GTMnow Podcast | Your First VC Meeting Will Be Agent-to-Agent

This episode is a rebroadcast of Auren's appearance on the GTMnow podcast --------------------------------------------------- Auren Hoffman (Flex Capital) joins the GTMnow podcast to share some of the most contrarian takes in tech today, from why AI moats are gone, to why your next VC meeting will be with a bot, to why AI is secretly going to trigger a baby boom. In this episode: Why Auren runs 500+ AI agents to source deals, and what that means for founders raising capitalThe "agent-to...

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  This episode is a rebroadcast of the GTM Now podcast.

• 0:03Speaker 01

  Welcome back to another episode of the GTM Now. We've got these special edition podcasts we do, our VC episodes, our bonus episodes. And today I'm joined by my good friend, Oren Hoffman, CEO of Incubate, general partner at Flex Capital, host of the Summation Podcast. We go way back. You were the CEO of Safecraft, brought in my good friend, Jason Richman, who was running Sales Free for a while over there. And then he moved into the CEO role. And before that, Live Ramp, you were a speaker at my first ever Sales Hacker Conference in 2013. So way back, time machine right there. You've done some really cool stuff. And right now,

• 0:44Speaker 01

  you're investing out of Flex. You're an angel in about 300 companies, but now most of the investments are out of Flex. Tell me more about Incubate and Flex and how the two work together? Completely separate ventures?

• 0:57Auren Hoffman?

  Completely separate, kind of an incubator. So we start companies mostly around data. We started three companies in 2025. We'll start probably three to four companies in 2026. Two of the three last year were venture backed, probably two to three of the four will be venture backed this year. And then Flex Capital is a seed stage venture capital firm. It's a scaled venture capital firm. So we do, we did 53 investments in 2025, probably roughly the same number in 2026. So like roughly about one a week. And we typically invest about 500K in a company and in the first kind of seed round, and then we hope to scale up from there.

• 1:36Speaker 01

  Incredible. So what are you looking at? I guess, do you have like a thesis or something? When you're looking to incubate a company? Do you have a person, a founder? You're bringing in a hired gun? How does that work?

• 1:47Auren Hoffman?

  Incubating companies is really hard because these things are really like very founder dependent. So typically, we'll work with like two founders. It could be a more go-to-market oriented founder and a technical founder, or it could be two technical founders. And we'll often have the idea first, and then we'll try to find like incredibly talented people and get them excited about. And then usually we'll split the equity like two thirds to the founder, one third to us. So it's kind of like a third, a third, a third, if you think of three founders. And then when we go bring in money and we'll go help and make sure that we, the two of the three that we raised money for last year, both of which we raised around nine and a half million dollars to kind of like kick off the company.

• 2:29Auren Hoffman?

  And so usually these are like big ideas, they're big markets, they're something that's like very exciting that the world needs that we try to address.

• 2:39Speaker 01

  So you're coming in kind of helping them start that company.

• 2:41Auren Hoffman?

  Yeah, usually it's our idea and then we find either people who are already passionate about that idea or people who maybe aren't yet passionate, but we help get there. And then of course with them, we rehone the idea, we come up with, you know, refound it. And then they're the CEO, they're the co-founders, they're the ones running the company. And, and then we help out in the ways that we think we can help. And usually it has something to do with like, there's some data element to it because that's where we have a lot of expertise in. So there's usually something around like, okay, we got to put together these data. We have to run something on the data or there's something that has to do with data.

• 3:18Speaker 01

  Yeah, I do want to get into that. I know your background is like thoroughly data. So LiveRamp, that was your first company or you're kind of?

• 3:27Auren Hoffman?

  LiveRamp was probably my eighth company, but the first like big success.

• 3:31Speaker 01

  All right. So LiveRamp, Wimpall Data, you were a co-founder also there, SafeCraft.

• 3:36Auren Hoffman?

  Yep.

• 3:37Speaker 01

  Data's always been your, your thing. When you move to kind of the, the VC side of the table, I know you're investing kind of across the board in SaaS. Have you kind of used that background in data to size up founders, size up markets, make investments for Flex and even as you think of big companies?

• 3:53Auren Hoffman?

  I think for Flex, in some ways like their data is obviously important in everything that you do, but it might be a little bit less important. We're using data to score companies and try to understand companies and try to understand. But we're investing so early at Flex, often like the product is, is barely out there. There's not a lot of data to have about the company. And so we're really making our decision based on the founders usually.

• 4:17Speaker 01

  Are you using data to understand maybe? Like an industry or solving a problem in an industry better.

• 4:24Auren Hoffman?

  We use a lot of AI tools. And so you think we have probably five to 600 AI analysts that work for us. And they're all doing like very, very discreet tasks and they're very, very good at this one, like very, very specific thing. But just that would necessarily, you know, it's something like a great human could do. It's an analytical task that's out there. It's not something necessarily like a data thing. Usually have to go, of course, you have to gather data. You have to read a bunch of stuff. You have to understand things, et cetera.

