How Many Startups Will Survive OpenAI? | E2288

Summary

Podcast Summary: This Week in Startups – How Many Startups Will Survive OpenAI? | E2288

Date: May 13, 2026
Host: Jason Calacanis
Guests: Jenny Fielding (Everywhere Ventures), Dave McClure (Practical Venture Capital), Sam (Slow Ventures), Deb
Main Theme:
The seismic impact of OpenAI and other AI giants on the startup ecosystem—particularly the fate of smaller startups and investors, the ongoing disruption in venture capital models, and the shifting dynamics of value capture, funding, and secondary markets in the agentic, AI-driven future.

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Episode Overview

This episode’s roundtable features Jason Calacanis with guests from major venture firms. They discuss:

• The fallout from OpenAI and Anthropic shaking up the secondary stock/SPV (Special Purpose Vehicle) markets
• How AI is eroding existing startup moats, leading to existential crises for some founders
• The future of secondary and private markets, and democratization of investment
• Dramatic changes in founder behavior, VC decision-making, and late-stage investment strategies as SaaS gives way to AI/agentic models
• Market valuation in “vibes” vs fundamental cash flows
• Industry pivots, legacy business transitions, and the challenge of keeping up with AI
• Notable stories about founders returning capital or switching direction due to AI disruptions

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Key Discussion Points & Insights

1. SPV Market Disruption by AI Giants

• SPVs (Special Purpose Vehicles) have allowed investors to buy pre-IPO shares in hot startups like OpenAI, Anthropic, and SpaceX.
• Recently, these companies have cracked down on unauthorized SPVs, citing fraud risk.
• Dave McClure recounts the early SPV “Wild West” and how controlling the cap table is a growing concern for founders (04:30).
• Deb: “They can have it both ways. These companies have been using SPVs to raise capital… Why are they now saying, oh, it’s not okay?” (04:52).
• Rising fees and predatory practices have led to lawsuits and calls for more regulation.

Timestamps:
[02:19] Context on Anthropic/OpenAI cracking down.
[06:51] Analogy: “This is like Lady Gaga and StubHub selling tickets..."
[09:18] "Single layer SPVs authorized by the company are probably fine."

2. Democratization, Accreditation, and Regulatory Evolution

• Only a tiny fraction (6-8%) of Americans can invest in these private markets due to accreditation rules.
• There’s hope for a "sophisticated investor" test at the SEC to broaden access, similar to a driver’s license for investing (12:02).
• Sam: "It's literally how the rich get richer... the best investment opportunities, let the rich people have them. That’s insane." (13:23)
• Inflation has made existing accreditation thresholds less meaningful.
• Core problem is lack of transparency from companies, not just access (15:40).

3. Valuations, “Vibes Investing,” and Market Dynamics

• Discussion of how valuations—especially for AI and tech—are increasingly driven by momentum and narrative (“vibes”), not strictly by financials.
• Sam: "We as a society have decided to start storing wealth just in stories, right? Not in cash flows." (31:25)
• Deb: "We're leaving fundamentals behind when we should absolutely be paying attention to fundamentals... I want you to understand the numbers of the companies you’re investing in." (41:09)

4. AI’s Existential Threat to Startups

• AI’s rapid progress is obliterating moats, even for startups with significant funding and data advantages.
• Jenny Fielding shares a striking story:
  “A founder that closed a $15 million Series A from a top tier VC and then a half year later... plans to return the cash to investors. You add that, Claude will displace the product and erode the value. This is really happening. Most people are not talking about it...” (00:03, 46:59)
• Founders are increasingly weighing opportunity costs, sometimes opting for roles at OpenAI over continuing their own ventures.

5. Secondary Markets & Liquidity

• The crackdown will weed out predatory SPVs but won’t kill secondary liquidity for employees and early investors.
• Dave McClure: "This is going to blow out the bad actors in the space..." (24:00)
• Access to liquidity (secondary sales) is critical, especially as IPO timelines extend, and has become a high-class problem for many in the Bay Area.

6. VC, Founder, and Late-stage Investor Dynamics

• Major funds push seed/angel investors to waive pro-rata rights in hot rounds, leading to difficult negotiations and sometimes threats of legal action.
• Sam: “If you sign a contract with me for pro rata rights... and then try to renege... I will sue you.” (22:09)
• Late-stage boards often struggle to accept necessary company pivots for survival in the AI era.

7. Value Creation & Capture in the AI Era

• While many believe model companies (OpenAI et al.) will become free cash flow machines, the reality could be otherwise; commoditization and massive cost declines might erode profits.
• Dave McClure: “Tokens are the fastest declining commodity in the world… What if the business looks like a bandwidth provider... It might not be the money-printing free cash flow machine...” (53:15)
• The uncertain future raises existential questions: If not these companies, then who stands to win?

8. Company Pivots, Legacy Firms, and Founder Authority

• Examples like Intercom rebranding around its agentic AI product (Fin) show the painful but essential transformation underway in the SaaS-to-AI transition.
• Only bold founder authority can drive radical pivots (e.g., Elon Musk at Tesla), while most large firms engineer slow tapers (Google/Alphabet’s evolution with Gemini, Chromebook, etc.)

Jenny: “The ones that move fast and took action when they didn't want to... it's probably 50% that I think might make it because they were very decisive. They had great leadership and they had vision and it was painful.” (62:35)

9. Geography, Wealth, and the Life of Startup Employees

• Discussion of Bay Area cost-of-living, the reality of $10 million windfalls still not being “enough,” and why relocating can be a smart move for post-exit founders/employees.
• The new geography of wealth: wealth is concentrating in places like Palm Beach, South Florida; Austin and Miami are becoming attractive for founders and teams.

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Notable and Memorable Quotes

• Jenny Fielding: "People don't want to talk about it because it's scary to admit that this is happening." (00:00)
• Sam: “It’s running a zombie company.” (00:18, 50:42)
• Dave McClure: "To put your nose to the grindstone at a startup for 10 years, 15 years and the outcome is unknown or you get a guaranteed... $10, $20, $30 million package from OpenAI." (00:20, 53:15)
• Deb: “Everybody should have the ability to lose tons of money betting on venture capital because they already have the opportunity to lose shit tons of money buying a house with 5-10x leverage.” (15:20)
• Jason Calacanis: “As these companies get bigger, the prize is larger, people want in more. And also I think right now, as people are afraid about the impact of AI on the job market…people want to own a piece of it—even the thing that might take their job.” (08:04)
• Jenny Fielding: “You’re betting on people at the pre seed and you’re betting on them to figure it out. I’d rather not get my money back but have them try a few different things and try to, you know, skate where the puck is going.” (50:15)
• Sam: "It's literally how the rich get richer... It's insane." (13:23)
• Dave McClure: "Tokens are the fastest declining commodity in the world...it might not be the money-printing free cash flow machine people think." (53:15)
• Jason Calacanis: “Entrepreneurship is about zigging when others zag.” (60:36)
• Deb: "Early stage valuation entry points still matter and fundamentals still matter. I don’t want to give my money to VCs who think it’s all vibes and not based on fundamentals." (41:09)

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Critical Timestamps & Segments

• [00:03] - Jenny recounts existential founder stories due to AI disruption.
• [04:30] - Dave on SPV cap table management.
• [06:51] - SPV analogy: Lady Gaga and StubHub.
• [13:23] - Sam on inequality and accredited investor realities.
• [22:09] - Legal battles over pro-rata rights.
• [31:25] - "We as a society have started storing wealth just in stories."
• [41:09] - Deb on fundamental investing.
• [46:59] - Jenny: “People don’t want to talk about it... it’s scary.”
• [53:15] - Dave: “Tokens are the fastest declining commodity in the world...”
• [62:35] - Jenny: SaaS-to-AI transitional companies—who makes it.
• [73:33] - Deb: Only founders have authority for radical pivots.

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Humor & Memorable Moments

• Jenny on predatory SPV brokers: "They’re not even doing targeted marketing" (07:01)
• “We're storing wealth in vibes, not cash flows.” – The millennial investing theme (31:25)
• The “10 million in SF still makes you Brokey” Twitter viral thread discussed with eye rolls (57:32)
• Reflections on Venture Capital conference antics and historic events—puking at TechCrunch 40 and unions protesting non-union tech events (83:14)

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Resource Links Mentioned

• Everywhere Ventures
• Practical VC
• [Trading Places Podcast](secondary market news and analysis, with Deb & Aman Virgie)

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Final Takeaways

• Huge changes are underway. OpenAI and similar AI advances are not just challenging the tech status quo—they threaten entire business models, erode startup moats, and amplify the need for speed, bold pivots, and founder-led reinvention.
• Secondary markets will survive but be reformed. The “bad actors” may be cleaned out by regulation and company crackdowns, but the need for liquidity and diversification is greater than ever.
• Valuations and riches are increasingly about narrative and access. Winners are concentrating faster, and the “vibes vs value” debate is far from settled.
• Founders and VCs must adapt or perish. The AI agentic era is here; only the fast, the transparent, and the fundamentally sound will survive.

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For Startups, Founders, and Investors
This is a can't-miss episode for anyone watching (or betting on) the next generation of tech. Hear how the new world is being built—and who risks being left behind.

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End of summary.

Transcript

[Jenny Fielding]

People don't want to talk about it because it's scary to admit that this is happening.

[Jason Calacanis]

A founder that closed a $15 million Series A from a top tier VC and then a half year later they plan to return the cash to investors. You add that Clyde will displace the product and erode the value. This is really happening. Most people are not talking about it. It's kind of wild.

[Sam]

It's running a zombie company.

[Dave McClure]

To put your nose to the grindstone at a startup for 10 years, 15 years and the outcome is unknown or you get a guaranteed, you know, 10, 20, 30 million dollar package from OpenAI.

[Jason Calacanis]

Do you think that the companies in your portfolio that are facing the similar chasm going from the SaaS era to the AI era or the agentic era are going to make it?

[Jenny Fielding]

Probably 50% that I think might make it.

[Dave McClure]

It might not be the money printing free cash flow machine that people think it's going to be.

[Jason Calacanis]

This week in Startups is brought to you by Pilot. Focus on your product. Let Pilot handle your bookkeeping. Pilot provides the most reliable accounting, CFO and tax services for startups and small businesses. Head to pilot.com twist and get $1,200 off your first year grasshopper bank. Time is money. Don't waste either. Go to Grasshopper Bank Twist and get an exclusive $500 cash bonus just for opening an account and quo, formerly OpenPhone. It gives you a clean, modern way to handle every customer, call, text and thread all in one place. Try it free and get 20% off your first six [e-mail] twist. That's quo.com twist hey everybody and welcome back to Twist. Today is May 13th. It's Wednesday, which means it's Venture Capital Roundtable day. I'm joined by a bevy of some of my favorite people, including of course, my usual co host, Jason Calacanis. Jason, how are you?

[Dave McClure]

I'm well excited for today.

