what does that practically mean? It means that you raise one round of funding and you can basically skip to like three rounds later if you're indeed, you know, those kind of freaks. Now as a DTO saying, and as all four of us know, you need to be very authentic, obsessed, high slope learning animal with high velocity. Because if you just are the kind of person, oh, I want to be part of the AI renaissance, it's happening in sf and now with Claude code, I don't even need the technical co founder and yes, I'll go to YC Startup School and I will pick up my idea there and a year later I'll be a unicorn. Well, that's not going to work. There's so many grifters out there now. There's so many people who are joining startups just for the status of it. And I'm from Greece or Italy. I see so many Europeans, even second timers want to come to SF just to be part of the experience, not because they want to build something huge that they've been thinking about for quite some time. Well, look, if you have the benefit of time, all of us who are experienced, right? If you meet somebody today and you meet them again two days from today and oh my God, the pitch sounds so much more refined. It's almost like in a wine that they get better, more sophisticated to the extent that you feel intimidated. Oh my God, that person is still scary good. How the hell did they do that? Or they are 10x engineer like Aditya, where the work output is such that you would expect it would take like 30 to 40 days for the normal founder. You're impressed. That's if you have the benefit of time. If you don't have the benefit of time, just go back old school, Ask them seven times why they're building, what they're building and if they run out of content. Probably you know your answer.
- [59:52]
A
Yeah, the why behind you taking on this crazy mission, Rick, is more important today than ever. Because it used to be. Do you have the skill to build this? Can you get the product out the door? Can you get from, you know, speaking of zero to one, I always say zero to one customers, zero to $1. Can you make that jump? Because that's the hardest one. I find now it's something different. It's like actually I'm trying to figure out if people are going to quit, will they stick with this? Because anybody can get a couple of customers now.
- [60:23]
D
Yeah. Do they have the grit and are they willing to do what it takes? And I think, you know, the people that are able to move the ball down the field and I think Nico put it well, you know, you want to see people that in between the time you talk to them, you think they're going to move the ball down the field 10 yards and all of a sudden you know they're scoring touchdowns. Those are the people who are exceeding expectations and you want to be part of their journey. Oftentimes it's hard to track them as they do that before someone else sees it or they put so many points on the board because you want to catch them at that inflection. So the key thing for us is are they willing to do things very quickly and are they learning fast? I actually thought Paul Graham had a great point and one of the non obvious things he learned after, I guess decades now at YC is how fast do people respond to emails as just a data point. And I've actually really resonated with me after doing this for decades. If people can respond to a question very quickly and very thoughtfully and you know, you know, you know they're on top of themselves in their business. So if you see, you know, you meet with them, you talk to them about their business, maybe the next day you find out, hey, this seems like a competitor, you know, that one of my partners is talking to. What do you think of this business? And if they don't know it or they take too long to respond, it's obviously a signal. But the people who you know, can't sleep at night because they're sweating every part of their competitive landscape, they're staying on top of their business and they want to make sure that happens is incredibly positive signal because as the barriers to start a business have come down, all these entrepreneurs have come, come in and you have to figure out how to sort through the people who are going to get from here to there because it's, you know, it's one customer, 10 customers is easy. Who are the people that are going to get to a million customers? Sense of urgency, a sense of agency and a sense of healthy paranoia that you know, are they sweating their entre, their competitors? Do they, you know, do they hate their competitors? Do they sweat their competitors and are they willing to, to do what it takes to get from here to there?
- [62:34]
A
Let's talk a little bit about this OpenAI versus Apple. I don't know if anybody here is an investor in OpenAI. I'm an investor in Apple, yes. I have a lot of Apple shares I've accumulated over the years and I'm a huge, huge fan of the company. Especially in this new local models on your desktop which I've been playing with, which I think is going to be crazy next year when they launched the new Mac Studio and you know, you got a terabyte on your desktop and just talk about the, the best practice Aditya of talent moving from one company to another. Your thoughts on this kerfluffle and then what it means for people who come pitch us after they've left Apple or Uber or Meta or Dropbox, whatever it is and what they should know when they're working on their side hustle and on their corporate laptop, maybe. Yeah.
- [63:25]
C
I don't know. This is a spicy one, right? I mean, I think that you shouldn't do anything illegal. Don't take trade secrets, don't take documents, don't take things that are clearly the property of the company that you work with onto another company. Right? But in reality, I think Silicon Valley was founded on the principle that there's very easy ways to go from like one company to another, right? Like, without this malleability of employment, Silicon Valley would not exist today. I think that it's crazy that you try to stop kind of like essentially companies, you know, great employees to go from one place to the other. And I frankly think that if you're Apple and you're scared that somebody is going to be able to replicate your insane success, I, you know, I probably give $20,000 a year to Apple, right? Between all my phones, my iPads, my services, my whatever, a South park common spend. If you're worried about essentially somebody being able to replicate that based on like, what you think is a trade secret, then that just feels kind of insane to me. I, for one, would be very glad if there was more competition in the hardware space. And so I think most people carry themselves with a high level of integrity. So in my take here, the onus, the burden of evidence here is really on Apple to prove that something wrong happened. Because in all my years of funding people who have left companies, I have almost never seen somebody taking a trade secret and then using that to start something that, you know, I was actually like, meaningfully competitive to the company that they left. So I think that the burden of evidence here very much is on Apple is kind of my take on it.
- [64:59]
A
I think it's a good take. Nico, what are your thoughts here on what founders should know? If, you know, hey, they're leaving their, you know, Google job or their Apple or Microsoft job and what to take with them and what not to take with them.