• 4:54Speaker 01

  What's in your go to kind of AI stack today?

• 4:56Auren Hoffman?

  Today, I mean, it's obviously changing every week. So maybe by the time this comes out, everything will change. So we do a lot of things in perplexity computer, which, you know, as of the day we're taping it today is only a few weeks old. Extremely powerful tool. We're also investors in perplexity. We're big fans of what they do. We love the company. We just think they're just like incredibly innovative of how they're doing things. And we run like a very large portion of our stack there. Now, of course, if somebody has something better, just because they're one of our portfolio companies will move to the best thing that's out there. And these things are moving like constantly every day. But at least as of today, I think it's like the best way to coordinate a ton of agents.

• 5:38Auren Hoffman?

  And then we do use Claude and Claude Co work quite a bit as well. And we're using some of these other things. And then, of course, there's something like very, very bespoke. The agents are kind of like coordinating it, but of course we're using bespoke tools to, whether it's like a data enrichment thing or a whole bunch of other types of tools that are like AI or at least AI light type of things. We're using them and we use a lot of our portfolio companies to like full and rich. We're big fans of, we use them. We're hitting their APIs every hour and many, many other companies that are out there.

• 6:08Speaker 01

  It's awesome. And you're in perplexity, full and rich. How many, it's 300 companies or way more for from flex right now, right?

• 6:15Auren Hoffman?

  Yeah. I mean, our, again, our fund invests in like roughly 50 a year or so. And then, you know, before we did the fund, Todd and I, when we started the fund, we had done a little over 200 investments just kind of with our own money. So we have lots of different. Experience over time as well.

• 6:31Speaker 01

  So tell me a little bit more about the flex fund model because we went into incubate, but you're doing smaller checks, 50 companies a year and as early as possible or it doesn't matter just buying the SaaS when you can.

• 6:44Auren Hoffman?

  As early as possible. If there's a company we missed, that's great company. Obviously, we still want to be in it, but it's obviously much harder to get into that company later. So if it's like a great company, well, why are they letting you in later on? There might be a good reason and one of the reasons is we have an amazing portfolio of seed stage and maybe they want to sell to those folks. Or for instance, we had missed Mercury. Mercury is one of my favorite companies out there. Almost every one of our portfolio banks with Mercury. They're just a great company. So even though we had missed them when we had an opportunity to invest later on, we jumped on that opportunity. And they let us into the round because we already had so many great seed companies that are all their obvious customers.

• 7:24Auren Hoffman?

  So it sometimes can make sense later on to get in, but you have to understand like, why are they letting you in? There's got to be a good reason to go do it. Usually we're in the first money into the company or maybe they did a small pre-seed. Typical seed round that we're in is about $3 million and then we're typically doing about 500K of that $3 million. And our hope is to size up the check over time. So as that company grows, we hope to put more money to work. But for most of these companies, these are fairly consensus deals for the vast majority of the ones that we're in, which means they're just extremely competitive. They're raising three and they have $100 million that wants to go into them, right?

• 8:06Auren Hoffman?

  So they can pick who they want. If you want to get more money into them that often, and they allow you to do that, that's often a sign that they're not a great company that don't have, you know, they have, right? So the more money you can put into them, often you have to understand, well, why am I getting this opportunity to do 2.5 of their 3 million seeds? Sometimes there's a good reason and you have to kind of understand that and you can kind of go with it. But often it's the case that they don't have other options and then maybe they don't have other options because they don't know how to raise. And then of course, well, okay, do you really want to be in that? Back that person, you won't have to teach them how to raise, or maybe they don't have other options. Because like you're seeing something so different than the rest of the market, which could be true, but you have to really

• 8:49Auren Hoffman?

  understand that and really make sure that as an investment committee, you can kind of underwrite that. And we do do that, we do those sometimes.

• 8:55Speaker 01

  I just read an article about, there's people who are like, high maintenance, no maintenance, and then negative maintenance. And it's like the negative maintenance folks are the types of folks where like, they're just making your job so easy. Because, you know, everything's set up on, you know, they're, they're super high agency. They're taking care of things. So like when you have to do your job, it's easier, right? So when you're looking for founders and you're in a lot of the hot companies right now, Replit, Perplexity, Rippling, Vercel, to name a few, how are you kind of sizing up these founders? It's 50 deals a year, so not every one of them are just going to be ripping from a numbers standpoint, right?

• 9:33Auren Hoffman?

  Yeah. In fact, almost none of them are ripping from the numbers standpoint, because almost none of them have numbers. At least for revenue, a lot of them, most of them are pre-revenue when we're investing, or if they have revenue, it's still quite small when we're.

• 9:45Speaker 01

  You pick them well. So how did you, like, how did you know?

• 9:48Auren Hoffman?