[Jason Calacanis]

We also have Jenny Fielding from Everywhere Adventures. Jenny, how's life on your end?

[Jenny Fielding]

It's good, good. I'm excited to be back. It's been a while.

[Jason Calacanis]

It has been a while. If you don't know her firm. Everywhere Ventures does essentially raises capital from a collection of about 500 founders and then sources deals from the same group. Portfolio companies include Star Cloud, Headway, Devo and others. Jenny, good to have you here. Now, Sam Slow Ventures. How are you doing?

[Sam]

I'm great man.

[Jason Calacanis]

Glad to have you here. Major port cos include Next Door, Robin Hood, Human interest, air table, et cetera, et cetera, et cetera. Busy man. And then finally we have Dave McClure from Practical Venture Capital. Dave, how are you doing?

[Deb]

Fantastic.

[Jason Calacanis]

Good to have you back. You run a secondaries focused fund that also buys GP and LP commits, which is a big deal because we're going to start today by talking about the most important thing in the world, which is news that Anthropic and OpenAI dropped successive bombs on the SPV market. And if you don't know what that means and you're listening to this, imagine that you can't buy shares in Anthropic or Open AI because you're not a vc, you're not an employee. So you go to somebody in a back alley behind a dumpster, they open up a coat, they have a couple of shares in there and they say, don't worry, that's got some Anthropic for you here. Yeah, exactly.

[Sam]

Just, just cut with a little bit of like, you know, sugar or something.

[Dave McClure]

Yeah.

[Jason Calacanis]

In this case the fentanyl is the layered fees. And it turns out that the two companies in question that have these great assets don't want you to trade them. They want to have permission. And so a lot of what happened

[Deb]

to democratization of capital, what happened to the little guy? Just stomp it all over them here.

[Sam]

But Dave, I'm confused. Like Most companies have ROERs on stock transactions. Like this is not non standard in the industry. I'm actually surprised they didn't already have those limits.

[Deb]

Well, I think Anthropic is picking and choosing who they want to be in their deals. I think Single layer authorized SPVs are still fine. Unauthorized SPVs, multi layer SPVs might start to get into weird territory, but there's going to be a fuckload of lawsuits regardless.

[Jason Calacanis]

That's what I wanted to ask about.

[Dave McClure]

Yeah, I mean having been in the SPV game for. Since its inception and Naval kind of taught me the industry. I was the first actual syndicate on angel is famously because he sent me a link to it, I signed up and he's like, hey, check this out, this is what we're going to do next. And then I tweeted it and he's like, oh, we didn't announce it yet. And I tweeted my syndicate and so if you are doing this and you don't have permission from the founders if you. It gets very annoying for them because now you're creating multiple ways to get on the cap table and they may not want certain people on the cap table. Maybe. I'm an investor in Uber and Sam is an investor in Lyft and Sam is doing some backdoor thing to get a shitty one. Well, I mean, it's just, I think that was the actual game on the field, right? You were Lyft.

[Sam]

I wasn't actually an investor. No. Fine, fine.

[Dave McClure]

But the truth is it's annoying to founders. Mark Pincus was the first to try to say, hey, I'm going to not allow this. And I want it to go in an orderly fashion. Elon has been very strongly managing this every six months. So it's kind of long overdue. And it's too much of the wild west out there and people creating synthetic shares in companies. This is Jason.

[Deb]

They can have it both ways. These companies have been using SPVs to raise capital and create a competitive market for their shares and their employees want to want liquidity. So like, why, why are they now saying, oh, it's not okay, when in the past they've just to push back?

[Sam]

I don't. Again, I might be out of date because I'm now old, but like, look, when I was at Facebook, used to be called Facebook back in the day.

[Dave McClure]

Yes.

[Sam]

This was like an unbelievably tightly controlled process. Right. Like, in fact, the way Yuri made a ton of money was by being the authorized buyer of share. Like, I don't.

[Deb]

So when same for Saka and Twitter.

[Sam]

So. And like, by the way, in that era there was a lot of concerns about the look throughs being like you have too many people on your cap table and you have to go. And so I don't. What did I miss in the last decade where some companies were just letting like unhinged SPVs happen? Like there's something I missed because to me this is the way it's always been done. And most companies do have like rofers on share transactions.

[Jenny Fielding]

I mean, have you seen the rise in all the brokers though? I mean, I get.

[Sam]

Yeah, but those are all scam. Like half of those guys are scammers. Like they're not real. Right. Or like, I mean, trust me, I've actually dealt with one of them recently. I won't name names on something. And like, I don't think it's true

[Deb]

that all or half of them are scams.

[Jason Calacanis]

Some.

[Dave McClure]

Well, Sam, Jenny did an actual study of it and it turned out to be 49.7% were scammers. So he rounded up. But I guess, Jenny, my question to you then is what did happen here? Did the companies just basically leave the barn door open? And maybe they did it because they wanted there to be Some liquidity. That seems to me what I saw happening, which was, hey, you know, it's, it's not hurting anybody. Let's let it rip. And then, Jenny, I think what happened eventually was the multi tiered ones and then the 10% load in fee, since everybody wants to get into Claude, OpenAI and SpaceX. And that's where maybe the founders were like, hey, that's our money, that's our money. That 10% load in fee should be going to us. That's coming off our valuation.

[Deb]

Jason, this is like Lady Gaga and StubHub selling tickets. And like, it's okay if one layer does it, but now if like three different people are doing it and I'm not getting that money. Wait, no, that's not cool.

[Dave McClure]

Yeah, go ahead, Jenny.

[Jenny Fielding]

I mean, in my experience, and not talking about some of these big guys, but in the, you know, the larger companies that I've been in, the founders are kind of busy running their business, right? And so they've maybe like, you know, kind of looked the other way for some of these. They're friends and friends of friends. And that's how it started. I think, you know, maybe in the last decade since Sam was at Facebook, there's been a whole cottage industry that has literally popped up and, you know, is kind of preying on this and it's taken it to a new level. I get inbound from these guys being like, hey, you know, do you want to sell Star Cloud? Do you want to buy StarCloud like an hour later? And I'm like, they're not even doing targeted marketing. And so, you know, I don't know if they're legit or not. I actually have spoken to some, but I think that it's becoming quite predatory. And I really wanted to talk to Dave today. So this all worked out on where he thinks the lawsuits are going to be and what's going to happen in the anthropic and OpenAI case.

[Jason Calacanis]

One key difference about what changed is that when Facebook went public, it was worth about $100 billion. And today we have several companies.

[Sam]

That used to be a lot of money.

[Jason Calacanis]

That used to be a lot of money.

[Dave McClure]

Now it's an A round.

[Jason Calacanis]

Now it's no. Now it's like a pre seed round for a NEO Lab. The point is, I think that as these companies get bigger, the prize is larger, people want in more. And also I think right now, as people are afraid about the impact of AI on the job market and the economy as a whole, in some cases we have some Polling data in the docket. People want to own a piece of it and who wouldn't want to own a piece of the thing that might take their job? So I can see the demand rising. But, but Dave, on the point about the mechanisms here. So Anthropic says any third party claiming to sell Anthropic shares to the public, whether through direct sales, forward contracts, tokenized securities or other mechanisms, is likely engaged in fraud. Fraud's a big.

[Deb]

That's their opinion. That's their opinion. I would want to go to a lawyer to. I mean, some of what they're saying, I would say is probably true, but some of that is probably a little bit of, you know, marketing and fear and spreading fear and doubt. And I don't think Anthropic is the reference point for the entire market. Like it's, it's true that there's a lot of volume going to SpaceX, Anthropic and OpenAI, or at least was going to OpenAI, but that's not, you know, 100% of the startups in the secondary market out there. And SPVs are a useful vehicle for folks to raise capital, assuming they're done in an organized and authorized way.

[Jason Calacanis]

Yeah, like a surgical scalpel is a tool and a weapon. Just depends on how you, how you use it and where you stick it.

[Deb]

Single layer SPVs authorized by the company are probably fine.

[Sam]

Yeah, well, the company is fine. Like, what's the problem, you know?

[Deb]

Well, I'm just saying that statement that they made was pretty broad and sweeping. And I'm pretty sure there are SPVs that anthropic authorized in the past.

[Dave McClure]

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[Deb]

Or even 5% on a $50 million allocation is decent chunk of money.

[Dave McClure]

It's great money for this weekend to pay off your bookie and go to Vegas and get more in debt. That's. Those are the characters here that are emailing all of us. And somehow they get the cap table every time somebody gives them a cap table and then they start emailing you. It's dysfunctional. What it does speak to at the end of the day is we have a broken system in America of accreditation where only 6% of the country can participate in this. But half the country wants to participate or 30% wants to participate. And this is where I think what Naval is doing with usvc. These closed end funds could take a little of the pressure off. And most importantly had the chair of the SEC on the all in interview program a month ago. They're going to create a sophisticated investor test. The SEC has been charged with this. So imagine going to sec.com sophisticated investor and you take a test, like a driver's license test, and then you can put money into spv. So that would be the ultimate solution here.

[Sam]

Can I be provocative, please?

[Deb]

Absolutely not.

[Sam]

I thematically agree with you and I've been saying this forever. Like, which is exactly this, which is there obviously should be a test. There's lots of unsophisticated investors that have a million dollars and blah, blah, blah. And like, you just take a test and then you can invest whatever the hell you want. I'm a big free markets guy. I get it.

[Deb]

Because everybody who's driving on the road right now is safe and not going to.

[Sam]

Cause, look, I just think it's ridiculous. I'm totally with Jason and this is like not a new problem where it just makes no sense. That it's literally how the rich get richer is like, oh, let's take all the best investment opportunities and let the rich people have them. Like, if insane. So I'm with you on that, but let me play devil's advocate, which is, you know, the rate of what you need to be an accredited investor is actually shockingly low. Like, it used to be high. Right? Like, and the funny thing is just with inflation over the last 20, 30 years, it went from being like, I think it's like $1 million in like a liquid net worth or income over $200,000 a year, 300,000 joint. That was a lot of money when the rules were written. And the natural law of inflation just made that not that much money. Like, I'm not saying it's nothing. Right. It keeps some people out. But I don't think a lot of these SPVs, like, people who aren't accredited investors, don't have a ton of liquid capital they're playing with. Like, I think these SPVs are like largely accredited investors, right? They're supposed to be in most cases. And it's not. It's a problem to solve. Is not as big a problem as it was 10 years ago just because of inflation.

[Dave McClure]

It's 7%, 8% of the country when you're correct, because of inflation, you know, doubling every 10 years. You know what I think we're attacking?

[Sam]

But also it's. Jason, here's the thing is like, that's totally true. And like, we're in this crazy inequality era, right? Like, it's wild what's happening. There's like the rich. That's just what's happening. That's the nature of tech. AI is compounding fine. But like, when you start slicing, it's. Who has Investable assets. It's not really 7%. Right. Because like half the company, half the country owns no equities. Right. Like so really it's a lot higher representatives than people like to admit in

[Jason Calacanis]

terms of people who own equities. Yeah.