- [65:11]
B
Look, when you join any tech company or any company in general, you sign a bunch of documents, right, that you're not supposed to take any of the IP with you. In the event that you leave, anything you invent or you work on stays with the company. Part of the reason of being all of us here in America and doing business here is because people take these agreements seriously and they don't just run around like what's happening in other countries, for example, where people are just copying, pasting the source code. Hopefully we're not going to destroy that awesome, awesome tradition that we have here. You can't stop anyone. You said it yourself, like we're employed at will by organizations that also employ us and can let us go for any reasons. So it can't help anyone. If somebody wants to leave a company that they're big to go and join another big company or small company, they will do it. Just can't stop them. Yeah, we need to accept that.
- [66:08]
A
Super, super simple, whatever's in your brain can come with you. Whatever's on your laptop or in your notes does not come with you. So if you kept a moleskin of all your meetings or granola of all your meetings or whatever transcript, don't.
- [66:23]
C
Frankly, I don't know. I have a strong point of view on this. I don't think that any big company should be kind of like harassing smaller startups with cease and desist and all of these things. It's a bad look. It's like, let there be innovation, let us compete. Right? So I think the fact that Apple is, even though OpenAI feels like a big successful company, they're still kind of a startup. They're not kind of like one of the biggest companies, the most successful companies in the world. So I think the onus, the burden of evidence, I don't know if Apple has handled themselves with aplomb here, especially given what has come out in the last two days in terms of how they have approached some of the reach outs to the OpenAI kind of like council and stuff like that.
- [67:04]
D
I guess as you're leaving a company, the most important asset you have is your integrity. So the last thing you'd ever want to do is have former employers, current employers, maybe worst of all the public, that includes your mom and your dad and everybody else questioning your integrity and you know what's right and what's wrong. You know, what you learned on your job and you know what's granola that you shouldn't take with you or CRMs that you could rip. And there's people that we've all worked with who maybe we didn't pursue legal methods but we knew didn't act with integrity when they left the company. And that's a stain on them and that's a stain on their integrity. And that's probably people we wouldn't work with again. And for young people who are listening to this, you have to keep that as a North Star, that your integrity will always be your most valuable asset.
- [67:54]
A
That is so well said. Here we are at the end of the program. Let's all Go around the horn. What startup did we invest in in the last six months or a year that we're particularly excited about? And we'll give them a little shout out. It's not your favorite in your portfolio. It's just one that's recent that you're excited about.
- [68:11]
B
Nico, we're just very early here at Verdict because we only got started in the beginning of the year. One that we are really excited about right now is a company called Forge Gui. This is a company that gets started by a very young founder, Julia Greco from Texas, who moved to San Francisco. And they're turning every single player from Minecraft and Roblox into a game developer. So in the future, anyone in the world will be able to play their games almost in an Amazon marketplace kind of fashion, where anyone can sell stuff and buy stuff. It's early days, but they go to 300,000 users very quickly in just a couple of months.
- [68:55]
C
Why pick one when you can say two? Right? I'll give you two. Both of them are in the news this week. One of them is Goodfire. The reason I love this company is because there's been a lot of, I would say, discussion around understanding what these AI models are doing, particularly as they go out and they do these log horizon kind of, especially cybersecurity tasks. So Goodfire is kind of the leading AI interpretability lab. And what that really means is that you can go and introspect what is happening in these models. It no longer has to be a black box. They just released Silico. This was a huge release, just kind of yesterday. And you can actually go in and figure out which weights are being activated. Why did the model do something? Why did it kind of choose to pursue a particular line of thought? So that's been really well received. And the second one I'll give you is actually pre scene. This is somewhat relevant to what we were discussing earlier, which is the world's best AI forecaster right now, which is that for any kind of thing that you might put on a prediction market, it can actually go out and give you forecasts that actually beat the best human super forecasters. And one of the founders turned 35 bucks into almost $2 million on CalSheep. Just kind of like using this, right? So we have these models, these systems that can do this super forecasting, kind of like chains right now, which I find fascinating. So Good Fire is a little bit further along. Pre scene. We're kind of like early, but they're both seeing very interesting traction. And I'd be very proud of them.
- [70:22]
D
So, you know, my latest investment, latest announced investment was, you know, slightly different and we still believe firmly in the consumer and the application layer. So we were investors in Overtone Networks, which is Justin McLeod who was the founder and CEO of Hinge. He sold that business to Match and it's probably the most successful dating app of the last 10 or 15 years. And what they were able to do is basically he's able to rethink about if you were building a dating network from scratch and the idea of a matchmaker using the benefits of AI finding someone who you know the AI is going to know a lot more both about you as well as what is a good match. They're also being, which I think is going to be a trend in AI and LLMs of being audio first, so very conversational in the interaction with your AI matchmaker and figuring out why that works. And I think that this hits on a lot of trends we're seeing of hey, AI really doing jobs and not only jobs for enterprises and not only jobs in building code, but doing jobs in the real world like matchmaking, which is super important. And then this application layer and things that sit on top of models but have a better ui, better UX and better customer experience for everybody. So, you know, we're really excited about that. Justin's a excellent serial entrepreneur, built right here in New York. So feeling good about kind of the next level of or next generation of application layer consumer startups that's coming out in the market today.
- [71:55]
A
All right, and I will give a quick plug for Micro One which is doing training data for all of these different AI startups and they have been on a tear. Micro One great founder Ali, who is just one of those incredible sales motion and sense of urgency founders have ever worked with. Ali, Ansari and Micro One, which we seeded when it was a but a $12 million company.
- [72:22]
D
Wow, congrats.
- [72:23]
A
All right everybody, another great show. Aditya, Nico and Rick, well done and we'll see you all next time. Bye Bye.
- [72:30]
C
Awesome.
- [72:30]
B
Good. Thank you very much. Great job too.