  I think it's extremely hard to pick, uh, because we're making decisions based on the founders. And sometimes there's a few more employees than the founders, but maybe there's five people that we're evaluating, or just evaluating the people.

• 10:00Speaker 01

  Yep.

• 10:00Auren Hoffman?

  And then there's kind of, if you just think about it, there's a small number of kind of decisions. Sometimes it's just a great set of people, like these are some of the best people we've ever met. Then we're 100% investing at any price, we're, we're, we're investing in the company. Then often you're meeting good people, good, solid people. In that case, we're not investing at all, or below good, sometimes they're less than good, uh, we're not investing. And then the question, it comes to when you meet very good people, right? They're better than good, but they're not the greatest you've ever seen. And then we're digging in a lot more on that, and then, and then price matters. So, um, and some of those people, like, again, these are very hard to evaluate, so we could miss, you know, we could think someone's a bad, and they actually could be great, we could think someone's great and they're actually not good.

• 10:45Auren Hoffman?

  So there, there could be all these different things, like we're, we're making evaluation often and like with some. AI and some resumes and a couple thirty minute meetings. So this is a very imperfect science, but we try to hone that over time and get better what we do.

• 10:59Speaker 01

  Do you feel like it's, you know, one of those things you make progress on every year? Are there patterns that change? How do you look at it as an investor who's, you know, built a track record for quite a long time? I mean, your track record spans now, what, fifteen, twenty years? And you were in Carda, Coinbase, Chime, Apple as an angel investor. And so I'd imagine sometimes even if times change like crazy and everything's changing right now, like week to week with perplexity in some of these companies. But, you know, maybe the tried and true things stay the same, like what makes a good founder? Like, what's the difference between Brian Armstrong and, you know, any of these folks that are starting companies now? So are you seeing some pattern recognition or are you actually seeing like a refinement there?

• 11:41Auren Hoffman?

  I do think it's very hard. So because the outcomes happen like ten years later usually. And so it's very hard to understand. And I think it does change founders. It's very important that people are ambitious, but the hard part is will they stay ambitious? So first of all, even just knowing if someone's ambitious is quite hard to know sometimes. It's not like if you ask someone, are you ambitious? Like, they're usually going to say yes. And even if you ask some questions around that, like they're going to know how to answer those questions. And then the question is, are they like, if they could ten X their wealth, are they still ambitious when that happens? And then often people like fall off the ambition train at some point. And of course, as a VC, you're really looking for like these tails to happen. So I think these things are hard.

• 12:25Auren Hoffman?

  There's two big mistakes that you can make as a venture capital firm. Well, there's many more than two, but there's two kind of very easy ones to define. So the first one is making an investment that turns out not to be a good one. And the second one is not investing in something that turns out to be quite good. And the second mistake is for us is like way, way, way bigger mistake. It's a much bigger.

• 12:45Speaker 01

  I think it's much bigger for like that. That is the most painful thing. The ones you should have done and could have done and didn't do feel so much worse than anything else.

• 12:54Auren Hoffman?

  So the simple thing for us, the simple fast data point for us is did they raise, you know, we're usually at Seed, did they raise a series A at some point? Did they raise a series B at some point? Obviously, those companies may end up doing great. They may end up going to zero. But it's at least an early data point for us to take a look at. So if we, we look at every single company that ever raises a series A, every single company ever raises a series B, and then we go back in time. Okay, did we see this company? If we saw this company and we decided not to invest in it, do we regret that? How do we, we try to reevaluate? We look at all of our notes. We look at, we, we call up our granola thing, you know, whatever it is. We try to understand, okay, why? Try to remember again, recreate it. Why we make that decision? Was it correct? Was it not? Et cetera.

• 13:39Auren Hoffman?

  And then, of course, the even bigger mistake sometimes is, is not seeing the company in the first place. So there's this great company. They raised the series B. We didn't see it at A. We didn't see it at seed. All of a sudden, this company is breaking out. Okay, how could we have seen this company? What could we have done to see this company? So for us, the, the most important thing is to try to see as many companies as possible. If you think of a, a fund, it's a three-year lifecycle. You know, in any given year, there's probably five to 10 breakout companies that truly are going to be the breakouts 10 years later. So over the course of a three-year fund, that's about 20 breakout companies that are there. For us, it's incredibly important that we're in at least one of them. The math doesn't work out that well unless we're in at least one of them.

• 14:22Auren Hoffman?

  If we're in two of them, we're going to be pretty darn good. They're going to have like one of the best funds of our vintage. If we're in more than two, it's going to be just extraordinary. Right? So we want to see these, as many of these things as possible. So first, like, do we see the companies? How many of these 20 do we see? Right? And then, of course, when we see them, are we smart enough to invest in them? Hopefully, that, that happens. And then, of course, once we're smart enough to invest, like, will they take our money? So this is kind of the funnel that goes in. And that's where, like, if you try to put too much money, you also could miss it. So, or if you have other kind of like things that are really important, you also could miss these deals.