[Sam]

Only half the country owns equities at all. Right. And so like when we're like this is this huge problem, it's like, you know, 30% of people are accredited investors who could possibly invest. And like the people who aren't, should they really be buying space x with their $10,000? Like, I don't know. It's a narrative I love. I mean I'm an investor, but like it's a narrative. It's like not exactly a cash flow driven valuation.

[Deb]

I just think we're attacking the wrong problem. I mean, personally, I think everybody should have the ability to lose tons of money betting on venture capital because they already have the opportunity to lose shit. Tons of money buying a house with 5-10x lever leverage. So like people don't.

[Sam]

Come on, what about that's not where they're losing their money.

[Dave McClure]

Yeah, I mean prediction markets, gambling.

[Jason Calacanis]

Yeah.

[Deb]

People lose money betting on real estate all the time. The, the thing that I think we're not attacking is the lack of transparency from the company side because like everybody talking about, oh, I need to be a credit investor and know what I'm doing. Like, who's got access to company financials when they're like doing this investing? People are not investing on balance sheets or financials. They're investing on vibes.

[Sam]

Like to push you, Dave. Also like, everything's just priced on vibes anyway. Like what?

[Deb]

Well, it shouldn't be. But that's what I'm saying is like, you know, we collectively venture capitalists and companies should be pushing for more transparency information in private markets as well as public. You don't have to like disclose everything. But I think it's a disservice to the industry when every company wants to be like completely private with their information. Like, if you're doing well as a company, why shouldn't you want to be fucking telling me what's your revenue? Growth and profits are preach.

[Jason Calacanis]

That's the whole point. I absolutely agree with that.

[Deb]

There should be a lower cost of capital available to people who want to provide that transparency. Right now it's the opposite. We're giving people cheaper cost of capital for being private. That's fucked up.

[Sam]

Sarbanes Oxley made being public super annoying and expensive. Right. Like back in history. And like it just Is like, not.

[Deb]

We went too far.

[Sam]

It just like, it was a terrible set of regulations. Right. And so all of a sudden, no one wants to be public. What you're basically pushing for is effectively half of the public market, which is like, yeah, let anyone buy it and like, let the information be public and make it all public. That's like half of take out the governance piece. That's what it is. Like, the question is, like, what standards? Like what?

[Dave McClure]

After we get back from this quick commercial breakfast for the cause, Jenny, I want you to give us your opinion of what should happen in terms of accreditation and private market transactions like this. But let's take a moment to just turn on our applaud and AI readers. And thanks to Plaid for supporting the podcast. I use this all the time to take notes when I'm on hikes on the ranch, which I did this morning.

[Jason Calacanis]

Jason, you have two different types of plaids. One that goes in your phone, one that clips to your chest. Which one do you prefer and why?

[Dave McClure]

Hmm, that's a great question. When I'm in meetings, I like this one. And when I'm skiing, I wear this one. When I'm. Yeah, otherwise I have it on the back of my phone. I basically have both with me at all times.

[Jason Calacanis]

Double fisting, as they say, while skiing.

[Jenny Fielding]

That's impressive.

[Dave McClure]

I leave it on for the whole day while skiing, and then I just talk to myself like a lunatic. And then at the end of the day, I get a transcript and action items and I say action item or blog post or notes or to do list. And then it just organizes it all for me. Give them the code, Alex.

[Jason Calacanis]

Yes. Plaud. AI twist. P L A U D A I twist. Use the code twist. Save 10%. Stop forgetting things. Be a better employee or a better boss.

[Sam]

Plod.

[Jason Calacanis]

Get one.

[Sam]

All right.

[Dave McClure]

Okay, Jenny.

[Jenny Fielding]

I run a small fund where we our business model is spv. So when I see these huge statements, you know, we write small checks at the precede and then we offer SPVs to our accredited and wonderful LPs who happen to be a community of founders. So when I see these broad statements by the model companies, it gets me a little bit nervous that there's going to be kind of broad crackdown. So while I agree with you that there should be democratization and that there should be standards, I also don't want that encroaching in our business model. And I don't think that's necessarily fair. So I don't have any huge insights on it, but I think it was Kind of overblown. And as most people said here, a lot of this is already baked into the docs and people are just getting, you know, kind of shafted.

[Dave McClure]

And Jenny, when you have this small seed position and then the company gets big, you have the right to that pro rata, to your syndicate. Right, that's in your docs.

[Jenny Fielding]

Correct.

[Dave McClure]

That's how I structure.

[Jenny Fielding]

And then also, you know, we have great relationships with our founders, and so we're in communication with them. They're introducing us to their lawyers, and it's all, you know, a very transparent process.

[Dave McClure]

Do you ever have a founder say, hey, thanks so much for supporting us early, but we don't want you doing SPVs now, we want you to waive your pro rata. And then how do you handle it?

[Jenny Fielding]

I have had that. It makes me quite grumpy because, quite frankly, you know, I was their first supporter before everyone was excited. And, you know, we have it in writing. And, you know, I do believe that you have to earn your pro rata and hopefully, you know, we do that. But it happens very infrequently, I would say, but once in a while, it really gets under my stand.

[Dave McClure]

Do you hold your ground?

[Jenny Fielding]

I have. I'd say sometimes it's. It's more, you know, you kind of just write off the founder and you're like, all right, well, this wasn't the right.

[Sam]

Jenny, don't say, even if you sometimes cave, you have to hold the line, which is. We never cave.

[Jason Calacanis]

Yes.

[Sam]

Don't put it in the. Don't put it out there that you cave. That is not what you want for us or for you.

[Jenny Fielding]

Yeah, I'd say it's happened. I've. I've invested three.

[Sam]

Contractual rights are contractual rights.

[Dave McClure]

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[Jenny Fielding]

Correct. It's. I've invested in 300 companies. There have been three or four cases where the founder has, you know, come back and basically, you know, tried to get us to waive our pro rata. And I will tell you honestly, it's sometimes it's not the founders, it's the big guys. The big.

[Sam]

It's always the big founders. No, the big investors, they will always

[Jenny Fielding]

say, yeah, whenever, putting pressure on the founders. And then that puts me in a position where, you know, I have to call up the, you know, series A or B investor and say, listen, you know, this probably isn't going to what you want to be doing so well

[Sam]

that, I mean, for what it's worth, that, I mean, this is like for sure, in Hot Rounds, the Series A investors will always tell, especially young founders.

[Jenny Fielding]

Yeah.

[Sam]

Oh, you have, you have pro rata rights, but seed investors will always waive them. Don't worry about it. And I've had that conversation several times and like, for me, it's like a complete non starter. It's like, I will sue you. Right. Like I have contractual rights and then that's it.

[Jenny Fielding]

Yeah.

[Deb]

You want to be putting it out there that suing founders is.

[Sam]

I will 100% put it out there that if you sign a contract with me for pro rata rights, I like to come back and try to renege on them. I will sue you.

[Jenny Fielding]

I take a slightly different approach, which is like you try to educate and support the founder and basically try to get them to push back. And if that doesn't work, then you call the series A investor and you say, I'm never sending you any deals again.

[Jason Calacanis]

Yeah. Jenny, can you explain why these major funds are pushing down so hard on CJ investors to give up their pro rata rights? Everyone in this conversation knows, but not everyone listening understands that dynamic.

[Jenny Fielding]

Yeah, in a competitive round, there's just not enough to go around. Right. So we recently had a case where it was a series B and there were three kind of leads, right. And it's like you can't get three people all getting their 10% into a round. And so what the founder did was the founder came to their pre seed investors and said, hey, I'm going to need you guys to sell. We were like, well, it's not actually how this works, so why don't we explain this to you. We went back and forth a bit and ultimately we did not. But we did have some conversations with those Series B investors who we supply deal flow to as, you know, the smallest person on the cap table. And, you know, it kind of all worked out. So there have been a few cases where it hasn't, but very few.

[Jason Calacanis]

I just want to understand broadly, though, it sounds like the secondary market itself is not in trouble. The worst actors in the SPV market are over their skis and just got their earlobes flicked.

[Sam]

Dave.

[Jason Calacanis]

But the model of buying shares, you know, on the secondary market in general will stay as it was, will hold. This will not kill it.

[Deb]

I don't think this is going to end the secondary market or the SPV market. It's probably will clean up some behavior that should have been cleaned up anyway, and that's probably a good thing. I think future lawsuits might result in more regulatory oversight and that would be interesting to see.

[Dave McClure]

This is going to blow out the bad actors in the space because the people who are buying into it, you know, who are saying like, I want to put 250k into anthropic or SpaceX, and they're like, yeah, give me 10% and I got this synthetic thing and yada yada, they're just gonna be like, this isn't worth the risk. I'll just wait to go public. And I think that's it's gonna put cold water on that group of people I know with. There was one robotics company that was funded like just like crazy valuation, all on SPVs, no VC pricing around. I think it got to like 30 or 40 billion. I wouldn't say the name of it, but I may have just inadvertently said the name of it. And yeah, there was all kinds of shenanigans going on. And then the founder has to worry, am I losing control of my cap table? Am I losing control of the story and my valuation? Because if they're going out there promising stuff, they don't have information rights. They're telling a story to investors. Is that the story you want? And that's the problem? Yeah, there were people who were telling me the figure thing was just a wild west of all SPVs they'd ever seen. I don't know if that's true or not. No dig to the founder.

[Jenny Fielding]

But I just wanted to add, you know, one thing which is I think it was anthropic they actually named some of these broker guys who are in my inbox every day and they actually named some groups, I won't say here that actually aren't brokers. They're just, you know, the back office or the container for the spv. And those people had to then come out and say like, listen, like we, you know, we check all documents and like we haven't done anything, you know, here.

[Sam]

So I think it's okay to name.

[Deb]

There is SIM decide. The CEO and founder of HIVE wrote a very prominent letter this morning about that structure.

[Jenny Fielding]

Right. But I'm not talking about Hive because they are as far as I understand, a broker. But I think they name Sidecar like some other folks. And you know, it's just, I don't think we should scare people away from the industry is my point.

[Sam]

Well, no, I agree. I am curious where you guys as VCs it's like, who, where the hell is all this money coming from? Because like it's an interesting thing. Like you know, the, the Middle east is kind of like out of money, right?

[Deb]

Like that is so not true. Sam, you are actually. I don't know, I heard oil prices are up. You think they're out of money in this environment? Come on dude, do the math.

[Sam]

Listen, let's see how it plays out in the next few years. My, my, my sense is, is that that honey pot which has been the last few years of ridiculous amounts of money is like slowing and going to stop. You know, VCs keep absolutely wrong. I don't know, Alison.

[Deb]

Those guys went into anthropic and SpaceX just as much as anybody else.