• 14:59Speaker 01

  Sourcing, picking, and then winning. Getting that access.

• 15:02Auren Hoffman?

  Correct.

• 15:02Speaker 01

  This is key there. You know, you talked about perplexity computer before. Is that something that you're using for sourcing? Is that kind of your main sourcing? Sourcing mechanism.

• 15:10Auren Hoffman?

  Most of our sourcing is done via agents. We have many, many agents that are doing sourcing, that are looking for things, are looking for signals. Someone changes their LinkedIn profile from Stripe engineer to Stealth, right? All these different things, we're reaching out to them. We might be reaching out to many different ways. And then every week, we're just, all we do is we work on those agents. So we just try to make those agents better. And we've had agents, kind of even like pre-AI agents, but they just weren't as good and they weren't as robust. Now they're much better. And we'll personalize it, like, we'll spend the time, if there's like a high value thing, we might spend even an hour, like, reaching out to that person and reaching out to that thing ourself, going, doing that. But the agent will help bubble that up for us to help do those things.

• 15:54Auren Hoffman?

  And then, of course, we're, the agent's doing its own evaluation of every company as well. Sometimes we override the agent, sometimes, you know, that we're, we're usually think of it as agent as like another analyst on the team, another principal on the team. They're adding value, but they're not like always the decision maker yet.

• 16:11Speaker 01

  Yeah.

• 16:12Auren Hoffman?

  I am confident, though, that by the end of this year, by the end of 2026, most of our first meetings with companies will be agent to agent. So it'll be our agent talking to their agent. They will be using that to evaluate us. Were the investor, are we somebody who's going to add value to them? And then we're going to be doing it to evaluate them. And then, assuming that agent to agent conversation, which by the end of this year will still be in English, but eventually we'll move to a more efficient way of having conversation. Assuming that goes well, the next conversation will be a live person to person conversation where we're talking to the founder. And that will take a lot less time for the founder. So for the founders, it will be really great, also take a lot less time for us.

• 16:54Auren Hoffman?

  And then we'll all be able to dive in, have a much more substantial conversations.

• 16:58Speaker 01

  Do you think a founder could just have an FAQ prepared and send you the answers to the FAQ? And say like, here's everything you need to know about me to know.

• 17:05Auren Hoffman?

  Yeah, I mean, it's essentially like that. And that kind of gets trained over time. And, you know, maybe when you're asking things, they might not know. And so, yeah, it's essentially kind of like that. It doesn't have to be the smartest agent in the world to be able to answer most of. The questions that we're going to have and some of their answers might depend on our answers.

• 17:25Speaker 01

  Yeah.

• 17:25Auren Hoffman?

  Right? They might not know enough about our strategy or they might not know. And then based on our strategy, it's like, well, um, you know, hey, maybe they're not even interested. So then they won't, they don't need to divulge more information.

• 17:37Speaker 01

  Yeah.

• 17:37Auren Hoffman?

  Cause there's usually some sort of information cascade that you're okay, you're willing to divulge this to everybody. And then this other thing to a subset and something to next subset, other thing to a subset. And there's some secret stuff that maybe won't tell anybody. So there's different things that you may have there that may also depend on a whole bunch of other kind of interactions as well.

• 17:55Speaker 01

  If you were raising right now for a startup that you were starting and you didn't have the tracker, let's call it your first company. How would you run that process as a founder? Would you spin up an agent and send it to VCs?

• 18:08Auren Hoffman?

  If you're gonna deal with an agent, you kind of want an agent dealing with an agent.

• 18:13Speaker 01

  Yeah.

• 18:13Auren Hoffman?

  There's a power imbalance if you're saying, hey, you can only talk to my agent or something, right? It, it just seems like a little bit weird. Certainly if a founder told me personally, I can only talk to their agent, I would think that's a little bit odd. And if I told the founder, probably you can only talk to my agent, that would be a little bit odd. But if it's an agent to agent conversation, I feel like that's much more in line with other. So today, to the best of my knowledge, like no VCs have like a good agent yet. So I don't know that I would create one if I was a founder, but I might make it easier for them. So I might send out the deck to them ahead of time. I might give them a video of me walking through it. I may have a whole FAQ out there and that also gives them the opportunity to opt out. Because a lot of times you're talking to VC, you think that VC is the right fit for you. And then you realize you might not know them that well.

• 18:57Auren Hoffman?

  And then of course I would use my agents to also research the VCs ahead of time. So is this one that actually is going to be a fit for what I want? I want to raise $4 million. Maybe this VC only invests 20 in something. So they're just not a fit. Why waste their time? Why reach out to them? Or why have them waste my time of like building that relationship now if I'm not going to talk to them for three years? So there's all these other kinds of things that you might want to do when you're out there. And you could have agents do most of that kind of research for you for sure. And if you want to know, if I was in college today, who are the VCs I should talk to? Yeah, I want to talk to Flex. Capital for sure, but maybe there's another like broad set of venture firms I want to be out there. And by the way, not just venture firms, like there's great angels that are out there. Who are the angels who are most helpful?