[Jason Calacanis]

They still have a lot more money than I do. But I think Sam makes a good point that when you look at the minimum oil price for many governments and oil producing countries in the Middle east, it's like 100, 110, 120. And so even though oil prices have rebounded, Dave, that does not mean they have massive surpluses that are new that are coming into their coffers. So I've always thought that the biggest push into AI was get in early while we still have the capital. Build something that will endure. And then as the oil industry slowly.

[Deb]

Alex, the sovereign wealth funds of Qatar, UAE and Saudi have over $4 trillion. The royals across those companies have hundreds of billions of dollars. But they are not shutting off the

[Sam]

spigot they pulled out of live, right? They're pulling back on sports, they're pulling back rationalizing their portfolios.

[Deb]

I'm talking about Saudi specifically.

[Dave McClure]

I can adjudicate this officially. So Dave is in the Middle east, he's very close to it. And Sam, you're absolutely correct. They did get over their skis in a lot of projects. Neom specifically and Liv would be great examples of that where maybe they started spending a little bit.

[Deb]

Neom for sure.

[Dave McClure]

Neom for sure. And then in some cases they were maybe doing too many venture funds and didn't have the infrastructure in place maybe to manage these things properly. And I think they're catching up to their spending. That's what I see when I go over there is hey, we need more partners. We need to have more eyes on these projects. And they're just refining their strategy. So I call it like splashy cashy. Somebody who's made a bunch of money goes to the casino. They just start playing a bunch of games. Then the next time they go they're like okay, which games am I going to play? Where do I want to put chips down? So I think this is just the natural second decade evolution of their participation in private stock stocks generally. The specific thing to your question Sam, of where the money is coming from. We have seen an upper. The upper middle class or the lower part of rich people in the United States has grown massively. So everybody's moved up. But there's a very specific group of people which is equity and owner base based middle class. And when you see the charts of how that's grown, it's kind of nuts. And it's grown at the expense of the lower and middle middle class. Is the upper middle class moving into.

[Sam]

So it is. But just to push them to connect the dots is it is accredited investors.

[Dave McClure]

Yes, 100 it's accredited unless they lied on their self accreditation forms, which I would say maybe, you know, low single digit percentage people do.

[Jenny Fielding]

So mine is anecdotal, but we just did a very large SPV in a buzzy company and all the money came from Palm Beach. So all families, they're not Middle East. That is concentration of wealth in certain areas in this country, including South Florida. And they all want into certain categories.

[Dave McClure]

So their 401ks are doing really well. The businesses they own, whether they own a restaurant or an H vac or a finance company. Like the rich are getting so much richer because of the stock market and the poor are staying the same. Which goes to your point.

[Deb]

Certainly last five years.

[Dave McClure]

Yeah. Of what's happening in the United States in terms of the haves and have nots. If you own equities, you're running away with it. If you don't own equities and you're making income, you're getting hobby. Yeah. And for an accounting firm, keeping your books in order is table stakes. It's the bare minimum, it's the baseline. But for an early stage and series a founder, you need a partner that actually understands the world of startups. It's very different. And you have to understand the world of venture capital because startups have boards and venture capitalists who've invested. And that partner is Pilot. Pilot is the largest accounting firm that's built specifically for startups. You're not just doing your taxes, you're getting CFO level advice on running your company. And those aren't just words. They have actual former CFOs and other seasoned operators on hand to answer your growth and scaling questions directly. All of their tools are intuitive, they're easy to use. You can track your expenses in real time. And Pilot's going to help you model cash flow scenarios before you make big decisions. So stay focused on scaling and let Pilot take care of the books. Plus Twist listeners get $1,200 off their first year. Go to pilot.com twist to get started. That's pilot.com twist yeah.

[Sam]

And the interesting thing about this is it's not just technology. There's also this like feedback loop cycle to the market, right? Where basically what's happening is like the market is going up because the market went up, right? And that is a real, I mean that is like a classic. It's interesting because on one hand that's classic bubble dynamics, right? It's up because it's up. But on the other hand, I keep going back to this thing that we as a society have decided to start storing wealth just in stories, right? Not in cash flows. Right. If you think about it, it's like,

[Dave McClure]

give you an example.

[Sam]

Well, I just say like the global clearing price. If I said I have a billion dollars of free cash flow, there is a global clearing price for that based on the growth rate or whatever that we could all model and everyone globally would basically model it the same way. And you come up with the value of that cash flow, none of the assets, that anthropic, OpenAI, SpaceX, all these enormous numbers, the tie to business logic is basically non existent in terms of valuation. It's a tie to, for those companies.

[Deb]

Yeah, I agree.

[Sam]

But that's basically everything in tech, right? Like I can't name the last.

[Deb]

That's, that's not true. That's not true. There's companies that are still valued on Fundamentals not. There's more companies being valued on Vibes recently.

[Sam]

Well, but I'd say the ones that are valued on fundamentals, like the movement in the stock, has much more to do with the vibe shift around it because it's just a multiple expansion question than like revenue growth. Right.

[Dave McClure]

Or profit.

[Deb]

But this is my point is that I think, you know, we're, we're leaving fundamentals behind when we should absolutely be paying attention to fundamentals. And in our podcast every week we focus on Valuation Corner and we analyze companies and there are some that are way crazy out there and there are

[Dave McClure]

others that are Example, Palantir comes to mind.

[Deb]

Palantir got ahead of itself kind of crazy.

[Sam]

Well, I would put this. My basic point of feedback cycles is like, if you were like being a fundamentals, if you're a value investor over the last decade, you're screwed. Right? You've made like no money. Right. Whereas if you're a Vibes investor, you are like crushing it.

[Jason Calacanis]

Right?

[Deb]

Like until you're not.

[Sam]

I agree with you. I struggle with this. I'm not saying that the Vibes investing is right in general. I'm not a Vibes investor and I'm not an anthropic or opening.

[Deb]

But if you look at the public mag, seven, you know, five of those seven, maybe six of those seven aren't crazy on fundamentals. Tesla's a little bit crazy on the fundamentals, but the other ones are not. They're, you know, you know, 20 to 25 pe, maybe 30.

[Dave McClure]

Jenny, are we, are we massively ahead of our skis, as you know, in terms of the public markets and the valuation of these companies and how they're being valued and will we return to maybe a scale at some point where we actually weigh them and say, what is the free cash flow from this company?

[Jenny Fielding]

I think it depends if there's other asset classes to go in. Right. A couple of years ago, everyone was very excited about credit that turned out not to be a great place. And so they're just looking for interesting opportunities. So right now the stock market's crushing. I think what we're here all interested in is what's going to happen as these companies go public and more liquidity kind of starts coming back. So that's the question I'm more interested in is like it's really hard to raise capital right now as a pre seed investor, but I think the floodgates are going to open with space and these other ones.

[Dave McClure]

Here is the share of families in each class. 1979 2001, 2024. And what you're looking at here really is the lower middle class going from 24% to 15%, the core middle class going from 35 to 30%. And then the upper middle class went from 10% to 31%. And then rich people went from 0.3% of our society. It went up 10x since 1979. So you have tripling of the upper middle class and 10xing of the rich.

[Sam]

What's kind of interesting, though, is this chart says that the poor and lower middle class are declining.

[Dave McClure]

Yes.

[Sam]

So, like, I guess the question is, what's the basis of how you define these buckets?

[Jason Calacanis]

Yeah. What are the. What are the bands here for income or wealth?

[Dave McClure]

Jason? Yeah, Let me look it up while we continue the conversation.

[Jason Calacanis]

But on the point about excess and liquidity, Jenny, you make a really good point. This week we saw Fervo Energy go public venture backed. We're seeing service go public venture backed. A little bit of liquidity there. Denny, do those two IPOs drive any meaningful amount of liquidity through venture, or are they relatively sideshows as we wait for the big three, SpaceX, Anthropic and OpenAI?

[Jenny Fielding]

My understanding of LPs is that, you know, they kind of work on, you know, sentiment and vibes and not necessarily reality. So I think seeing a few things gives them hope. And we start. I mean, we can literally track this, like, the amount of inbound we get from LPs and how fast they kind of get back to us based on some of these IPOs. So I don't think that moved the needle necessarily, but I think there's a lot of anticipation of some bigger ones, and I think those will move the needle, but we're actually seeing a lot more inbound.

[Jason Calacanis]

We'll see.

[Sam]

There might not be, though. I mean, this is the problem. I mean, I have this on a personal level, right, like, which is, you know, I have a relatively small relative slice of, like, the SpaceX, you know, thing. And I'm excited. I mean, like, you know, that'll be a great return for me personally, just from a PA perspective. But it's a really interesting question about whether you sell and redistribute back into other things or not. Right. And it's not clear.

[Dave McClure]

Right.

[Sam]

And I'll give you the two.

[Jenny Fielding]

If you were an institution and that was really your job and you were waiting.

[Sam]

I don't know. I mean, I talked to a lot of. We have a lot of digital question, which is like, there's a really Big difference in institutions that pay taxes and then those that don't. Right. So if you're a tax free institution, you can reallocate for free. That actually makes sense. You maybe take some. But if you do pay taxes, you're paying 40% taxes, 50% tax, call it 40. In California it is so expensive to redistribute. And on the flip side, you know, we are living in this new feudal age of like effectively these like fiefdoms where number go up because number go up and everyone has to buy space X and that. So it's actually really unclear, I understand historically how this work, but it's really unclear to me how this redistribution is going to work on these IPOs.

[Jason Calacanis]

Dave, what do you think?

[Deb]

Just to get to some numbers here on the Cerebras IPO projected float is going to be probably between four and a half to $5 billion back to investors. That's meaningful capital. Might be the only IPO we see before SpaceX and after that because SpaceX is going to take up a lot of the available capital in the market and maybe Anthropic and others might before the end of the year. But I think our numbers are way out of whack because we are focusing on anthropic, SpaceX and OpenAI being these massively large IPOs. Venture capital doesn't need that big an IPO to have meaningful paydays. It's still fine to have billion dollar IPOs that can see Sam brings up

[Dave McClure]

a really good point which is if you are a family office, right, and you've got 20% allocated to venture and you've got, I don't know, 40% in equities, you're eventually, if your pipeline is your VC firms and you're in Founders fund or you're in sequoia and your VC fund is delivering you SpaceX shares or delivering you, you know, WhatsApp, Facebook shares via the WhatsApp and Instagram acquisitions and then you had sold those previously, booked the gain and then you wind up buying them in the public market like it's just not tax efficient so you might as well just sit on them forever. And then this does create a redistribution issue. I think Sam's correct there. And then it's going to really matter to the company if it's an Elon Musk company because of the Elon premium that he's created the future so many times now that's like a venture investment and a public investment. If you look at Tesla's valuation now, it's Not a car company anymore. It's going to be remembered as Optimus. The company will only be remembered. Nobody's going to remember Robo Taxi or cars. I predict they're going to remember Optimus because that thing's going to sell a billion units and they're going to charge by the hour for that product. It's got unlimited upside. And if he figures that piece out or data centers in space for SpaceX, this is like unknown cap, unknown tam. These TAMs could break people's brains in terms of how big they are. So you basically have no choice but to hold it I think forever. If it's like SpaceX or Tesla, which

[Sam]

becomes self fulfilling because if everyone's holding forever, the number go up and this becomes an interesting disconnect of what's going on. Which is if you believe the future is a Future, a feudalism 2.0 where you have a few hyper winners that have the cost of capital zero. They have all the things, right. And AI is fundamentally a compounder then like it's just an incredibly different configuration of the venture landscape and like what you want to allocate to than what we've seen for the last 20 years where the whole story was software helps insurgents beat big guys. You know, I've been saying this for a while that AI is just a strict benefit to like the winners effectively like cheap cost of capital. These are like the things that matter. But I just think we have to come to terms of the fact that like the venture capital, the next 20 years is just going to be massively different than it was the last 20 years. Right?

[Dave McClure]

What do you think, Jenny? How is it going to be different? Do you just take your fund when you raise your 50 million, put it into a MAG7 index and then slowly draw down from it? And I mean, I know this sounds ridiculous, but in a sense, you know, that's what these crossover funds do. They.

[Jenny Fielding]

Yeah, we've been seeing that for years. I mean people are getting really grumpy when all those funds were putting money into Bitcoin and solana and the LPs were like, screw you, I could do that too. Why are you charging me a fee? So I'm not sure that's the future of venture capital. But getting back to like the trickle down, I would say maybe I'll amend my answer, you know, a slight bit that some of these, you know, although it may not be enough to transform the liquidity issue. I mean a small investor like us, we're not in some of those names you mentioned. But you know what the folks that put money into us are, and I don't mean the LPs, like, you know, the benchmarks, the foundations, they all put money into early stage funds. And so then I have more money that I can deploy to early stage founders. So I actually think that it'll be very healthy for the cycle. Even those small ones, I mean, obviously, you know, the bigger ones will be even better. But I'm pretty excited.

[Deb]

I think we need to temper our enthusiasm for tech and vibes and the potential for investing in companies that are going to have big outcomes with the strict valuation fundamentals that are still required. Like, you know, when my son was 16, over the summer during COVID I sat down with him every week, we said, hey, let's go take a look at a public company. I'll give you 100 bucks, you can go buy it on Robinhood. But I want you to explain to me like why it's a good buy. Let's talk about revenue growth and profits. Let's talk about balance sheets and capital and like know whether you're investing on fundamentals or whether you're investing on vibes. And it was okay if you wanted to invest on vibes, but I was like, like, you know, why the are you investing in this company when PE multiples are way out of whack and this one's a reasonable. The same is true for venture. We can't just say like, hey, everything is going to be 100x2000x sort of outcome and throw valuation out the window. You know, early stage valuation entry points still matter and fundamentals still matter. Like, I don't want to invest. I don't want to give my money to VCs who think that it's all vibes and not based on fundamentals. That I want you to understand the numbers of the companies you're investing in. I want you to understand your portfolio model. I want you to understand whether like makes sense to do follow on investments or not at new prices. Math. I still fucking battles, of course.

[Sam]

Like Dave, I'm like, you like? Look, I like we're incredibly cheap at slow ventures. Like, we don't do well.

[Deb]

We. It's okay to not be cheap.

[Sam]

No, we're cheap. We're cheap motherfuckers.

[Dave McClure]

Right?

[Sam]

I don't like. And you are allowed to say that like twist. Okay, good. And like, you know, it's like you look at cash flow based deals, it's like it was reported by the FTSE and a bunch of others that you know, onlyfans just did a transaction value at a $3 billion valuation. Financially, that's a steal, right? Like, it's.

[Dave McClure]

Because what is their, what is their earnings? I mean, they make 4 or 500 million in profit a year.

[Sam]

I shouldn't comment, but the point is,

[Dave McClure]

I know you were trying to buy it.

[Sam]

The, the, the point is only that, like, yes, there's always going to be a financial clearing price to things based on growth and fundamentals, but in the last, like, five to 10 years, the people who have done well have not done that at all. Right? And the question is, what happens to the industry because of that? Like, you know, one tweet from Elon about space data centers makes your company worth a billion dollars. Right on vibes, right in the market, you know, versus, like if you go double, triple, triple, double, double on a software company right now. Truly. No, a round investor cares, right?

[Dave McClure]

Which is insane. Like, it's such a great business. It could be a money printing machine. At some point. Free cash flow is going to matter to people. And I think it's going to be this time next year after these companies get out, then there are going to be institutional investors who are going to start looking at Anthropic and OpenAI, and they're going to take out their abacus, their spreadsheet, whatever, their back of the envelope, and they're going to just go, hey, math doesn't math. You're losing this much money on every transaction. When does this become a free cash flow machine? When does the J curve end? How do I know this? I watched it with Uber up close and personal. The entire narrative of Uber and ride sharing was it can never make money, it will lose money forever. It's going to constantly go down that J curve. It's never recovering. And then I was on CNBC famously one time, and I just said to one of them, like, would you stop taking Uber if it was $3 more a ride? And they were like, no. And I was like, okay, who would? And they're like, the bottom 3% of users was like, okay, great, you fired your bottom 10% of users and then you became wildly profitable. And that's exactly what happened. But it took a changing of the guard and the changing of the cap table for that to happen. And that's about to happen for SpaceX, Anthropic, OpenAI and Cerebras. They're all going to start getting weighed.

[Sam]

Unless it doesn't. Because the retail investor base of your upper middle class, Jason, is big enough and Vibey enough, right? It's a GME situation, right, where it's like it actually hasn't happened reality at all.

[Dave McClure]

No, I don't think Sam's right. I think that we've hit the top. I think we've hit the top to a certain point.

[Deb]

Jason, why do you think Elon's making a 30% retail allocation in the IPO?

[Dave McClure]

Because Elon is a total exception and I think it will get filled. The question is, when I agree with

[Deb]

you, it'll get filled.

[Dave McClure]

What other stocks are going to go down? Where is that money going to come from? Is that coming from somebody's 401k from a Vanguard fund? Is it coming from their cash on hand? Is it a second home that they sell to buy more space stations? Where is that incremental money coming from?

[Deb]

If Elon gets his way, it's going to come out of the NASDAQ 100 and eventually out of the S&P 500.

[Sam]

Yep.

[Dave McClure]

Correct. Yes. And that, so that's my point is this rebalancing over the next year is going to be vibes now. Get your shares and then a year from now people are going to start weighing these things and saying.

[Sam]

What I could imagine, Jason, is that people, I mean, this has already happened in some places where people are, you know, on the margin pulling out of Mag 7 and going to chips in various places like it. But like I could imagine that the pes on some of the mag 7 become so attractive that people just can't help themselves. Right.

[Deb]

And like the Mag 7 are, are actually not crazy. Like, you know, again, Meta at 20, Alphabet at under 20, Microsoft, Amazon next year, Apple 30. Tesla's the only one that's really out of range there.

[Sam]

Right? Because it's a meme stock. Yeah.

[Jason Calacanis]

But if you buy into those companies, you get allocation to the other private firms you care about because they're all investors. Next up, Jenny, you said something that I thought was absolutely fascinating. You told the story that I don't think I've ever heard told before. You said that you heard about a founder that closed a $50 million Series A from a top tier VC and then a half year later they plan to return the cash to investors. You add that, Clyde will displace the product and erode the value. This is really happening. Most people are not talking about it. It's kind of wild. Tell me more about this story and how common it is.

[Jenny Fielding]

First of all, I think people don't want to talk about it because it's scary to admit that this is happening. And it doesn't really serve their interests of raising capital from LPs or telling the narrative, you know, that Silicon Valley is healthy and everything's good. Now I'll preface this by saying, like, I'm long term bullish, I will keep on investing in startups and I'm very excited. But I think people have underestimated the impact. And this isn't just about. So in this case, it was a founder. He'd raised about $15 million Series A and he'd been working in the legal tech space. But not, I mean, this wasn't just like an application layer. This was a deeply technical second, third time founder who thought that he had a really interesting data moat and was working very hand in hand with a few firms to kind of pilot this and design it. And he wasn't saying that just because Claude released their MCP connector that he was going out of business. But what I think is interesting is that these savvy founders are basically taking a long view, kind of looking back and not saying what's happening today, but where am I going to be in five years and where are these models going to be in five years? And I think that's what scared him. And that kind of freaked me out. And then when I started telling some of my peers at other firms, they all seem to have stories about this. Maybe this one seems extreme, although it is quite true. So I think it's a real, it's a real thing and it's a threat. And like we're not talking about it. I don't think that serves our founders. I think we need to have more open conversation about what moats can be and not moats today. Right. I mean, I think everyone has a theory on what's interesting today, but five and 10 years out, I think it's moats.

[Sam]

I think it's also just like what people want to work on at this moment. Like to run a company and build a company, like you need two things. Like one is you need a great business and the second is you need to care. Right. And like the great business part, I couldn't agree with you more about. Like we spend a lot of time on what's a moat. How do you really think about that long term? But we had one founder. This is years ago now when founding team was excellent. Founding team couldn't be better. Group of people doing a thing and they called up and they said, look, AI is about to happen. This is the LLM moment and we've studied this our whole lives and we're building this company and candidly, we really need to work on this. This is what we've trained for in the moment we're waiting for. And they're like, so we're effectively returning capital and going to go take senior positions at OpenAI. Good for them, like to have that perspective which is like, this is my life, you know, this is my next decade. And if the world is changing so fast and things change and like all of a sudden like I just emotionally have to do something. Like I respect.

[Jenny Fielding]

Yeah, I think there's opportunity costs, especially for seasoned founders. And in this case it was that it just seemed quite extreme. They just raised the money. They just, you know, convinced a top.

[Sam]

I just think, I mean it's funny if for instance, if Jenny and you and I are talking, I'm extremely serious about pro rata. Right. Like hear me now, startup world, like I'm crazy about that. But actually if a founder comes to me and raises money and like six months later is like we're wrong. And like by the way our opportunity costs and like the really expensive thing, especially early is your time and effort. It's not the money. Right. Like you're like, I'm return money because like I. This is not. It's better for everyone. Like they're not going to win at a thing they're not super passionate about. Right. The world changes fast. I candidly would rather have the money back and redeploy it if that's the situation.

[Jenny Fielding]

I mean, I'll just take the other side in that. You know, you're betting on people at the pre seed and you're betting on them to figure it out. And I'd rather not get my money back but have them try a few different things and try to, you know, skate where the puck is going.

[Sam]

I get it.

[Jenny Fielding]

And I think you have to just be fast in this market. You know, I was talking to someone that runs a kind of quasi consulting AI consulting business. But there's, they productized some of it and they said our team, you know, rips everything out every two weeks and starts again.