• 19:39Auren Hoffman?

  I'm doing something bespoke in the counter drone, you know, military things. Well, I want someone who understands that or who has like good connections to the Pentagon or, you know, whatever it might be.

• 19:50Speaker 01

  Exactly. I, I think you can certainly get pretty far with prompts. Build your short list, you know, reach out to these folks. You could probably handle a lot of this with agents. I do think there then becomes the element of like, well, then it's a marriage. Like, who do you want to take on the ride?

• 20:04Auren Hoffman?

  That's a long time, right?

• 20:06Speaker 01

  Yeah.

• 20:06Auren Hoffman?

  Figuring out like who you should talk to for the first date is, I think, something an agent can do. Figure out who you want to marry. That's something that as a human, I think is very important that you spend a lot of time figuring that out.

• 20:18Speaker 01

  I'm a pair of co-founders and Orin, from all accounts, seems like a great guy, knows my space very well. He's somebody that I could think I could turn to if I have a disagreement with my co-founder and we need to figure that out. And they'll play the right role in that. And they'll also know our space when we need to go to market and stress, trust, PMF and all that kind of stuff. And then based off your interviews and everything you put online, I know that you'd be a great investor for us. But it's not till I talk to you that I'm really like, okay, I want to work with this person. It's actually funny, I'm not sure that the public from your public persona knows this about you. Maybe they do, but you're like a phenomenal relationship builder. One of my favorite things of values, you send an email on everybody's birthday eve, wishing them a happy birthday.

• 21:02Speaker 01

  And I like that. It's a nice touch because it doesn't get lost in like the day of the birthday craziness where you're just like, oh my God, I can't even get any work done today. Cause it's like, there's so much craziness going on.

• 21:11Auren Hoffman?

  But I've been doing that for 30 years now. So that's how old I am. I've literally been doing that since I was young and it's just my thing. I like to do that. At some point I'll have to do something else because at some point like AI is just going to do that for everybody and I won't have an edge. But for at least for the last 30 years, it's been quite fun to do. It's nice to delight people in little ways. So if you can like spend a little bit of time delighting somebody, sending them a birthday thing, sending them a text if you saw them on a podcast or something or whatever. People like to be delighted. They like to be thanked. They like to, so if you, if somebody touches you in some sort of way, letting them know about it is always nice.

• 21:45Speaker 01

  It is. And it's funny, one time you sent it and I thought about it and I was like, oh, I wonder if he just like triggers all these things up at the same time, like at the beginning of the year. And I was like, you know, I don't even want the answer to that because I enjoy the jester and it's thoughtful and like it's, it's great. You know, it, it just goes to show like, you know, when I look at the list of the angel investments you were able to do and the network you've been able to build. I mean, you've been in some great companies and I think it's because of those relationships you've been able to foster over time. And so.

• 22:13Auren Hoffman?

  It's very hard to do these things at scale. So seed at scale is an incredibly difficult thing to do operationally. It's not strategic. Most investors are very strategic. That is why they go into investing. They're strategic people. They think big. They are really good at kind of connecting the dots and understanding those things. That's their edge. Seed at scale is the opposite. It's extremely operationally. It's operational. It's kind of a lot of grunt work. It's so much work. You have to meet with thousands and thousands of companies. You have to sift through all these things. You have to build all these agents. You have to build outbound. It's like a mid-market sales process going through, right?

• 22:59Auren Hoffman?

  And it is not something that 98% or maybe even more of investors would like to do. It's not in their sweet spot. But we're not that strategic. We are operational people. So for us, it's our edge, but for most people, it's not a good fit for them.

• 23:15Speaker 01

  Yeah. And I think if you compare what you're doing with the agents and your kind of technical lens with how good you are at relationship building and kind of building the network you've built over 30 years. Obviously that's probably a very great winning formula for seed stage investor and kind of proven it so far. But I want to pull up a quote. You're extremely outspoken, great follow on Twitter. Love the napkin diagrams, by the way. Keep those coming. But I think you said something like software spend will double and many software companies will die. Series A has become a slaughterhouse. Can you elaborate on that? Because it's like a strong statement.

• 23:55Auren Hoffman?

  There's been a lot of people talking about like the death of software. And software companies have always died. It is always a very fast moving industry where software companies are constantly dying since the beginning of software. So many of the leaders, most of the leaders of the eighties like don't exist. And these are massive public companies of the eighties don't exist today. And most people today don't haven't heard any of their names. Same thing, even with the leaders of the nineties, they don't exist. You just kind of go down the list. So it is, even if you were just the dominant company a couple of decades ago, there's no reason why you would necessarily be around today. It is a very, very fast moving thing. But spend is there. People are spending more on software today than they ever have before.

• 24:37Auren Hoffman?