[Sam]

I get it. It's just like ultimately like it's like it's running a zombie company. As a great person in a moment where the world is changing so fast is like, it's like the worst feeling you could possibly have. Like there's this amazing thing going on and you're boxed out of it. Because I'd like rather just fix that. And like life is long.

[Deb]

I think whether I'm investing in an entrepreneur or Another fund manager. I want them to feel like they've got an edge and have conviction and passion for what. What they're doing. And so if they've lost that, then, sure, I don't want them doing it either, but I want to invest in people who think they can still figure it out.

[Dave McClure]

All right, we got to drop Sam off. Sam, thanks for coming on the pod and see you next time. Thank you. He's got a high hot take per minute, so we, we allow him to leave early, check out his podcast. More or less. Everybody has to have a podcast now, so more or less got to have a podcast. You need to control your media channel.

[Jenny Fielding]

He's got to go beat up those founders who didn't give him pro rata.

[Dave McClure]

He. Somebody just said, oh, my God, we're challenging you on this. He's getting on the phone with his attorneys. You know, if a founder gets to the point, Jenny, where they're like, I just can't do it. I'm not living my real life. I kind of feel like it's like one of these kids who goes and does ayahuasca or they go to Burning man and they, they, they do LSD or something. They come back and they're like, I'm living a lie. I need to go be a yoga instructor. I need to start a surf camp in wherever. I'm just like, you know, okay, Godspeed. Godspeed. Everybody has somebody in their circle who came back from Burning man and their brain was broken and whatever they were doing is over. Like, they left their spouse, left their city, and they're in Kauai living their best life. Mazel tov.

[Deb]

Or they came back with a great vision for a new startup and I'm like, great, I want to give them some money.

[Dave McClure]

But it is frustrating. Jenny. I always think to myself, like I always say to the founders, what are your three other ideas? Do you have another idea? We've already got the capital here. We bet on you. What else?

[Jenny Fielding]

I'd be curious if you're seeing this too, Jason, around first time versus second time founders. We are finding that the first time founders will just like, you know, put their nose down and just like, try to get through and burn the money potentially. But they're going to try to find something. The passion, maybe the ego. And the second and third time founders who've had a lot of success or some success, it's just opportunity cost. And in this case, it felt like a team, very seasoned, very technical, had a lot of success and they just said, you know, what like it's not going to work?

[Dave McClure]

It's a function of how great those offers were. I've seen some of these offers and to put your nose to the grindstone at a startup for 10 years, 15 years and the outcome is unknown or you get a guaranteed 10, 20, $30 million package from OpenAI and you know it's going to 10x from here. So it's really a 300 million and there's a secondary market as we talked about in the first thing and I could just start selling my shares immediately. You know, I told somebody recently, they were like 99% of my net worth is in one of these companies. And I just said sell it all and put it in index funds or sell at least half of it, put it in index funds, go buy yourself a house and a ski house by the way. That's the advice I gave myself which is just keep building that foundation that's rock solid with the speculative stuff and get yourself diversified and out of these. Because if these companies are trading at 30, 40, 50 times revenue, okay there's a chance that they'll catch up and their earnings will get there. There's also a significant chance that open source and other products win a big part of this. And tokens just are the fastest declining commodity in the world. Are tokens like the cost of a token is plummeting because more data centers, better energy, photonics between the chips, language models that are more efficient, open source distributed computing, tau subnets that are, you know, racing to the bottom. So if these things keep going down, I'm not going to give myself a clip. Like you'll only ever need a 10 megabyte hard drive. Obviously people are just going to keep using a phenomenal amount of tokens, but it just may not be the most profitable business. What if the business looks like a bandwidth provider? What if the business looks more like a hard drive provider and it's a commodity business that free to the bottom it just, it might not be the money printing free cash flow machine that people think it's going to be. That's a possibility.

[Jason Calacanis]

If it's not though, then what is? Because if AI really does subsume a number of industries like we're seeing progress on the legal field from Anthropic, they just dropped SMB products. And if they don't make money Jason, then who does?

[Dave McClure]

The hardware, the energy company, the data center, the application layer, the person running a law firm that needs everything, people and charges, you know, the same amount of money. Money but. Or they charge 20% less, but the cost to deliver the products, 40% less, and their margins went up. Like, there's a lot of permutations to this. And anybody who says they know exactly which one works and where the value gets captured, it's just not telling the truth. Right.

[Deb]

Jason, I think you pointed out a good, you know, a thing for a lot of founders and actually for VCs, this happens later too, is you're concentrated in a single asset. You don't have access to diversification of liquidity. That's literally why the secondary market exists.

[Jenny Fielding]

You help with that, Dave,

[Sam]

Go ahead

[Deb]

and give a plug.

[Dave McClure]

Yeah, I mean, it's.

[Deb]

Well, I'm just saying I did the same thing five or six years ago when I was looking to sell a piece of my carry and my first two funds at 500, which had become very concentrated in a couple of winners. And I wanted to take a little bit off the table and buy a house. I think that's the big reason the secondary market exists, at least for founders and employees who are selling, is there's 100,000 people in the Bay Area who own 1 to 10 million doll worth of equity. It's probably 10,000 people in the Bay Area WHO own 10 to $50 million worth of equity, and they can't afford to buy a house in the Bay area that costs 3, 4, 5 billion dollars. Can't even qualify for the loan to buy a house. And I think that's why you're seeing more of these tender offers. And a lot of companies providing regular liquidity programs is to give them an outlet. Because IPOs are taking 15 years now, the employee vesting schedule happens in a third of the time it takes for a company to go public.

[Jenny Fielding]

Like, so I think that's great. But I also think, like, you know, these companies like Intercom, you know, that have to reinvent themselves and they're pushing through, are very inspiring as well. And if you find a founder like that who's just gritty as hell and wants to, you know, then become an AI native company after all these years, like, I think that's pretty awesome.

[Deb]

And I was an early investor at Intercom and Owen. Coming back and figuring out Fin was amazing.

[Jenny Fielding]

Amazing.

[Deb]

That doesn't always happen.

[Jason Calacanis]

There was a lot of commentary on the how much money does it cost to be kind of of set in San Francisco conversation. OpenAI had a tender offer for employees last year. Turns out 600 investors, sorry, 600 employees sold stock, $6.6 billion, which led to this tweet from Shruti from Array VC that went incredibly viral. She says the people who sold their roughly 10 million will still be quote SF Brokey 50% in taxes, 3,4 million in cash for a house. Probably needs another million of improvements. Leaves with 1 or 2 million kids on the way. Nanny's 100k a year daycare is 45k a year. Camps extracurricular 30 to $100,000. Tesla 50k. They will still be at the office 996 and not going to enjoy any of this. Only have money to hike and camp.

[Deb]

If $10 million they'll be just fine.

[Jason Calacanis]

Thank you.

[Deb]

Yes, there's a high class problem there.

[Jenny Fielding]

Yeah. And that's also for those just one secondary that they did. So.

[Deb]

Yeah.

[Jenny Fielding]

But they have a lot more upside.

[Deb]

Yeah.

[Jason Calacanis]

I don't think the perspective though she got dunked on a little bit, but I don't think the perspective is that, that, that far off. When everyone looks up to mere billionaires now as a second class compared to the hundred billionaires and possibly compared to the first trillionaire. I think people's expectations have really changed and I don't think it's the right time for technology to become richer in a visible way given how AI is polling right now. It seems to be a mistake.

[Jenny Fielding]

Well, first of all, get out of the bay. Get out of the Bay Area.

[Dave McClure]

Yeah. By the way, in Austin, by the way, you can buy an acre of land for 100k 20 miles outside the city. And so you want to buy like your 10 acres for a million bucks, like and people have no idea how big. 10 acres is like huge. It's a lot of space. Go buy your 10 acres.

[Deb]

Austin and Miami are great places to move after you've made money. But there's a ton of people still here in the Bay Area who are making money in spite of the high taxes and the high cost of living because they're making a lot of money working for the company.

[Dave McClure]

Totally fine to make it there. And then when you're ready for your second or third company, if you're doing your second or third company and you've got a crew, like basing yourself in Austin is such an unlock. Which is why you see so many people saying like, yeah, why not put my company here and if I move my team there, they save on the state tax. So that's a whatever it is, 10, 12, 14% raise, then their cost of living goes down a third. So now they're at a 50% raise and your net, your 100k nanny goes down. Well, that's in the cost of living.

[Deb]

These are life optimization strategies after you've

[Dave McClure]

made money or you're running your second company.

[Jason Calacanis]

Nannies don't go down in price that much. If you leave the Bay Area. Just let, just.

[Dave McClure]

Well, I thought that was the one thing about her tweet that I was like 100k for a net.

[Deb]

I think Keith Ray Boys was going to be mayor of Miami for a few years, but he decided to come back.

[Dave McClure]

Is he back in the Bay? I thought he was in New York most of the time. Yeah.

[Deb]

Well, I'm just saying that a lot of people came back to the Bay Area to either make. Make money or invest in people who are here.

[Dave McClure]

Yeah, absolutely.

[Jenny Fielding]

I just think, like, isn't entrepreneurship about zigging when other people zag? So if like you have to live in Pac Heights and you have to send your kid to Alpha School and you have to do all these things, then like, you're going to have to pay the price. But otherwise you have to get scrappy and move to Austin or wherever. And I think you can do really well.

[Deb]

I think New York and the Bay Area are still great places to build companies.

[Jenny Fielding]

I mean, I run a fund called Everywhere Ventures.

[Dave McClure]

So in the name, folks, what is this story about the company rebranding the agency Intercom? Yeah, we kind of skipped over that, but tell us about that. I think it's.

[Jason Calacanis]

Jenny brought it up. So Intercom is a company that early in the AI era said we are going to re architect our firm around building an agent. And they said it early enough, Jason, that people, people were a little bit like, maybe is the technology there yet? Is it going to be there? And as they worked on their customer service agent called Finn and saw real success with it. They've talked about this kind of over the last. Jenny helped me out here year and a half, two years. They just announced they're going to rebrand the whole company. Fin and Intercom will then be a sub brand of it. They're still going to work on the core Intercom product. They said in a blog post that Intercom 2.0 just came out and they're going to invest more in it. But the company is clearly moving in the agentic fashion. And what I think really matters here is this is not just a new product, it's not just a new name. They stress that they have changed how they price, how they build, etc. So they've really done a full architect re architect of the company and they've made it through. So when Jenny was talking About?

[Jenny Fielding]

Well, they're starting to make it through. I mean, I think we all have portfolio companies that are Series C and beyond, and they have to go through this chasm. Right now, I have probably five or six that are, you know, late stage and they have to transform and, like, some of them will work long term and some won't. But I thought this was, like, a great story. And I mean, Intercom customer service, you think that would be the first thing to be displaced. So I kind of love that. It was a bold statement, the founder coming back, and I'm rooting for them. I'm not an investor.

[Jason Calacanis]

Do you think that the companies in your portfolio that are facing the similar chasm going from the SaaS era to the AI era or the agentic era, are going to make it like 50% of them, 80%? How many make that jump?

[Jenny Fielding]

The ones that move fast and took action when they didn't want to, they had to fire their executive team because they weren't AI native. They had to change their pricing from SaaS to usage base. That was hard. So I think in my portfolio, it's probably 50% that I think might make it because they were very decisive. They had great leadership and they had vision, and it was painful. Right? They didn't want to fire those people that took them two years to recruit, but they did. And so I think that's the key.

[Jason Calacanis]

Jason, same thing in your portfolio. Are people taking the medicine to actually get across?

[Dave McClure]

There's an interesting story about ZoomInfo, which helps you find leads. The sales team use these. What was like, one of the first thing people did when they saw openclaw, when they see cowork, they're like, find me 10 leads. Find me. You know, everybody who. The first thing I did with Openclaw was I was like, take these hundred, the top 100 podcasts, tell me who the advertisers are, then go put those leads into our SaaS product, which is Pipedrive, and then tell me if they're in there already and when was the last contact date. It did that beautifully. And it was like, okay, that's an SDR job of, you know, 30, 40K, you know, offshore work from home or 60, 70, 80K in the United States. Work from home or in a city, you know, in Austin or in Phoenix. So ZoomInfo is like the perfect example of a company that's going to have a heck of a time. That's like private equity home company. I think it's a private equity company or a public one.

[Jason Calacanis]

It's public.

[Dave McClure]

Yeah, it's public. So they're getting their ass handed to them. They're going to need to cut half the staff. They're going to need to take an AI approach. But we have a company, LeadIQ, which was nipping at Zoominfos heels, has eight figures in revenue. Go to leadiq. Com. Their homepage is here's AI. Here's our AI solution to the same problem as opposed to, you know, here's our SaaS software for the same problem. So accelerate revenue with AI driven data. So they're like, here's the next person you should talk to, here's why you should talk to them. But this is going to require a totally different company. And I remember talking to the founder maybe and she was like, okay, we have these offers to get acquired. They're not quite where we want them to be. We're still growing. But AI and AI first companies are super dangerous. And I was like, there's really only one choice. Sell. If you don't believe in your ability and you just want to get off the train and accept what might be to you, I don't know, the bronze medal or a participation trophy or do you want to go for the gold? If you want to go for the gold, then you have to skate to where the puck is going while dealing with a board of directors who wants the number to go up. And that really is the problem. You might have somebody like Jenny or myself who's like, yeah, we don't care about a little revenue destruction and shaking up the management team in order to get to the future. Because we invested at whatever valuation. The later stage folks were like, wait a second, we were supposed to double, double, triple, triple, triple, double, double, double and then exit. And this was going to be incredible. And Salesforce was going to buy us and HubSpot was going to buy us. Those folks are the ones who are over their skis. So the real dynamic is the board issue. 100% and it's just unfixable. And I've had to have these conversations multiple times with the late stage board members who say, leave the board, sell your shares back to the company at a discount or just leave the board and we'll take it from here and you'll see if you get a return or not, write off the investment, whatever you got to do. But yeah, it just becomes untenable.

[Jason Calacanis]

What do they say when you told them?

[Dave McClure]

I mean, it's always the late stage folks always want to believe that they're the early stage investors and they have that gestalt and they have that passion for a blank whiteboard. They want to have that passion for a blank sheet of paper. And we're going to come up with a product this weekend. Let's do a hackathon at the company. We'll break into five teams, come up with five different product ideas. And one of them, you know, Evan Williams will say, oh, Jack, your version, this Twitter thing is what we're going to put all our eggs in that basket. Let's go. They want to believe they're that, but their LPs are not that. Their LPs, if they're late stage like that, are looking for five year term, you know, returns on invested as opposed to ours, which might be okay with 10 to 15 years. So time horizon is everything. Right? And you just can't make unnatural.

[Deb]

Company pivots are not really common.

[Jenny Fielding]

No, we don't, we don't take board seats. So we can be, you know, the whisper in the founder's ear and, you know, the voice of reason and they don't feel nervous about it. I think it's a real advantage.

[Jason Calacanis]

I think the difference between VCs and late stage private market investors that are not quite PE is the divide that Jason just outlined, like, are you willing to do revenue destruction or do you have to have this steady rise? So are you modeling or are you believing?

[Dave McClure]

Yeah, I mean, and go to Grin Co. This is another SaaS era company that we incubated, did fantastic. And if you scroll down on their page, you'll see their GIA product. Gia. And yeah, go, keep going down. So this is like their existing product. And then they're like, and by the way, if you're done with that affiliate product to manage influencers, here's gia, the AI that lets your team focus on relationships, not the busy work. And what happens over time is you have the existing product. The paradigm has shifted. Here's the new product and you're trying to service both of these revenue lines and educate your market on, hey, the new product's gonna be more effective. And man, it's just, it's hard to sell two different products concurrently. I saw this with Google right now. They released a Google book yesterday. And I tweeted like, what's the difference between this and the Chromebook? Chromebook? And people are like, oh, well, it's Android, but it's built on Chrome, but it's got the Google. And I'm like, yeah, but my Chromebook had the ability to load these apps. And I was like, yeah, we don't know, it's just people's perception is they want a Gemini Google Book. They don't want a Chromebook. Chrome means browser.

[Sam]

Google.

[Dave McClure]

Gemini Book means, like new AI book. It's essentially the same thing. It's an Apple Neo laptop, top competitor. It's a less than $500 laptop.

[Sam]

Yeah.

[Jason Calacanis]

Here's an important picture of Google announcing the Google Book recently.

[Dave McClure]

Yeah, I mean, it is really hard. It is really hard running a legacy business that's printing money, that's growing, that has constituents internally on the board.

[Deb]

Hey, Sacha made it work.

[Jenny Fielding]

Who did?

[Deb]

Satchio made that pivot work.

[Sam]

Work.

[Deb]

That's a really late stage pivot.

[Dave McClure]

Yeah, I mean, it's just, it's, it's, it's just hard. You're going to be having. You have to have. I can tell you exactly how to say it. The only people can figure this out is people with a high tolerance for ambiguity.

[Deb]

Okay.

[Dave McClure]

Like a Jedi knight.

[Jason Calacanis]

Give people more about ambiguity. In this case, Jason, ambiguity about what's going to happen or ambiguity about which tolerance.

[Dave McClure]

I'll give you like, the idea of a tolerance for ambiguity. Taiwan. Taiwan is a proud nation. That's part of the incredible China story. And we respect Taiwan and China. This was the strategic ambiguity that the world gave China and Taiwan for the last 30 or 40 years. And it's worked. Chef's kiss. You don't need to challenge Taiwan. So far, it's worked pretty damn well. Now you're talking out of both sides of your mouth, right? Is it a lie or is it you're holding space, you know, to use the woke term. You know, our company Intercom is loved and super helpful and has. Is a catalyst for growth in over 10,000 enterprises. And our new product, Fin, is the future of customer engagement. Like, okay, wait.

[Deb]

As soon as they realize that fun that Fin was working and becoming the future of the company, they decided to go all in on that. And just recently.

[Dave McClure]

But they didn't fire their customers for Intercom, and people can still log into their intercom accounts. Now, if you want to understand somebody who burns the boats, Elon said, Tesla Model S and X, there's 100 left. You can buy one of the hundred to end the run. My wife bought one of the Model X's. God bless her. You know, she had one of the. I had the first signature Model S. She has one of the last Model X's. And he's like, those are loved cars, but they have to die so Optimus can live. And they're retooling those like there are burn the boat founders. They're very rare. Most people in Elon shoes would have been like, absolutely, we're going to put these on a paced rollout. You can still buy your Model S, we'll incrementally improve it. They wouldn't have the boldness to say that business is nothing compared to the upside of Optimus.

[Jenny Fielding]

So you, you're basically saying that Google doesn't have that agility anymore.

[Dave McClure]

Only a founder can do that. It's founder authority that allows you to kill products. What a company like Google does is they just let it taper off. They just let it taper, taper, taper, taper. And then someday you wake up and they're like, yeah, the nest is the Google thermostat. Took them like 10 years to have the boldness to say, you know, or drop cams are now Google cams or the Chromebook is now the Google book. It's just, there's somebody internally fighting, there's two camps internally fighting for each product. And then the CEO wants to be magnanimous and she, he, they, them. It says, yeah, you know, okay, you made a great argument. So, yeah, let's launch that new product on this date and, and we'll keep supporting that other product.

[Jenny Fielding]

I mean, I don't think you can, you can count them out though, right? I mean, they came back with Gemini after, you know, they could have been ahead and did a phenomenal job. And I actually love that product, so.

[Dave McClure]

And I made a huge bet on it. I bought Google at $100 a share when everybody said it's over and all the searches are going to chat. Because I was like, wait a second. I watched them after Mahalo take all the little innovations we were doing at Mahalo and put them onto the Google homepage when it was 10 blue links. And I was like, like, there's nothing stopping them from putting the AI answer at the top of the page. They did that with the one box. So what if they put the AI answer at the top? Which is exactly what they did. I'd seen them do that my whole career. They would put flight information up there, they would put their local information up there, they would put the one box, the sports score. What's to stop them from putting the AI answer? They did it and their revenue went up.

[Jenny Fielding]

Yeah, very successful.

[Dave McClure]

Yeah. It just took them. How long did that take them?

[Jenny Fielding]

2 years to make that decision until they felt like they were going to, going to be outrun pretty quickly. They had to feel the pressure and

[Dave McClure]

and then who, who actually made the decision?

[Jenny Fielding]

Right. They had a founder come back.

[Dave McClure]

The founder had to come back and put down.

[Deb]

I was going to say that that

[Dave McClure]

was founder authority part.

[Deb]

When somebody came in and did that.

[Jenny Fielding]

Yeah, yeah.

[Dave McClure]

No, certainly somebody said, enough, the decision's been made. We're going AI first.

[Deb]

I think there's only so many Steve Jobs who can make, you know, company changing pivots and make that work. And yeah, sometimes if they're no longer there, that pivot might not be as easy to pull off.

[Dave McClure]

Which is, I think why Tim Cook is retiring is they're at a crucible moment, as Roelof would say at Sequoia. It's like a crucible moment for Apple. Are they going to play a role in this next universe? Are they going to leverage their massive hardware footprint or not? I think they put a guy in charge who worked on the chips and is an engineer for a reason. Their future is local models running on massively powerful Apple silicon with 128 gigs, 256 gigs of RAM on your laptop. And you're gonna pay $4,000 for the privilege?