  And the question is, will spend increase over time or will it decrease? The big difference between software and almost every other category. So one category would be travel, right? You are flying on United Airlines. You are getting a hotel in Marriott. If you need to fly on United Airlines or if you need to fly, you're not building your own airline unless you're an airline company, right? If you're a normal company, let's say you're a consulting firm or a bank or something like that. You use an airline, an already existing airline to fly, and you use an already existing hotel chain to get your hotel. You'd never just like make your own hotel. It'd be like pretty weird to go do that. Software is different. Software, oftentimes you decide to make.

• 25:20Auren Hoffman?

  In fact, a bank often spends more money making software than they spend buying software. In fact, they often spend orders of magnitude more making software than buying software. So if you just think of the total software spend of a bank, yeah, they spend on Workday, they spend on Salesforce, they spend on this and that. And they use AWS, they use all these other types of things. But they also spend just massive amount of money, both in their own employees and in consulting firms making. And so this making thing is something people always forget when it comes to software. It's already massive how much people spend making. And yeah, they will spend probably even more total of buying and making that pie

• 26:00Auren Hoffman?

  in the future than they will today because it's just becoming more and more potent about what you can do with all of this.

• 26:06Speaker 01

  So I think what you're saying is like with Claude Code, with a lot of these other, you know, new AI agent builders, essentially, you think more and more companies will start to build their own software instead of buying?

• 26:18Auren Hoffman?

  They may buy, they may build, it kind of depends. I would always rather buy than build if it's simpler and easier and you don't have to maintain it. And we're, at Flex, we're maintaining almost a thousand agents that we have to maintain. It is annoying. It would be so much better to just like easily buy it. If so, if someone had an agent for us or had whatever. And so some of those over time probably will buy. Some of the things we're buying today, we'll probably make. Well, we're going to, there's all these new things that are going to be happening. You're usually only making when something's like so custom to you. Now, in case of like workflows and your business, turns out so much of it is custom. So much of it is, it's like, it doesn't make sense for somebody else to make it for you

• 27:01Auren Hoffman?

  because they would have to, it's so unique to your particular business. So these things are really hard to do, but like there's still going to be tons of buying. The question is like, if you think like a SaaS company, they'd be like, oh, these SaaS companies are cheap, or they're expensive, or they're going to do well, they're not going to do well. It's very hard to know the future of like each individual company. And also very hard to know like how well they're going to do to innovate. Because if your software, the one thing that is for sure changing in the world of software is it used to be, you could have a great piece of software, people would buy it, and then you wouldn't have to change it for 10 years and they would still use it.

• 27:39Speaker 01

  Yep.

• 27:40Auren Hoffman?

  And they would just use it and it doesn't have to get better. Salesforce.com has not gotten better in the last 12 years. In fact, it's probably gotten worse. So many tools out there, LinkedIn, LinkedIn has not improved in the last 10 years, it's probably gotten worse over that time. People still use these things. This is not going to be the case in the future. You will have to be making it better all the time and you will probably have to be making it significantly better every month. If you're not making it better for a few weeks, it's fine, your customers will stay with you, but once it starts getting to a month, they Will get really, really mad. And the big thing that we are seeing is that very few companies today are willing to sign even a yearly deal.

• 28:26Auren Hoffman?

  Used to you would sign multi-year deals before. Today, almost all these tools, like if you think of a tool that's like $200 a month or 2,000 a year. 2,000 a year is an amazing discount on $200 a month. Only reason not to do that is if you think you're going to churn off of it. Almost every company thinks they're going to churn because things are moving so fast. So yeah, you might, we use perplexity computer day. We love it. If they're not still good in three months, we will churn. They know that. That's why they're working so hard to make their products so good. Cause they have a lot of competition. Everywhere in the stack is like uber, uber, uber competitive. And only get more competitive over time, our belief. And so these moats have gone away. They've basically been blown up. The only way to win is to make your product just better all the time.

• 29:11Speaker 01

  I was just gonna go into moats. So I'm glad you brought it up. So you think that they're blown away. Do you feel that way for incumbents and startups? Do you think there's any truth to the fact that like, okay, but workday is fine. They're entrenched in these enterprises or even DocuSign where, you know, there was the whole, oh, I just built, I vibe coded a DocuSign competitor in, you know, 24 hours and I don't need to spend money on DocuSign anymore, which, you know, to me personally, I've always found a little crazy because it's like, well, I don't know what, 999 a month. And I know that if I sign a document on here, they'll stand up in court. Like that was the whole point of it, not to sign the actual document. But where do you think that will net out?

• 29:52Auren Hoffman?

  It depends. Obviously, I think every one of these companies is different, but every one of these companies is going to face way more competition from than before. So if you're more entrenched, you are, the bigger you are, a workday is going to be harder to dislodge. And they're a great company and Salesforce is a great company, even though their products, you know, they're at least their main product stinks, in my opinion. But, you know, it's, it's obviously a great company if you just look at that company. But you know, before when they just haven't changed the core product or made the core product experience better for five years, like that's just. Not going to fly in the future. Now they're a great company with an amazing CEO. He realizes that for sure. Before he realized, okay, it doesn't make sense to make my product better.