[Jason Calacanis]

I hope so. All my Macs are constantly out of ram. I wish someone would fix that bottleneck. All right, listen, before we go, Jason, I want to get to a question from the Notity Gang that was submitted before we even went live today where you get taking questions from our awesome Noti Gang group chat over on X. If you want to join, there'll be a link in the show. Notes, notes, but from Goldilocksville. Jason, how should I manage a meeting with large venture capital firms in New York City without losing credibility as both a newbie and someone who's still determining who to build the company with? I apparently need a co founder so they're looking for some general advice. Talking to New York.

[Dave McClure]

I mean, if you somehow got a meeting without your co founder in a very nascent company, you should just own the state of your company. Hey, it's great to meet with you, Fred Wilson. I've been reading your blog and I heard your recent podcast. I need really three pieces of advice from you. Here's my vision, here's our progress. Number one, do I need a co founder or should I just go to building a founding team? Should I raise a friends and family round or should I go directly to seed? And we have this B2B or B2C function. I'm leaning towards B2B because that seems to be where I can get the flywheel going. And what are your Thoughts on these three questions. If you come in and you say it the way I just say it, it, I'm owning the state of my business. I'm self aware, I'm confident, and I have questions for you. I know that you're a wealth of knowledge. You did all of these.com era companies. You did Cosmo, you did, you know, Twitter. I have specific questions for you. So you're just basically kung fuing it. You're saying to the person, you know, here's where I'm at, here's my problems. You might have solutions for me. I want to make the most of this meeting and I need to get this information out of your brain. Which then makes the person realize, oh, this person is good at collecting information and listening. They're a sponge. If I back them, they're going to suck more information out of other people's brains. As opposed to they're an arrogant 21 year old who's telling me like, I'm going to miss the boat.

[Jason Calacanis]

I miss being an arrogant 21 year old

[Dave McClure]

or delusional, like a little bit. That's okay.

[Jason Calacanis]

No, I just think life grinds that out of you slowly.

[Dave McClure]

What do you say, Jenny? You were nodding. I think a bit.

[Jenny Fielding]

I was. You know, I've actually personally changed my tune on the solo founder. So it used to be something. I ran two companies. I had co founders. I actually had a founder breakup and I know how awful that can be. But I think for the first, you know, five years of my investing career, I always said, you know, you need a co founder mostly because it's a lonely road and you need a thought partner. But I have really changed my tune on that. I think solo founders that have great foundational teams and support can be great, great, and very successful. And so I guess my advice is I wouldn't really bring it up. I would just run it as if things are going smoothly. I would talk about the momentum in the business rather than the traction. So you don't have to worry about that. You don't have metrics that you're super early, especially if you're talking to an early stage investor. But just talk about all the progress that you and potentially your founding team have made. So that's how I would approach it.

[Jason Calacanis]

All right, friends, this has been another amazing venture capital roundtable. We're doing this nearly every single Wednesday. So if you want to hear from the VCs who are writing the channel checks, come to us on Wednesdays.

[Dave McClure]

Jason, this is my favorite one so far. I mean, this is the based Candid Group. I like this one a lot.

[Jason Calacanis]

Absolutely. Jenny, thank you so much for coming. The URL is everywhere. VC and for Dave, it's close. It's practicalvc.com Please get together, figure out your TLDs, harmonize them. I'm going to forget those and get them all wrong.

[Deb]

Can we plug something before we wrap up here?

[Dave McClure]

Yes, of course, Jenny. Add me to your syndication.

[Jenny Fielding]

It. Oh, yeah, for sure.

[Deb]

Well, before I plug my other stuff, I want to say Jenny is an amazing VC and invests all over the place and I would plug her as, you know, investing in her fun.

[Jenny Fielding]

Thank you, Deb.

[Deb]

But I would say for folks who are interested in learning more about secondary, Trading Places is our podcast. Every week we cover news and secondary. We do evaluation Corner program.

[Dave McClure]

Who's your co host?

[Deb]

Aman Virgie, my PayPal colleague from Way back.

[Dave McClure]

He's good. He's a little spicy.

[Deb]

He's a lot smarter than I am

[Dave McClure]

and he actually spicy. I was going for

[Deb]

and then a brief plug for a company we just invested in. Not a secondary. We invested in a company called Equity B that provides employee option financing. You may not know this, but a ton of options go unused, unexercised, because the employees can't afford to exercise their options before they leave companies. So. So EquityMe helps people finance the purchase of their employee stock options so they can still keep some upside when they need to leave the company.

[Dave McClure]

Tel Aviv based.

[Deb]

They were, but now they're Palo Alto based.

[Dave McClure]

Got it. I remember. I think I heard this pitch. Great job.

[Deb]

We're actually running an fpv.

[Sam]

Ooh.

[Deb]

I don't know if that's illegal, but if folks are interested. Jason, I'll drop you an email.

[Dave McClure]

Yeah, send me that deal memo. I'll read it. Absolutely.

[Deb]

Will do. And I'll see you at Liquidity Summit.

[Dave McClure]

Oh, yes. You're coming. Awesome. Great. Yeah. Liquidity is going to be nuts this year. I. Liquidity was my original angel summit. I renamed it Liquidity did it for a year. The all in guys did me a favor and showed up and we taped an episode there for the last two years. And then Chamath was like, I like this event. Can we buy it? And I was like, it's just for angel investors and early stage folks. It's like, well, what if it was for everybody? And I was like, okay. So we took the price from $5,000 a ticket and I would just break even on it. And then we doubled the price and we tripled the attendance from 150 people to 500. And we took over the town of Yonville. So the budget, the revenue, everything, year over year or year over 18 months went like 10x triple. And it is going to be absolutely nuts. We said no. I think everybody who got a spot there, we said no to three or four other people who applied. This is applying to buy a $10,000 ticket. It is pretty.

[Deb]

What a privilege.

[Dave McClure]

Well, I mean, the amount of money we're spending is crazy. Like, we literally took over the town of Yonville for the entire duration. It's going to be nuts. And people are coming in from around the world. And I have, like, speaking of people in the Middle East, I have people like, hey, I met you when you were over here. I run this sovereign wealth fund. I applied for a ticket. I didn't get in. Is there any way you can get me in? And I'm like, ah, we need a bigger boat. Like the.

[Deb]

I think you should have let in the people with sovereign wealth funds, Jason.

[Dave McClure]

That would probably be.

[Jenny Fielding]

Tell them to buy the next town over.

[Dave McClure]

The problem is it's. Everybody comes at the last minute and then there's like, you know, four besties. Each one gets 30 requests. 40 requests for last minute tickets. 40 requests times four besties. 160 seats. We're out of seats. It's a physical limitation and that little

[Jenny Fielding]

town can't handle it. But that's so great.

[Deb]

I think next year we will playoff game problems.

[Dave McClure]

Absolutely.

[Jenny Fielding]

So, Jason, you know, the last time I was on a, you know, platform with you was at your launch festival in Fort Mason and your producer Jacob sent me the clip and I was like, oh, my God, that was 10 years ago.

[Dave McClure]

And holy cow.

[Jenny Fielding]

Yeah. And that was such a great event. I loved that venue.

[Dave McClure]

It was such a cool, you know, I did that event. I had started TechCrunch50 with my friend and then we broke up, or I should say he kicked me out and screwed me. And I was like, okay, I'll just do my own. I'll do Launchfest. And he went on to rename it Disrupt. And it was the best thing that ever happened to me because I got away from somebody who was a bit toxic. But I was able to do it the way I wanted to, which was, I used to do it. Anybody could get a free ticket if they were a founder. They just had to fill out a form. We had 15,000 people at the peak register. And then you had 6,7000 people there. And the audience size was like, the number of seats was 2000. We had like video rooms to watch it. So I brought it back this year and we had Launch festival in San Francisco. Only 400 seats, free for founders. I sold like, like 30 tickets, you know, for VCs or whatever and sit in the front row. And we really had a great time making it intimate again. So I'm going to do it again and I'm going to do it twice a year and I'm going to make it themed. So launch your company for free. And I had done it Jenny. As a reaction to demo. Demo was charging $20,000 to be on stage. They would then charge you five or ten thousand dollars to be coached. So they had like a mandatory coaching product. And then you had to buy tickets and then you had to buy a booth. It was. Do you remember those days?

[Jenny Fielding]

I mean, I just remember being on that stage and looking the audience and there were thousands of founders there. When I got off the stage, it wasn't like a line of 10 people, it was like hundreds of people. It was like so exciting and that venue was just amazing. So.

[Dave McClure]

Well, they made it impossible for me. The unions then attacked me for using non union spaces, started banging on the doors and protesting it because I used robotic cameras. And I was like, I'll never do an event in San Francisco again. And here I am. I did one recently, but I think I'm going to move it to like, like the Peninsula because San Francisco is just too hard. They make it way too hard to do anything. But you were at the early ones, Dave. You were, you were at everything. Back in the day.

[Deb]

You were admonishing me to take my iPad off the stage.

[Dave McClure]

Yes, we had, we had a showdown because he was using his iPad. I was like, These guys have 90 seconds. Please pay attention to them.

[Deb]

I was doing due diligence on the company.

[Dave McClure]

You have adhd, my friend. You have adhd. I am am your Ritalin. I am your human version of Ritalin.

[Jason Calacanis]

I think everyone here has, has at least add. I'll just throw in my historical context. I was in high, late high school during the Tech Orange 40 Tech Orange 50 days, Jason. And you guys got me drunk enough that I threw up on the wall outside the venue as a baby. So there it goes.

[Dave McClure]

I got you drunk enough. Yes. I put the gun.

[Jenny Fielding]

It was literally him, not the baby. That story wins.

[Dave McClure]

You win puking at TechCrunch 40. All right, all right, everybody, we'll see you next time. Bye bye.

[Sam]

Thanks for watching this week in Startups. If you liked this episode, check out more. If You're a Startup founder founder university cohort 13 kicks off this fall. It's a 12 week program that provides guidance on building your product, launching to real customers and pitching to investors. Top startups receive $25,000 or $125,000 in investment.

[Deb]

Apply now at Founder University Twist already have traction.

[Sam]

The Launch Accelerator invests $125,000 and connects

[Deb]

you with 500 PL to help you raise your next round. [e-mail] if you're an accredited investor looking

[Sam]

to gain access to quality deal flow.

[Deb]

Apply for Jason's angel syndicate@the syndicate.com we

[Sam]

find two to three deals a month and check out this week in AI Jason's experts only roundtable with top AI

[Deb]

founders and operators every week.

[Sam]

Find it this week in AI AI.

[Dave McClure]

Check out the Twist Ticker, our daily

[Deb]

newsletter at thisweekinstartups.com Ticker thanks again to

[Sam]

our sponsors for making today's show possible. Follow the show on Instagram Follow the show on X.com this Week in Startups publishes three days a week, Monday, Wednesday and Friday at 5pm Central Time. You can submit an audio or video file question by emailing it to thisweekin.com.