• 30:36Auren Hoffman?

  Everyone loves it. They're going to stick with it, or maybe they don't love it, but they're going to stick with it anyway. Now he is smart enough to realize, oh, I got invested making this product better. Because someone's going to be eating my lunch and maybe my my current customer isn't going to churn. But it's I'm not going to be able to grow because I'm not going to be able to get new customers. I'm not going to be able to and and somebody eventually is going to come after me. So everyone is going to have to be working harder. Everyone is going to have to be innovating. They're going to have to be doing everything across the stack to do what's best for their customer. And it's always hard to know what is best for your customer.

• 31:07Speaker 01

  Yeah.

• 31:07Auren Hoffman?

  Sometimes it's like making things faster or making things easier, taking less of your customers' time. It could be the buying process could be better. Right now, the buying process so bad on on some of these companies that are out there. It could be making your product cheaper. Maybe Salesforce should all of a sudden say, hey, everyone now you you pay eighty percent. Which is hard to do for a public company.

• 31:26Speaker 01

  Yeah.

• 31:26Auren Hoffman?

  So there could be a lot of different ways of winning and there's lots of different levers to win on. But we're going to have to be using those levers because there's going to be so much competition in the future.

• 31:36Speaker 01

  Yeah, another another issue for some of these bigger companies is that they're all, to your point on pricing, they're all kind of stuck on seat based pricing. And with AI, if you're not going to need as many people, not going to need as large a headcount. Seat based pricing may not be the best way to charge, but the customers have all have kind of all been in sync now. And stuck with this pricing for so long, it's what they expect.

• 31:58Auren Hoffman?

  It's not Salesforce killed Siebel and maybe Salesforce won't get killed by the next. Maybe they'll innovate. I hope they do because they have a great culture and an amazing CEO and amazing history. So I hope they do find a way to innovate, but I can tell you with the current product they have, they are not going to win. I can pretty much guarantee you that. So they need to have massive innovation if they want to stay ahead of the game. If there's someone in there who thinks they could win without innovating massively, that person should be fired. And I really don't think anyone in the C suite of Salesforce I've talked to them believes that. Like they know they've got to make things better. They know their product is substandard. They know that a lot of the competing products are better in many dimensions. Maybe not on every dimension, maybe there's like one core dimension that they're way better at or something like that. And they know they have to kind of keep things moving.

• 32:43Auren Hoffman?

  Or, you know, they have a lot of other products that are great, like Slack and other types of things. So maybe they just kind of invest in those.

• 32:50Speaker 01

  They're active in M and A. They bought.

• 32:52Auren Hoffman?

  And they're a great acquirer.

• 32:54Speaker 01

  Years. So I, I think, you know, and, and Mark, you know, one of the, the best CEOs.

• 32:58Auren Hoffman?

  Never want to bet against Mark Benioff. Like, he's an amazing CEO. I certainly wouldn't short that stock.

• 33:04Speaker 01

  Yeah.

• 33:04Auren Hoffman?

  So if someone's out there being like, what's stock to short? It would not be Salesforce. So like, that is an incredibly well-run company and they're going to figure out a way to win that's out there. But it is going to look a lot different in the future than it is today. All these companies will, and they're just going to be out there. I was talking to one of our portfolio companies doing extremely well. We're found like a billion dollar kind of revenue kind of company. It is growing so fast. The CEO has been doing this for like seven or eight years. He has taken one short vacation during that time. He is working like an insane madman. And he knows his only advantage is product velocity. He has no other moat, even a company that big. He has no moat.

• 33:48Auren Hoffman?

  He has to just keep grinding and keep working his tail off. And everyone else has to be working their tail off. And that is hard to sustain.

• 33:55Speaker 01

  Mm hmm.

• 33:56Auren Hoffman?

  It is really, really hard. And he knows, because he's like, my competitors are smart. They have super smart people. They're working super hard. He is paranoid as hell. And that is why he's currently winning. And he knows if he even just loses a little bit of edge, he is not going to win. That's a tough business. That is a much harder business than an old SaaS company where you can just lie on the beach for a long time and just rake in the dollars.

• 34:19Speaker 01

  It's a new day. It's certainly a new day.

• 34:21Auren Hoffman?

  Yeah.

• 34:21Speaker 01

  You know, I, I want to touch on one more thing while we still have you here that, that you said that was, I'd say, an interesting take. So everyone says that AI is destroying jobs, but you're out here predicting that AI is going to cause a massive baby boom, which is an unexpected take, I guess, in the AI discourse. How are you seeing that AI is going to kind of reshape our, our meaning and stability and what everyone else is missing there?

• 34:46Auren Hoffman?

  There was already a baby boom going on in the United States amongst richer people.

• 34:51Speaker 01

  Okay.

• 34:52Auren Hoffman?

  So we're already seeing that married richer people are having more kids than they were 25 years ago. So we're already seeing that boom starting to happen as people are getting wealthier. They're investing more in their families, they're investing more in their kids. So many people who had two before are having three, so many people who have three are having four. And all you need is people go from like nuclear family of two to a nuclear family of three. To just see just like a massive baby boom happen in the United States. And this is not necessarily happening in many other countries, but in the United States, we're seeing it happen. The fertility rate has declined in the US, but the reason the fertility rate has declined over the last 30 years is that unmarried women are having fewer kids.

• 35:34Auren Hoffman?

  We saw a massive drop, for instance, like teenage pregnancy, this in the 90s teenage pregnancy was a problem. Now that's dropped to very, very, very low rates in the US. And then unmarried women are having fewer kids. Married women are still having the same number of kids today than they were having 30 years ago. Now fewer people are getting married and they're getting married later. And of course, when you're getting married later, the only reason people are having the same number of kids as they were before is we have all these new technologies to help them. We have IVF, you have all this other stuff today to help them like catch up. So so if they're having two point something kids before, they can still have those two point something kids today. So the question is, will technology allow them to have even more kids as they're getting married later?

• 36:16Auren Hoffman?

  Or will people get married a little bit earlier, which will also allow them to have more kids? Will people want to invest more in kids? Will it become easier? Of the people who are super wealthy, and I wouldn't say super, let's say people making $200,000 a year or up. So like very quite wealthy people in the United States.

• 36:33Speaker 01

  Upper middle class.

• 36:36Auren Hoffman?

  Yeah, definitely, you know, top 5% earners or something like that. The number one reason I believe they don't have kids is because they have to invest so much in the kid. And the reason why they invest so much in kids is because college is still so important. And so they have to invest in things like private schools, they have to invest in travel, sports, they have to invest in these other things. Potentially, AI will make college less important. If AI makes college less important, that's another people will have more kids. And so if you you see the area where the college is the most important place, the most determinant place of your life, South Korea. And that is the place where people have the fewest number of kids per family. So there are some sort of sometimes different correlations there. It doesn't work out perfectly, but that is one of my beliefs.

• 37:21Auren Hoffman?

  And the other thing is just like, it's so human. So it's just something AIs is not going to replace is that parental type of thing. And people want to have more and potentially it will become much easier to have it more. There's a lot of ways, sometimes people have tough pregnancies. There should be a lot of ways to reduce that, to make the pregnancies better with technology. There are even alternative to pregnancies that are happening, like surrogacy is happening. Potentially you could even have like an artificial womb. You could have all these other things that could happen with technology. All those things could also increase. And then of course, things like self-driving cars, that's going to be great for families. There's a lot of other things that are out there that could potentially do more of the housework, other things in the future.

• 38:02Auren Hoffman?

  So all these things could make it where it could become a lot easier for people to have more kids.

• 38:07Speaker 01

  I think we're very close on AI and getting close on robotics. And that includes like self-driving cars. I think the third unlock would be finding clean, safe energy source.

• 38:18Auren Hoffman?

  Yeah, obviously if energy can get cheaper, like that would be great. So there's a lot of things that if you really believe in the promise of AI, you could see where people don't. They're too interested in the AI. They don't want to meet their spouse. So if marriage rates start to fall dramatically, well, then that will be a counter argument. I could see that argument being made as well. But if there's still a very human thing to getting married, still a human thing to getting paired up. If you believe that that's still going to trump all the technology, all the, sometimes it's like, okay, do I want to go to the bar to meet my spouse? Or do I want to watch this new show on Netflix? Like it's a tough decision and maybe people choose the Netflix one. And then of course, as the AI gets better, it becomes an even harder decision to go make. And maybe that does make the marriage rates fall. But so I could see the argument.

• 39:03Auren Hoffman?

  I'm an optimist and I'm betting that, that we're going to have more people who are going to want to pair up and find their life partner, et cetera.

• 39:11Speaker 01

  I love it. I think it's certainly good for humanity when people are thinking a few generations ahead, you make different decisions. So it's, it's certainly changed my mindset and outlook on life. When I went from kind of like, oh, I don't know if I want to have kids. I can kind of take it or leave it to like, okay, I'll have kids and then actually having kids. And then the, the way you see the world is different in terms of kind of how you want to leave it.

• 39:31Auren Hoffman?

  Yeah, you think more in the future.

• 39:33Speaker 01

  Exactly. Orin, thank you so much. This was so fun.

• 39:37Auren Hoffman?

  Max, this was awesome. Great to see you, my friend.

• 39:39Speaker 01

  Likewise, likewise. Appreciate you. That was another fantastic episode of the VC Series on the GTM Now Podcast. Head over to Apple, Spotify, or YouTube and give us a like and subscribe and we'll see you on the next one.